iSun, Inc.

Greetings. Welcome to the ISUN Energy Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mary Conway. you may begin.

Thank you, operator, and good morning. We are pleased to welcome you to ISUN's conference call, where we will discuss financial and operating results for the third quarter of 2023. Jeffrey Peck, Chairman and Chief Executive Officer, will provide an update on our operating performance in the quarter, along with reviewing our outlook for 2023. John Sullivan, Chief Financial Officer, will provide an overview of the third quarter 2023 financial results. After our prepared remarks today, we will open the lines to address any questions. As a reminder, the earnings release that was issued this morning and which can be found on iSun's investor website at www.isunenergy.com includes financial disclosures and reconciliations for non-GAAP financial measures. Any comments that we make on today's call may include forward-looking statements that refer to management's expectations or future predictions. These statements are made as of today, and management undertakes no obligation to update these forward-looking statements in the future. Such statements are subject to risks and uncertainties that could cause actual results to differ from management's expectations. With that, I will now turn it over to our CEO, Jeff Peck. Jeff?

Good morning, everyone. Thank you for joining us today. I'm pleased to share an update on ISIN's continuing robust progress in the third quarter of 2023 and review our plans and expectations for the remainder of the year. Once again, we are very pleased with the strong performance our team has generated this quarter. In the third quarter of 2023, we have produced another beat on the top line with revenues up 47% year over year, nicely above the streets consensus. Despite some of the macroeconomic challenges in our sector, we continue to do precisely what we said we would do. Build a business, grow revenues, and reduce our losses by focusing on efficiencies while we serve our existing customers and win new business. Our commercial and industrial group is driving excellent results, and our residential group, Suncommon, continues to see high customer satisfaction and referrals despite a short-term slowdown in residential demand, as I'll discuss shortly. Meanwhile, we are seeing continued opportunities in the EV infrastructure segment and our origination team is helping to ensure that we continue to build backlog to sustain that growth. Our success in winning significant new contracts in solar and EV infrastructure, as well as more residential business, despite some of the headwinds in that segment, provides us with heightened confidence in our ability to meet the annual financial targets that we shared earlier and are affirming today for annual revenue growth and improving profitability. He remains dedicated to executing our strategic plan to achieve our mission to help accelerate the adoption of solar energy. Today I want to touch on a few points that underscore why ISUN is following a different path in the solar energy industry and what has been driving our recent success. I also want to share some thoughts on some trends we are seeing and why we believe we are well positioned for continued growth as we continue to scale our business. As I said before, it starts with our platform approach. encompassing the full lifecycle of providing solar energy solutions from origination and development to construction and management across business segments. We maintain that this approach is a competitive differentiating advantage that positions us for long-term sustainable growth. We see the proof of the success of the strategy and execution in the meaningful year-over-year revenue growth we have generated this year, and on a year-to-date basis, we have increased revenues by 39%. compared to the same period in 2022. And as you'll hear us point out repeatedly, we generated this robust growth while reducing our operating expenses over the same period by $5.6 million or 21%. We're very proud of the success we're having from the efficiency measures that we've implemented. Quickly reviewing our third quarter results, revenue increased by 47% to $27.9 million. gross margin rose 45 basis points to 19.45 percent up from 19 in 2022 third quarter as our efficiency efforts enabled more of the top line to drop to the bottom line in the third quarter 30 of our revenues came from the residential segment where gross margins tend to be higher which added pressure to margin expansion we remain confident that as we scale and drive synergies and efficiency throughout the organization our margins will expand even though there will be some variability in any given quarter depending on the revenue mix. As of September 30, 2023, our total backlog remained at 161.8 million, and our pipeline remained at 1.6 gigawatts of projects as of the end of the third quarter of 2023. The size of the backlog and pipeline underscore the healthy customer demand we are experiencing, as well as the effectiveness of our efforts to originate more projects and expand to more states, all part of our ongoing strategic initiatives. Our success also reflects a high level of customer satisfaction, specifically in the residential segment, which generates strong referrals, creating a lower customer acquisition cost. We see the same positive referral impact in our CNI group. I'll provide some more details about one of our new partnerships with Clean Tech Industry Resources momentarily. Let me share a few words about the performance of our three divisions in the past quarter. The residential division did well, despite the backdrop of a more sluggish residential segment across the industry, reflecting the impact of higher interest rates on home improvement loans. If there's a silver lining here, I would note that the sticker shock consumers had initially experienced when looking at home improvement loans has abated somewhat. People now know what to expect. There continues to be strong interest in residential solar in our markets, and I will note that because we aren't exposed to the California market, like most of our peers, we're somewhat insulated from the additional residential market challenges. We continue to build more business and expect a heavier period of installations in the coming quarter. The Commercial and Industrial Division, which we combined as of the beginning of 2023, is continuing to generate very strong results this year and accounted for 67% of our revenue in the third quarter. Our origination team has become more involved in this effort, focused on initiating projects that have then turned over to the C&I division to execute. We are continuing to work through our backlog while adding more business to the backlog through contract lens. Based on the results we've seen thus far, including enhancing our labor utilization and a reduction in operating expenses, as I mentioned, we remain certain that the decision to combine the commercial and industrial segments was a good one. Our utility and development division continue to face delays, once again something we see across the industry, although we continue to increase the backlog that the group is addressing, and we saw small revenue growth in this past quarter compared to prior quarters in 2023. Despite these project delays around expected implementation, we continue to believe the projects will move forward beginning late this year, enabling resulting revenues to be recognized later this year or early 2024. The development and engineering team has provided invaluable support to our residential and C&I divisions as we continue to integrate and drive operating efficiency throughout the organization. Beginning in 2024, we will consolidate our utility and development divisions into our commercial and industrial team. This consolidation will allow us to capitalize on additional synergies and continue to focus on cost reduction and containment. Our teams bring proven expertise and knowledge of the industry, which is incredibly valuable at these volatile times. This creates a strong, customer relationship, leading to contract awards across our business. In the third quarter, we added $27 million in new business, bringing our total for the first nine months of 2023 to $67 million. Despite sector challenges, we've approached our business with relentless innovation. One of our recent partnerships exemplifies this style of operation. Cleantech Industry Resources, or CIR, is a highly automated provider of energy, project development, and engineering services. By collaborating, we can focus on expanding our core turnkey EPC business in conjunction with CIR's growing development as a service and engineering services business. By working together, we reduce any conflicts of interest with many of our developer partners. We also can access CIR's ultra low-cost services platform on a preferred basis while retaining construction rights to all of CIR's internally developed and owned projects. Plus, we also secured preferred partner status on CIR's growing pipeline of EPC-related projects which is currently estimated at 5.25 gigawatts. This will fuel our project backlog for years to come. We look forward to sharing more information about this collaboration as we move forward together. In terms of the solar landscape, we remain optimistic and enthusiastic. As I mentioned, our CNI segment is scaling nicely, responding effectively to increased customer demand with expanded teams while ensuring that our labor utilization is optimized. Justin Delacruz- customer demand continues to increase across the country directly and through partners and continue to secure more opportunities to bid on meaningful projects. Justin Delacruz- The residential segment has been sluggish, as I described, but our diversified model allows us to deploy our internal resources. Justin Delacruz- More efficiently across segments during these challenging times and the good news is that we have we have ample backlog execute in this segment and operate in markets insulated by some of the larger heavens. Our origination team is producing more opportunities that will eventually be executed largely by our CNI segment, and the Utility and Development Division continues to push projects forward and provide valuable services throughout the organization. We remain convinced that both the heightened interest in alternative energy as well as the IRA legislation passed last year will afford ISUN and the industry genuine benefits. We continue to expect that more specific rules and the removal of uncertainty will increase the value of solar assets Those in development, as well as those under construction, which in our case will lead to a higher valuation of our pipeline as it spurs increased demand that we will address in 2024 and beyond. In 2023, considering all the evolving macroeconomic factors, we have continued to demonstrate strong revenue growth and reduce operating expenses, both of which will help us attain operating profitability in the years ahead and sustain our margin expansion. Thus, we are affirming our expectations for total revenue in fiscal year 2023 of between $95 and $100 million, reflecting a 24% to 31% increase over the total revenue in 2022, along with gross margin expansion on an annual basis. With that, I'll turn the floor over to John.