Q3 2023 iSun Inc Earnings Call

Speaker 1: Greetings. Welcome to the ISUN Energy 3rd Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow.

Greetings welcome to the eye Sun Energy third quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Please note. This conference is being recorded I will now turn the conference over to your host Mary Conway you may begin.

Speaker 1: Please note this conference is being recorded. I will now turn the conference over to your host, Mary Conway. You may begin.

Thank you operator and good morning, we are pleased to welcome you to Iphones conference call, where we will discuss financial and operating results for the third quarter of 2023, Jeffrey Pack, Chairman and Chief Executive Officer, who will provide an update on our operating performance in the quarter.

Speaker 2: Thank you, operator, and good morning. We are pleased to welcome you to ISUN's conference call, where we will discuss financial and operating results for the third quarter of 2023.

Speaker 2: Jeffrey Peck, Chairman and Chief Executive Officer, will provide an update on our operating performance in the quarter, along with reviewing our outlook for 2023.

Along with reviewing our outlook for 2023.

Speaker 2: John Sullivan, Chief Financial Officer, will provide an overview of the third quarter 2023 financial results. After our prepared remarks today, we will open the lines to address any questions.

John Sullivan, Chief Financial Officer will provide an overview of the third quarter 2023 financial results. After our prepared remarks today, we will open the line to address any questions.

Speaker 2: As a reminder, the earnings release that was issued this morning, and which can be found on iSUN's investor website at www.isunenergy.com, includes financial disclosures and reconciliations for non-GAAP financial measures.

As a reminder, the earnings release that was issued this morning, which can be found on iphones investor website at Www Dot I son energy Dot Com includes financial disclosures and reconciliations for non-GAAP financial measures.

Any comments that we make on today's call may include forward looking statements that refer to management's expectations or future predictions.

Speaker 2: Any comments that we make on today's call may include forward-looking statements that refer to management's expectations or future predictions.

Speaker 2: These statements are made as of today and management undertakes no obligation to update these forward-looking statements in the future.

These statements are made as of today and management undertakes no obligation to update these forward looking statements in the future.

Speaker 2: Such statements 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 Peck. Jeff. Good morning, everyone.

Statements 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> Jeff.

Good morning, everyone. Thank you for joining us today.

Speaker 3: I'm pleased to share an update on ISUN's continuing robust progress in the third quarter of 2023 and review our plans and expectations for the remainder of the year.

I'm pleased to share an update on ashland's, continuing robust progress in the third quarter of 2023.

To review, our plans and expectations for the remainder of the year.

Once again, we are very pleased with the strong performance our team has generated this quarter.

Speaker 3: Once again, we are very pleased with the strong performance our team has generated this quarter.

Speaker 3: In the third quarter of 2023, we have produced another beat on the top line with revenues up 47% year over year, nicely above the streets consensus.

In the third quarter of 2023, we produced another beat on the topline with revenues up 47% year over year nicely above the street's consensus.

Speaker 3: Despite some of the macroeconomic challenges in our sector, we continue to do precisely what we said we would do.

Despite some of the macroeconomic challenges in our sector. We continue to do precisely what we said we would do.

The other business grow revenues and reduce our losses by focusing on efficiencies, while we serve our existing customers and win new business.

Speaker 3: scale the business, grow revenues, and reduce our losses by focusing on efficiencies while we serve our existing customers and win new business.

Speaker 3: Our commercial and industrial group is driving excellent results, and our residential group Suncommon continues to see high customer satisfaction and referrals, despite a short-term slowdown in residential demand, as I'll discuss shortly.

Our commercial and industrial group is driving excellent results.

Residential groups uncommon continues to see high customer satisfaction and referrals. Despite a short term slowdown in residential demand as I'll discuss shortly.

Speaker 3: Meanwhile, we are seeing continued opportunities in the EV infrastructure segment and our origination team is helping to ensure that we continue to build backlog to sustain that growth.

We're seeing continued opportunities in the infrastructure segment.

Our origination team is helping to ensure that we continue to build backlog to sustain that growth.

Our success in winning significant new contracts in solar EV infrastructure as well as more residential business. Despite some of the headwinds in that segments provides us with heightened confidence in our ability to meet the annual financial targets that we shared earlier and are affirming today for annual revenue growth and improving profitability.

Speaker 3: Our success in winning significant new contracts in solar and EV infrastructure, as well as more residential business, despite some of the headwinds in that segment, provides us with heightened confidence in our ability to meet the annual financial targets that we shared earlier, and are affirming today for annual revenue growth and improving profitability.

Speaker 3: He remains dedicated to executing our strategic plan to achieve our mission. Help accelerate the adoption of solar energy.

We remain dedicated to executing our strategic plan to achieve our mission to help accelerate the adoption of solar energy.

Today I want to touch on a few points to underscore why I started following a different path in the solar energy industry and what has been driving our recent success I also wanted to share some thoughts and trends we are seeing and why we believe we are well positioned for continued growth as we continue to scale our business.

Speaker 3: Today, I want to touch on a few points to underscore why ISON is following a different path in the solar energy industry and what has been driving our recent success. I also want to share some thoughts on some trends we are seeing and why we believe we are well positioned for continued growth as we continue to scale our business.

Speaker 3: As I said before, it starts with our platform approach encompassing the full life cycle of providing solar energy solutions from origination and development to construction and management across business segments.

As I said before it starts with our platform approach encompassing the full lifecycle, but providing solar energy solutions from origination and development to construction and management across business segments.

Speaker 3: We maintain that this approach is a competitive differentiating advantage that positions us for long-term sustainable growth.

We maintain that this approach is a competitive differentiating advantage.

Positions us for long term sustainable growth.

Speaker 3: We see the proof of the success of the strategy and execution in the meaningful year-over-year revenue growth we have generated this year. And on a year-to-date basis, we have increased revenues by 39% compared to the same period in 2022.

We see the proof of the success of the strategy and execution and the meaningful year over year revenue growth we have generated this year.

On a year to date basis we.

Increased revenues by 39% compared to the same period in 2022.

Speaker 3: And as you'll hear us point out repeatedly, we generated this robust growth while reducing our operating expenses over the same period by 5.6 million, or 21%.

And as you hear as pointed out repeatedly.

We generated this robust growth, while reducing our operating expenses over the same period by $5 6 million or 21%.

We're very proud of the success, we're having from the efficiency measures that we've implemented.

Briefly reviewing our third quarter results revenue increased by 47% to $27 9 million and gross margin was 45 basis points to 19, four 5% up from 19% in 2022 third quarter.

Speaker 3: Quickly reviewing our third quarter results, revenue increased by 47% to $27.9 million. And gross margin rose 45 basis points to 19.45%, up from 19% in 2022, third quarter.

Speaker 3: as our efficiency efforts enabled more of the top line to drop to the bottom.

Our efficiency efforts enabled more of the top line to drop to the bottom line.

Speaker 3: In the third quarter 30% of our revenues came from the residential segment where gross margins tend to be higher, which added pressure to margin expansion.

In the third quarter, 30% of our revenues came from the residential segment, where gross margins tend to be higher which added pressure to margin expansion.

Speaker 3: We remain confident that as we scale and drive synergies and efficiency throughout the organization, our margins will expand, even though there will be some variability in any given quarter, depending on the revenue.

We remain confident that as we scale and drive synergies and efficiencies throughout the organization our margins will expand even though there will be some variability in any given quarter, depending on the revenue mix.

Speaker 3: As of September 30, 2023, our total backlog remained at 161.8 million and our pipeline remained at 1.6 gigawatts of projects as of the end of the third quarter of 2023.

As of September 32023, our total backlog remained at $161 8 million and our pipeline remained at 1.6 gigawatts of projects as of the end of the third quarter of 2023.

Speaker 3: The size of the backlog and pipeline underscored the healthy customer demand we're experiencing, as well as the effectiveness of our efforts to originate more projects and expand to more states, all part of our ongoing strategic initiative.

The size of the backlog and pipeline underscored the healthy customer demand, we are experiencing as well as the effectiveness of our efforts to originate more projects and expand to more states.

All part of our ongoing strategic initiatives.

Speaker 3: Our success also reflects a high level of customer satisfaction.

<unk> also reflects a high level of customer satisfaction, specifically in the residential segment, which generates strong referrals, creating a lower customer acquisition costs.

Speaker 3: specifically in the residential segment, which generates strong referrals, creating a lower customer acquisition.

Speaker 3: we see the same positive referral impact in our C&I group. I'll provide some more details about one of our new partnerships with Cleantech Industry Resources momentarily.

We see the same positive referral impact in our C&I group.

Provide some more detail about one of our new partnerships with clean tech industry resources momentarily.

Speaker 3: Let me share a few words about the performance of our three divisions in the past quarter. The residential division did well, despite the backdrop of a more sluggish residential segment across the industry, reflecting the impact of higher interest rates on home improvement loans.

Let me share a few words about the performance of our three divisions in the past quarter. The residential division did well despite the backdrop of a more sluggish residential segment across the industry, reflecting the impact of higher interest rates and home improvement loans.

Speaker 3: If there's a silver lining here, I would note that the sticker shock consumers had initially experienced when looking at home improvement loans has abated somewhat.

But there is a silver lining here I would note that the sticker shock consumers had initially experience we're looking at home improvement loans has abated somewhat.

People don't know what to expect.

Speaker 3: There continues to be strong interest in residential solar in our markets, and I will note that because we aren't exposed to the California market, like, most of our peers were somewhat insulated from the additional residential market challenge.

There continues to be strong interest in residential Florida markets and I will note that because we aren't exposed to the California market like most of our peers, we're somewhat insulated from the additional residential market challenges.

Speaker 3: We continue to build more business and expect a heavier period of installation in the coming quarter.

We continue to build more business and expect the heavier period of installations in the coming quarter.

The commercial and industrial Division, which we combined as the beginning of 2043 is continuing to generate very strong results. This year and accounted for 67% of our revenue in the third quarter.

Speaker 3: The commercial and industrial division, which we combined as of the beginning of 2023, is continuing to generate very strong results this year and accounted for 67% of our.

Speaker 3: Our origination team has become more involved in this effort, focused on initiating projects that are then turned over to the C&I division to execute. We are continuing to work through our backlog while adding more business to the backlog through contract lending.

Our origination team has become more involved in this effort focused on initiating projects.

And turned over to C&I division to execute we are continuing to work through our backlog, while adding more business to the backlog through contract wins.

Speaker 3: Based on the results we've seen thus far, including enhancing our labor utilization and a reduction in operating expenses, as I mentioned, we remain certain that the decision to combine the commercial and industrial segments was a good one.

Just on the results, we've seen thus far including enhancing our labor utilization and a reduction in operating expenses as I mentioned, we remain certain that the decision to combine the commercial and industrial segments was a good one.

Our utility and development Division continued to face delays once again, something we see across the industry. Although we continue to increase the backlog that the group is addressing.

Speaker 3: Our utility and development division continue to face delays, once again, something we see across the industry, although we continue to increase the backlog that the group is addressing.

Speaker 3: and we saw small revenue growth in this past quarter compared to prior quarters in 2023.

And we saw a small revenue growth in this past quarter compared to prior quarters in 2023.

Speaker 3: Despite these project delays or unexpected implementation, we continue to believe the projects will move forward beginning late this year, enabling resulting revenues to be recognized later this year or early 2024.

Despite these project delays are unexpected implementation, we continue to believe the projects will move forward beginning late this year, enabling resulting revenues to be recognized later this year or early 2024.

Our development and engineering team has provided invaluable support for our residential and C&I divisions, as we continue to integrate and drive operating efficiencies throughout the organization.

Speaker 3: Development and engineering team has provided invaluable support for residential divisions as we continue to integrate and drive operating efficiencies throughout the organization.

Speaker 3: Beginning in 2024, we will consolidate our utility development divisions into our commercial and industrial team. This consolidation will allow us to capitalize on additional synergies and continue to focus on cost reduction and containment.

Beginning in 2024, we will consolidate our utility development divisions into our commercial and industrial team. This consolidation will allow us to capitalize on additional synergies and continue to focus on cost reduction and containment.

Our team is being proven expertise and knowledge of the industry, which is incredibly valuable. These volatile times. This creates a strong customer relationship being the contract awards across our business in the third quarter, we added $27 million in new business, bringing our total for the first nine months of 2023% to $67 million.

Speaker 3: Our teams bring proven expertise and knowledge of the industry, which is incredibly valuable at these volumes.

Speaker 3: This creates a strong customer relationship, leading to contract awards across our business.

Speaker 3: In the third quarter, we added $27 million in new business, bringing our total for the first nine months of 2023 to $67 million.

Despite sector challenges, we've approached our business with relentless innovation one of our recent partnership exemplifies this style of operation.

Speaker 3: Despite sector challenges, we've approached our business with relentless innovation. One of our recent partnerships exemplifies this style of operation.

Cleantech industry resources or Cir is a highly automated provider energy project development and engineering services by collaborating we could focus on expanding our core turnkey EPC business in conjunction with <unk> growing development as a service and engineering services business by working together, we reduce any conflicts of interest with many of ours.

Speaker 3: Cleantech Industry Resources, or CIR, is a highly automated provider of energy, project development, and engineering services.

Speaker 3: By collaborating, we can focus on expanding our core turnkey EPC business in conjunction with CIR's growing development as a service and engineering services business. By working together, we reduce any conflicts of interest with many of our developer partners. We also can access CIR's ultra low-cost services platform on a preferred basis while retaining construction rights to all of CIR's internally developed and owned.

<unk> partners.

We also can access <unk> ultra low cost services platform on a preferred basis, while retaining construction rates to olive cir internally develop it on projects.

Speaker 3: Plus, we also secured preferred partner status on CIR's growing pipeline of EPC-related projects, which is currently estimated at 5.25 gigawatts. This will fuel our project backlog.

But we also secured preferred partner status Cir is growing pipeline of EPC related projects, which is currently estimated at 5.25 Gigawatts. This will fuel our project backlog for years to come.

We look forward to sharing more information about this collaboration as we move forward together.

Speaker 3: We look forward to sharing more information about this collaboration as we move forward together.

Speaker 3: In terms of the solar landscape, we remain optimistic and enthusiastic. As I mentioned, our CNI segment is scaling nicely, responding effectively to increased customer demand, with expanded teams while ensuring that our labor utilization is up.

In terms of the solar landscape, we remain optimistic and enthusiastic as I mentioned, our C&I segment scaling nicely responding effectively to increase customer demand with expanded teams, while ensuring that our labor utilization is optimized customer.

Speaker 3: Customer demand continues to increase across the country directly and through partners. We continue to secure more opportunities to bid on meaningful products.

Customer demand continues to increase across the country directly and through partners. We continue to secure more opportunities to bid on meaningful projects.

Speaker 3: The residential segment has been sluggish, as I described, but our diversified model allows us to deploy our internal resources more efficiently across segments during these challenging times. And the good news is that we have ample backlog to execute in this segment and operate in markets insulated by some of the larger hedges.

The residential segment has been sluggish as I described but our diversified model allows up to deploy our internal resources more efficiently across segments. During these challenging times and the good news is that we have ample backlog to execute in this segment and operating markets insulated by some of our larger headwinds our origination team has produced.

Speaker 3: Our origination team is producing more opportunities that will eventually be executed largely by our CNI segment and the utility development division continues to push projects forward and provide valuable services throughout the organization.

More opportunities that will eventually be executed largely by our C&I segment in the utility and development Division continues to push projects board and provide valuable services throughout the organization.

Speaker 3: We remain convinced that both the heightened interest in alternative energy, as well as the IRA legislation passed last year, will afford Iceland and the industry genuine benefits.

We remain convinced that both the heightened interest in alternative energy as well as the Iowa legislation passed last year, when our board, Iceland and the industry genuine benefits.

Speaker 3: We continue to expect that more specific rules and the removal of uncertainty will increase the value of solar assets.

We continue to expect that more specific rules and removal of uncertainty will increase the value of solar assets.

Speaker 3: Those in development as well as those under construction, which in our case will lead to a higher valuation of our pipeline as it spurs increased demand that we will address in 2024 and beyond.

Those in development as well as building and construction, which in our case will lead to a higher valuation of our pipeline as it Spurs increased demand that we will address in 2024 and beyond.

Speaker 3: In 2023, considering all of the evolving macroeconomic factors, we have continued to demonstrate strong revenue growth and reduce operating expenses, both of which will help us attain operating profitability in the years ahead and sustain our margin expansion. Thus, we are affirming our expectations for total revenue in fiscal year 2023 of between $95 and $100 million, reflecting a 24% to 31% increase over the total revenue in 2022, along with gross margin expansion on an annual basis. With that, I'll

In 2023, considering all of the evolving macroeconomic factors. We have continued to demonstrate strong revenue growth and reduced operating expenses, both of which will help us attain operating profitability in the years ahead.

Sustained our margin expansion. Thus we are affirming our expectations for total revenue in fiscal year 2023 of between 95 and $100 million, reflecting a 24% to 31% increase over the total revenue in 2022.

With gross margin expansion on an annual basis with that I'll turn the floor over to John.

Thank you Jeff we are pleased with the sustained robust revenue growth, we produced yet again in the third quarter as we continue to execute on our backlog.

Speaker 4: Thank you, Jeff. We are pleased with the sustained robust revenue growth we produced yet again in the third quarter as we continue to execute on our backlog.

I will provide an overview of our statement of operations as well as provide details on our segments before turning to the balance sheet.

Speaker 4: I'll provide an overview of our statement of operations, as well as provide details on our segments before turning to the balance sheet.

Speaker 4: ISUN reported third quarter 2023 revenue of $27.9 million, up 47% from Q3 2022 revenue of $19 million.

<unk> reported third quarter 2023 revenue of $27 9 million.

47% from Q3, 2022 revenue of $19 million.

Speaker 4: For the first nine months of 2023 revenue was 70.3 million, representing a 19.7 million or 39% increase over the same period in 2022.

For the first nine months of 2023 revenue was $70 3 million, representing a $19 7 million or 39% increase over the same period in 2022.

Speaker 4: Revenue growth in the quarter and year to date was driven by effective execution of our commercial and industrial backlog, as well as fulfillment of our residential consumer demand.

Revenue growth in the quarter and year to date was driven by effective execution of our commercial and industrial backlog as well as the element of our residential consumer demand.

Speaker 4: As Jeff mentioned, in the third quarter of 2023, 30% of our total revenues were in the residential segment, which impacted our margin expectations as historically 50% of our total revenues were in the residential segment. While we continue to execute.

As Jeff mentioned in the third quarter of 2023, 30% of our total revenues were in the residential segment, which impacted our margin expectation is historically, 50% of our total revenues were in the residential segment.

While we continue to execute against our existing backlog.

Speaker 4: We also generated new demand and added $27 million in new business during Q3 for a total of $67 million added so far in 2023, effectively replenishing the revenue earned year to date.

We also generated new demand and added $27 million in new business. During Q3 for a total of 67 million added so far in 2023.

Effectively replenishing that revenue earned year to date.

Speaker 4: Total backlog was $161.8 million as of September 30, 2023.

Total backlog was $161 8 million as of September 32023.

Speaker 4: By segment, our residential division generated revenue of $8.3 and $24.5 million in the third quarter and year-to-date respectively.

By segment, our residential division generated revenue of $8 three.

And $24 5 million in the third quarter and year to date, respectively.

Customer orders of approximately $15 million are expected to be completed within three to five months.

Speaker 4: Customer orders of approximately 15 million are expected to be completed within three to five months.

Our commercial and industrial Division, which were consolidated as of January one 2023 generated revenue of $18 eight and $44 7 million in the third quarter and year to date, respectively.

Speaker 4: Our Commercial and Industrial Division, which were consolidated as of January 1, 2023, generated revenue of $18.8 and $44.7 million in the third quarter and year-to-date respectively.

Speaker 4: The division has contracted backlog of approximately 140.3 million expected to be completed within 10 to 18 months.

The division has contracted backlog of approximately $140 3 million.

<unk> to be completed within 10 to 18 months.

Our utility and development Division generated.

Speaker 4: $0.9 and $1.2 million in the third quarter and year-to-date respectively.

0.9, and $1 2 million in the third quarter and year to date, respectively.

The utility division had a contracted backlog of approximately $6 5 million and one six gigawatts of projects currently under development expected to achieve and GP in early 2024.

Speaker 4: The utility division has a contracted backlog of approximately 6.5 million and 1.6 gigawatts of projects currently under development.

Speaker 4: expected to achieve NTP in early 2024.

Speaker 4: Gross profit in the third quarter was $5.4 million, up 50% from $3.6 million in the third quarter of 2022.

Gross profit in the third quarter was $5 4 million up 50% from $3 6 million in the third quarter of 2022.

Speaker 4: Gross margin for the quarter was 19.45%, up 45 basis points from 19% in the same period in 2022.

Gross margin for the quarter was 19, 45% up 45 basis points from 19% in the same period in 2022.

Our C&I segment accounted for approximately 67% of the quarter's revenues.

Speaker 4: Our C&I segment accounted for approximately 67% of the quarter's revenue.

Margin improvement reflected efficiencies generated through the consolidation of our teams leading to more efficient utilization of our labor. Despite the headwind from revenue mix.

Speaker 4: Margin improvement reflected efficiencies generated through the consolidation of our teams, leading to more efficient utilization of our labor, despite the headwind.

Speaker 4: Year-to-date gross profit was $14.9 million, up 41% compared to $10.5 million during the same period in 2022.

Year to date gross profit was $14 9 million up 41% compared to $10 5 million during the same period in 2022.

Year to date gross margin was 21, 2% up 40 basis points compared to 28% during the same period in 2022.

Speaker 4: Year-to-date gross margin was 21.2%, up 40 basis points compared to 20.8% during the same period in 2022.

Speaker 4: Margin is expected to remain strong in 2023 as we continue to scale operations and drive efficiency.

Margin is expected to remain strong in 2023, as we continue to scale operations and drive efficiencies across segments.

Speaker 4: Although in any given quarter, revenue mix can cause variability in.

Although in any given quarter revenue mix can cause variability in margin.

As part of our ongoing strategy to expand gross margin each year, we will continue to implement synergies and efficiencies as we did this past quarter as our segment revenues grow.

Speaker 4: As part of our ongoing strategy to expand gross margin each year, we will continue to implement synergies and efficiencies as we did this past quarter as our segment revenues grow.

The operating loss in the third quarter was $1 8 million, a $3 million or 64% improvement compared to a loss of $4 9 million in 2022 third quarter.

Speaker 4: The operating loss in the third quarter was $1.8 million, a $3 million or 64% improvement compared to a loss of $4.9 million in 2022's third quarter, primarily reflecting the higher revenue and lower operating expenses as part of the company's focus on efficiency.

Primarily reflecting the higher revenue and lower operating expenses as part of the company's focus on efficiencies.

Speaker 4: Year-to-date operating income was a loss of $6.2 million, a $10 million or 62% reduction compared to a loss of $16.2 million during the same period in 2022.

Year to date operating income was a loss of $6 2 million, a $10 million or 62% reduction compared to a loss of $16 2 million during the same period in 2022.

Noncash depreciation and amortization expenses were <unk> 8 million in the third quarter of 2023.

Speaker 4: Non-cash depreciation and amortization expenses were $0.8 million in the third quarter of 2023.

Speaker 4: $1 million lower than $1.8 million in prior year period.

$1 million lower than $1 8 million in prior year period.

Year to date noncash depreciation and amortization expenses were $2 3 million a $3 million reduction from $5 3 million in the same period in 2022.

Speaker 4: Due-to-date non-cash depreciation and amortization expenses were $2.3 million, a $3 million reduction from $5.3 million in the same period in 2022.

<unk> reported a net loss of $2 2 million or seven cents per share in the third quarter of 2023 compared to a net loss of $4 9 million or <unk> 36 per share in the same period in 2022.

Speaker 4: ISUN reported a net loss of $2.2 million, or $0.07 per share, in the third quarter of 2023, compared to a net loss of $4.9 million, or $0.36 per share, in the same period in 2022. Year-to-date net loss

Year to date net loss was $7 8 million or <unk> 35 per share compared to a net loss of $13 5 million or 98 cents per share in the same period in 2022.

Speaker 4: or $0.35 per share compared to a net loss of $13.5 million or $0.98 per share in the same period in 2022.

Speaker 4: Adjusted EBITDA for the third quarter of 2023 with a loss of $0.5 million or $0.02 per share compared to a loss of $2.5 million or $0.18 per share in 2022's third quarter.

Adjusted EBITDA for the third quarter of 2023.

Loss of <unk>, 5 million or <unk> <unk> per share compared to a loss of $2 $5 million or <unk> 18 per share in 2020 twos third quarter.

Year to date adjusted EBITDA was a loss of $2 3 million or <unk> 10 per share compared to a loss of $5 9 million or <unk> 43 cents per share in the same period in 2022.

Speaker 4: Year-to-date adjusted EBITDA was a loss of $2.3 million or $0.10 per share compared to a loss of $5.9 million or $0.43 per share in the same period in 2022.

We are continuing to focus our efforts on operational integration and creating systems and processes that allow for efficient and effective growth.

Speaker 4: We are continuing to focus our efforts on operational integration and creating systems and processes that allow for efficient and effective growth.

In the third quarter of 2023, we reduced operating expenses by approximately $1 3 million or 15% from the same quarter of 2022, while increasing revenue by 47%.

Speaker 4: In the third quarter of 2023, we reduced operating expenses by approximately $1.3 million, or 15% in the same quarter of 2022, while increasing revenue by 47%.

Speaker 4: So far in 2023, we have reduced total operating expenses, even while our revenues have increased by 39% by 5.6 million or 21%.

So far in 2023, we have reduced total operating expenses, even while our revenues have increased by 39% by $5 6 million or 21%.

Speaker 4: We expect these positive trends to be sustained throughout the rest of 2023.

We expect these positive trends to be sustained throughout the rest of 2023.

Now turning to the balance sheet.

Speaker 4: Total debt decreased $4.2 million to $9.4 million as of September 30, 2023, down from $13.6 million at December 31, 2022, reflecting the ongoing repayment of our long-term debt.

Total debt decreased $4 2 million to $9 4 million as of September 32023 down from $13 6 million at December 31, 2022.

The ongoing repayment of our long term debt.

Our cash position of $5 5 million as of September 32023 is the same as it was as of December 31 2022.

Higher revenues and diligent collections have benefited our cash position.

Speaker 4: Higher revenues and diligent collections have benefited our cash position.

Speaker 4: Although it has been slightly higher at different points this year, reflecting the large project volume currently in process.

Although it has been slightly higher at different points. This year, reflecting the large project volume currently in process.

As we noted last quarter, we recognized a downward pressure on our evaluation from our outstanding convertible note.

Speaker 4: As we noted last quarter, we recognize the downward pressure on our evaluation from our outstanding convertible notes.

Speaker 4: Our strong operating performance so far this year enabled us to refinance our debt.

Our strong operating performance so far this year enabled us to refinance our debt facility with.

Speaker 4: We're delighted to have signed a term sheet for a non-diluted $8 million term loan that is expected to close at the end of this month.

We're delighted to have signed a term sheet for a non dilutive at $8 million term loan that is expected to close at the end of this month.

Speaker 4: The primary purpose will be to retire the convertible note, as well as provide working capital funds. And with that, I will.

The primary purpose will be to retire the convertible notes as well as provide working capital funds.

And with that I will turn it back over to Jeff.

Thank you John.

Speaker 3: Let me reiterate how pleased I am with our performance this year in the face of challenging macroeconomic factors, which have enabled us to continue to exceed the streets consensus.

Let me reiterate how pleased I am with our performance this year in the face of challenging macroeconomic factors, which have enabled us to continue to exceed the streets consensus.

Speaker 3: The growth and strong execution in CNI last quarter offset the pressures we are experiencing in the residential segment, which demonstrates how our diversification is a true advantage.

The growth and strong execution in C&I last quarter offset the pressures we are experiencing in the residential segment, which demonstrates how our diversification is a true advantage.

Our continuing ability to win new contract awards, both through our efforts and through our collaborations and partnerships ensures that we remain well positioned for success as we finish up 2023.

Speaker 3: Our continuing ability to win new contract awards, both through our efforts and through our collaborations and partnerships, ensures that we remain well positioned for success as we finish up 2023.

Speaker 4: Our team is laser focused on what they need to do to execute on the many different opportunities we have created within this continually evolving and dynamic energy market.

Our team is laser focused on what they need to do to execute on the many different opportunities. We have created within this continually evolving and dynamic energy market.

In addition, we are benefiting from our focus on efficiency, which as John described has enabled us to reduce our operating cost significantly even while we are growing our topline even more substantially.

Speaker 3: In addition, we are benefiting from our focus on efficiency, which, as John described, has enabled us to reduce our operating costs significantly, even while we are growing our top line even more substantially.

Speaker 3: All in all, we continue to execute on our strategy, supported by the investments that we have made to create recurring revenue opportunities, as well as the positive impacts from the inflation reduction.

All in all we continue to execute on our strategy supported by the investments that we've made to create recurring revenue opportunities as well as the positive impacts from the inflation reduction Act.

Speaker 4: We remain confident the best is yet to come for ISUN and our stakeholders. I'll now turn it back over to the operators.

We remain confident that better to come for Iceland, and our stakeholders.

I'll now turn it back over to the operator to open the lines for questions.

Operator.

Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker 1: Certainly. At this time, we will be conducting a question and answer

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Your first question for today is coming from Justin Clare with Roth and K N.

Speaker 5: Your first question for today is coming from Justin Clare with Ross MKM. Yeah. Hi. Thank you for having me.

Yeah, Hi, Thanks for taking my questions here.

So first off on the.

Speaker 4: And on the term loan here, so you signed a term sheet for a non-dilutive term loan and

The term loan here. So you signed a term sheet for a non dilutive term loan and I was wondering if you could just talk about the use of proceeds so do you expect to repay.

Speaker 4: I was wondering if you could just talk about the use of proceeds. So do you expect to repay all of the outstanding senior secured convertible notes in full? And then also, can you share any of the details on the terms for the new loan at this point, such as the interest rates, or do you need to wait for it to close before you can share that information?

All of the outstanding senior secured convertible notes in full.

And then also can you share any of the details on the terms for the new loan at this points such as the interest rates.

Or do you need to wait for it to close before you can share that information.

Hello, Justin This is John here, Thanks for joining us this morning.

Speaker 4: Hello, Justin, this is John here. Thanks for joining us this morning. So, that the primary use of the proceeds of the new term loan would be to retire the convertible in full. We anticipate that that closing will happen towards the end of November 1st, we could December just given the holidays. What that will do is improve our working capital position by approximately 6Million dollars at the time of closing.

So that the primary use of the proceeds of the new term loan would be to retire the convertible install.

We anticipate that that closing will happen towards the end of November the first week of December just given the holidays.

That will do is in improve our working capital position by approximately $6 million at the time of closing.

In terms of the actual terms.

Speaker 4: In terms of the actual terms, I think we need to wait until we finalize that, but we anticipate that to be done here in the next couple of weeks.

We need to wait until we finalize that but we.

Anticipate that to be done here in the next couple of weeks.

Speaker 4: Got it. Okay, that's that's helpful. And then was wondering if you just talk about the demand that you're seeing for the residential segment versus the CNI segment here, it looks like the rise in interest rates is having a greater impact on residential versus CNI. Was wondering if you talk to, you know, why that may be like, do you give a sense for what explains the resilience of CNI demand in the current environment?

Got it okay. That's that's helpful and.

And then was wondering if you can just talk about the demand that youre seeing for the residential segment versus the C&I segment here. It looks like the rise in interest rates is having a greater impact on residential versus C&I, but I was wondering if you talk to why that may be like do you give a sense for what <unk>.

Blames the resilience of C&I demand in the current environment.

Okay.

Yes, good morning, Justin Jeff Beck.

Speaker 3: You know, one of the things that we're seeing with the consumer is just a little bit of sticker shock on the rates connected with the loan. Oftentimes they're going out for home equity loans, and they're used to borrowing at rates.

You know what are the things that we're seeing with the consumer is just a little bit of sticker shock on.

The rates.

With the loan oftentimes, they're going out for home equity loans, and they're used to borrowing at rates.

Speaker 3: you know, the 3 and 4% level. And so I think what we saw early on as interest rates rose is just sticker shock. We have seen since August a pickup in residential demand. And so we think that some of that sticker shock is

3% and 4% level and so I think what we saw early on as interest rates rose as just sticker shock we have seen since August a pick up in residential demand and so we think that some of that sticker shock us.

Is abating a bit on the commercial side. These projects take a much longer time to develop and.

Speaker 4: is abating a bit. On the commercial side, these projects take a much longer time to develop and get to NTP to

Get to NTP to construct and so.

Speaker 4: Uh, you know, there's a lot of a lot of dollars spent and a lot of the process and the. Interconnection queue, et cetera has been done by that point and so.

There's a lot of.

A lot of dollars spent in a lot of the process.

Interconnection queue et cetera has been done by that point and so.

Likely what's happening as projects are moving forward in.

Speaker 6: You know, likely what's happening is projects are moving forward and, you know, there's, you know, hopefully for some of them opportunities to refinance.

There is.

Hopefully for some of them opportunities to refinance it.

Speaker 6: in forward years as interest rates go down or by the interest rates down. I would imagine that the provisions within the IRA have also helped create additional value within some of those projects to potentially offset the increase.

In forward years as interest rates go down or by the interest rates down I would imagine that the provisions within the area of also helps create additional value within some of those projects could potentially offset.

The increased interest rates.

Okay got it and then I guess it is.

Speaker 4: Okay, got it. And then I guess, do you have a sense for, you know, is there a risk that some of the projects may fall out of the backlog if they, if the economics may have been challenged somewhat by the higher interest rates, or do they still seem to pencil and still, you know, you expect them to move, to all move forward here?

Do you have a sense for you know.

Is there a risk that some of the projects may fall out of the backlog if they are.

If the economics may have been.

Challenged somewhat by the higher interest rates or do they still seem to pencil and still.

Do you expect them to move to all move forward here.

Speaker 6: Yeah, I mean, I would imagine going forward that is a, that is a possibility. We haven't seen that yet again. I think the, some of the provisions within the IRA has helped support the value of the. Of the CNI projects to date, so we haven't we haven't seen that as of yet.

Yes, I mean, I would imagine going forward that is a that is a possibility we haven't seen that yet again I think the some of the provisions within the Iras.

<unk>.

Support the value of the.

So the C&I projects.

To date, so we haven't we haven't seen that as of yet.

Got it okay.

Speaker 4: Got it. Okay. And then maybe just shifting to the utility business, you have 1.6 gigawatts under development, I think in early 2024. Is it all of that 1.6 could reach NTP? At which point would you essentially begin work? And then just wondering what the construction timeframe is. Is it something like nine months to a year at this point for much of those assets?

And then maybe just shifting to the utility business.

One six gigawatts under development I think in early 2024 is it all of that one six could reach NTP at which point would you essentially begin work and then I'm just wondering what the the construction timeframe is as it is this something like nine months to a year at this 0.4.

Pretty much of those assets.

Yeah, Theres multiple projects within that one six gigawatts.

Speaker 6: Yeah, there's multiple projects within that 1.6 gigawatts. You know, some of that timing is a little bit difficult to predict, which is why we're giving the guidance that we are on the timing to construct about a year. For most of these, it's likely the timeframe.

Some of that timing is a little bit difficult to predict.

Which is why we are.

We're giving the guidance that we are on the timing of the construct.

About a year.

For most of these is likely the timeframe.

Okay got it okay. Thanks very much.

Thanks for joining us.

Your next question for today is coming from Jeff Grant with Alliance Global partners.

Speaker 1: Your next question for today is coming from Jeff Gramp with Alliance Global Partners.

Good morning.

Speaker 7: Morning, I was hoping to get a, an update on the, some of the synergy consolidation efforts that you guys have talked about. Would you guys consider kind of the heavy lifting for those efforts kind of largely complete at this point and reflected in the current cost structure for or do you guys think there's still additional progress to be made in that regard?

I was hoping to get a an update on the some of the synergy consolidation efforts that you guys had talked about would you guys consider kind of the heavy lifting for those efforts largely complete at this point and reflected in our current cost structure Fry Sun or do you guys think there's still additional progress to be made in that regard.

Hi, Good morning, Jeff. This is John here, Thanks for joining us this morning.

Speaker 4: Good morning, Jeff. This is John here. Thanks for joining us this morning. So, we definitely have made some major strides in the cost consolidation and driving those synergies through the different organizations. I think that is a part of our continuous improvement mantra that we like to drive through the different organizations.

So we definitely have made some major strides in the cost consolidation in driving those synergies through the different organizations.

That is a part of our continuous improvement mantra that we make to drive through the different organizations.

Speaker 4: We'll continue that progress here in the Q4 and into 2024 as well. We do think that there is still some significant revenue growth that can be realized at the top of our overhead structure. And as we drive more efficiencies through systems and processes, I believe we'll do some additional overhead savings in the future as well.

We will continue that progress here in the Q4 and into two.

2020 for us as well, we do think that there is still some significant revenue growth that can be.

Realize the top of our overhead structure and as we drive more efficiencies through systems and processes I believe will be some additional overhead savings in the future as well.

Okay, great. Thank you and a follow up as a question on the residential side I think Jeff you mentioned the high referral rates and how that's been a positive impact for for acquisition costs.

Speaker 7: Okay, great. Thank you. And follow up with a question on the residential side. I think Jeff, you mentioned, you know, the high referral rates and how that's been a positive impact for for acquisition costs. Is there any kind of, I guess, qualitative or quantitative update you can provide in terms of, you know, where acquisition costs have trended recently and any referral rate metrics you could reference would be helpful to. Thanks.

Is there any kind of I guess qualitative.

Quantitative update you can provide in terms of where acquisition costs have trended.

And any referral rate metrics, you could reference would be helpful too. Thanks.

Yes, we're still seeing Oh.

Speaker 6: Yeah, we're still seeing a really competitive.

A really competitive.

Just for acquisition cost in that 35% to 40 40 range certainly.

Speaker 6: Customer acquisition costs in that $0.35 to $0.40 range certainly are existing customer base.

Our existing customer base.

Speaker 3: provides a high percentage of referrals, you know, in that.

<unk> provides a high percentage of referrals in that.

50% to 65% range, depending on the quarter and as I said earlier, what we have seen is.

Speaker 6: 50 to 65% range depending on the quarter. And as I said earlier, what we have seen is.

Speaker 6: Uh, really since August , uh, an uptick in demand from the residential space, uh, you know, we operate in areas where.

Really since August and uptick in demand from the residential space, we operate in areas where.

The.

Speaker 6: The cost for power is somewhat higher than other areas, so as people digest and get used to the higher interest rates, they're coming back and seeing the value of solar on their roof.

The cost per powers somewhat higher than other areas. So as people digest and get used to the higher interest rates they are coming back in kingdom.

The value.

Solar on their roof.

So we've seen.

Speaker 4: So we've seen a nice pickup in demand really consistently since August .

<unk> seen a nice pickup in demand really consistently since August.

Okay, and if I can sneak one more in just on that last topic in years past. It's typically been kind of this cliff in terms of the tax credits on the residential side.

Speaker 7: Okay, if I can speak 1 more and just on that last topic, you know, in years past, there's typically been kind of this, you know, cliff in terms of the tax credits on the residential side with with the IRA providing a little bit more certainty in a longer timeline. You could argue. There's there's less of a rush to get something done in any given calendar year. Are you guys seeing any impact?

With the IRA providing a little bit more certainty and a longer timeline you could argue there's less of a rush to get something done.

In any given calendar year are you guys seeing any impact.

Speaker 7: to kind of maybe smooth out some of that kind of year-end rush? Or is that still a dynamic that you guys are seeing thus far? Understanding we still have a little bit of time left in the year.

Kind of maybe smooths out some of that kind of year end rush or is that still a dynamic that you guys are seeing thus far understanding with them a little bit of time left in the year.

Speaker 6: Yeah, I don't think it's as critical as we've seen in previous years, certainly from a revenue mix, we'd always been sort of that 30-70 first half, second half. That'll probably moderate some to a, you know, 40-60, just based on some of that lack of rushing for the tax equity at year end. So, you know, likely some small impacts, but really in a positive way to better smooth revenue throughout the year.

Yeah, I don't think it's as critical as we've seen in previous years, but certainly from a revenue mix. We had always been sort of that 30, 71st half second half.

It'll probably moderate some too.

40 60.

Just based on some of that lack of rushing for the for the tax equity at year end.

So.

Some small impacts, but but really in a positive way to better smoothed revenue.

Throughout the year.

Okay. Thanks for the time guys.

Thank you.

Your next question for today is coming from Sameer Joshi with H C. Wainwright.

Speaker 1: Your next question for today is coming from Samir Joshi with H.C. Wainwright. Good morning.

Good morning, John Jeff Thanks for taking my questions.

Just a little bit granularity on the sequential adjusted EBITDA improvement Theyre doing expense expecting should we see it.

Speaker 8: Just a little bit granularity on the sequential adjusted EBITDA improvement that you're expecting. Should we see improved gross margin or further synergies from OPEX or both that will contribute to this adjusted EBITDA improvement?

Group gross margin or fluids or synergies from opex or both that can contribute to this.

The EBITDA improvement.

Good morning, Samir Hi, this is John here. So we do anticipate some additional margin enhancements as we drive those synergies.

Speaker 4: Good morning, Samir. This is John here. So we, we do anticipate some additional margin enhancements as we drive those synergies. What we've done throughout the year is look to consolidate our installation teams.

What we've done throughout the year as look to consolidate.

Our.

Installation teams more appropriately and what that allows us to do is to flex and disbursed labor in a much more efficient way. So we do anticipate that improvement to continue as we close out this year and into 2024 as we continue to find strong ways of work.

Speaker 4: More appropriately, and what that allows us to do is to flex and disperse labor and in a much more efficient way. So we do anticipate that improvement to continue as we, we close out this year and into 2024, as we continue to find strong ways of working together.

Together.

In addition, we do expect to stabilize and focus on cost containment in our overhead structure and drive some additional synergies there as we continue to make the process improvements through the organizations.

Speaker 4: In addition, we do expect to stabilize and focus on cost containment in our overhead structure and drive some additional synergies there as we continue to make the process improvements through the organization.

Speaker 8: Understood. Thanks for that. And in terms of

Understood. Thanks on that.

And in terms of.

Speaker 8: C&I customers, I know you answered a couple of questions on that. Given that the backlog has remained stable and you generated

C&I customers I know you answered a couple of questions on that.

Given that the backlog has remained stable and you generated.

The lion's share of our revenues from that sector.

Speaker 8: the lion's share of your revenues from that sector. Can you help us understand what helped that growth? Is there any geography-specific specificity or any particular industry vertical within this sector that is coming, or is it just the same broad-based, and as Jeff alluded to, these are longer-term projects and

Do you have.

Can you help us understand what that growth is there any geography specific the specific b or any particular industry vertical within this sector that is coming or is it just the same broad based and as Jeff alluded to these are longer term projects and.

Speaker 8: these customers expect to refinance the current high rates at lower rates later.

These customers expect to refinance that.

The current tire et cetera, low rates later.

Yes.

Yes, as far as the geographies go where.

Speaker 6: As far as the geographies go, the bulk of our work is in what I would consider the northern New England belt, Vermont, New Hampshire, Maine, some also throughout the east coast.

The bulk of our work is in what I would consider the northern New England Belk.

New Hampshire, Maine.

<unk> also throughout the.

East Coast.

And we have some long term relationship with various customers, who continue to expand and add to their portfolio. So.

Speaker 4: And, you know, we have some long-term relationship with various customers who continue to expand and add to their portfolios. So, you know, so we believe we'll continue to see a nice project flow with CNI in those territories and also throughout other territories as our customers expand where they own their assets as well.

We believe we will continue to see.

Nice project flow at C&I in those territories and also throughout other territories.

Does their customer expand where they own their assets as well.

Okay, and then the last one.

Speaker 8: Okay, and then the last one, can you just talk a little bit more about the CIR relationship and where, in what areas would you see synergies and increased revenues as a result?

Can you just talk a little bit more about the <unk> relationship and so.

So.

Where and what areas would you see us in the us and increased revenues as a result.

Speaker 3: Yeah, our partnership and our collaboration with CIR is really to continue to fill that pipeline through.

Yeah, our partnership and our collaboration with <unk> is really to continue to fill that pipeline through.

Speaker 3: You know, through relationships and partnerships and collaborations, they're working on origination and early design and engineering with many companies all over the country and with our relationship with them, we have both a preferred status.

Through relationships and partnerships and collaborations.

They are working.

On origination.

Early design and engineering with.

Many companies all over the country.

<unk>.

With our relationship with them, we have both a preferred status.

Speaker 3: on engineering support, as well as access to their portfolio of projects that they're working on with their customers.

Engineering support.

As well as access to their portfolio of projects that youre working on with your customers.

For construction rates to build them. So we're excited about that we think that.

Speaker 6: for construction rights to build those. So, we're excited about that. We think that, you know, as we approach companies and enter into partnerships and agreements, it's really with the mindset of growing a long-term business. And this relationship will really help swell our pipeline, which will turn into larger backlogs and more projects and more project opportunities in the years ahead for us.

As we approach companies and enter into partnerships and agreements, it's really with the mindset of growing a long term business and this relationship will really help so while our pipeline, which will which will turn into larger backlogs.

More projects more project opportunities in the years ahead for us.

Sounds good.

Speaker 8: Thanks and congrats for the progress this year.

Thanks, and Congress for the progress this year.

Thank you very much thanks for joining.

Okay.

We have reached the end of our question and answer session and I will now turn the call over to Jeff for closing remarks.

Speaker 1: We have reached the end of the question-and-answer session, and I will now turn the call over to Jeff for closing remarks.

Thank you everyone for joining our call today, we appreciate your time to hear about the <unk>.

Speaker 3: Thank you, everyone, for joining our call today. We appreciate your time to hear about our progress and performance. If you have any questions, please reach out to.

Progress and performance.

Do you have any questions.

Please reach out to IR.

In Iceland energy Dot com.

Speaker 6: Thank you and have a great day.

And have a great day.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Speaker 1: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.