Shares of Maxeon Solar Technologies (MAXN +5.30%) are down 11.8% as of 12:45 p.m. ET Thursday after the solar technology company announced mixed third-quarter 2023 results and disappointing forward guidance.
To be fair, this update shouldn't be entirely surprising considering Maxeon announced preliminary results over a month ago. Citing a temporary pause of shipments in late July after its largest U.S. distributed generation (DG) customer, SunPower, breached its payment obligations under Maxeon's Master Supply Agreement, Maxeon told investors its Q3 revenue would arrive in the range of $224 million to $229 million, with shipments in the range of 622 megawatts (MW) to 632 megawatts.
NASDAQ: MAXN
Key Data Points
On Maxeon's near-term weakness and SunPower settlement
Indeed, when all was said and done Maxeon's quarterly shipments fell 22.2% year over year to 628 MW, while revenue declined 17.4% year over year to $227.6 million. On the bottom line, that translated to a net loss under generally accepted accounting principles (GAAP) of $108.3 million, or $2.21 per share. Analysts, on average, were expecting a much narrower net loss of $0.93 per share on roughly the same revenue.
"As indicated in our preliminary results announcement of our third quarter financials, the third quarter was significantly impacted by the absence of shipments to SunPower for a majority of the quarter as well as by the industrywide supply and demand imbalance in Europe," Maxeon CEO Bill Mulligan said in the earnings release. "Maxeon has responded by taking decisive action to adjust its market focus and manufacturing footprint to reposition Maxeon for success."
On a more positive note, Maxeon did reach a settlement agreement with SunPower that allowed it to resume shipments. Per the terms of the agreement, SunPower will purchase 85 MW of IBC panels at contracted pricing through February 2024, and will post a $30 million payment security bond. Maxeon also received a warrant to purchase 1.7 million shares of SunPower's common stock.
What's next for Maxeon stock?
Maxeon also said the settlement paves the way for the company to "aggressively ramp sales into the U.S. market" through its acquisition of Solaria Corporation and accelerated ramp-up plans for its new Maxeon 7 technology.
In the meantime, however, Maxeon expects fourth-quarter 2023 revenue of $220 million to $260 million, assuming shipments in the range of 610 MW to 650 MW. By comparison, most analysts were looking for significantly higher fourth-quarter revenue of $278 million.
That certainly doesn't mean Maxeon is a broken business. To the contrary, its near-term weakness notwithstanding, Maxeon appears to be well positioned to capitalize on future demand as it ramps up production for its next-gen solar technologies. Assuming there aren't any more payment hiccups from key customers, this pullback might well prove to be a compelling buying opportunity for patient, long-term investors.
