Analyst Summary:
Sunworks, a leading provider of solar power and battery storage solutions, reported financial results for the fourth quarter and full-year 2022. The company's residential solar segment contributed to strong year-over-year growth in new installations, revenue, backlog and originations, driven by the recent investment in the direct sales force. While long-term demand fundamentals for solar power continue to remain strong, the fourth quarter saw negative impacts from rising interest rates and economic uncertainty. The company has taken targeted action to reduce the impact of higher financing costs, such as the addition of new loan providers and solar power purchase agreements. The company expects to accelerate solar adoption as the government provides an important tailwind with the Inflation Reduction Act.
Sunworks' strategic update includes increasing the velocity of installation, expanding cost-efficient direct sales channels, driving efficient sourcing and procurement, driving targeted commercial expansion and driving sustained margin expansion.
Sunworks' full-year 2022 revenue increased mainly from the increased contribution of the residential solar segment, which benefited from a growth in installation volumes. While the increase in revenue in both segments has led to an increase in gross profit, it was partially offset by margin degradation resulting from increased labor costs, as well as jurisdictional and weather delays. The company reported a net loss of $7.0 million in Q4 2022, primarily due to a $5.5 million goodwill impairment in the prior year-quarter.
The company's adjusted EBITDA loss in Q4 2022 was $5.6 million compared to a loss of $4.4 million in Q4 2021. Sunworks expects improved margin realization in 2023 as recent performance improvement initiatives are further implemented.