Exhibit 99.1
SUNWORKS REPORTS THIRD QUARTER 2022 RESULTS
PROVO, UT., November 8, 2022 - Sunworks, Inc. (NASDAQ: SUNW), a leading provider of solar power and battery storage solutions for residential, agriculture, commercial, industrial, and public works markets, today announced financial results for the third quarter of 2022.
THIRD QUARTER 2022 RESULTS
(As compared to the Third Quarter 2021)
| ● | Total revenue of $40.7 million, a 30.4% increase, |
| ● | Gross profit of $19.5 million, a 49.3% increase, |
| ● | Residential Solar segment revenue of $36.7 million, a 57% increase |
| ● | Commercial Solar Energy Solar segment revenue of $4.1 million, a 48% decrease |
| ● | Total Residential Solar segment originations increased 48% year over year |
| ● | Total Commercial Solar Energy segment orders of $8.2 million |
| ● | Total backlog increased 116% to $110 million, including $15 million sequential growth driven by improved residential and commercial demand |
“During the third quarter, we capitalized on strong underlying demand for our integrated solar solutions, while continuing to advance our multi-year business transformation strategy,” stated Gaylon Morris, Chief Executive Officer of Sunworks. “As household electricity bills continue to rise, order rates for new residential rooftop solar installations accelerated on a year over year basis, contributing to robust year-over-year revenue growth in the third quarter. While customer financing costs have increased in tandem with higher interest rates, the economic case for residential solar remains highly compelling, particularly for customers who value independent, reliable access to renewable energy.”
“Earlier this year, we introduced a series of strategic actions intended to drive improved operating leverage and profitability,” continued Morris. “These actions focused on the launch of a customer-centric service model, expansion of our direct sales channel and enhanced sourcing and supply chain capabilities. In combination, these actions have quickly led to measurable performance improvements in our Residential Solar segment.”
“Within our Residential Solar segment, total watts installed during the third quarter increased by 50% on a year-over-year basis, driven by strong new contract origination sourced through our direct sales force,” continued Morris. “Our direct sales force, which now includes more than 600 agents in 14 metro markets, represented 24% of total Residential Solar segment revenue in the period, versus less than 4% of segment revenue in the prior-year period.”
“Total backlog grew materially on both a sequential and year-over-year basis during the third quarter, driven by accelerating demand across both of our Commercial Solar Energy and Residential Solar segments,” continue Morris. “Given the impact of recent price actions, we estimate that our backlog has improved margins, which will be realized next quarter.”
“As planned, we invested heavily in panel and component inventory during the third quarter to support a growing backlog of project activity,” noted Jason Bonfigt, Chief Financial Officer of Sunworks. “During a period of broader supply chain disruption for the industry, we believe investment in critical componentry remains a prudent allocation of capital, one that positions us to capitalize on favorable demand conditions, while mitigating materials sourcing risk.”
“During the third quarter, we raised $7.3 million under our at-the-market (ATM) equity program to support strategic growth,” concluded Bonfigt. “At the end of the third quarter, we had no debt and $14.5 million in cash to support the ongoing growth of our business.”
“Today, our industry has the technology to provide affordable, reliable electricity to every home and business in America,” concluded Morris. “Sunworks remains a pioneer in the renewable energy revolution, one well-positioned to capitalize on the underserved, fragmented residential and commercial solar markets where we’ve built a leading market position. Looking ahead, we remain focused on continuing to drive incremental improvement within all areas of our business.”
STRATEGIC UPDATE
Increase the velocity of installation. Sunworks believes a reduction in the time required to install a residential solar installation improves both pricing power with third-party channel relationships and customer retention. During the second and third quarters of 2022, Sunworks decentralized all design, permitting and scheduling activities to local and regional Company teams, while continuing to leverage the benefits of scale across shared services. The Company will continue to utilize lean principles and practices to optimize workflow and improve installation timelines to improve customer experience.
Expand cost-efficient direct sales channel. Sunworks has embarked on a multi-year initiative to develop a robust, direct sales team designed to complement its third-party channel partners. This direct sales team is incentivized to develop business across the residential markets where Sunworks operates, with an emphasis on rooftop solar installations. During the third quarter of 2022, the direct sales team was responsible for 24% of total residential installation revenue, versus approximately 4% in the prior-year period.
Drive efficient sourcing and procurement. The Company intends to shift an increased proportion of its sourcing from foreign, third-party distribution channels toward U.S. based original equipment manufacturers, an approach that will allow for improved surety of supply. By year-end 2024, the Company intends to source a significant share of its panel and component inventory from U.S. based producers, whereas no materials are currently sourced domestically. During the third quarter, Sunworks’ grew total inventory by $8.1 million sequentially to $26.9 million, thereby increasing product availability during a period of elevated customer demand.
Drive sustained margin expansion. The Company believes key drivers of margin expansion include programmatic price increases; market share gains in both its core California commercial market and new geographic regions; reductions in lead times; optimization of its sales channel partner network; an increased mix of revenue derived from its direct sales force; increased productivity resulting from recent headcount investments; and the adoption of lean principles to reduce cost and drive continuous improvement. Sunworks expects to achieve improved margin realization in the fourth quarter of 2022, when compared to the first nine months of 2022, as recent performance improvement initiatives are further implemented.
THIRD QUARTER 2022 SUMMARY
For the three months ended September 30, 2022, Sunworks reported total revenue of $40.7 million, versus $31.2 million in the prior-year period. The year-over-year growth in revenue was attributable mainly to increased contributions from the Residential Solar segment, which benefited from a growth in installation volumes. Commercial Solar Energy revenue declined $3.8 million compared to the prior year period, primary driven by lower order intake in the preceding periods. During the third quarter, residential and commercial revenues represented approximately 92% and 8% of total revenue, respectively.
Total gross profit increased to $19.5 million in the third quarter 2022, versus $13.1 million in the prior-year period. The year-over-year variance was primarily attributable to growth in customer acquisition and operational improvements throughout the business, including increased focus on accuracy in estimating, quoting and improved execution, partially offset by inflationary pressures on materials and labor.
The Company reported a net loss of $5.4 million in the third quarter 2022, or ($0.16) per basic share, versus a net loss of $6.5 million in the prior-year period, or ($0.24) per basic share. The year-over-year variance was primarily attributable to lower amortization expense associated with the Solcius acquisition and lower stock compensation expense, partially offset by inflationary pressures on materials and labor, as well as investments to support anticipated growth in each of the Company’s segments.
Adjusted EBITDA was a loss of $3.7 million in the third quarter 2022, compared to a loss of $3.3 million in the third quarter 2021. A reconciliation of GAAP to non-GAAP financial measures is provided below.
NON-GAAP FINANCIAL MEASURES
EBITDA is a non-GAAP financial measure defined as net income (loss) excluding interest, taxes and depreciation and amortization. Adjusted EBITDA is further adjusted for non-cash stock-based compensation expense, goodwill impairment and acquisition transaction expenses. Adjusted EBITDA is a key measure used by the Company to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital. The Company presents Adjusted EBITDA to provide information that may assist investors in understanding its financial results. However, Adjusted EBITDA is not intended to be a substitute for net income (loss).
Certain non-GAAP financial measures are presented in this press release, including Adjusted EBITDA, to provide information that may assist investors in understanding the Company’s financial results and assessing its prospects for future performance. We believe these non-GAAP financial measures are important indicators of our operating performance because they exclude items that are unrelated to, and may not be indicative of, our core operating results. These non-GAAP financial measures, as we calculate them, may not be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to the Company. These non-GAAP financial results are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent we utilize such non-GAAP financial measures in the future, we expect to calculate them using a consistent method from period to period. A reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure is provided below.
| Three Months Ended | Year To Date | |||||||||||||||
| Sept 30, 2022 | Sept 30, 2021 | Sept 30, 2022 | Sept 30, 2021 | |||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||||||||||||
| Net Loss | $ | (5,393 | ) | $ | (6,460 | ) | $ | (21,185 | ) | $ | (13,140 | ) | ||||
| PPP Loan Forgiveness | 0 | 0 | 0 | (2,881 | ) | |||||||||||
| Stock-based compensation | 364 | 1,206 | 2,019 | 2,470 | ||||||||||||
| Depreciation and amortization | 1,232 | 1,930 | 3,827 | 3,900 | ||||||||||||
| Interest expense | 50 | 10 | 115 | 40 | ||||||||||||
| Income Tax Expense | 0 | 0 | 94 | 0 | ||||||||||||
| Acquisition Transaction Expenses | 0 | 25 | 0 | 775 | ||||||||||||
| Adjusted EBITDA | $ | (3,747 | ) | $ | (3,289 | ) | $ | (15,130 | ) | $ | (8,836 | ) | ||||
THIRD QUARTER 2022 CONFERENCE CALL
A conference call will be held today at 1:00 P.M. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of Sunworks’ website at https://ir.sunworksusa.com/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
To participate in the live teleconference on November 8, 2022:
| Call Dial-In: | 1-877-407-0789 |
| Conference ID: | 13733407 |
To listen to a replay of the teleconference through November 22, 2022:
| Call Replay: | 1-844-512-2921 |
| Replay Passcode: | 13733407 |
ABOUT SUNWORKS
Sunworks has been providing high-performance solar and battery storage solutions since 2000. It acquired Solcius in 2021 to extend its national presence and provide high-quality, performance-oriented solutions to sectors ranging from residential to agricultural, commercial, industrial, federal, and public works. Today, Sunworks is proudly paving the way toward the democratization of renewable energy for all with their agile, partner-centric, and technology-agnostic network that has installed over 200 MW of solar and battery storage systems. Their dependable, solutions-oriented teams are recognized in the industry for their commitment to customer service and renewable energy advancement. Sunworks was recently recognized by Solar Power World as a leading solar supplier and is a member of the Solar Energy Industries Association (SEIA). For more information, visit www.sunworksusa.com and www.solcius.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to statements regarding the impact of price increases, the Company’s ability to scale its decentralized operational model, the Company’s ability to increase margins, the strength of demand for the Company’s products, the impact of increased inventory, and the Company’s ability to diversify sourcing of materials. These forward-looking statements are based upon the current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Sunworks. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements because of possible uncertainties. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Sunworks’ reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available on the SEC’s Internet site (http://www.sec.gov). We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
INVESTOR RELATIONS CONTACT
720.778.2415
IR@sunworksusa.com
SUNWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021
(in thousands, except share data)
| September 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 14,273 | $ | 19,719 | ||||
| Restricted cash | 248 | 323 | ||||||
| Accounts receivable, net | 7,633 | 4,568 | ||||||
| Inventory | 26,927 | 10,219 | ||||||
| Contract assets | 24,722 | 14,498 | ||||||
| Other current assets | 3,278 | 4,154 | ||||||
| Total Current Assets | 77,081 | 53,481 | ||||||
| Property and equipment, net | 2,494 | 3,195 | ||||||
| Finance lease right-of-use assets, net | 1,888 | 1,407 | ||||||
| Operating lease right-of-use assets | 1,937 | 2,502 | ||||||
| Deposits | 162 | 132 | ||||||
| Intangible assets, net | 5,620 | 7,910 | ||||||
| Goodwill | 32,186 | 32,186 | ||||||
| Total Assets | $ | 121,368 | $ | 100,813 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 19,160 | $ | 11,127 | ||||
| Contract liabilities | 26,695 | 12,201 | ||||||
| Finance lease liability, current portion | 491 | 424 | ||||||
| Operating lease liability, current portion | 905 | 993 | ||||||
| Total Current Liabilities | 47,251 | 24,745 | ||||||
| Long-Term Liabilities: | ||||||||
| Finance lease liability, net of current portion | 997 | 542 | ||||||
| Operating lease liability, net of current portion | 1,032 | 1,509 | ||||||
| Warranty liability | 1,431 | 1,251 | ||||||
| Total Long-Term Liabilities | 3,460 | 3,302 | ||||||
| Total Liabilities | 50,711 | 28,047 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity: | ||||||||
| Preferred stock, $0.001 par value, 5,000,000 authorized shares; no shares issued and outstanding | - | - | ||||||
| Common stock, $0.001 par value; 50,000,000 authorized shares; 35,161,648 and 29,193,772 shares issued and outstanding, at September 30, 2022 and December 31, 2021, respectively | 35 | 29 | ||||||
| Additional paid-in capital | 207,067 | 187,997 | ||||||
| Accumulated deficit | (136,445 | ) | (115,260 | ) | ||||
| Total Shareholders’ Equity | 70,657 | 72,766 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 121,368 | $ | 100,813 | ||||
SUNWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 and 2021
(in thousands, except share and per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September
30, 2022 | September
30, 2021 | September
30, 2022 | September
30, 2021 | |||||||||||||
| Revenue, net | $ | 40,713 | $ | 31,220 | $ | 108,306 | $ | 69,480 | ||||||||
| Cost of Goods Sold | 21,204 | 18,150 | 59,030 | 42,348 | ||||||||||||
| Gross Profit | 19,509 | 13,070 | 49,276 | 27,132 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Selling and marketing | 14,773 | 10,072 | 41,320 | 21,468 | ||||||||||||
| General and administrative | 8,718 | 7,185 | 24,025 | 17,081 | ||||||||||||
| Stock-based compensation | 364 | 1,206 | 2,019 | 2,470 | ||||||||||||
| Depreciation and amortization | 1,056 | 1,062 | 3,177 | 2,160 | ||||||||||||
| Total Operating Expenses | 24,911 | 19,525 | 70,541 | 43,179 | ||||||||||||
| Operating Loss | (5,402 | ) | (6,455 | ) | (21,265 | ) | (16,047 | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Other income (expense), net | (6 | ) | 5 | 46 | 2,896 | |||||||||||
| Interest expense | (50 | ) | (10 | ) | (115 | ) | (40 | ) | ||||||||
| Gain on disposal of property and equipment | 65 | - | 243 | 51 | ||||||||||||
| Total Other Income (Expense), net | 9 | (5 | ) | 174 | 2,907 | |||||||||||
| Loss before Income Taxes | (5,393 | ) | (6,460 | ) | (21,091 | ) | (13,140 | ) | ||||||||
| Income Tax Expense | - | - | 94 | - | ||||||||||||
| Net Loss | $ | (5,393 | ) | $ | (6,460 | ) | $ | (21,185 | ) | $ | (13,140 | ) | ||||