Maxeon Solar Technologies, Ltd. (MAXN) Q1 2023 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Maxeon Solar Technologies First Quarter 2023 Earnings Conference. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Please go ahead.

Thank you, operator. Good day, everyone, and welcome to Maxeon's first quarter 2023 earnings conference call. With us today are Chief Executive Officer, Bill Mulligan; Chief Financial Officer, Kai Strohbecke; and Chief Strategy Officer, Peter Aschenbrenner. Let me cover a few housekeeping items before I turn the call over to Bill. As a reminder, a replay of this call will be available later today on the Investor Relations page of Maxeon's 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, the 6-K and other SEC filings. 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 supplemental slide deck on the Events and Presentations page of Maxeon's Investor Relations website. Also, we will reference certain non-GAAP measures during today's call. Please refer to the appendix of our supplemental slide deck as well as today's earnings press release, both of which are available on Maxeon's Investor Relations website for a presentation of the most directly comparable GAAP measure as well as the relevant GAAP to non-GAAP reconciliations. With that, let me turn the call over to Maxeon's CEO, Bill Mulligan.

Thanks, Rob. I'm pleased to report that Maxeon had a very strong first quarter, executing well across the whole company and delivering financial performance ahead of expectations. On our last earnings call, we noted several internal and external factors that have the potential to accelerate our margin expansion. These factors helped Maxeon exceed our Q1 financial projections and reach our corporate gross margin target of at least 15%. Our first quarter 2023 non-GAAP gross profit was $54 million or 17% of revenue. We also delivered adjusted EBITDA of $31 million or 9% of revenue. While the team is pleased with these quarterly results, we are still very much in execution mode focused on hitting our full year targets and executing key projects that we believe will make Maxeon one of the most profitable companies in the solar industry. With this context, I'll now provide an update on our first quarter key initiatives and accomplishments through the lens of our distributed generation and utility scale businesses. Kai will then review our Q1 financial performance, refresh our 2023 outlook, and we'll conclude with Q&A. Our DG business was led once again in volume, revenue and gross margin dollars by our European team and our unique direct-to-installer channel in that region. Our strong European footprint allowed us to maintain margins at similar levels to the previous quarter in both percentage and absolute terms despite typical Q1 seasonality trends and increased overall industry supply volumes that created a more competitive pricing environment. This is another example of how Maxeon has been able to consistently maintain significant ASP premiums through our differentiated product portfolio and unique channel strategy. Belgium and France were bright spots, both posting year-on-year volume growth of more than 40%. Our Italy team also exceeded their volume target, in part due to growth in the commercial segment. Serving commercial rooftop demand through our existing dealers allows us to increase our mix of performance line modules and in turn frees up IBC volume for sale in higher ASP segments. Overall, European ASPs were down sequentially in line with our expectations but benefited from an AC module mix north of 20%. We expect beyond the panel sales to increase over the course of 2023 with a higher attach rate of microinverters as well as sales from storage and EV charger products. Our United States DG business also delivered strong results with higher-than-planned shipments to SunPower as well as material gross margin contribution from our new Maxeon residential channel. While demand in some segments of the U.S. residential market has cooled, customer appetite for our premium products remain healthy, particularly in markets where the effect of rising interest rates has been offset by increased power costs and were constrained roof space plays to our product efficiency advantage. We were particularly excited to begin the ramp of our new Maxeon U.S. residential channel in Q1. By moving closer to U.S. end customers, we were able to capture the highest ASPs in the company's history, increasing our global blended DG ASP by almost 3% in the first quarter. It will take time and considerable effort to build a leading independent presence in the U.S. DG market, but we feel good about our prospects due to the long-standing reputation that our products enjoy in this market and considering our deep channel experience in other regions. Last year, we began assembling a core sales and marketing team of industry veterans, familiar with our product. This team is targeting premium installers incremental to the SunPower dealer network. We formally launched our multi-tier channel program in April, leveraging many parts of the structure already built for Europe. Our first preferred partner signed up almost immediately, switching a majority of their module business to Maxeon. The partner is in Massachusetts, a state where we have always loved doing business due in part to tree shading conditions favoring high-efficiency systems and also due to performance-based incentives, which elevates the importance of degradation rates and energy production over time. This partner is just one of 48 residential installers nationwide who purchased our product through Green Tech last quarter. Look for more updates regarding our U.S. channel development in future quarters. Overall, we are pleased with how our DG channel is positioned in terms of margins, growth and diversification. We have over 17 years of presence in both the European and the U.S. market, a portfolio of highly differentiated solar panel offers and increasing traction in our beyond the panel products. And outside these core markets, we are pursuing growth opportunities in Latin America, Japan, Australia and in specialty applications. On a combined basis, these growth segments accounted for around 13% of DG revenues last quarter. Maintaining technology leadership is a key focus area for our management team, particularly in our DG business with Maxeon 7 close to commercialization. In order to ensure the current and future projects meet our high expectations, we've added the position of Chief Technology Officer to our executive team and hired Matt Dawson, one of the world's leading experts in IDC architecture. Matt and I worked together at two previous companies, including SunPower, where he led the R&D team for several years. I am thrilled to welcome Matt and look forward to working closely with him and his R&D team to continue driving technology innovation and maintaining industry leadership. Now let's turn to our utility scale business. We booked several new projects in the first quarter, all with repeat customers. Our North America supply chain is sold out through the end of 2025 with over 1 gigawatt of capacity allocated for 2026 and 2027 based on options supported by deposits. The U.S. utility scale market is dynamic continues to be influenced by various regulatory and policy factors. We believe that Maxeon is very well positioned in terms of our ability to supply this market with our 1.8 gigawatt North American manufacturing facility nearing full ramp. Given the opportunity in the U.S. utility scale market and the strong demand signals from our customers, we are also evaluating a variety of expansion opportunities, including, but not limited to, a U.S. solar cell and module manufacturing facility. Since our application with the Department of Energy Loan Program Office progressed to the due-diligence phase last quarter, we have expanded our negotiations with potential customers for product delivery through 2030. We regularly hear from utility scale customers that they appreciate our industry-leading ESG profile. This is something that has been a core part of our culture dating back to our legacy SunPower days, and it is one of the reasons why our technology has a remarkably prominent presence among high-profile corporate campuses and government buildings for sustainability requirements are paramount. We recently received two new important ESG recognitions. First, we saw our MSCI ESG rating increased from A to AA, the second highest rating achievable for a company and at the top of our industry. Second, our IBC manufacturing facilities increased their cradle-to-cradle certification from bronze to silver, the highest status achieved in the solar industry and a meaningful competitive advantage for any project attempting to optimize a lead rating. The energy level among Maxeon employees today is high. Our people are energized by the company's recent progress, but still laser-focused on the execution work ahead, achieving the remaining elements of our annual targets and realizing our future expansion opportunities. With that, I'll turn it over to Kai.

Thank you, Bill. I will discuss the drivers and details of last quarter's performance and then provide guidance for the current quarter as well as updated guidance for the full year. Total shipments for the first quarter were 774 megawatts, up 6% sequentially and nearly 60% year-on-year. We exceeded our guidance range of 730 to 770 megawatts due largely to the accelerated ramp of our new U.S. utility scale capacity. Revenues for the first quarter were $318 million, near the midpoint of our guidance range of $305 million to $345 million. In DG, we saw ASP expansion in the U.S., which offset expected price declines in Europe. Blended global DG ASPs were slightly down sequentially due to a higher mix of specialty application solar cell sales. These carry an exceptionally strong margin percentage, but at a lower price per watt compared with module sales. Non-GAAP gross profit in the first quarter was $54 million, up from $21 million in the previous quarter. This represents a 17% non-GAAP gross profit margin and is the highest ever for Maxeon as a stand-alone company. While we forecasted strong gross margin expansion, the result exceeded the expectations embedded in our $30 million to $40 million guidance range. The largest contributor was a favorable $12 million net utilization of provisions related to our U.S. utility scale business based on lower of cost or market accounting rules. Excluding this impact, our results still would have come in above the high end of our guidance range. The European team maintained a strong price premium and the expected market price declines were offset by lower input costs, including poly and freight. And in the U.S., we expanded margins sequentially as a result of our new SunPower contract and additional high margin revenue from our new U.S. residential channel. Production volumes at our facilities in Malaysia and Mexico for our performance line panels have been increasing and a reduction in Q1, COGS combined with higher prices, drove margin improvement in our U.S. utility scale business. Non-GAAP operating expenses were $38 million in the first quarter, compared to our guidance of $37 million plus or minus $2 million. Adjusted EBITDA in the first quarter was $31 million, significantly better than our guidance of $10 million to $20 million based on the previously mentioned favorable developments that impacted our gross margin. GAAP net income attributable to stockholders came in at $20 million compared to a loss of $76 million in the previous quarter, driven primarily by a $35 million sequential improvement in adjusted EBITDA and a $42 million quarter-on-quarter swing in the mark-to-market valuation of our prepaid forward. Moving on to the balance sheet, we closed the first quarter with cash, cash equivalents, restricted cash and short-term investments of $304 million compared to $344 million at the end of the fourth quarter. Capital expenditures in the first quarter were $16.5 million, which was within our guidance range. The majority of the, spend was for our Malaysia and Mexico performance line capacity. We are very pleased to have started 2023 with a strong financial performance, posting gross margins ahead of our target model. While we recognize that our first quarter results benefited from roughly 4 percentage points of gross profit margin due to the previously mentioned one-time material effect. Our teams are now highly focused on achieving gross margins of at least 15% based solely on consistent run rate contribution. We indicated previously that we expect to reach this milestone late in 2023, once our Malaysia and Mexico facilities are fully ramped, and we have transitioned to higher-priced utility-scale contracts. We also anticipate improved costs from our performance line products for DG, offset in part by expected price decreases in Europe and in our rest of world markets. These catalysts are all still relevant, and we expect them to play out across the next two quarters in a fashion that allows the company to maintain gross profit margins within striking distance of our 15% target, give or take a couple of percentage point. Heading into Q4, we expect to see further modest improvement in gross margins based on incremental enhancement of our U.S. utility scale business as well as usual seasonality in DG. With this context in mind, I'll now turn to our guidance for the second quarter of 2023 and an update for the full year. We project second quarter shipments of between 860 and 900 megawatts - the midpoint of this guidance represents 14% sequential growth and nearly 70% growth year-over-year, reflecting the continued ramp of our U.S. utility scale capacity. We project second quarter revenues of $360 million to $400 million, a nearly 20% sequential improvement at the midpoint driven in part by growth in U.S. DG mix with higher ASPs, more than offsetting lower pricing associated with our growing utility scale mix. Non-GAAP gross profit is expected to be in the range of $50 million to $60 million. This projection is roughly flat sequentially, but based entirely on what we consider sustainable run rate metrics and driven primarily by the higher mix of U.S. DG volume at ASPs above our global average as higher DG volumes overall. Non-GAAP operating expenses are expected to be $42 million plus or minus $2 million. This includes a slight increase in our spend for beyond the panel and the U.S. residential channel, both of which are expected to enable incremental top and bottom line growth. Adjusted EBITDA is expected to be between $24 million and $34 million, driven largely by the improved run rate metrics impacting our gross profit. Second quarter capital expenditures are projected to be in the range of $20 million to $26 million. And for the year, our expectations are unchanged at $100 million to $120 million for the completion of manufacturing capacity for performance line channels to be sold into the U.S. market, completion of manufacturing capacity for our Maxeon 6 product 18.55 platform, further development of Maxeon 7 technology and the pilot line preparation for scale-up of Maxum 7 technology as well as various corporate initiatives. As a reminder, this annual CapEx guidance excludes spending for any U.S. manufacturing, which we plan to finance primarily with the U.S. Department of Energy loans and customer co-investments. Last quarter, we introduced 2023 annual guidance of $1.35 billion to $1.55 billion in revenue and $80 million to $100 million in adjusted EBITDA. While our 2023 year-end exit expectations are largely unchanged, we exceeded our expectations for the first quarter, and thus, our projections for the year are now also increased. We estimate 2023 revenues will be in the range of $1.4 billion to $1.6 billion, and adjusted EBITDA will be in the range of $95 million to $120 million. Our confidence in these projections is bolstered by the fact that roughly half of the revenue on fixed commercial terms for both volume and price. With that, I'll turn the call back to Bill to summarize before we go to Q&A.

Thanks Kai. As I mentioned last quarter, my goal is to help make Maxeon one of the most profitable companies in the solar industry by driving aggressive manufacturing cost reduction and operational excellence while extending our panel technology leadership and leveraging our unique global channels to market. I'm pleased with our results this quarter and look forward to continuing to demonstrate the strength of Maxeon's business model over the coming quarters. Now let's go to Q&A. Operator, please proceed.

[Operator Instructions] Our first question comes from Julien Dumoulin-Smith of BofA. Go forward with your questions.

Thank you, operator. Thank you, team. I appreciate the opportunity here and nicely done, I got to say. Maybe just to kick things off, there's been some broader commentary through the earnings cycle here on channel inventory levels across various products and equipment in the residential space. Can you comment a little bit about what you're seeing vis-à-vis those concerns perhaps through the course of the '23? Obviously, we see your guidance till year today. But more specifically, how are those inventory dynamics impacting you and impacting your ability to price? And what are you assuming through the course of the year here, specifically across the U.S. and Europe?

Yes. Hi, Julien, Bill here. Yes, we monitor that pretty closely. But so far, again, we really compete in a somewhat different market with our highly differentiated product. So we're just not competing against all the material that's building up in inventory. And so, so far, it looks good our own inventory. I think it's solid. Kai, do you want to add anything to that?

Yes. I think on our inventory side - hi Julien, you can see that inventories are slightly up quarter-on-quarter here, but I would say that's probably more of a seasonal effect that we have seen, but we feel pretty comfortable with the inventory levels that we have.

Excellent. All right. Perfect. And then if I can pivot a little bit here. How do you think about margin cadence from here? I mean, how do you think about where you exit the year versus where, obviously, you started the year on a pretty high note. How do you think about that evolving considering your commentary just now on channel, but also as you think about the mix shift over time here, too, what does that say? And what does that mean for exiting the year as well?

Yes. This is Kai. It's, of course, a pretty multifaceted question here, I would say. So let me try to unpack that a little bit. So as we look at the first quarter here from a gross margin standpoint, we had about 17% gross margin in the first quarter. And we commented that 4 percentage points of that is because of that onetime effect where we utilize some prior inventory provisions for lower across the market inventory accounting. So on a normalized basis, it's about 13% if we take that one time out. For the second quarter, if you look at our guidance, we are guiding at the midtown for about a 14.5% gross profit margin here. So that's -- and of course, there's a range around that as you have heard. And then as I said in my prepared remarks here, over the next couple of quarters, we think we are going to get a slide of about a gross margin in line with the long-term financial model of 15%, give-or-take a couple of percentage points here. And of course, as you know, our long-term financial model, 15% is at least 15%. So we expect that in the fourth quarter, we're probably towards the end of the year, you can see a uptick that may be related to seasonal patterns in the DG space, but also us shifting to higher price contracts on the U.S. utility scale. So that's in a nutshell how we see, at the moment, the year unfolding here, and that's what our guidance is based on.

Right. And the new app there being the higher priced products that you're shifting to that you alluded to in the fourth quarter, that shouldn't they carry over at least into '24 as you're alluding to?

We would expect some of those contracts to carry over into '24. And as we have said, we are booked out through 2025 for our U.S. performance line supply chain here. And some of those contracts are fixed price, but also some of those contracts are underlying a variable pricing structure.

Wonderful. Thank you guys so much, again, truly congrats.

Thanks Julien.

Thanks Julien.

[Operator Instructions] Our next question comes from Brian Lee of Goldman Sachs. Please move forward with your question.

Hi, guys. Good afternoon. Kudos on the strong execution at the start of the year. I guess my question first would be on the guidance. If I look at Q1, even if I adjust out the $12 million provision and then the Q2 guide, you're kind of already annualizing to the high end of the updated EBITDA guidance range. And I think, Kai, in response to Julien's question, you said gross margins are probably going up through the year. And then with seasonality, I would assume volumes are also higher in the second half than they are in the first half. So maybe I'm missing something or there's just a high degree of conservatism baked into this new updated EBITDA guidance, but why wouldn't you have passed in an even higher EBITDA viewpoint as you move through the year, if those are the moving pieces, higher gross margins, higher volumes and already having kind of covered half of the top end of the range through the first half of the year if you execute to the guidance here for 2Q?

Yes. Thank you, Brian, for the question. I mean, obviously, we want to put guidance out here that we have a high degree of confidence in. And secondly, I think as I've said in the next couple of quarters, there's going to be a few gives and takes that we expect, which may give us margins that hover around the 15% by a couple of percentage points. So that's how we see it laying out here. And again, we have confidence in our margin projection here and our guidance and we will be very, very focused to execute according to that and where we see opportunities to outperform, we will try to seize those opportunities.

Okay. Fair enough. And then a second question on pricing. It looks like IBC ASPs were kind of at the highest level we've seen them in quite a long time. And then you mentioned your pricing was down a little bit. Do you anticipate IBC pricing to continue to move up through the rest of the year? Or is this sort of a stable level we should be forecasting going forward? And then similarly, on Europe, is there more pricing degradation as you move through the next few quarters? Or are we going to kind of stabilize at these levels you saw to start the year?

Yes. Hi Brian, well, there are two different markets, right? Europe and the U.S. In Europe, we do expect continued pricing declines, and we've built that into our outlook. In the United States, as you probably know, we have a lot of our volume contracted at fixed prices. So we're feeling pretty good about that. And then in addition to that, we just recently launched the Green Tech channel. And so far, as we noted in our prepared remarks, it's adding a significant amount of ASP uplift. And Kai, I don't know if you want to say anything else?

Yes, maybe just two more comments. One is the new Green Tech channel with -- in the U.S. has started this past quarter and it's not fully ramped yet. It's still ramping. So we need to take that into account and have taken that into account in our guidance. And secondly, in markets like Europe, as we said, we are anticipating and have baked in some price declines, but also reduce reduction - anticipate reductions in input costs. And if you look at the data that we put out in our Zonal chart, you can also see that in IBC, we have had 17% increase in average ASP quarter-over-quarter compared to the fourth quarter. So that's just to underline your statement that we are seeing very, very high and encouraging prices here in the first quarter.

Okay, that's great, very helpful. Last one from me, and I'll pass it on. Recently, one of the solar peers in the space got final approval on a DOE loan guarantee. Obviously, a different scope from what they are doing. But our understanding is that you ICE may have started the application process somewhere in the same time frame as they did. So wondering if you had any updates as to kind of how close you are to reaching final stages and then ultimately being able to put together a financing package for the U.S. capacity expansion? Thanks guys.

Yes, sure - this is obviously for our U.S. manufacturing facility, and we're still very excited about this project. As we reported last quarter, we are in due diligence with the DOE loan program office, and we're working through that. The schedule is not entirely under our control, but I think we're moving forward expeditiously at this point. So hopefully, we'll have some news on that yes soon.

Okay fair enough, thanks guys.

Thank you. [Operator Instructions] Our next question comes from Philip Shen of ROTH MKM. You proceed with your question.

Everyone thanks for taking my questions. First one is on margins. It sounds like you have '23 margins well in hand. I would think a lot of the strength is coming from your fixed price contracts, especially with SunPower, given the environment that we're in, and I'm sure that's helping? How much risk is there to your 24% margins as the SunPower fixed price contract, I believe, converts to variable pricing. Can you talk about how you would expect that to be dealt with in '24? Thanks.

Yes, I'll say a couple words, Phil, and then turn it over to Kai. We are sticking for 2024 with our long-term financial model of at least 20% year-on-year revenue growth and 15% gross margin. So, we feel like we're on track with that. There are obviously puts and takes. And maybe, Kai, you can say a few more words.

Yes, I think we feel pretty good about our SunPower contract also for '23 and for '24. It's true that there are some variable changes some variable components in the pricing, but we do feel that it's a balanced contract and it enables us to stay on the long-term financial model and within that margin range. There are other things that we move into 2024 that are going to take a more significant part of the business than what we have right in '23. And right now, we're starting the beyond the panel business in this quarter or in this first half, and that's going to grow over the next quarter to something more significant. We have more dry powder also on the side of our HSPV joint venture, where we can take more offtake from that side. And also in '24, we are going to have a fully ramped U.S. utility scale capacity throughout the year, which is still in the ramp stage here in 2023. So there are some things that we think are going to enable us in 2024 also to stay on that long-term financial model with regards to the margin and the growth.

Great, thanks for the color. Shifting to the Greentech relationship, you touched on it earlier. I was wondering if you could share how much volume you think you pulled through Greentech in Q1? And then how much do you expect that to be in 2023 overall? And how is that comparing to your original plan before, especially the inventory build and the module price declines that we've seen for a lot of other players? Thank you.

Yes, we actually haven't publicly commented in our volume plans for 2023 with Greentech. It's a significant undertaking for both companies, and we're putting a really strong effort into this. But we think it's going to be a really -- we're really optimistic about this channel. We saw sort of the early benefit of the high ASPs feedback from customers has been decidedly positive. But yes, we're not publicly disclosing volume plans yet for 2023.

Okay. I can appreciate that. That said, I was wondering if you could talk about whether or not you're meeting the goals that you had set with this relationship last year, you had said some -- I'm guessing some volume targets without sharing the targets, are you meeting those goals or do you feel like you're maybe falling short of that? And if so, are you finding other outlets for that Maxeon panel Maxeon branded panel. For example, are you able to sell to - back into the SunPower channel, some of those Maxeon panels or are you still - are you definitely keeping all the Greentech modules in that through that distribution channel? Thanks.

Yes, we're happy with the margin contribution that we've gotten so far. So I would say, we're largely on track.

I just want to underline maybe one thing that Bill has said in his prepared remarks. So that U.S. residential channel has actually increased our global blended DG ASPs by almost 3% in the first quarter. So that's pretty substantial and has made a substantial positive dents in the ASPs that we discussed earlier so, just as a data point to show where we are with that and the positive contribution that we're getting from.

Great, okay. Thanks and great job on the execution and I will pass it on. Thanks.

Thank you, Phil.

[Operator Instructions] Our next question comes from Graham Price of Raymond James. You may move forward to your question.

Hi, thanks for taking the question. First one I had, just following up on the DOE [LPL] application question. Now that you're in the due diligence phase, wondering, does this change the nature of your discussions with potential customers? Do you have a little more certainty in those talks?

Yes, well, as we mentioned in our prepared remarks, we're now negotiating offtake agreements with customers extending all the way through 2020. So it's very clear that customer interest is very high in this project.

I think Bill just said 2020, I'm sure you meant 2030.

Oh sorry, 2030, sorry.

Got it, got it. Perfect. And then just looking at 2Q, I was wondering how we should think about the ratio between IBC and performance shipments and maybe any color on the breakout by region as well?

Well, I would say, Graham on the IBC side, we would still expect for the year to sell about 1 gigawatt of IBC. So we started with about 0.2 gigawatts, about 200 megawatts that seasonality. We don't give a quarterly breakout, but you would expect that it's going to go up in order to reach that 1 gigawatt, which is our total capacity. On the performance line, that also continued ramping for the U.S. utility scale. We would also expect further growth as we go through the year with the performance line products that come from our HSPV joint venture and so mostly into Europe and Australia, among some other places. So there, I would also expect some growth on the performance line, probably mostly coming from the U.S. in the utility scale space and then also some growth in Europe and Australia.

Okay. Great. Great. Thank you for that color. I'll jump back in the queue.

Thank you.

[Operator Instructions] Our next question comes from Andrew Percoco of Morgan Stanley. You may proceed with your question.

Great. Thanks so much for taking my question. On the prepared remarks, you mentioned some cooling in the U.S. DG market. I'm just curious if you're seeing any differences in the demand trends between the SunPower channel and the channel you have set up with Green Tech?

Yes. Well, we don't manage this SunPower channel. So I don't know that we could comment on how they're doing there. The Green Tech channel is a different channel. It's a new channel. And SunPower, of course, has many years of experience selling through their channel. We're still ramping up our channel and rolling out our model from other regions where we've been successful, that requires bringing on new sales force, training them, training the dealers. So we're early on in the process, and I don't think it's like we're in a situation where you could kind of compare the sales success of those two channels.

Got it. Understood. And maybe just one follow-up on that. How would you expect the mix of your U.S. DG business to evolve between Green Tech and SunPower over time?

Well, as we said in the prepared remarks, we're trying to do this as very much incremental to the SunPower demand. So SunPower should grow. And I think Green Tech will grow incremental to that.

Got it. Thank you.

[Operator Instructions] Our next question comes from Donovan Schafer of Northland Capital Markets. You may proceed with your question.

Hi, guys. Thanks for taking the questions. I wanted to see if we could get an update on the residential battery. I might be misremembering some of this. But I believe you initially rolled it out in Australia maybe a quarter ago, and it sounds like your -- the launch is kind of underway in Europe. So just if there have been any incremental data points kind of from that process, whether it's -- you've actually been able to push it out to customers, so you can start to talk about things like attachment rates or if it's been more distributor feedback or whatnot. But just any kind of updates there for the residential battery would be great.

Yes. Thanks. I think you're referring to our SunPower Reserve product, which in fact, we did roll out in Australia. And so far so good. We've gotten some initial feedback from installations, and it's been very strong. And we're in the late stages of preparing to roll this out in Europe in several of our key countries in Europe.

In Europe, when would you expect like the -- what quarter would there be -- I know the de minimis in terms of amount, but just kind of to keep track of things, when would that kind of hit the shelves and start to translate into revenue just as a framework like a reference point?

Yes. I think we said that we expect our beyond the panel revenues to be meaningful by the end of this year.

Okay. Okay. And then one other question is probably -- I'd like to ask some oddball questions just because sometimes it's stuff that people might miss and who knows someday could be -- maybe it becomes material. So one thing I've seen just from like a news alert is your cells, the IBC cells kind of get picked up in random products because you've got, I think, some unique properties with IBC around durability, some around kind of flexibility. So I've seen someone a smaller company using your cells for the roofs of golf carts. And then most recently, there was some company making -- they're like [Magna] tiles, these costlier tiles almost like it looked like they were using I believe it was Maxeon IBC cells. So -- and then people talk more about putting solar on automobiles and maybe it does or doesn't make sense. You can kind of argue either way, but somebody who's going to pay $100,000 for an EV Jaguar or something, they kind of like to trick it out with all that stuff. So for these uses, it's kind of niche uses at IBC panels, is that something that could be interesting if you were able to integrate it and become a big supplier for cars or something? Or -- and then can you get just a really great ASP because it becomes more of this consumer product?

Yes. Good question. So yes, in fact, we are in this market today. We're making a significant number of cell sales, as we reported in the prepared remarks. I'll let Peter Aschenbrenner say a little more about the long-term market prospects.

Hi Donovan. Yes, so as you mentioned, our sales are kind of uniquely appropriate to some of these all specialty applications because of the very high efficiencies, the fact that they look really good, close on a consumer product, say and of the car. They're quite susceptible they can send quite easily and for - giving to track that a little bit, some of these kind of compound curves. So all these applications are ones that we're engaged with, as Bill mentioned, -- we had a strong quarter in Q1 with sales of those cells. We're typically constrained in terms of the analysis we have available. But over time, we plan to grow that business in a more meaningful way because there are a lot of these specialty applications on the floor now. And as we said in the prepared remarks, the gross margins on those sales are really good.

Okay. Very interesting. Thanks guys. I'll take the rest of my questions offline.

Thanks, Don.

[Operator Instructions] There appears to be no further questions. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.