Q2 2022 iSun Inc Earnings Call
Speaker 1: Good morning ladies and gentlemen and welcome to the ISUN second quarter 2022 earnings conference call.
Good morning, ladies and gentlemen, and welcome to the <unk> second quarter 2022 earnings Conference call.
Speaker 1: At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
Speaker 1: It is now my pleasure to turn the floor over to your host, Tyler Barnes. Sir, the floor is yours.
It is now my pleasure to turn the floor over to your host tighter bonds.
The floor is yours.
Thank you and good morning, we're pleased to welcome you to <unk> Conference call, we will discuss financial and operating results for the second quarter of 2020 to Jeffrey <unk>, Chairman and Chief Executive Officer will provide an update on the deployment of items recently completed solar platform and illustrate how it prepared the organization.
Speaker 2: Thank you and good morning. We are pleased to welcome you to ISIM's conference call where we will discuss financial and operating results for the second quarter of 2022. Jeffrey Peck, Chairman and Chief Executive Officer, will provide an update on the deployment of ISIM's recently completed solar platform and illustrate how it prepares the organization for the future of the solar marketplace and creates value for shareholders.
For the future of the solar market place and create value for shareholders, John Sullivan, Chief Financial Officer will provide an overview of the second quarter and year to date 2022 financial results and operating performance. After our prepared remarks today, we will open the line to address any of your questions. As a reminder, the earnings release, which can be found in <unk>.
Speaker 2: John Sullivan, Chief Financial Officer, will provide an overview of the second quarter and year-to-date 2022 financial results and operating performance.
Speaker 2: After our prepared remarks today, we will open the line to address any of your questions.
Speaker 2: As a reminder, the earnings release, which can be found on ISN's website, includes financial disclosers and reconciliation for non-GAAP financial measures that should help you analyze results.
<unk> website includes 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 to update these forward looking.
Speaker 2: 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 expectations.
In the future they are subject to risks and uncertainties that could cause actual results to differ from management's expectations with that I will now turn it over to our CEO Jeff <unk>.
Speaker 2: With that, I will now turn it over to our CEO , Jeff Peck. Thank you, Tyler. Good morning, everyone. Thank you for joining our conversation today about our second.
Thank you Tyler good morning, everyone.
Thank you for joining our conversation today about our second quarter earnings results.
There is so much to discuss since our last conference call.
Speaker 3: We recognize that we have provided few updates throughout this quarter, and we are committed to communicating with our shareholders when we believe it will drive long-term value and provide adequate material updates on the progress of our long-term strategy.
We recognize that we have provided few updates throughout this quarter and we.
We're committed to communicating with our shareholders. When we believe that will drive long term value and provide adequate material updates on the progress of our long term strategy.
That being said I have been eager to share with you. The progress we've made this quarter towards our mission to accelerate the adoption of solar.
Speaker 3: That being said, I've been eager to share with you the progress we've made this quarter towards our mission to accelerate the adoption of solar.
Speaker 3: Before I begin, I'd like to take a moment and thank our team members for their outstanding efforts this year. The strength of our organization comes from the quality of commitments of all of the individual team members.
Before I begin I'd like to take a moment and thank our team members for their outstanding efforts. This year the strength of our organization comes from a quality and commitments of all of the individual team members.
Speaker 3: All of us at iSun have been hard at work deploying the platform we built in 2021.
All of us at <unk> been hard at work deploying the platform we built in 2021.
We have made tremendous progress and we are energized to continue our integration.
Speaker 3: We have made tremendous progress and we are energized to continue our integration.
Speaker 3: As we continue to see our project pipeline and backlog transition to active projects, the hard work and preparation of our team will allow us to meet the increasing demand in an effective and efficient manner. So thank you to everyone on the iSend team.
As we continue to see our project pipeline and backlog transitioned to active projects the hard work and preparation of our team will allow us to meet the increasing demand and effective and efficient manner.
So thank you to everyone on the <unk>.
In my remarks today Youll hear one recurring fee.
The strategic initiatives and investments, we have made perfectly positions us for the future of the evolving energy marketplace.
Speaker 3: that the strategic initiatives and investments we've made perfectly positions us for the future of the evolving energy market.
Speaker 3: Our place in the center of the industry uniquely positioned us to drive long-term shareholder value. And we are better prepared to react to the dynamics of the solar industry.
Our place in the center of the industry uniquely positions us to drive long term shareholder value and we are better prepared to reactivate ideal mix of the solar industry.
This confidence comes from the capabilities of the team we've assembled our experience the strategic investments we've made to diversify our revenue streams and accelerate the growth of our pipeline and backlog.
Speaker 3: This confidence comes from the capabilities of the teams we've assembled, our experience, the strategic investments we've made to diversify our revenue streams and accelerate the growth of our pipeline and back to the next level.
Speaker 3: In 2021, we made a number of strategic investments in order to transform the company and make you capable of serving each segment of the solar market.
In 2021, we made a number of strategic investments in order to transform the company and making capable of serving each segment of the solar marketplace.
Speaker 3: These capabilities diversify a revenue stream and improve timing of cash.
These capabilities diversify our revenue stream and improved timing of cash flows.
Speaker 3: Our diversified approach also better prepares us to meet the accelerating demand for solar.
Our diversified approach also better prepares us to meet the accelerating demand for solar.
Speaker 3: Our internal development services team shortens the time between sales and installation across all of our...
Our internal development services team shortens the time between sales and installation.
All of our divisions.
These synergies translate to an ease of business transaction for our customers as we are a one stop shop for their evolving energy needs.
Speaker 3: These synergies translate to an ease of business transaction for our customers as we are a one-stop shop for their evolving energy needs.
Speaker 3: Additionally, we've proven that we can pivot to meet demand wherever it occurs.
Additionally, we've proven that we can pivot to meet demand wherever it occurs.
Speaker 3: as large-scale projects across the industrial and utility-scale projects have stalled.
As large scale projects across the industrial and utility scale projects have stalled.
Speaker 3: ISUN has been able to redeploy its resources and labor within its commercial and residential sites.
IPhone has been able to redeploy resources and labor within its commercial and residential segments.
Speaker 3: This will be especially important in the coming quarters when ISUN will scale and deploy labor to previously delayed industrial projects as they move towards notice to proceed.
This will be especially important in the coming quarters, when iPhone with scale and deploy labor to previously delayed industrial projects.
They move towards notice to proceed.
Speaker 3: We also made strategic investments designed specifically to secure project pipe.
We also made strategic investments designed specifically to secure project pipelines, which gets us involved with projects earlier than a traditional EPC.
Speaker 3: which gets us involved with projects earlier than a traditional EPC.
Our early involvement allows us to do things like flex schedules combined our buying power.
Speaker 3: Our early involvement allows us to do things like flex schedules, combine our buying power.
Speaker 3: better serves our customers and will secure future cash flows by maintaining a retained interest in many of the projects we construct.
<unk> serves our customers and will secure future cash flows.
By maintaining our retained interest in many of the projects we construct.
Speaker 3: This model aligns us both with our mission and the needs of our community.
This model aligns us both with our mission and the needs of our customers.
Speaker 3: Our preparation, along with the excellent news from Washington on climate legislation, has been more optimistic than I have ever been regarding Iceland's ability to execute on our strategic plan and the massive opportunities in front of us.
Our preparation along with the excellent news from Washington on climate legislation that would be more optimistic than ever been regarding Iceland ability to execute on our strategic plan and the massive opportunities in front of us.
Speaker 3: This legislation is a significant win for the story.
This legislation is a significant win for the solar industry.
Speaker 3: provides the long-term commitments in stability necessary to accelerate the energy industries transition from dirty to clean energy.
Provide the long term commitments and stability.
<unk> to accelerate the energy industry's transition.
From Dirty to clean energy.
Speaker 3: The 10-year extension of a 30% ITC increases the value of our entire pipe.
The 10 year extension of the 30% ITC increases the value of our entire pipeline.
Speaker 3: The standalone 30% tax credit on storage will increase the attachment rates for batteries on solar projects.
The standalone, 30% tax.
Tax credit on storage will increase the attachment rates for batteries and silver projects.
Speaker 3: and will drive the average price higher per installation.
And we will drive the average price higher per installation.
This commitment will spur new investments.
Speaker 3: A recent study by Princeton's REPEAT project predicts by 2024 a 500% increase over 2020 levels of utility solar and a tenfold increase by 2040.
A recent study by Princeton's repeat project predict by 2020 for a 500% increase over 2020 levels of utility solar.
And a 10 fold increase by 2030.
With this legislation and financial commitment America is embracing items mission to accelerate the adoption soar.
Speaker 3: With this legislation and financial commitment, America is embracing Iceland's mission to accelerate the adoption of solar.
Speaker 3: We are perfectly positioned and ready to seize the opportunity.
We are perfectly positioned and ready to seize the opportunity.
Speaker 3: The dynamics of the solar industry in the first half of the year also validate our strategy. This quarter presented a very unique set of industry-wide challenges.
The dynamics of the solar industry in the first half of the year also validate our strategy. This quarter presented a very unique set of industry wide challenges.
And our team continued to deliver.
Speaker 3: The entire industry has seen supply chain delays, surge in commodity prices, labor constraints, and rising interest.
The entire industry has seen supply chain delays certain commodity prices labor constraints and rising interest rates.
Speaker 3: Additionally, we saw permitting extensions provided to projects in our backlog that slowed us receiving notice to proceed.
Additionally, we saw permitting extensions provided to projects in our backlog that slowed us receiving notice to proceed.
Speaker 3: This specifically impacted our industrial vision in the second quarter.
This specifically impacted our industrial division in the second quarter.
While we have not seen a single project cancelled. This specific issue caused several projects to push out their start dates.
Speaker 3: While we have not seen a single project canceled, this specific issue caused several projects to push out their start.
Speaker 3: While we have not been immune to the challenges resulting from supply chain labor shortages, our diverse product and service offerings are a benefit to our customers and a competitive advantage over our peers.
While we have not been immune to the challenges, resulting from supply chain labor shortages, our diverse product and service offerings are a benefit to our customers and a competitive advantage over our peers.
Despite these industry dynamics.
Speaker 3: We continue to see exceptional top line growth with a tripling of our revenue in the second quarter.
We continue to see exceptional top line growth with the tripling of our revenue in the second quarter.
Over the prior year.
Speaker 3: We saw customer demand continue to accelerate, adding $35.7 million to our backlog in the quarter, bringing our total backlog to $147.9 million.
We saw customer demand continued to accelerate adding $35 7 million to our backlog in the quarter, bringing our total backlog to $147 $9 million.
Speaker 3: We grew the number of projects currently under development with the iSUN Utility Division to approximately 1 gigawatt.
We grew the number of projects currently under development with iphones utility division to approximately one gigawatt.
We increased our efficiency with our fourth straight quarter of margin expansion.
Speaker 3: We increased our efficiency with our fourth straight quarter of margining.
Speaker 3: We increased our residential demand by 46% year over year.
We increased.
For our residential demand by 46% year over year.
Speaker 3: We've just begun to execute against our large EV infrastructure contract that we announced in the first quarter, which is generating additional opportunities in this sector of the industry.
And we've just begun to execute against our large EV infrastructure contract that we announced in the first quarter, which is generating additional opportunities in this sector of the industry.
Again, our strategic initiatives address the challenges of the current solar marketplace and delivered results during a very dynamic time in the industry.
Speaker 3: Again, our strategic initiatives address the challenges of the current solar marketplace and deliver results during a very dynamic time.
Speaker 3: Happily as we are with such performance, we're even more excited to demonstrate what the platform is capable of over the long-
Happy as we are with the performance, we're even more excited to demonstrate what the platform is capable of over the long term.
Speaker 3: We want to emphasize that the investments we made in 2021 built iSun as a platform for growth.
We want to emphasize with the investments we made in 2021, both iPhone as a platform for growth.
Speaker 3: Our integration process continues to reveal opportunities for cost and efficiency improvement.
The integration process continues to reveal opportunities for cost and efficiency improvements.
Speaker 3: And now our divisional leadership teams are focused on growing revenue and reestablishing positive EBITDA. With What
And now our divisional leadership teams are focused on growing revenue and reestablishing positive EBITDA.
With that I'll turn things over to John .
Thank you Jeff.
Speaker 2: We are excited to have continued our growth trajectory into the second quarter of 2022. I'll provide an overview of our statement of operations.
We are excited to have continued our growth trajectory into the second quarter of 2022 I'll provide an overview.
Overview of our statement of operations.
Speaker 2: details on our segment before turning to our balance sheet.
On our segments before turning to our balance sheet.
Speaker 2: ISUN reported second quarter 2022 revenue of $16.5 million, representing a 12.1 million, or 278% increase over the same period in 2021.
<unk> reported second quarter 2022 revenue of $16 5 million, representing a $12 1 million or 278% increase over the same period in 2021.
Speaker 2: Year-to-date revenue was 31.6 million, representing a 19.9 million or 172% increase over the same period in 2021.
Year to date revenue was $31 6 million, representing a $19 9 million or 172% increase over the same period in 2021.
Speaker 2: Revenue growth was driven by the continued fulfillment of our residential consumer demand and execution of our commercial
Revenue growth was driven by the continued fulfillment of our residential consumer demand.
And execution of our commercial and industrial backlog.
Speaker 2: While we continue to execute against our existing backlog, we also generated new demand by adding $35.7 million in new business during the second quarter.
While we continue to execute against our existing backlog.
We also generated new demand by adding $35 7 million in new business during the second quarter.
Speaker 2: By segment, our residential division generated revenue of $8.9 and $14.1 million in the second quarter and year-to-date respectively.
By segment, our residential division generated revenue of $8 nine and $14 1 million in the second quarter and year to date, respectively.
Speaker 2: Customer orders are approximately 30.7 million and are expected to be completed within three to six months.
Customer orders are approximately $37 million and are expected to be completed within three to six months.
Speaker 2: Our commercial division generated revenue of 1.1 and 2.5 million in the 2nd quarter and year to date respect.
Our commercial division generated revenue of one one and $2 5 million in the second quarter and year to date, respectively and had a contracted backlog of approximately 11 4 million expected to be completed within six months to eight months.
Speaker 2: and has a contracted backlog of approximately 11.4 million expected to be completed within six to eight months.
Speaker 2: Our industrial division generated revenue of $6 and $12.9 million in the second quarter and year to date, respectively, and has a contracted backlog of approximately $105.8 million expected to be completed within 12 to 18 months.
Our industrial division generated revenue.
Six and $12 9 million in the second quarter and year to date, respectively and has a contracted backlog of approximately $105 8 million expected to be completed within 12 months to 18 months.
Speaker 2: Our utility division generated revenue of 0.5 and 2.1 million in the second quarter and year to date respect.
Our utility division generated revenue of $5 and $2 1 million in the second quarter and year to date, respectively.
Speaker 2: Our utility division also has 993 megawatts of projects currently under development. With project achieving NTP in late 2022 and early 2023.
Our utility Division also had 993 megawatts of projects currently under development with project achieving NTP in late 2022 in early 2023.
Okay.
Speaker 2: Gross profit in the second quarter was 3.8 million compared to
Gross profit in the second quarter was $3 8 million compared to.
Speaker 2: point six million dollar loss during the second quarter 2021.
$6 million loss during the second quarter of 2021.
Speaker 2: Gross margin for the quarter was 22.8%. Compared to a negative 14.6% over the same period 2021.
Gross margin for the quarter was 22, 8% compared to a negative 14, 6% over the same period of 2021.
Speaker 2: Year-to-date gross profit was $6.9 million compared to a loss of $0.5 million during the same period in 2021.
Year to date gross profit was $6 9 million compared to a loss of <unk> 5 million during the same period in 2021.
Speaker 2: Year-to-date gross margin was 21.9% compared to a negative 4.4% during the same period in 2021.
Year to date gross margin was 21, 9% compared to a negative four 4% during the same period in 2021.
Speaker 2: The margin improvement represents the fourth consecutive quarter in which our margin has improved. As we grow synergies among our segments, the strengthening of our margin is expected to continue.
The margin improvement represents the fourth consecutive quarter in which our margin has improved.
As we grow synergies among our segments the strengthening of our margin is expected to continue.
Speaker 2: Operating income in the second quarter was a loss of $5.6 million compared to a loss of $2.8 million over the same period 2021.
Operating income in the second quarter was a loss of $5 6 million compared to a loss of $2 8 million over the same period 2021.
Speaker 2: Year-to-date operating income was a loss of $11.3 million compared to a loss of $5.4 million during the same period in 2021.
Year to date operating income was a loss of $11 3 million compared to a loss of $5 4 million during the same period in 2021.
Speaker 2: Non-cash depreciation and amortization expenses were $1.8 million in the second quarter, compared to $0.2 million in the same period in 2021.
Noncash depreciation and amortization expenses.
Were $1 8 million in the second quarter compared to a <unk> 2 million in the same period in 2021.
Speaker 2: Year-to-date non-cash depreciation and amortization expenses were $3.5 million compared to $0.3 million in the same period in 2021.
Year to date noncash depreciation and amortization expenses were $3 5 million compared to a <unk> 3 million in the same period in 2021.
Speaker 2: ISUN reported a net loss of $5.7 million or $0.40 per share in the second quarter of 2022 compared to a net loss of $1.3 million or $0.15 per share over the same period in 2021.
<unk> reported a net loss of $5 7 million or <unk> 40 per share in the second quarter of 2022 compared to a net loss of $1 3 million or <unk> 15 per share over the same period.
In 2021.
Speaker 2: Year-to-date was a net loss of $0.086 million or $0.64 per share compared to a net loss of $4.4 million or $0.53 per share in the same period in 2021.
Year to date with a net loss of $8 6 million or <unk> 64 per share compared to a net loss of $4 4 million or <unk> 50, 310th.
<unk> per share in the same period in 2021.
Speaker 2: EBITDA for the quarter was a negative $3.2 million or 23 cents per share, compared to a negative $2.4 million or 26 cents per share.
EBITDA for the quarter was a negative $3 2 million or <unk> 23 per share compared to a negative $2 4 million or <unk> 26.
Speaker 2: per share in the same period in 2021.
Cents per share in the same period in 2021.
Speaker 2: Year-to-date EBITDA was a negative $3.4 million, or 25 cents per share, compared to a negative $3.8 million, or 45 cents per share in the same period in 2021.
Year to date EBITDA was a negative $3 4 million or <unk> 25 per share compared to a negative $3 8 million or <unk> 45 per share in the same period in 2021.
Now turning to the balance sheet.
Speaker 2: We continue to focus our efforts on strengthening our balance sheet to improve our cash position and liquidity ratio.
We continue to focus our efforts on strengthening our balance sheet to improve our cash position and liquidity ratios are.
Speaker 2: Our collections remain strong and we have invested in inventory to meet the needs of our growing customer backlog and to mitigate supply chain.
Our collections remain strong and we have invested in inventory to meet the needs of our growing customer backlog and to mitigate supply chain risks.
Speaker 2: We recognize the need to clean up our balance sheet following the multiple acquisitions that were successfully closed during 2021.
We recognize the need to clean up our balance sheet. Following the multiple acquisitions that were successfully closed during 2021.
Speaker 2: We are in active conversations to provide a new debt facility that will provide the opportunity to restructure our existing debt.
We are in active conversations to provide a new debt facility that will provide the opportunity to restructure our existing debt.
Speaker 2: properly collateralize the assets from our investments and acquisitions.
Properly collateralize the assets from our investments in acquisitions and provide the capital necessary to continue our growth trajectory.
Speaker 2: provide the capital necessary to continue our growth trajectory.
Speaker 2: We anticipate closing prior to the end of the third quarter.
We anticipate closing prior to the end of the third quarter.
I'll now turn it back to Jeff.
Speaker 3: Thank you, John , I've spent much of my time today discussing the benefits of the strategic initiatives that we executed on in 2021.
Thank you John .
Spent much of my time today discussing the benefits of the strategic initiatives.
Executed on in 2021.
Speaker 3: While all of what we've accomplished is exciting, I'd like to focus on what's next. Are
While all of what we've accomplished with exciting I'd like to focus on what's next.
Our strategic investments have been very calculated.
Speaker 3: with the goal of solidifying a pipeline and growing our backlog. And these investments...
With the goal of solidifying our pipeline and growing our backlog.
And these investments have built up for a very exciting future.
Speaker 3: Over the last 12 months, our development team has been hard at work building a foundation and establishing strategic partnerships with legacy energy and infrastructure companies.
Over the last 12 months our development team has been hard at work building a foundation in establishing strategic partnerships with legacy energy and infrastructure companies.
Speaker 3: These partnerships provided $8 million in development capital for Iceland's comprehensive development and project origination services.
These partnerships provided $8 million in development capital for iphones comprehensive development and project origination services.
Speaker 3: This has led to the origination of almost one gigawatt of projects throughout eight states.
This has led to the origination of almost one gigawatt of projects throughout eight states.
Speaker 3: As these projects transition from development to notice to proceed status, IECEN retains the EPC rights for each of these projects, as well as minority ownership in each of the operating assets.
As these projects transition from development to notice to proceed status Iceland retains the EPC rates for each of these projects as well as minority ownership in each of the operating assets.
Speaker 3: By late 2022 and early 2023, we will begin to see the first of these projects achieve NTP.
By late 2022 in early 2023.
We will begin to see the first of these projects achieve NTP.
Speaker 3: This quarter, our strategic partnerships raised an additional $26 million in development capital.
This quarter, our strategic partnerships rates, an additional $26 million in development capital.
Speaker 3: This development capital will generate services revenue for ISUN by accelerating project origination and utilizing ISUN's comprehensive development services.
This development capital will generate services revenue for Iceland by accelerating credit origination and utilizing <unk> comprehensive development services.
Speaker 3: For this next phase, we have identified 13 states as well as municipalities, schools, state governments, and nonprofits as targets for project greenfield development and project acquisition.
For this next phase we've identified 13 states as well as municipalities schools State government and nonprofit as targets for project Greenfield development and project acquisitions.
Speaker 3: As with prior agreements, ISIN retains the EPC right.
As with prior agreements iPhone retains the EPC rates.
Speaker 3: as well as the minority ownership in the operating.
As well as the minority ownership in the operating assets.
Speaker 3: To build on what we are creating, we also made a strategic investment in Encore Renewable Energy.
To build on what we are creating we also made a strategic investment in encore renewable energy.
Speaker 3: Encore has been a long-term partner that we've been building projects with over the next...
Encore has been a long term partner that we've been building projects with for over a decade.
Speaker 3: Encore is a best-in-class project development firm specializing in reclaiming undervalued real estate for clean energy generation and storage to help revitalize communities.
Encore is the best in class project development firm Specialises specializing in reclaiming undervalued real estate for clean energy generation and storage to help revitalize communities.
Speaker 3: that are recently named Best of World B Corp and ranked 22nd nationally among US orders.
There are recently named best of World B Corp, and.
And ranked 22nd nationally among U S. Oregon offers.
Speaker 3: We're proud to be partnered with such a successful and well-respected firm.
We're proud to be partnered with such a successful and well respected firm.
But also one that shares our values.
Speaker 3: Since our investment, Encore has raised an additional $20 million in finance.
Since our investment on.
<unk> raised an additional $20 million in financing.
Speaker 3: that has allowed them to double the size of their team and expand their project pipeline.
That has allowed them to double the size of their team and expand their project pipeline.
Speaker 3: Consistent with our investment strategy, we secure the rights of first refusal to construct all projects in their pipeline, which will drive...
Consistent with our investment strategy, we secured the rights of first refusal to construct all projects in their pipeline.
Which will drive projects into our backlog.
Speaker 3: Currently, Encore has a project pipeline of 1.65 gigawatts.
Currently encore has a project pipeline of 165 Gigawatts.
Speaker 3: And of that, they have near and medium-term backlogs of 575 megawatts located in our key operating areas. And I'm happy to answer any questions you have, Ms. mit
Of that near and medium term backlog of 575 megawatts located in our key operating areas.
Now that we have secured a massive pipeline.
Speaker 3: in a growing backlog with years of projects ahead of us.
And a growing backlog with years of projects ahead of us.
Speaker 3: Our focus will be on embracing a culture of constant improvement and maximizing efficiency.
Our focus will be on embracing a culture of constant improvement and maximizing efficiencies.
Speaker 3: by leveraging our digital sales and marketing to expand our brand recognition to new markets.
By leveraging our digital sales and marketing to expand our brand recognition to new markets.
Speaker 3: by decreasing sales to installation timelines to provide world class service to all of our customers.
By decreasing sales to installation timelines to provide world class service to all of our customers.
Speaker 3: by increasing efficiencies in all of our shared services throughout the organization.
By increasing efficiencies and all of our shared services throughout the organization.
Speaker 3: and by increasing collaboration and operation to drive down project.
And by increasing collaboration and operations to drive down project costs.
Speaker 3: We have so much great work ahead of us, and we have been thoughtfully building and preparing our team to execute on the incoming pipeline and back.
We have so much great work ahead of us and we've been thoughtfully building and preparing our team to execute on the incoming pipeline and backlog.
Speaker 3: Part of this preparation is having the appropriate capital available to execute on our strategic plan and the runway that we've created.
Part of this preparation is having the appropriate capital available to execute on our strategic plan.
And the runway that we've created.
Over the last several quarters, we've been running a process to provide the company with the liquidity it needs to execute on our strategic plan.
As John discussed we.
Signed a term sheet to refinance can expand our existing debt facilities.
Speaker 3: This will adequately fund our working capital needs as well as provide flexible capital to support our growth plans.
This will adequately fund, our working capital needs as well as provide flexible capital to support our growth plans.
Most of the diligence process is complete.
And we have a path towards closing this debt facility and expect to close in the current quarter.
Throughout our 50 year history, we have always embraced innovative change and there has never been a more meaningful or impactful time to be a leader in the innovation that will help fight climate change.
I assume thats built a team that is passionate.
About transitioning the American power generation and consumption.
Clean solar energy.
For our installers on the roofs in the ground to our project managers and finance team to the division heads and the executive team. We are passionately focused on our mission to accelerate the adoption of solar energy.
Speaker 3: Today, we are witnessing the most impactful climate legislation the United States has ever seen, which will help support our mission.
Today, we.
We are witnessing the most impactful climate legislation in the United States ever seen which will help support our mission.
Speaker 3: It is encouraging for us to see public policy is aligning with our values and exciting to think how this legislation will impact our ability to accelerate the energy transition.
It is encouraging for us to see public policy is aligning with our values and exciting to think how this legislation will impact our ability to accelerate the energy transition.
As we help hardworking families.
Speaker 3: businesses small and large save money and future proof against runaway energy inflation.
Businesses, small and large save money and future proof against runaway energy inflation.
And we know that as we execute our success hopes the air B a little clearer.
Speaker 3: Our success helps the air be a little clearer, our water be a little cleaner, and we leave the planet a little better.
Our water would be a little cleaner and we leave the planet a little better.
Speaker 3: Even though we have our 50-year legacy to be proud of, it feels as if our journey has just begun.
Even though we have our 50 year legacy to be proud of it.
It feels as if our journey has just begun.
Speaker 3: This both creates a sense of urgency in our team, and it keeps us focused on the importance of building long-term shareholder value....
This creates a sense of urgency in our team and.
And it keeps us focused on the importance of building long term shareholder value.
We look forward to sharing our success with you.
Thanks for listening.
Speaker 3: Thank you for your interest in what we are building, and thank you for your time.
Thank you for your interest in what we are building and thank you for your time today.
Speaker 3: With that, I'll turn it back over to the operator. We'll open the lines for questions.
With that I'll turn it back over to the operator, who will open the lines for questions.
Speaker 1: Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that while posing a question. Please pickup your handset if you're listening on speaker phone to provide optimal sound quality.
Speaker 1: We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality.
Speaker 1: Once again, if you have any questions or comments, please press star 1 on your phone. Pease hold-
Once again, if you have any questions or comments. Please press star one on your phone.
Please hold while we poll for questions.
Speaker 1: Your first question is coming from Justin Clare from Ross Capital Partners. Your line is live. Hey, good morning. Thanks for taking our questions.
Your first question is coming from Justin Clare from Roth Capital Partners. Your line is live.
Hey, good morning, Thanks for taking my questions.
Good morning, gentlemen, thanks for joining the call.
Speaker 4: Yep. So I guess first off here, I wanted to ask about the guidance. So you had previously provided 2022 revenue guidance of 125 million. Given the challenges experienced in Q2, the project delays you've seen, can you just update us on your expectations for revenue in 2022 and how things might trend in Q3 and Q4 here?
Yes.
So I guess first off here.
I wanted to ask about.
The guidance.
You had previously provided 2022 revenue guidance of $125 million.
Given the challenges experienced in Q2, the project delays you've seen.
Can you just update us on your expectations for revenue and in 2022.
How things might trend in Q3 and Q4 here.
Speaker 3: Yeah, I mean, historically, our revenue mix has been sort of a 30-70 split first half to second half.
Yes.
Historically, our revenue mix has been sort of a 30 70 split first half to second half.
Speaker 3: You know, now we have additional revenue streams coming in from our ED infrastructure and development services in 2022 that we didn't really have in prior years. So we've got a lot of resources are portips for our
Now we have additional revenue streams coming in from our EV infrastructure and development services in 2022 that we didn't really have in prior years.
And so while the first half.
Speaker 3: You know, may look a little light. We're pretty confident that we have the pipeline and the personnel to achieve our goals. You know, that being said, our industrial group and some of the larger projects that team. Installing based on.
May look a little light, we're pretty confident that we have the pipeline and the personnel to achieve our goals.
That being said, our industrial group and some of the larger projects had seen.
Installing.
Based on.
Speaker 3: Long lead times in the supply chain, so we're confident that we have the certainly the pipeline and the backlog and the personnel to execute and achieve our goals. But it is a dynamic market for sure.
Long lead times and the supply chain.
So we're confident that we have the certainly the pipeline in the backlog and the personnel to execute.
<unk> achieved our goals.
But it is a it is a dynamic market for sure.
Speaker 4: OK, great. And then the just wondering, you know, right now, what are the largest challenges that you are experiencing? How have those evolved from Q2? Because you mentioned a number of different things, permitting being one of them, supply chain. So just wondering, you know, is there one that stands out more than the others or is it just all of them together? And then, you know.
Okay.
Great and then.
Just wondering right now what are the largest challenges that you are experiencing.
Those evolved from Q2, because you mentioned a number of different things permitting being one of them supply chain.
So just wondering is there one that stands out more than the others or is it just all of them together and then.
Speaker 4: There is the UFLPA enforcement that is ongoing for module supplies, so I was wondering if you could just talk about the accessibility of modules.
There is the <unk> enforcement.
Ongoing for module supply. So I was wondering if you could just talk about.
The accessibility of modules right now.
Speaker 3: Sure. So looking back, if we look back at the second quarter, I think what impacted us.
Sure.
So looking back if we look back at the second quarter, I think what impacted us.
Speaker 3: The most was there was specifically a CPG extension in Vermont that really allowed developers to take more of a wait and see approach to moving projects to NTP.
The most was there was specifically a CPG extension in Vermont.
Got it.
Allowing developers to take more of a wait and see approach to.
Moving projects to NTP.
Speaker 3: Some projects that we had anticipated hitting late Q1 or Q2.
So projects that we had anticipated hitting late Q1 early Q2.
Speaker 3: were delayed because they could really take a wait and see on inflation and see if commodity prices came down.
We are delayed because it could really take a wait and see on inflation and see if commodity prices came down.
Speaker 3: Due to those extension, we also had some really long lead times on utility equipment that caused projects that we.
Due to those extension we also had.
We also saw some really long lead times on utility equipment.
<unk> projects that we.
Speaker 3: we had anticipated would start in early Q2 to be delayed path there. So we are seeing all the lead times certainly on panels. They are available, more available now than they are.
We had anticipated would start in early Q2 to be.
To be delayed path there so.
We are seeing long lead times and certainly on panels. They are available more available now.
Speaker 3: than they have been. We've also spent a lot of time working on building our inventory for residential and the large.
And they have been we've also spent a lot of time working on building our inventory for residential.
<unk>.
Speaker 3: backlog we have there to execute on. So, we're addressing some of the supply chain issues by building up the inventory and being prepared for installation in the second half.
Backlog, we have there to execute on so we're addressing some of the some of the supply chain issues by building up the inventory.
Being prepared for installation in the second half.
Speaker 4: Okay, got it. And then just turning to your utility division, you expanded the pipeline of opportunities here pretty significantly, 993 megawatts under development.
Okay got it.
And then just.
Just turning to your utility division.
You expanded the Piper.
Our pipeline of opportunities here pretty significantly 993 megawatts under development.
Speaker 4: So NTPs expected late 2022 and 2023. Just wondering, once NTP is reached, what is your expectation for the construction timeline and when could revenue be recognized? So for that entire 993, could we see 2022 and 2023, all of the revenue be recognized for those projects?
So NTP is expected late 2022 and 2023.
Just wondering.
Once NTP has reached what is your expectation for the construction timeline and when could revenues be recognized so for that entire 993 could we see 2022 and 2023.
All of the revenue will be recognized for those projects.
That's a great question.
Speaker 3: And so by the end of this year, so let me just break this down a little bit.
So.
By the end of this year so.
Break this down a little bit the <unk>.
Speaker 3: Development Services Division, the development services that we provide exist within our utility division. So they provide development services that...
Development Services Division.
The development services that we provide exist within our utility division so they provide development services that.
Speaker 3: Study land feasibility, do project development work, including land options, permitting, interconnection studies, wetland studies, topography, soil properties, all of the things that
So the land feasibility do private development work, including land options permitting interconnection studies.
Wetland studies topography total properties all of the things that.
Speaker 3: need to be done to get a project to fully permanent and executed. So within our.
It needs to be done to get a project too.
Fully permitted and executed.
So within our gigawatt of Pi.
Speaker 3: It's actually, as of this morning, 1.23 gigawatts.
Pipeline, it's actually.
As of this morning was 13123 Gigawatts.
Speaker 3: There's projects of various sizes from seven.
Theres projects of various sizes.
From.
Seven megawatts.
Speaker 3: and maybe even a few that's a little bit smaller than that, all the way up to 112 megawatts DC.
Maybe even a little bit smaller than that.
All the way up to 112 megawatts DC.
Speaker 3: So I would expect that. And then there's some portfolio of projects as well that are in the.
So I would expect that and then there is there is some portfolio of projects.
As well that are in.
10 to 15 to 20 megawatt size.
Speaker 3: And so I expect as 2022 ends and we turn to 2023 that we'll see an acceleration of these projects achieving permitting and NTP. Uh, you know, the larger projects are a little bit more of a. A little bit more of a fly ball on timing. There's a lot more complexities there. You know, I will say that the climate legislation will be helpful in some of the medium and smaller size projects. Um.
And so I expect.
As 2022, and then we turn into 2023 that we will see an acceleration of these projects achieving permitting and NTP.
Hi.
Larger projects are a little bit more of a.
A little bit more of a fly ball on timing is a lot more complexity. There I will say that the climate legislation will be helpful. In some of the medium and smaller sized projects.
Speaker 3: with the ITC availability for interconnection upgrades at five megawatts and lower. But we should see some positive impacts.
With the ITC availability for <unk>.
Interconnection upgrades at five megawatts and lower so we should see some.
Some positive impacts there.
Speaker 3: So, I hope that answered your question. I'm thinking late 2022 we'll see some of our first development assets hit NTP and we should see an escalation throughout 2022 into 2023. Okay. Yep. That's helpful. Then just one more. Can you talk about what the – for the utility scale development here?
So I hope that answered your question I'm thinking late late 2022, we will see some of the our first development assets.
Pete.
We should see an escalation throughout 2020.
Two into 2023.
Okay.
Full.
Then just one more.
Can you talk about what the for the utility scale.
<unk> here.
Speaker 4: What could be the revenue potential? And I think in the past you've talked about a margin profile of maybe 15 to 18% on the gross margin. Is that still the expectation?
What could be the revenue potential and.
I think in the past you've talked about a margin profile of maybe 15% to 18% on the gross margin is that still the expectation here.
Speaker 3: Yeah, I think some of that will depend on how these projects were again, and how much of the portion of the contract we hold versus our partners in this.
Yes, I think some of it will depend on how these projects for.
Breakdown and how much of the EPC portion of the contract.
We hold versus our partners in this.
Speaker 3: On the utility scale project, if you count the full EPC, you're looking anywhere between
On the utility scale project, if you count the full EPC.
Youre looking at anywhere between.
Speaker 3: Best case scenario, high 80 cents up to a dollar and change per watt. So on a 112 megawatt project you could be looking at.
Best case scenario high 80 up to a $1 and change per watt. So on 112 megawatt projects you could be looking at.
Speaker 3: You know, 90Million to 125Million in potential revenue. Now, you know.
90 million to $125 million in potential revenue.
Now.
Speaker 3: And I would assume the margin that you just referenced there would be true on these projects. The exception to that being there may be some margin compression on large purchasing of panels or other equipment, getting a pass through 15% gross margin.
And I would assume the margins that you that.
Reference there.
It would be true on these projects the exception that there may be some.
The margin compression on large purchasing of panels or other equipment.
Getting a pass through 15%.
Gross margin.
Speaker 3: On on that side of panel purchase. May not be fair and equitable to our partners on these projects. Also will. Likely have a retained ownership interest.
On.
That seismic panel purchased.
I mean, it would be fair and equitable to our partners on these projects also will likely have a retained ownership interest.
Speaker 3: Minority ownership in some of these projects, so it's important to.
Minority ownership in some of these projects so it's important to.
Speaker 3: To bring these through as economically as possible and we're aligned with our partners in that way. So. That would be important as well.
To bring these through as economically as possible.
Aligned with our partners in that way so.
It will be important as well.
Okay. Thanks, very much I appreciate it.
Thanks, Justin.
Speaker 1: Thank you. Your next question is coming from Jeffrey Campbell from Alliance Global Partners. Your line is live.
Thank you. Your next question is coming from Jeffrey Campbell from Alliance Global Partners. Your line is live.
Yes.
Good morning.
Good morning, Jeff.
Speaker 5: I wanted to ask you, bearing in mind the industrial division challenges you noted, your gross margin remains quite...
I wanted to ask you.
Having in mind, the industrial Division challenges you noted your gross margin remained quite good.
Speaker 5: Can you comment on how that good margin was maintained in the report?
Can you comment on how good margin was maintained in the quarter.
Speaker 3: Yeah, I think the mix of revenue and diversification of the revenue coming in allows us to.
Yes.
The mix of revenue and diversification of the revenue coming in a lot of Thats too.
Speaker 3: you know, adjust labor and management to meet the demand where it's occurring. It should help us.
Adjust labor and management to meet the demand where it's occurring.
Should help us.
Speaker 3: should help us scale more reasonably when things get much busier and allows us to move assets around to be more efficient in our execution of projects and contracts.
It should help us scale more reasonably.
When things.
Get much busier.
And allows us to move assets around to be more efficient in our execution of projects and contracts.
Speaker 3: And I think in the future as we look forward, I think that there'll be additional savings available there as well in the future.
Okay.
In the future as we as we look forward I think that.
There'll be additional savings available there as well.
In.
Speaker 3: You know, shared shared purchasing powers. You know, certainly if you're buying panels or equipment for a community, so our asset that might be 5 megawatts or last year buying power is. Quite different than what you would see.
Sure sure purchasing powers.
Certainly if youre buying panels or equipment for community solar asset that might be five megawatts last year buying power is quite different than what you would see.
Speaker 3: Uh, somewhere else and larger projects, so being able to leverage larger projects and combine them with. Smaller scale projects to provide some.
Somewhere else on larger projects, so being able to leverage larger projects and combine them with.
Smaller scale projects to provide some some.
Speaker 3: Some better pricing, I think, will be helpful. In the climate bill, there's American-made provisions.
Some better pricing I think will be helpful.
And the climate builders.
American made provisions.
Speaker 3: And so, if we're working on utility scale or industrial scale projects –
And so if we were working on utility scale or industrial scale projects.
And are working with American manufacturers that may.
Speaker 3: give us access to American-Made Panels for...
Give us.
Access to American made panels for for.
Speaker 3: For homes and commercial projects as well that we may not otherwise have. So I think there's a.
For homes and commercial projects as well that we may not otherwise have so I think as the.
There's a lot of benefits there.
Speaker 5: Well, just to pick up on that last point that you made, I mean, when I think of American bait, I think of first solar.
Just to pick up on that last point that you made I may want to think of American made I think of first solar.
Speaker 5: kind of a unique technology, although it's the same form factor as standard utility panels.
Kind of a unique unique technology, although it's the same form factor and standard utility panels are there other <unk>.
Speaker 5: significant producers besides Verso are out there that you're referring to.
Significant producers the size of our solar out there than you are.
We're referring to.
Speaker 3: I think probably the key word there is significant, right? Not in the size and scale of first solar, but certainly the
And I think probably the keyword there is significant right.
Not not in the size and scale of first solar but certainly the.
Speaker 3: You know, the climate bill will help increase that. We've spoken to at least two other factors who are in the process of expanding operations.
The climate Bill will help increase that we saw.
Welcome to at least two other factories, who are in the process of expanding operations.
Speaker 3: to meet the perceived increased demand that's going to come with this signing of the bill.
To meet the <unk>.
Received increased demand that's going to come with the signing of the bill.
No that's helpful.
Speaker 5: Will the inventory bill that you've articulated in your remarks affect gross margin during the second half of an inventory away?
Well the inventory build that you brought in through the year.
Particular remarks affect gross margin during the second half in any material way.
No I don't believe so.
When I compare.
<unk>.
Speaker 5: quarter over quarter divisional backlog numbers, it appears that residential and commercial and industrial backlog increased about 8.2 million, which suggests that the bulk of
Over quarter divisional backlog numbers, it appears that residential and commercial and industrial backlog increased about $6 million suggests that the bulk of the $35 7 million increases in the utility universe is that correct.
Speaker 5: increases in the utility division. Is that correct?
Speaker 5: If it is, is that all project related or is it some of the design?
It is is that all project related or is it some of the design work.
Speaker 3: talk about it in part. Yeah, none of the design work exists in our backlog. So our backlog is, you know, our backlog may be unique in the way that we recognize it.
Talk about.
Yes, none of the design work exists in our backlog our backlog is.
Our backlog may be unique in the way that we recognize it.
Speaker 3: Our backlog is comprised only of projects that we had either a letter of intent or notice to proceed.
Our backlog is comprised only of projects that we had either.
It's a letter of intent or a notice to proceed.
Speaker 3: or assign EPC contract with a 90% probability of executing on those contracts. So that's where we get our backlog from.
Or signed EPC contract.
Okay.
90% probability of executing.
On those contracts so that's how we.
That's where we get our backlog from.
Speaker 3: You know, I can go back and look at the specific numbers, but I would say most of the increase in backlog would have been in the residential industrial side. I think the increase the overall increase was.
I can go back and look at the specific numbers, but I would say most of the increase in backlog would have been in the residential industrial side I think the increase the overall <unk>.
<unk> was.
Speaker 3: About 35 with 35.7 million. I think we referenced I can get you I get back to you on the exact numbers I don't want to throw something out there and be off a little bit, but I.
About 35, $35 7 million I think we referenced I can get you.
I can get back to you on the exact numbers I don't want to throw something out there and be off a little bit but.
Speaker 3: But I would categorize it as saying that most of it existed in our industrial and residential pipeline. Yeah, we can take that up.
But I would categorize it as saying that most of it existed in our industrial and residential pipeline or backlog.
Yes, we can take that offline yes.
Speaker 3: Yeah. And then, when we talk about pipeline, which is somewhat different, we talked about the 1 gigawatt pipeline that we have and the 1.65 gigawatt pipeline that we have rights to through Encore, and then their backlog of 575 megawatts. None of that exists in our current backlog. Thank you.
And then when we talk when we talk about pipeline, which is somewhat different we talked about the one gigawatt pipeline we have in the 165 gigawatt pipeline.
We have rights to encore and then their backlog of 575 megawatts, none of that exists in our current backlog.
Speaker 3: And so, you know, the investments that we've made and what we've done to try to transform the company has all been about creating
And so the investments that we've made and what we've done to try to transform the company has all been about.
Creating.
Really longevity.
Speaker 3: and efficiencies within the company to help build these projects out. And obviously, it was important for us to retain some ownership in projects where possible.
And efficiencies within the company to build these projects out.
Obviously.
It was important for us to retain some some ownership in projects where possible.
And to that point I wanted to ask.
Speaker 5: I appreciate the distinction between development and backlog. Does the current utility backlog contain high sign ownership.
Again, I appreciate the distinction between development and backlogs.
Does the current utility backlog contain eisai ownership vendors as well or is that.
Speaker 5: well or is that something that's purely under development?
Something thats purely on the development pipeline.
Speaker 3: Yeah, so because our development assets are have are. You know, I would categorize them in the early and medium stages, meaning we don't we don't have permits yet. So, because of that, we don't have EPC. Contracts on most of these.
Yes, so because of our development assets are.
<unk>.
<unk>.
Categorize them in the early and medium stages.
Meaning we don't we don't have permits yet so because of that we don't have EPC contracts on most of these.
Speaker 3: But to answer your question, once we achieve, once these projects move into the permit into the notice to proceed phase after they've received permitting, we will have ownership rights.
But.
To answer your question once we achieve once these projects move into the Permian into the notice to proceed phase that legacy permitting.
We will have.
Ownership rights to these yet.
Speaker 5: Okay, no, let me just ask again just to make sure in the, in the current utility backlog, which grew quite a bit. Quarter over quarter are any of the CPC contracts that provide ownership to the company in that backlog or set purely in the development and for the future.
Okay. So let me just ask again just to make sure.
The current utility backlog, which grew quite a bit quarter over quarter.
Are any of these EPC contracts that provide ownership to the economy and that backlog or is that purely in the development for the future.
Speaker 3: Yeah, I think what you're referring to is our pipeline, our utility pipeline is grown. I don't believe we broke out a number in our backlog, right? So again, sort of that distinction between pipeline and backlog.
Yes, I think I think what you're referring to is our pipeline our utility pipeline has grown right.
We broke out a number in our baton our backlog right. So again sort of a distinction between pipeline pipeline and backlog.
Speaker 3: So, our pipeline has grown. I was swearing it was 1.23 gigawatts. Yes, on that pipeline that I'm referencing.
So our pipeline has grown.
It was 123 Gigawatts and yes on.
That pipeline that I'm referencing.
Speaker 3: we have minority ownership rights on
We have.
Minority ownership rates.
Yeah.
All of those projects.
Speaker 5: And just to be clear on that point, what I was referring to was the line in the press release and said our utility division also has a 993. Mega watts of projects currently under development.
Okay, and just to be clear on that point, what I was referring to was the line in the press release that said our utility Division also has a 993 megawatts of projects currently under development projects, achieving yes, right. So that's where we are I just want to identify that the area. We're talking about where you are.
Speaker 5: achieving getting NTPs late. So that's where we're, I just want to identify that the area we're talking about where you will vent.
We'll eventually have ownership.
Speaker 3: Correct, correct. And when we when we talk about our backlog.
Correct, correct and when we when we talk about our backlog.
Speaker 3: of that 993 megawatts, which I think in my –
None of that 993 megawatts, which.
I think in my.
Speaker 3: In my conversation, I discuss approximately a gigawatt, which is now 1.3 gigawatts. None of that exists in our backlog. It is all pipeline work. At once, permitting is achieved.
In my conversation I discuss approximately a gigawatt, which is now one three gigawatts none of that exists in our backlog. It is all pipeline work at once permitting is achieved.
Speaker 3: will move, will then transition into our backlog. So we've got, you know, we have this 1.323 gigawatts of project assets that, based on the signing of this climate bill, certainly all of these assets go up and down.
We will move will then transition into our backlog so we've got it.
We have this 1323 gigawatts of project assets.
Based on the signing of this climate Bill certainly.
All of these assets go up in value substantially.
Speaker 3: and I think some of the provisions in there will also help.
And.
I think some of the provisions and there will also help.
Speaker 3: the utilities and some of the interconnection challenges they're going to face.
The utilities and some of the interconnection challenges theyre going to face.
Speaker 3: Uh, which will help I'm hoping I believe I'm right and this will help speed these projects along. Maybe faster than we would have otherwise seen.
Which will help them.
Im hoping.
I believe I'm right and this will help speed these projects alone.
Maybe faster than we would have otherwise seen.
Speaker 3: And so we're incredibly optimistic and bullish on these projects.
So we're incredibly optimistic and bullish on on these projects.
Speaker 3: certainly a large percentage of them in our pipeline.
Certainly a large percentage of them that are in our pipeline.
Receiving permitting.
Speaker 3: uh and us executing EPC contracts and having minority ownership in the future. And when we did this first round of
And <unk>.
Executing EPC contracts and having minority ownership it in the future.
When we did this first.
Round of.
Partnerships.
Speaker 3: We were really focused on red states where there was not a lot of solar that existed there.
We were really focused on on Red States, where there was not a lot of solar that existed there.
Speaker 3: And so, you know, we spent a lot of time studying cues, looking for the right land and the right.
And so we spend a lot of time studying queues.
Looking for the right land in the right places.
Speaker 3: so that we would have a high level of success.
So that we would have a high level of success.
Part of that.
Speaker 3: We thought we were right in assessing that the pressure coming from state, local governments, federal government.
We thought we were right in assessing that the pressure coming from state.
Local governments federal government.
Speaker 3: as well as large employers in these historical red states that weren't interested in solar.
As well as large employers and these historical red states that weren't interested in solar.
Speaker 3: a few years ago, we felt that that transition was coming. And so as we were developing assets, that's where we focused. And we think that
A few years ago, we felt that the transition was coming.
And so as we are developing assets, that's where we focused and.
We think that.
Speaker 3: We think that we'll have a high level of success with what we're developing.
We think that will have a high high level of success with what we're developing.
Speaker 5: And just the last question on the ownership aspect, my understanding, at least in the past, was that ownership of assets was mainly the goal was mainly to offset SGA. Is that still essentially the goal or is there...
Okay and just the last question on the ownership aspect my understanding in the past was that ownership of assets mainly.
The goal is mainly to offset SG&A.
Is that still essentially the goal or is there.
Got a little more ambitious.
The development pipeline.
Speaker 3: Well, you know, with the large, you know, certainly short medium term goal is to generate enough recurring revenue to offset all of our SG&A in the company. And if we can continue to provide
Well with the large but you know certainly.
Short medium term goal is to generate enough recurring revenue to offset all of our SG&A in the company and if we can continue to provide.
Speaker 3: uh pre-cash flow after that and continues to make sense for the company then we'll continue to execute.
Free cash flow after that and continues to make sense for the company that we will continue to execute.
On that strategy.
Speaker 5: And finally, and I think you just kind of alluded to it again, you've mentioned that these development projects may take you into multiple stages.
And finally.
And I think you just kind of alluded to it again you've mentioned the development of these development projects may take you into multiple states.
Speaker 5: whatever level of specificity you're comfortable with, can you provide some indication if some of these.
However level of specificity you are comparable with can you provide some indications.
If some of these states represent new markets.
Speaker 3: Yeah, in what I'll call as the first round of this, we focused on eight states. I think we've mentioned some of those before. Now we are focused on 13 states plus municipalities, state governments.
Yes.
And what I'll call as the first round of this we focused on eight states and I think we've mentioned some of those before.
Right.
Now we are focused on <unk>.
13 States plus.
Municipalities State governments.
Speaker 3: You know, nonprofits, Brownfield opportunities, things of that nature. But, yeah, I don't want to get specific on the states. We're actually targeting, but we've identified, we've kind of deep dive and identified areas that we think we can be successful and and. The. the.
Nonprofits.
Field opportunities things of that nature, but yes, I don't want to get specific on the states, we're actually targeting but we've identified.
Deep dive and identified areas, we think we can be successful in.
And.
The two.
Speaker 3: $26 million in development capital that was raised will be directed towards those 13 states.
$26 million.
Development capital that was raised will be directed towards.
Those 13 states.
Speaker 5: Well, okay, not not not to. Yeah, order here, but can we at least say that some of these states might not be in your historical Northeast?
Well okay.
Not to be out of order here, but can we at least say that some of these states might not be in your historical northeast.
Speaker 3: Correct. Oh, absolutely. Yeah, these will be states outside of our normal operating areas, mostly. Okay, great. Now let's go.
Correct, absolutely, yes, this will be easily states outside of.
Outside of our normal operating areas mostly.
Okay, Great no. That's helpful. Thank you I appreciate it.
Thank you Jeff.
Speaker 1: Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star, then one on your phone at this time.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press Star then one on your phone at this time. Your next question is coming from Noel Parks from Tuohy Brothers. Your line is live.
Speaker 1: Your next question is coming from Noel Parks from Tui Brothers. Your line is live.
Hi, good morning.
Good morning, all.
Speaker 3: Just had a couple. As far as your new debt facility or updated debt facility you're negotiating, do you have any particular priorities on the structure of it that are behind your conversations?
Just had a couple.
As far as your new debt facility or updated debt facility Youre anniversarying.
Do you have any.
Any particular priority is on the structure of it.
That are behind the conversations.
Speaker 3: We want to make sure that we get a deficit in place that adequately funds all of our working capital needs and gives us some flexibility to support growth plans.
We want to make sure that we get a debt facility in place that adequately funds all of our working capital needs.
And given us some flexibility to support.
<unk>.
Speaker 6: Sure, and I just meant as far as are you particularly sensitive to rates or covenants or...
Sure and I just meant as far as are you, particularly.
That's helpful. Thanks for that.
Rates or covenants.
Yeah.
<unk>.
Speaker 3: You know, I think we want to minimize the use of equity where we can and we want to get as low cost of capital as possible with flexible terms.
I think we want to minimize the use of equity where we can we want to.
It is low cost of capital as possible.
With flexible terms.
Speaker 3: So, you know, we're, we're certainly in those conversations all of those items are.
So.
Certainly.
And those conversations are all of those items are.
The points of discussion for sure.
Speaker 6: Okay, great.
Okay, Okay great.
Just as a general.
Quick question.
Speaker 6: For residential business versus the CNI business, at this point when you're in negotiations with potential customers, is timeframe a bigger negotiating point than price at this point? Just because of supply chain and so forth, I just wondered what was foremost on customers' minds.
For residential business versus.
Hi.
C&I business at this point when you are in negotiations with.
With potential customers.
Timeframe.
Bigger in negotiating point than price at this point.
Just because of supply chain and so forth I just wonder what was what was foremost on customers' minds.
Speaker 3: That's a good question. I think if we...
Oh, that's a good question.
I think if we.
Yeah.
Speaker 3: You know, when when people come to us and they're looking for solar, of course, they want it tomorrow. Right? And.
When people come to us and they are looking for solar of course, they want it tomorrow right.
Speaker 3: Most of our members understand that there's a normal and customary timeline to get these projects permitted and executed.
Most of our married to understand that.
There is a normal and customary timeline to get these projects permitted and executed.
Speaker 3: I think with most of them, sooner is better. I think as we start extending timelines too long on projects that we've originated and sold that can impact cancellation rates, we haven't seen that yet. I think the climate bill will be supportive of that. Will allow people to take a little more of a long-term approach and understand that some of the long lead times and supply chain challenges exist. And if they have a
I think with most of them sooner is better I think as we start extending timelines too long on projects that we've originated and sold that can impact.
Cancellation rates.
Haven't seen that yet I think the climate bill will be supportive of that.
We will allow people to take a little bit more of a long term approach and understand that some of the long lead times and supply chain challenges exist.
They have committed to.
Speaker 3: transitioning to renewable energy and solar that, you know, they'll wait the appropriate time to get that done. But certainly we're pulling all the levers to try to shorten the time frame between sale and installation.
Transitioning to renewable energy and solar that.
With the appropriate time to get that done, but certainly where we are.
Pulling all the levers to try to shorten the timeframe between sale and installation.
Speaker 6: Sure, sure. And just last one for me. It's kind of a reality check with, you know, all the challenges we talked about, we all know about supply chain, etc. As far as utilization of
Sure sure and just last one for me.
It's kind of a reality check.
All of the challenges we talked about we all know about supply chain et cetera.
As far as.
Utilization.
Speaker 6: the crews and sort of having the visibility to...
Your crews and sort of.
Having the visibility.
Speaker 6: you talked about sort of trying to better sync up labor with the actual business. Are you in a situation where you wind up with a significant amount of labor you've planned for actually being idle, crews being idle, or is it just a matter of basically on the priority list just where they go to get to their next project.
You talked about sort of.
Better synced up.
Flavor with.
With the actual business.
Are you in a situation, where you wind up with a significant amount of late.
Labor.
<unk> actually being idle crews being idle.
Is it just a matter of basically in the.
On the priority list, just where they call it to.
To get to their next project.
Speaker 3: Yeah, much more of a priority lesson where they go and how to allocate those resources. Being able to scale up as new projects come on is important to us, which we've done pretty effectively over our history.
Yes, much more of a priority list on where they go and how to allocate those resources.
Being able to scale up as new projects come on as important to us, which we've done pretty effectively over our history.
Speaker 3: Uh, and then, you know, obviously in. The 1st quarter when it's really cold in the Northeast, there's. Some less labor efficiency that happens just with the weather. But, you know, but other than that, where we're deploying our resources where they needed most and. And scaling up and down as, as required by by project contracts. Okay, great.
And then obviously in the.
In the first quarter.
Really cold in the northeast there is some.
Less labor efficiency that happens just with the weather.
But other than that where we're deploying our resources, where they're needed most.
And scaling up and down as is required by by project contracts.
Okay, great. Thanks, a lot.
Thank you.
Speaker 1: Thank you. That concludes our Q&A session. I will now hand the conference back to Jeffrey Peck, CEO and Chairman of ISUN, for closing remarks. Please go ahead.
Thank you that concludes our Q&A session I will now hand, the conference back to Jeffrey Peck, CEO and chairman of ISR for closing remarks. Please go ahead.
Speaker 3: Thank you, everybody. We appreciate your time and your engagement today in allowing us to share our progress with you. If you have any follow-up questions that weren't addressed, please feel free to email them to IR at isonenergy.com, and I'll try to follow up with an appropriate response.
Thank you everybody. We appreciate your time and your engagement today, and allowing us to share our progress with you. If you have any follow up questions that weren't addressed please feel free to E mail them to IR at <unk> energy Dot Com and we'll try to follow up with an appropriate response.
Speaker 3: We look forward to providing you with updates in the future. Thanks for joining the call.
We look forward to providing you with updates in the future. Thanks for joining the call today.
Speaker 1: Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.
Yes.