Ladies and gentlemen, thank you for standing by. And welcome to the SunPower Third Quarter 2020 Results Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please advised, that today’s conference maybe recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Bob Okunski, Vice President, Investor Relations. Please go ahead, sir.

Thank you. I would like to welcome everyone to our third quarter 2020 Earnings Conference Call. On the call today, we'll start out with a strategic overview for the quarter from Tom Werner, CEO of SunPower, followed by Manu Sial, our CFO who will review our third quarter 2020 financial results before turning the call back to Tom for guidance. 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 2019 10-K and 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 and Presentations page of our Investor Relations website. In the same location, we have also posted a supplemental data sheet detailing some of our other historical matters. With that, I'd like to turn the call over to Tom Werner, CEO of SunPower. Tom?

Thanks, Bob, and thank you for joining us. On this call, we will provide an overview of our third quarter performance, as well as a brief update on the performance of our individual business segments. As detailed at our Capital Markets Day, we remain confident that we are well positioned for success going into next year, given our strong competitive position, industry-leading solutions in a strong market. Let's start with a recap of our third quarter performance. Please turn to slide three. We executed well on the third quarter, as we exceeded our revenue and EBITDA guidance and completed the spin-off of Maxeon to our shareholders. Given our strong Q3 bookings performance, we are raising our Q4 in fiscal year 2020 EBITDA guidance. Our Residential and Light Commercial segment continued to outperform, as we saw strong megawatt growth in our residential retrofit and new homes businesses, while improving our overall gross margin for the quarter. Finally, we are seeing increased customer demand for our recently launched SunVault residential storage solution, while working with our new home builder partners to further roll out our OneRoof product, which has already been installed in approximately 20 new communities. Our C&I Solution segment also performed well, as we were profitable on an adjusted EBITDA basis for the quarter. We added to our backlog with continued strong demand for our Helix storage solution, including being awarded our largest solar plus storage C&I project to date, during the quarter. As Manu will discuss later, our efforts to improve liquidity and strengthen our balance sheet are paying off, as we increase cash by $90 million in the quarter and expect our business segments to be operating cash flow positive in Q4, and 2021. As a result, we are reviewing options related to our 2021 convert to further…

Thanks, Tom. Before we discuss the financial results for the quarter, I wanted to remind everyone that we have posted a detailed metric sheet on our Investor Relations website that has been updated and enhanced for disclosures we had made at the Capital Market Day on September 10. Please turn to slide eight, where we have provided our consolidated financial results and select metrics related to our valuation framework that provide clarity to values related to day one customer contact, and that's on recurring revenue streams. We are pleased with our financial performance for the third quarter, as we exceeded our revenue and EBITDA guidance. Moving on to the specifics of the quarter. Post spin, we have segmented [ph] the company into residential and light commercial and C&I solutions. We saw continued recovery in both our segments, as demand remains strong throughout the quarter. Overall, megawatts recognized rose approximately 20% sequentially, with our residential light commercial segment up 17% sequentially, with residential up 33% versus second quarter. Our C&I solution segment was also up 32% sequentially. We expect the strong volume growth trend to continue in the fourth quarter. Consolidated non-GAAP gross margin in Devco was $0.35 per watt, and up from $0.30 per watt in second quarter, with the residential at $0.46 per watt in third quarter. We expect a significant step-up in gross margin per watt in fourth quarter in residential, as we benefit from improvements in our residential loan and lease economics and execution on our cost roadmaps. We also saw sustainable improvements in project execution in C&I solutions, where we posted a positive EBITDA in third quarter. As Tom mentioned, demand for SunVault residential storage solution remains very high going into 2021. And we are pleased with the continued traction of our Helix storage product for…

Thanks, Manu. Moving on to guidance, please turn to slide nine. The company's fourth quarter in fiscal year 2020 guidance is as follows. Fourth quarter GAAP revenue of $330 million $370 million, GAAP net income of $11 million to $21 million and megawatts recognized in the range of 145 to 175. For the fiscal year - for fiscal year 2020, the company expects GAAP revenue of $1.1 2 billion to $1.16 billion, GAAP net income of $190 million to $200 million and megawatts recognized in the range of 465 to 515. Given our third quarter performance and strong visibility for the balance of the year, we are raising our fourth quarter and fiscal year EBITDA guidance. We now expect fourth quarter EBITDA to be in the range of $26 million to $36 million, and 2020 EBITDA to be in the range of $30 million to 40 million. In summary, Q3 was a solid quarter for the company, as we executed on our strategic initiatives, completed the successful spin-off of Maxeon and laid the foundation for improving our profitability. With that, I would like to turn the call over for questions.

Thank you. [Operator Instructions] Our first question comes from Brian Lee with Goldman Sachs. You may proceed with your question.

Hey, guys. Thanks for the questions. You know, good job on the quarter. Two questions for me here, both sort of related to gross margins. I guess first on SunVault. It sounds like you're not at your, you know, sort of optimal gross margin targets quite yet. But when it is, it will be additive to the RLC gross margins. Is that fair? A fair assumption here based on the comments you're making? And then when do we see that margin target hit on SunVault and does this imply gross margins, well into the 20s or are we even in the 30s, just trying to gauge profit potential here on this new product opportunities, since it's so incremental. And we've also seen some of your peers talking about much higher profit margin levels in this category. And then I had a follow up.

Brian, Tom Warner here. Thanks for the question. And SunVault is, - now got certifications, dealers are being trained, and it is being installed. So we are ramping. And I think we'll have a favorable position actually end margins compared to others since we designed the product ourselves. And I'll let Norm expand.

Yeah. Thanks, Tom. Thanks, Brian. Yeah, relative to margin, you can think about SunVault being consistent with our overall margins, which are growing next year. It is certainly additive and incremental. In fact, we expected to add 20 - upwards of $0.20 to $0.30 a watt of incremental margin on the same sale. So it not only has the value of incremental margin, but that incremental margin is at effectively a much lower customer acquisition cost, because we're already making that sale at the customer. And so similar to be – we expected to be - the margin similar to the overall business and completely incremental.

Okay, understood. That's helpful. And then maybe just a follow up on the gross margins, again, focused on RLC. If I look at that chart you had up in one of the earlier slides, for the past couple years, you know, have been pretty seasonal. I know there's been a global pandemic embedded in the midst of that bar chart. But how should we think about gross margins in RLC going forward from a seasonal perspective, is there any reason that, you know, it will be a seasonal as we've seen historically? And the reason I ask is, I'm trying to gauge how much of a starting point or baseline, the 20% plus level you're talking about for Q4 2020 years here, and trying to figure out where your trend in ’21? Is that a starting point, and we should track higher from there, or we're going to see some of the up and down sort of seasonality that we've seen over the past couple years into next year? Thanks, guys.

Okay. Why don't we do it reverse Norm. You say a few words, and I'll probably add on.

Okay, yeah, no happy to. There is some seasonality in our margin that can be expected, I will tell you that that seasonality has been reducing as our costs have become more in line. And I think, frankly, I think overall ASPs has been more stable. So you should expect some seasonality, but less in the coming year that you’ve seen in the past. And as I’ve said at the Analyst Day, we expect to hit or exceed our margin model for the full year 2021, which is above 20% margins.

And, Brian, I think it's really important to point out, that the margin picture in residential is fundamental, meaning that our loan economics are fundamentally better, because we service our own loans now. So we don't pay someone else to do that. And because our cost to capital has gone down, with lease, we've continuously improved on the parameters of lease. And we've made the biggest step in our latest lease facility, both of those start really in earnest in 2021. To that we've improved our cost of installation. And I think we're a leader in customer acquisition costs. So the bases of RLC margin are very fundamental across all four quarters, even though you will still see some seasonality, as you know, often driven by changes in policy.

All right. That's great. Thanks for the color, guys. Appreciate it.

Thanks, Brian.

Thank you. Our next question comes from Michael Weinstein with Credit Suisse. You may proceed with your question.

Hi, guys. Can you talk about SunVault, we estimate that a $100 million SunVault revenues in 2021, implies [ph] about 250 megawatt hours of sales in a year, whether attach rate of about 30% or greater? Is that the right math, so that’s the right way to think about it?

I think you're in the ballpark, for sure, and of course, we're ramping quite rapidly. And of course, the attach rate will vary significantly, depending on regions. It might be a touch lower than that, and Norm, maybe you can dial it in a little?

Actually, I think that's a pretty good estimate. At this point, I would say, you know, our estimate is quite rough at this point. If anything, I think our view is that there's upside to those numbers based on just the demand level, the broad based demand level. But assuming the numbers that we've quoted, I think your estimates pretty close, I'll actually have to do the math in my head to confirm. But I think that's about right.

Who were the suppliers? And how much capacity do you have access to?

So we've not announced the suppliers or the main pieces of the hardware inside. But I can say that the products has been designed to be vendor agnostic. So our intention long term is to be able to follow the battery and inverter cost curves downward. So that's the approach. From a supply standpoint, we have plenty of supply for our ramp, and is right now really the only thing constraining our ramping today is really our ability to have enough installation capacity. But both battery, we're using a very high volume battery supplier, and high volume inverter, equipment supplier and then we've designed other elements in the system ourselves. From a supply standpoint, we're very comfortable. We do want to have multiple suppliers long term for better economics.

And Michael, I want to remind everybody that our solution is two boxes on the wall. And if you look at other solutions, you'll see a lot more than two boxes, we've been able to consolidate some functionality into one of the two boxes. So one box is an inverter and a battery, the battery is sized so that we can have different suppliers for that same size battery. There aren't that many sources here is it at basically six big sources in the Far East. And we're prepared for any of those six, or most of those six, I should say. On the other boxes designed by us, it is our monitoring system, which is second source components. It's a service panel, which is a common item. It's an automatic transfer switch, which is a common item, and then some electronics that we design. So the common theme here is we designed it, we have lots of control there. Therefore it's very scalable.

Right. Yeah, just one or two more questions. If, - you know, how does the improved EBITDA in Q4 bode for assumptions for 2021 that you laid out in September? I mean, just 2021 so look around greater than $100 million of EBITDA?

So I'll take that and Manu you can jump in if you'd like. So Q4 gives us, I'll put it this way, Q4 gives us a lot of confidence, with the implied guidance of the metrics we gave for 2021. I having been in Solar for a very long time. We're careful about giving guide, you know, specific guidance beyond what we have until we get into the year. But I would say that, as we sit here in Q4, our confidence level going into 2021 is highs it's been since I've been with the company.

Got you. One more question, on the 6% cost of capital. I mean, do you see that - I know you said new facilities will be cheaper. Do you see that trending down 100 bps, 150 bps, 200 bps next year?

I'll let Manu take that.

Yeah, so I think with - you know, we are in a historically low interest rate environment. I think as you think about the 6% cost of capital, we have headroom on all forms of capital, a part of the capital stack, both debt and equity, with a little bit more opportunity on the equity side of the house. So I think how you're thinking about it is, is correctly, in terms of the reduction we should expect.

And I think the way we're operating is, since we sell products or projects, and since we monetize them, we have a very clear marker of what the public markets, right. We’ll value projects on the balance sheet. So we know what the threshold is. And as our balance sheet has improved radically, and we’ll do so even more so as we go forward. We should benefit from that and we need to compete with the cost of capital. The public markets are rewarding projects on the balance sheet. So that is the cash we’re on.

Great, thank you very much, guys.

Thanks, Michael.

Thank you. Our next question comes from Ben Kallo with Baird. You may proceed with your question.

Hey, thanks for taking my question and congrats on the quarter. Just going to the storage side. Why go ahead with your own product? Maybe it's my first question versus some other people you're outsourcing that? And then I guess my second question is, Tom, your customer acquisition cost has been one of the biggest things that sign up [ph] the resi space, I think, and what has changed there? Or has anything changed there? And when we look at your numbers going forward, is that a driver for them, you know, being better than your forecasted that you can get customer acquisition cost down? And I guess, you know, the final part of that is, is there's this whole debate about whose - was it better to have a channel partner and dealer network or do it yourself with your own salesforce? And so where are we on that? Sorry, that’s to long…

Okay, I'm going to take a pass. Did you have one more Ben?

No, that's it.

Okay, great. I'm going to take a pass at them. And then Norm is going to add on to what I say, probably with more appreciation. Why do we design our own? It is the heritage of SunPower. We designed our own solar cell back in - all the way back to the 80s. But we productize that and scaled it in 2003 to 2010 and created a very unique world's highest efficiency product, so it's in our core DNA. And then the short answer to your question is because we have a better product. And so we expect the product that will back up more load that installs faster, and works better, because it's two boxes, which is a big deal, because you often see them every time you pull on your garage. And the second reason why we design it first is better. Second is for future proofing. As we add services, which we already have, you can imagine of course, that we have to do rate arbitrage. And of course, we have to do resiliency and micro grading. That is we add services of grid interface, grid services, and how we monetize those, it's much easier to do, it's our own software. And we're integrating with ourselves. Thirdly, we offer one stop shopping for our customer and Norm can expand on this. But the comfort to our dealers and our customers that they don't have to call multiple people or call one person who calls somebody else to call somebody else they call last one stop shopping. So it's our warranty. It's wrapped by one company. So those are the three things I'd say about why we do it ourselves. On customer acquisition cost, Norm can expand on. Our marketing engine is running great. We're generating appointments for our dealers. This is by the way, a vision we had or strategy we had 10 years ago, and Norm and his team are executing on it now. They've scaled the marketing engine such that we generate appointments differently than our peers and more cost effectively. So yes, it's a point of competitive advantage. And lastly, channel partners. That's interesting strategic question, because the channel is really fragmented. There's independent EPC companies that execute and generate business. There's sales companies that only generate leads and then sell that leads to whomever, including the EPC companies, then there's channel partners. And each has its own advantages. And I'll let Norm expand on his thoughts on what we're doing today and going forward, so probably quite a bit to add on from Norm.

Yeah. Thanks, Tom, that was – you actually covered really well. But I have a few, other few added data points. I mean, on the economical reason for doing our own storage is simply in many ways to avoid margin stacking, right, instead of us paying margin somebody else than to supply that storage, we see a great economic opportunity to make margin on the hardware we sell. And that's what's important about, it's not just to new customers, which is a big deal, but to over 330,000 existing customers. And so, I think economically long term, we believe that will be meaningful, bottom line impact to the company. I think from a strategic standpoint, Tom alluded to this. What's really important to us is that we control the software that our customers use. And a fully integrated software approach means that the customer has a single tool which monitors their TV, their storage, their complete solution, and that is both important for us as far as getting customers to adopt us, stick with us, to refer us to their neighbors. But it's also important, as Tom said, is the basis for a service model long term. And I think the importance there is you really own that storage software platform, which you often won't get if you were to choose model or somebody else's providing somebody else's storage solution. Those are the kind of the strategic drivers. Just switching to a couple comments. You talked about customer acquisition costs. I'm glad Tom highlighted that we're - our appointment generation engine is getting better and better. I'll give you a good data point from October. This past month, we generated 43% more front end - our front end and funnel did 43% versus the same quarter last year. So we're not just beyond COVID, we're almost 50% larger month versus month in terms of the front end and funnel. So that is becoming a bigger, bigger portion of what we bring to our dealer partners as value. And so that's been super important. And last comment relative to the channel, it's a great question, in terms of, we're seeing a very much a mixed model. One of the keys to low customer acquisition costs has been our dealer model, it's a lower cost model. At the same time, we are seeing certain areas where virtual selling makes sense to do more in different areas of the country directly or with partners that just do sales as opposed to doing installs. So while we are continue to grow our independent dealer network, we are also growing our installed portion of our business. Its still smaller, relatively small, compared to the installing dealer portion, but it is grown.

Got it. Thank you, guys.

Thank you. Our next question comes from Philip Shen with ROTH Capital Partners. You may proceed with your question.

Hey, guys. Thanks for taking my questions. The first one is on the loan financing fee reduction targets. I know it's critical to your gross margin expansion story. Obviously, you're leveraging the relationship with TCU. I think in this model, you guys serve as the originator of these loans, rather than, you know, a mosaic or a loan palette [ph] or something. And given that situation, I think what happens is the accounting for your installers may change where they may only recognize the revenue on the equipment sale. So I was wondering how your installers and dealers are taking that equipment - that accounting change. And do you expect to be able to have - and have those, pardon me. But you expect to have those dealers use your loan program completely? Or do you think you still might have to use a mosaic for example? Thanks.

So I can take it, this is Norm. Just from a – at the first level, we continue to use both mosaic and TCU. So I want to point out, we do still have two partners. But as far as the accounting from a perspective of our dealers, that has not changed with our TCU product, that is still actually the same in both cases. So they are not seeing any sort of issue from a dealers having a different accounting, because we've gone to the TCU approach. So really, what we've been able to see now is a bigger variety of loan products. And a suite of products and now includes low APR products, longer term and lower APR products that have been very attractive. And virtually all of our dealers are using TCU. They may still be using some mosaic as well. But we've already converted virtually all of our loans, partners to using some TCU. But they can access both in the systems that we provide.

Great. Thanks, Norm. You guys talked about grid services already, but I was wondering if you could provide some more color on that opportunity. You know, for example, when do you expect revenue to be starting to - start to be generating in a meaningful way? And when it could it be meaningful? And what's the timing of that? And ultimately, what is the revenue model? Is it going to be a SaaS model? Or is it a percentage of some kind of, you know, the fee that you might end up charging to the facility for embracing the software that you guys are providing? So any color on that revenue model would be great. Thank you.

I think you're muted, Tom.

So I'll take that. The ability to have services is directly proportional to the amount of storage capacity you have in the market and today we have meaningful storage capacity in the market and commercial. And so we do have some capacity. We participate in some capacity markets, and we do generate some revenue. In order to get meaningful service revenue, you really need to get the very large numbers, perhaps even gigawatts deployed. And so, commercial, we're already seeing some grid services revenue. Of course, since we're just launching SunVault in residential, we need to scale it to get the service revenue. Typically, as you probably know, I'm sure you know, you bid in these wholesale markets three years in advance typically. And so we are bidding into wholesale markets, planning for the attach rate for SunVault and then leveraging that. If you go out to a five year model, the numbers get to be meaningful. Of course, there's peers that have given numbers and the math is going to work similarly here. So commercial first for us, residential second, it takes a few years, we're already bidding and we already have some revenue in the commercial business from grid services. I should also point at the model, those models look more like SaaS. They are multi year commitments, and you get revenue each year. Now, as we go on, we're going to be very precise at that grid services versus customer services. We can offer services to our customer where we optimize their bill. And we do that today in commercial, and that's built into the price of what they pay for a solar system. In the future, we may license that, as we expand the offering. That's resiliency, rate arbitrage. And I believe in residential, we call it TOU arbitrage, but same idea. And then of course, from there, you go to grid services. So the answer to your question is both, commercial built into the price of the system, and in some cases, it's recurring, and therefore it looks like SaaS.

Great. Thanks, Tom. I'll pass it on.

Our next question comes from Colin Rusch with Oppenheimer. You may proceed with your question.

Thanks so much, guys. You know, if you look forward and in the grocery business, what are you looking for in terms of needs and in terms of working capital? And how are you planning to address some of that?

So am I understating [ph] you're correct - question correctly, you're asking about cash, and how we think about cash needs. Let me say a few words and I’ll let Manu take it and then you can follow up if I didn’t get it correct. So the new SunPower, I guess, it's not new anymore. SunPower, I will have limited if any CapEx. We expect to be – manage our working capital such that we can be operating cash positive. And so we expect our business to generate cash. And as Manu said in his prepared comments in a little bit in the Q&A, we're already in a position to pay off our first convert. And so we're now looking at ways to sort of optimize our balance sheet in terms of how much recourse that we've had versus cash. But the ratios have improved dramatically and Manu can comment on that. So any need for cash, as we forecast it would be inorganic, meaning M&A. And Manu again can expand. So Manu.

Yeah. So as you think about cash and specifically cash conversion from EBITDA, one, you know, our model is a cash based model. So, from an EBITDA to cash perspective, we have forward flow arrangements both in the residential and the commercial business. So relatively low cycle from EBITDA to cash, that's one. Second, both our businesses, lots of initiatives in terms of improving things like inventory returns, specifically in residential, where you're getting to 10, 11 tonnes from a inventory perspective. So what I would say is both businesses generating operating cash in fourth quarter. That trend is going to continue. From a modeling perspective, you should expect a high conversion of EBITDA into cash, given our forward flow arrangement, as well as our inventory returns.

That's super helpful. And then just in terms of model supply, you know, as industry facing the prospect of the tight supply environment. How much flexibility do you have in terms of different suppliers on the model side to supplement your capacity and build all the materials to grow?

I'll take that Colin. So we have a two year exclusivity in residential. And that's extendable. We look out during that entire two years with Maxeon, we meet frequently with them as you can imagine. In commercial, it's one year, which is now 10 months more exclusive. And then we'll mutually decide whether or not to continue that exclusivity. But commercial could use other people's models as soon as, call like, third quarter of next year, yet to be determined, working closely with Maxeon, which by the way is doing great for us, as a partner two months in. And we do plan capacity upsides with Maxeon, and we're doing a product roadmap session with them tomorrow, actually. So we're also looking at ways to expand the breadth of product that we get from Maxeon.

All right. Thanks so much. Appreciate it.

Thank you. Our next question comes from Stephen Byrd with Morgan Stanley. You may proceed with your question.

Hey, good afternoon. Thanks for taking my questions. I just wanted to follow up. First, just on the cost of capital discussion, in a prior question, you talked a little bit about the ability to reduce the 6% cost of capital and you highlighted the equity opportunity. I wondered if you could be - if there's any way to kind of get a little more granular in terms of, you know, drivers there, the approximate magnitude, just given how critical that particular assumption is, as we think about the value?

I'll say a few things and Manu, you can jump in, if you want to add on to it. First of all, our primary resources of equity are well known. And if you look at their sources of capital, they've done a very good job of raising very cost effective capital. So our partners have done a good job. And we expect as they have that we expect going forward that we’ll benefit from that. Secondly, our balance sheet has improved, which has an implied leverage, so to speak, or implied advantage with our partners. The risk premium for SunPower has gone down dramatically and will continue to go down. And there should not be one. And then at the extreme, you could say, as our net debt position approaches $100 million, as soon as we said at Capital Markets Day or sooner, then of course, we could always say, we're just not competitive enough. And we'll put some of these assets on our balance sheet. Now, that's not our plan. But we have that option as we improve our balance sheet. And we are of course, all capitalizing on historically low interest rates. So it looks like they'll persist given the Feds position. Manu, do you want to say anything?

Yeah, I think Tom you covered well. The only thing as you think about dimension, there is a significant headroom between public markets, cost of equity and the cost of equity that is in our residential funds. So there is opportunity and headroom to get further compression.

That makes sense. And then just shifting over to customer trends, you discussed Community Solar, and that seems like a great area of growth. I wonder if you could just expand on that a little bit more. How do you think about, you know, at a high level, the volume potential, the relative importance of Community Solar over time?

So SunPower has a long history and ground mount solar system. We used to be in the solar power plant business and did 4 gigawatts of power plants around the world. And we did a little bit of Community Solar in the old days. This is different. This is - Community Solar today is different and has evolved. And I'll let Eric expand.

Thanks, Tom. Yeah, I think of Community Solar as a real way for us to leverage our existing origination and development groups. And it comes in a couple of different flavors. One is we can go to existing customers who maybe don't have the behind-the-meter load and provide them a policy and incentive that allows them to actually maximize their existing asset, it could be a rooftop, it could be a parking lot. So that's one flavor where we're going to kind of your traditional C&I customers. The other flavors may be a little bit more consistent with what Community Solar is been known as in the past, where it's going out, finding land positions, getting an inner connection queues and building projects there. But even that is shifted to be more of a distributed generation type of policy. So both of those initiatives have almost doubled what we're focused on as a business unit. So we see it as a real growth driver for us going forward.

Thank you. That's all I had.

Okay, I think we're going to take one more question, one more group of question. So if you could go ahead, please.

Thank you. Our next question comes from Julien Dumoulin-Smith with Bank of America. Your may proceed with your question.

Hey, good afternoon, everyone. Thanks for squeezing us in time. So just to pick up a little bit on where we left it off here, on the growth side of the equation here, how do you think about, you know, beyond the exclusive here on Maxeon and expanding those options, and what that does to the trajectory, especially the commercial opportunities, you think about, you know, expanding beyond resi here and having greater options? And then breaking through on the second related question here. How do you think about leveraging the storage opportunity? I presume this is strictly being sold through the existing dealer channels? Is this something that you would think about past marketing a little bit more broadly or through other channel?

Okay, thanks for the questions. Norm, I'll give you the second line. Operator, I'm sorry, we will take one more set of questions after this. So in terms of options on the panel, we were, as you can imagine, extremely closely since we used to be one company and before August 26, with Maxeon. And they really want us to be successful. They want us to be a healthy partner. And of course, us likewise with them. And so we have detailed conversations about their product roadmap and the breadth of their roadmap, how well it fits with the lease loan and cash sales, how it fits with ground mount carport, rooftop, residential retrofit, new homes and there are areas where over the course of the next half a year to a year, we're deciding on does it make the most sense for Maxeon to add products or not? And if the answer is not, then we're working on a mutually productive way that SunPower could source elsewhere, all right. So we have not made any - we're not prepared to discuss any decisions, but we’d have a very, I’d say realistic dialogue with Maxeon, and they want us to grow and succeed up here and be healthy. So more to come on their front Julien. And then Norm, can you take the second part on storage and channels?

Sure, happy to. I would say Julien that the way we think about this is first, our first priority is supporting our existing channels and new sales with storage. And as we talked to earlier, and its generally in the market, it is extraordinary demand. And so that's kind of the first priority. Our second priority is really going to be addressing our existing customer base. One of the things that's important about the way we did storage is it is AC coupled. And as its AC coupled, it makes it a lot easier to apply it to existing systems, even if their lease or certainly cash. So we really see a great opportunity just within our own base to grow significantly. And certainly any of our expectations for 2021 are supported just by those two things, probably our new cash sale, and is just starting to penetrate our existing customer base. I will say we've discussed the third step, which would be, do we go beyond our dealer channel? And really I think we'll judge that based on just the level of acceptance we see for the product, the opportunity to extend it, I could certainly see it someday become a storage first model as well, as it gets more and more popular. But I would say that's a little further out there. We can more than exceed our growth expectations from our existing dealer channels with new solar and our existing customer base for the next year.

If I can quickly clarify that super quick. On the ability to go back to existing customers, would that have to be at a certain point in time or can you literally go back given the financing and all that to your customers, you've just recently saw practically?

We can go back to them right away. The issue right now is just choosing the priorities about where we - because we're building up installation capacity and really kind of ramping the product. But for a big portion of our customer base, we could have addressed that market right away. We are prioritizing the new sales to maximizing revenue per customer. But the product is able to be installed at a big portion of our customer base, kind of really right out of the box.

Thanks, guys.

Thanks, Julien.

Thank you. Our next question comes from Pavel Molchanov with Raymond James. You may proceed with your question.

Thanks for taking the question. Two quick ones, both in relation to the ITC. First one, if you have any predictions on whether anything will happen with the ITC legislatively in the lame-duck session? And second, back when you do guidance for ’21, obviously, there was no visibility at all on whether ITC might make it into a stimulus. There's perhaps a little better clarity on that today. Would there be any guidance changed for ’21 if there were to be an extension announced in lame-duck?

So I think you probably know more than me about the lame-duck possibilities. Is that which I do know, I would say that it's low odds, but no odds. And we're engaged though. And I think if you go beyond lame-duck, is very much on the table. In terms of impacts on 2021, I think it would have some impact more than offset, of course, by the multi year improvement in our plan and our ability to scale and get cost down faster and be more aggressive. But Norm do you want to say anything and then after Norm you're done, I'm going to wrap it up.

I don't know if I've had too much other than, I mean, I think its - there could be a small impact on the second half of the year, as far as kind of the increase in cash that might be generated based on a significant roll off. But obviously, more than made up for the long term benefits this would have and we’re obviously very, very quick support as an extension of the ITC.

And Pavel, I would add that the New Homes business is largely insulated from that dynamic. And storage is a little bit more insulated from that. So there is some things that would smooth out changes. So Pavel, I think we're all set, right?

Thank you.

Okay. Thanks, Pavel. Thank you, everybody for joining our call. We look very much forward to our next call with you where we'll nail down 2021 and we'll have a good insight into the new year and of course, the outcome of the election. So thanks, everybody, very much.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.