iSun Inc (ISUN) 2020 Q4 法說會逐字稿

Good morning. My name is Laura, and I will be your conference operator today. At this time, I would like to welcome everyone to the iSun's earnings conference call for the fourth quarter 2020. (Operator Instructions)

I would now like to turn this call over to Mr. Chase Jacobson, iSun's Investor Relations Advisor and Managing Director with Vallum Advisors. Please go ahead. You may begin, sir.

Thank you and good morning. We are pleased to welcome you to iSun's conference call where we will discuss financial and operating results for the fourth quarter and full year 2020.

Jeffrey Peck, Chairman and Chief Executive Officer, will provide an update on iSun and key highlights from the year. And John Sullivan, Chief Financial Officer, will provide an overview of the fourth quarter and full year 2020 financial results.

In addition, management will provide its outlook for 2021 and beyond, and discuss in more detail iSun's unique position in the market and its long-term growth strategy. After our prepared remarks today, we will open the lines to address any of your questions.

As a reminder, the earnings release, which can be found in iSun's website includes financial disclosures and reconciliations for non-GAAP financial measures that should help you analyze results.

Comments and answers to questions during the call will include forward-looking statements that refer to management's expectations or future predictions. These statements are made as of the date of this call, and management is under no obligation to update these forward-looking statements in the future. They are subject to risks and uncertainties that could cause actual results to differ from management's expectation.

With that, I will now turn it over to our CEO, Jeff Peck.

Good morning and thanks to everyone who dialed in. I'm excited to be talking with you today. And I'm looking forward to having a more regular cadence of quarterly results conference call going forward.

There is a lot to discuss on today's call. We had exceptional fourth quarter 2020 results, with record fourth-quarter revenues and strong earnings performance. We recently transformed the company through the acquisition of iSun and rebranded our business under the iSun name, which combined with a robust market outlook and a number of strategic initiatives in the pipeline position us well for meaningful growth in 2021 and beyond.

First, I would like to set the stage and talk about the iSun acquisition and provide an overview of where our company stands today. In January, we acquired iSun Energy LLC, a provider of innovative solar-powered and electric mobility solutions and services for government, commercial, retail, academic, and data center customers.

While the core of our company has strong roots in construction markets over our 50-year history, we are also a company that embraces innovation and new markets. In the late 1980s, we built on our experience as an electrical contractor in [maybe the] telecom and data. About 10 years ago, we saw an opportunity in the solar energy infrastructure and moved into the market that was beginning to more meaningfully above in our core geographic markets.

Our acquisition of iSun is another example of the company embracing innovation and positioning itself for success and growth in the future.

iSun's flagship solution is the iSun Energy and Mobility Hub, an electric vehicle carport charging system that incorporates solar panels to charge electric vehicles. This product line measures well within our core EPC business and provides revenue synergies from the standpoint of us being able to develop and install these solutions and expand our geographic customer footprint in areas where iSun have established relationships.

Additionally, iSun's operating system provides us with another differentiator in the solar energy infrastructure market. The iSun OS provides owners the ability to monitor and analyze key operating metrics of their solar assets, allowing for more efficient operations and cost savings over time, which we believe we can leverage across many projects in our portfolio, especially as we look to develop projects through our GreenBond partnerships.

With this, I would like to publicly welcome Sass Peress to our management team as Chief Innovation and Experience Officer. Sass was the Founder and CEO of iSun prior to the acquisition and brings over 30 years of experience in solar energy infrastructure markets. His relationships, knowledge of the solar industry, and an eye for innovation are already proving valuable to the combined company.

As it stands today, we believe iSun offers the most comprehensive packages of services to the solar energy and e-mobility infrastructure markets. We are well positioned to take advantage of what we expect to be continued positive trends in renewable energy infrastructure investments in North America over the near, medium, and long term.

Turning to a few key highlights for the fourth quarter and full year 2020. It is well known that 2020 was a unique year for iSun and most companies globally. While we started the year out strong, the COVID-19 pandemic caused delays at a number of our projects in the second quarter and much of the third quarter. However, as states begin to open back up, we started to see return to work late in the third quarter and throughout the fourth.

As such, we had strong financial performance in the fourth quarter. Revenue was $9.3 million, up 47% compared to the fourth quarter of 2019. A normalized EBITDA increased [to $0.4 million], up to 453% from the fourth quarter of 2019. These results exclude the one-time gain on forgiveness of our PPP loan of $1.5 million. Including the gain on the PPP loan, fourth quarter 2020 EBITDA would have been $2.1 million and full year 2020 EBITDA is $0.4 million.

We will welcome the return to a more normal operating environment and believe our ability to quickly ramp up work at existing installations. It is a testimony to the dedication of our workforce in delivering high-quality solar energy infrastructure solutions for our customers.

Despite the pandemic, we continue to develop new business and grow our project pipeline during last year. We ended the fourth quarter with a backlog of $61 million, up from $16 million at the end of 2019 and expect to continue our organic growth through 2021 in both our traditional solar EPC projects and in new markets.

A recent example of a new market win is the $2.2 million project that we were awarded at the Meriden Housing Authority in Connecticut to provide solar EV carports, combined with our traditional solar rooftop and ground mount installations. A customer will also be utilizing our software to monitor these assets. The scale and expertise of our legacy EPC business, combined with iSun innovative solutions and relationships were critical in our successful bid for this work. We have several other projects in the new market in our pipeline, which we hope to be able to announce in the near future.

Also, we have taken a number of steps to shore up our balance sheet and improve our liquidity, which John will discuss in more detail. This improved liquidity provides us with capital to execute our projects in our backlog, a prospect pipeline, and also provides us the ability to continue our growth strategy that is focused on enhancing our innovative service offerings in the solar energy and e-mobility markets and enhancing our geographic footprint throughout North America.

With that, I'll turn the call over to John to discuss our financials, then I will come back to discuss our go-forward strategy and 2021 outlook in more detail.

Thank you, Jeff. I will begin my comments by discussing our fourth quarter and full year 2020 operating results, followed by an update on our balance sheet and liquidity position.

iSun reported record fourth-quarter revenue of $9.3 million, an increase of 47.1% compared to the fourth quarter of 2019. Revenue growth was driven by strong project awards throughout 2020, including two large contracts and new regional markets. And we grew organically in all of our core markets.

However, as Jeff mentioned, we did not have enough time to make up for all of the project pushouts and delays during 2020. As a result, full-year revenues were $21.1 million, a decrease of 25.4% compared to the previous year. Gross profit was $1.8 million in the fourth quarter, up from $0.1 million in the fourth quarter last year. Gross margin in the quarter was 19.1% compared to 2.2% in the fourth quarter of 2019. Higher gross margin was driven by an improved project execution and economies of scale.

For the full year, gross profit was $2.3 million, down from $4.2 million in 2019. This resulted in gross profit margin of 11.1% in 2020, down 370 basis points from 2019 due to the work site shutdowns and other inefficiencies during the COVID pandemic. In a more normalized environment, we expect gross margins to be in the 17% to 19% range.

Operating income was $0.5 million in the fourth quarter compared to a slight operating loss in the prior-year period. Fourth-quarter operating margin was 5.4% compared to a negative 0.4% in the fourth quarter 2019. Higher operating margin compared to the same period last year was driven by higher gross profit, partially offset by higher selling, general administrative, warehousing, and other expenses.

Operating income for all of 2020 was a loss of $1.7 million compared to an operating profit of $0.9 million in 2019. iSun reported fourth-quarter net income of $1.7 million, or $0.32 per share compared to $0.3 million, or $0.07 per share in fourth quarter of 2019.

For the full year, iSun reported essentially break-even net income versus a net loss of $0.4 million for the full year 2019. Included in fourth quarter and full-year net income is a $1.5 million gain related to the forgiveness of the Payroll Protection Program loan we received in April 2020.

It is important to note that we were able to retain our core employees as a result of this loan, which helped support our return to normal operations in the fourth quarter. If we had not received the funds, we would have likely had to reduce costs by a similar amount to sustain the business earlier in the year, which ultimately could have impacted our ability to pursue new opportunities and return to work as quickly and seamlessly as we did in the third quarter and throughout fourth quarter 2020.

Fourth quarter 2020 EBITDA was $2.1 million compared to $0.1 million in the fourth quarter 2019. The year-over-increase EBITDA was driven by higher revenue and better overall project performance as a result of scale and solid project execution, as well as the PPP loan forgiveness.

Full year 2020 EBITDA was $0.4 million, a decrease of $1.1 million from EBITDA of $1.5 million in 2019. The decline in full-year EBITDA was a result of project delays and inefficiencies due to state mandated COVID-19 shutdowns.

Now, turning to the balance sheet. The company finished the year in a strong financial position with cash at year end 2020 of $0.7 million, up from $0.1 million at the end of 2019. Cash benefited from strong working capital improvements as accounts receivable improved by $1.1 million from the end of 2019 despite more back end weighted revenues in 2020.

Total debt outstanding of $4.5 million at the end of 2020 was down from $5.6 million last year. Total debt includes $2.8 million on our revolving line of credit that supports working capital and $2 million of long-term debt that is supported by our recurring revenue stream generated by our solar assets. Importantly, subsequent to the end of the quarter, a number of items took place that's further strengthen the company's financial position and flexibility to pursue its growth strategy.

During the first quarter, we received cash proceeds of approximately $15 million from the exercise of our public warrants and an additional $10.5 million from a registered direct offerings. As a result, as of March 12, we have approximately $21 million in cash availability. This does not include proceeds from warrants that have or may be exercised following our redemption notice last week.

Our strong cash position, together with approximately $3.5 million of availability under our line of credit gives us significant capacity to support the execution of our backlog and pursue our growth and investment strategy.

With that, I will turn the call back over to Jeff.

Thanks, John. We are excited about the future of iSun. Since becoming a public company in 2019, we have experienced significant growth in our core EPC business, and the addition of iSun has opened new markets for us. While 2020 had its challenges due to the COVID-19 pandemic, we ended the year with strong momentum, and to date in 2021, we are seeing exciting new opportunities to drive growth in the business and have significantly improved our balance sheet, which we will plan to utilize to grow the company.

Going forward, we will maintain our three-pronged approach to our growth strategy. First, we will continue to pursue organic growth opportunities across the Northeastern United States and other key regional markets, seeking to win projects with new customers as demand for solar energy and e-mobility infrastructure growth. We have executed on our plan of expanding throughout the Northeast and believe we can use our improved liquidity to expand across the United States.

Secondly, we will look to grow through accretive M&A and strategic investments. This could be in the form of expanding our geographic footprint with acquisitions for traditional solar EPC companies. However, we also see a number of opportunities for investments in companies that provide energy as a service, which can further establish iSun as a leader in the solar market and provide EPC services, both within and outside our historical geographic regions.

With a much stronger balance sheet, we have the ability to act on potential opportunities more quickly than ever and hope to be able to provide some more details on this part of our strategy in the coming months.

Thirdly, we will continue to leverage our GreenBond partnership to invest in solar assets. This not only provides us with new EPC opportunities, but also provides us a solid base of long-term cash flows for the company and asset owners.

Turning to our 2021 outlook, we are optimistic on trends in the solar energy market. The recent ITC extension, along with upcoming infrastructure investments, as well as the accelerating transition to electric vehicles in the United States will provide increasing demand for our services. As we continue to enable the transition from dirty energy to clean energy, our comprehensive portfolio of services will allow us to meet the demands of our expanding marketplace.

We exited 2020 with a record backlog of $61 million, which is work that we expect to be completed within the next 12 months to 18 months. In addition, we are engaging the existing customers and new partners outside of our core markets, which will drive additional growth. Based on this, iSun expects to at least double revenues in 2021 compared to 2012. The company also expects to achieve growth in EBITDA margin expansion, given the improved operating efficiency and greater economies of scale.

In conclusion, this is an exciting time for iSun. We are building on our strong history as an electrical installer contractor and will continue to embrace innovation as we take our company into its next phase of growth by capitalizing on strong market trends, enhanced service offerings, and geographical expansion.

With that, I will now open the lines for questions. Operator?

(Operator Instructions) Jeffrey Campbell, Alliance Global Partners.

Good morning and congratulations on the strong fourth quarter 2020 performance.

Good morning. Thank you.

Yeah. Regarding the $61 million current backlog, is that entirely solar EPC projects or is there any iSun future sales included in there at this time?

That includes the announced project in Connecticut that came through with the acquisition of iSun and existing solar EPC backlog.

Okay, great. Thank you.

When you speak about expanding into key markets, can you point out any specific markets where you believe you would have an advantage?

Yeah. We think that we have advantage at the Northeast. We've got good routes here, as well as are there some other key markets throughout the East Coast that we're looking at now. I don't want to get ahead of what our plans are, but our primary focus is where can we add value to our customers and where can we commit early on in the projects and help bring value to them. And that's when our customers have projects in other geographical areas where we can provide value, that's where we will look to expand.

Okay, great. Well, I think further on the East Coast, this is good color. And my last question, as you continue to position iSun as a service provider, are there any particulars services that you would like to develop that you don't have now, that you'd like to develop either organically or through acquisition?

Yeah. I think as we look at acquisitions and services to our customers, what we want to be able to do is we want the acquisitions to be accretive, number one. But number two, to bring additional value to our customers. So I think as I look at the evolving EV market and what that is, and how iSun help support that, I would look at opportunities that we can have where we can bring value to our customers and help with their transition from dirty energy to clean energy. So that would be our approach.

As well as there's opportunity to acquire a traditional EPC or electrical contractor in emerging market, leverage their local experience with our sort of national customer base, that may be something that's interesting to us as well.

Okay, great. Thank you.

Thank you.

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. Jeffrey Peck closing remarks.

Thank you, operator. Thanks everybody for joining our call today. Obviously, we are very excited about our future and appreciate everyone's interest in iSun. We look forward to speaking with many of you in the near future. Thank you and have a good day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.