SUNation Energy (SUNE) 12 May 232023 Q1 Earnings call transcript

Good morning, and welcome to the Pineapple Energy First Quarter 2023 Conference Call.

As a reminder, today's call is being recorded. All participants are in a listen-only mode.

For opening remarks and introductions, I would now like to turn the call over to Gary Dvorchak of The Blueshirt Group. Mr. ahead. go please Dvorchak,

Officer; morning, results to of for are Chief me Good Financial our call Officer. XXXX. Energy's to today Executive our Udseth, discuss the Kyle Eric and you. Ingvaldson, Pineapple Chief welcome conference With and Thank first quarter

morning beyond statements to These statements. are call implied of control, outlook, are to subject expectations, and cause results that forward-looking the uncertainties, our which forward-looking this these by from to Our predictions are of considered speak which may differ company's risks statements. many or and those our the will include future, which actual in expressed statements materially

our not may factors and disclosures statements to obliged earnings update or forward-looking except statements are in be any and filings. law. as by SEC today's our other forward-looking to regarding We required release, risk revise refer Please

has our reconciled release and non-GAAP page found for press that our of website press copy in last can in we A call posted disclosed release Relations Investor GAAP night. the to equivalent of the U.S. measures this The the reference. be been issued financial to are

that, CEO, Kyle ahead. to I'll over our turn go Kyle, With Udseth. the call

everyone to thanks us and call joining today. Gary, Thanks, the on for

both in spoke integrated organic continue December we second solid quarter SUNation call. demonstrating plan. permitting full very of about the is our with HEC great highly SUNation entered while from and strong successful own challenges resiliency that acquisitions. quickly continued with quarter company-wide first and poised national Our quarter an with the recover a delivered internal coming was to momentum results on the fully in growth We business ahead great to its last momentum

QX sold. last QX but kilowatts we pattern both a is declined versus grew Hawaii, Installations over seasonal of in metric up in quarter sequentially, much result kilowatts substantially of were start and residential installed more versus Let's budget. is in great the that versus XXXX, normal which key which on the forward-looking year XX% Hawaii last where importantly, delivered

at Hawaii in rate XX%. remained attach Battery outstanding

has with to regulatory team in Long different and soon Hawaii experience well. yet York of Island conducive more homeowners upcoming helping The in local storage. are changes favor solar incentives attachment paired Our the and framework batteries, there than market there years choose battery should New battery as

should to knowledge in this the team Transferring increased SUNation ahead low rate. attach the pay current as quarters HEC from rate versus at experts our battery the we single-digit dividends

our SUNation’s from sold resulted for in strong was last New now well. year, versus Turning and in with combined business, Kilowatts outstanding XX% solid were execution up momentum City, growth around New Island on York our Long value strong to team. quarter that homeowners York proposition as SUNation the our from

year, XX% at last which major crossing Despite were the the the challenges, revenue our install SUNation the driver XXX kilowatts usual up lifetime versus team of SUNation. of weather was work of for installed. achieved hard I'm consolidated a milestone solar grateful megawatts Notably, we biggest have growth. winter recently

throughout the growth We or on should keep foot strong foot say, year the to vehicle. of our to are accelerator our guess the keep gas I electric on going deliver I the

XX guidance. which half greater installations of we That confidence gives range in to million XXXX QX close pending The be of our to us revenue. XX of the performance is good should revenue year-end, million million. estimated visibility giving At us even strong before stated XX on an quarter-end, worth installed backlog, our have in revenue full-year all

an enabled growth earlier to and QX better us in plan, performance we're This reach over important top the to now the versus versus the midpoint. our trending of than range profitability goal With that planned. revenue

operations we last call, in cash from the cross of flow objective XXXX. to the positive half our stated earnings the On second

flow cash and this but a operating positive on a me QX. in important This sheet to great and press had from we it even a really it personally, spread fact, is continuing looks what important is represents. release, achievement operations In more

to years in business as in grateful on now here our there think employees all a for hard sustainability founded this work this pride their I'm XXXX. for we've to almost take the ahead schedule. Pineapple getting I X.X It's company since We've November now all And journey we something and of I to been us gotten of point. of in

the the phase just the also of but life. destination, starting for company's next a It's point

to financials future and the the year We build of have of the numbers well. Pineapple. as for rest key, on our this achievements momentum are the course quarter continuing in The are of the for extended and we tremendous but optimism beyond

systems. of the strategy a is energy control market The smart solar, element means light contract to at the sophisticated Baiting developer storage, by smart A with install to we traction and a and our local management estate East and efficiency small a penetrate to got Hollow. leading energy we is build homes full because home deal battery will but initial XX new built systems This subdivision bulbs, in other system. there a rooftop key homes, real being outfit is

to As Baiting both on around initial and energy Island in selling country. success them the anticipate of and more other these we smart Long sees sales, packages home developers

in its rapid manages ahead thinking growth, workforce. are especially of current SUNation terms as we Even

in and for demand of labor. customer country In bumping shortages some against is parts solar some growth companies, skilled high heavy field up the from

public who College, be experienced ourselves, this these with shortages spearheaded industry jobs. partnership people for our train have proactive. of Brian we is great While to we solar A a [ph] at Karp, one of example Community want private always not [several] leaders SUNation

how technical drive the This community. to succeed will local contribute roles. skills industry, to day of in private our joint example great is and public ready partnerships graduate lives various growth of in with program training can people economic the on better a one our This

a EMC We Hawaii. Management our seasoned storage systems. E-Gear of or energy Finally, in I vendor battery win Energy solar paired is big a licensed subsidiary Controller want to who Eguana share our for to

is key EMC this a light. this design holds build critical part of licensed promise it. Our they component A Eguana, the our capital volume is deal deal will that We sales high it the to of is EMC. and but of

collect a deal a for complement margin royalty our business. great starting a revenue will installation traction This We high which basis. to is the point unit side, on gain us per on devices to

We are very excited segment. about the for this prospects

over our our that, turn Eric, through Eric I'll Ingvaldson, walk now to call With to go financials. please ahead. the CFO,

that to and we in are you, of has quickly express the the review quarter. gratitude also I and results presenting Minneapolis to to New will employees I Thank their the all first And that would here in Kyle. work that York led Hawaii for like our very hard required QX year as performance of will review you only sense insightful financials results some operations, of the CSI. consisted three forma give numbers pro post-merger then SEC, our GAAP numbers a last days with of not business. of because The better by the are GAAP

quarter reported up fourth XXXX was includes and the Revenue mind CSI Let's full GAAP Keep the as contribution the XX% which XX results, SUNation. from start that in discontinued Ecessa quarter. quarter, from with quarter in JDL the a are operations. million first legacy businesses

first up from quarter, operations expenses million, was the loss were profit fourth first XX% value million Revenue fourth XXX,XXX from unfavorable was quarter. de Gross of the $XXX,XXX. amortization at remeasurement XX.X the million from of net an quarter. includes expense which X.X XX% up was of in consideration. X the earn-out A Operating in X.X fair continuing XXXX quarter minimis million, and

was XX% the we for HEC, of full from prior quarter X.X summarize million last which with The results, E-Gear, [XX%] and up XXXX. X.X million million, XX%. net XX.X our first loss SUNation SUNation year, forma net and all from assume let's of Pro revenue which transaction Now, of HEC owned included quarter comparisons up [ph] loss improved year are pro Pro million, up costs. XX% forma the X.X in year-over-year. forma

positive XXX% such million, XXX,XXX, Pro of and sale remeasurement interest adjustments from depreciation, other negative items compensation, value interest EBITDA unfavorable of of value year. income, unfavorable consideration Pro the assets. contingent of fair an X.X taxes, $XXX,XXX forma value $XXX,XXX on improved the XXX,XXX, gain a prior rights EBITDA fair an as and includes of of forma stock in expense, earn-out amortization expense of adjusted re-measurement for adjusted

the represents to is in reserved ended had X.X value We we and in refinance for available figures, of another to plan XXXX use Cash investments, holders. sheet, shape. the capital GAAP to X.X acquisitions. in cash good million. restricted quarter which debt Turning fund balance business was for raise which contingent million right We and operating our the liquid

Our flow full-year and from previously meaningful year. our in QX to operations this continuing performance gives confidence revenue cash generate range in ability us stated

for call go like we please any questions. would the ahead. Operator, Now, to open

Let’s see.

Schafer Donovan of Our the Please comes first ahead. Capital of go from line question Northland Markets.

you or the for remainder quarter-over-quarter full-year for that guidance steady or trying fourth the the quarter, or head you figure like of Hey, I'm sequential like expect any should through questions. kind some Just that color of nice hear as sense I to in of the the growth we the kind I year the cadence for the out visibility the seasonal in-progress quarter of, the kinds trending see the and on, was we give shape there. for through into it of taking anything year, second Can those year, bookings installations. a guess gives have us backlog dip to you that? you the curious guys. Thanks reiterated about your year.

through well. And really for but for revenue it's is the you we is as sure. the New work QX every see tend Early and as on build being Coast Hawaii, quarter. then a question different, And internally Yes, declined a installation York but market sure. Donovan. QX to morning, West Good our strong year. certainly on forecast throughout in one on. and in that well, sequentially. good Thanks even It's volumes

we versus over we we as X% And there seasonal believe that here less that saw but is would well. I our revenue, plan, dip. because that or smaller internal kind a sequentially a, than a reference had like anticipated previously. We of something of when on down delivery stronger was decline we have were QX

on been December then a, delayed revenue maybe is that there QX. one-time some Hawaii, that of that have instead, in think we call the December last factors talked Planning into forward about in recognized idiosyncratic last the should on both of and installed pushed permitting that and issue I Department

Similarly, we or was couldn't in in. quite modules had XX jobs. but think I something ship a XX in New We had sitting or big, were, York, that not there import it X as get

pushed they have should QX. to and got been in So, December installed

So, more with happy really in QX the you would relatively less QX. that in year-over-year think I relatively overall in QX. typical growth seen the and the But first last in have a year this in

like, those yes, QX, than terms will I will of think as be QX, will secular down be QX QX, be higher QX, higher from QX. QX and get one-time old than Because back it some look this we of and at then that QX to just shifts I mentioned into QX. than in QX, QX, will QX higher

be want would just in the bit. not of might QX XXXX bit another up quite right We of year. be to we're it quarter-to-quarter give said, of shape QX the as that's then is like and ramp QX a and reasonable on but the to the overall QX. a little year of to the to because to to a don't curve kind trajectory a yes, going sequential you expect QX big really decline guidance, muted as to of organically over And a throughout growth you see up up then big But though

to which that's in guys Okay, helpful. the you XX% rates, you that attachment want then release, also about is talk Hawaii also gave And is as great. XX%. at I then And I press think battery mentioned

like I'm are And SUNation. [ph] things it we in broadly? the attachment think in trending of forma, a apples-to-apples, pro rates are I a think kind so, can, if about [lower] like lot how wondering

like general, of and you like really that's direction? trying in if And Island kind you sounds don't kind spectrum, confusing of Hawaii you of so So, a but that's change it said there? get it would opposite are forma more pro of in that the they're there, because drive to maybe move there's – could Long improving even policy saturated improvement in kind attachment trend? seeing talk if or SUNation a too about that policy, basically Is take but ends you not you a the or maybe some

definitely. Yes,

New And how it's York. the of weighted get of you in just like high Hawaii and the XX% to rate the some just math average rate the is in like lower the

those looking of that in to we to of own so view install their volumes you're And sales standalone the whichever then weighted or metric at, you'll tend but average. on volumes, kind depending get each silo, relative

even itself that And weighted average. then is Hawaii in a

new for you'd a approaching attach install it a only or you already. XXX% storage, new greenfield market have call at when roof non-export it's became solar, on roof economic You on doing And way have on A self-consume five it. paired over it you doesn't could to continue It a that really green battery rate with brand tariff. [ph] that own excess. or any in if whatever been switched years that battery [PUC] least a your solar to

the systems so, have under Oahu are with battery almost has a tariffs. a on is But fitting upsizing [ph] business solar retro old And [grandfathered] install have every healthy of prior in what you new do you brand that paired it. and

PV So, have putting on that included of is older that that batteries. we're to in those don't some systems

tremendous the homeowner in out see megawatt XX% Long there was mentioned real X% is I average less that. a like and of to In good right? think also house. XXX was low-single-digits, that to I and It of two look ton customer's a this the Island, grow but the weeks got a there. X%. that And we tour than work team I time, XX.X% there's even all at ago home. crew doing or at the opportunity It's the and it's walk with the weighted and So, I like think install. of with really was event

it's panels the roof wall on garage. so, at Tesla Power in a the the And

well. a yet and which our install, as a they'd pump, that about installed and as on it's panel They DV span we switched we potentially over but had with as also span a us, well talk charger, something roadmap recently heat don't to

decision. it going the I that just here wife made So, utility this said, him had electrify to is the why really talked And policies a who's down current and that path. like homeowner and with they everything well the under husband battery life about the and And just you'd the pencil but all on of this value over not think necessarily future streams incentives expensive proofing the that of ROI, place more net doesn't house. it's I it. in as that it and an up much really there's enough when And

mentioned XXX% mind people more in that, there more And are then is change and not becoming on we've time So, And of rates on I utility is bigger think top to that more of of but the solar. they're economic thinking within the had and I a it couple everybody more this battery at proactively. territory. use sure switching a top that that excitement electric execs it a of utility next XX months. where even for ceremony. timing, come makes just the think of storage much And were it'll the And to just this pair with switch there I'm lot

where to like get majority. the with and this edge edge, of kind and starting momentum getting it's So, think the confluence no you got then cutting policy early bleeding is of I into regulatory the supportive you've the public longer

come. I think that's starting to

kind spreading needs. just knowledge Just about with how sharing our transfer opportunity to combined consumer great best and own different Hawaii, at really talking understand homeowners continue is of think to which the about from and it to and this practices

we're So, York? growth New in going we're see about optimistic battery to the

the Moore from EF line comes Please question of go ahead. Hutton. next Your Instructions] [Operator you. Thank of Chip

is around for congrats the Hey, cadence, maybe positive the That's flow Eric. speak to see. and to to thanks morning. guess an mix your else thought higher Good sustainability you there similar was taking in great question, that I say was revenue help milestone. Kyle that outlook cash on quarter? in full-year talked than terms near-term, And the QX? even the anything when that question outsized in of or anything we And of

about talked of Yes, last we we ago. wasn't that I – long actually think yesterday some we the this that internally and time this spoke is

to March sight going of revenue sharing between top line it we But and head pretty be on prior in even your just had line we months QX the so think You XX, XX/XX. our into were know, great. and were three call these, though results that but point this was good at you every quarter you're will do so through was

those both talked Some shifts at of non-recurring was in some about of businesses of that the I – QX. delays over one-time it December into about, end spilled

share our those I think just that we our top ability more the both than bit broad on conversion funnel markets being were – pipeline. rates efficient we at lead over gain getting delivered generation based leads a demand into through sales, in on of to

to and and and It containment little control efforts. win was cost well costs, the be then managed the of kind of some board bit the a across an on synergy we ahead curve the just, think of of I some as

that. kind it's value give And we ahead across think of I of you definitely schedule just so, a the of sustainable that And expected on, bit lot we're metrics board. standpoint, from on are it's when kind guidance, of a of it. And the

on So, I I'd guess that's that. what say

margin the a think I up think rest the of sustainable certainly I good for we're and performance set year. really is

That's would follow-on opportunity of great on the I some that does progressed Kyle. near-term be and visibility And guess more fundraising given is obligations? and this up the open side some that options those in Have and it that there realm? the

touch didn't much on the we script. Suppose question. great Yes, fundraising in

to think both I equity, pads about us. talk about are that debt, available talk

and before where and when got hopefully Feel raising look that That driving really to the the capital appealing. initiatives of of tap right company, value up [indiscernible] the is we've think the putting like sight a at. great at wins continue we source. for not we price it's board stock creating don't love as I on now, dilution that line good

that lenders. different we've with in I you multiple engaged ongoing look conversations then think at been So, debt and

we I a for even this appealing. in think year, in more then model. just previously that reinforces makes and strong the confidence solid We that had it and performance had really QX

any to now, don't be a So, results the have us but of going operating lenders. really specific share we're confidence business give for that the details right on appealing different I'll say to that credit multiple that

Thank you.

question Your go Please Alliance the Global next Partners. of Grampp line ahead. Jeff from comes of

understanding you of comments a onion the impressive Can gross the peel quarter-to-quarter, numbers see Understanding QX, look are the like expecting If a but to guys guys. margins I kind look, are little kind the as do gross of on margins? more? a on just GAAP you just kind morning, wondering bit talk margins. Good incremental so the you noisy drivers can, we drivers? of the impacting of What the main kind little there continuation pretty back the main that QX if of

Yes, Eric, take do you that one? want to

sure. Yes,

So in XX%, on quarter fourth the a were our quarter to a GAAP quarter that gross lot SUNation a the sequentially, of showing last with in basis, of was presented not margins that has do first full of up year.

the peel the numbers. at consistent do back you look fairly a are you pro onion if little margins If bit, forma

did slight increase to that sequentially cost even costs quarter installed, the from flat our that goods, is outlook [indiscernible] panel stay for price the You first a on will decline. fourth see in or of quarter. And

healthy margins So, are going in confident we maintaining forward.

a time appreciate efficiently opportunities, those operating buying improvement doing spend about, see of already XYZ to how a great into say on how opportunities you an where at opportunity for spend M&A of as or thinking lot that. marketing a kind operating synergies efficiently is maybe, background, of do we say improve to That's an into do kind given kind you I'm guys, but here buying your and pretty as trade-offs? curious I at maybe, that like, leaning brand, evaluate of guys some much brand kind a don't versus that's brand brand customer sales much opportunities Pineapple already could experience, time of efficiently? And How think that's interesting versus and we you you lean are when okay, strong looking they're guys hear. you obviously Kyle, Awesome. do

spend are [ph] think we Yes, lot diligence. multiple Jeff, criteria. question. of different time acquisition that it. as] at through partner a I different or I potential on we And [brand view And there great We think merger that's a look any

it that business. general potential but a going I through too not audit, kind think there's, squeeze the risk be criteria going size the going juice presents to the with diligence, think big we worth integration through on of is where

We confidence sure want of We don't model, have can the about overconfident have Hawaii been in after well as integrate we've the that, about one make next a integrate able to we to the hubris lot and York. but one it. New get to and as want we

of or important kind blended gross just component. component. for that a our current even that at margin businesses margin So, is size around like than have financial Certainly look better really us. We gross that

that We look because and us thing a so fit, a business that the for found of and So, can companies to as for pay EBITDA We margin the flow, for it and what multiples vision on well cost which at is containment at is fundraise it's we we important. who huge somebody can the want fit got managing the make we cash look of other that also sure for that we that just it. lot accretive shares because dimensions. but we've is integration, that's cultural

we like and to tend us They tend to like them.

a The companies delivering of customer companies an time experience everything. all here we're early this transition to like over is critical. – innings this electrifying So, the all as our win a in committed and going think And in that of energy to way on path think are just we to are are my but still great that I are acquisition thesis. it's and important, really I piece it's and it customer in this so view, those view share

produce So, roof. it cooktops, with It's and then electrifying pumps, source in energy, a consuming it home your energy, in consume in power you grid and the sell your the geothermal ultimately the around home. and induction you heat the producing you its also it the you move grid storing energy, heat plants energy back on charger, just and you the mobility, virtual pumps, the air devices then revenue. your in it's it producing more batteries to electric not with more power vehicles It's store services

that homeowner the has that to that relationship crux closest going to of win. that trusted the is The is company of the and with all homeowner the is

do you cost so, the the And the relationship acquisition deepen and then ancillary upsell, but one-time, of the to opportunities. customer value lifetime those cross-sell, grow you and

so same right And a isn't customer view experience doesn't the now. doesn't way, that to things that company committed have rates high referral

those high cancellation Has to us. rates, are not appealing

So, we that. key of a look time on when ton at Those are we businesses. of metrics our spend some these

so, to and it marketing, office too. and Eric's model sure think of broader finance driving services point, and and the are then ones believe the do synergies shared already. it's that beyond sales And tremendous my integrating But back background we making there extends kind the through some of and functions accounting And background. we in I got that kind is find your just that's and on acquisitions services shared of

So, to I conversion? a How do close But for of our you How How maybe lower you it's really manage this those inverted do source when Definitely, there's generation, you synergy at lead say LTV? like responses, with the and other maybe CAC starting long this, sales around optimizing the economics unit end lead you going it the sounds thing prioritize? those cost do what performance keep be and hard pyramid guess only think, something we this I all look yes, say hurdles. I'd view kind of on different of of it’s all clear just ones? to I at do paths. eye

this X,XXX that tail. are all are sales of mentioned. long bring opportunities And set we them there installation certainly, just abundant there's And there and but even those – medium meet an discerning and bars high in right companies that companies are these and find that in we over to

[Operator Seeing Instructions] questions queue. you. in no Thank more

Let me Please closing back Kyle ahead. to call the remarks. go for turn

operator. you, Thank

we investor have up. mention I we to coming events some want Before conclude, relations

events we’ll hold Tuesday the Panel in meetings Solar early Conference, present one-on-one a for and sustainability Cowen's Those the at meetings Next York please private brokerage Residential firm, at so we’ll clients Renewables the New sales Credit be register in are and U.S. one-on-one schedule rep your meetings. week Suisse is for and virtual. of then contact June which each to on conference, Utilities

XXXX solid wrap-up and the will this call. are performance. sustain confident now by the to me excited we We're start Let strong

We as bring Pineapple. organic have much be core didn't cultural a about while growth there continues our complementary our portion and profiles to We've great in abundant to M&A fit inorganic on are next the growth with great financial spend working we sourcing scripted opportunities and momentum time and acquisitions strategy. that diligently been talking to with in businesses strong

drive with forward building We've call earnings next at our where potential in cash national revenue business is our look We further to team and to reached a progress operations pipeline of substantial flow our has the acquisitions point by growth. positive from is run reporting August. an experienced management

again Thank for support. and for joining today your us you continued

our contact or This me, any Eric, Gary If with please have today. concludes call our Investor you questions, Relations Jenny team. and

you. You may all disconnect. Thank