SunPower Slides After Disclosing Plans to Restate Earnings

(Bloomberg) -- SunPower Corp. tumbled the most in four months after disclosing plans to restate almost two years of financial results.

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The rooftop solar company expects the revisions related to misclassifying sales commissions and other costs to decrease 2022 and 2023 income from continuing operations by $15 million to $25 million, according to a filing Tuesday.

The shares tumbled as much as 17%, the steepest intraday loss since December, before clawing back most of that decline.

The revision comes at a difficult time for the company. SunPower replaced its top executive this year and defaulted on a credit agreement in late 2023 after an earlier earnings revision that delayed results. SunPower had to raise $200 million to ease a cash crunch and in January announced plans to restructure operations to reduce costs.

“We ultimately expect this to drive more investor concern on potential covenant violations/overall mgmt. credibility given the continued challenges SPWR continues to face,” analysts at Truist Securities Inc. led by Jordan Levy wrote in a research note.

Read More: Solar CEO’s Vision of 3,200% Sector Growth Foiled by High Rates

The rooftop solar industry is struggling as high interest rates make it more expensive for people to install panels. California, the biggest solar market, cut payments to homes and businesses that sell excess solar power back to the grid, a move that left the industry reeling. About two-thirds of household solar installers in California, where SunPower is based, are struggling to generate enough sales to say afloat.

SunPower plans to restate its 2022 annual report and quarterly results through the first nine months of 2023. The misstatements were primarily related to capitalization of deferred costs, classification of sales commissions and general and administrative expenses.

--With assistance from Janet Freund.

(Updates with details from filing in last paragraph.)

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