Q3 2025 SUNation Energy Inc Earnings Call
Thank you all for joining me today. This is a call that I'm truly looking forward to for quite some time. You know, since Jim and I took the Helm of sun Nation about 18 months ago. It's felt at times, like staring through unpredictable conditions, keeping steady staying focused and making sure everyone on the team understood where we were headed and why. Now I won't tell you things have calmed down. They absolutely have not as we look ahead to 2026. There's still a lot of movement in the in the industry and uncertainty, but the difference is that we're no longer reacting. We're leading, we've got structure Direction and a team that's completely aligned on the mission.
And this quarter represents the turning point. For the first time in a long while, our results reflect the impact of our hard work, the discipline, and the cultural rebuilding that's taking place inside this organization.
If I had to sum up Q3 in one phrase, it's this: we delivered on our promises. Sales rose, costs came down, margins improved, and profitability strengthened. Our capital structure is squeaky clean, and our balance sheet is the strongest it's been in years. That didn't happen by chance. It took tough calls, long hours, and people who refuse to give up.
But it proves what happens when we stay focused and execute, while many in our industry have struggled to find direction. So, the nation has moved forward, stronger, leaner, and ready for what's next.
Those of us who've been in solar for a while know the ride, never really Smooths out the 1, big, beautiful bill and the upcoming Sunset of section 25d have created new challenges and New Opportunities. And our team has handled both with focus and professionalism.
The rush to complete residential installations before the end of 2025 has been intense.
And our teams in New York and Hawaii have been extraordinary and really stepped up to the plate.
These are 2 of the most expensive energy markets in the country. And our people have helped own a homeowners, take control of both their power and their costs residential sales. In those markets were up 54% year-over-year in. Q3 I want to say that again, residential sales in those markets were up 54% year-over-year in Q3 and we expect that momentum to continue right through the year end. At the same time, we're not focused on this surge. We're preparing for what comes after. We've been developing new financing options and lease to own programs that will carry us not just in 2026, but far beyond tried and true approaches that have been part of sun Nation success story for more than 2 decades.
On the commercial side, we're continuing to see steady demand from institutions and municipalities across Long Island and downstate New York.
Between C Market and Standalone Roofing. While we double down on our service and onm side, helping both our long-term customers and those left without support. When their original installers disappeared,
We're also evaluating strategic M&A opportunities that make sense, to bring scale efficiency or exposure to fast-growing sectors like AI, crypto, and data centers. These are reshaping how power is used, and we're positioning SUNation to play a meaningful role in the future.
Through all of this, one thing hasn't changed: we stay calm, focused, and deliberate. Running a business, much like navigating a ship, isn't about avoiding rough conditions. It's about knowing your course, trusting your crew, and making steady progress, no matter what's ahead. Every day, I'm driven by three things: our team, who show up with greater purpose; our customers, who trust us to deliver on the promise of solar; and of course, our shareholders, whose patience and confidence we are determined to reward. SUNation is strong—stronger than it's been in a long time. We understand the challenges ahead, but we also see tremendous opportunity in front of us. We have built a company that can adapt, grow, and lead through whatever comes next.
And I'll close with this.
God willing, the market will begin to acknowledge and reward our efforts our resilience. And the results that this incredible team has delivered for you. In Q3
Thank you all for your time and Trust in your continued confidence and Sation with that. I'll turn it over to our coo CFO. And my steady Co Captain Jim Brennan who will take us through the numbers. Jim
Thank you, Scott, and good morning, everyone. I appreciate you joining us today, especially those on the West Coast who are joining us at 6:00 a.m.
we are joined today by Kristen lofta Sun, nation's Chief accounting, officer and corporate Treasurer as well as miss summer some nation's corporate controller.
We filed our 10-Q on November 7th and issued our earnings release on Monday, November 10th.
As we reflect on our performance for the third quarter, I am pleased to report that the actions we have taken have delivered significant improvements throughout the business, as we promised.
We ended the third quarter in the strongest financial position in recent history.
Through in-depth planning, disciplined execution, and sharp focus on operational efficiencies by the regional leadership teams in both New York and Hawaii, we strengthened our balance sheet, expanded our margins, and improved profitability.
These much improved results are direct outcome of the hard work of the entire team and the commitment to deliver value to our shareholders, in the midst of a rapidly evolving Market environment.
We are on track to report strong results in the current fourth quarter and have reiterated our 2025 full year Financial guidance for higher total sales and a return to positive adjusted Eva as compared to full year 2024.
On to the review of our Q3 2025 results.
Total Q3 sales rose by 29% to $19 million from $14.7 million last year. Sales at Sunday Nation in New York and Hawaii rose by 22% and 47%, respectively, with residential sales rising 54% and service sales increasing by 72%. This was driven by an accelerated pace of system installations prior to the expiration of the federal tax credits on December 31, 2025.
Although commercial sales declined by 1.7 million, we expect continued stability in this sector as businesses and institutions such as churches and schools continue to take advantage of the longer. Runway that the 1, big beautiful bill has offered
Inherently, the commercial sector is more complex and nuanced than residential. As a result, these projects tend to take more time to develop and install.
On a consolidated basis, overall kilowatts installed on residential projects increased by 52% in the third quarter of 2025. Revenue per installation increased by 25%.
Consolidated gross margin improved to $7.2 million, or 38% of sales.
Increased, the 32.1% from 29.5%.
We continue to effectively manage costs throughout our organization. While total operating expenses rose to $7.5 million from $6.8 million, as a percentage of sales, the total operating expenses declined to 39.
3% from 46.5% and we expect the total operating expenses in 2025 to be lower than 2024.
Interest expense in the third quarter of 2025 declined to $143,000 from a whopping $812,000 last year, reflecting the continuing benefits of paying off the expensive debt earlier this year.
We continue to expect our annual interest expense to decline by approximately $2 million for 2025 as compared to 2024.
we operated just below break, even for the quarter with a net loss of approximately 393,000, which is a 2.9 Million improvement from a net loss of 3.3 million in last year's, third quarter,
Taking all of this into account, Q3 adjusted IBA improved to a positive $898,000, up from a loss of $1 million in last year's third quarter.
With respect to the balance sheet.
Cash and cash equivalents rose to $5.4 million on September 30th, which is our largest or highest cash level since 2022.
Our total debt decreased by over $11 million, falling to $7.9 million, compared to $19.1 million. At the end of 2024, this total debt included an unrecognized consideration of $1 million.
Other areas of improvement this year through September 30th include.
accounts payable and proved 7.3 million to 8 from 8 million on December 31st 2024, current liabilities improved to 19.0 million from 27.2 million on December. 31st 2024, and lastly shareholders Equity improved to 21.7 million from 8.5 million on December. 31st 2024
Based on these Q3 results, solar projects, pipeline, and the general business environment, we are reiterating our guidance for 2025 as follows.
Total sales are expected to rise to between $65 million and $70 million, a projected increase of 14% or 23% from total sales of $56.9 million in 2024.
Adjusted evida is expected to improve to between 500,000 and 700,000 dollars from an adjusted even a loss in 2024.
Before turning things back to Scott, I want to again thank the entire SUNation team both in Hawaii and New York for their hard work and dedication. This process has not been easy over the past six months. Our financial health has improved dramatically. Sales are up, costs are down, profits are higher, and our financial position is strong.
It's no secret that our industry is in a state of transition and that the challenges we all face are significant. But that's okay. We are embracing these challenges as an opportunity to redefine SUNation as a whole and the value we can deliver to our shareholders.
The global demand for energy is an accelerating and Son nation has over 2 Decades of experience in delivering clean sustainable, solar energy.
As we look ahead to 2026, we will continue to address these opportunities from a renewed and we believe sustainable position of financial strength. We are optimistic about our future and look forward to keeping your prize of any news and progress. I want to thank you for your time and will now turn things back to the most handsomest guy in solar, Scott masking, good, thanks Jim. Uh we taking calls now guys.
All right, fire away.
All right, at this time, I would like to remind everyone in order to ask you a question press star, then the number 1 on your telephone keypad,
We will pause for just a moment to compile the Q&A roster.
Comes from the line of Julian. Dealin Smith with Jeffries. Your line is now open. Please go ahead.
Hey, good morning. You have Hannah Velasquez on for Julian. Uh, thanks for the update. This quarter, I had a quick question or rather, yeah, just an update on 25D expiration. Curious to see what you all are seeing out there in the market in terms of any pull-forward effect. And then also, any reactions to the Advent or, you know, I suppose the introduction of this new concept, the prepaid lease plus loan bundle. I think you alluded to it on your call, but any additional detail you can provide there in terms of if it's viable as a replacement for 25D. And if you would consider pursuing it.
Sure, thanks for the time today. Um, so, uh, listen, 25D has certainly, you know, the sunset of that tax credit certainly has a meaningful impact, especially in markets like New York and Hawaii, um, with high costs of kilowatt hours. Um, we've traditionally been loan markets; we have done some leasing, and there's been a lot of different tools that are out there. So what I would say is that we're driving to the end of the year.
Pull forward. Yeah, there's a ton of people that sat on the fence for a long time that got off off the fence and they're just, you know, I mean there's a lot of angry else out there that, you know, were on the fence for too long and we just simply could not get them installed. I mean, my teams in on, in both states are running, you know, 6 days a week plus um to get this work done. That being said um I believe that there are some significant advances in a lot of different financing tools other than just traditional leasing um and Loans. So I think A lot's going to evolve as more information comes out on fiak. Um I I you know when I when I look at at our markets we can still make a damn fine, you know Financial um model for a loan and for owning it. So I don't think it's going it's going to slow things. I think that we're in the um in a trough right now of
People that rush to move forward and then when they could, and they're in pause mode. And then, what's going to happen is, we'll figure out ways to get them back on the fence through some of these other tools, I think they're all going to be viable. I think that people that are coming out with new and unique financing options are really making sure that their eyes are dotted and their teas are crossed on the, on the tax side of it. And that's been, uh, I I I'd say that's been, uh, a slower than they anticipated. Um,
You know, process did that answer your question?
Yeah, that was perfect. And then maybe this is a follow-up there. So we're hearing with 25d expiring, you're having new entrance. I suppose in the competitive market maybe more so on the TPO side but you can. Can you just um double click in terms of what you're seeing out there? Are you seeing new tpo's enter trying to take advantage of the shift towards the leasing Market? I, I know. Tesla also joined the space and so just, what are you seeing from a competitive perspective?
Uh, you know, when you made mention of the t-word, never count Elon Musk out for anything. He's got the bag and, you know, that the sheet that he can upend this entire industry on a moment's notice. But I think that as somebody who's been involved for 20-some odd years, I...
So many players Financial players kind of circle and circle and you know they take advantage of opportunities when they're there and then some get smacked down and then they reinvent themselves and they come back. I mean this all boils down to Capital and available capital and available tax Equity. Right. So, you know, my understanding on the in the market, you know, raising capital in solar is, is difficult right now. Doesn't mean that it's, it's not non-existent, but I think that there's going to be, um, a little bit of a low people still want solar but the players they some of them rename themselves. Some of them, you know, Retreat. And then come back. I mean I I'm I'm mindful of how SunPower, you know.
So, and you know, I'll say that, you know, SunPower exit, it bankrupt. And now they're coming back in as a player. So and and you know, uh acquiring companies and stuff, I I look at some other companies that, you know, were in the in the, you know, the LMI Market that just couldn't get the capital and and imploded. Right. So it it's just like a big. It it's kind of a big Vortex, a big circle. Um, but ultimately everybody comes back to the top, the same players that are involved in the space are the same place that keep Rising, they may rename themselves. And you know, listen, we're going to go back and again, all it needs to happen. Is the cost of energy continues to rise. It makes every decision even easier and more palatable.
Yeah, I would add that I would add to that that um, you know, some of the newer tools that are becoming available based on some of the financial Wizards in this market prepaid, leases synthetic cash, you name it. There's a lot of buzzwords circulating around, but I, I, I love it. Uh, as long as we have the ability to deliver to these customers, you know, some sort of approach that works for them. Even though the recent stupidity in Washington, got it, 100% wrong. We are pivoting to continue to survive. There are as Scott mentioned, there are companies in the industry that won't. The reality is New York, and Hawaii are not alone with expensive power. Uh you know, some of the target acquisition markets that we're looking at have even more expensive power than Long Island which is hard to believe. Um, but uh, those those folks are are predicting higher, uh, Revenue. This year than 20 or next year than 2025 because their
Math continues to work in a purchase to own Market, even in the absence of the 30% Federal ITC.
Okay, and if I could just have one more follow-up question, um, on that point, you know, maybe on a consolidated basis? How are you thinking about market growth in 2026? I mean, you hear the consultants all over the place, right? Talking about a 10% decline, best case scenario, and then up to a 20% to 30% decline, all in just given 25D expiring.
And as as like a secondary question there, um, what's the latest you're hearing on fiak? Thank you.
So, the first part of your question was about 2026 guidance and I'm not prepared to give that today. Um, we do, um, predict a, a lower than normal q1. Although, as I say those words, I was recently, um, uh, pleasantly surprised from the New York team that they've already booked nearly a 100 deals for January, which was surprising given that given the new set of circumstances that we're dealing with. Um, and and, but by the way, that's the normal cycle of our business, q1 and Q2 are always low in both New York and Hawaii for different reasons and then Q3 and Q4, just like this year in 2025, Q3 and Q4 were cranking, uh, so much so that we're having trouble keeping up with all the work. And so, I, I suspect that a very similar model, uh, will follow in 2026 as well.
And Scotty wants... Yeah, you know, I just, you know, on fiac.
It's still, it's still happening.
Right, every day there's a change. Every day somebody's coming out with different, you know, securing different equipment or different AVL's and stuff like that. I don't think that anybody can securely say this is where it's going to be on January 1st, because it's just a guidance. It's just too fuzzy.
I think that we will adapt, we will find product. And and, you know, you know, cash is King. Also, those, with strong balance sheets are going to be able to get equipment and others are going to implode and, you know, I just want to, you know, I just want to touch on what Jim said. You know, I have often and the thesis of sunation would, you know, has always been, you know, a regional company. Um, you know, when the analysts say, 10% decline, 40% decline, 50%, it's it's really unfair because, you know, you look at some, you know, you look at California who's just said gut punch after gut punch, but last year, you know, they, they, they blew it out out of the door, right? Like, you know, with the e exit of, um, N3. But you know, North Carolina is growing, Massachusetts is growing, so it's hyper Regional markets and Hyper Regional. I've always said we're very, um,
We're exposed by utilities and state policies. So find me a state that is really pro-energy, find me a state that's going to see a growth of data centers and AI, and I'll show you, you know, a state that is going to grow revenue because, of course, the power is going to be so high.
Great question.
Thank you.
Thank you.
At this time, I would like to turn the call back over to Devin Sullivan.
Thank you, Bella. Um, we do have a couple of questions from Sun Nation stakeholders that I'd like to ask on their behalf. The first one to the management team is: What is your long-term vision for Sun Nation following the passage of the 1 Big Beautiful Bill Act?
Thanks, Stephen. Um, and to whoever that shareholder is, thank you.
Um, you know, I need to harp on the diversification of SUNation, as you know, one of our...
Shareholders, and for our company.
You know, we see a rush to the end of the year. Um, we're figuring out a lot of things for 2026 and moving forward, but we see the commercial industry really growing. We see the service industry growing, um, residential is going to figure itself out. We've been through these Cycles before. Um, so I'm I'm not too, there's a lot of confidence, you know, sometimes, you know, things like this are also good gut, check, you know, you know, where can we be better? Where can we be more efficient?
And take advantage of that thing. And that's not just with Opie you know that's not just with with employees and stuff like that. I mean you know over time you kind of bloat and you you look at your software stack and you look at, you know, all kinds of things that you spend money on as you're growing and growing and growing. And sometimes it's a good, it's a good exercise to retool and reshape the company so that you can come back. It's almost like going into the corner of a prize fight, so that you can come out punching, you know, after somebody splashes water on you. So, um, I'm not concerned overly concerned about 26 and 27, because we're in a good spot for it. Um, we have a lot of different revenue streams, you know, there's a lot of different opportunities out there to add Revenue, you know, to the shareholder, you know, to the company, to the listing, to some Nation as a whole that maybe in the energy field. Maybe not right. Um,
So, those are the things that give me a lot of confidence moving forward into 2026 and 2027 and at 62 years old, you know, I I, I need a little, uh, I need those pearls to to keep me going.
Kevin, I would add to that answer that, just for clarification, revenue diversification has been our strength for a long time.
The companies that we've seen that have failed over time are the ones that have a single source of revenue, and you can name them off the top of your head, I'm sure.
You know, in our case we buy we went out of our way to have 6 or 7, hopefully even more sources of revenue. So we have a residential Revenue stream, commercial service Roofing, we actually do electrical work for some of our solar customers. We have Community solar and in the future. Uh, hopefully if the moon's aligned, We'll add HVAC in some high efficiency HVAC tools that and so on so that, because as Scott mentioned, the we'll see in the future a time, where another part of our Revenue stream slows down, that's fine. That's part of the cycle that we all live through but we'll have a back fill from other revenue streams, just like in 2025, the commercial team had lower than expected Revenue, but I doubt that will be the discussion in 2026 because there's a ton of work that those folks are are cranking through right now.
Thank you. Uh, thanks Scott, and Jim and actually, Jim that that's a good segue into our final question is, can you how would you describe the market for commercial in 2026?
Yeah, so I'll start with that 1. I see that we've um, in New York, we positioned ourselves very well with national developers. Um, you know, we've always taken the approach that it's great to init. You know, originated your own work, but I make money when trucks roll or shareholders, you know, when, when trucks roll and money comes in. So I don't really care who sells the job, but we're really good at executing on those things. Um, because of that diversification, with the national developers, um, we're seeing a, a big inrush in schools, institutional type things. Um, and we're really, really well suited to execute on that kind of stuff. I'm not saying that, you know, traditional rooftop, solar on, you know, an industrial building is going to go away.
But you know, we have a very strong Pipeline and that's going to be a major Focus for us moving forward. Um, you know because listen that's kind of where the you know, with sweet spot is in the industry right now. Also at least until through 2027. So uh you know that's I you know, all there's nothing Damn, the Torpedoes full set. It's needed ahead on that kind of stuff.
7. I would just add to that that because we do a lot of work for these large National developers and we do a pretty damn good job at delivering on those projects we are now getting asked or actually we've been throughout the year being asked to to do work in other states.
So you know, we historically have had an acquisition view on growth into new markets, but this is an organic view simply because the commercial team does a good job at delivering.
The developer wants us to go into a different state because they have another project, um, and so that'll definitely be some growth into next year that we'll see on the commercial side.
Thank you, both. That is, um, that is our final question. So, I'll turn things back over to Scott for closing comments.
Well, thanks for everybody.
Tony Monday morning with us. Customers are happy, they're making money today because the sun's out in New York and soon Hawaii. Um I want to wish everybody a happy holiday season. Let's not forget, you know what's important? As we move forward revenue and and shareholders. And business is important but family first and that's how we treat our our business. So I want to thank everybody for the time and the confidence. And uh, man, am I looking forward to that end of year report? Okay, so thanks Devin. Thanks team.
All right, ladies and gentlemen, that concludes today's conference call. Thank you all for joining, and you may now disconnect. Everyone have a great day.