Sunworks, Inc. (NASDAQ:SUNW) Q2 2022 Earnings Conference Call August 9, 2022 1:00 PM ET

Company Participants

Jason Bonfigt - Chief Financial Officer

Gaylon Morris - President and CEO

Conference Call Participants

Donovan Schafer - Northland Capital Markets

Operator

Greetings. And welcome to the Sunworks Second Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Jason Bonfigt, Chief Financial Officer of Sunworks. Thank you. 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 second 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 over to Gaylon.

Gaylon Morris

Thank you, Jason. And welcome to those joining us today for our second quarter results conference call. Before I cover our progress on our strategic objectives and provide a Q2 financial update, I wanted to highlight the importance of the likely passage of the Inflation Reduction Act. The provisions of the act support the Biden administration’s domestic, renewable resources and climate policy goals by promoting clean, reliable and low cost energy to businesses and homeowners. We view this as a significant win for the solar industry, specifically the 10 year extension of the investment tax credit at the 30% level. The ITC is a proven path to rapidly growing solar adoption. While costs in the solar industry have declined over the past decade, they have risen sharply in 2022 and this ITC extension is expected to have a meaningful impact on lowering the cost of solar and storage and additionally should promote US manufacturing.

Moving on to our business update. During the second quarter, we demonstrated measurable progress on our business transformation strategy, while continuing to capitalize on increased demand for our integrated solar solutions. Net sales and gross profit each increased on a year-over-year basis in the second quarter, driven by strong residential demand, while both orders and backlog increased to multi-year highs. Since our last quarterly conference call in May, demand conditions have strengthened materially across both our residential and commercial markets. While supply chain disruptions, module availability and wage inflation remain a headwind, we've enacted several consecutive price increases in 2022, the benefits of which will position us to achieve improved gross margin capture as we move into the latter months of the current calendar year, while moving us that much closer to free cash flow breakeven.