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SunPower Corporation reports 2,044% Net Income growth in 2020 and 5.1 pp EBITDA Margin growth from -0.073% to 5.0%

02/17/2021 • About SunPower Corporation ($SPWR) • By InTwits

SunPower Corporation reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • SunPower Corporation is a company in decline: FY2020 revenue growth was -39.7%, 5 years revenue CAGR was -6.5%
  • EBITDA Margin is expanding: 5.0% in FY2020 vs. -0.1% in FY2019 vs. -11.3% in FY2016
  • SunPower Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -19.8%
  • SunPower Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 3.2%.
  • CAPEX is quite volatile: $15m in FY2020, $47m in FY2019, $45m in FY2018, $70m in FY2017, $187m in FY2016
  • The company has unprofitable business model: ROIC is -0.1%
  • It operates with high leverage: Net Debt/EBITDA is 8.2x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


The company's Revenue dropped on 39.7%. Revenue decline showed acceleration in FY20Q4 - it was 43.4% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.1 pp from -0.073% to 5.0% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2017 at -46.8% and was growing since that time.

Gross Margin increased on 8.1 pp from 6.8% to 14.9% in FY2020. During FY2016-FY2020 Gross Margin bottomed in FY2018 at -17.2% and was growing since that time. SG&A as a % of Revenue increased slightly on 0.67 pp from 14.0% to 14.6% in FY2020.

Net Income margin surged on 41.0 pp from 1.2% to 42.2% in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2017 at -51.8% and was growing since that time.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 1.3% in FY2020. The company showed decline in CAPEX/Revenue of 2.6 pp from 3.9% in FY2017 to 1.3% in FY2020. Average CAPEX/Revenue for the last three years was 2.1%. CAPEX as a % of Revenue stuck to a declining trend at -1.3 pp per annum in the last 5 years.

Return on investment


The company operates at negative ROIC (-0.1%) and low but positive ROE (229.3%). ROIC increased on 9.6 pp from -9.7% to -0.097% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2018 at -54.2% and was growing since that time.

Leverage (Debt)


Debt level is 8.2x Net Debt / EBITDA and 12.3x Debt / EBITDA. Net Debt / EBITDA jumped8.2x from to 8.2x in FY2020. Debt dropped on 36.8% while cash dropped on 45.0%.

SunPower Corporation has no short term refinancing risk: cash is higher than short term debt (137.5%).

Valuation and dividends


The company's trades at EV/EBITDA 122.5x and P/E 13.5x.

Management team


SunPower Corporation's CEO is Thomas H Werner "Tom". Thomas H Werner "Tom" has 17 years tenure with the company. The company's CFO is Manavendra S Sial. Manavendra S Sial has 2 years tenure at the company.

Financial and operational results


FY ended 01/03/2021

SunPower Corporation ($SPWR) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue2,5601,7941,7261,8641,125-39.7%
Gross Profit190-19-29712616732.7%
SG&A329279260260165-36.8%
EBITDA-288-840-722-156
Net Income-471-929-811224752,043.8%
Balance Sheet
Cash425435309423233-45.0%
Short Term Debt713584011416948.1%
Long Term Debt1,5651,247859980522-46.7%
Cash flow
Capex18770454715-69.2%
Ratios
Revenue growth62.4%-29.9%-3.8%8.0%-39.7%
EBITDA growth322.0%191.3%-14.0%-99.8%-4,204.4%

Gross Margin7.4%-1.0%-17.2%6.8%14.9%8.1%
EBITDA Margin-11.3%-46.8%-41.8%-0.1%5.0%5.1%
SG&A, % of revenue12.9%15.5%15.1%14.0%14.6%0.7%
Net Income Margin-18.4%-51.8%-47.0%1.2%42.2%41.0%
CAPEX, % of revenue7.3%3.9%2.6%2.5%1.3%-1.2%

ROIC-15.2%-39.3%-54.2%-9.7%-0.1%9.6%
ROE-38.3%-116.4%229.3%
Net Debt/EBITDA8.2x

SunPower Corporation ($SPWR) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
P&L
Revenue449353275342 29.0%-19.1%-3.9%-43.4%
EBITDA-23-161330 --117.8%-23.6%
Net Income-11945412 --84.0%-7,482.3%
Balance Sheet
Cash205235325233 10.7%40.7%71.8%-45.0%
Short Term Debt136450408169 170.4%531.7%358.6%48.1%
Long Term Debt882566535522 -4.1%-41.1%-41.4%-46.7%
Ratios
Gross Margin8.3%6.1%13.5%22.0% 19.0%1.6%-2.4%6.2%
EBITDA Margin -5.1% -4.7% 4.8% 8.8% 20.4%-25.8%5.5%4.8%
Net Income Margin -0.3% 5.5% 16.2% 120.7% 25.4%-22.3%21.5%119.8%

Peers in Semiconductors


Below we provide SunPower Corporation benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Inphi Corporation ($IPHI)-30.8%-15.4%24.2%86.8%
Sequans Communications S.A. ($SQNS)-5.9%-16.6%-23.3%65.0%
MaxLinear, Inc ($MXL)-8.4%-8.4%-17.6%50.9%
Advanced Micro Devices, Inc. ($AMD)-21.6%23.3%4.0%45.0%
Kopin Corporation ($KOPN)-23.0%-12.1%20.7%35.9%
 
Median (43 companies)1.2%11.0%4.9%-3.2%2.8%
SunPower Corporation ($SPWR)--29.9%-3.8%8.0%-39.7%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
CEVA, Inc. ($CEVA)91.6%92.1%89.8%88.4%89.3%
Universal Display Corporation ($OLED)83.9%80.8%75.5%78.5%80.1%
Rambus, Inc. ($RMBS)80.1%79.9%76.8%77.1%75.0%
Analog Devices, Inc. ($ADI)65.1%59.9%68.3%67.0%65.9%
MoSys, Inc. ($MOSY)49.0%46.9%61.8%61.0%65.7%
 
Median (43 companies)48.0%49.1%50.4%50.7%49.4%
SunPower Corporation ($SPWR)7.4%-1.0%-17.2%6.8%14.9%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Texas Instruments Incorporated ($TXN)43.5%46.7%48.6%47.5%47.6%
Intel Corp ($INTC)35.2%41.7%45.7%45.9%46.7%
Broadcom Inc. ($AVGO)19.9%40.4%44.2%40.9%46.2%
Universal Display Corporation ($OLED)44.8%51.6%35.3%48.0%45.9%
Analog Devices, Inc. ($ADI)36.2%32.1%43.2%42.1%42.0%
 
Median (41 companies)9.2%10.7%9.8%13.6%17.4%
SunPower Corporation ($SPWR)-11.3%-46.8%-41.8%-0.1%5.0%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Micron Technology, Inc. ($MU)46.9%23.3%29.2%41.8%38.4%
Sequans Communications S.A. ($SQNS)11.8%13.3%22.9%29.6%27.1%
Intel Corp ($INTC)16.2%18.8%21.4%22.5%18.6%
First Solar, Inc. ($FSLR)7.9%17.5%33.0%21.8%15.4%
Power Integrations, Inc. ($POWI)3.1%7.5%5.9%5.7%14.5%
 
Median (40 companies)3.6%4.7%4.4%3.8%4.0%
SunPower Corporation ($SPWR)7.3%3.9%2.6%2.5%1.3%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Texas Instruments Incorporated ($TXN)34.9%43.1%47.5%39.7%38.2%
Applied Materials Inc ($AMAT)19.0%31.2%36.4%27.7%32.1%
Advanced Micro Devices, Inc. ($AMD)-21.7%7.3%21.6%21.5%31.8%
QUALCOMM Incorporated ($QCOM)15.8%5.7%2.2%38.0%28.1%
NVIDIA Corporation ($NVDA)13.1%27.3%35.3%36.9%22.7%
 
Median (45 companies)1.7%3.2%3.0%3.8%5.5%
SunPower Corporation ($SPWR)-15.2%-39.3%-54.2%-9.7%-0.1%


Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
MACOM Technology Solutions Holdings, Inc. ($MTSI)3.0x7.2x98.6x-6.6x
Rambus, Inc. ($RMBS)-0.1x-0.1x--5.9x
Inphi Corporation ($IPHI)4.5x33.7x32.2x4.5x3.4x
Canadian Solar Inc. ($CSIQ)11.3x6.8x2.7x3.4x3.3x
Broadcom Inc. ($AVGO)4.0x0.9x1.4x3.0x3.1x
 
Median (31 companies)0.2x0.4x0.3x0.5x0.1x
SunPower Corporation ($SPWR)----8.2x