Sunworks, Inc. (NASDAQ:SUNW) Q3 2022 Results Conference Call November 8, 2022 1:00 PM ET

Company Participants

Jason Bonfigt - Chief Financial Officer

Gaylon Morris - President and CEO

Conference Call Participants

Phillip Shen - ROUTH

Donovan Schafer - Northland Capital Markets

Operator

Greetings. Welcome to the Sunworks Inc. Third Quarter 2022 Results Conference Call. [Operator Instructions] Please note this conference is being recorded.

I'll now turn the conference over to your host Jason Bonfigt, CFO. You may begin.

Jason Bonfigt

Thank you, Operator. I'm Jason Bonfigt, Chief Financial Officer of Sunworks. On behalf of our entire team, I'd like to welcome you to our third quarter 2022 results conference call. Leading the call with me today is our President and CEO, Gaylon Morris.

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

With that, I'd like to turn the call over to Gaylon.

Gaylon Morris

Thank you, Jason, and welcome to those joining us today. During the third quarter, our business benefited from a combination of strong residential solar demand, strategic price actions, discipline expense management, and market share gains. As household electricity bills continue to arise, order rates for new residential rooftop solar installations accelerated on a year over year basis contributing to robust organic revenue growth in the third quarter.

While customer financing costs have increased in tandem with higher interest rates, originations during the quarter were at record levels as the economic case for residential solar remains highly compelling particularly for customers who value independent reliable access to renewable energy. To help to illustrate this point, let's use a real world example.

Currently, the average residential electric bill in California, our largest market, is more than $1,550 annually or nearly 50% higher than it was a decade ago. Even as electricity prices have risen meaningfully, grid reliability has declined, leaving many households and businesses to explore alternative options. Consumers want more control over how they source energy, they want choices.

The average residential installation will typically cost between $25,000 to $30,000 including the benefit of tax credits financed over a 15 to 25 five year period. By installing solar, a homeowner can in most cases use their system to offset their electricity usage 100% and have a system which will support future consumption growth. Over the past year, the cost of solar has increased for the first time in the industry's existence. Financing rates have increased by more than 5% and low interest rate products are being limited by the loan providers. Inflationary pressures for labor and key componentry have pressured the economics of solar.