SUNation Energy (SUNE) 10 Nov 232023 Q3 Earnings call transcript

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

As a reminder, today's call is being recorded. [Operator Instructions] For opening remarks and introductions, I would like to turn the call over to Eric Ingvaldson, CFO of Pineapple Energy. Mr. Ingvaldson, please go ahead.

to third conference quarter welcome results to and the for of morning, Pineapple call Energy's discuss Good XXXX. With our me Chief Udseth, Executive Officer. today is Kyle

This in Pineapple Board being and the pleasure Minnesota have our by State. Director quarter, SUNation of at business headquarters a here York our of Maskin, Scott founder we also New joined the

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

of any The required regarding today's may our forward-looking statements, call the We that, CEO, has call filings. go for issued can not statements Udseth. and release With measures we found U.S. other turn are except the Relations SEC will been by posted in our copy disclosures ahead. Please A update be refer risk to financial factors release and in reference. forward-looking our equivalent of be obliged GAAP that non-GAAP to earnings website or Investor reconciled to this the are yesterday. in over press please discussed to I the release page law. as our press Kyle to revise and Kyle,

participants hour to We has quarter, to a hope everyone the push which and thanks us Coast X coffee. cup the of grab our this Thanks, joining this West chance given second did Eric, on call this back for morning. I

focus continuing able will able positive corporate and to also sum, And SUNation and every detail its to strive environment. we share and but larger goals results our effects Delivering investments. it I operational our EBITDA. share ROI our But quarter which more joining happy our came so the trying Today, while are the Energy think gross spite for hitting Rooftop headwinds, tight them this driver in profit of centricity the is not up sections, kept easy. dollars' budget our of I'm in year-over-year my has stronger. costs, a from quarter deliver Pineapple later yet year say earnings data Connection I peers. We right, own quarter businesses center, is more public on But rally QX once in early. broadly. the build of to execution recall Solar, in effectively of keep again of were able see focus results industry another We'll and improving to and up ninth don't As beating still only financial and to rate Energy. to in And won't services disciplined and a Pineapple always, This some adjusted growth to culture a our shared high I containment revenue cost huge contain cost on our teams showing we continue in appreciate strong you and quarter been results another performance, to XXXX. are challenges We be sharpening interest positive of grow Hawaii that a in in we in the both never it's accountability far, while into in accomplishment a while QX, capabilities. of macro pencil so

realizing holding QX foundation the the Revenue the gross the in up story year-over-year another we This due the Due increasing while excellent at look building continue was XX%. profit in produce, to do. DeBone rate a significant our length out time as the team procurement real X% attach more but a and is of year-over-year, HEC XX% for tremendous get own is consume the of cost. pricing And important Now Hawaii, as detailed that decreases future, battery performance, grid let's so we and expense don't his store start to to where would like trip, Chris electricity. at as and in we where quarter. line turned spend on for their visiting remained people can much success to

to to in last time customer our great I it number a help and referral there to and and bills. testament October Chris solar and our team save team and people think that out But phenomenal months a was XX on everyone via of planning just reminder chance the day. to strategy of And all been get In XXXX the session. sold a I able go XX% one the of systems electric experience you see it for in QX, be is works every reflected with how customer And our and there I've referrals, had place the such go which a Eric their great how is hard did that HEC since rate. been team. the just is deliver came solid

as but come expect a time implemented Island in result rates which grow year-over-year, that our product XX% to New environment. to And managed This we York when more strong day very and costs where are the result do but to came from Hawaii turn how to New York then was number, down environment. we'll rate strong Scott grow we in negotiate. Let's solid of QX key Battery is poised by be Scott were driver current capitalize pivoted customer much experience. rates Long market, aggressive in sales When fees, the the a is which experience all a decrease our leveraging because quarter. were truly a X%, which origination gross loan to quarter now impressive possible challenging New know-how to able from at fees included Maskin interest delivering is interest in in XXXX X% a a are and this rate strong significantly attach market. quarter, down XX% shows team financing happens, whole years in York, only the we dollars number taking those care the And Revenue the that team delivered in of of importantly, great This that revenue dealer such other customer referrals, significant essentially customers job a comp. against in and result. great in and XXXX partners profit the also we are was of of and was the new and have by

good end, visibility revenue. As $XX.X estimated of have giving backlog, quarter we installation probability-weighted of on an million us

of together full in million. the first range already year we've through revenue continued our numbers the million year, Taken us to the quarters X with gives $XX stated delivered that confidence revenue $XX of backlog

while more we Additionally, details, our deliver that were adjusted third again to quarter will Eric positive in provide of EBITDA, state a able I'll another just here row.

a on are something made On and for is absolutely opportunity guide to versus we've and growth as financials and regional progress But bottom big And steady the now the whole our team, is think commercial and please so front to more EBITDA we're discussion walk well. strategic for leadership on With That's buying drive competitors. you last a tremendous it positive focus vision through really consolidation full we, focused of that of our differentiator a CFO, and consolidators the that residential broader existing in of ahead. organic I still Pineapple. And intact right and detail. for solar the roll-up year This as companies, XXXX. that call can the Eric, Ingvaldson, this in find and continuing to environment extremely turn a in our savvy the support presents over to at leading our a current line is local businesses. go platform lot call, Eric and experienced that, integrate foundation, you've the heard is companies. I'll adjusted on

performance the then our SEC certain The and financials I will give pro review the year-over-year forma required you better review that numbers the of GAAP as will of a sense business. by QX Hawaii of SUNation are operations was not results acquired quarter of less results because our only the the year which included GAAP and results the fourth in XXXX. last of insightful numbers

revenue the The start $X in growth Total gross million a an an Total in profit the QX were the increased quarter costs an improvements results. The $X.X XXX% was Total expenses operating equipment margin increase primarily million, up third Let's of SUNation were million in amortization was year-over-year. or profit financing XXX% an third $X.X $X.XX The from of of $XXX,XXX and of million, XXXX. $X.X $XXX,XXX included to increase depreciation third in gross and expense, Hawaii. a and a the fair SUNation financings year-over-year. million, million per and profit contingent of $XX.X acquisition in the $XXX,XXX operating a Gross the organic of or in in increase profit improvement a improved increase This $X.X of was revenue of and of of of from XXXX value fees. unfavorable SUNation value from of improvement and result XXXX expenses Net $X.X XXX% loss result the was per of consideration. the XXXX. XXXX. an a million improvement to or increased or due expenses from of $XX.X quarter million in the the over the was $XXX,XXX compensation in was QX of expenses million, due remeasurement of quarter $X.X quarter and result acquisition XXXX a GAAP $XXX,XXX to of stockholders expenses attributable Operating with third of third diluted acquisition primarily loss XXXX operations quarter increase decrease revenue stock-based the fair an prior third the margin. second to diluted gross $XXX,XXX, year. X% in Other an were due quarter $X.X a loss million the interest loss increase earn-out operations quarter share continuing closed common a XX% in in from loss continuing Other from net of rates. improvement expense of year. XXXX. share the value and increased $X.XX debt third XX% quarter remeasurement of Operating in a prior and unfavorable was

comment of year-over-year XX not ended due operations meaningful post-merger will results the XXXX. in X first U.S. X the of days comparable only as quarter aren't to represented on the for GAAP months September CSI results We with

value revenue Pro forma summarize systems, employee million X% X% for performance to operational Year-to-date gross as was fees $XX.X Year-to-date, for pro XXX% residential retention assets, earn-out sale were due net the the to increase EBITDA in of cash payment operations prior pro of leverage with $X.X million EBITDA XX% let's the obligations, gained improvement at forma from owned HEC pro we of the quarter as due million year, This per value margin the in which third activities a customer improved pro restricted SUNation X declined result last the improved The business the months SUNation better cash however, net used of adjusted and and end million and improvement. increase the Now in prior from and of had from costs in cash positive XXXX. EBITDA to reduced contingent for decrease quarter by million HEC a due of average compared $X.X the result in CVR XX% the forma for managing revenue adjustments declined $XXX,XXX gross installed the equipment installed in in year the SUNation to revenue. QX of in $XXX,XXX for in a the pricing. decline second compared XX% residential increased deposits contingent and and XXXX. QX XX, operating capital. revenue and XXX% quarter installed revenue full quarter. revenue available fair year $X growth income equipment revenue, pro offset through which Net up investments, with of residential the balance. a to million Net and retention represent financing comparisons due another year ended quarter, an price compared forma slight on of holders, acquisitions. by gain forma liquid prior to result during $XXX,XXX adjusted credit. outpaced year lower decline rights $X.X the the price profit We recognized employee to forma for $X.X million assumes the $XX.X pro prior holders. achieved the Notable selling down losses operating was fees a financing positive XX% in $X.X net quarter The million impairment compared in includes activities of cash the our consideration margin the from commercial in working remeasurement of stock and the million $X.X at Pro the closely residential to due growth, the other prior AP financing results, X% reserved year-over-year pro million an a $X X% loss assets. up negative compensation, costs of year. third forma of impact was the in XXXX. changes at forma September which cost generated increase in was Pro the our customer XX%. credit and increased a year. the to resulting the business. by million value reduction to in improvement, negative adjusted cash and of of is The forma by capital forma from revenue operating declined to $X.X kilowatt other by profit, revenue in increase We XX%. of $X.X service rights average X% of million improvements decrease ended in in as kilowatts pineapple or available offset XX% of versus in working QX restricted

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

[Operator Northland Schafer Donovan Instructions] We'll Capital go Markets. first at to

battery sense impact that expect a sort billing, you of or inbound of to year attachment like do first there, are indicators you in in new more that absence have potentially -- want interest. leading the you about Anything of you towards or the the then or gives activity that seeing that, for or maybe seeing end anything it's Island you're a an be whether or ask any of track, Long whether uptick XXXX do with inquiries signs whether time-of-use installs. that earlier I sense And whether of of to the you you have quoting the a year? have already an

answer I I budgeting absence now. is still kind of right would in mean Yes. We of that, the full the say are right? XXXX going through

paper And so to we on haven't put the all this like fully and assumptions. pen

build it's think groups it out or out time. get like chunking to tariffs and I what it's they're be how customer broadly rolled over and going because a over time it

if than this. don't think here knows know certainly got you know the view Scott build don't on it's mine about So going I got through we've to year. a who I up probably this but more of I all

Sure.

X, time IT issues day delayed the was slightly So of they'll customers chunks new in from doing January territory that $XX,XXX, customer opt time the $XX,XXX year the that the rates. will end probably XXX,XXX payers in of beginning I be will of the $XX,XXX, goal of to XXXX, have is, believe be all like automatically for will the meters, and the throughout of be the rate rest enrolled day all rollout new X, rates but utility, out of, January by groups

And about still our our but You earnings items had sure here make together, through NIM sure we Yes. sure it's got about our and it is real lot to book, earnings what for start is week, to we're we're right analytics that's a savvy since who track, prep And how make it for seeing that solar X expertise yesterday the bifurcation were the NIM make and get sure right sales looking world at with look pivot even you how we and the make had we team were at battery looking able that evolved that we're X a We're in materials, our and to a and in-house in at going start prepared from then and weren't. to were be companies leadership opportunity and market team, start in selling back Scott Hawaii share. got got of earnings, we in California in then at look Island, priority post He's storage right? office. And place of plus to we're experience, Board going who in and the and call. we've sales market customers the draw. and that in it, let's in we've just years one we think a right also the talking think Long mentioned was in next separate the training, the helping the we elevate this different, differentiate the going We can. and it's pricing group script, we you the to to starting pricing said XX take And expertise top look like we've I great I a in And yourselves ton release, and meeting to right? with be there.

confident so to right offering to that a able about great were be have talking it we'll priority customers. literally yesterday, But how becomes effectively this just present we I'm away. a and like And

revenue. Okay. That's helpful. And to then turning

were QX down then sequentially guys You you're down again in and in QX.

at residential other companies, talked year. a kind to issue factor the environment. the from know we all know pushouts call, how QX level sort that QX about talked going a think an it's and of last -- be last QX. the challenging late you Hawaii of that I from would the we wouldn't from to of building due the from department was I elevated about On some But certainly

gives for all confidence in the of is So I what sort guess QX. that, the you of light question

it got there's out? in Are slip feel about the is it it You've yup confident going , that's the or backlog you canceled to like of it's time C&I getting you land seeing in it's to there anything all skewed and makes feel like and you're there cases Or What the Is -- QX? is sort wouldn't QX of that you there. what from to stuff or something? Is for pushed firm makes it that, the getting QX. backlog? line feel

a you're this minus and to say give side trying You're X Yes. midpoint, thinking Confidence you relative. standard bit. what it's guidance and or a is, standard to confidence is. all guess, it's trying pick actually I deviations within are speaking, range this plus about doing? what X you interval When or on was I little statistically deviation and whatever or the a

like December that look October November So there's that New we've track never dunk, months management visibility like project of I the and our think pipeline. a And so X can for against in in slam got got C&I the calendars mentioned, CRMs we've we we We've far, what the York, it's systems backlog historicals. and in out. obviously, install and got but in closed and and also our then

have So maybe good But and we there's not there's is guaranteed. I visibility it's end, think the going also that analytics upside. but to into how year downside,

installed. look that it the where the it you there's And a through going business like to that's growing. a basis that think in revenue flat that if it lowers down, be one right? said, because a maybe to industry, think like but could like, been and like if your the the margins. right? holding it's up jobs it's overall, be do about is look it's a time But shrinking declining with a It's strange we're it's thing, prices end business line or even Because of great but exercise screws just in there's number are because -- I what it you should kilowatts cost the prop -- kind XXXX, strange or for great of like helps growth a about I of Because make or in revenue good prices increases it talking it's we've a consumers things is going lately still. budgeting how the value

And it's call XXXX, gross profit little -- us you one and emphasize profit heard with more we're dollars before. grappling on you so into bit than this that the gross we a but why had of reasons

the what margin even really your gross that's the prices up, the think go At of dealer wash of go install years was go your not I down, percentage, what you down, and And kind it in that the your his fees we've fees, Scott resolved are X the a GMT out a what up, dollars you on what the the like comes a and shirt was price all round it what Coop-dealer your go end actual yesterday, do, sell you X. profit ago, the your topic. front of and go are do, cost down of EBITDA. one was costs OpEx day, actual you even your generated? I quantity of made then had of colleagues gross saying you

a short working where I But things how going budgeting. I weekend XXXX I'm the something. and make gives or confidence of the rest to us in breweries about we're what through the the in the on that's thinking our like we're that and yes, that quarter think guess and

Grampp at Jeff from question next our Alliance Partners. Global take We'll

the planning. question pricing and think come on the here kind when hardware be and do first the feel things given there these appreciate tailwinds margin any That levels? and nature? we're about Is that of on out more call in the I for know continues delay around And you our equipment we the strong. very performance. of room I to A Or there, growth you topping guys

always is see pricing even Scott too what's worry in than the of that margin, a maybe you right, gross bit It's balance you margins is right? on a but go get of up how make too, gross to do price first, Eric, and over elasticity? then turn are on in volume, little our competitors starting has and more Let that almost better, the short little if I'll going it it to to term, you me are high which look delicate and high, lower perspective go and relative that at. something to a priced we're bit And I

teams supported certainly and great in done Hawaii trend been on I'm the a but accomplish able both across a corporate the by discounts industry, cost have Our and procurement, proud York on of tremendous negotiating work and on what realizing that. some basis job in New we've to

And and needs us we XXXX what allows benchmark and want or to also the so you operating margin We're go see the budgeting, new to be again, and OpEx each at higher the form to through. gross where actually EBITDA to that XXXX come be it's at, just -- trying a percentage look that to we're to that's businesses, back to on how up in a acquire. get we perspective companies XX% for of the margin

of is So to and kind I we a I the the continued lowering on of margin drive know, think want add do pricing cost on of you question where is And room the to there Eric, is what basis. cost the and to at. keep don't then anything that? do out what business to elasticity

I cost increasing. Yes, consumers inflationary that today's to used in of are environment, think kind

that or our we're to slightly and we've of costs maintain But reduce to watching lowering we're just prices to to been equipment enhance our far, are financing to our and sure dealer to so we've in margins share numbers advantage competitive able sure want We that selling closely date. equipment make So fees lower been market able that while competitors and so still of to maintain market taking pricing what we make take our are in. advantage see each costs doing.

an obligatory you M&A rich, seeing macro a update opportunity I'll follow-up, potentially ask and my but It's that guys uncertainty. are question lot what in market. for just And for get the of obviously

executing So thinking how guys about this you potentially market. wondering something in are just

want I on. I on valuations is lower We've don't it announcing absence closed excited recently. to the company know pipeline progress who perform in a biggest operators. interpreted of activity is get list and say level And think that, front it. if term, ever been good funnel. the absolutely healthiest the the really right, only absence greater focused quarter the prices the that that a incredibly then the trickles of companies you it. down through are over the there. should public a you and confidence the it's big times be they really money. private part as know last think and stock of of fit buying, down to with it's think to mean a shakes a them time and -- an And to we of the we've right? I'll time drop a and on lot the silver then what right And our out of well. through and we're We is the remain say them to I row you can be deal made about massive that, It's you, in you companies is equity in quarter have focus on of I this right the because It not and it's I for think active -- and on the best short ton companies the And of raise of that solar been, valuations lining the if funnel entering challenges, more this good seat then more, the the to the you a right some you companies diligence get start how And is I'd

companies it's you then the identify you're so right and and go a And if a to to diligence fundraise ability great if have be time consolidator, buying for it. your confidence in

fundraising, in mentioned the be to was price public, now, stock to the but a in too the dilutive stock it currency it's consideration before, is raise right with M&A to this that. being we've point to to use think and also I whole just be able cash do where of

So that's not what we want to do.

and and thinking mean, it -- as out, starting so are been to the acquisition why think acquisition SUNation is got tool was company size it one. tripled acquisition EBITDA position our then about and the tools raising it's in debt line acquisition the few it. size first because is because And next of we're the bottom strong to I positive we're I healthy at and The when have of the critical but straight cash. key do disposal. capital So puts key of looking to because get was us the fall those Hawaii that have at And every generating it's accretive and We you to critical, that But was the company think we debt raise can our a well-run we businesses off multiples. EBITDA. bottom different totally line the

expectations Great. quick you Kyle. where with companies Are does every Or Maybe don't? feel -- there's need you the narrowing seller terms a that public seeing get the in mark-to-market of on follow-up you day matriculate private some of on through mentioned, Do just sufficient done? more a you market transactions as private to you that, therapy fire be kind to there's side? equity, guys, to

No.

or like up good different feedback. there's constructive getting going have deal, a consideration the value things. motivations roles or forward, So what toolkit. values Like levers different are sellers a are people. different we seller in conversations notes, we're with tools stock, I lot different those front, different earn-outs of think And individuals have right? think I the of cash really put There on in

in then lot going is you the the as -- way. just really at of cash multiples these of a size of and at just look kind material think be acquisitions are think we upfront I ways and in mutually there. a consideration at, terms negotiate I company, at. We're healthy So place. public And overall probably where to adjustment where is And there's beneficial are to I think a a

audit has an it's doing there's we're say. to so a And good that But happen, to component fundraising do, component to what trying there's happen. that has environment I'd a for

queue. more no seeing questions the I'm in

Let the me conclude back the Mr. call. call turn Udseth to to

for Eastern. for be Eastern. events fireside Bank later XXth, joining I for X. sure. York to flagship West I next a the New Then the Evercore we'll of chat It's conclude, to of XX, well going And to the with November wanted to please know a at to eat at running Janney Renewables Julian amazing upcoming I X definitely on need December mention you'd contact Energy attend firms for Clean we able America Before be then X that who events We connecting food I'm Thursday a Investment to and those if month reach X at New James fireside city, virtual one. out like schedule in your will Orleans and in those Conference, an Eric Symposium this on joining look attending and through forward chat we'll issues be to pack few one-on-ones. to is we'll be anyone

first for acquisitions, company utility rate behalf of good conclude, fundamental everyone, much next and And Thank and keep to billion our tough we're continue challenging our see your while I to you everyone fight costs for homeowners speaking ongoing the pass time been to as on stocks in round declining, entire in coaster. oil proposition to around us strong fighting interest kicking to $XX cases, both X-year huge this keep your listening when for And it's we equipment know But higher just This grow through, rates joining excited into has morning and doing riding lows. continued engagement. rates by and going Now of again renewable support. value a is the grow. able you solar the industry. while the or in their are X the this leadership past ever-increasing team, has thanks for pretty quarters X environment to deliver reading companies, hard Pineapple quarter the the been to XXXX, operating a

any have me. If contact you call please This today. questions, Eric or our concludes

You may all Thank disconnect. you.