SunPower warns of equipment defect, earnings headwinds exiting 2021

SunPower Corp. warned Jan. 20 that it expects to incur approximately $31 million in charges to replace defective equipment in its commercial and industrial energy systems.

The company said it discovered cracking issues with some of the connectors in equipment supplied to SunPower by third-party manufacturers. There have been no reported safety incidents from customers as a result of the defect, SunPower said, nor any degradation in performance.

SunPower said it will use cash on hand to pay about $27 million in supplier-quality charges for the fourth quarter of 2021 and about $4 million in the first quarter as it works to recover costs from suppliers.

Excluding those charges, SunPower said it expects adjusted EBITDA for the fourth quarter of 2021 at the low end of previous guidance due in part to California weather disruptions and impacts from the COVID-19 pandemic. The company plans to release full financial results Feb. 16.

SunPower shares were down 11.62% in morning trading Jan. 21.

"With high-growth opportunities spanning our existing and evolving markets, customers can count on us for transparency and the right tools to power the world with solar," SunPower Chairman, President and CEO Peter Faricy said in a statement. "It's part of our commitment to do the right thing."