Hi, my name is T.J. Rodgers. I'm the CEO of Complete Solaria. And today, we're going to give you the second quarter report. I'm going to introduce the gentleman on the far side, during my pitch. This is Dan Foley, who's our new CFO, started today. Excuse me. This is the first quarterly report. Okay, getting into the quarterly report. This was the document we put out this morning. SunPower seeks court approval for its bankruptcy asset purchase agreement, APA naming Complete Solaria stalking horse. I typically try to write things in English, and simply so people can understand them. But this was rewritten by lawyers a couple of times, so now I'll translate it into English. SunPower is going through a Chapter 11 bankruptcy process. They are going to court. This is a U.S. bankruptcy court in Delaware, to seek the court's approval for an asset purchase agreement. So this is when companies combine in the sense that, one company buys assets of the other company. Naming Complete Solaria is a stalking horse. And what that means is SunPower chose, to have us be the bidder that comes in first. What we serve is we give a floor bid that they accept, and then that bid is later subject to an auction. So, we have an asset purchase agreement, which defines what we want and what we're going to pay for it and the rules. And that will be given to the court this week. That typically is not a large hurdle. They wouldn't present it, and do it unless they wanted to get it done. Okay, so I already said this. Let me talk about the stalking horse. So the stalking horse bid is a term from the 1800s. It is the stalking horse is something used to…

Yes, thank you, T.J. I appreciate everything as well. It's been a pleasure working with you.

Okay. So the new auditor is BDO. They're the fifth largest auditing firm in the world, and we've gotten off. They're now in control of auditing, and this was their first audit. To replace Brian, given that we're in a potential acquisition mode, we're not recruiting right now. We're waiting to see, because we want to keep as many jobs as we can. I've appointed Linda DeJulio who is our VP of Quality, to be acting CEO and the ranking officer in the company. She's done the work whenever needed to deserve that promotion. Okay, working on cost. This is a graph of headcount. That's 450 when I came in June a year ago, so it's been a little bit over a year. That was the head count. That was the meetings that explained that that was about right, but maybe a few more people. Yes, I said a few, like minus 200 or minus 300, and we went through a series of rifts. I actually started slowing down in here, because these are traumatic events, and I was worried of overshooting. And we finally got down to rift number seven. We got down to 109 people. So we started at 428, got down to 109, and we've been holding at 109. There's a process I use that's called the requisition auction that manages head count in sort of autopilot in the company. You only replace people that leave. Anybody that leaves doesn't get replaced, and then the slot gets auctioned off in an auction of merit, with the executive staff. Who needs this person the most? They argue with each other. The winner is picked by the CEO, and everybody kind of likes the process, because it's fair, and what you end up doing is 80% of the time…

Core Energy.

He ran Core Energy. Yes, there it is right there, Core Energy, and was the Founder and CEO. He's got a business degree out of Utah State. He lives in Logan. He ran sales for a company that got pretty big, a couple hundred million dollars. And then, he decided to go out on his own. He started and worked as CEO for Core Energy, and that company in the good year of 2022 did $150 million. So he demonstrated the ability to scale. Cole, introduce yourself first, and then I've got a couple stories I want to tell.

Cole Farmer acting is the VP of Sales for Complete Solar. Grew up in Logan, Utah. As T.J. said, a Utah State Aggie. And have a family and five kids. Big time background in sales. Somehow I got thrown into the construction world of solar, and as some of us will call the solar coaster, been living that life for 10 years. Big solar fan. I've enjoyed it very much and very excited to be at Complete Solar, building their sales team here.

So Cole's the new guy, and when we gripe about not having enough orders, he explains how that's going to end, and I'll show you some data in a minute. He also, one thing I liked when I, two things. One, he played on a Utah State Championship High School team, so that was wonderful. And second thing is, when I called him, I said, you know, we're looking to try to expand our company growth and non-organic growth, and he said he would be interested in talking to us about acquisition. So I called him up, I deliberately called him on a Sunday to see if he would, work on, would do what he had to do. And he said, sure, and I said, send me over your deck. Deck, what deck? You know, your deck you used to raise money, and he said, we've never raised money. We've been in business four years and we've never raised any money. And I'm going, that's the way solar needs to get run. So those are my two stories, two stories about Cole. Here's the first thing he's done. This is the number of active Sales Partners. So a Sales Partner is a company that sells you orders, and they sell you orders that are signed contracts, so they're expensive. They're like $10,000. And there's an entire industry of competing companies that compete with each other for orders. And they're euphemized various ways. Dealers, sales partners is what we call them. And the problem is when we had this happen to us, all of our partners went away. These guys were partners pretty much in name only, and they weren't producing many orders for us. They were giving into other customers. And this is Cole's first quarter right here. We now…

[Operator Instructions] The first question we have today from Achilles Capital, approximately a year ago, the Fab was said to be supply limited. Are you worried about the ramp up now being demand limited due to the solar slowdown?

Yes, right now. Up to a month ago, I had 139 orders. The cupboard was getting bare, and we are worried about demand. Our demand is not huge, so it's a tractable problem. I'd hate to have a big solar company right now and have to feed it. And Cole's came in, like I said, and turned it around. So right now, I'm not worried about demand other than timing. I have to finish out this quarter and have a good backlog for the beginning of the next quarter.

Thank you. There are a series of questions regarding the merger, and many of them acknowledge that some of the information cannot be answered, but we'll endeavor anyway. Can you discuss the rationale behind the acquisitions and your expectations for revenue and margins post SunPower?

I agree with all the stuff that you can't say. I decided to give one revenue number, which is not out of our plan, which is the magnitude of what the combined company will look like at $100 million per quarter. And beyond that, I don't have a good enough plan to start making commitments to investors. What do I expect out of it? Well, I've worked with SunPower before. Our fab guys built their first factory in Manila. They did their training for making their cell, the one that turned on in the market in our Austin plant. Actually, the guy who ran that plant is working with us and helping us now. So, I expect to have a company that integrates very quickly, has shared values, and takes advantage of the tailwind in the solar market. I think, we've gone through the ugliest time. I think it's time to turn on. It's like Warren Buffett. I was listening to something he said a couple weeks ago, and he said it's amazing the bargains you get at the bottom of these recessions. And that's what - we're all hoping for.

Thank you. In the same vein question, your next question is, if awarded SunPower, can you discuss your overall growth strategy in the next few years, and do you expect Starbucks to expand their pilot to more than 100 stores?

Growth strategy. There's one big different thing between semiconductors - that was my career, and solar. And that is, in semiconductors, you invest massively in research and development, 25% of revenue. If you don't stay on the Moore's Law curve, you die. This is back in the 80s, 90s, and early 2000s. And you kind of will your own growth. In solar, it's a cash flow business. You may or may not be able to get cash. Cash may be cheap or expensive. People may or may not want to. And you've really got to turn it the other way around and look at the demand, have the right products, which we're going to improve products. I'm a technologist, and one thing that SunPower had back in the ancient days when I was there, is they had really great technology, and we're going to have really great technology again. So you don't force your way in. You, in effect, size your company to the growth rate that you can accommodate in the marketplace. And sometimes it'll be flat. Sometimes it'll be down. In California, the government turned on a little animal called NEM3, N-E-M, Net Electricity Metering. And what they did was they stopped paying full price for solar-generated energy in a home as it went back into the grid to run your meter backwards. They stopped paying for it. They cut it down to the price of almost nothing, to a nickel. The same things happened, amazingly enough, in Netherlands, where there's actually a negative tariff, meaning they charge you money to take away your garbage power in the middle of the day. Okay, and that's the way the world's going, because of success. The solar industry has managed to produce more power than we need during daylight hours. So all of a sudden, that excess power isn't needed. They don't want to pay for it, and in the case of some grids, it actually can be destabilizing. So now we're into storage, right? And that means you store your energy during the day and use it at night when utilities typically, at least in California, screw you for high rates. So, we will have to live in a world, unlike silicon, where you don't just put your head down and say, we're changing the world. The next transistor will be 7 nanometers and literally 10 angstroms thick gate oxide. We have to say we're going to be a change agent that does what the environment wants, and the environment includes us, our customers, our competitors, and the government, and changing needs in the world. Cole, you got anything to add on that one?

There has been certainly a lot of changes in last year especially with NEM 3.0. I think California installers, complete solar in particular, has handled that very well with batteries. So there's exciting opportunity there, additional revenue opportunities for sure, and I would even say additional profitability areas with storage capacity. Batteries have been much easier to integrate than I think any of us thought. I know that from experience, and they've been much easier to sell, and there's a high demand for those. So the other shift we've seen is with the higher interest rates, things have moved heavily to leases or power purchase agreements, but those have really kept the industry optimistic in a place where it can continue to grow and figure out how to finance these solar projects.

One other comment. I've been working on renewables in the, I guess I'll call it the second half of my career, and one of the companies I work with is Enphase Energy. They make batteries. They're the second largest battery maker in the United States, behind the Tesla, the leader that started bringing out batteries for home storage. And they're focusing on batteries that do exactly what Cole was talking about. And their battery sales have taken off, and we use their batteries, and we expect to work on them with projects to define the kind of batteries you need for homes. And well, let me leave it there, because I might stumble on some feature that somebody wants to, doesn't want to let out.

Thank you. Our next question comes from Phil Shen from ROTH. If you were to win the bid to acquire Blue Raven, would you expect to operate Blue Raven as an independent subsidiary as it largely was maintained by SunPower, or would you get rid of the Blue Raven name and integrate it fully with Complete Solaria?

I'm sitting here thinking about what kind of trouble, can I get in by honestly answering that question. My personal view, which I don't necessarily impose, you've got to, the other thing is you've got a lot of constituents and you have to gain consensus of what to do, is that Blue Raven wisely was not messed with by SunPower. They run an excellent shop. I was really impressed. I spent a whole day there and talked to all their managers. They run an excellent shop. They have a name that is important to their employees and their customers, and that thing ought to be let alone. And by the way, if you look back at my history, I ran a company with seven different product lines. And making, for example, a programmable logic chip is way different from making a high-performance Internet memory. And I had seven VPs that ran it. Tom Werner was one of them. Badri Kothandaraman, who runs Enphase was another. And those guys ran their own businesses, and I did meddle with them. That is, you know, I had certain ideas how companies ought to run, and what processes ought to be used, but on the business side, they did their own thing. And I let them alone, and I'm very happy for that. So I'm not going to dictate the organization. Right now, we're in the mode where our org charts and our planning is, they've got boxes with titles and functions, but we haven't started sorting that stuff out yet. So I'll just give you one example. The Cypress Semiconductor, my call center. Typically, the President's call center is massive. You've got entertainment. You've got this. You've got that. My call center had my secretary who's sitting over there, me, and my secretary, me, and my NASDAQ dues, and that was it. And nobody argued about the allocation, because it was so small. Product lines had to talk about their overhead, their excess people, and the groups in the company had to serve the product lines. So, for example, we had 20 lawyers. Now, you say, why do you have lawyers? And the answer was, our lawyers could produce a patent way cheaper and way better, because they were also engineers, than we could get on the outside by renting a law firm or using lawyers outside. So, yes, Blue Raven runs well. Why would you take an asset that runs well and screw it up?

Thank you. Phil Shen had a follow-up to that. He said, T.J., you just mentioned - that you will have highly differentiated technology. The module technology is now with Maxeon. What products or product categories specifically do you expect to introduce?

I have a bunch of startups that are related, and they may or may not directly play into the exact market that - Complete Solar plays in. And I'll give you one example. There's a company in Rochester, New York, called SunDensity, and I've worked with them for two years. They have a technology. They have two technologies. One of them I'll describe grabs sunlight, absorbs light 400 nanometers in ultraviolet below, high-energy light that doesn't do well in silicon anyway, charges up sites, atoms in the coating. And then re-emits two photons instead of one, two red photons, which have less energy, conservation of energy, than one blue photon or one ultraviolet photon. And that literally doubles the current you get out of a panel for that one photon. You get two electronic currents for one photon. So that company, the promise there is to work on the basic technology and beat the silicon limit. The fundamental silicon limit is 29.3%, I think. It's the Shockley-Queisser limit. And it's a calculation that Shockley did after the solar cells invented at Bell Labs, and he was at Bell Labs. So these guys are doing new things, compound semiconductors, layered semiconductors, photon splitting, quantum splitting of photons, to try to beat that limit, because it's a different system that can beat that limit. So I'm working on that. I'm working on batteries, both at Enphase and at Enovix, which is a battery company, which is lending me their studio today so we don't have to pay for it. And in general, I'm going to bring technologies like that, electronic technologies from Enphase, optical technologies from more than one company that I'm working with right now, to bear. And when I find one, it's perfect, right for your customer. We'll make you famous. We'll take your inverter or your panel or whatever to market, and we'll brag about it. So and I'm a technologist, right, so I can go and talk their language. So that's my hope. I live in Silicon Valley, and I should be able to lever that in the future in the R&D area. I've given my theory, and I've been totally vague about exactly what products we're working on.

Thank you. Our next questions come from Derek Soderberg from Cantor Fitzgerald. His question is to you, Cole. What are the commission rates as a percentage of project revenue you are paying for the signed contracts? Under 30% or 25%, what is the approach to helping complete Solaria reduce selling costs?

Thank you. Those are in the 25% to 33% range. A lot of that depends on the channel that that sale comes from. A lot of the things that we're doing is working with win-win solutions with the different sales partners that we have. Those solutions help lower and increase the profit margin on our side. There's other things we're doing, such as, you know, some lead generation programs and different partnerships there that can help really maximize the potential there. But I think most of it comes from a win-win. As someone who comes from a sales background who knows these salespeople, most of the sales companies we deal with now are looking for stable ground. They're looking for an EPC, or a solar installer that shows financial health, and they know they can plant their flag there. That's usually enough to get there, and we're not getting as many conversations about beating each other over price, and it's more of a hand-in-hand approach moving forward.

Thank you. We have time for one or two more. Our next question comes from Joseph Osha from Guggenheim. His question is, what are your plans for working with financing partners, particularly with respect to leasing and FPA customers?

We're currently working with a few different leasing companies. EverBright, LightReach are two in particular. We're seeing a lot of the traditional loan finance companies getting into that space as well, so I think there will be some additional leasing and PPA offerings that we'll be able to look at and choose from, which is great. Having those options really stabilizes the industry and also shows that there's still pretty good capital looking into that space. So two main ones we'll probably use consistently, but we're seeing a lot of new ones that have good financial backing popping up.

Thank you, everyone. We recognize that there's a bunch of people we have not gotten to their questions in the queue today. We'll be reaching out to you individually in the coming days. T.J., did you have any closing comments?

Do we have a time limit?

We can get going if you want, we have a few more?

Let's go on until 3 o'clock if they've got more questions.

Okay, excellent. We have a couple regarding the APA. Assuming the approval of the APA, what sort of relation - I think you've answered this one already. In general, they're asking about assuming the approval of the APA plans for relationships with Maxeon and Enphase, which you touched on earlier?

Yes, there's one thing we're going to have to work with Maxeon, because when Maxeon split out of SunPower, they got the rights to put SunPower on their products. Obviously, they had to have that. They split out and they had to be able to use their same manufacturing name. So there's a cloud over the use of the word, or the use of the trade name SunPower, and it's contractual and it's real. So we will work with them. Bill Mulligan runs the company, and he was part of that original SunPower team. When I was standing there with Swanson, Bill Mulligan was the VP of R&D of SunPower at that time. So, we'll try to sort that one out with them.

All right. Well, thank you very much for everyone's time today. We look forward to speaking with you in the coming quarters.

Thank you.