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SunPower Management Discusses Q2 2012 Results - Earnings Call Transcript

Third, an innovation-driven, cost-reduction roadmap. By reducing the complexity of our high-efficiency panel manufacturing process, we can combine unique process cost reduction with broader industry supply chain advantage, such as lower wafer prices. We are also driving similar efforts on balance of system costs.

Finally, maintaining a strong balance sheet and adequate liquidity. Access to capital has become a clear strategic factor, both for large power plant projects and residential leasing programs. Increasingly, lenders and customers want to ensure that they are dealing with a financially stable counterparty. Our strategy is well suited to the current industry environment, and we believe that the benefits of these strategy will become more evident as PV industry consolidation proceeds.

Now let me provide some specific Q2 operational highlights. Please turn to Slide 5. Q2 was a solid quarter. We reported gross margin and bottom line performance above our forecast and successfully reduced our operating expenses per our plan. We also beat our cost-per-watt reduction targets for the second quarter, while prudently managing our balance sheet and working capital needs.

In the Americas, we continue to benefit from our extremely strong power plant project pipeline, as well as from our leadership position in the residential dealer segment and commercial market. The CVSR project remains on track to meet our September milestone. We have installed more than 30% of our total panels at CVSR through the end of July. This project provides us with important volume, revenue and margin visibility into 2013.

We are also in the process of financing the first 2 Southern California Edison Antelope Valley solar projects totaling 600 megawatts, and we expect to start construction next year. Initial interest in financing this project has been very strong, and we believe we will have financing in place in time to meet this accelerating construction schedule.

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