Complete Solaria, Inc. (NASDAQ:CSLR) Q2 2024 Earnings Conference Call August 14, 2024 5:00 PM ET
Company Participants
T.J. Rodgers – CEO
Brian Wuebbels – COO
Cole Farmer – VP of Sales and Marketing
Conference Call Participants
T.J. Rodgers
Hi, my name is T.J. Rodgers. I’m the CEO of Complete Solaria. And today, we’re going to give you the second quarter report. I’m going to introduce the gentleman on the far side, during my pitch. This is Dan Foley, who’s our new CFO, started today. Excuse me. This is the first quarterly report.
Okay, getting into the quarterly report. This was the document we put out this morning. SunPower seeks court approval for its bankruptcy asset purchase agreement, APA naming Complete Solaria stalking horse. I typically try to write things in English, and simply so people can understand them. But this was rewritten by lawyers a couple of times, so now I’ll translate it into English.
SunPower is going through a Chapter 11 bankruptcy process. They are going to court. This is a U.S. bankruptcy court in Delaware, to seek the court’s approval for an asset purchase agreement. So this is when companies combine in the sense that, one company buys assets of the other company. Naming Complete Solaria is a stalking horse. And what that means is SunPower chose, to have us be the bidder that comes in first.
What we serve is we give a floor bid that they accept, and then that bid is later subject to an auction. So, we have an asset purchase agreement, which defines what we want and what we’re going to pay for it and the rules. And that will be given to the court this week. That typically is not a large hurdle. They wouldn’t present it, and do it unless they wanted to get it done.
Okay, so I already said this. Let me talk about the stalking horse. So the stalking horse bid is a term from the 1800s. It is the stalking horse is something used to hide behind. It’s like a dummy or a blind. And it is the name of the bid that is, allowed to launch the bidding process in a bankruptcy. The stalking horse motion is scheduled for the 29th coming up, and that’s in bankruptcy, U.S. bankruptcy court in Delaware.
And then the process is a well-defined legal process that will culminate, around the end of September 2024. And our bid is $45 million for “certain assets”. So this is not about buying the company, buying everything in it, taking over groups of people. It’s about certain assets that we want to bring, obviously, to Complete Solaria, because SunPower is one of the leaders and has been for years.
In order to stabilize the SunPower business, they have some cash issues they’re working on with some of their vendors. Complete Solaria’s bid will also assume certain liabilities up to another $7.2 million. So you can look at the sum of those numbers is what we will potentially write checks for. We are currently making what I use the word attractive retention offers for SunPower people, who will come across to Complete Solaria in the event that we are chosen as the acquiring candidate, or not acquiring, but the candidate in the Chapter 11 process.
We’ve made retention offers to them. That includes stock options. My philosophy is – we’re in the middle of Silicon Valley right here, and people get stock, and that’s why Silicon Valley is Silicon Valley. We’re doing that with SunPower. The stock they’re getting in their contingent offers is Complete Solaria, Complete Solar stock. It says the offers are contingent on executing the APA. The APA says that we’re the stalking horse and we’re going to merge.
If the APA doesn’t happen, for example, because somebody outbids us in the auction, then obviously those offer letters that come to work at our place will not be valid. Why SunPower? It turns out I have a long history with SunPower. I haven’t been working with them since 2010, so that’s 14 years absent. But I go back a long way with SunPower. This picture is about 2001.
That guy right there is Dick Swanson. He’s the founder of SunPower with one of his panels. This is the roof of Cypress Semiconductor Mile Company that I retired from in 2016. That’s Silicon Valley back there. So, we’re promoting SunPower panels. And this was one of the earliest solar installations in Silicon Valley. This is a pitch about me, and I took some slides out of it.
And I talk about I invest in entrepreneurs, and in this case, ones who make all-black high-power panels. The pitch for SunPower at that time, and still, through their Maxeon co-company, their manufacturing is they make very high wattages, half-size panel, 95-watt panel, and the equivalent panel from, I think this was BP, British Petroleum. Okay. So that was the pitch, all-black, look good, high power.
The company got in trouble. I couldn’t get my company to invest in them, because we were headed to the 2001 crash, and I wrote a personal check for $750,000 way back when. I also had another guy working in the Cypress family of companies, a guy named Tom Werner, and I helped them with a new star CEO. Tom came in and ran the thing for over 20 years. Dick became CTO.
I also, and by the way, I’ve – just made the comment here, Tom has gotten yanked out of retirement to fix SunPower from the recent financial trouble they got into after he left. This is a slide I used for another purpose, but that’s Manny Hernandez. He was my CFO at Cypress. He wanted very badly to get into solar, and we arranged for him to go across as well.
These are solar cells, so we, SunPower, made solar cells. This is at their plant in the Philippines, and we worked with them both at our plant in Texas, and built this plant in the Philippines for them with new automated equipment to make solar cells. Here you see a river of silicon, four cells wide, going through an automatic machine in the SunPower plant in Manila.
SunPower got famous with one of the things that made it famous is this picture. So, this is an airplane. The curve of the wing has got solar cells on it ground down to 100 microns so that they can bend over the wing, and they run 14, two-horsepower electric motors. This is a NASA project that SunPower delivered the solar cells for, and they picked the highest energy they could get at the time, and that was SunPower.
Interestingly enough, this airplane set a world record of 96,000 feet, which still is not broken. It took off – for airplanes that are conventionally powered, not rockets, conventionally powered propellers or jets, taking off and landing under their own power. That includes this airplane. I just wanted to make a point of how amazing this thing was. This airplane is, of course, the SR-71 Blackbird, our spy plane, Mach 3.3, and its maximum altitude, its record, if you look it up, is 85,069 feet.
So they’re now, in about six weeks, going to the Wall Street Journal talking about making artificial satellites, 100 times cheaper by using these stations. Now put batteries in them so they can run at night and stay up all the time. The check was written back just before this period of time. SunPower was controlled by Cypress during this time, but the employees had stock options in SunPower.
This is revenue. They grew to $1.43 billion in 2008. We did an IPO for them in 2005. They weren’t that big at that time. Then in 2008, we spun them out. I didn’t want to do that, but my shareholders demanded that they get a SunPower. It was a jewel. They didn’t care that much about Cypress, the scroungy little chip company, and they wanted their SunPower. So we spun them out.
40% of the shares we owned, they were 10-vote shares, and that was worth $2.6 billion. So our shareholders loved us, and SunPower became public. A couple years later, they were bought. They had control taken by purchasing 60% of their shares publicly, and they became a subsidiary, or a controlled company by TotalEnergies, the French oil company. I left in 2010, as I said earlier.
Anyway, this is why I’m doing this partly, because I have a lot of nostalgia for this, and I personally worked on this in my career. When I got the call, are you interested, I said, of course I’m interested, and I’ve been working on it ever since. Okay, I divided that in half so I could insert those nostalgia slides in there. Continuing on with the headlines from the quarterly report, we had a terrible revenue quarter.
We only did $4.5 million. That was due to a near total lack of working capital. We were shut down. I remember when we passed over the 200 jobs given back line, because we couldn’t buy panels for it, and that drought lasted for the better part of two quarters and obviously clobbered our revenue. I’ll talk a little bit about that later. So we had to raise money. We had to pay back the people we owed money.
We negotiated, got a figure, and we went out and raised $46 million in July of 2024 with a convertible to venture, 12% convert at a 50% conversion premium, which was $1.68. So it’s $1.68 convert pretty much at the strike price as we speak that pays 12% while you’re waiting, standard five-year convert, Rule 144A, et cetera. We took that money and we got our working capital, so we turned the factory back on.
We paid off the long-term debt. That was the private equity debt, and we paid off. We had a bunch of overdue accounts, some of them overdue by 180 days, and we paid all that off. We announced the total elimination of private equity debt on July 1, and when we did that, the company stock traded up 32.1% on a record 132.7 million shares. This is a picture, courtesy of Cantor Fitzgerald, of the trading record of Complete Solar, and you can see this bar, this one bar is so amazing.
People came in, and these other bars are actual trading, and it’s not really zero market. These other bars averaged 2.55 million shares a day. So whatever we did that day announcing we got out from under the private equity debt struck a chord with the market, and they liked it.
Okay, also in the quarter, our OpEx, which includes commissions the way we reported, but stripping out to classic OpEx. It doesn’t include sales commissions paid to third-parties. We’ve got the company to a two-year low of $4.4 million of OpEx in the quarter, and that’s still coming down. My plan is to get that down below $3 million in the next two quarters.
And finally, we acquired a company called Core Energy. When we finally brought it in, there were 37 people, and we gave them all stock options, brought them into the company. We took everybody that wanted to come. In this case, it was a – we’ll talk about it later when I introduce Cole. You’ll hear a pretty amazing story about how they worked, and what I’ve learned from them. And they’ve been integrated. They’re part of our company now.
Okay, so here are the non-GAAP financial indices, revenue, gross margin, op inc, and then some cash funding, cash flow, cash balance figures. Going backwards, so here we have the quarter I’m reporting. Going backwards, you see we’ve been – the period of the impasse in loans. We were technically in default with one of the lenders. And when you’re in default, nobody will give you money for any reason, right, because the guy declaring default can call it, come in and take the money.
Therefore, nobody will give you money, and that’s what shut us down hard. And that dropped our revenue first in half. We had a little bit of a quarter before this one cut off, and then in half again. So this has been a disaster. If you want to say there’s good news here, which is difficult for me, if you look at op inc, we managed to actually reduce our operating losses during this period.
And we now have plenty of leverage where when we come back to this number, we will be better and more profitable than we were when we hit $20 million the first time. And here’s funding. It turns out that the funding we did in the quarter was $3 million, and the cash flow was minus $739. So bottom line, we were burning a little bit of money. What I just told you, we raised $46 million in July, so that’s Q3 beyond the scope of this report.
And at the end of it, after we paid off our debt and paid off our accounts – our aged accounts payable to key vendors, we had $26 million left out of the $46 million. I make one comment here. This number, if you’re an operating guy like me, you’d tee off on that number and talk about it for the next two hours. It’s a horrible number. We had some – when you look at gross profit, we had some one-time events.
We decided to clean up some – get rid of some old lots, old jobs in the line, and get rid of some old inventory and decided to take the hit. That’s really the reason we got that bad number. We expect that next quarter we’ll bounce back to 30% plus gross margin in Q3, ’24, which is starting to become where we want to operate.
Organization changes. You’ve known Brian Wuebbels when he was CFO. He was promoted to COO, and he’s been commuting on relatively long flights or feeling guilty for not commuting for a while. He lives in Illinois. He’s got families, grandchildren, daughters there, and he’s just decided he doesn’t want to have a remote job. So he’s taken a CFO role in a local company, and I asked Brian to get on the phone.
So he can hear me thank him with investors for all that he’s done, especially sticking around that extra eight months to get us through, get our auditors changed, get the 10-K done, and the 10-Q done for this quarter. So I asked him that, and that was a big ask, and he helped me out. Brian, thank you.
Brian Wuebbels
Yes, thank you, T.J. I appreciate everything as well. It’s been a pleasure working with you.
T.J. Rodgers
Okay. So the new auditor is BDO. They’re the fifth largest auditing firm in the world, and we’ve gotten off. They’re now in control of auditing, and this was their first audit. To replace Brian, given that we’re in a potential acquisition mode, we’re not recruiting right now. We’re waiting to see, because we want to keep as many jobs as we can. I’ve appointed Linda DeJulio who is our VP of Quality, to be acting CEO and the ranking officer in the company. She’s done the work whenever needed to deserve that promotion.
Okay, working on cost. This is a graph of headcount. That’s 450 when I came in June a year ago, so it’s been a little bit over a year. That was the head count. That was the meetings that explained that that was about right, but maybe a few more people. Yes, I said a few, like minus 200 or minus 300, and we went through a series of rifts. I actually started slowing down in here, because these are traumatic events, and I was worried of overshooting.
And we finally got down to rift number seven. We got down to 109 people. So we started at 428, got down to 109, and we’ve been holding at 109. There’s a process I use that’s called the requisition auction that manages head count in sort of autopilot in the company. You only replace people that leave. Anybody that leaves doesn’t get replaced, and then the slot gets auctioned off in an auction of merit, with the executive staff. Who needs this person the most? They argue with each other.
The winner is picked by the CEO, and everybody kind of likes the process, because it’s fair, and what you end up doing is 80% of the time replacing somebody that you can live without with somebody you really badly need, and that’s really worked out for the company. Here I put in the core merger, and I told you earlier we brought in 37 people, but the head count didn’t go up, and that’s because in the merger based on merit, we actually brought in those people and all of them and replaced people that were currently in the company.
Okay, big graph, a lot of data. This is the inventory and jobs, 2,000, 4,000. This is the inventory, is the flay of where it is. Preconstruction, essentially an order. Post-construction, glass on the roof, but not turned on. Pre-PTO, waiting, pre-PTO and PTO pending, waiting to take the glass that’s been installed, the glass being the panels, and turn them on, and then finally cash pending.
So if you want to look at how we see it, these are orders. So that is the unfulfilled part of our backlog. This should happen relatively quickly. This is not timed vertically, but this should happen relatively quickly, and then from the time you have the installation done, you’re waiting for the utility to turn you on and for the financing company to pay the cash.
And what happened to us when I came in, I came in right about here, is that we had jammed a line up to 3,635 jobs, and that line ran well. At one time, Complete Solaria was rolling, and that line ran well at 2,000. So for a silicon guy like me, this looks exactly like a silicon fab where they jammed in too many wafers, and found out the more wafers they jammed in, the fewer came out, and it messed it up. And, of course, I made those mistakes and lived that life.
So I shut down the orders here and said, ship what you have, and that brought us down back to the line where we were at, but it wasn’t healthy. So over here you see that the, let’s say, from construction through the waiting period for cash. So you get cash up here, here you’re done with construction. So back here, the time of the number of jobs, rather, from finished construction until money was a small fraction of the inventory.
When we got back down to the same inventory level here, that was not true anymore. We had fewer orders, and we had a lot of people waiting for their power to get turned on in this blue stripe. It was a lot of people whose job weren’t being paid off yet by the financer. So here we had a company whose line wasn’t running well. And, by the way, that was part of the problem up here, but it really shows up down here.
Then we had the trouble with finances, and we had a cash problem, a working cash problem, and this is what’s happened. Now, one thing that’s interesting is this little bar here is called the model. That model says what you would like your line to be, what you want it to look like. So we’re not – this number of runs in the line is good. If I can make a lot of money in small runs, meaning I’m turning my inventory fast and making money.
But what’s not good here is the fact that when you are installing panels, which we didn’t, then you aren’t buying orders, which we weren’t. And then, the people who sell you orders go away and sell their orders to somebody else and get used to it. So the problem here, I showed this whole graph, make that point right there, 139 orders in the line pre-construction. And that is the current problem we’re trying to break out of as we shake off the cash drought blues. So that’s why we got this guy.
He’s a Cole Farmer. He’s our VP of Sales and Marketing, works for me. He ran Core Energy, which is – Core Energy or Core Systems?
Cole Farmer
Core Energy.
T.J. Rodgers
He ran Core Energy. Yes, there it is right there, Core Energy, and was the Founder and CEO. He’s got a business degree out of Utah State. He lives in Logan. He ran sales for a company that got pretty big, a couple hundred million dollars. And then, he decided to go out on his own. He started and worked as CEO for Core Energy, and that company in the good year of 2022 did $150 million. So he demonstrated the ability to scale. Cole, introduce yourself first, and then I’ve got a couple stories I want to tell.
Cole Farmer
Cole Farmer acting is the VP of Sales for Complete Solar. Grew up in Logan, Utah. As T.J. said, a Utah State Aggie. And have a family and five kids. Big time background in sales. Somehow I got thrown into the construction world of solar, and as some of us will call the solar coaster, been living that life for 10 years. Big solar fan. I’ve enjoyed it very much and very excited to be at Complete Solar, building their sales team here.
T.J. Rodgers
So Cole’s the new guy, and when we gripe about not having enough orders, he explains how that’s going to end, and I’ll show you some data in a minute. He also, one thing I liked when I, two things. One, he played on a Utah State Championship High School team, so that was wonderful. And second thing is, when I called him, I said, you know, we’re looking to try to expand our company growth and non-organic growth, and he said he would be interested in talking to us about acquisition.
So I called him up, I deliberately called him on a Sunday to see if he would, work on, would do what he had to do. And he said, sure, and I said, send me over your deck. Deck, what deck? You know, your deck you used to raise money, and he said, we’ve never raised money. We’ve been in business four years and we’ve never raised any money. And I’m going, that’s the way solar needs to get run. So those are my two stories, two stories about Cole.
Here’s the first thing he’s done. This is the number of active Sales Partners. So a Sales Partner is a company that sells you orders, and they sell you orders that are signed contracts, so they’re expensive. They’re like $10,000. And there’s an entire industry of competing companies that compete with each other for orders. And they’re euphemized various ways. Dealers, sales partners is what we call them. And the problem is when we had this happen to us, all of our partners went away.
These guys were partners pretty much in name only, and they weren’t producing many orders for us. They were giving into other customers. And this is Cole’s first quarter right here. We now have 29 of them, and the things reinvigorated. And then, of course, the question is, reinvigorated enough to cure your finances? And the answer is yes.
This is a graph showing the days from 30-day. This is a 30-day rolling sales graph we look at. And this looks at the middle of July to the middle of August. And then the bars, and you’ve got Saturday and Sunday in there, so they’re empty. And there’s the 4th of July holiday. The bars, the height, is how many orders you got on a given day. So here, the record was like 20. There’s some days where you get one or two.
And then the question is, is that enough to fix that problem, 139? Well, in the last 30 days since Cole arrived, he’s done 176, so that doubled what we had. That’s 5.87 orders per day. An order, even an order, even a signed contract, has a 30% chance of going away as the person changes their mind, can’t – he does gets laid off, whatever. So you take the orders and you put on a 70% yield factor. That means we’re getting four orders a day. That’s 370 orders a quarter, and they’re worth $37,500 each on average.
So that’s $13.86 million a quarter. So in 30 days, we’ve gone from worrying about our future to having a third of the backlog we need to have a $40 million quarter. So, yes, he’s done. By the way, I didn’t show it, but the motto of his company, which I’ve appropriated, I declared that, well, we bought that motto since we acquired your company, is start fast, finish strong. So that’s now the motto of our company, and he’s surely demonstrating that here.
Okay, to round up before questions, the big news really is the SunPower APA, Asset Purchase Agreement, and that’s an opportunity for us to scale the company way faster than building back from the problems we’ve had. And by fast, I mean talking about $100 million quarter kind of numbers. We’ve got a stalking horse bid in at $45 million, and we have added $7.2 million to that, at least the liability to that to add to what other people would have to bid against us.
We’re working on a detailed financial plan. Since SunPower was spun out of Cypress, they have a lot of our financial planning tools and a lot of our language that they use. So it was real easy to start working with Tom Werner, who’s running the show on the SunPower side, and we’re already up through revision number four on our plan, and it’s becoming more and more credible as we go along.
The theory is we make a plan, and then we hire the people we can afford to hire, to meet the plan and have some money left at the end of the day. That’s cash flow management. That’s what I’ve learned in my most recent foray into this very tough business. We’ve also started making employment offers. I call them, again, attractive, and they include stock options for all retained employees. So we plan to make them all employee shareholders, and then let them do what employee shareholders do, which is do a better job than – non-shareholder employees. Okay, that’s it.
We’re ready for questions. They come in and get relayed to us.
Question-and-Answer Session
A – Unidentified Company Representative
[Operator Instructions] The first question we have today from Achilles Capital, approximately a year ago, the Fab was said to be supply limited. Are you worried about the ramp up now being demand limited due to the solar slowdown?
T.J. Rodgers
Yes, right now. Up to a month ago, I had 139 orders. The cupboard was getting bare, and we are worried about demand. Our demand is not huge, so it’s a tractable problem. I’d hate to have a big solar company right now and have to feed it. And Cole’s came in, like I said, and turned it around. So right now, I’m not worried about demand other than timing. I have to finish out this quarter and have a good backlog for the beginning of the next quarter.
Unidentified Company Representative
Thank you. There are a series of questions regarding the merger, and many of them acknowledge that some of the information cannot be answered, but we’ll endeavor anyway. Can you discuss the rationale behind the acquisitions and your expectations for revenue and margins post SunPower?
T.J. Rodgers
I agree with all the stuff that you can’t say. I decided to give one revenue number, which is not out of our plan, which is the magnitude of what the combined company will look like at $100 million per quarter. And beyond that, I don’t have a good enough plan to start making commitments to investors. What do I expect out of it? Well, I’ve worked with SunPower before.
Our fab guys built their first factory in Manila. They did their training for making their cell, the one that turned on in the market in our Austin plant. Actually, the guy who ran that plant is working with us and helping us now. So, I expect to have a company that integrates very quickly, has shared values, and takes advantage of the tailwind in the solar market.
I think, we’ve gone through the ugliest time. I think it’s time to turn on. It’s like Warren Buffett. I was listening to something he said a couple weeks ago, and he said it’s amazing the bargains you get at the bottom of these recessions. And that’s what – we’re all hoping for.
Unidentified Company Representative
Thank you. In the same vein question, your next question is, if awarded SunPower, can you discuss your overall growth strategy in the next few years, and do you expect Starbucks to expand their pilot to more than 100 stores?
T.J. Rodgers
Growth strategy. There’s one big different thing between semiconductors – that was my career, and solar. And that is, in semiconductors, you invest massively in research and development, 25% of revenue. If you don’t stay on the Moore’s Law curve, you die. This is back in the 80s, 90s, and early 2000s. And you kind of will your own growth. In solar, it’s a cash flow business. You may or may not be able to get cash. Cash may be cheap or expensive. People may or may not want to.
And you’ve really got to turn it the other way around and look at the demand, have the right products, which we’re going to improve products. I’m a technologist, and one thing that SunPower had back in the ancient days when I was there, is they had really great technology, and we’re going to have really great technology again. So you don’t force your way in.
You, in effect, size your company to the growth rate that you can accommodate in the marketplace. And sometimes it’ll be flat. Sometimes it’ll be down. In California, the government turned on a little animal called NEM3, N-E-M, Net Electricity Metering. And what they did was they stopped paying full price for solar-generated energy in a home as it went back into the grid to run your meter backwards.
They stopped paying for it. They cut it down to the price of almost nothing, to a nickel. The same things happened, amazingly enough, in Netherlands, where there’s actually a negative tariff, meaning they charge you money to take away your garbage power in the middle of the day. Okay, and that’s the way the world’s going, because of success. The solar industry has managed to produce more power than we need during daylight hours.
So all of a sudden, that excess power isn’t needed. They don’t want to pay for it, and in the case of some grids, it actually can be destabilizing. So now we’re into storage, right? And that means you store your energy during the day and use it at night when utilities typically, at least in California, screw you for high rates. So, we will have to live in a world, unlike silicon, where you don’t just put your head down and say, we’re changing the world.
The next transistor will be 7 nanometers and literally 10 angstroms thick gate oxide. We have to say we’re going to be a change agent that does what the environment wants, and the environment includes us, our customers, our competitors, and the government, and changing needs in the world. Cole, you got anything to add on that one?
Cole Farmer
There has been certainly a lot of changes in last year especially with NEM 3.0. I think California installers, complete solar in particular, has handled that very well with batteries. So there’s exciting opportunity there, additional revenue opportunities for sure, and I would even say additional profitability areas with storage capacity. Batteries have been much easier to integrate than I think any of us thought. I know that from experience, and they’ve been much easier to sell, and there’s a high demand for those.
So the other shift we’ve seen is with the higher interest rates, things have moved heavily to leases or power purchase agreements, but those have really kept the industry optimistic in a place where it can continue to grow and figure out how to finance these solar projects.
T.J. Rodgers
One other comment. I’ve been working on renewables in the, I guess I’ll call it the second half of my career, and one of the companies I work with is Enphase Energy. They make batteries. They’re the second largest battery maker in the United States, behind the Tesla, the leader that started bringing out batteries for home storage. And they’re focusing on batteries that do exactly what Cole was talking about.
And their battery sales have taken off, and we use their batteries, and we expect to work on them with projects to define the kind of batteries you need for homes. And well, let me leave it there, because I might stumble on some feature that somebody wants to, doesn’t want to let out.
Unidentified Company Representative
Thank you. Our next question comes from Phil Shen from ROTH. If you were to win the bid to acquire Blue Raven, would you expect to operate Blue Raven as an independent subsidiary as it largely was maintained by SunPower, or would you get rid of the Blue Raven name and integrate it fully with Complete Solaria?
T.J. Rodgers
I’m sitting here thinking about what kind of trouble, can I get in by honestly answering that question. My personal view, which I don’t necessarily impose, you’ve got to, the other thing is you’ve got a lot of constituents and you have to gain consensus of what to do, is that Blue Raven wisely was not messed with by SunPower. They run an excellent shop. I was really impressed. I spent a whole day there and talked to all their managers.
They run an excellent shop. They have a name that is important to their employees and their customers, and that thing ought to be let alone. And by the way, if you look back at my history, I ran a company with seven different product lines. And making, for example, a programmable logic chip is way different from making a high-performance Internet memory. And I had seven VPs that ran it.
Tom Werner was one of them. Badri Kothandaraman, who runs Enphase was another. And those guys ran their own businesses, and I did meddle with them. That is, you know, I had certain ideas how companies ought to run, and what processes ought to be used, but on the business side, they did their own thing. And I let them alone, and I’m very happy for that. So I’m not going to dictate the organization.
Right now, we’re in the mode where our org charts and our planning is, they’ve got boxes with titles and functions, but we haven’t started sorting that stuff out yet. So I’ll just give you one example. The Cypress Semiconductor, my call center. Typically, the President’s call center is massive. You’ve got entertainment. You’ve got this. You’ve got that. My call center had my secretary who’s sitting over there, me, and my secretary, me, and my NASDAQ dues, and that was it.
And nobody argued about the allocation, because it was so small. Product lines had to talk about their overhead, their excess people, and the groups in the company had to serve the product lines. So, for example, we had 20 lawyers. Now, you say, why do you have lawyers? And the answer was, our lawyers could produce a patent way cheaper and way better, because they were also engineers, than we could get on the outside by renting a law firm or using lawyers outside. So, yes, Blue Raven runs well. Why would you take an asset that runs well and screw it up?
Unidentified Company Representative
Thank you. Phil Shen had a follow-up to that. He said, T.J., you just mentioned – that you will have highly differentiated technology. The module technology is now with Maxeon. What products or product categories specifically do you expect to introduce?
T.J. Rodgers
I have a bunch of startups that are related, and they may or may not directly play into the exact market that – Complete Solar plays in. And I’ll give you one example. There’s a company in Rochester, New York, called SunDensity, and I’ve worked with them for two years. They have a technology. They have two technologies. One of them I’ll describe grabs sunlight, absorbs light 400 nanometers in ultraviolet below, high-energy light that doesn’t do well in silicon anyway, charges up sites, atoms in the coating.
And then re-emits two photons instead of one, two red photons, which have less energy, conservation of energy, than one blue photon or one ultraviolet photon. And that literally doubles the current you get out of a panel for that one photon. You get two electronic currents for one photon. So that company, the promise there is to work on the basic technology and beat the silicon limit. The fundamental silicon limit is 29.3%, I think. It’s the Shockley-Queisser limit.
And it’s a calculation that Shockley did after the solar cells invented at Bell Labs, and he was at Bell Labs. So these guys are doing new things, compound semiconductors, layered semiconductors, photon splitting, quantum splitting of photons, to try to beat that limit, because it’s a different system that can beat that limit. So I’m working on that. I’m working on batteries, both at Enphase and at Enovix, which is a battery company, which is lending me their studio today so we don’t have to pay for it.
And in general, I’m going to bring technologies like that, electronic technologies from Enphase, optical technologies from more than one company that I’m working with right now, to bear. And when I find one, it’s perfect, right for your customer. We’ll make you famous. We’ll take your inverter or your panel or whatever to market, and we’ll brag about it. So and I’m a technologist, right, so I can go and talk their language.
So that’s my hope. I live in Silicon Valley, and I should be able to lever that in the future in the R&D area. I’ve given my theory, and I’ve been totally vague about exactly what products we’re working on.
Unidentified Company Representative
Thank you. Our next questions come from Derek Soderberg from Cantor Fitzgerald. His question is to you, Cole. What are the commission rates as a percentage of project revenue you are paying for the signed contracts? Under 30% or 25%, what is the approach to helping complete Solaria reduce selling costs?
Cole Farmer
Thank you. Those are in the 25% to 33% range. A lot of that depends on the channel that that sale comes from. A lot of the things that we’re doing is working with win-win solutions with the different sales partners that we have. Those solutions help lower and increase the profit margin on our side. There’s other things we’re doing, such as, you know, some lead generation programs and different partnerships there that can help really maximize the potential there.
But I think most of it comes from a win-win. As someone who comes from a sales background who knows these salespeople, most of the sales companies we deal with now are looking for stable ground. They’re looking for an EPC, or a solar installer that shows financial health, and they know they can plant their flag there. That’s usually enough to get there, and we’re not getting as many conversations about beating each other over price, and it’s more of a hand-in-hand approach moving forward.
Unidentified Company Representative
Thank you. We have time for one or two more. Our next question comes from Joseph Osha from Guggenheim. His question is, what are your plans for working with financing partners, particularly with respect to leasing and FPA customers?
Cole Farmer
We’re currently working with a few different leasing companies. EverBright, LightReach are two in particular. We’re seeing a lot of the traditional loan finance companies getting into that space as well, so I think there will be some additional leasing and PPA offerings that we’ll be able to look at and choose from, which is great. Having those options really stabilizes the industry and also shows that there’s still pretty good capital looking into that space. So two main ones we’ll probably use consistently, but we’re seeing a lot of new ones that have good financial backing popping up.
Unidentified Company Representative
Thank you, everyone. We recognize that there’s a bunch of people we have not gotten to their questions in the queue today. We’ll be reaching out to you individually in the coming days. T.J., did you have any closing comments?
T.J. Rodgers
Do we have a time limit?
Unidentified Company Representative
We can get going if you want, we have a few more?
T.J. Rodgers
Let’s go on until 3 o’clock if they’ve got more questions.
Unidentified Company Representative
Okay, excellent. We have a couple regarding the APA. Assuming the approval of the APA, what sort of relation – I think you’ve answered this one already. In general, they’re asking about assuming the approval of the APA plans for relationships with Maxeon and Enphase, which you touched on earlier?
T.J. Rodgers
Yes, there’s one thing we’re going to have to work with Maxeon, because when Maxeon split out of SunPower, they got the rights to put SunPower on their products. Obviously, they had to have that. They split out and they had to be able to use their same manufacturing name. So there’s a cloud over the use of the word, or the use of the trade name SunPower, and it’s contractual and it’s real. So we will work with them. Bill Mulligan runs the company, and he was part of that original SunPower team. When I was standing there with Swanson, Bill Mulligan was the VP of R&D of SunPower at that time. So, we’ll try to sort that one out with them.
Unidentified Company Representative
All right. Well, thank you very much for everyone’s time today. We look forward to speaking with you in the coming quarters.
T.J. Rodgers
Thank you.
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