Sunworks, Inc.

Please stand by, we're about to begin. Good day, ladies and gentlemen, and welcome to the Sunworks second quarter 2021 earnings call. After the presentation, there'll be a question and answer session. If you should require assistance during the call, please press star zero and an operator will assist you. At this time, it's my pleasure to turn the floor over to Mr. Rob Fink of FNKIR. Sir, the floor is yours.

Thank you, operator. Good morning, everyone. Thank you all for joining the Sunworks Second Quarter 2021 Earnings Conference Call. Hosting the call today are Galen Morris, Chief Executive Officer, and Paul McDonald, Chief Financial Officer. Before we start, I would like to remind everyone that during this call, management's remarks may contain forward-looking statements which are subject to risks and uncertainties, and management may make additional forward-looking statements during the Q&A session. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those contemplated by the forward-looking statement because of certain factors including, but not limited to, general economic and business conditions, competitive factor, changes in business strategy or development plans, integration and operational risks associated with the acquisition of Solstice, the ability to track and retain qualified personnel, and changes in the legal and regulatory environment. In addition, any projections as to the company's future performance represent management's estimate as of today, August 13, 2021. Sunworks assumes no obligations to update these projections in the future as market and business conditions may change. With all that said, I'd like to turn the call over to Sunworks' CEO, Galen Morris. Galen, the call is yours.

Thank you, Rob. Good morning, everyone, and thank you for joining our call. I have been the CEO of Sunworks for approximately seven months. In that short period, we have changed the face, the trajectory, and the culture of the company. We are a larger, more mature, and more efficient company. We have endeavored to improve all facets of our business. The Solstice combination has brought energy, scale, and effectiveness to our residential projects. Increased rigor and accuracy have improved our margins in our commercial and industrial projects. Combined with regulatory and market tailwinds, we are positioned to progress towards profitability, and we have many opportunities to maintain and accelerate our growth. I'm excited to speak to our stockholders today to discuss the transformation of Sunworks and speak to our go-forward strategy. First, on the residential side of our business, all work is now being sold under the Solsius management team. For more than seven years, Solsius has been a recognized leader in residential solar solutions, and we are benefiting from their processes their expertise, and their energy. Partly due to increased availability and partly due to our greater scale and resulting purchasing power, we have seen an increase in our access to batteries. This has enabled us to advance more than 80 projects which have been stuck in backlog awaiting batteries. Additionally, Solstice is now offering energy storage solutions in each sale. From a geography standpoint, we are now offering solar and storage solutions in Laredo, Texas, expanding our residential operations to 19 markets in 10 states. We plan to expand into Dallas in September and Houston by the end of the year, significantly expanding our presence in Texas. From a sales channel partner standpoint, we just signed an exclusive two-year extension with our largest sales partner, which will continue to contribute a significant portion of our residential sales and revenues. Additionally, we have added 22 new sales channel partners since closing the acquisition on April 7th, bringing our total number of sales channel partners to 57. We are continuing to actively recruit for new sales channel partners throughout the United States. To that end, earlier this month, Solsius launched a new Select program for new and existing sales channel partners, which will allow us to be extremely competitive on base rate installs. by streamlining what is included in the base rate to our most popular offerings and shifting more specialized selections to a list of add-ons. This will help us to increase the number and locations of our sales channel partners, expanding our indirect revenue streams. We will continue to support and grow our sales channels in an effort to further improve our growth. While we continue to support and grow our sales channels in an effort to improve our growth outlook and be able to move more quickly and effectively into new geographies, Solcius kicked off a dedicated direct sales effort this summer, hiring sales leaders in multiple geographies who will build teams of local direct sales agents, allowing us to deploy increased sales coverage in local markets. Additionally, the SumWorks residential sales team has transitioned to become the Solcius telesales team, focused on selling to wide geographies via telephone and virtual sales efforts. To support this effort, we are now running television ads, radio ads, and are increasing our focus on all of our marketing and branding efforts. This is a large reason why our costs have increased as we are investing in marketing programs to drive brand awareness and revenues. In addition, we have hired a new senior vice president of marketing. Starting in September, she brings extensive experience not only in modern marketing methods, but also in brand management and acquisition integration. Turning now to our commercial and public works businesses, we have made significant progress in our efforts to improve margins. To achieve this, our highest priority has been increasing our focus on improving our estimating and quoting and enhancing our deployment execution to avoid costly project overruns. Simply put, SumWorks is now a margin-focused organization. Our team is measured on margin, not just run revenue. In addition, as our business matures, we are increasingly focused on process improvement throughout the business. We have put additional processes in the turnover between sales and operations to improve integration and avoid miscommunication, and we have started conducting post-project profitability reviews to identify and learn from our successes and our misses. In short, we believe we have finally succeeded in getting away from revenue for revenue's sake. As a result, our forecasted gross margin for public works projects is now over 15%, and for commercial projects it is over 20%. This is on projects that are in our backlog or already in construction, not on quoted work. We have a very clean backlog right now with almost all of our work scheduled for execution. In the past 18 months, partially as a result of COVID-19, we have experienced project delays that have made more difficult the timely completion of projects. Scheduling delays can also make quoting a challenge in an environment where material prices change frequently. Actively working to avoid delays has been an important initiative for Sunworks. In the near term, I have started a search for a national sales leader with a goal of injecting new energy and focus into our commercial and industrial sales efforts. On the operations and maintenance front, we have decided to put significant energy into turning our O&M group into a profit center servicing all users of solar and storage, including residential and utility customers, as well as the commercial and public works customers the group currently serves. I expect we will sign several new accounts in Q4 of 2021 and Q1 of 2022. With that, I will ask Paul to provide more specifics related to our financial results in the quarter.