Sunworks, Inc.

Greetings and welcome to Sunworks Inc. 4th Quarter and Full Year 2022 Results 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Bonfite, Chief Financial Officer. Thank you. You may begin.

Thank you, Operator. I'm Jason Bonsett, Chief Financial Officer of Sunworks. On behalf of our entire team, I'd like to welcome you to our fourth quarter and full year 2022 results conference call. Meeting to call with me today is our President and CEO, Galen Morris. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's four looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our four looking statements. Following our prepared remarks, we'll open the line for questions. With that, I'd like to turn the call over to Galen.

Thank you, Jason, and welcome to those joining us today. During 2022, we continued to build a leading integrated solar solutions platform across our core regional markets while continuing to advance our business transformation strategy. Last year, we continued to drive an improved velocity of installation, ensuring improved customer retention between project originations and installations We continued to reweight origination toward our direct sales channel, thereby reducing customer acquisition expense. We expanded our procurement relationships with an emphasis on increased access to domestically sourced materials. And we moved further towards a centralized operating model, one that further positions us to move quickly in support of individual customer requirements. In summary, it was a year of significant organizational change and transformation. one that culminated in strong fourth quarter revenue growth of more than 70% versus the prior year period, given sustained market share gains across both our residential and commercial segments. Our residential solar segment, which represented 83% of total fourth quarter revenue, delivered strong year-over-year growth in revenue, new installations, originations, and backlog, as recent investments in our direct sales force have contributed to significant ongoing market share gains. Within residential, our direct sales channel represented a record 27% of fourth quarter revenue, up from 5% in the prior year period. Since the Solstice acquisition in 2021, we've increased our direct sales force to more than 600 representatives, positioning us to drive above-market originations growth. By the end of 2023, we expect our direct sales channel will represent approximately half of our annual sales. While the pace of revenue growth evidenced in the fourth quarter reflects robust demand for our solar solutions, a combination of rising interest rates and general economic uncertainty muted new originations in the period. While origination growth remained challenged into the first quarter of 2023, we have begun to see rebound recently with improving weather in our key markets. In response, we have taken targeted action to curb the impact of higher financing costs on the pace of solar adoption across our customer base. These actions include the addition of new loan providers together with solar power purchase agreement options, which will materially lower the total cost of ownership for consumers. While many Americans continue to face a rising cost of living, including rising monthly utility bills, we expect homeowners will continue to pursue solar power to reduce or eliminate their utility bills while becoming energy independent. Rising electricity prices continue to drive increased solar adoption, particularly in California, which represented more than 40% of total sales in 2022. Before I turn the call over to Jason for his remarks, allow me to provide a general outlook for our business entering 2023. We believe the recent passage of the Inflation Reduction Act will provide an important secular tailwind for the domestic solar industry beginning this year. As detailed in the legislation, the solar industry will have unprecedented access to both production and investment tax credits for domestic manufacturing across the solar supply chain over the next decade, providing significant incentives and visibility for consumers. We believe solar adoption rates will accelerate as the market is fully educated on the significant financial incentives afforded by the IRA. At the same time, we anticipate a higher interest rate environment could severely impact smaller competitors, positioning larger platforms such as Solstice to take market share during a period of competitive churn. As higher rates become the new normal, we think consumers will recalibrate to a slightly higher total cost of ownership, as is currently happening in the residential housing market. Over time, we see the potential for Sunworks to expand its project financing capabilities providing customers with a more robust solution offering that makes solar adoption that much more accessible. This year, we have begun to aggressively pursue strategies to further enhance our value proposition with customers and sales channel partners. For example, we believe battery and electric vehicle charging adoption rates will grow rapidly over the next few years. With this in mind, we are actively pursuing these and related product adjacencies, given both their appeal to our customers as well as their attractive margin profile. On balance, I'm positive on the outlook for our businesses entering 2023. A combination of sustained market share gains, recent price actions, and favorable long-term demand fundamentals, particularly with the added benefit of the IRA, position us to move closer towards EBITDA break-evens. With that, I will hand the call over to Jason for a review of our fourth quarter results.