Good afternoon, and welcome to SunPower Corporation First Quarter 2017 Results Conference Call. Today's call is being recorded. If you have any objections please disconnect at this time. I'd like to turn the call over to Mr. Bob Okunski, Senior Director of Investor Relations, SunPower Corporation. Thank you, sir. You may begin.

Thank you, Marco. I'd like to welcome everyone to our first quarter 2017 earnings conference call. On the call today, we will start off with a strategic and operational review by Tom Werner, our CEO; followed by Chuck Boynton, our CFO, who will review our first quarter 2017 financial results. Tom will then discuss our outlook for Q2 and 2017. As a reminder, a replay of this call will be available later today on the Investor Relations page of our website. During today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in the Safe Harbor slide of today's presentation, today's press release, our 2016 10-K, and on our Quarterly Reports on Form 10-Q. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. To enhance this call, we have also posted a set of PowerPoint slides, which we will reference during the call on the Events & Presentations page of our Investor Relations website. In the same location, we have posted a supplemental datasheet detailing some of our historical metrics as well. With that, I'd like to turn the call over to Tom Werner, CEO of SunPower, who will begin on slide 3. Tom?

Thanks, Bob. And thank you for joining us. Today, I'll provide our perspective on the evolving solar market and describe how we are adapting power our strategy for future success. I will then discuss our segment performance in greater detail and provide some color around the recent announcement of our new SunPower Solutions business unit as well as provide further detail concerning our P-Series panel manufacturing JV in China. Please turn to slide 4. As many of you know, SunPower has been a leader in the solar industry for over 30 years. During this time, we experienced dramatic market growth and several significant changes in the overall market structure and specific growth drivers. The first two decades, our focus was very much on solar cell technology development and the industry was driven largely by expectations of future contributions to the energy mix. It was during this period that we developed our unique high efficiency back contact solar cell technology. Starting in 2006, the year we completed the ramp of our first factory, the industry exhibited accelerated growth as an annual deployment volume grew from around 2 gigawatts in 2006 to almost 80 gigawatts last year. This hyper growth phase was driven primarily by financial incentives such as feed-in-tariffs, which provide very effective – proved very effective in stimulating expansion of the industry, but also highly disruptive when they were appropriately modified. SunPower's strategy during this period included a conscious diversification of our geographical and application segment mix to mitigate the impact of policy dislocations. During this period, a number of solar companies led by SunPower expanded their scope from upstream manufacturing into various downstream channel and development activities, in some cases even including long-term asset ownership models. The result was massive capital deployment across the entire value chain and a…

Thanks, Tom, and good afternoon. I will first review our first quarter results and then discuss certain financial highlights for the quarter. I will then turn the call back over to Tom for our guidance. Please turn to slide 12. We exceeded our forecast while continuing our restructuring programs and prudently managing cash and working capital. Before moving on to the P&L, I would like to point out that starting this quarter, we have made a decision to exclude the impact of our above market poly contracts from our non-GAAP results as we believe this will provide a more accurate picture of our performance. Moving on to the P&L, our non-GAAP revenue was in line with our guidance as we executed according to plan in all segments. Q1 results reflect the impact of seasonality, as well as significant rain in California. In power plants, we are building projects for second half delivery, but as Tom mentioned, this segment remained very challenging. In our DG business, revenue grew significantly year-over-year, and as expected, declined sequentially from our historically strong Q4 results. Overall, non-GAAP gross margin was 6.5% as we were impacted by overhead absorption across low volume, power plant sales and commercial project mix, specifically by segment. Q1 power plant margins remained challenging and we expect will not improve in Q2. We see continued project pricing pressure primarily in Mexico, but do expect a very strong Q4 with planned project sales in Chile. Non-GAAP commercial margins declined in the quarter, due to overhead and project timing. We expect continued margin improvement throughout the year and eventually back to the mid to high teens. In residential, margins for the quarter were impacted by overhead costs allocated across lower company volumes and regional mix. Internationally, Europe and Japan were ahead of plan. In…

Thanks, Chuck. I would now like to discuss our guidance for the second quarter as well as reaffirm our fiscal year 2017 outlook that we gave in February. Please turn to slide 15. The company's second quarter fiscal 2017 GAAP guidance is as follows, revenue of $275 million to $325 million, gross margin of negative 3% to negative 1%, and a net loss of $135 million to $110 million. Second quarter 2017 GAAP guidance includes the impact of the company's HoldCo asset strategy, revenue and timing deferrals due to real estate accounting, as well as the impact of charges related to the company's restructuring initiatives. On a non-GAAP basis, the company expects revenue of $275 million to $325 million, gross margin of 2% to 4%, EBITDA of negative $25 million to breakeven, and megawatts deployed in a range of 330 megawatts to 360 megawatts. As a reminder, our non-GAAP results exclude the impact of our above market poly contracts, which is estimated to be approximately $13 million for Q2 and $100 million for fiscal year 2017. On slide 16, we are providing our fiscal year 2017 guidance, which remains unchanged from what we disclosed in our February call. With that, I'd like to turn the call over for questions.

Thank you for calling the digital replay service. At this time, we are now ready to begin the question-and-answer session. Our first question is from Ben Kallo. Please state your company name. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: Baird. Hey, Tom, Chuck and Bob.

Hey. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: Can you just talk about the margin for Q2, and how much that has to do with your own production gain where it needs to be versus the overall market? And then I have one more question.

Yeah. Hey, Ben. This is Tom. Just a quick comment. Overall on Q2, it is a profile that is basically what we were communicating in Q1 for the year. We did hold the year guidance, and what we see is impact of volumes and absorption of overhead in the first half of the year, where the back half of the year is much stronger. Chuck will comment a little bit further.

Yeah, Ben. So, the profile is that we are deploying about 350 megawatts but only recognizing around 200 megawatts. And we amortize the overhead only across the megawatts recognized. So, what you see is a really strong back half of the year based on more volume and then plus the items as Tom mentioned. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: And then on the – thank you very much. On the P-Series, could you talk about how much has been deployed, what the reception has been, and then maybe I'll tie in a third one, going to China for the JV versus a concentrator, how was that decision made versus possible trade rules out there, barring you from shipping that product to the U.S.? I'll leave it there. Thanks.

Okay. So, I got how much is deployed, how is it performing in China, where we're producing. And if I miss something, Ben, just remind me. So, first, deployed is tens of megawatts. We've deployed our first meaningful system in terms of scale about 14 months ago, so we have lots of field data, and we have the certificate – we've been through certifications, and we have two independent engineer reports. So the product is performing at or above rated energy production at the sites that we're monitoring, and the receptivity is excellent for the product. We are selectively deploying the product. It is not offered everywhere. It's offered where it fits best which is high cost of capital markets and where balance of system is inexpensive, think warehouses or that sort of thing. So we're selectively offering P-Series in the near term, and the performance is great. As we commented overall, we're working to simplify SunPower as a company, simplify our financials and simplify and to deleverage our balance sheet and to reduce the amount of capital that we need to deploy. So China, for P-Series fit great, because it requires a lot of capital to add significant capacity expansion. It gives us access to the world's largest solar market, gives us access to the world's largest supply chain, and therefore, we can scale and get costs down faster. We can also produce and do produce P-Series in other module operations, one of those is in Mexico, and we can buy cells from non-tariff countries. So, we have the flexibility in our supply chain to produce in tariff free, and the P-Series is inherently less capital intensive, so it's more flexible than other technologies as we look at potential other changes in tariff structures. And as I mentioned in my prepared remarks, we've received meaningful orders including an order from an American utility for over 100 megawatts and this is a very discriminating utility. So I think we've crossed the threshold of credibility. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: Great. Thank you very much.

Thank you. The next question comes from Brian Lee and please state your company name. Brian Lee - Goldman Sachs & Co.: Hey, guys. Goldman Sachs here. Couple of questions, maybe first Chuck on the revolver, I know you touched on this a little bit. But could you maybe elaborate a little bit more on the latest status on the ability to access it, how much has Total backstopped and are you able to access just that amount or the full amount? And then maybe more broadly in looking ahead, how are you generally thinking about the liquidity into 2018, just what capacity do you have, what sources are they and then is the general thought around that 2018 converts to refi or would it be something else, any color on that would be great? Thanks.

Great. Thanks, Brian. So, as we look at our cash plans, we feel that we have ample cash to run the business. However as you know, the revolver which currently matures in 2019 is not currently accessible. And so as we look at our plans, because project timing can move and what not, we felt it was prudent to have a backstop there. And so, Total agreed to backstop $100 million of the revolver, and that was simply based on sensitivities and what not, so we feel like we're in a really strong position there from a liquidity standpoint. As it relates longer term, yeah, the convert is about five quarters out, so it's still a little bit premature. But as we're thinking about this, our preference would be probably to pay it off in cash right now, given our share price, but I'd say, it's still early and it's something that we're actively working on, but would probably provide more color on the next call. Brian Lee - Goldman Sachs & Co.: Okay. Great. Appreciate that. And just second question for me is on the 8point3 process, I know, there is sensitivities around what you can say publicly, but maybe at a high level. Can you give us some thoughts around, how much of a say you have in – how your partner, First Solar, how they ultimately work in monetizing that strategic alternatives process? It seems like their priorities are different than yours in this process. So, if you could maybe characterize those differences at some high level and also to what degree you guys are working in tandem with them on making sure you both come out on the right side of this? Thanks.

Yeah. Certainly. So, they've been a great partner throughout this process. They're committing to helping us run 8point3 for the intermediate term. And so, as we go through this evaluation process, I think, our general desire would be to stay in and find a partner, however given that they've started this process, we thought it was prudent to look at all alternatives. And we both have hired advisors and are running a process, there's a lot of interest. And so, I think, we'll see a lot more unfold over the next couple of quarters. But 8point3 is running extremely well, delivering solid results. We just increased distributions for the seventh quarter in a row and it's producing really high quality, stable cash flow. So, I think, we're in a really good position and we appreciate First Solar being a strong partner in this JV up to this date. Brian Lee - Goldman Sachs & Co.: All right. Thanks, guys.

Thanks, Brian.

Thank you. The next question comes from Krish Sankar, and please state your company name.

Yeah. Hi. It's Bank of America Merrill Lynch. Thanks for taking my question. I have two of them, first one, Tom or Chuck. If I look at SunPower, let's say two, three years into the future, it looks like most of them are – panels are going to be more P-Series versus your IBC N-type technology. Is that true? And if so is it because you think IBC is not cost competitive anymore? And then I had a follow-up.

Sure. This is Tom. The answer to your question is no. The strategy is unfolding as we projected it when we made the investment when we bought Cogenra for P-Series technology. And that is to have P-Series for non-OECD markets where the cost of capital is higher and therefore, the discount rate is higher and you're penalized or you want to have a low capital upfront cost panel. But you'd also like to have a high energy production and that's exactly what P-Series is. And as we mentioned, increasingly, the solar business is going to be a world-wide business or a geographically dispersed business. And therefore, having P-Series ramped preferentially is consistent with where the market is going, where the market is going is more geographically diverse. It's also because it's lower capital intensity and so we can use that to grow our company faster with less capital intensity. Now, IBC, IBC, interdigitated back contact technology, that is what we are known for is still the world's highest efficiency solar molecule technology, solar cell technology. And we have 1.2 gigawatts of that technology that competes on a cost of energy basis, where there's good sunshine or the balance of system is at a premium. Obviously, that's residential. There tends to be a lot of commercial. That can be power plant depending on where you are because it's expensive land. So it's complementary to P-Series and in fact, lastly on – we got first silicon off our pilot line for our next generation technology here in Silicon Valley and that next generation technology would be slightly more efficient with significantly less cost. And so we're actually excited about the future of IBC and it really is, still at the core our company because the mainstream of our company will be the commercial and residential businesses.

Got you. Got you. That's very helpful, Tom. And then, along the same path, just a final question. With your focus on DG, the resi margins look a little depressed, I understand because the volumes are low. What do you think is the long-term gross margin profile for the resi business for you guys? Thank you.

Yeah, let me say just two words and I'll pass it to Chuck. Resi is interesting evolution of our offering in residential, as we've added Equinox and Equinox's complete solution what we call The Power of One, which is not just our high efficiency module, but unique mounting system that you can't see, so called InvisiMount, with a microinverter that is all supplied by SunPower and therefore has one company, one-stop shopping, one-stop warranty and the value of that to our residential customer is shown by the attach rates, which are now about 80%. That influences how we think about margins going forward. And Chuck will take that.

Yeah, great. And so the other thing to think about – if you looked back a year ago, resi margins were at 25.5%. I think we'll be at that level in the mid-20s long-term. Clearly Q1, as you mentioned, is impacted by the overhead. It's also – we had a really strong quarter in Europe and Japan, and with FX those margins are a little bit lower than the historical averages. So we think, as we grow our volumes throughout the year, you'll see those margins move back to where they've been historically, which is mid-20s.

Thanks, Tom and Chuck.

Thank you. The next question is coming from Pavel Molchanov, and please state your company name. Pavel S. Molchanov - Raymond James & Associates, Inc.: Raymond James. You mentioned kind of a disparate dynamic in Latin America, Mexican margins being quite disappointing, whereas Chile looks much better. What accounts for the difference between those two markets that ostensibly look quite similar?

Thanks, Pavel for the question. So, Chile, has a lot more buyer interest. It's quality PPAs. And versus Mexico where there's significant supply of projects in Mexico by virtue of the first few auctions, and so, there's a supply and demand mismatch. And of course, the geopolitical environment has been perceived as being more risky, and so that's not favorable in terms of buyer rates of return.

Yeah. I would just add that, yeah, I think it's largely driven by the PPA pricing, both are really high-quality projects, and in Mexico, what we're seeing is a lot of interest in those projects we have not started construction yet, so we're in the early phases, and I think which is in abundance of caution, looking at the political environment and interest rates and merchant curves and whatnot. But there's a lot of interest in both projects, and we feel that we're going to get really good price. Those are really high-quality projects with great offtakes and we think are just are worth a lot of money, and so we'll have to wait and see but we're being a little bit cautious as we look to the future. Pavel S. Molchanov - Raymond James & Associates, Inc.: And if I can just ask quickly on – to get your thoughts on Suniva and the whole discussion in Washington about escalating tariffs on Chinese modules.

Sure. We're not in a great position to forecast how that's going to come out nor – it's very early stage, so it would be premature for anyone to forecast. Remember, and you're well aware of this, Pavel, that we're an American company, we source a lot of materials from America, and so it'll of course be relevant if things were to play out, how they would play out in terms of what's considered American content and what isn't, but we have a significant supply chain in America. And we, of course, have produced models in America previously. Our supply chain is a worldwide supply chain, so we have flexibility and we'll evaluate options as we need to. But again too early to forecast, and I think, things sort of on that front are taking a little longer to develop than perhaps some of the comments might suggest. Pavel S. Molchanov - Raymond James & Associates, Inc.: Appreciate it.

Thank you. The next question comes from Vishal Shah, and please state your company name.

It's Deutsche Bank, Tom. I just had a question on the longer-term capacity plans. What percentage of your total mix would be P-Series versus IBC? And what percentage of your IBC capacity is contracted, or do you have visibility for the back half of this year? And I have a follow-up.

Sure. Let me deal with the latter first. In terms of IBC capacity, I don't have a specific number for you, but it's well north, it's a majority of the capacity is spoken for, that does go to our turns business. So, the residential business is typically a quarterly cycle for bookings, the commercial business is direct – is split between direct and channel. The direct business is 100% booked for the rest of the year and that's all IBC. And the channel business does use some P-Series, channel commercial business, and it has also a shorter booking cycle. So, I'd say the majority that's still not 100% booked. As I look at beyond this horizon, we're still finalizing our five-year plan with our board and making the decision of how aggressive to ramp our next-generation technology. I think our P-Series plans are pretty clear, those were conveyed on our prepared remarks. The additional capacity for IBC will be our next-generation lower cost capacity and we have not finalized plans, so I don't have that mix yet, we will probably by the next call.

Okay. Great. That's helpful. And then, what kind of a premium are you able to charge to your customers for the IBC capacity, IBC panels relative to the P-Series panels?

So, the IBC panels are higher efficiency by 1 – by let's say 2 to 4 percentage points, so materially higher energy production. They also have a completely different architecture. Therefore, they perform differently in terms of energy production over the life of the system. So, the premium we get is mostly based on that which is a levelized cost of energy. And it can be material. It can be on upwards of, in some cases, depending on the end market, anywhere from 50% to 150% premium.

Okay. Great. Thank you. Appreciate it.

Thanks, Vishal.

Thanks, Vishal.

Thank you. The next question comes from Andrew Hughes, and please state your company name. Andrew Hughes - Credit Suisse Securities (USA) LLC: It's Credit Suisse. Good afternoon, everybody. Couple of questions, first on – it's great to see the continuing signs of support from Total. Seems they're coming in sort of $90 million to $100 million chunks, as of late, at least. As you think about how SunPower fits into 8point3 going forward, is there a role that Total could play here, have they expressed any interest to you in perhaps purchasing First Solar's stake or otherwise getting involved?

Thanks, Andrew. This is Chuck. Total has been extremely supportive and a great partner on power plants around the world. To-date, they have not been active in power plants in the U.S., because the complications of the tax equity markets. I won't speculate on if they would be a buyer of First Solar. We're running a process and I think our proclivity is to find a partner, who is a U.S. developer, who brings value to the U.S. development market, but it's hard to say how things will ultimately shake out. Andrew Hughes - Credit Suisse Securities (USA) LLC: Great. Appreciate that. And then, just on the HoldCo strategy, going forward, curious how you see that evolving. Tom, I think, you mentioned maybe selling some projects in Mexico that are in the construction phase. Just as you guys balance some of the liquidity cash flow priorities going forward, do you see yourself selling projects in the HoldCo earlier than you may have thought you would six months ago, and just how that looks going forward? Thanks.

Okay. Thank you, Andrew for the question. And we'll take one more question after this, we appreciate everyone calling in. So, in terms of the HoldCo strategy, I'll start with recall that when we IPO-ed 8point3, we did drop down some residential assets. As residential assets mature in the years forthcoming, they could be dropped down into 8point3. And commercial projects were great in 8point3, and we've dropped a number of commercial projects into 8point3 as well, that will continue business as usual. Of course throughout the course of a quarter, that what we choose to do because of the number of projects varies. But certainly in the longer term, both of those work for 8point3. In power plants, we'll be more selective. There still will be projects that we can build out through COD and drop down, but it'll be far more selective and therefore, I would say that there would be less of those going forward. But that's not excluded from the available assets to drop down into 8point3. Okay. Let's go with one more question please.

Last question is coming from Colin Rusch and please state your company name. Kristen Owen - Oppenheimer & Co., Inc.: Oppenheimer, and this is Kristen on for Colin. Thank you for squeezing us in. Just had a quick one, wanted to build off of a previous question. As you look at the opportunity for power plants in Central and South America, can you talk about where you're seeing those pockets of significant growth of opportunities?

So, I'd say most of our efforts have been focused in both Chile and Mexico. We've seen opportunities elsewhere, but we have primarily focused development in those two markets. Kristen Owen - Oppenheimer & Co., Inc.: Okay. Thank you very much.

All right. Thank you all very much for calling in. We look forward to talking to you at our next earnings call.