Sunworks, Inc. 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."
- 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.