Sunworks, Inc. (Nasdaq: SUNW), a provider of solar power solutions
for agriculture, commercial and industrial (ACI), public works and
residential markets, today announced financial results for the
second quarter and first half of the year ended June 30,
2018.
Second Quarter 2018
Summary:
- Revenue of $20.0 million for the second quarter of 2018
increased 49% versus the $13.4 million for the first quarter of
2018.
- Net loss of $1.8 million for the second quarter of 2018
compared to $1.7 million for the first quarter of 2018. The
current period net loss included a non-cash, non-recurring stock
compensation expense of $0.6 million.
- Gross margin was 14.5% for the second quarter of 2018. The
gross margin during the quarter was impacted by a high percentage
of the current period revenue being generated from projects
initiated in prior years at low price levels.
- Backlog of projects scheduled for installation in the next 12
months as of June 30, 2018 was $52.7 million compared to $60.5
million at March 31, 2018.
- Cash balance at June 30, 2018 was $4.8 million versus $1.6
million at the end of the first quarter.
Chuck Cargile, Sunworks Chief Executive Officer
said, “Our effort to transform Sunworks continues, although the
results reported today indicate that this process is taking longer
than anticipated. Flushing out older, lower-margin projects is
necessary to make our backlog of future revenue more positive, but
it significantly impacted our current period gross margins. Our
process for pricing new project proposals is more disciplined and
our backlog of projects won includes more profitable business. Our
focus on creating a stable, profitable platform for sustainable
growth is unchanged, merely delayed. We expect our gross margins
and overall profitability to improve in the third quarter and
beyond and we anticipate generating positive cash flow from
operations in the remaining six months of this year.”
2018 Expectations:
- Management noted that although it is difficult to predict the
quarterly timing of installation revenue, they expect to generate
more than $40 million in revenue in the final two quarters of 2018,
leading to a slight increase in revenue compared with the $77.5
million recorded in full year 2017.
- Management expects the company to generate positive earnings
before interest, taxes, depreciation, amortization and stock
compensation expense (Adjusted EBITDA) for the second half of
2018.
- The company expects to generate positive cash flow from
operations for the remainder of 2018.
Second Quarter Financial
Summary
Total revenue for the quarter ended June 30,
2018 was $20.0 million compared to $25.0 million in the same period
last year. The reduction in revenue is a result of weaker
year-over-year residential sales, and installation delays for
certain ACI projects.
Gross margin for the second quarter of 2018 was
14.5% compared to 26.9% in the year ago period. The low gross
margin was primarily a result of a high percentage of the current
period revenue being generated from projects initiated in prior
years at low price levels. The company specifically noted one
transaction related to a project won in 2017 in which $2.3 million
of inventory was sold at zero margin.
Selling, general and administrative expenses,
excluding stock-based compensation, were $3.7 million, or 18.7% of
revenue for the second quarter of 2018, marking a slight sequential
decrease from $3.9 million, or 28.9% of revenue, in the first
quarter of 2018, and a decrease from $5.1 million, or 20.4% of
revenue, in the second quarter of 2017.
Net loss for the quarter ended June 30, 2018 was
$1.8 million, or ($0.07) per basic and diluted share, compared to
net income of $1.1 million or $0.05 per basic and $0.04 per diluted
share in the second quarter of 2017.
During the second quarter of 2018 the Company
incurred a non-cash, non-recurring charge of $0.6 million for
acceleration of stock compensation for a retiring member of its
board of directors. In addition, the Company incurred $0.1 million
of interest expense associated with the term loan established in
April of 2018.
Conference Call Details
Management will host a conference call to
discuss these results at 4:30 p.m. ET. To access the call, please
dial 1-877-407-0778 (toll free) or 1-201-689-8565. 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://www.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) and using
the replay ID #36402 until 11:59 p.m. ET on August 15,
2018.
About Sunworks, Inc.
Sunworks, Inc. (NASDAQ:SUNW) is a premier
provider of high performance solar power systems. We are committed
to quality business practices that exceed industry standards and
uphold our ideals of ethics and safety. Sunworks continues to grow
its presence, expanding nationally with regional and local offices.
We strive to consistently deliver high quality,
performance-oriented solutions for customers in a wide range of
industries including agricultural, commercial and industrial,
federal, public works, and residential. Our dedication to
excellence is reflected in our 25-year warranty, a benchmark that
we stand by to support our customers above and beyond their
expectations. Sunworks’ diverse, seasoned workforce includes
distinguished veterans who bring a sense of pride, discipline, and
professionalism to their interaction with customers. All our
employees 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," “will,”
"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. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, these they 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, regulatory, environmental and other factors
affecting the Company and its operations, markets, products, and
prospects for sales, lower revenues, failure to earn profit, higher
costs than expected, persistent operating losses, ownership
dilution, inability to repay debt, failure of acquired businesses
to perform as expected, the inability to complete projects within
anticipated timeframes and costs, the impact of tariffs imposed by
governmental bodies, 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. We also refer you to the risks described in “Risk Factors”
in Part I, Item 1A of Sunworks, Inc.’s Annual Report on Form 10-K
and in the other reports and documents we file with the Securities
and Exchange Commission from time to time.
Any forward-looking statement made by us in this
press release is based only on information currently available to
us and speaks only as of the date on which it is made. We undertake
no obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
Investor Relations Contact:
Rob Fink Hayden IR646-415-8972
rob@haydenir.com
|
|
|
|
SUNWORKS, INC. |
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
AS OF JUNE 30, 2018 AND DECEMBER 31,
2017 |
|
|
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
4,752 |
|
|
|
$ |
6,356 |
|
|
|
Restricted cash |
|
|
426 |
|
|
|
|
475 |
|
|
|
Accounts
receivable, net |
|
|
7,715 |
|
|
|
|
11,330 |
|
|
|
Inventory, net |
|
|
4,288 |
|
|
|
|
4,450 |
|
|
|
Contract
assets |
|
|
3,928 |
|
|
|
|
3,790 |
|
|
|
Other
current assets |
|
|
83 |
|
|
|
|
2,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets |
|
|
21,192 |
|
|
|
|
28,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and Equipment, net |
|
|
1,042 |
|
|
|
|
1,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
|
|
|
|
Other
deposits |
|
|
71 |
|
|
|
|
68 |
|
|
|
Goodwill |
|
|
11,364 |
|
|
|
|
11,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Assets |
|
|
11,435 |
|
|
|
|
11,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
33,669 |
|
|
|
$ |
41,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
10,486 |
|
|
|
$ |
13,090 |
|
|
|
Contract
liabilities |
|
|
5,622 |
|
|
|
|
7,288 |
|
|
|
Customer
deposits |
|
|
99 |
|
|
|
|
2,905 |
|
|
|
Loan
payable, current portion |
|
|
217 |
|
|
|
|
229 |
|
|
|
Acquisition convertible promissory note, current portion |
|
|
757 |
|
|
|
|
606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities |
|
|
17,181 |
|
|
|
|
24,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
Term Liabilities |
|
|
|
|
|
|
|
|
|
Loan
payable |
|
|
166 |
|
|
|
|
267 |
|
|
|
Promissory note payable, net |
|
|
3,641 |
|
|
|
|
- |
|
|
|
Convertible promissory notes |
|
|
149 |
|
|
|
|
149 |
|
|
|
Acquisition convertible promissory notes |
|
|
404 |
|
|
|
|
707 |
|
|
|
Warranty
liability |
|
|
306 |
|
|
|
|
246 |
|
|
|
Total
Long Term Liabilities |
|
|
4,666 |
|
|
|
|
1,369 |
|
|
|
Total
Liabilities |
|
|
21,847 |
|
|
|
|
25,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity |
|
|
|
|
|
|
|
|
|
Preferred
stock Series B, $.001 par value; 5,000,000 authorized shares; 0 and
1,506,024 shares issued and outstanding, respectively |
|
|
- |
|
|
|
|
2 |
|
|
|
Common
stock, $.001 par value; 200,000,000 authorized shares; 25,678,322
and 20,853,921 shares issued and outstanding, respectively |
|
|
25 |
|
|
|
|
23 |
|
|
|
Additional paid in capital |
|
|
73,082 |
|
|
|
|
72,000 |
|
|
|
Accumulated Deficit |
|
|
(61,285 |
) |
|
|
|
(56,365 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Shareholders’ Equity |
|
|
11,822 |
|
|
|
|
15,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders’ Equity |
|
$ |
33,669 |
|
|
|
$ |
41,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUNWORKS, INC. |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2018 AND 2017 |
|
|
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended (unaudited) |
|
Six Months Ended (unaudited) |
|
|
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
19,994 |
|
|
|
$ |
25,011 |
|
|
$ |
33,441 |
|
|
|
$ |
39,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold |
|
|
17,095 |
|
|
|
|
18,278 |
|
|
|
28,132 |
|
|
|
|
29,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
2,899 |
|
|
|
|
6,733 |
|
|
|
5,309 |
|
|
|
|
9,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing expenses |
|
|
1,035 |
|
|
|
|
1,793 |
|
|
|
2,157 |
|
|
|
|
3,540 |
|
|
|
General
and administrative expenses |
|
|
2,604 |
|
|
|
|
3,204 |
|
|
|
5,267 |
|
|
|
|
6,534 |
|
|
|
Stock
based compensation |
|
|
800 |
|
|
|
|
317 |
|
|
|
1,032 |
|
|
|
|
534 |
|
|
|
Depreciation and amortization |
|
|
97 |
|
|
|
|
103 |
|
|
|
193 |
|
|
|
|
206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses |
|
|
4,536 |
|
|
|
|
5,417 |
|
|
|
8,649 |
|
|
|
|
10,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Income before Other Expenses |
|
|
(1,637 |
) |
|
|
|
1,316 |
|
|
|
(3,340 |
) |
|
|
|
(1,302 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense |
|
|
(8 |
) |
|
|
|
(2 |
) |
|
|
(13 |
) |
|
|
|
(45 |
) |
|
|
Interest
expense |
|
|
(142 |
) |
|
|
|
(246 |
) |
|
|
(162 |
) |
|
|
|
(491 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Expenses |
|
|
(150 |
) |
|
|
|
(248 |
) |
|
|
(175 |
) |
|
|
|
(536 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Income before Income Taxes |
|
|
(1,787 |
) |
|
|
|
1,068 |
|
|
|
(3,515 |
) |
|
|
|
(1,838 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax Expense |
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss) Income |
|
$ |
(1,787 |
) |
|
|
$ |
1,068 |
|
|
$ |
(3,515 |
) |
|
|
$ |
(1,838 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)
INCOME PER SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.07 |
) |
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
|
|
$ |
(0.08 |
) |
|
|
Diluted |
|
$ |
(0.07 |
) |
|
|
$ |
0.04 |
|
|
$ |
(0.15 |
) |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
24,789,181 |
|
|
|
|
22,447,752 |
|
|
|
23,974,581 |
|
|
|
|
21,859,169 |
|
|
|
Diluted |
|
|
24,789,181 |
|
|
|
|
25,831,671 |
|
|
|
23,974,581 |
|
|
|
|
21,859,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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