Q4 2020 iSun Inc Earnings Call
Good morning, My name is Laura and I will be your conference operator today.
This time I would like to welcome everyone. She was on I sons earnings Conference call for the fourth quarter 2020, all lines have been placed on mute to prevent any background noise.
If you should need assistance during the call. Please press Star then zero on an operator will come back online to assist you.
I would now like to turn this call over to Mr. Chase Jacobson I shouldn't Investor Relations adviser 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 iphones conference call.
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 iPhone 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.
Management will provide us outlook for 'twenty, 'twenty, one and beyond and discuss in more detail I Sun's unique position in the market and its long term growth strategy.
After our prepared remarks today, we'll open the lines to address any of your questions.
As a reminder, the earnings release, which can be found on iphones website.
<unk> financial disclosures and reconciliations for non-GAAP financial measures that should help you analyze the 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.
These forward looking statements in the future there.
They are subject to risks and uncertainties that could cause actual results to differ from management's expectations.
With that I'll now turn it over to our CEO Jeff pack.
Good morning, and thanks to everyone, who dialed and I'm excited to be talking with you today looking forward to having a more regular cadence of quarterly results conference calls 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 ice on it.
We branded our business on your the ISO ne which combined with a robust market outlook.
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 ice on acquisition and provide an overview of where our company stands today.
In January we acquired ice on energy LLC.
On a provider of innovative solar power and electric mobility solutions and services for government commercial retail academic and datacenter customers.
While the core of our company has struggled and construction markets over our 50 year history. We're also a company that embraces innovation and new markets.
In the late 19 AIDS, we built on our experience as an electrical contractor in the telecom and data.
About 10 years ago, we saw an opportunity in the solar energy infrastructure.
Moved into the market it.
It was beginning to more meaningfully above our core geographic markets.
Our acquisition of <unk>.
The company embracing innovation in positioning itself for success and growth in the future.
Ice on flagship solution is the ice on energy and mobility hub.
An electric vehicle card port charging system that incorporate solar payloads to charge electric vehicles.
This product line meshes, well with our core EPC business and provides revenue synergies from the standpoint of us being able to develop and sell these solutions and expand our geographic.
From a footprint in areas, where iPhone has established relationships.
Additionally items operating system provides us with another differentiator in the solar energy infrastructure market.
The ice on OS provides owners the.
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 within our portfolio, especially as we look to develop projects through our green bond partnership.
With this I would like to publicly welcome SaaS per ads to our management team.
As chief innovation and experience officer.
First what was the founder and CEO of bias on prior to the acquisition. He brings over 30 years of experience in solar energy infrastructure markets his relationships and knowledge of the solar industry.
Innovation are already proving valuable to the combined company.
As it stands today.
Levi's and offers the most comprehensive packages of services to the solar energy in E mobility infrastructure markets.
We are well positioned to take advantage of what we expect to be continued positive trends in renewable energy infrastructure investment in North America over the near medium and long term.
Turning to a few key highlights for the fourth quarter and full year 2020.
He is well known that 'twenty 'twenty was a unique year, Iceland and most companies globally while.
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 start to see a 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 per cent compared to the fourth quarter 2019.
Normalized EBITDA increased to $44 million up 453% from the fourth quarter of 2019.
These results exclude the onetime gain on forgiveness of our P. P P on at $1.5 million.
Including the gain on the PPP loan fourth quarter 2020, EBITDA would've been.
If you put $1 billion and full year 2020 EBITDA.
Is <unk> 4 million.
We welcome the return to a more normal operating environment I believe our ability to quickly ramp up work at existing installations.
It is a testimony to the dedication of our workforce and 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 we expect to continue on organic growth through 2021 in both our traditional solar EPC projects and in new markets.
A recent example of a new market when is the $2.2 million project that we were awarded in the Meridian housing authority in Connecticut to provide solar EV carports combined with our traditional solar rooftop and ground Mount installations.
The person who will also be utilizing our software to monitor these assets.
The scale and expertise of our legacy E. P. C business combined with the Iceland innovative solutions and relationships were critical.
Successful based on this work we have seven on several other projects in the new markets and our pipeline, which we hope to be on to announce in the near future.
Also we have taken a number of steps to shore up our balance sheet Vancouver on liquidity, which John will discuss in more detail.
This improved liquidity provides us with capital to execute on projects in our backlog a prospect pipeline.
Also provides us the ability to continue our growth strategy that is focused on enhancing our innovative service offerings and the solar energy and E mobility markets and enhancing our geographic footprint throughout North America.
With that I will turn the call over to John to discuss our financials.
Come back to discuss our go forward strategy in 2021 outlook and.
In more detail.
Thank you Jess 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.
I saw on 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.
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 push outs 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.
From point $1 million in the fourth quarter last year.
Gross margin in the quarter was 19, 1% compared to two 2% in the fourth quarter of 2019.
Higher gross margin was driven by 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.
Worksite 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 <unk> 5 million in the fourth quarter compared to a slight operating loss in the prior year period.
Fourth quarter operating margin was five 4% compared to a negative <unk>, 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.
One 7 million compared to an operating profit of <unk> 9 million in 2019.
<unk> reported fourth quarter net income of $1 7 million.
Or 32 per share compared to <unk> 3 million or <unk> <unk> per share in fourth quarter of 2019.
For the full year I saw on reported essentially break even net income versus a net loss of <unk> 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 a return to normal operations in the fourth quarter.
If we had not received the funds we would have likely had to reduce cost by a similar amount to sustain that 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 a point $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 <unk> 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 <unk> 7 million up from point 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 million on our revolving line of credit that supports working capital and $2 million of long term debt that is supported by a recurring revenue stream generated by our solar assets.
Importantly, subsequent to the end of the quarter a number of items took place that 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 then additional 10 5 million from a registered direct offering.
As a result as of March 12, we have approximately $21 million in cash availability.
This does not include proceeds from warrants that have from 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 ice on since becoming a public company in 2019, we have experienced significant growth on our core EPC business.
And the addition of iPhone has opened new markets force.
While 2020 had its challenges due to the COVID-19 pandemic.
Ended the year with strong momentum and to date in 2021, we are seeing exciting new opportunities to drive growth in the business.
Difficultly improved our balance sheet.
Which we will plan to utilize to grow the company.
Going forward, we will maintain our three pronged approached our growth strategy.
First we will continue to pursue organic growth opportunities across the north eastern United States and.
In other key regional markets.
She seeking to wind 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 per traditional solar EPC companies. However, we.
We also see a number of opportunities for investments in companies that provide energy that service.
Which could further establish Iceland 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.
I 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 green bond 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 as asset owners.
Turning to our 2021.
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 existing customers and new partners outside of our core markets, which will drive additional growth.
Based on this ice unexpected to at least double revenues in 2021 compared to 2012.
The company also expects to achieve gross and EBITDA margin expansion, given the improved operating efficiency and greater economies of scale.
In conclusion.
This is an exciting time for us on we.
We are building on our strong history with them on.
On electrical and solar contractor.
And we will continue to embrace innovation as we take our company into its next phase of growth by capitalizing on strong market trends.
And service offerings offerings.
Geographical expansion.
With that I will now open the lines for questions.
Operator.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation from our indicate your line is on the question queue.
You May press star two share.
Question from the queue.
Disciplined using speaker equipment. It maybe not this day to pick up your handset before pressing the star keys.
One moment, while we poll for questions.
Our first question comes from the line of Jeffrey Campbell with Alliance Global Partners. You May proceed with your question.
Good morning, and congratulations on the strong fourth quarter 'twenty performance.
Good morning, Thank you.
Yes regarding the 61 billion on backlog.
That entirely solar EPC projects are is there any ice on future sales included on there at this time.
That includes the announced project in Connecticut that came through with the acquisition of our lights on.
And existing solar EPC backlog.
Okay alright, thank you.
When you speak about expanding on to key markets can you point out any specific markets, where you believe you would have an advantage.
Yeah.
We think that we have.
The advantage that the northeast we've got a good roots here as well as some other key markets.
Throughout the East coast that were that were looking at now I don't want to get ahead to get ahead of what our plans are but.
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Our primary focus is where can we add value to our customers and where can we come in early on in the projects.
And help.
Bring value to them and that's why.
When our customers have projects in other geographical areas, where we can provide value, that's where that's where we will look to expand.
Okay, great well I think further on the East coast is that's good color.
Hum.
And my last question as you continue to position I saw on the service provider are there any particular services that you would like to develop.
Maybe you don't have now that you'd like to develop either organically or through acquisition.
I think as we 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 I spend.
Support that I would look at the opportunities that we can have that where we can bring value to our customers and help their transition from dirty energy to clean energy.
So.
That would be our approach.
As well as the.
The opportunity to acquire.
Traditional EPC or electrical contractor in the emerging market.
Leverage there.
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 answer session I would like to turn this call back over to Mr. Jeffrey Parker for closing remarks.
Thank you operator thank.
Thanks, everybody for joining our call today are.
Obviously, we were very excited about our future and appreciate everyones interest in Iceland.
We look forward to speaking with many of you on the near future. Thank.
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.
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