Good afternoon and welcome to SunPower Corporation's Fourth Quarter 2013 Results Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time. I would like to turn the call over to Mr. Bob Okunski, Senior Director of Investor Relations at SunPower Corporation. Sir, you may begin.

Thank you, Sheila. I would like to welcome everyone to our fourth quarter 2013 earnings conference call. On the call today, we will start off with an operational review from Tom Werner, our CEO; followed by Chuck Boynton, our CFO, who will review our fourth quarter 2013 financial results. Tom will then discuss 2014 guidance before opening up the call to questions. As a reminder, a replay of this call will be available later today on the Investor Relations page of our website. During today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in our 2012 10-K, our quarterly reports on Form 10-Q, as well as in today's press release. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. To enhance this call, we have also posted a set of PowerPoint slides, which we will reference during the call, on the Events and Presentations page of our Investor Relations website. In the same location, we have posted a supplemental data sheet detailing some of our historical metrics. On Slide 2 of our PowerPoint presentation, you will find additional information concerning the risk and uncertainties associated with our forward-looking statements contained in this presentation. With that, I'd like to turn the call over to Tom Werner, CEO of SunPower, who will begin on Slide 4. Tom?

Thanks, Bob, and thank you for joining us today. SunPower delivered strong Q4 results, exceeding our financial forecast every quarter last year. Our performance reflects robust worldwide demand for our high-performance distributed generation solutions and solid execution in our power plant construction and upstream manufacturing. On the Power Plant side of the business, construction on our Solar Star project was ahead of plan and CVSR reached full commercial operation during the quarter. We also made good progress expanding our international power plant footprint announcing new project wins in South Africa and Japan, while securing financing from OPEC for our Chilean 70 megawatt Merchant Power Project where construction is already underway. Our joint project development cooperation with Total is already delivering significant international power plant project as we continue to strengthen our partnership efforts in a number of emerging markets. In our Distributed Generation Business demand in U.S residential lease remained strong and we recently closed the $220 million financing fund with Bank of America. Revenue and margins in our EMEA business continued to improve. In Japan, we recorded another strong quarter with record shipments. Our operations team executed well against our cell and panel cost reduction roadmap during the quarter, enabling us to drive greater than 20% panel cost reduction for the second straight year. Equally important, we reduced OSS balance of system cost by 24% in 2013. As we have said in the past we believe that SunPower’s ability to directly attack cost across the entire value chain represents an important source of long-term competitive advantage. With respect to capacity expansion, fab 4 remains on track with initial production expected in less than 12 months at a cost per watt that is 35% lower than our fab 2. Additionally, we will leverage our strong research and development efforts and…

Thanks, Tom. Good afternoon. Please turn to Slide 7. We posted another strong quarter of results in Q4 as we executed well across all geographies and end segments. For the quarter revenue, margin and EPS all came in better than our plan. Non-GAAP gross margin rose 170 basis points year-over-year with net income increasing significantly compared to last year. We also delivered 270 million in free cash flow for the year beating our forecast by 70 million. Overall, execution on our power plant projects, further expansion of our global distributed generation market footprint, stable pricing and lower annual manufacturing costs enabled us to exceed our forecast. Moving on to the P&L. Our non-GAAP revenue for Q4 with 758 million compared with 785 million last year and better than our forecast. As a reminder, our Q4 2004 results included a one-time benefit of development revenue for Solar Star. Cell production in Q4 was 317 megawatts, a company record, as our fabs were fully utilized during the quarter. Megawatts recognized for the quarter totaled 334 and megawatts deployed were 336. Our non-GAAP gross margin for the quarter was 20.4% and better than plan. Now let's discuss our regional performance in more detail. In Q4 non-GAAP North America revenue was 503 million and accounted for 66% of total revenue with a non-GAAP gross margin of 22.5%. We recognized 190 megawatts in the quarter with approximately 70% coming from our power plant business. We benefited from strong execution at our Solar Star project for MidAmerican and with CVSR now in full operation. The fourth quarter includes revenue from CVSR and Solar Star of 347 million on a non-GAAP basis and 225 million on a GAAP basis. The balance of our North American business performed well with strong commercial bookings and public sector revenue. Also,…

Thanks Chuck. I would now like to discuss our guidance for the first quarter as well as our improved 2014 earnings outlooks. Please turn to Slide 11, for Q1, 2014 we expect to recognize revenue on approximately 320 to 350 megawatts with full-year megawatt recognized in the range of 1.15 to 1.25 gigawatts. On a non-GAAP basis we expect Q1 revenue of $650 million to $700 million with full-year revenue to be between $2.4 billion and $2.6 billion. For Q1 we see non-GAAP EPS in the range of $0.25 to $0.40, and for 2014 we're raising our earnings guidance range from at least $1 to $1.3. On a GAAP basis we expect Q1 revenue of $575 million to $625 million with annual revenue of $2.45 billion to $2.65 billion. In relation to earnings per share we see Q1, 2014 in the range of $0.10 to $0.25 and 2014 earnings of $0.65 to $0.95 per share. Capital expenditures in the first quarter are expected to be in the range of $25 million to $30 million as we start to ramp construction at fab 4. We will now open the call to questions. In addition to Chuck, we also have Howard Wenger, Regions President and Bob Okunski our Senior Director of Investor Relations. First question please.

(Operator Instructions) Our first question comes from Ben Kallo. Please announce your company name. Benjamin Kallo - Robert W. Baird & Co.: Calling from Robert W. Baird. Thanks for taking my question. On the guidance Tom, can you just walk us through, it looks really front end loaded, so is there some -- you don’t have visibility into the back half or is this a starting point; how are you looking at it?

Hi, thanks for the question Ben. The way we’re looking at it is, it is somewhat front end loaded and that’s mostly architected because of the Quinto project that we will build this year we’ll actually plan on selling that project in 2015 because the economics will be superior by building it on our balance sheet. So it's a big part of the driver of the profile of the year. Secondly Solar Star get start out with a little more [rev rack] [ph] in earnings in Q1 than the rest of the year, but that’s primarily the profile to give you a sense of how things are going to progress. Benjamin Kallo - Robert W. Baird & Co.: Okay, and so just to make that clear, the project you’re building is going to be earnings -- it's going to generate earnings in ’15, but you’re allocating modules this year to it?

Exactly and resources, yes but exactly. Benjamin Kallo - Robert W. Baird & Co.: Okay. And can you just size that out to us if possible at all and then any of these other entities that you guys talk about maybe this is for Chuck, does that impact earnings this year, whether it's talking about yield co.’s are you factoring any of that in or even the leasing allocation there, and I’ll hop back in queue and thanks guys.

Yes, it's a good question. Quinto is a 135 megawatt project and Howard maybe you can circle back. You can give a sense of how much of that will be built. But it's hard to give you some sense of scale, 135 megawatts. There will be a little bit of looking forward to structures that we might utilize, but that’s not going to be a big driver for the year in terms of keeping commercial assets on our book or residential assets on our books.

So, Ben the yield co. decision would be a few quarters out and would likely start with Quinto with is later half of ’15. Benjamin Kallo - Robert W. Baird & Co.: Great. Thanks guys.

In terms of construction at Quinto, we’re looking -- this is Howard, we’re looking at you can think a third 2014, two thirds 2015.

The next question comes from Vishal Shah. Please announce your company name.

Hi, this is Jermaine Brown on the line for Vishal from Deutsche Bank. And I was just hoping if you could touch on the Japanese market, specifically from Q2 to the end to the end of the year how, what's the outlook there and how could that impact profitability?

This is Howard. 2014 is really strong demand year for the company. We have two thirds of the company megawatts are in backlog in terms of bookings. So we enter the year extremely strong, very balanced portfolio across the world. Half of our revenue we’re looking international, half domestic and again half DG and half utility scale.

And Jermaine, we jump in. So strong Q1, we started shipping in earnest to some of our commercial and power plant projects, and that’s new for us, so we have a new mix and over the course of the next few quarters that mix will still stay similar but we expect on the volume in Japan to stay the same, but maybe towards the end of the year to see margins increasing some.

Okay, that’s helpful. And then maybe just piggybacking off that, the upper end of your earnings guidance, would that be coming more from shipments or margin increases this year?

So, it's internally driven from our margin and margin could be pricing mix or better cost.

Okay, great. Thanks guys.

The next question is from Robert Stone. Please announce your company name.

It's Cowen and Company. Hi, guys, thanks for taking my question. So, Tom in your prepared remarks you talked about having new capacity online in less than a year. I think that’s faster than originally expected. Can you add any detail to that and any thinking about as you know what you might add or what comes behind that?

Hey, Rob thanks for the question. Yes, I can. It's a little bit faster than we were thinking and of course the operating team knows that sooner is better. So they are working aggressively to bring that fab online. To give you a little bit of color, the first of the three line pairs, that first line pair will be the existing technology, the second two line pairs will be advancements on our existing technology platform which will allow us to increase the efficiency of the product and take steps out so that we can get cost down. To think of the fab, the way we think of it is, the first two lines being one build and the second set or four lines being a new platform. And so materially we’ll get out, put out the first two lines next year and start seeing the new technology towards the end of ’15. In terms of another fab, yes our team is looking at where we would take that new technology from those last two line pairs and build that in much larger scale at a fifth fab and on, and so yes we’re doing the work to decide where we would do the fifth FAB and it would be a larger fab on that new technology.

Great. My follow-up question is on Oasis cost reduction. I think you said 24% if I recall correctly. How did you do that and do you have a target for further reduction this year.

Howard, do you want to jump in after I go, let me know. So yes, I can say 24% and it's a result of the work that we did at CVSR. We perfected a power block which is the size of 1.5 megawatts and we pre-engineered the 1.5 megawatts so that we can replicate that on the sites. That gives us purchasing scale by virtue of the replication from block to block. It also gives us efficiency of install because it's partially pre-fab. So we take a lot of the difficult tasks out of the field. Secondly, it is pre-engineered, so you're not reinventing things each block that you implement. Thirdly, we were able to engineer those blocks so that we make more efficient use of the commodities that are part of balance the system. And you can think of optimizing the mounting structures. And when you build a very large scaled plant, you can optimize not only the block but also where the blocks are positioned. It allows you to optimize the amount of steel you use. So these are the primary drivers. As we look forward, there are different revisions of Oasis that we've implemented. So any new project would benefit from capitalizing on the last revision that had all of the improvement. So we would continue to see better BOS performance by virtue of the fact that we're using the best, latest generation of Oasis; so more to come.

Am I right that that 50% increment on the block side, didn't it used to be a 1 megawatt block?

The short answer is yes. We didn't build a lot that was one. We went to 1.5 pretty quickly, but you have a great memory.

Great, thanks.

The next question comes from Patrick Jobin. Please announce your company name. Brandon Heiken - Crédit Suisse AG: Hello. It's Brandon Heiken on behalf of Patrick Jobin from Crédit Suisse. Thanks for taking the question guys. I just wanted to clarify, I think you mentioned that the mix of the residential lease should increase going forward. Was it constrained by the tax equity in the fourth quarter there and what do you see for the new loan offering this year?

Brandon, this is Tom. I'll make some overall comments and hand it to Howard. We started Q4 or just prior to Q4, yes, it's been constrained with the amount of tax equity lease capacity that we had. So Howard's team did a very nice job of responding to customer demand and our lease capacity and he can talk about how he sees things going forward plus the loan product.

Sure. So we had a really strong quarter in Q4 in residential. Demand overall for residential U.S. is very strong. In the middle of 2013 we were finance constrained to an extent, so we were able to flex our channel and move customers to cash and we had record sales and residential for cash customers in Q4, up 30% quarter-on-quarter. So, per our press release we did a deal with Bank of America for $220 million of financing, so we're really not facing a constrain in lease capacity going forward and we expect a really strong year for lease growing that disproportionally, probably on the order of very substantial growth year-on-year, at least 50% or higher growth in lease for 2014. As far as – we have a suite of financial products for our customers and we don't really lead with lease, we lead with our products because we think we're differentiated on the product side and that's what customers really value. And then we consult with them on how to pay for it. Many of our customers want to pay cash, some want to pay with a loan and take advantage of the tax rate themselves and we have a number of facilities for customers to get loans directly and we'll continue to offer those to our customers in '14. Brandon Heiken - Crédit Suisse AG: Thanks. And just to clarify, it looks like you mentioned the margins were up in EMEA in part because of the Israel project and then down in Japan because of a mix shift to commercial sales. What would margins have been all else equal in those two regions if you were to adjust for that project in Israel and for say a neutral mix or constant mix in Japan?

Yes, I'll say a few words and Chuck if you want to add. So, in Europe we certainly don't want to convey that the positive margins were exclusively the project because they weren't. The core business has improved significantly. Over the course of the year we've sized our organization to the size of the business and business has improved by targeting the segments that better fit our product. And so our core business, the residential – the distributed generation business has improved rather significantly. Therefore, you should expect to see good results out of the region going forward as well. But we did in fact have a project that improved things further.

To answer your first question on Japan, margins would have been consistent with historical levels on the residential side and it's a few points lower, in EMEA also a few points. I do want to point out though we did improve year-over-year our EMEA gross margins by $75 million, so it was a pretty radical turnaround. Brandon Heiken - Crédit Suisse AG: Okay. Thank you, guys.

Thanks.

The next question comes from Tom Daniels. Please announce your company name.

Hi. This is Tom Daniels on for Brian Lee from Goldman Sachs. Thanks for taking my question. I really just had two. To start with, on the NCI guidance for 1Q, I think it's down about 33% and it sounded like you guys are tax equity constrained in 4Q, so just wondering is that just lower megawatts because it sounds like a bigger mix on the tax equity, residential, lease side and then how should we think about NCI going forward in 2014?

Sure. This is Chuck. On the NCI side, Q3 was a little higher than normal because a lot of – how do I get the benefit about six months or after interconnection and we had a bit of a backlog that came through in Q3. Q4 and Q1 are probably more of a normal level. The easy way to think about NCI is we get roughly two-thirds of the tax benefit year one, roughly one-third in year six. And so if you just do the math on the value of the system, we get roughly two-thirds of that benefit in year one. And so we would expect NCI to grow in '14 and '15.

Okay. Thanks, Chuck. Do you think it will be up around what your residential expectations are, which I think you said was around 50%? Is that a decent benchmark for year-over-year growth?

No, because it emitted a lag affect [ph] of about six months, so given that we were constrained in the back half of the year in tax equity, it will be up but you'll see a bigger increase in '15 than you will in '14.

Okay, got it. Great, thanks. And then just one other question. A lot of talk recently about the Middle East and I know you guys have done a lot of work over there with Total, but specifically around the need for potential local content requirements, is there any way you guys could comment on that? And how do you guys think about increasing your production capacity, Philippines and over Asia, would the Middle East be an option for you? Do you think you need to have local content there to compete in that market? Thanks.

Yes. The Middle East is still evolving in terms of what the business model will be. It's certainly common to a lot of the conversations is local content and then the question becomes what is the most effective local content. And I think the objective is primarily on local employment. And it's not clear what drives the most local employment. For example, in some of the upstream facilities often import a lot of the people that work in those facilities, so it doesn't always accomplish the goal. So the conversations are rather refined. As you know, they've been ongoing for some period of time. Those conversations really only exist where there is likely or potentially a longer term ongoing sizable market. And you're right, we leveraged Total. We've been doing business and a meaningful business in the region for 75 years or more. So it's a huge advantage for us. And it allows us to be part of the conversation to shape where this goes. There are some near-term tenders in markets outside of Saudi Arabia that will be interesting over the next year and probably in the next year or so, we'll start to see some activity in Saudi Arabia as well.

Great. Thanks, Tom. I will jump back in queue.

Thank you.

The next question comes from Krish Sankar. Please announce your company name.

Bank of America Merrill Lynch and this is Andrew Hughes on for Krish. Congrats guys on your quarter.

Thank you.

Thank you.

One question on the yield co. prospects, it sounds a little -- it sounds like their might be little more excitement around yield co. is a potential landing place for a project like Quinto rather than doing one on your own, but I’m wondering if you can talk a little bit about the status of the pipeline in terms of what’s contracted versus what’s not contracted and how that might play into what you’re thinking here in terms of your own yield co. plans?

So I will go first and then Howard can talk about the pipeline. We are in really good spot because we generate and develop projects and with proliferation of yield co.’s and the discussion on these new financing vehicle, its making us real excited about the value creation of lowering the cost of capital. And Quinto and Henrietta are two very large Class A projects that are desirable for yield co.’s and other buyers so. If we decided to launch when those would be great assets and I will let Howard comment on our pipeline.

Thanks, Chuck. This is Howard. We have about six gigawatt global pipeline for projects. Lot of that with Total or co-developing projects internationally specifically. We’ve announced some wins. So far the deals that we’ve talked about add up to about 450 megawatts contracted that we’ve actually announced, that includes Henrietta and Quinto in the U.S. Its 265 megawatts and then we announced the project in Chile 70 megawatts, another project in South Africa 85 megawatts as examples. So we expect 25% of the pipeline to convert to real contract, so that’s well over a gigawatt and those projects are candidates for yield co and we are talking to a number of parties that have yield co.’s or thinking of yield co.’s together, we’re talking internally about our own thoughts around yield co. and the main drivers Chuck mentioned is you need projects to make these yield co.’s work. So we’re really in good shape to feed the yield co. ecosystem that’s developing.

Okay. And then just one quick one on leasing. I am wondering if you guys can talk about what the lease revenue was this quarter and talk also a little bit about how the cash sales lease or sale type lease versus operating lease breaks out either on a revenue or megawatt basis?

Lease revenue we saw about $10 million increase to just over $40 million of lease revenue and you’ll note in our 10K when it gets filed in a few days. We have separately disclosed what we call our ESP revenue which is that shows power plant systems as well as lease and other revenues. So we track that nicely and again as we disclosed last quarter, our lease business was profitable and we grew profits again this quarter. So both a cash flow positive and profitable.

And just in terms of how the cash sale or sales type leases versus operating lease breaks out, you guys talk about that?

We do. Our operating leases were about 70% and that was consistent quarter-over-quarter.

Thanks guys. I’ll jump back in the queue.

Thanks.

The next question comes from Colin Rusch. Please announce your company name.

Northland Capital Markets. Can you talk a little bit about the trends on leasing, the lease pricing right now as well as when we can expect something in either Australia of any real material nature or in Europe on a lease product?

Hey, Colin this is Howard. Lease pricing is going into 2014 I’d say is fairly stable. We may be selective in different markets in the U.S. in terms of tuning the leases to get volume up, the lease pricing. As far as Australia and Europe we’ve talked about that before. We're -- we have launched the pilot in France already and that’s ongoing where we’ve actually signed up over 100 residents in France to participate in the pilot. And then we are still working on Australia and expect to give more news in the quarter or second quarter on the progress there.

I would just jump in and add, this is Tom, that in meaningful markets we're able to price favorably to conventional electricity so that market for us we're at the right place and it's creating a lot of demand. Second thing I want to comment on is our product, works great in lease because we're really happy to price on an energy basis because like we've said for years, that's what our customers are buying. In the case of lease, that's exactly what they're buying. In the residual value of our products, it's four outside agencies have verified in the last year will be higher than alternative products. So we have two product advantages in lease as well. Thank you for the question.

Okay. And just a quick follow-up. On the C7 product, can you talk a little bit about the bidding activity that you have right now using that product and as well as your expectation for the relative value proposition and your margin potential with that product. It looks to me like there's a potential significant cost advantage on the energy basis with – once it's fully rolled out, if you could just give us a sense of what your expectation is on activity around that product and what we can expect from a margin profile?

Sure. I'll take the question. So it's nice to have the data center application particularly well suited because it's just at the beginning and it's sort of a nascent market, so there's a lot more activity that could be had there. In the C7, essentially we'll call it little concentration PV project product because the 7 will improve – the concentration will improve as we introduce our higher efficiency cells. It has the potential to be very cost effective and it has the virtue of utilizing our fab output very efficiently. And so it's a way of expanding without adding fabs. So yes, it's economically competitive and b, it's faster to scale. The last comment I would make is it is what we're focused on in China and China has huge upside potential. So as we build out our four-way joint venture in China and we build some projects later this year, there's a really significant upside as we look to the out years.

Okay, great. Thanks a lot.

The next question comes from Paul Coster. Please announce your company name.

JPMorgan. Thanks very much for taking my question. Just want to get on the guidance for the full year for a moment, if I may. In sounds like the Quinto project, about third of the revenue shifts south – the whole project shifts into '15, I'm guessing it's about 150 million. Am I approximately correct? And then the sort of broader question is, it's a front-end loaded year. You're talking about strength in – things seems to be getting stronger in Japan and you now no longer capital constrained with the North American DG business. What's preventing you from running up those numbers through the reminder of the year? Is it capacity constrained?

Chuck will take the first part of the question and then I'll take the second.

Yes, about a third of the overall project revenue and profits for Quinto under the old model would have been recognized in 2014. And so normally you've seen a lot of development revenue and profits, which are significant. We're planning on those on all the profits; the EPC, development, et cetera, all being reported likely in '15 although it could be in a yield co., as we discussed earlier. So you're right. About a third of the progress may have been completed under the old model. And then Tom can take the…

Yes, so the second part of your question is yes, there is a finite capacity for the year. Now, we shouldn't go overboard with the strength in the first quarter, right. It is front-end loaded but it's not like we're going to have a difficult Q2 through Q4. As you alluded to, the DG business is a strong business and there still is mix improvement that can happen for the rest of the year, so where you choose to do business in DG. So there is strength that we can capitalize in the next three quarters. It's just the profile that we see today slightly favors Q1 or is biased towards Q1. We're going to take one more question and then wrap it up.

Actually, Tom, can I just chime in [ph] quickly. What is your estimate of the U.S. retained value per watt on the distributed lease projects now? And you said something about 2015 having a good line of sight into growth in 2015. Can you just elaborate on that from your prepared remarks?

Sure. You can't ask any more questions. Just kidding. So Chuck will take the first part and I'll take the second part and then we'll go to the last question. So we indicated almost a year ago, I guess the year gone May, our retained value for our typical California lease is about $1.75. Over the last year we've seen a 20% cost reduction in our PV, so we're excited about overall cost reduction and the components in our residential lease. So you can infer by that there was a growth in the retained value. We've also seen the cost of financing just going down. For instance, the BofA deal that we just consummated has a lower cost to tax equity than our first deal did. So, that competition is working, it's driving down the overall costs. We are not providing specific numbers on retained value. We've tried to give you guys the input so you could model your expectations given the assumptions of residual value and cost to capital, et cetera.

In 2015, the drivers are the movement of Quinto and then there might be some upside from the second project Henrietta. And then we have the new fab coming on line giving us more output. And then out of the existing fabs, we'll have improvement throughout the year that we'll capitalize on in 2015, so we'll get more output out of the existing fabs. There are three big projects that we'll start to build this year that we'll capitalize on in '15 the build of our new fab and more output out of the existing fabs.

Thank you.

Thanks, Paul.

The last question is from Pavel Molchanov. Please announce your company name.

Raymond James. For your full year guidance in 2014, what percentage is attributable to projects that are sponsored or backed in anyway by Total?

Hi, Pavel. It's been a while. It's nice to hear from you. It would be a small percentage of revenue this year. And when you backed, it would be our co-development model where they've invested some equity in it and that would almost (indiscernible) and to be more precise probably around 5.

Okay, that's very clear. Appreciate it.

All right, thank you very much. Thank you all very much for your time and we look forward to talking to you on our next earnings call. Thank you.