Maxeon Solar’s Fiscal 2024 Results Highlight Regulatory Struggles and Strategic Shifts

Maxeon Solar Technologies’ fiscal year 2024 (ended December 31, 2024) earnings report paints a stark picture of a company grappling with severe headwinds. Revenue plummeted to $509 million, a 54% decline from $1.12 billion in 2023, while shipments of solar panels fell by 52% to 1,424 MW from 2,963 MW. These figures underscore the devastating impact of U.S. Customs and Border Protection (CBP) restrictions on the company’s operations, which have left it in a precarious financial position.

The CBP Restriction Crisis

The root of Maxeon’s troubles lies in a July 2024 CBP order barring imports of its Maxeon 3, 6, and Performance 6 solar panels into the U.S., citing alleged violations of the Uyghur Forced Labor Prevention Act (UFLPA). Despite providing extensive documentation to prove compliance, CBP has not cited specific evidence of forced labor in Maxeon’s supply chain. The ban has caused “material disruption” to Maxeon’s business, with Q4 2024 revenue collapsing to $49 million—a 78% drop from Q4 2023’s $228 million.

The company has responded by filing a lawsuit at the U.S. Court of International Trade to overturn the ban. A favorable ruling could unlock access to the U.S. market, which is critical for recovery. However, uncertainty lingers, as CBP’s actions are part of broader geopolitical tensions between the U.S. and China, where Maxeon sources key components.

Strategic Shift to the U.S. Market

Facing these challenges, Maxeon has pivoted its strategy to focus exclusively on the U.S. market. This includes:
- Divesting non-U.S. assets, including Philippine operations, to free up liquidity.
- Restructuring debt, including extending $200 million in Green Convertible Senior Notes due 2025 to 2028.
- Building domestic partnerships and supply chains to navigate U.S. tariffs and regulatory hurdles.

CEO George Guo emphasized progress in securing U.S.-based suppliers and streamlining operations. However, transitioning manufacturing and logistics to the U.S. will take time and capital, with no guarantees of success.

Financial Health and Risks

The financials are grim:
- GAAP net loss swelled to $614.3 million in 2024, nearly tripling from 2023’s $275.8 million.
- Adjusted EBITDA turned into a $376.1 million loss, contrasting with a $3.7 million profit in 2023.

The company has suspended quarterly earnings reports due to macroeconomic and policy uncertainty, opting instead to report semi-annually as a foreign private issuer. This lack of transparency compounds investor anxiety.

Liquidity and Shareholder Concerns

Maxeon’s liquidity is strained, though recent moves aim to stabilize it:
- A $97.5 million debt investment from its largest shareholder, TCL Zhonghuan Renewable Energy Technology Co. (TZE), and plans for a $100 million equity infusion.
- These transactions, however, will dilute existing shareholders’ stakes, with TZE becoming a controlling shareholder pending regulatory approvals.

Outlook: High Stakes, Uncertain Path

Maxeon’s future hinges on two critical variables:
1. CBP Litigation: A win could restore U.S. market access and shipments, potentially reversing revenue declines. A loss would deepen losses and force further restructuring.
2. Execution of U.S. Strategy: Building domestic supply chains and partnerships is a high-risk, high-reward endeavor. Success could position Maxeon as a key player in the U.S. solar market, which is booming due to tax incentives and climate goals.

Conclusion

Maxeon Solar’s FY2024 results reflect a company at a crossroads. Its financials are battered by CBP’s restrictions, with revenue halved and losses tripling. While its pivot to the U.S. market and legal battle offer potential pathways to recovery, these efforts carry immense risk. Investors must weigh the possibility of a turnaround against the likelihood of further regulatory and operational setbacks.

With $52 million in 2024 capital expenditures focused on restructuring and a reliance on TZE’s support, Maxeon’s survival depends on swift resolution of the CBP dispute and execution of its U.S. strategy. For now, the company remains a speculative play—a bet on regulatory relief and operational resilience in one of the world’s most volatile industries.