Good afternoon and welcome to SunPower Corporation's Second Quarter 2016 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, SunPower Corporation. Thank you, sir. You may now begin.

Thank you, Martha. I'd like to welcome everyone to our second quarter 2016 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 second quarter 2016 financial results. Tom will then discuss our updated outlook for Q3 and 2016. 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 the Safe Harbor slide of today's presentation, today's press release, our 2015 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. To enhance this call, we have also posted a set of PowerPoint slides, which we will reference during the call on the Events & Presentations page of our Investor Relations website. In the same location, we have posted a supplemental datasheet detailing some of our historical metrics as well. With that, I'd like to turn the call over to Tom Werner, CEO of SunPower, who will begin on slide three. Tom? Tom H. Werner - Chairman, President & Chief Executive Officer: Thanks, Bob, and thank you for joining us today. In my remarks today, I will review SunPower's solid second quarter results and comment on recent changes in the solar power plant business environment. I will explain the expected impact of these changes on our near-term financial projections and detail some proactive steps we are taking to position SunPower for a long-term success. We executed well in the second quarter across all geographies and segments. In power plants, we achieved a number of significant…

Thanks, Tom, and good afternoon. I'll first review our second results, then provide additional color on the impact and actions we are taking in our power plant segment and upstream operations, before turning the call back to Tom for our updated 2016 guidance. Please turn slide 13. Q2 was a solid quarter for the company as we met or exceeded our forecast, executed on our project development schedules, and added to our backlog. We generated approximately $30 million in EBITDA for the quarter, while increasing our megawatt deployments by more than 20% sequentially. In addition, we successfully monetized a large commercial project from the Holdco, while building additional projects for the second half of the year. Specifically on the P&L, our non-GAAP revenue came in ahead of plan, as we had better than forecasted performance in both our residential and commercial segments. The improvement in DG was offset by lower sequential revenue in power plants, as we've recognized revenue from our Hooper Project in Q1. As you recall, power plant revenue is very dependent on project sale timing. In our commercial segment, non-GAAP revenue more than doubled as we benefited from strong execution as well as the early completion of certain projects. As Tom mentioned, we continue to see strong customer interest in our Helix product. Commercial backlog for the second half of the year is very strong, and we should see significant top line increases as Q3 megawatts recognized is forecasted to increase more than 50% sequentially. Our global residential business also performed well as megawatts recognized increased more than 20% year-over-year. Our U.S. residential business was again the leader in the segment as we met or exceeded our forecasts. Our non-GAAP gross margin for the quarter was 13.1% and in line with our plan. Power plant margins were…

At this time, we're now ready to begin the question-and-answer session. Our first question is coming from the line of Mr. Ben Kallo [Robert W. Baird]. Please pronounce your company name. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc. (Broker): Hi, guys. So, I have a quick housekeeping and I have about three questions. First of all, the guidance for next year, it's just – like, GAAP EBITDA, could you just confirm that and let us know what the difference is? Tom H. Werner - Chairman, President & Chief Executive Officer: Ben, it's our non-GAAP EBITDA, but would expect to align with the new revenue recognition standard that have been pronounced for 2017 early adoption. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc. (Broker): Okay. Number two. It seems like a whole lot of moving parts, just blind site me, maybe not everyone, but definitely me, when you guys have publicly spoken over the past near couple of weeks, we didn't hear any kind of hint of this, we've heard about some in the marketplace, but nothing of this kind of size. Realignment. And so, just, can you just tell us, when this all came to light here? Tom H. Werner - Chairman, President & Chief Executive Officer: Yeah. This is Tom, and I'll take that question. So, in our prepared remarks, we talked about the factors that influence the power plant business and let me give you a little bit more color on those factors. So, we all know, that in December, the ITC was extended – I think what we talked about a little bit less was depreciation was part of that. Chuck mentioned in his remarks that (36:05) on one of our projects, the counterparty stopped negotiating with us to close the PPA,…

Thank you. Our next question comes from Brian Lee. Please state your company name. Brian Lee - Goldman Sachs & Co.: Hey, guys. Goldman Sachs. Thanks for taking the questions. I guess the first one I had, I'm just curious if you can help reconcile Tom. The comments around the YieldCo environment meeting for that to become a better environment for that to be the type of monetization mechanism that you were previously planning, it was going to be when it works effectively. It seems like we've seen some equity capital raise here recently, and then yield-oriented investments in general seem to have rallied a bit this year. Obviously, started off in a tough spot and a very early part of the year, but seems to have rallied quite a bit, so I was just trying to reconcile what you guys are looking for specifically in that environment versus maybe some of the better data points that seem to be out there? Tom H. Werner - Chairman, President & Chief Executive Officer: Sure, I'll comment and give it to Chuck. Let me just say that that was another factor, the first half trading of YieldCos is in the books, and it's clear what they traded like and that was certainly below our plan, that's one of the things we would have expected to rebound faster, they didn't. We believe that 8point3 is a differentiated YieldCo for the points that we've made previously with two strong general partners, they're best developers in the world, it's all solar, it's investment grade off-take, it's long-term PPAs. And that in fact is how 8point3 has performed. And it has started to return with the rest of the dividend yielding space. So, those are the comments that I'd make quickly, I'll turn it to Chuck, and then I'll say a few more words after Chuck.

Yeah. Thanks, Brian, and we are pleased with the recent performance of 8point3. We've closed the next drop down, our Macy's Maryland project. So, we've seen continual drop downs to 8point3. And I think you were seeing really some strong signs in the overall YieldCo market in general. We do plan to sell Henrietta to 8point3. And so – yeah, I think – generally we're bullish. The revised ROFO schedules that we've done for 8point3 I think are a real strength of 8point3 and will help 8point3. It does have a small negative impact on our P&L this year and that's a benefit that we should pick up in 2017 and beyond. Tom H. Werner - Chairman, President & Chief Executive Officer: And I didn't finish the answer to the Ben's question about the status of the market, the power plant market. I'd say that the power plant market is unlikely to improve in America in the next few quarters. It will in time. The power plant market will be the biggest part of the solar market over the course of years. The combination of all the factors that I communicated, plus the amount of solar that's been installed in America, as we showed in the GTM chart in our prepared remarks mean that certainly 2017 will be a difficult year in power plants; and again, we built that into our outlook for 2017. Brian, if you want to ask another question, go ahead. Brian Lee - Goldman Sachs & Co.: Yeah. No, that's helpful color and maybe a segue into my second question and then I'll pass it on. Just you guys mentioned, the PPA pricing environment, that being also challenging and you're making the comment now that the power plant market in the U.S. is going to be…

Thank you. The next question is from Krish Sankar. Please provide your company name.

Yeah. Hi, it's Bank of America Merrill Lynch. I have two quick questions, one, Tom, not to beat up on the power plant business. Some of these challenges of ITC extension and PPA pricing is not new news, right. So, I'm just kind of trying to figure out the guidance downward shift, is it primarily on the margin, mainly due to a couple of SunPower specific projects, is a way to characterize it, or did PPA actually – pricing get exacerbated on the downside in the last three months? And then I had a follow-up. Tom H. Werner - Chairman, President & Chief Executive Officer: Yeah. I think, to be clear, we have a site, had a buyer, or a PPA off-take. That negotiation failed in December directly correlated with the ITC. We had another buyer that may ultimately be – or another PPA off-take that may ultimately be the one that we sign for the project. And we still have confidence we will, but that has not gone as fast as we planned. That was part of the re-guide and that became clear as we got into the second quarter. We were selling two projects in the second quarter, contracting to sell, two projects in the second quarter that had all of the factors that we mentioned in our narrative affect them. So, to the extent that it's SunPower-specific, it's that we had, did not have enough legacy PPAs to cover the year that we were perfecting new PPAs at the end of last year for this year. Now, almost all of the things that I have mentioned are part of the market. So, as we end the year and go into next year, they are not SunPower-specific. And at least our view is this is the business reality and we're going to address our business strategy to deal with it.

Got it. Got it. That's very helpful. And then, a follow-up question on the EBITDA guidance. If I look from this year into next year, looks like there's going to be more DG in the mix and looks like more and more homeowners prefer the cash sales alone versus PPAs or leases. I'm kind wondering, how will you grow EBITDA next year? What is a key driver for the growth in EBITDA from 2016 to 2017 with that backdrop? Tom H. Werner - Chairman, President & Chief Executive Officer: So the key drivers are the DG business and within the DG business we expect growth, one. Two, we expect better margins as a result of Equinox and Helix being significantly higher part of our mix. Already Equinox is more than half of the residential business that we ship and Helix is almost a 100% of the new business in commercial and the benefits of those will be completely borne out in 2017. And then lastly, the investments we've made in our DG business, where we've actually increased OpEx year-on-year, we expect to get the benefit of that OpEx expenditure, which is a combination of marketing and cost reduction in the soft cost. We expect to accrue some of that benefit in 2017 as well. So, there is real tangible programs that are being shipped to market now that we would expect to monetize in 2017. And then on top of that in the power plant business, we've made the changes, and are not counting on a significant return to profitability of that business in 2017.

Thanks, Tom.

Thank you. The next question comes from Patrick Jobin. Please state your company name.

It's Credit Suisse, and it's Andrew (55:33) on for Patrick. Hi, guys. Thanks for the questions. Just a few on 2017 guidance following on some of Krish' – the EBITDA breakeven in the power plant business for 2017, is that a function of primarily delayed project or profit recognition for projects dropped 8point3, or is there something else going on there? Tom H. Werner - Chairman, President & Chief Executive Officer: I would say that is a factor, there are projects that we're dropping down, and the real estate accounting associated with that, and also is a transition through our P-Series product, which we're ramping. And as we get through the year, we expect the cost to P-Series to drop, and as we get into next year and through next year, the cost to P-Series product will reduce significantly. We're also starting to ship our next-generation Oasis balance to system in the first quarter, and it will have its full impact starting in Q2 and beyond. So, the timing of new products, the mix of projects that we have and 8point3 are the reasons for our comments or our color on power plant.

And then, you gave us a good sense of what drives the lower end of EBITDA – 2017 EBITDA guidance having it come primarily from DG. Just curious at the high-end of guidance is that upside all from power plants, or is that assuming above expectation growth in the DG businesses? Tom H. Werner - Chairman, President & Chief Executive Officer: It's all mostly power plant, the DG business obviously, had some variables in the attach rate of Helix and Equinox, can influence the DG business, but the bigger driver is the performance of power plant into some degree P-Series product, because we capitalized on front contact pricing.

And so with that in mind for the back half of this year and then what's embedded in 2017 guidance. What does that require of 8point3 in terms of buying assets and potential capital raises and I'll leave it there? Thanks. Tom H. Werner - Chairman, President & Chief Executive Officer: We have broken out the exact details for 8point3 in 2017, but it's not the cornerstone to our 2017 plan. The cornerstone to our 2017 plan is execution on distributed generation, and ramping P-Series. So, 8point3 should not have material impact next year.

Thank you. Tom H. Werner - Chairman, President & Chief Executive Officer: Go to the next question please?

Thank you. The next question is from Vishal Shah. Please state your company name.

Yeah, hi. It's Deutsche Bank. Thanks. Tom, I'm just trying to understand the 2016 EBITDA breakdown between DG and power plant, and I appreciate the color on 2017. But can you just talk about what the breakdown would be in 2016? Tom H. Werner - Chairman, President & Chief Executive Officer: Well, I can tell you that on our projections for the year, I would say that on the profile of 2017 is very similar to what's going to happen in 2016 in our projections. But I'll let Chuck give you a little more color.

So, Vishal we expect Q3 to be a very strong EBITDA quarter for power plants, when we monetize Henrietta. And so, we'll have a fairly strong EBITDA year in power plants, driven by Henrietta monetization in Q3. And it will be sort of neutral in Q4, we expect a very, very strong EBITDA to continue in the residential channel with volume growth and share gains. And in commercial, we expect a strong Q3 and Q4 in commercial as we continue to sell projects. But the biggest contributor is residential for the company in 2016.

Okay. And I guess, what you're trying to say is that Q3, a lot of the EBITDA will come from power plant; and for the full-year, would you say that 70% to 75% of the EBITDA will be from the DG business, majority from resi?

Yeah. So, when – our Q3 guidance for EBITDA, the strong guidance for Q3, is primarily driven by Henrietta, and then Q4 is a combination of volume increases and monetization of our Holdco projects, with a strong quarter in residential. And as you all know Q4 is typically a strong quarter for our residential business.

I appreciate that. And this – also what percentage of your capacity in 2016 would be utilized for DG versus power plant business and how do you think about 2017? I mean, I think you mentioned some numbers in, for 2017 I just want to confirm those? Tom H. Werner - Chairman, President & Chief Executive Officer: Yeah, I'll let Chuck to look at it, this is Tom, I'll give you the broad sense. Next year, it will be roughly split equally.

And that's the same this year, so roughly 50% of our volume goes to DG and 50% to power plant.

Okay. So, I'm just trying to reconcile your guidance for next year, but it sounds like the big increase in EBITDA from the DG business, so is it all primarily coming from – I guess is it all coming from margin expansion? And what kind of margins do you see I mean, you already have pretty good margins in the resi business, 20%, so do you think, you can get to 30% margins in the resi business in 2017? Tom H. Werner - Chairman, President & Chief Executive Officer: In certain markets we may, I think overall from a margin profile standpoint, I'd expect residential to be fairly consistent and increasing over time as attach rates grow and as we sell complete solutions. On commercial, we've talked a number of times, we expect margin expansion with our Helix product, and then in the power plant side, I think there's – it's going to be variable depending on the market and the projects.

There is growth in the DG business as well, so it's not all from margin expansion. There is growth. And as I said earlier, the Helix and Equinox product shipping.

Okay. And just one last question. What percentage of your 2017 outlook is currently contracted either into power plant as well as the DG business? Tom H. Werner - Chairman, President & Chief Executive Officer: Well, we – in our prepared remarks, we said approximately 50% of the power plant business has contracted. The residential business is a shorter cycle business, so it's not contracted for next year, but we have run 10 years of run rates to work from, in the commercial business side that we don't have that data, at least, I don't have that data handy, but certainly there is material business contracted for next year.

Thank you.

Thank you. The next question is from Colin Rusch. Please state your company name. Colin Rusch - Oppenheimer & Co., Inc. (Broker): Oppenheimer & Co. Historically, you guys have had a pretty lengthy wait for the high-power modules. Can you talk a little bit about what that looks at this point? You've talked about having contracts in place for large volumes through 12 months to 18 months, where does that stand right now? Tom H. Werner - Chairman, President & Chief Executive Officer: So, there are X-Series panel is what we're building in Fab 4, Fab 4 is almost completely ramped and so our X-Series production is increasing significantly, we'll have over 500 megawatts of X-Series next year. And so, as the next few months go by, we'll able to shift X-Series with lead time similar to the rest of our products. Colin Rusch - Oppenheimer & Co., Inc. (Broker): Okay. And I'll take the rest at offline. And then just with the introduction of your energy storage product, can you give us a sense of ramp on that as well as who your self-suppliers is going to be for those paths? Tom H. Werner - Chairman, President & Chief Executive Officer: So, I caught the second part, I mean need you to repeat first part, the second part of your question is the self-supplier will be both Chinese, Mainland and non-Chinese 4 P-Series depending on the market that we ship too. What was the first part of the question? Colin Rusch - Oppenheimer & Co., Inc. (Broker): You know, I guess there was about revenue ramp, and then I guess my follow-up question there is, are they cylindrical cells or prismatic? And if you could answer that then I'll take the rest at offline. Tom H. Werner - Chairman, President & Chief Executive Officer: For P-Series these are one-sun and front contact cells. Colin Rusch - Oppenheimer & Co., Inc. (Broker): Okay. Great. Thanks a lot guys. Tom H. Werner - Chairman, President & Chief Executive Officer: Okay. Okay, we are going to take one more question and then we're closing the earnings call. Next question please?

Thank you. The next question is from Sophie Karp. Please state your company name.

Guggenheim Securities. Thank you for taking my question. I just wanted to make sure I understood you guys correctly. There was just one project that was essentially slipped into 2017, because of the failed PPA negotiation or was there more than one? Tom H. Werner - Chairman, President & Chief Executive Officer: Hi, there is a site that we were in significant PPA negotiations on in December prior to the ITC extension that that site – that negotiation broke down post-ITC. And again, we have a replacement PPA negotiation that is likely to be completed but not in time for monetization in our P&L this year.

Okay. And do you still plan to deliver I guess Stanford? Tom H. Werner - Chairman, President & Chief Executive Officer: Yes. So, our Stanford project is in the Q4 ROFO, it's a really high-quality project 50 megawatts. And we do plan to monetize that in Q4.

Got it. With the higher – you mentioned higher or rising project finance cost I guess, do you factor higher cost in 2017 versus 2016, as we may be looking at higher rates? Tom H. Werner - Chairman, President & Chief Executive Officer: We assume that the market continues. I think, there is an upside case, where the market returns to where the levels have been but you've heard next year – in the power plant business we've assumed stable financing costs from where we are today. I'll say on the positive side the DG side, we have not seen a reduction or an erosion in value. That business is very, very strong. We've got great financing partners that provide capital, tax equity, cash equity and we've – that business is very robust. We have not seen a degradation in those rates.

Okay. And lastly, do you plan, I guess, to participate in the Mexican tenders later this year, an additional ones? Tom H. Werner - Chairman, President & Chief Executive Officer: Yes. Absolutely.

Thank you. Tom H. Werner - Chairman, President & Chief Executive Officer: All righty. Thank you for joining us in the call, and we look forward to the next earnings call.