SunPower announces restructuring aimed at doubling down on

On Oct 5, 2021

Construction workers install SunPower tiles on homes in San Ramon, Calif.

Robert Nickelsberg | Getty Images

SunPower said Tuesday that it’s restructuring its operations in a bid to focus exclusively on the fast-growing residential solar market. The company is acquiring residential solar provider Blue Raven, while also looking to sell its commercial and industrial business.

SunPower CEO Peter Faricy said the acquisition was a natural fit for several reasons, including that Blue Raven’s customer-first approach aligns with SunPower’s motto. Additionally, more than 90% of Blue Raven’s customers are in 14 states that account for just 5% of SunPower’s sales. In other words, the acquisition expands SunPower’s footprint in places where the company has struggled to seize market share.

“From a strategy point of view, this transaction is an example of something that allows us to serve consumers much faster than we would have otherwise,” Faricy said, adding that the deal will be revenue and EBITDA positive from day one.

SunPower will gain more than 20,000 customers from Blue Raven, adding to the 376,000 residential customers it had at the end of the second quarter.

The total transaction value of the acquisition is up to $165 million, with the cash required to close the deal standing at up to $145 million. SunPower used cash from operations to fund the acquisition, with the majority of the money raised after the company sold 1 million shares of Enphase Energy.

Focusing on residential solar

Faricy said that while the commercial and industrial solar segment is an attractive space to operate in with plenty of growth ahead, the company’s decision to sell the division came down to capital allocation and the opportunity for a streamlined business.

He noted that the unit has garnered interest from potential buyers, but did not disclose any individual names. Faricy also pointed to the attractiveness of the asset, saying that SunPower currently makes money in commercial and industrial through managing contracts, while a future owner could take advantage of both the managing and financing side of the operation.

SunPower intends to use the money from a potential sale to reinvest into its newly core residential business, including around customer acquisition and expanded digital services for homeowners.

“In our case, we’re happy to have the clarity for investors on this singularly focused strategy now, focusing on residential moving forward,” Faricy said.

A restructuring of this nature is not the first for SunPower. In August 2020 the company spun out photovoltaic module maker Maxeon Solar, although the two separate entities still work together.

Shifting the company’s focus to individual consumers is perhaps a natural fit for Faricy, who took the helm of SunPower in April. He was previously CEO of global direct-to-consumer for Discovery Inc., and also served as vice president of Amazon Marketplace.

And while commercial and industrial solar offer alternative growth avenues, the…