Sunworks Inc (NASDAQ:SUNW) investors are heading for the hills today after the solar panel installation company announced financial results for the quarter and nine months ending September 30, 2016.
Q3 and Year to Date 2016 Financial Highlights:
Total revenue for the third quarter and first nine months of 2016 of $17.6 million and $68.0 million, respectively. Year-to-date revenue increase of approximately 87% resulting from acquired businesses and strong organic growth. Third quarter 2016 revenue declined from the prior year level due to the timing of installations, which pushed recognition of revenue from third quarter 2016 revenue to fourth quarter 2016.
- Gross margin for the third quarter and first nine months of 2016 of 27% and 29% respectively, compared to 27% and 29% in the respective periods of the prior year. Current year gross margins were stable and reflect investments that are expected to enhance revenue and improve profitability in future quarters.
- Net loss for the third quarter of 2016 of $6.1 million and a net loss of $5.7 million year to date 2016, versus net income of $1.4 million and a net loss of $123,000 on the comparable year ago periods. The current year loss results include sales and marketing investments as well as $3.9 million in non-cash charges related to the issuance of stock-based compensation.
- Backlog of $42.7 million as of September 30, 2016, representing an increase of 31% compared to the third quarter of 2015.
Jim Nelson, Sunworks Chief Executive Officer commented, “Our sales have increased nearly 90% in the first nine months of this year demonstrating our increasingly strong position in the solar market. We continue to invest in our business and are experiencing momentum in expanding our addressable market. We also strengthened our board of directors, our management team and enhanced our organization so that we can more effectively scale our business and capitalize on growth opportunities. During the third quarter, we doubled the size of our commercial sales team by investing in a world-class, experienced sales group with a proven track-record to drive sales. We also made investments to license Sunworks in new markets, added experienced professionals to penetrate new vertical end- markets, joined associations that directly influence markets we serve, and again invested in equipment, personnel and systems that are critical to support our accelerated long-term growth strategy. Although these investments negatively impacted our profitability during the third quarter of this year, we are confident that they are part of a foundation that will drive continued robust growth and market share gains in the future.”
Mr. Nelson continued, “We introduced our new Chief Financial Officer, Paul McDonnel, who has quickly acclimated himself to his new position, demonstrated leadership amongst the team and identified process and controls necessary to scale our business . In addition, we welcomed Charles Cunningham as a Managing Director, to expand our business into the Federal markets, further diversifying our business model and providing considerable opportunities for incremental future growth. We also continue to strengthen our board of directors, having added Charles Cargile, who brings a wealth of experience in financial and operational leadership, as well as Rhone Resch, the former President and CEO of the Solar Energy Industries Association. I am excited to add these quality leaders to our team and am confident they will enhance our drive for increasing shareholder value.” (Original Source)
Shares of Sunworks are currently trading at $2.24, down $0.63 or -21.99%. SUNW has a 1-year high of $3.43 and a 1-year low of $1.84. The stock’s 50-day moving average is $2.75 and its 200-day moving average is $2.63.
On the ratings front, Chardan analyst James McIlree initiated coverage with a Buy rating on SUNW and a price target of $5.00, in a report issued on August 4. The current price target implies an upside of 74% from current levels. According to TipRanks.com, McIlree has a yearly average loss of 2%, a 46% success rate, and is ranked #3110 out of 4205 analysts.
Sunworks, Inc. provides photo voltaic based power systems for the residential, commercial and agricultural markets in California and Nevada through its two operating subsidiaries, SUNworks and MD Energy, which design, arrange financing, integrate, install and manage systems ranging in size from 2 kilowatt for residential loads to multi megawatt systems for larger commercial projects. Commercial installations have included office buildings, manufacturing plants, warehouses, and agricultural facilities such as farms, wineries and dairies. The company provides a full range of installation services to its solar energy customers including design, system engineering, procurement, permitting, construction, grid connection, warranty, system monitoring and maintenance.