Maxeon Solar Technologies, Ltd. Q3 FY2022 earnings call

• Launched US channel expansion initiative at RE+ conference, with new partnership with Greentech Renewables for DG market. - DG sales up 25% YOY, benefited from price increases and higher mix of Maxeon six product. - France saw 60% AC module mix and >20% residential market share. - Australia had 40% AC module mix and storage orders booked. - Evaluating strategies to expand Maxeon seven capacity instead of retrofitting existing lines. - Ramped utility scale performance line capacity to over 1 GW, on track to 1.8 GW in 2023. - Planning to capitalize on US manufacturing opportunity with new 3 GW factory in SE US, anticipating ramp in 2025.

DG sales in Q3 were up 25% year over year. Europe set new volume and revenue records for the sixth consecutive quarter. In France, crossed the 60% threshold for AC module mix and increased residential market share to north of 20% in Q3. In Australia, AC module mix increased to approximately 40% and began booking orders for storage. DG ASPs were up in many geographies due to price increases and higher mix of beyond the panel revenue. Third quarter revenues were $275 million, a 16% sequential increase. Non-GAAP gross income in Q3 was negative $16 million, an improvement from the second quarter.

• Q3 shipments 605 MW, consistent with guidance range of 580-620 MW. - Q3 revenue $275M, consistent with guidance range. - Q4 shipments expected 680-720 MW, revenue 290-330M. - Non-GAAP gross profit expected breakeven to 10M. - Non-GAAP EBITDA projected negative $17M to negative $27M. - CapEx projected $16M to $20M for Q4, majority for performance line ramp in 2023.

• Potential delays in manufacturing facility due to factors like transformer lead times. - Geopolitical and supply chain risks that could affect the timeline of the proposed 3 GW factory in the US.

Q: Can you talk about the ramp through 2022, legacy ASPs rolling off, and under-utilization?

A: Demand in US utility space is strong, booking out years in advance. Moving past lower contracted prices, COGS improvement, under-utilization disappearing as capacity ramps, and contribution from beyond the panel products. Under-utilization charges have peaked and are expected to decrease.

Q: Update on IBC market and technology, patents?

A: Strong patent protection, ongoing innovation. Interest in IBC as longer term mainstream technology, but most action currently in Topcon.

Q: Forced labor prevention and border issues?

A: Customers feel comfortable with supply chain, shipping hundreds of shipments monthly. Section 201 exclusion for IBC product slated to go away but no issues expected for US shipment.

Q: CapEx phase-in for $1B project, DOE loan guarantee?

A: Total project investment ~$1B, still evaluating customer co-investment models. Vast majority of investment expected from DOE and customer co-investment.

Q: Customer co-investment structure and facility timing risk?

A: Evaluating prepayment/loan models for co-investment. Concerns about transformer lead times, but confident in current schedule though risks exist.

Q: Relationship with Sun Power and 2023 supply?

A: Slight decrease in supply to Sun Power in 2023 as part of margin optimization, but good relationship.

Q: PV pricing and module supply constraints?

A: Seeing strong demand for premium products, backlogs carry through Q4. Excess modules not affecting DG markets internationally.

Q: Region with 50% revenue and hotspots?

A: Europe is a hotspot, with France having >20% residential market share, strong in Italy, and AC products performing well. Storage product to ship to Europe in Q2 2023.