Sunworks Reports Second Quarter Revenue of $25.0 Million and Earnings per Share of $0.05

ROSEVILLE, CA–(Marketwired – August 10, 2017) – Sunworks, Inc. (NASDAQ: SUNW), a provider of solar power solutions for agriculture, commercial and industrial (ACI) and residential markets, today announced financial results for the second quarter and six months ended June 30, 2017.

Q2 2017 SUMMARY:

  • Revenue of $25.0 million, a decrease of 19.3% compared to the record $31.0 million recorded in the year-ago quarter and a sequential increase of 73.6% versus the $14.4 in the first quarter of 2017.
  • Gross margin of 26.9% compared to 29.4% in the year-ago quarter and 19.4% in the first quarter of 2017.
  • Net income of $1.1 million compared to net income of $0.7 million in the year-ago quarter and a net loss of $2.9 million in the first quarter of 2017.
  • Backlog of $58.2 million compared to $59.8 million at March 31, 2017 and $43.8 million at June 30, 2016.

Chuck Cargile, Sunworks Chief Executive Officer said, “We executed well in the second quarter to achieve our near-term objective of returning Sunworks to profitability. Our revenue and gross margins improved sequentially and we reduced our operating expenses while strengthening our back-office systems and internal controls. As a result, we generated a 43.5% year-over-year increase in net income on a lower base of revenue, demonstrating the earnings power of Sunworks. Today, we have a stable platform for profitable growth firmly in place. Our backlog for scheduled installations remains strong and our pipeline for new sales is robust, giving us confidence for even greater profitability in the second half of this year. We are intensely focused on driving higher revenue and profitability to significantly increase shareholder value.”

“The second quarter last year represented a record level of revenue for Sunworks, more than 60% above previous records,” added Mr. Cargile. “The $25 million reported in the second quarter this year is the second-highest revenue level in our history, and we are confident we have the backlog and demand to support sustainable and profitable growth going forward.”

As of June 30, 2017, the company’s cash balance was $4.2 million and total debt outstanding (including convertible debt) was $2.2 million.

BACKLOG:
Three Months Ended
Q2 2017 Q2 2016 % CHANGE
(in Millions USD)
Beginning backlog $59.8 $39.6 51.0%
New sales 23.4 35.2 -33.6%
Revenue (25.0) (31) -19.4%
Ending backlog $58.2 $43.8 32.9%
(In Megawatts)
Beginning backlog 23.6 13.0 81.5%
New sales 10.9 14.0 -22.1%
Revenue (12.1) (12.5) -3.5%
Ending backlog 22.4 14.5 54.8%

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA):

Adjusted EBITDA is a supplemental non-GAAP financial measure that the Company believes is an important measure of operating performance.

The following is a non-GAAP measure of cash flow, or adjusted EBITDA, which adds back non-cash items including interest, taxes, stock based compensation and depreciation and amortization.

ADJUSTED EBITDA:
Three Months Ended Q2 2017 Q2 2016 $ CHANGE
(in Thousands USD) Net income $1,068 $744 $324
Add back:
Interest 246 286 (40)
Taxes 0 0 0
Stock based compensation 317 1,834 (1,517)
Depreciation and amortization 103 96 7
Adjusted EBITDA $1,734 $2,960 $(1,226)
As a percentage of revenue 6.9% 9.5%

CONFERENCE CALL DETAILS:

Management will host a conference call to discuss these results today, Thursday August 10, 2017 at 10 a.m. ET. To access the call, please dial 1-866-682-6100 (toll free) or 1-862-255-5401 (international). The conference call will also be broadcast live over the Internet, which can be accessed via the Investor Relations section of Sunworks’ web site at http://ir.sunworksusa.com. All participants should call or access the website approximately 5 minutes before the conference begins.

The webcast will be available for replay for at least 90 days. A telephonic replay of this conference call will also be available by dialing 1-877-481-4010 (toll free) or 1-919-882-2331 (International) using Replay ID 18827, until 11:59 p.m. ET on August 24, 2017.

ABOUT SUNWORKS, INC.

Founded in 1983, Sunworks, Inc. is a premier provider of solar power solutions for both consumers and businesses. We’re committed to quality construction practices that always exceed industry standards and uphold our ideals of ethics and safety.

Today, Sunworks continues to grow its presence, expanding nationally with regional and local offices. We strive to consistently deliver high quality, performance oriented solutions for the agriculture, commercial, federal, public works, residential, and utility industries. Our dedication to excellence is reflected in our 25-year warranty, a benchmark that we stand by in order to support our customers above and beyond their expectations.

Sunworks fields a diverse, seasoned workforce that includes distinguished veterans who are devoted to providing the very best customer experience. All of our employees, from technicians to executives, uphold our company’s guiding principles each day. Sunworks is a member of the Solar Energy Industries Association (SEIA) and is a proud advocate for the advancement of solar power. For more information, visit www.sunworksusa.com.

SAFE HARBOR STATEMENT

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These risks include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, products, and prospects for sales, failure to commercialize our technology, failure of technology to perform as expected, failure to earn profit or revenue, higher costs than expected, persistent operating losses, ownership dilution, inability to repay debt, failure of acquired businesses to perform as expected, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

SUNWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND JUNE 30, 2016
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2017 JUNE 30, 2016 JUNE 30, 2017 JUNE 30, 2016
Revenues $ 25,011 $ 30,995 $ 39,362 $ 50,424
Cost of Goods Sold 18,278 21,869 29,850 35,714
Gross Profit 6,733 9,126 9,512 14,710
Operating Expenses
Selling and marketing expenses 1,793 3,284 3,540 5,845
General and administrative expenses 3,204 2,869 6,534 5,750
Stock based compensation 317 1,834 534 1,862
Depreciation and amortization 103 96 206 116
Total Operating Expenses 5,417 8,083 10,814 13,573
(Loss) Income before Other Expenses 1,316 1,043 (1,302 ) 1,137
Other Expenses
Other expenses (2 ) (13 ) (45 ) (218 )
Interest expense (246 ) (286 ) (491 ) (533 )
Total Other Expenses (248 ) (299 ) (536 ) (771 )
(Loss) Income before Income Taxes 1,068 744 (1,838 ) 366
Income Tax Expense
Net (Loss) Income $ 1,068 $ 744 $ (1,838 ) $ 366
EARNINGS PER SHARE:
Basic $ 0.05 $ 0.04 $ (0.08 ) $ 0.02
Diluted $ 0.04 $ 0.03 $ (0.08 ) $ 0.02
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic 22,447,752 20,354,517 21,859,169 19,583,194
Diluted 25,831,671 24,321,750 21,859,169 23,051,023
SUNWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2017 AND DECEMBER 31, 2016
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
JUNE 30, 2017 DECEMBER 31, 2016
(UNAUDITED)
Assets
Current Assets
Cash and cash equivalents $ 4,165 $ 11,069
Restricted cash 250 37
Accounts receivable, net 16,674 9,665
Inventory 3,698 3,394
Costs in excess of billings 5,839 4,307
Other current assets 623 117
Total Current Assets 31,249 28,589
Property and Equipment, net 1,494 1,674
Other Assets
Other deposits 65 53
Goodwill 11,364 11,364
Total Other Assets 11,429 11,417
Total Assets $ 44,172 $ 41,680
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 12,153 $ 12,979
Billings in excess of costs 8,879 4,997
Customer deposits 534 64
Loan payable, current portion 225 218
Acquisition convertible promissory note, current portion 606 454
Total Current Liabilities 22,397 18,712
Long Term Liabilities
Loan payable 381 496
Acquisition convertible promissory notes, net of beneficial conversion feature of $370 and $807, respectively 640 505
Warranty liability 186 116
Convertible promissory notes 384 654
Total Long Term Liabilities 1,591 1,771
Total Liabilities 23,988 20,483
Shareholders’ Equity
Preferred stock Series B, $.001 par value; 5,000,000 authorized shares; 1,506,024 shares issued and outstanding 2 2
Common stock, $.001 par value; 200,000,000 authorized shares; 22,455,664 and 20,853,921 shares issued and outstanding, respectively 22 21
Additional paid in capital 71,141 70,317
Accumulated Deficit (50,981 ) (49,143 )
Total Shareholders’ Equity 20,184 21,197
Total Liabilities and Shareholders’ Equity $ 44,172 $ 41,680

INVESTOR RELATIONS CONTACT:
Rob Fink/John Roginski
Hayden IR
646-415-8972 / 570-569-2479
rob@haydenir.com / john@haydenir.com

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