SOURCE: Sunworks, Inc.

Sunworks, Inc.

August 10, 2016 07:00 ET

Sunworks Reports Record Second Quarter Revenue of $31.5 Million and Raises Full-Year Revenue Guidance

Company Increase Full-Year Revenue Guidance to $110-$115million

ROSEVILLE, CA--(Marketwired - August 10, 2016) - Sunworks, Inc. (NASDAQ: SUNW), a provider of solar power solutions for commercial and residential markets, today announced financial results for the quarter and six months ended June 30, 2016, and increased its full-year guidance.

Q2 2016 Highlights:

  • Record total revenue of $31.5 million, up 186% year-over-year due primarily to acquisition of Elite Solar and organic growth; 59% sequential revenue growth
  • Gross Margins at 29.4% despite higher commercial business mix in the quarter
  • Net income increased to $744,000, compared to loss of $122,000 in the second quarter of 2015
  • Backlog of $43.5 million as of June 30, 2016, up 192% compared to the second quarter of 2015
  • Adjusted EBITDA increased $2.7 million to $2.9 million compared to $215,000 in the second quarter of 2015.

"We continue to build on the sales momentum that began in 2015 and delivered record revenues that are nearly 60% higher than our previous record," said Jim Nelson, Chief Executive Officer of Sunworks. "During the second quarter, growth of our commercial business outpaced residential. We expect this trend to continue in the near term as we capitalize on the growing momentum we are driving in the commercial market. Looking forward, we believe that the initiatives we have in place to accelerate residential sales will scale and that the distribution of revenues between our business lines will return to more historical levels in 2017."

"The Sunworks brand is becoming more widely accepted as an industry leader and we are capturing a larger share of a rapidly growing market," Mr. Nelson added. "We continue to prudently explore strategic acquisitions and expand our sales organization to further enhance our growth trajectory. Investing in our business to support expansion, whether within our existing footprint or in additional geographies, remains a priority."

"With a backlog of $43.5 million at the end of the second quarter, we have increasing visibility into our business," Mr. Nelson concluded. "This contracted business, coupled with our growing pipeline of opportunities, provides us with the confidence to increase our full year guidance by at least 10%. We now expect revenue growth of at least 105% compared to 2015, with a significant increase in profitability."

2016 Guidance

The company increased its revenue guidance for the full year ending December 31, 2016. Management now expects revenues in the range of $110 to $115 million, up from the previously issued guidance of $100 million. Management continues to expect consistent profitability.

Second Quarter 2016 Summary

Revenue for the three months ended June 30, 2016 increased to $31.5 million compared to $11.0 million in the three months ended June 30, 2015. The increase was primarily a result of the inclusion of Elite Solar's operations and strong commercial sales and continued growth in residential installations. Sales to the commercial and agricultural markets represented approximately 80% of total revenue with the residential market at 20% in the second quarter.

Gross profit was $9.2 million, or 29.4% of revenue for the three months ended June 30, 2016 compared to $3.4 million, or 31.4% of revenue, in the quarter ended June 30, 2015. The lower gross margin percentage was primarily due to a higher mix of commercial and agricultural business.

Net income of $744,000, or $0.04 per basic and $0.03 per diluted share for the three months ended June 30, 2016 as compared to a net loss of $(123,000) or $(0.01) per basic and diluted shares for the corresponding quarter of 2015.

Adjusted EBITDA for the three months ended June 30, 2016 was $2.9 million, inclusive of $1.8 million in non-cash, non-operational accounting charges related to the issuance of stock-based compensation. This compares to $190,000 in the corresponding period in 2015.

Year-to-Date 2016 Summary

Revenue for the six months ended June 30, 2016 increased to $51 million, compared to $16.7 million in the six months ended June 30, 2015. The increase was due primarily to the inclusion of Elite Solar's operations as well as strong organic growth in commercial and agricultural markets.

Gross Profit was $15.1 million for the six month period ended June 30, 2016 as compared to $5.4 million in the six month period ended June 30, 2015. Gross margins remained strong at 29.6% of revenue despite the overweight in commercial and agricultural business for the period compared to 32.4% for the corresponding quarter of 2015.

First half 2016 net income was $366,000, or $0.02 per basic and diluted shares as compared to a loss of $1.5 million in six months ended June 30, 2015 or $0.09 per basic and diluted shares.

Adjusted EBITDA for the six months ended June 30, 2016 was $2.9 million, inclusive of $1.9 million in non-cash, non-operational accounting charges related to the issuance of stock-based compensation in the second quarter. This compares to a negative Adjusted EBITDA of $780,000 in the corresponding period in 2015.

Balance Sheet

  • The Company had $7.7 million in cash and cash equivalents as of June 30, 2016
  • As of June 30, 2016, the Company had $236,000 of debt outstanding, exclusive of convertible debt of $1,140
  • Stockholder's equity was $26.8 million as of June 30, 2016.

Backlog

Order backlog on June 30, 2016 was $43.5 million, up nearly 200% from the corresponding quarter in 2015. Backlog is based on signed orders.

    
  Q2-2015 Q2-2016 % Change
Beginning sales backlog - $M $14.7 $39.8 271%
       
Total new sales - $M 19.0 35.2 185%
       
Total Earned Revenue - $M 11.0 31.5 286%
       
Ending Backlog - $M 22.7 43.5 192%
       
Beginning Backlog - MW 4.6 13.0 282%
       
Total new - MW Sold 6.3 14.0 222%
       
Total - MW Installed 3.7 12.5 338%
       
Ending Back Log - MW 7.2 14.2 197%
       

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that the Company believes is an important supplemental measure of operating performance.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period.

The following is a non-GAAP measure of cash flow, or adjusted EBITDA, which adds back non-cash items including gains on change in fair value of derivative liabilities, stock based compensation, interest expense depreciation and taxes.

  
Adjusted EBITDA  
(In thousands)  
                
   2nd Quarter ended   6 months ended  
   Jun-16  Jun-15   Jun-16  Jun-15  
Net Income/(Loss)  $744  $(122 ) $366  $(1,526 )
 (Gain)/Loss on change in fair value of derivative liability   -  $-   $-  $(68 )
                
 Non-cash Stock based compensation   1,834  $35   $1,863  $75  
               
  Depreciation   47  $11   $113  $16  
                 
   Interest   289  $266   $554  $723  
                    
Adjusted Net Income/(Loss) - EBITDA  $2,914  $190   $2,896  $(780 )
                    

Conference Call Details

Management will host a conference call to discuss these results today, Wednesday, August 10, 2016 at 10:00 a.m. ET. To access the call, please dial 1-800-901-2731 (toll free) or 1-785-424-1096 (international). The conference call will also be broadcast live over the Internet, which can be accessed via the Investor Relations section of Sunworks' web site at http://ir.sunworksusa.com. All participants should call or access the website approximately 5 minutes before the conference begins.

The webcast will be available for replay for at least 90 days. A telephonic replay of this conference call will also be available by dialing 1-877-481-4010 (toll free) or 1-919-882-2331 (International) using Replay ID 10066, until 11:59 p.m. ET on September 10, 2016.

About Sunworks, Inc.

Sunworks, (formerly known as Solar3D) a leading provider of solar power solutions, is focused on the design, installation and management of solar power systems for commercial, agricultural and residential customers. Sunworks, is one of the fastest growing solar systems providers in the western United States, delivering 2.5 kilowatt to multi-megawatt commercial systems. The Company's mission is to further the widespread adoption of solar power by deploying affordable, state-of-the-art systems and developing breakthrough new solar technologies. The Company's focus is on putting the customer first, providing the best value systems in the industry, and delivering on what is promised.

To learn more about Sunworks, visit our website at http://www.Sunworksusa.com.

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These risks include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, products, and prospects for sales, failure to commercialize our technology, failure of technology to perform as expected, failure to earn profit or revenue, higher costs than expected, persistent operating losses, ownership dilution, inability to repay debt, failure of acquired businesses to perform as expected, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

 
SUNWORKS, INC. (FORMERLY SOLAR3D, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(in thousands, except share and per share data)
(unaudited)
   Three Months Ended   Six Months Ended  
   June 30, 2016   June 30, 2015   June 30, 2016   June 30, 2015  
Revenues  $31,455   $11,004   $51,027   $16,663  
                 
Cost of revenues   22,214    7,551    35,938    11,269  
                 
Gross Profit   9,241    3,453    15,089    5,394  
                      
Operating Expenses                     
 Selling and marketing expenses   1,670    1,241    2,872    2,354  
 General and administrative expenses   4,588    2,016    8,987    3,780  
 Stock based compensation   1,834    29    1,863    75  
 Research & Development        22    -    47  
 Depreciation & amortization   47    11    113    16  
                      
  Total Operating Expenses   8,139    3,319    13,835    6,272  
                      
Income before Other Income/(Expenses)   1,102    134    1,254    (878 )
                      
Other Income/(Expenses)                     
 Other expenses   (69 )  10    (334 )  7  
 Gain on change in fair value of derivative liability   -    -    -    68  
 Interest expense   (289 )  (266 )  (554 )  (723 )
                      
  Total Other Income/(Expenses)   (358 )  (256 )  (888 )  (648 )
                      
Income (Loss) before Income Taxes   744    (122 )  366    (1,526 )
                      
Income Tax Expense   -    -    -    -  
                      
Net Income (Loss)  $744   $(122 ) $366   $(1,526 )
                      
EARNINGS PER SHARE:                     
 Basic  $0.04   $(0.01 ) $0.02   $(0.09 )
 Diluted  $0.03   $(0.01 ) $0.02   $(0.09 )
                      
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                  
 Basic   20,354,517    17,724,113    19,583,194    16,127,649  
 Diluted   24,321,750    17,724,113    23,051,023    16,127,649  
                 
                 
SUNWORKS, INC. (FORMERLY SOLAR3D, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2016 AND DECEMBER 31, 2015
(in thousands, except share and per share data)
  March 31,
2016
  December 31,
2015
 
  (Unaudited)    
Assets        
Current Assets        
 Cash and cash equivalents $7,663  $12,040 
 Restricted cash  37   37 
 Accounts receivable  16,072   7,023 
 Inventory  2,372   1,269 
 Cost in excess of billing  13,441   2,130 
 Other current assets  423   220 
          
  Total Current Assets  40,008   22,719 
  Property and Equipment, net  1,222   745 
         
Other Assets        
 Other deposits  38   36 
 Goodwill  10,864   10,864 
 Other Intangible Assets  500   500 
          
  Total Other Assets  11,402   11,400 
           
   Total Assets $52,632  $34,864 
         
Liabilities and Shareholders' Equity        
Current Liabilities:        
 Accounts payable and accrued liabilities  19,102   5,033 
 Billing in excess of costs  5,242   1,990 
 Customer deposits  91   394 
 Loan payable, current portion  75   2,028 
 Acquisition convertible Promissory notes, net of beneficial conversion feature of $1,283 and $1,767, respectively  484   750 
 Convertible promissory notes  -   850 
          
  Total Current Liabilities  24,994   11,045 
         
Long Term Liabilities        
 Loan payable  161   232 
 Warranty liability  58   45 
 Convertible promissory notes  654   - 
          
  Total Long Term Liabilities  873   277 
           
  Total Liabilities  25,867   11,322 
         
Shareholders' Equity        
Preferred stock, $.001 par value;        
5,000,000 authorized shares; 1,506,024 shares issued and outstanding, respectively  2   2 
Common stock, $.001 par value; 200,000,000 authorized shares; 19,762,844 and 18,320,535 shares issued and outstanding, respectively  21   18 
Additional paid in capital  66,139   63,285 
Accumulated Deficit  (39,397)  (39,763)
         
Total Shareholders' Equity  26,765   23,542 
         
 Total Liabilities and Shareholders' Equity $52,632  $34,864 

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