Sunworks Inc (SUNW) 2023 Q1 法說會逐字稿

Greetings, and welcome to the Sunworks first-quarter 2023 results conference call. (Operator Instructions) As a reminder, this conference is being recorded. And it is now my pleasure to introduce to you Jason Bonfigt, the Chief Financial Officer. Thank you, Jason, you may begin.

您好，歡迎參加 Sunworks 2023 年第一季度業績電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。現在我很高興向您介紹首席財務官 Jason Bonfigt。謝謝你，傑森，你可以開始了。

Thank you, operator. I'm Jason Bonfigt, Chief Financial Officer at Sunworks. On behalf of our entire team, I'd like to welcome you to our first-quarter results of 2023 conference call. Leading the call today -- with me today, is our President and CEO Gaylon Morris.

謝謝你，接線員。我是 Jason Bonfigt，Sunworks 首席財務官。我謹代表我們整個團隊歡迎您參加我們的 2023 年第一季度業績電話會議。今天與我一起主持電話會議的是我們的總裁兼首席執行官蓋倫·莫里斯 (Gaylon Morris)。

Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as otherwise required by law, we undertake no obligation to update our forward-looking statements. Following our prepared remarks, we'll open the line for questions. And with that, I'll turn the call over to Gaylon.

今天的討論包含有關未來業務和財務預期的前瞻性陳述。由於各種風險和不確定性，包括我們向美國證券交易委員會提交的定期報告中描述的風險，實際結果可能與今天的前瞻性聲明中預測的結果存在顯著差異。除非法律另有要求，我們不承擔更新前瞻性陳述的義務。在我們準備好的發言之後，我們將開通提問熱線。然後，我會將電話轉給蓋倫。

Thank you, Jason, and welcome to those joining us today. The first quarter was a challenging period for Sunworks as we managed through inclement weather conditions in many of our primary geographic markets, which impacted the timing of project completions. We also experienced disruptions created by net energy metering transition in California and the tightening credit market negatively impacted working capital.

謝謝你，傑森，歡迎今天加入我們的人。第一季度對 Sunworks 來說是充滿挑戰的時期，因為我們在許多主要地理市場中應對了惡劣的天氣條件，這影響了項目完成的時間。我們還經歷了加利福尼亞州淨能源計量轉型造成的干擾以及信貸市場緊縮對營運資本的負面影響。

For those not familiar, net energy metering, or NEM ,is utilized in California to allow consumers to participate in selling unused solar power generated from their power systems back to the grid. This power sharing relationship is the defining incentive that has led many households to invest in rooftop solar.

對於那些不熟悉的人來說，淨能源計量（NEM）在加利福尼亞州被用來允許消費者參與將其電力系統產生的未使用的太陽能出售回電網。這種電力共享關係是促使許多家庭投資屋頂太陽能的決定性激勵因素。

In December of 2022, the California Public Utility Commission, or CPUC, issued a final decision to update its NEM policies, which adversely impacted the economic benefits of residential and commercial solar by lowering the export rate or the price at which the consumer sells their power back to utility by approximately 75%.

2022 年 12 月，加州公用事業委員會 (CPUC) 發布了更新其 NEM 政策的最終決定，該政策降低了出口率或消費者出售電力的價格，對住宅和商業太陽能的經濟效益產生了不利影響恢復效用約 75%。

While the reduction in the export rate is significant, the cost of solar relative to current electricity bills and ongoing inflationary pressures on future utility rates are expected to continue to justify the economics of solar consistent with our long-term market view. Additionally, homeowners may augment their solar systems with batteries to ensure that excess power generated during the day offsets their power needs during the evening peak pricing period.

雖然出口率大幅下降，但相對於當前電費的太陽能成本以及未來公用事業費率持續的通脹壓力預計將繼續證明太陽能的經濟性與我們的長期市場觀點一致。此外，房主可以用電池增強太陽能係統，以確保白天產生的多餘電力抵消晚間高峰電價期間的電力需求。

In advance of the well-publicized NEM transition, customers who submitted their solar applications through solar providers, including Solcius and Sunworks by the April 14 deadline are expected to qualify under the prior, more economically beneficial NEM 2.0 regulations. This change in regulation by the CPUC resulted in a surge of applications prior to the mid-April 14 deadline -- the mid-April deadline that has caused significant delays, with the average utility interconnection application wait time increasing from less than a week to the eight weeks or more we are currently experiencing.

在廣為人知的 NEM 過渡之前，在 4 月 14 日截止日期之前通過包括 Solcius 和 Sunworks 在內的太陽能供應商提交太陽能申請的客戶預計將符合之前更經濟實惠的 NEM 2.0 法規的資格。 CPUC 的這一監管變化導致 4 月 14 日中旬截止日期之前的申請激增——4 月中旬截止日期導致了嚴重的延誤，公用事業互連申請的平均等待時間從不到一周增加到了我們目前正在經曆八週或更長時間。

In plain terms, this backlog of applications contributed to a short-term spike in new project demand, but extended interconnection application, and approval wait times have resulted in delays to project permitting and completion. With these project delays, in-process component inventories have stayed on our books longer than is typically the case, resulting in higher working capital balances and slower cash conversion cycle times.

簡單來說，申請的積壓導致了新項目需求的短期激增，但互聯申請和審批等待時間的延長導致了項目許可和竣工的延遲。由於這些項目的延誤，在製品庫存在我們賬簿上的停留時間比通常情況要長，導致營運資金餘額增加和現金轉換週期變慢。

While our first quarter results were clearly challenged, demand conditions remained strong across our end markets through April, giving us optimism for improved results as we move throughout the year. In the first quarter, our residential solar segment revenue and backlog increased 14.6% and 12.7% respectively versus the prior year period.

雖然我們第一季度的業績明顯受到挑戰，但截至 4 月份，我們的終端市場的需求狀況依然強勁，這讓我們對全年業績的改善持樂觀態度。第一季度，我們的住宅太陽能部門收入和積壓訂單分別比去年同期增長了 14.6% 和 12.7%。

Order rates increased at an accelerated pace, given an influx of new applications for rooftop solar installations ahead of the NEM deadline. California represented more than 50% of our new residential originations in the first quarter. Direct sales contributed to more than 40% of new originations in the first -- in the period versus 18% in the first quarter of 2022, contributing to a 450 basis point decline in segment selling and marketing costs as a percentage of revenue.

由於屋頂太陽能裝置的新申請在 NEM 截止日期之前湧入，訂單率加速增長。第一季度，加州占我們新建住宅項目的 50% 以上。今年第一季度，直銷佔新產品銷量的 40% 以上，而 2022 年第一季度為 18%，導致細分市場銷售和營銷成本佔收入的百分比下降了 450 個基點。

As before, we continue to employ a disciplined pricing strategy into a period of rising demand. Within our commercial solar energy segment, revenue and backlog increased more than 64% and 119% respectively versus the prior year period. First-quarter results included an order for a 1.5 megawatt rooftop and carport solar installation with a 2000-kilowatt hour energy storage system located in Southern California with a Fortune 250 company.

和以前一樣，我們在需求不斷增長的時期繼續採用嚴格的定價策略。在我們的商業太陽能領域，收入和積壓訂單分別比去年同期增長了 64% 和 119% 以上。第一季度業績包括向一家財富 250 強公司訂購位於南加州的 1.5 兆瓦屋頂和車庫太陽能裝置，以及 2000 千瓦時的儲能係統。

The $5 million order represents an important strategic entry point with a large corporation with a nationwide footprint. The project, which will commence in the third quarter of 2023 and should conclude in the first quarter of 2024, is expected to provide significant long-term energy savings for the customer consistent with their renewable energy objectives.

這份價值 500 萬美元的訂單代表了一家業務遍及全國的大公司的一個重要戰略切入點。該項目將於 2023 年第三季度開始，並應於 2024 年第一季度結束，預計將為客戶提供顯著的長期節能效果，符合其可再生能源目標。

Turning to a discussion of our balance sheet and liquidity. Following the banking crisis earlier in the year and as several other solar companies have gone out of business, credit markets have tightened for rooftop solar financing. Historically, milestone payments have been provided by lenders at various stages of the project's life cycle. Lenders are reducing risks by shifting payments to later stages of the project negatively impacting working capital.

轉向我們的資產負債表和流動性的討論。今年早些時候發生銀行危機後，隨著其他幾家太陽能公司倒閉，屋頂太陽能融資的信貸市場收緊。從歷史上看，貸款人在項目生命週期的各個階段都提供了里程碑付款。貸款人通過將付款轉移到項目的後期階段來降低風險，這對營運資金產生了負面影響。

During the second quarter, we took coordinated actions to enhance our liquidity and reduce our fixed overhead costs. Our liquidity enhancing actions, which Jason will discuss in more detail shortly, increased our available liquidity position by $8 million in May of 2023. This cash infusion, together with nearly $3 million of cash on hand we had as of March 31, will help to further bolster our liquidity profile as we navigate the current operating environment.

第二季度，我們採取協調行動來增強流動性並降低固定管理成本。 Jason 將很快詳細討論我們的流動性增強行動，該行動使我們的可用流動性頭寸在 2023 年 5 月增加了 800 萬美元。這筆現金注入，加上截至 3 月 31 日我們手頭有近 300 萬美元的現金，將有助於在我們應對當前的運營環境時，進一步增強我們的流動性狀況。

Following the NEM transition in April 2023, we anticipate CPUC application -- utility application rates and project completion time should normalize over the next quarter. In that scenario, we expect working capital requirements to stabilize and capacity utilization to improve. As before, the market opportunity for solar remains significant across our geographic footprint, positioning Sunworks to play a leading role in the transition towards affordable, clean, and independent energy production.

在 2023 年 4 月 NEM 過渡之後，我們預計 CPUC 申請——公用事業申請率和項目完成時間應在下個季度恢復正常。在這種情況下，我們預計營運資金需求將穩定，產能利用率將提高。與以前一樣，太陽能的市場機會在我們的地理分佈範圍內仍然很大，這使得 Sunworks 在向負擔得起的、清潔的和獨立的能源生產過渡中發揮著主導作用。

With that, I will hand the call over to Jason for a review of our first-quarter financial results.

這樣，我將把電話轉交給傑森，以審查我們第一季度的財務業績。

Thanks, Gail. Beginning with our summary of our first-quarter financial performance, Sunworks generated total revenue of $38.1 million in the first quarter of 2023, an increase of 22% versus the prior year period, reflecting growth across the company's residential and commercial markets. As we highlighted previously, weather delays in our primary market delayed roughly $7.8 million of revenue from being recognized in our residential segment.

謝謝，蓋爾。從我們對第一季度財務業績的總結開始，Sunworks 2023 年第一季度的總收入為 3810 萬美元，比去年同期增長 22%，反映了該公司住宅和商業市場的增長。正如我們之前強調的那樣，我們的主要市場的天氣延誤導致住宅領域約 780 萬美元的收入無法得到確認。

Gross profit was $11.9 million or 31.3% of sales compared to $13.2 million or 38.5% in the prior year quarter. The main drivers of the year-over-year reduction was primarily driven by lower labor utilization in our residential segment, again, an impact of the weather-related challenges we experienced. Specifically, our residential gross margin declined to 37.9%, an 800 basis point decrease year over year. And in our commercial segment, a write-down of inventory or lower of cost to market drove gross margin to 4.5%. Without this non-cash impact occurring, the business would have generated approximately a 17% gross margin higher than the previous year quarter.

毛利潤為 1,190 萬美元，佔銷售額的 31.3%，而去年同期毛利潤為 1,320 萬美元，佔銷售額的 38.5%。同比減少的主要驅動因素主要是由於我們住宅領域的勞動力利用率較低，這也是我們經歷的與天氣相關的挑戰的影響。具體來說，我們的住宅毛利率下降至37.9%，同比下降800個基點。在我們的商業部門，庫存減記或上市成本降低將毛利率推至 4.5%。如果沒有這種非現金影響，該業務的毛利率將比去年同期高出約 17%。

Within other income, we realized a $3.7 million gain. The year-over-year variance is primarily attributable to a $5.1 million net benefit associated with the company qualifying for the employee retention tax credit, then partially offset by a loss on sale of excess module inventory. We reported a net loss of $6.4 million in the first quarter of 2023 or $0.18 loss per share versus a net loss of $8.2 million in the prior year period or $0.28 per basic share.

在其他收入中，我們實現了 370 萬美元的收益。同比差異主要歸因於與有資格獲得員工保留稅收抵免的公司相關的 510 萬美元淨收益，然後被過剩模塊庫存銷售損失部分抵消。我們報告 2023 年第一季度淨虧損 640 萬美元，即每股虧損 0.18 美元，而去年同期淨虧損 820 萬美元，即每股基本虧損 0.28 美元。

Cash from operations was negatively impacted in the first quarter of 2023 due to the weather and utility approval delays as well as tighter financing terms for residential solar installations that Gaylon mentioned. As of March 31, 2023, the company had cash and cash equivalents of $3.4 million.

由於天氣和公用事業審批延遲以及蓋倫提到的住宅太陽能裝置融資條款收緊，2023 年第一季度的運營現金受到負面影響。截至2023年3月31日，該公司擁有現金和現金等價物340萬美元。

During April 2023, the company received proceeds of approximately $1.5 million through sales of common stock and registered at-the-market offerings. And then on May 5, 2023, we entered into accounts receivable factoring agreement based on the company's commercial customer receivables with the ability to advance up to $2.5 million at any point in time.

2023 年 4 月，該公司通過出售普通股和註冊市場發行獲得了約 150 萬美元的收益。然後於2023年5月5日，我們根據該公司的商業客戶應收賬款簽訂了應收賬款保理協議，可以在任何時間點墊付高達250萬美元。

And then subsequently on May 22, 2023, the company entered into a trade purchase agreement with regards to its ERTC receivable with proceeds netting of $5.7 million. The company intends to use the proceeds from these finance activities to support elevated near-term working capital requirements in the continued effects of protracted utility approval timelines, which are expected to normalize over the coming months.

隨後於 2023 年 5 月 22 日，該公司就其 ERTC 應收賬款簽訂了貿易購買協議，淨收益為 570 萬美元。該公司打算利用這些融資活動的收益來支持近期增加的營運資金需求，以應對長期公用事業審批時間表的持續影響，預計該時間表將在未來幾個月內正常化。

Operator, that concludes our prepared remarks. Please open the line for questions as we begin our question-and-answer section.

接線員，我們準備好的發言到此結束。當我們開始問答部分時，請打開提問熱線。

(Operator Instructions) Donovan Schafer, Northland Capital Markets.

（操作員說明）Donovan Schafer，Northland Capital Markets。

Hey, guys. I'm happy to see the liquidity improvements, the proactive moves. It looks like you guys have taken there after the close of the quarter. I'd like to first ask about the outlook for the second quarter.

大家好。我很高興看到流動性的改善和積極主動的舉措。看來你們在本季度結束後就已經到了那裡。我想首先詢問第二季度的前景。

We're already two-thirds of the way through the quarter, so I'm just curious if you can at least give us a sense of should we expect sequential improvements in the second quarter? If so, are we talking like a single-digit percentage growth or double-digit, like quarter over quarter?

我們已經完成了本季度的三分之二，所以我很好奇您是否至少能讓我們了解我們是否應該期望第二季度的連續改進？如果是這樣，我們談論的百分比增長是個位數還是兩位數，比如季度環比？

And if it's too soon to tell, what -- if you could elaborate on what's happening in this last month of the quarter that causes that uncertainty whether it's trying to rush and get -- catch up to your backlog, projects, and squeeze as much as you can in before the close of the quarter. Or uncertainties around customer eligibility, getting them grandfathered under NEM 2.0, just what are the fact -- what's the Q2 -- how should we think about it? And then if it's too soon to really say anything, what are those factors?

如果現在說還為時過早，那麼——如果你能詳細說明本季度最後一個月發生的事情導致了不確定性，是否試圖趕上——趕上你的積壓工作、項目和擠壓盡可能多的事情您可以在季度結束前進行。或者圍繞客戶資格的不確定性，讓他們在 NEM 2.0 下受到尊重，事實是什麼——第二季度是什麼——我們應該如何看待它？如果現在說什麼還為時過早，那麼這些因素是什麼？

Sure. I'll start -- let's start with the commercial business, because I think that's a little easier to walk through. So we have continued to make improvements in the backlog in our commercial business. Backlog increased sequentially to $35 million, and as we get into the summer months, it's always a little bit stronger when we have less sort of weather-related issues in the commercial business.

當然。我將從商業業務開始，因為我認為這更容易理解。因此，我們繼續改善商業業務的積壓情況。積壓訂單連續增加至 3500 萬美元，隨著進入夏季，當商業業務中與天氣相關的問題較少時，積壓訂單總是會增加一些。

So we're anticipating moderate growth there. Within residential, we had a lot of challenges in Q1 that we talked about with weather, and then I would say that Q2 has been almost a comparable impact on the business with regards to what's happening in California with approval timelines.

因此，我們預計該地區將出現溫和增長。在住宅領域，我們在第一季度遇到了很多挑戰，我們談到了天氣問題，然後我想說，就加州的批准時間表而言，第二季度對業務的影響幾乎是相當的。

And that's -- as we're not going to provide guidance there, but I'm not expecting the approval rates to be coming in for permits to improve dramatically over the next four to five weeks for the quarter. So I think it's -- I think there's going to continue to be some pressure in that residential business for most of the quarter.

那是 - 因為我們不會在那裡提供指導，但我預計許可證的批准率不會在本季度接下來的四到五週內大幅提高。所以我認為，在本季度的大部分時間裡，住宅業務將繼續面臨一些壓力。

Okay. And then for the full year -- in the full year, so 2023, in the past, I know you guys have talked about having sort of a very high level, an overall 20% to 30% year-over-year growth bogey that you shoot for, just in terms of the idea of hitting the scale to absorb overhead.

好的。然後是全年——全年，所以 2023 年，過去，我知道你們已經談到了非常高的水平，整體同比增長 20% 到 30%，你的目標，只是為了達到平衡以吸收開銷的想法。

And at the same time, I know, at the current moment, you're driving some profitability measures, and those can sometimes slow growth in the short term. So my question is, are you still sort of internally aiming for something on the order of 20%, 30% growth in this year over last year? Or is that -- do you see that as realistic in light of the profitability measures?

與此同時，我知道，目前您正在推動一些盈利措施，而這些措施有時會在短期內減緩增長。所以我的問題是，你們的內部目標是否仍然是今年比去年增長 20%、30% 左右？或者，根據盈利能力衡量標準，您認為這現實嗎？

I mean, so (multiple speakers)

我的意思是，所以（多個發言者）

We're not going to last year.

去年我們不會去。

If you look at our residential group, even though we had a difficult quarter against our plan, we still exceeded revenue in the first quarter of last year by almost 15%. So I think that performance is indicative of our year-over-year ability to perform.

如果你看看我們的住宅組，儘管我們的季度業績與我們的計劃相比很困難，但我們仍然比去年第一季度的收入增長了近 15%。因此，我認為績效體現了我們逐年執行的能力。

With -- like I said, the challenges we've had have been against what we were anticipating and the revenue levels that we were budgeting for and working against from a cost-basis standpoint, they aren't necessarily have been a challenge against growth year-over-year.

正如我所說，我們所面臨的挑戰是針對我們的預期以及我們從成本基礎的角度製定預算和工作的收入水平，它們不一定是對增長的挑戰一年又一年。

Okay. And then I think this probably ties in with the commentary around the permit delays. But I think in the press release, I saw a mention to labor inefficiencies, and Gaylon, I think you referred to this as like capacity utilization. Just curious if, like, where we stand as of today? Are you at that same level of utilization where there's whether it's electricians or there are people on staff that you don't want to let them go because once things pick back up again you want to certainly be able to quickly use those resources. But are we at the similar level of labor inefficiency at the moment or utilization? Or have we seen improvements? Just curious how that -- where that's today relative to the quarter -- first quarter?

好的。然後我認為這可能與有關許可證延誤的評論有關。但我認為在新聞稿中，我看到提到了勞動力效率低下，蓋倫，我認為您將其稱為產能利用率。只是好奇我們今天的處境如何？您是否處於相同的利用率水平，無論是電工還是員工，您都不想讓他們離開，因為一旦情況再次好轉，您當然希望能夠快速使用這些資源。但我們目前的勞動力效率或利用率是否處於相似的水平？或者我們看到了改進嗎？只是好奇今天相對於第一季度的情況如何？

On the --

關於——

We'll see. We'll see.

我們拭目以待。我們拭目以待。

On the resident -- oh, go ahead. I was just going to -- sorry, Gaylon. I was just going to talk about the residential business.

關於居民——哦，繼續吧。我只是想——抱歉，蓋倫。我只是想談談住宅業務。

And I was going to say, go ahead and talk about the residential.

我想說，繼續談談住宅吧。

Okay. So I would expect some modest improvements. But the pressure that we saw in gross margin was pretty intense during the quarter. And I think in the absence of having a very healthy backlog in the residential business, we would have had to have made staffing -- significant staffing reductions. We don't feel -- we didn't feel comfortable with that because of the strength of the backlog and making sure that we have skilled labor to support the growth for the rest of the year.

好的。所以我希望有一些適度的改進。但我們在本季度看到的毛利率壓力相當大。我認為，如果住宅業務沒有大量積壓，我們就不得不進行人員配置——大幅削減人員配置。我們對此感到不舒服，因為積壓的訂單量很大，並確保我們擁有熟練的勞動力來支持今年剩餘時間的增長。

So I think there -- that is certainly with the challenges in California, there are -- there are going to be -- continue to be inefficiencies in Q2. And I -- but I think as we get into the second half of the year, we're expecting some of these variables to improve. And we should be able to get gross margins improvement as well back to at least to where we were last year.

因此，我認為，加利福尼亞州確實面臨著挑戰​​，第二季度將繼續存在效率低下的情況。但我認為，隨著進入今年下半年，我們預計其中一些變量會有所改善。我們應該能夠使毛利率改善，至少回到去年的水平。

On the commercial side of the business, the staff utilization is 100%-plus right now. It's exactly where it needs to be.

在業務的商業方面，目前員工利用率超過 100%。它正是它需要在的地方。

Okay. Great. And then I was going to ask the same -- Jason, you answered what I was going to ask about gross margins, what we should expect them to head back to. So nice to hear that they -- there hasn't been any sort of a structural change that would create a new normal gross margin below the mid-40s, like what you had last year. So that's nice.

好的。偉大的。然後我要問同樣的問題——傑森，你回答了我要問的關於毛利率的問題，我們應該期望他們回到什麼水平。很高興聽到他們——沒有任何結構性變化會創造出低於 40 多歲的新正常毛利率，就像去年那樣。所以這很好。

Same question for sales and marketing. Gaylon, you commented, I think it was a 450 basis point improvement that you're getting through the direct sales channel. And it seems like I'm guessing that's not blended. You're just saying within the sales that come through the direct channel have the 450 basis point improvement.

銷售和營銷也有同樣的問題。 Gaylon，您評論道，我認為您通過直銷渠道獲得了 450 個基點的改進。我猜這似乎不是混合的。您只是說通過直接渠道的銷售額提高了 450 個基點。

So you'd have to go -- you'd have to go to 100% direct in order to have that -- the 100% conversion into your financials to see a 450 basis point improvement. But in general, I guess correct me if I'm wrong on that, and how should we expect that to trend as a percentage of revenue, sales and marketing expenses for this year?

因此，你必須 100% 直接轉化為財務數據，才能看到 450 個基點的改善。但總的來說，如果我在這一點上錯了，我想糾正我，我們應該如何預期這一趨勢佔今年收入、銷售和營銷費用的百分比？

So we -- as Gaylon mentioned, we had roughly 40% of our originations come through the direct channel. Our short-term goals are to get that to be around 50%. And then I think, so we'll be building traditional dealers, and we'll be also building our direct force. So I don't -- I don't expect significant changes in the short-term on this percent of sales that we're talking about for residential. So -- but until (multiple speakers)

因此，正如 Gaylon 提到的，我們大約 40% 的來源來自直接渠道。我們的短期目標是達到 50% 左右。然後我想，我們將建立傳統經銷商，我們還將建立我們的直接力量。所以我預計我們所說的住宅銷售百分比在短期內不會發生重大變化。所以——但是直到（多個發言者）

That's sort of the investment -- that's because sort of the investment -- the investment costs offsetting the benefits in the near term?

這就是某種投資——那是因為某種投資——投資成本抵消了短期內的收益？

There's always an investment in direct force. There's always a -- there's also a commission structure that's in place for direct, just like other sales channels have. It's just on a revenue basis, it's slightly lower. So I think until we -- you're not going to see that -- a significant reduction there until we start to see originations for direct go well above 50%.

總是有對直接力量的投資。就像其他銷售渠道一樣，直銷總有一個佣金結構。僅以收入為基礎，略低一些。所以我認為，直到我們——你不會看到——大幅減少，直到我們開始看到直接來源遠高於 50%。

Okay. Okay. Okay. Well, I'll let someone else ask some questions, and I'll jump back in the queue. Thanks, guys.

好的。好的。好的。好吧，我會讓其他人問一些問題，然後我會插回隊列。多謝你們。

Thank you.

謝謝。

Tim Moore, EF Hutton.

蒂姆·摩爾，EF 赫頓。

Thanks. And I don't have as many questions as I normally would because I have the handful on Tuesday after the press release of the results. But maybe starting off, just to put this in perspective for everybody to grasp it, most of the gross margin headwind in the March quarter was primarily because of bad weather. And then this quarter, because of NEM and the utility delay in the approvals causing under-absorption, too. Do you think that you can get back on a track to be at 40%-plus gross margin in the September quarter if the weather and utility delays get behind you by then?

謝謝。我的問題不像平時那麼多，因為周二結果新聞發布後我的問題很少。但也許一開始，只是為了讓每個人都能理解這一點，三月份季度毛利率的大部分逆風主要是由於惡劣的天氣。然後在本季度，由於 NEM 和公用事業公司的批准延遲，也導致了吸收不足。如果到那時天氣和公用事業延誤已經過去，您是否認為您可以在 9 月季度恢復毛利率 40% 以上的軌道？

So, I think we have to look at that on a segment basis or commercial versus our residential business because the commercial business is growing as well, and that has a lower margin profile. So, I think really the one-time hit that we had in our commercial business was the write-down of inventory.

因此，我認為我們必須以細分市場或商業與住宅業務為基礎來看待這一問題，因為商業業務也在增長，而且利潤率較低。因此，我認為我們在商業業務中真正遭受的一次性打擊是庫存減記。

Again, that's a one-time adjustment. We wouldn't expect that to occur again unless if module pricing really deteriorates, which would then help other parts of our business. But I think, as we're thinking about the rest of the year, we're targeting that the mid high teens within our commercial business for gross margins.

再次強調，這是一次性調整。我們預計這種情況不會再次發生，除非模塊定價確實惡化，這將有助於我們業務的其他部分。但我認為，當我們考慮今年剩餘時間時，我們的目標是商業業務中的中高十幾歲的毛利率。

And then our internal targets are certainly to get back into the mid-40s in our residential business. And I think that blend or that mix of revenue should support a greater than 40%, but there are caveats to that depending on the mix of the business.

然後我們的內部目標肯定是讓我們的住宅業務回到 40 年代中期。我認為這種混合或收入組合應該支持超過 40%，但根據業務組合的不同，也有一些注意事項。

I understood that. That segues into my next question because I'm thinking about things as a net selling margin after the selling and marketing expense because you're getting such good leverage out of that as your direct sales force grows to 50% of originations for residential. But just maybe on commercial and public works combined if I'm thinking of them together, what type of backlog do you think you need to hit a good inflection point for operating margin improvement? Do you need to get to $50 million to $60 million versus $35 million lately?

我明白。這就引出了我的下一個問題，因為我正在考慮扣除銷售和營銷費用後的淨銷售利潤，因為當你的直銷隊伍增長到住宅來源的 50% 時，你會從中獲得很好的槓桿作用。但也許就商業和公共工程而言，如果我將它們放在一起考慮，您認為您需要哪種類型的積壓才能達到營業利潤率改善的良好拐點？您是否需要達到 5000 萬至 6000 萬美元，而不是最近的 3500 萬美元？

Yeah, we believe that getting to -- so our focus is, how do we generate positive cash flow out of that business positive EBITDA because there isn't significant CapEx involved? So, we believe that the way that we're pricing these jobs and from an execution standpoint, if we can get into the 50s, into the 60% backlog, that backlog usually represents approximately a year's worth of revenue. And that would be supportive of us of generating that positive EBITDA.

是的，我們相信，所以我們的重點是，我們如何從該業務的正 EBITDA 中產生正現金流，因為不涉及大量資本支出？因此，我們相信，我們對這些工作進行定價的方式以及從執行的角度來看，如果我們能夠進入 50 年代，進入 60% 的積壓，那麼積壓通常代表大約一年的收入。這將支持我們產生正的 EBITDA。

Great. And I know nobody has a crystal ball on timing, but when do you think that could be? Do you think that could be by the end of calendar next year, the backlog getting that big?

偉大的。我知道沒有人能預知時機，但你認為那會是什麼時候？您認為到明年日曆年底，積壓的訂單會變得這麼大嗎？

The pipeline of opportunities we have available to us right now, if we were able to execute on them, supports the backlog of that size by the end of this year.

我們現在擁有的一系列機會，如果我們能夠執行的話，到今年年底可以支持如此規模的積壓。

Great. That's helpful clarity. I appreciate it. And that's it for my questions.

偉大的。這對清晰度很有幫助。我很感激。這就是我的問題。

Thank you.

謝謝。

Donovan Schafer, Northland Capital Markets.

多諾萬·謝弗 (Donovan Schafer)，北國資本市場。

Hey, guys. I just have two more questions, and then I will let you go. So, the first question is looking at the improved liquidity position. That's a pretty significant improvement with the ERTC advance and the factoring agreement. And then, I think it was nice to see that, as a result of that, it looks like you really only tapped the ATM to a pretty minimal extent at the low share prices. So that was also nice to see.

大家好。我還有兩個問題，然後我就讓你走了。因此，第一個問題是考慮流動性狀況的改善。這是 ERTC 預付款和保理協議的一個相當重大的改進。然後，我認為很高興看到，因此，看起來你在低股價時實際上只在很小的程度上使用了 ATM。所以這也很高興看到。

But my question is, I'm curious if you could talk more about how you see yourself like holding these -- using these different levers if you expect to lean more on the factoring or, ATM, or if you feel like between these things and the working capital reversal, you'll be in good standing there. And maybe any thoughts around when you think you could get to, like, a cash flow positive situation?

但我的問題是，我很好奇你是否可以更多地談談你如何看待自己持有這些東西——如果你希望更多地依靠保理或ATM，或者如果你覺得在這些東西和營運資金逆轉，你就會在那裡保持良好的信譽。當您認為自己可以實現現金流量積極的情況時，也許有什麼想法？

Yeah, we should have noted. (multiple speakers)

是的，我們應該注意到的。 （多個發言者）

Go ahead, Jason.

來吧，傑森。

Sorry, Gaylon. I was just going to note the impact of the changes in milestone payments, just to put a number on that is significant and significant for all EPCs, moving from -- with some lenders, 30% to 50% last year receiving at sort of the time of sale to moving that more towards construction and PTO.

對不起，蓋倫。我只是想指出里程碑付款變化的影響，只是想用一個數字來說明這一點對所有 EPC 來說都是重要的，對於一些貸款人來說，去年的 30% 到 50%銷售時間將其更多地轉向建築和 PTO。

That has resulted in $5 million to $7 million, depending on the volume at a given time, it's about $5 million to $7 million. So it's a fairly significant impact for us. This ERTC benefit certainly washes that out. I think as we -- so we have a lot of tools, I think, at our disposal. We, of course, have the ATM. We don't want to continue to dilute our shareholders, but it is an option to us if necessary.

這導致了 500 萬到 700 萬美元的收入，根據特定時間的交易量，大約是 500 萬到 700 萬美元。所以這對我們來說是一個相當重大的影響。 ERTC 的福利無疑消除了這一點。我認為，我們有很多工具可供使用。當然，我們有 ATM 機。我們不想繼續稀釋我們的股東，但如果有必要，這是我們的一個選擇。

And we're also -- we also have other assets that are unencumbered across the company, including mostly inventory, which is roughly $20 million at the end of the quarter. So we will be exploring other solutions that could help us raise additional liquidity and that could make us in an even stronger financial position. So I think there's more that we're working through there.

我們還有整個公司未受限制的其他資產，其中大部分是庫存，截至本季度末約為 2000 萬美元。因此，我們將探索其他解決方案，以幫助我們提高額外的流動性，並使我們的財務狀況更加強大。所以我認為我們正在努力解決更多問題。

So I'll hand it over to Gaylon.

所以我會把它交給蓋倫。

I was going to say that the considerable residential backlog is something that could be very quickly converted into cash if the utility approval situation improves, as it eventually has to. So there's basically a large bag of money sitting just outside of our reach, and it's close. And the liquidity situation, the efforts that we've made over the last two months have all been around, supporting the business, and giving us the opportunity to continue to execute to attain that.

我想說的是，如果公用事業審批情況改善（最終必須如此），大量的住宅積壓可以很快轉化為現金。所以基本上有一大袋錢就在我們夠不到的地方，而且已經很接近了。流動性狀況以及我們過去兩個月所做的努力都在支持業務，並使我們有機會繼續執行以實現這一目標。

And then, what about getting to cash flow positive in some kind of a horizon? Any sense around that?

然後，在某種範圍內實現正現金流怎麼樣？這有什麼意義嗎？

It's going to be so dependent on the utility approval timelines. We had forecasted it being much earlier than it will probably be, based on those utility timelines having been so pushed out. It's hard to peg that. I would say that once we understand where the tail of that comes into place, it would be a lot easier for us to estimate the next two to three quarters' cash flow positions.

這將非常依賴於公用事業的批准時間表。基於那些被如此推遲的公用事業時間表，我們預測它會比實際情況要早得多。很難確定這一點。我想說，一旦我們了解了其尾部的位置，我們就可以更容易地估計未來兩到三個季度的現金流狀況。

Okay, great. That's helpful. And then just my last question. I know you guys brought in someone to focus on EV charging in the commercial segment.

好的，太好了。這很有幫助。然後是我的最後一個問題。我知道你們聘請了一些人來專注於商業領域的電動汽車充電。

Yes.

是的。

Yeah, I think you were at Intersolar talking about that back in January or February, whenever that was. And so I'm just curious if there have been any updates there, because I think of you guys as historically with public works and commercial projects, a lot more sort of solar heavy, solar focused, putting a lot of panels up on roofs and government buildings and things like that.

是的，我想您在一月或二月時在 Intersolar 上談論過這個問題，無論什麼時候。所以我很好奇那裡是否有任何更新，因為我認為你們歷史上一直從事公共工程和商業項目，更多的是太陽能重，以太陽能為重點，在屋頂上安裝了很多面板，政府大樓之類的東西。

But have you -- is the EV business, the charging, is a lot of that just adding EV chargers onto that? Are you doing some dedicated public works or EV charging installations where you're just rolling out a bunch of chargers? Any color or updates on how that initiative is going.

但是，電動汽車業務、充電業務，很多只是在其上添加電動汽車充電器嗎？您是否正在做一些專門的公共工程或電動汽車充電安裝，而您只是推出了一堆充電器？有關該計劃進展情況的任何顏色或更新。

Yeah, I'm very happy with that initiative. We have a bogey on that for several million dollars in sales this year, and I think that we're going to get very close to that. We are not only selling EV chargers as an upsell, if you will, with regards to our existing customer base and the work we would usually did, but we're also starting to sell solar -- I'm sorry, EV charger only projects, allowing EV chargers to lead the business conversation versus solar, which is exciting for us.

是的，我對這個舉措非常滿意。今年我們的銷售額達到了數百萬美元，我認為我們將非常接近這個目標。我們不僅將電動汽車充電器作為追加銷售（如果您願意的話）考慮到我們現有的客戶群和我們通常所做的工作，而且我們還開始銷售太陽能——抱歉，僅電動汽車充電器項目，讓電動汽車充電器相對於太陽能充電器能夠引領商業對話，這對我們來說是令人興奮的。

I think that the EV charger market is going to grow exponentially over the next several years, and our goal is to be able to be a part of that growth curve. And so, yeah, more to follow with regards to actual individual wins that are EV charger-specific or EV charger-led, but they're in the pipeline and there's some that are close.

我認為電動汽車充電器市場將在未來幾年呈指數級增長，我們的目標是能夠成為該增長曲線的一部分。因此，是的，關於電動汽車充電器特定或電動汽車充電器主導的實際個人勝利，還有更多值得關注的內容，但它們正在醞釀之中，而且有一些接近。

Okay, fantastic. All right, well, thanks, guys. I'll take the rest of my questions offline.

好吧，太棒了。好吧，謝謝，伙計們。剩下的問題我會離線回答。

Thank you, Donovan.

謝謝你，多諾萬。

There are no further questions at this time, and I would like to turn the floor back over to Gaylon Morris for any closing comments.

目前沒有其他問題，我想將發言權轉回蓋倫·莫里斯以徵求結束意見。

Sorry, I was on mute. Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at ir@sunworksusa, and a member of our team will follow up with you.

抱歉，我當時處於靜音狀態。再次感謝您加入我們的通話。如果您有任何疑問，請隨時通過 ir@sunworksusa 與我們聯繫，我們團隊的成員將與您聯繫。

This concludes our call today. You may now disconnect. Thank you.

我們今天的電話會議到此結束。您現在可以斷開連接。謝謝。