Sunworks, Inc.

Good day, ladies and gentlemen, and welcome to the Sunworks fourth quarter and full year 2021 earnings call and webcast. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jeff Standless. Sir, the floor is yours.

Thank you, Operator. Good afternoon, everyone, and thank you all for joining Sunworks fourth quarter and full year 2021 earnings conference call. Participating on the call today are Galen Morris, Chief Executive Officer, and Jason Bonfit, Sunworks 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 question and answer 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 statements because of certain factors not limited to general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel, and changes in legal and regulatory requirements. In addition, any projections as to the company's future performance represent management estimates as of today March 11, 2022. Sunworks assumes no obligations to update these projections in the future as market and business conditions may change. I would now like to turn the call over to Sunworks CEO, Galen Morris.

Thank you. Good afternoon, everyone, and thank you for joining our call. This was a very productive year for Sunworks as we have successfully built a scalable platform for profitable growth in the rapidly growing solar industry. In April, we acquired Solsius, a residential EPC organization with significant market reach, excellent technology solutions, and sales-oriented competencies. This acquisition transformed some works from being a small player in both residential and C&I to a scalable platform in both end markets. This residential business continues to deliver excellent results, and we are moving to continue expansion of our geographic presence which according to many industry forecasts should be a very strong market for the foreseeable future. We now have a robust organization of proven professionals with deep and relevant experience at larger companies. Over the past year, we have added key leadership to our commercial and industrial business and have established enhanced processes to ensure quality and timely installations, helping us expand our gross margins and to scale our business in the future. Our focus as we turn to 2022 is on growing this effective platform, and we are pursuing both organic and inorganic growth opportunities. The successful Solstice acquisition gave us a platform for growth with differentiation and a track record of success. Scale matters in this industry. Scale enables greater access to panels, batteries, and other components, and sometimes to more favorable pricing. Scale enables us to more effectively leverage marketing and advertising investments both in our residential and commercial business units. We need to scale to better cover our public company costs, and as a public company, we have greater access to capital and more pathways to finance acquisitions. Finally, with more than $48 million in net operating loss carry-forwards, acquiring and integrating businesses represents a path to extracting greater value as we can utilize these NOLs to reduce future federal taxes. Over the past year, valuations for solar companies have declined, and the supply chain issues have created a more buyer-friendly acquisition environment. We are evaluating potential acquisition targets, primarily small to medium-sized companies, both on acquisitions that will expand our scale and contribute to our growth. Geographically, we are now offering solar and storage solutions in 19 markets in 15 states. During the past year, we significantly expanded our residential presence in Texas. We continue to assess additional markets to enter into over the next several quarters. Geographic growth is a key initiative for Sunworks, especially in the residential market because the Solstice model enables us to quickly establish a presence in a new geography with a limited initial cost. Staying with our residential business, our goal is to create a multi-channel sales organization, more effectively leveraging our capabilities notably our fulfillment technology platform. We continue to actively recruit for new sales partners throughout the United States to augment our other third-party sales partners. As a part of this, Solstice recently launched a select program for new and existing sales channel partners, making us even more competitive on base install rates 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 increase the number and locations of our sales channel partners, rapidly expanding our channel revenue streams. Not only will we expand via sales channel partners, but we also have rapidly grown and will continue to grow our direct sales channel. Post acquisition, we have added 250 direct sales people, and in six months, our direct sales team is now our second largest source of deal origination. This team will further penetrate existing markets, and allow us to grow in markets where we do not participate today. And while we are in the early innings of executing the strategy, I am encouraged by the number of new originations being generated through this channel. Turning to our commercial and public works businesses, margin improvement and growth remains our key priorities. This business can be seasonal, and winter weather in the fourth quarter can and did impact installation timeframes, impacting both revenue and margin. But overall, we have made significant progress in addressing lower project margins that presented a significant challenge for Someworks in the past. Today, we are much better at accurately estimating and quoting and have improved our deployment execution to avoid costly project overruns. Someworks is now a margin-focused organization with compensation and evaluations based on margin, not just revenue. Looking to the future, margins on our quoted work now often exceed 20%. But I caution that until these projects are won, convert to backlog, and ultimately to revenue, this is speculative. It is, however, indicative of the progress we have made. Over the past year, we've added industry veterans to this business in key operations positions and within sales. These individuals have significant experience and a track record for growing businesses in the CNI space. I am encouraged by the pipeline of opportunities that our organization is pursuing and look forward to providing backlog updates throughout the year. Overall, the market backdrop is a tailwind to the industry. The Russia-Ukraine conflict has driven up crude oil pricing and quickly made renewable forms of energy more important than ever. Voter sentiment regarding clean energy and energy independence is growing, and we believe Congress will pass climate-related provisions to further incentivize renewable energy adoption and to reduce reliance on oil. Additionally, our customers see solar as a natural fit to offset inflationary pressures and a mechanism to reduce their reliance on carbon-based fuels and to ultimately lower their utility bills while providing energy independence on an individual basis. With that, I will ask Jason to provide more specifics related to our financial results in the quarter.