Building staff set up SunPower tiles on houses in San Ramon, Calif.
Robert Nickelsberg | Getty Photos
SunPower stated Tuesday that it is restructuring its operations in a bid to focus solely on the fast-growing residential photo voltaic market. The corporate is buying residential photo voltaic supplier Blue Raven, whereas additionally trying to promote its business and industrial enterprise.
SunPower CEO Peter Faricy stated the acquisition was a pure match for a number of causes, together with that Blue Raven’s customer-first method aligns with SunPower’s motto. Moreover, greater than 90% of Blue Raven’s clients are in 14 states that account for simply 5% of SunPower’s gross sales. In different phrases, the acquisition expands SunPower’s footprint in locations the place the corporate has struggled to grab market share.
“From a method standpoint, this transaction is an instance of one thing that enables us to serve customers a lot sooner than we’d have in any other case,” Faricy stated, including that the deal shall be income and EBITDA optimistic from day one.
SunPower will achieve greater than 20,000 clients from Blue Raven, including to the 376,000 residential clients it had on the finish of the second quarter.
The overall transaction worth of the acquisition is as much as $165 million, with the money required to shut the deal standing at as much as $145 million. SunPower used money from operations to fund the acquisition, with the vast majority of the cash raised after the corporate offered 1 million shares of Enphase Power.
Faricy stated that whereas the business and industrial photo voltaic phase is a horny house to function in with loads of progress forward, the corporate’s resolution to promote the division got here all the way down to capital allocation and the chance for a streamlined enterprise.
He famous that the unit has garnered curiosity from potential consumers, however didn’t disclose any particular person names. Faricy additionally pointed to the attractiveness of the asset, saying that SunPower at the moment makes cash in business and industrial by means of managing contracts, whereas a future proprietor might benefit from each the managing and financing facet of the operation.
SunPower intends to make use of the cash from a possible sale to reinvest into its newly core residential enterprise, together with round buyer acquisition and expanded digital companies for householders.
“In our case, we’re blissful to have the readability for traders on this singularly targeted technique now, specializing in residential shifting ahead,” Faricy stated.
A restructuring of this nature isn’t the primary for SunPower. In August 2020 the corporate spun out photovoltaic module maker Maxeon Photo voltaic, though the 2 separate entities nonetheless work collectively.
Shifting the corporate’s focus to particular person customers is probably a pure match for Faricy, who took the helm of SunPower in April. He was beforehand CEO of world direct-to-consumer for Discovery Inc., and in addition served as vp of Amazon Market.
And whereas business and industrial photo voltaic supply different progress avenues, the vast majority of SunPower’s income comes from residential operations.
Full-year 2020 gross sales from residential and light-weight business totaled $848 million, whereas the business and industrial unit introduced in $254.8 million. The residential unit can be extra worthwhile. Gross margins per watt jumped from $0.19 in 2019 to $0.66 this yr, whereas margins from the business and industrial division declined from $0.25 to $0.06 throughout the identical interval.
“The info are the residential enterprise is bigger, it is sooner rising and it is extra worthwhile,” Faricy summarized. “[Residential] is the precise place for us to deal with as we transfer ahead, and I believe we count on it to be properly obtained by traders.”
Wanting ahead, SunPower desires to be a one-stop store for customers. Slightly than having a one-time buyer relationship when the system is put in, the corporate is including vitality storage, electrical automobile capabilities and a number of digital merchandise together with vitality administration programs.
Residential photo voltaic installations have jumped in recent times, however on the finish of 2020 simply 2.7 million, or 3%, of houses throughout the U.S. sported rooftop panels. President Joe Biden’s local weather agenda requires photo voltaic’s portion of electrical energy era rising from 3% as we speak to 40% by 2035. Photo voltaic installations might want to surge in coming years if these objectives are to be met.
However alternative would not at all times translate to returns for traders trying to capitalize on long-term tendencies. After a banner 2020, photo voltaic shares have suffered in 2021. Provide chain bottlenecks, rising uncooked materials prices and coverage uncertainty are among the many components which have dented sentiment.
Faricy famous that SunPower has remained largely insulated from the chip scarcity, saying that the corporate has visibility by means of the top of the calendar yr. That stated, he acknowledged the issue of securing parts, saying provide chains are a “lifelong problem.”
Shares of SunPower are up almost 6% over the past month, aided by an almost 10% achieve final Friday after S&P Dow Jones Indices introduced that SunPower can be added to the S&P MidCap 400 previous to the opening bell on Tuesday. The Invesco Photo voltaic ETF, by comparability, is down 10% over the past month.
SunPower shares superior 2% throughout premarket buying and selling on Tuesday.
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