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Good afternoon. Welcome to SunPower Corporation’s First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. Mike Weinstein, Vice President of Investor Relations at SunPower Corporation. Thank you, sir. You may begin.

Thank you. Good afternoon. I would like to welcome everyone to our first quarter 2022 earnings conference call. On the call today, we will begin the comments from Peter Faricy, CEO of SunPower, who will provide an update with first quarter announcements and business highlights, followed by our expectations for the remainder of 2022. Following Peter’s comments, Manu Sial, SunPower’s CFO, will then review our financial results and guidance for the year. As a reminder, a replay of the call will be available later today on the Investor Relations page of our website. During today’s call, we will be 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 2021 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. Also, we will reference certain non-GAAP metrics during today’s call. Please refer to the appendix of our presentation as well as today’s earnings press release for the appropriate GAAP to non-GAAP reconciliations. Finally, to enhance the call, we have posted a set of PowerPoint slides on that we will reference during the call in the Events and Presentations page of the Investor Relations website. In the same location, we have also posted a supplemental data sheet detailing additional historical metrics. With that, I’d like to turn the call over to Peter Faricy, CEO of SunPower. Peter?

Thanks, Mike and good afternoon everyone. It was terrific to get the opportunity to meet most of you last month in person at our Analyst Day. You will recall, we presented our five-pillar strategy, but we are using to build SunPower into the world's best renewable energy company. Our full attention is now on the execution of that plan. Today, we will highlight the results we have achieved in the first quarter toward our goals and how we plan to continue working to deliver our full year 2022 guidance. Let's discuss some of our Q1 business highlights on slide 4. I'm pleased to report that customer demand continues to be very strong. And that we have added 16,500 new customers in the quarter, a 40% increase year-over-year and nearly even sequentially with the new customer count from the seasonally strong Q4. We Importantly, we also continued to see strong growth across all of our sales channels with 83 new dealers added and 118% year-over-year growth from the SunPower direct channel. Again this quarter, we set a new backlog record and 13,800 customers. We also set another record this quarter with over 70,000 new homes customers in the pipeline, including a growing multifamily segment. Our Sunbelt energy storage system continues to benefit from strong customer interest with a 24% SunPower direct booking and tax rate and SunPower Financial continues to make progress with a 41% bookings attach rate in the quarter on its way toward achieving our stated goal of a 45% attach rate on recognized customers by year-end. Please turn to slide number 5. As we announced at Analyst Day, our discussions continue with First Solar to develop the high-efficiency, tandem thin film and polysilicon modules over the next 18 to 24 months. This product will keep SunPower in the forefront of residential solar technology as we move to diversify our supply chain and provide customers with the highest efficiency panels in the industry. Please turn to slide number 6. We recently launched our dealer accelerator program to provide new growth and territorial expansion opportunities to our dealer network. Many of our dealers have the desire to grow their businesses on our capital constraint. SunPower is the only company to address this need by making investments in our highest-performing dealers. In Q1, we reached a new agreement with Empower Solar in New York City and Long Island, and we continue to see strong interest in the program across our dealer channel. This program is an important component of our plan to grow our market share over the next few years, and we look forward to providing you with further updates. Please turn to slide number7. Our growing list of new homebuilder partnerships is an important part of our growth plan. And we are proud to announce our newest exclusive agreement with Landsea Homes. All homes built by Landsea in California will include a SunPower system and buyers in Arizona, Florida and Texas will have the option to add a system as well. Increasingly, we are seeing the homebuilder industry seeking to emphasize its environmental and ESG focus with a commitment to rooftop solar, and we are proud to be a partner in that effort. With Landsea, we now have national agreements for solar in states outside of California in place with five of the top 20 U.S. homebuilders and we continue to work on adding more. Please turn to slide number 8. Let me share with you some of the progress we have made executing against the five pillars of our strategy. For customer experience, we have already made significant progress in Q1. Our Net Promoter store improved from 35% to 49%, a 32% improvement year-over-year. Phone and chat service levels also improved, reducing customer wait times 48% to less than a minute when customers contact us by phone. We focused on these and other important measures to ensure that SunPower continues to earn, the title of the best customer experience in the business. Our new products, in addition to our late-stage discussions with First Solar, we recently announced our expanded SunVault whole home backup offerings, at 26 and 52 kilowatt hour options with an industry-leading 10-year warranty. Under growth, we now cover 71% of the U.S. geography with the addition of new dealers and additional investments to expand our business. Our mobile mySunPower app and website are both receiving new intention for rapid improvement. This has resulted in measurable progress in our customer ratings. We are just getting started here and have plans to expand the functionality and usefulness of our customer and installer facing applications and look forward to delivering more updates throughout the year. And finally, SunPower Financial continues to grow quickly, with over 8,500 customer finance attachment bookings in Q1 and 86% increase versus last year. SunPower Financial has already added over $2 billion of third-party capital for new multiyear loans and leases this year. Before I turn it over to Manu, I'd like to comment on two of the hot topics right now, which is rising supply chain pricing and concerns about panel supply. On Rising supply chain prices, I think it's important to start to remind everyone that SunPower did not raise prices for our dealers and for our customers in 2021. Therefore, we are in the unique position of being able to pass -- fully pass along our supply chain cost increases this year in 2022. When you combine these increases with the fact that consumers are seeing increases in the utility bills, it is clear that residential solar is still a great value and the strong customer demand for our products reflects this. Regarding panel supply, panel supply has become more challenging with the recent Department of Commerce anti-circumvention investigation, it's important to note that our current main panel supplier has not been named in that investigation. But even with the challenge this brings, we've been able to place additional POs for enough panels to meet our customer demand and meet the guidance goals we laid out for you at Analyst Day. Now I'll turn the call over to Manu Sial, CFO of SunPower, to share our detailed results for the quarter. Manu.

Thank you, Peter. Please turn to Slide 10. As Peter mentioned earlier, strong demand is the key story for SunPower in the first quarter and this, combined with continued healthy gross margin, and platform investment to boost execution should set us up well for a strong second half of the year. For first quarter, we are reporting $11 million of adjusted EBITDA and $336 million of non-GAAP residential revenue. We added 16,500 new customers in the first quarter, a 40% increase year-over-year that flowed from a 72% increase in gross lead appointments, putting us on track to achieve our guidance of 73,000 to 80,000 customers by year-end. Residential gross margin of 23% remained in line with Q1 results last year, although we continue to note the impacts of higher panel, freight and labor costs that are impacting our results and the industry broadly. Combined with more spending on sales and marketing this quarter, these factors resulted in a sequential reduction to adjusted EBITDA per customer before platform investment to $1,700 for the quarter. As we highlighted at the Analyst Day, platform investment of $18 million is primarily product, digital and corporate OpEx and in line with 2022 guidance for $70 million. We expect to get operating leverage as we scale our customer base faster than spending through the remainder of the year. Finally, our balance sheet continues to remain strong and provides us with the flexibility to invest in the business. Please turn to Slide 11. We are affirming our guidance for 2022 and our target model for 2025 and that we most recently discussed at the Analyst Day. As Peter and I have illustrated today, strong customer growth and backlog will add to operating leverage in the coming quarters. Next, I want to walk you through some of the expected improvements to adjusted EBITDA per customer that we expect to see as we build up to our guidance for $90 million to $110 million of adjusted EBITDA for 2022. Please turn to Slide 12. On this slide, we are highlighting factors that lead to our 2022 full year guidance for $2,000 to $2,400 EBITDA per customer before platform investment starting from a base of $1,700 in the first quarter. First, we expect to see improvement to gross margin largely in the second half of the year from higher customer pricing to offset cost inflation that will result in a net incremental improvement of $125 to $325 EBITDA per customer for the full year metric. As Peter mentioned, we are in a strong position for this, especially since we did not raise prices in 2021. Second, recall that our target model from the Analyst Day also assumes SunPower financial attach rates grow from 35% to 45% by the end of 2022. The target model also assumes a storage attach rates for installed system that grows through 2022, assuming up to $1,000 to $3,000 of incremental margin with each attached customer, we ultimately expect a broad incremental improvement of $125 to $225 EBITDA per customer for the full year. Third, we expect improvement to come from keeping sales and marketing spending relatively steady across the remainder of the year, allowing it to decline on a per customer basis by $50 to $150 EBITDA for the full year. Altogether, that nets out to an improvement of roughly $300 to $700 EBITDA per customer for the full year metric bridging the gap between the $1,700 we are reporting for the first quarter and our annual guidance of $2,000 to $2,400 for 2022. As a result, -- you should think about our results as seasonally weighted towards the latter half of the year as higher pricing takes effect and we see the benefits of higher sales and gross margins relative to investments. Please turn to Slide 30. Before we head into Q&A, I want to tell you a bit more about the new residential lease and PPA fund that we closed this quarter, which would support demand and enable more of our customers to afford and achieve electrical savings. As in the past, SunStrong will use the fund to pay SunPower and upfront payment that we recognize as revenue. However, I'm pleased to report that for the first time, SunPower will also be receiving 50-plus of SunStrong's remaining equity cash flows for the fund after its debt service in addition to the upfront cash payment. Furthermore, with a lower cost of capital, we have also recalculated our estimated value of SunPower's share of SanStrong's lease renewal net retained value to $280 million. With that, I would like to turn the call over for questions.

Thank you, sir. [Operator Instructions] Your first question is from Sean Morgan with Evercore. Please go ahead.

Thanks guys. Peter, I was interested to see when you guys made the announcement on the First Solar collaboration. So typically think of thin film on residential roots. So I was kind of wondering what are some of the challenges to using thin film as opposed to kind of crystalline is -- is it cost mostly toxicity. What sort of things do you have to achieve to start integrating that into your systems?

Thanks, Sean. And I should start off by just saying a quick apology to everybody. I'm a little under the weather, so my voice is -- this is like my radio voice, not my normal earnings call voice. But on the partner -- potential partnership with First Solar, I think we're quite excited for a number of reasons. And I think the first reason for excitement is that this tandem product that we want to build together will really be the first of its kind. And because it will allow light to both be picked up by silicon cells and by thin films, it's really unique and quite innovative, and we think will lead to great efficiencies. The big difference in thin film is it also allows you to make a panel very efficiently from a manufacturing standpoint, and also the aesthetics, which do matter to consumers. This looks like a flat screen panel. As many of you saw at our Analyst Day, flat screen TV, I should say. So it’s a technology that's proven itself out in the field at utility scale and then combined with silicon cells, we really believe has the potential to be a great innovator in the residential business. Most of the panels that First Solar has made today are of larger size and residential panels. So probably one of the biggest areas of innovation we'll be focused on with them is how we now produce the same panels in residential size and how do we think about what we can do to innovate on the installation experience side? All of that is exciting information, I would say, stay tuned. We'd love to talk to you more about that once we get the deal done.

Wow. Okay. And this one might be more for Manu, but I was curious because we haven't had a rising rate environment for many years now. So you guys are starting to lean into diversifying away from cash purchases. Are you seeing any impact to like customer preferences in terms of PPA, leases and loans as rates rise? Is that something to anticipate?

Go ahead, Manu.

Okay. So look, we've always been about the customer choice. And we are not seeing any major changes in preferences, although, I would note that our SunPower financial attach rates are increasing like we said at the Analyst Day, our bookings attach rate are at 41%. And then within the three instruments of cash, loan and lease we are seeing significant growth in all three, but loan is leading the pack. And then as it relates to the interest rate comment, we've just announced close to $2 billion of new financing, including the new Dorado lease fund that lowers our all-in cost of capital to less than 5.25%.

Okay. So not like a really noticeable headwind. Thanks a lot, Manu and Peter.

Thanks, Sean.

Your next question is from Ben Kallo with Baird. Please go ahead.

Hi, guys.

Hey, Ben.

You mentioned you didn't reprice or raise rates. I just want to understand how that flows through or how much of your customer base you can do that with is my first question. Then I have a follow-up.

Yes. So Ben, the way we thought about it, as we made a point in our opening remarks, we really feel like we're in this unique position because we did not raise prices in 2021 and so there's an opportunity, I think, in this environment for us to do that without hurting the real value that consumers get. So we've been able to raise prices both for panels and for our storage products. And as you saw from our demand and our comments on demand, demand actually accelerated at the same time, we've been raising prices. So I don't think those two things will normally go together in the long term, but I think in the short term, we feel pretty comfortable being able to pass along all of our supply chain cost increases in the form of higher prices. And even into early Q2, I will tell you, demand continues to accelerate. So we feel very good about the demand side of things.

And on your customer count, it looks like it's the highest new adds, except for last quarter. How much do you think is environment -- how much is your offerings? And how much is your new strategy?

Yes. Believe it or not, I don't think a lot of it is the new strategy because we're just making these investments and we're just getting going. So in my mind, I think some of the new strategic areas have the potential to add to it. But I think the fundamental issue that's going on right now, Ben, is the fact that consumers can save money. And when you read about utility prices going up 15% year-over-year, and I think it's hitting everybody hard in the pocket book. And there are so many Americans that live paycheck to paycheck. I think solar has been very valuable. But now I think it's even -- there's a bigger spot and the fact that -- this is not only something that's going to help us save the planet, but it's actually going to help save you a lot of money. And I think that's the strong interest that we're seeing across the board. And the interesting thing to me is we're seeing strong demand across all of our sales channels. We happen to give some information about our direct sales channel, but I would tell you that our installing dealer channel, our Buly Raven channel, new homes, we're in a very strong position from a demand standpoint across the board. And then we're also seeing a lot of geographic diversity. So we're seeing strong demand in Texas, Florida and the Northeast. And so -- this is not just a California solar business anymore. It's really a strong, healthy business across the entire US.

And if I can just sneak one in. Coming off your dealer that before Analyst Day and the Accelerator program, and you added three new dealers. Can you just talk about your kind of reception where that stands versus where just a few months ago was kind of the feedback from all of that and how you're thinking about it. Thank you

Yes. Thanks, Ben. Well, I was quite excited for this dealer conference. This is my first as CEO, and it was really the first time we've gotten to be in person with our dealers and the first time they've met quite a few of the new folks in the management team. And the feedback we got during the meeting and afterwards has just been very, very positive. I think the dealers are very aligned with the five points of our strategic focus, customer experience is an area where we lead today and they really feel like we can differentiate ourselves. The product advantages we've had, they're very excited to see what we're going to do now with these next-generation products, whether it's with First Solar or our new battery products. The fact that we're investing in their channel is a really big deal. And so the dealer accelerator program, now to answer the core part of your question, is exciting to us because for us, it's kind of a win-win-win. The first investment we make helps them grow in the new states. So if you take a look at Freedom Solar, they're the most outstanding solar installer in the state of Texas, they want to now take what they've learned there and apply in states like Colorado and Florida, and we would love to help them by being a provider of capital. But we also, as part of these investments, lock in exclusivity with these dealers. And so, they're exclusive with us on all of their physical products, whether it be panels, storage, EV chargers. And then, we also become exclusive with each other on financial products. And so when you combine those two things together, faster incremental growth, exclusivity with both companies together, the payback on an investment like this for us is quite quick and quite attractive. And then, of course, we do this for an equity investment in the company, which we believe that these companies will be worth more and more over time. So it's really an attractive model for both parties. And I think one of the ways starting the trust of dealers is to make promises and deliver against them. I think they're quite excited about the investments we're making. And I think they were delighted that part of those investments will be actually investing in many of them and helping them grow faster. In this land grab we're in, where there's 77 million homes that would save money today, on our way to 100 million homes, but only 4 million homes have solar. We're really taking the approach that we need to invest heavily across all of our sales channels. And one of the things I told the dealers is that, our installing dealer channel is critical to our success historically, and it will remain a big focus of this company as we move forward. Thanks, Ben.

Thank you.

Your next question is from Brian Lee with Goldman Sachs. Please go ahead.

Hey, guys. Thanks for taking the questions. Just had a couple actually on the financing side, given some of the details here. So you highlighted the Dorado 1 fund and I think the release implied the combined cost of capital is now less than 5.25%. Can you talk about what cost on Dorado that fund was specifically? And then also, in terms of volume visibility, how many megawatts you now have kind of funded on the capital side?

Yes. So let me start with the second one first. The fund is roughly $350 million. And then that lasts us through all of this year, some into early part of next year. And then the way to think about it is, we have previously talked about our cost of capital at all in at 5.5%, including loan and lease. And we are talking about more than a 25 basis point reduction. A lot of that is attributable to the lease fund as well.

Okay. Fair enough. And then, I guess, in terms of new capital, I don't know, maybe you answered this, Manu, but are you contemplating tapping the ABS markets or the bank debt market, just trying to think about how you're setting up the financing strategy? I know, overall, yields on some of those securitization products for the solar sector, kind of, tipping into the 5% range. So can you do something else this year that lowers your cost of capital further? Are we kind of more static here, kind of, at this 5.25%, if we think about it, kind of, going forward? Thank you.

Yes. So, a lot to unpack there, but let me take it in the pieces. I think from how to think about 2022 capital for us, it's about providing the most flexible and the lowest cost of capital to as wider range of consumer. So we've added features into the lease financing as well as we talked about over $2 billion of overall financing, including loans, that allows us to go to a wider consumer base. So that's one. I think there are more -- we've demonstrated the ability to lower our cost of capital in this interest rate environment. And I think that is a point I want to make. Also, a lot of our capital or cost of capital comes from depository capital, which is less sensitive to interest rates. And then as I've talked about, as our balance sheet gets stronger, which it is, and as we grow our volume, we get the ability to improve our cost of capital through things like less hold back and other things. So I would say, there are more arrows in our quiver as we think about cost of capital on an apples-to-apples basis or lowering our cost of capital on an apples-to-apples basis. But more importantly, you should think of us utilizing SunPower Financial to go to a wider customer base.

All right. Thanks a lot, guys. I’ll pass it on.

Your next question is from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Thank you. Congratulations team on the continued progress. I hope you guys are well. Just first quick question here, just probably two part, what percent price increase you are guys contemplating here on your customers? I know, then tried to get at that earlier. Just can you try to talk through that a little bit how much latitude do you perceive yourself as having considering what you said about 2021 here? And then related to that, I'll throw the second one at the same time here, the attach rates and the target -- is the supply available out there to get you to 45%? I know you commented on panel availability here, but just to reconcile 45% attach rate by the end of the year, given where you are, there's a little bit of a ramp, but obviously, there's a ramp in availability supply there, too. Just curious on both sides?

Yeah. Thanks, Julien, and great to see you last month at the Analyst Day. The – on the pricing front, the way I would describe it is this, we're – as you know, this is one of the most difficult supply chain environment. For me, probably the most difficult in my 30-plus year career. So it's hand-to-hand combat day to day, week to week, we're trying to manage and make sure that we can actually not just absorb the cost increases, but ideally, architect and find ways to reduce our cost over time. The way we've been thinking about it this year is for the cost increases that we've had and any others that we anticipate, we believe that we can, one for one take those cost increases and turn those into price increases. And so far, without materially hurting demand, demand actually has accelerated Q4, Q1 and into Q2. So we feel really good about that and where that goes from here, our goal would be to manage our supply chain so that there are fewer cost increases. And over time, as I said, architect our products so that they're actually more cost efficient over time. On the attach rate, I think we feel quite comfortable with where we're headed on SunPower Financial. Our long-term goal is to get well above the 45% target we have this year. But the fact that we're already at 41% in Q1 is terrific. And so we have, from a panel supply perspective, from a Sunbelt perspective and obviously, from a capital perspective, we have the inventory we need to serve both customer demand and the numbers that are consistent with the guidance we gave you this year. So we feel good about panels, batteries and capital relative to the guidance for 2022.

Yeah. And just specific to that at a higher level, you talked about this 2,000 to 2,400 2022 guidance, what's the exit run rate that you're thinking about corresponding to that? Again, I get to the $400 per customer range here, but what does that imply as an exit run rate based on where you're starting at 1,700 on Q1. If you can kind of talk about like 2022 that range being an average, and you're at 17% now, what does that mean kind of 4Q exit?

Yes. No, no. I understood your question. I think the way to think about it is as we – as we go through the rest of the year, we have provided you clarity on how we get from 1,700 first quarter average of I'd say, midpoint 2,200. The exit run rate is going to be higher than the midpoint of the range. And that is largely driven by, as I said, the SunPower Financial I’d say get up to 45% exiting the year as well as SunVault starts to kick-in in terms of the attach rate.

Got it. Excellent. Thanks, guys. Good luck. Good to see you guys. Thank you, again.

Your next question is from Graham Price with Raymond James. Please go ahead.

Hi. Good afternoon. Thanks for taking my question. So it's been about a year since you started the EV charging partnership with Wallbox. So I just wanted to get an update on how that's progressing?

Yes, I think, Graham, we're quite excited about the EV charging opportunity for a number of reasons. One of which is we know that EV charging customers, people who have an electric vehicle today, 40% of them have a solar system -- solar product on a roof. And so we think there's going to be the strong overlap between people who have electric vehicles and people who need solar. And then the interesting thing is as we look forward, in addition to the fact that the OEMs have an enormous number of new EVs coming out there, I think it's been pretty well documented that the grid doesn't have the capacity to support that incremental amount of charging that we'll want to do across the nation. So I think for practical purposes, we really view these things as being interlocked and linked together. I think it's still relatively early in the EV strategy with Wallbox. They make a terrific product. We're happy with their partnership. I think we've had the most success is there's a great opportunity for us on new homes to really install a complete solar system with panels, batteries and EV chargers, all integrated into one. So that's probably the area that we've seen the biggest bump to begin with. But I will say stay tuned. We have more working on in that space, and we're excited about where this goes as we move forward.

Got it. Thank you for that. And then maybe switching gears just a little bit. Florida net metering has been in the headlines recently. So just wanted to get your thoughts on the veto by Governor DeSantis of HB 741 and just that whole situation?

Absolutely. Yes. I'm going to make some comments to the close of our call, but I'm happy to comment on it now. We thought it was obviously very much in line with the needs and desires of Florida residents. You know, I'm pleased to say that we're actually seeing quite a few policy tailwinds in nearly every state where we do business. The Governor DeSantis veto was one that was great to see because I think at the end of the day, Florida residents are really going to be impacted by these higher utility costs and many of the folks in the state will now benefit from getting their full net energy metering program benefits. And so I thought it was frankly a courageous move and I thought it was a terrific move that will be very popular has been very popular in Florida. And if you take a look at California, I think part of the reason there's been a delay in any proposed changing of the program is for this very reason. This is the exact wrong time of history to take away solar benefits at a time when the UN report suggests we're going to be doing permanent damage to the planet by 2030 at a time when utility rates are rising in record amounts. This is the time where most states are really adding incentives, and we're quite pleased to see that

Understood. Make sense. I will pass it along.

Thanks.

Your next question is from Philip Shen with ROTH Capital Partners. Please go ahead.

Hey guys. Thanks for taking our questions. The first one I have is on module availability. Peter, you were talking about you have enough to meet customer demand and to serve guidance. Our checks suggest that your module supply is actually very tight and that it's actually tough getting modules and one week are available and then the next week or not, and people are needed to dance around. It seems like you're getting through it, but can you talk through how that could limit what's beyond the guidance? And then also the PVS 6, the key monitoring system or device that you guys have. It seems like there's substantial delays in that equipment, which is required for commissioning systems. So, I was wondering if you could talk through what's going on from a inventory -- or actually supply chain perspective with a little bit more detail? Thanks.

Yes. Thanks Phil. So, let me start with panels. As you might remember, as we made a change to our supply agreement with our current panel supplier, one of the big improvements to the agreement is that it's a one-way exclusivity. So, they're exclusive with us, but we have the ability to seek out other panel alternatives. And as you might imagine, we've taken advantage of that, and that was one of the very first things we did once the new supply agreement was finished is that we have reached out and been working with a number of panel suppliers. So, from what we can see for both demand this year -- and we've got a pretty good view of where demand goes because we can see much higher in the funnel than we report on publicly. But also where our guidance is. I think we feel very comfortable with our total panel supply, most of those panels will still be from our existing panel supplier, but we do have two other panel suppliers we'll be working with as the year goes on. It's premature to announce those on this call, but I'll say that we're well-prepared to make sure that we have enough panel supply across the board to serve customers well. And then PVS 6 is actually not necessarily always required for commissioning, but it is required to be able to do panel level monitoring. And there are some delays, primarily, chip-related delays on that particular component that's not really necessarily going to slow down the installation of solar systems, but it may slow down the ability of customers to be able to do their panel level monitoring as fast as they'd like to. So, that's one of those delays that we're day by day, hand-by-hand combat, we're working to see how fast we can get those back in stock and get those back in good supply for customers. But we don't expect that to have a material impact on any of the guidance we've given this year, and we don't expect it to have, frankly, a material impact on our customer experience for this year.

Great. Thanks for that detail. The two other panel suppliers, sounds like can pick up some slack there. And it's probably a good problem to have. In general, the dealers we've talked to are very happy with the new management team there. So, it sounds like you're doing a great job. As it relates--

Thanks a lot. I do think -- sorry, go ahead, you first.

No, please Peter. It's okay.

I'm just going to say, I think having demand problems is the highest class business problem, I think you can have. So, I think along with our dealers, the fact that we're working hard to get more supply, more than we thought we needed this year, that's a delightful problem to work on. So as far as supply chain problems go, we need more panels because we got more demand. That's a really good one, and we're happy to work on that together. Sorry, go ahead with your next question.

Thanks Peter and that's what it sounds like the situation is. So, in terms of the First Solar deal, I think at the Analyst Day, it sounded like maybe we could see a commercial offer within 18 to 24 months. With that said, when do you think, the deal could get signed and finalized. Are we talking about a quarter or two or do you think it could drag on to a year before the deal becomes fully consummated? Thanks. And what are the gating factors as well?

Yes. Well, as you might imagine, I mean, this is quite an exciting opportunity for both companies. I think for First Solar, I'll let them speak for themselves. But I think they'd be quite excited to be able to enter the residential business and become a big player in that part of the world. They've been primarily focused on utilities and utility scale. And obviously, we're quite excited about the opportunity to really reinvent the panel world and be something that's never existed before and be able to have something that's a big exclusive for our dealers and something that we think would delight our customers. So, as you might imagine, as we go through a deal like this, it just takes a little bit of time because there are quite a few elements that both companies want to work on together. What I would expect, we'll have an outcome of those discussions in the next couple of quarters. So, I don't think this is something that drags on for years. I think we'll be able to talk more about where that's headed in the next couple of quarters. And then as you look forward, I think our opportunity to work with companies like First Solar and many others, there aren't really any gates to that. I mean we're -- our heritage is really on hardware innovation. We talked about at the Analyst Day, we also think that software will be as important as hardware and we're really committed to the innovators in this business. We really want to – in addition to be seeing by customers as having the highest quality customer experience, we also want to continue to have the most innovative products and the most innovative software, so look for us to continue to double down in those areas as we roll out this new strategy together. Thank you.

One last question. Which business unit, if that's the right term, do you think is more profitable? Would you say SunPower Direct or the dealer channel? Maybe it's be tough for you to specify, but how would you expect that mix to change overtime?

This was like asking which of your children is your favorite, fill up, I think that's a tough question to answer. But what I -- I'll put up I'll give you this for color. I think in most business models, anytime you own a direct business, you would do that with the belief that you could become more efficient and that would be more profitable. There's just fewer intermediaries and there's fewer steps. And I think you'd see that same thing play out here. I think our installing dealer business is very profitable, both for our dealers and for SunPower, but I think it would be fair to say our SunPower direct business. And by the way, I also include Blue Raven as a direct business, even though it's not called SunPower direct. But I think both of those businesses are even more profitable.

Great. Thanks again.

Thanks Philip.

Your next question is from Kashy Harrison with Piper Sandler. Please go ahead.

Good afternoon and thank you for taking the questions. So just some real quick ones for me. I think in the past, you guys have highlighted year-over-year bookings growth. And so, apologies if I missed this because go around, but can you provide that number for Q1? And then looking at your quarter-over-quarter growth is strong, looking at a year-over-year growth is strong. And so I'm just curious, do you think you're seeing some benefit of a demand pull-forward due to the NEM uncertainty, or do you think that for the most part, the demand you're seeing is rising electricity rates?

Yeah. Kashy, I don't think we've given very mind time, the actual bookings growth are further up in the funnel, but let me give you some color on that. We measure it two ways. We measure both the customer -- number of customers who've signed contracts, so that's booking for us or contracts. And then we also measure the revenue booking growth year-over-year. And I would describe them in Q1 as that growth rate being well-above the 40% actual growth of customers and not a little bit above but well-above from a customer standpoint. And then the revenue booking was even higher than the customer bookings. So in other words, we're actually growing at a faster rate on the revenue side than we are on the customer side and the customer bookings is growing a lot faster than our actual customers added. So I think we feel pretty optimistic that this demand right here is strong fundamentally because it's tied to customers being able to save money and being able to save money matters during all times of the world. Now having said that, I think the other thing we take a look at is where is the demand coming from? And I don't think it's uniquely focused on California. I think we mentioned in the last call, and we saw it again this quarter, quite strong demand from Texas, Florida and the Northeast. So those areas continue to be very strong. And I think we talked about our California business and non-California being about 50-50 by the end of the year. And so we're on track to achieve that kind of geographic diversity, and we're seeing good growth and good demand outside of California right now.

That's very helpful color there, Peter. And then just one quick follow-up. Just looking through the cash flow statement, it looks like there was a decent sized use of working capital. Just wondering what that pertains to? And then maybe if you could just give us some guidance on how to think about changes in working capital over the course of the year? Thank you.

Peter, I can take that. So a couple of things, Kashy, right? One, we exited first quarter with a very strong balance sheet. That's one. Second, as you parse through the pieces that's in the bridge in the appendix, the use of working capital was related to SunPower Financial. As you know that our model is not to keep assets on the books. But time to time, there may be working capital that straddles the quarter. I think from a first quarter perspective, as you bridge that from a modeling point of view to the rest of the year as well as the out years beyond 2022, you would expect to see that number come down and actually we'll get cash back onto the balance sheet as we start to utilize third-party capital that we alluded to earlier in the call. But just for reference, we said we raise over $2 billion of third-party capital. So the $60 odd million that you see in the -- on the page will reverse over the next few quarters.

Helpful. Thank you.

Terrific.

And that ends the question-and-answer session for today. I will now hand the call back to Mr. Peter Faricy for final comments.

Terrific. Thank you very much, and thanks everyone for joining us again today and for your support of SunPower. As I promised, I want to leave you with a couple of our thoughts on the state of the industry and government policy. As most of you know, our household electricity bills are rising rapidly across the country, up more than 15% year-over-year in a number of states according to the U.S. Department of Energy and consumers urgently need a more affordable, stable and resilient energy solution. A recent analysis from the White House found that the average American family could save $500 a year from using clean electricity like rooftop solar and heat pumps to power their homes. So in order to make solar more accessible, to more Americans, at all income levels, across all geographies we believe it's imperative at Congress pass energy legislation that includes a long-term extension of the solar Investment Tax Credit, or ITC, at that 30% value. As utility rates rise, this extension could extend rooftop solar savings to more than 100 million homes, by the middle of the decade, and the bill would also create more than 1 million clean energy jobs across the next 10 years which is a high priority for all of us and for the administration. As I mentioned earlier, the good news at the state level is that we're actually seeing quite a few policy tailwinds, particularly in the states to redo business. Governor DeSantis towing the bill that eroded the states that would have eroded the states that energy metering program was terrific. In California, there's been a substantial delay to proposed changes to the net energy metering program and these developments clearly show the popular opposition of the people to policies that would reduce the benefits of rooftop solar. In fact, the majority of states are actually increasing incentives and improving rate designs for consumers to move to sustainable, clean, reliable and all electric forms of energy. While SunPower would not be significantly impacted by the results of the pending AV, CVD investigation, we are aligned with our solar industry colleagues and urge the Commerce Secretary to issue a preliminary decision as soon as possible and no later than the end of May. Removing the current uncertainty in the industry is vital for renewable energy jobs, growth, consumer benefits and the ability of the U.S. to achieve President Biden ambitious and important climate goals. We are fully supportive of increasing American manufacturing in the solar industry. And in fact, we hope to be good partners with those who do this, but it will take meaningful and substantial government incentives, to make this a viable reality. Big thanks again for everyone tuning in for our first quarter earnings call. We look forward to talking to you for our next call. Thanks.