Sunlight Financial Holdings, Inc.

Greetings and welcome to Sunlight Financial first quarter 2022 earnings 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. I would now like to turn the conference over to your host, Lucia Dempsey with Investor Relations. Please go ahead.

Good afternoon and welcome to Sunlight Financial's first quarter 2022 earnings call. After the close of the market today, we announced first quarter 2022 financial results and posted an earnings presentation to our investor relations website at ir.sunlightfinancial.com. Before we begin, I'd like to remind everyone that this webcast may contain certain statements that constitute forward-looking statements within the meaning of the private securities litigation reform act of 1995. These include remarks about future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Forward-looking statements include, but are not limited to, sunlight financials expectation or prediction of financial and business performance and conditions, and competitive and industry outlooks. Forward-looking statements speak as of the day they are made, are subject to risks, uncertainties, and assumptions, and are not guarantees of performance. Selmite Financial is under no obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. The company also refers participants on this call to the press release issued by the company and filed today with the SEC. The supplemental presentation posted to Selmite Financial's website and Sunlight Financial's SEC filings for a discussion of the risks that can affect our business. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in both our press release and the supplemental presentation. Joining me today are Matt Petteri, Sunlight Financial's Chief Executive Officer, and Rodney Yoder, Sunlight's new Chief Financial Officer. Matt will provide an operational update in the quarter, and then Rodney will share additional detail on our financial results. Following these prepared remarks, we will open the call to Q&A. It is now my pleasure to turn the call over to Matt Petteri.

Thank you, Lucia, and thank you all for joining us as we discuss Sunlight Financial's first quarter 2022 operational and financial results. I'm pleased to report strong first quarter results, which are on track with our expectations for 2022. As such, we are affirming each of our previously provided full year 2022 guidance metrics. In the first quarter, Sunlight funded $593 million of solar and home improvement loans, $8 million higher than the midpoint of our first quarter funded loan guidance of $580 to $590 million. and $12 million higher than our funded loans in the first quarter of 2021. Importantly, this level of volume is in line with typical seasonality, where sales and credit approvals slow down over the holiday season, driving lighter installation volumes in the first quarter. Home improvement volumes were particularly strong, with $76 million in the first quarter of 2022, more than double the first quarter of 2021 volume of $31 million. While it'll take some time for home improvement to become a significant portion of our business, we're excited about this strong growth trajectory as we drive more business in this rapidly growing $400 billion market. And we're further encouraged by the strength in customer demand we've seen over the last two months as the Omicron wave has receded. That said, we are keeping a watchful eye on the overall macro environment, as I'll discuss in greater detail shortly. Sunlight continued to perform well on other operational key metrics. We remain a leading financing choice for contractors and homeowners, as our Orange platform provides a fast and frictionless process for financing solar installations and home improvement projects. We funded loans for nearly 17,000 borrowers in the first quarter, up 5% from the same period a year ago. Average loan balances also continue to increase, which drives incremental revenue for Sunlight without any additional expense. First quarter 2022 solar loans in particular averaged $44,000, the highest yet for the company, and up 12% relative to the first quarter of 2021. Sunlight's battery attachment rate was 13% in the first quarter of this year. While this is lower than attachment rates we saw in 2021, driven by tighter battery supplies and our contractor mix, we believe that battery storage will continue to provide increasing benefits to homeowners over time and that our battery attachment rates will increase as a result, particularly as battery supply shortages abate. We are also pleased to have 80 additional active contractors on our platform in the first quarter of this year, bringing our total relationships to nearly 1,600. We continue to see rapid growth in our home improvement contractor network as we build brand awareness in that market. On the solar side, we're focused on adding new contractors as well as strengthening loyalty and increasing volume with existing contractors by building relationships that lead installers to choose sunlight first each and every time. While Rodney will discuss our profitability in more detail, I'd like to share an update on our strategic capital deployment. as we continue to operate a capital light business that generates significant cash. I'm excited to announce that our board of directors has approved a share repurchase program under which the company may die back up to $50 million of Class A common shares over the next 18 months. This program will be funded with excess cash on hand, as well as cash generated from operations. We believe the program is an attractive use of capital to drive long-term shareholder return while maintaining ample cash on hand to ensure liquidity and execute on our growth strategies. To that end, we also continue to invest in our contractor advances program, where we provide qualified contractors with working capital for sunlight finance installations. We find this to be an effective way to leverage our balance sheet to strengthen relationships with our contractor partners. In the first quarter, we invested an additional $19 million in advances and will continue to allocate capital to this program opportunistically to drive profitable buying. We may also strategically use capital toward M&A opportunities and are continually evaluating acquisition opportunities that further enhance our value proposition or that enable us to apply our unique capabilities in adjacent verticals. It's now my pleasure to turn the call over to Rodney Yoder, Sunlight's new CFO, who joins me today for his first Sunlight financial earnings release.