Sunlight Financial Reports Second Quarter 2022 Results
Sunlight Financial reported a record-high 2Q22 funded loan volume of $716 million, an 18% increase in total revenue to $31.6 million, and an 8% rise in GAAP net income to $5.7 million. Adjusted EBITDA decreased to $6.8 million from $11.5 million in the prior year due to public company costs and delayed sales. The company repurchased 1,472,068 shares at a cost of $5.6 million. Full-year guidance for funded loan volume, total revenue, and adjusted EBITDA has been reduced, reflecting expected margin pressures.
- Record-high funded loan volume of $716 million
- Total revenue increased 18% to $31.6 million
- GAAP net income rose 8% to $5.7 million
- Platform fee margin improved to 4.7%
- Adjusted EBITDA decreased to $6.8 million from $11.5 million
- Reduced full-year guidance for funded loan volume to $2.8 - $3.0 billion
- Total revenue guidance lowered to $130 - $140 million
- Adjusted EBITDA guidance cut to $35 - $40 million
- 2Q22 Record-High Funded Loan Volume of
- 2Q22 Total Revenue up
- 2Q22 GAAP Net Income up
- 2Q22 Adjusted EBITDA of
- 2Q22 Adjusted Net Income of
- 1,472,068 Class A Shares Repurchased as of
“I'm proud of Sunlight's strong performance in the second quarter. Despite continued industry challenges with supply chain and labor constraints, we exceeded quarterly records for funded volume, number of borrowers served, and average solar loan balances due to strong demand for Sunlight's products," said
"While our relationships with depositories and our industry-leading credit quality have provided a strategic advantage in a challenging macro-economic environment, we expect materially lower near-term margins in our Indirect Channel to impact our performance in the second half of 2022," added Potere. "As recently-enacted pricing changes take effect, we expect Indirect Channel margins to return to historical levels over time."
Second Quarter 2022 Key Financial Metrics
-
Total Funded Loans of
, compared with$716 million in the prior-year period$666 million -
Total Revenue of
, an$31.6 million 18% increase from the prior-year period -
GAAP Net Income of
, an$5.7 million 8% increase from the prior-year period -
Adjusted EBITDA of
, relative to$6.8 million in the prior-year period, primarily driven by incremental public company costs and the delayed sale of funded volume to 2H22$11.5 million -
Adjusted Net Income of
or$2.3 million per fully-diluted share, relative to Adjusted Net Income of$0.01 in the prior-year period$9.3 million -
Total Platform
Fee Margin of4.7% (up from4.0% in the prior-year period) and Solar Direct Channel PlatformFee Margin of5.4% (up from4.3% in the prior-year period)
A reconciliation between historical GAAP and non-GAAP information is provided in the tables below.
Share Repurchase Program
On
Full-Year 2022 Outlook
Although Sunlight has taken actions to mitigate the impacts of recent market volatility, including pricing changes and management of operational costs, rising interest rates and an increase in Indirect Channel loans are expected to negatively impact margins in the second half of 2022. Therefore, the Company is reducing its full-year 2022 guidance to the following ranges:
-
Full-Year Funded Loan Volume of
-$2.8 (from$3.0 billion -$2.9 )$3.1 billion
-
Full-Year Total Revenue of
-$130 (from$140 million -$145 )$155 million
-
Full-Year Adjusted EBITDA of
-$35 (from$40 million -$55 million)$60
Conference Call Information
Sunlight will host a conference call and webcast to discuss its second quarter 2022 financial and operational results and business outlook at
Earnings Presentation
A supplemental earnings presentation is available at ir.sunlightfinancial.com. Additional information is available in the Form 10-Q, which Sunlight filed with the
About
Sunlight is a premier, technology-enabled point-of-sale finance company. Sunlight partners with contractors nationwide to provide homeowners with financing for the installation of residential solar systems and other home improvements. Sunlight’s best-in-class technology and deep credit expertise simplify and streamline consumer finance, ensuring a fast and frictionless process for both contractors and homeowners. For more information, visit www.sunlightfinancial.com.
Forward-Looking Statements
The information included herein and in any oral statements made in connection herewith may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may generally be identified by the use of words such as “could,” “should,” “would,” “will,” “may,” “believe,” “anticipate,” "outlook," "2022 guidance," “intend,” “estimate,” “expect,” “project,” “plan,” “continue,” or the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Sunlight disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date hereof. Sunlight cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Sunlight. Such risks and uncertainties include, among others: risks relating to the uncertainty of the projected operating and financial information with respect to Sunlight; risks related to Sunlight’s business and the timing of expected business milestones or results; global supply chain shortages, competition for skilled labor, and permitting delays; the effects of competition and regulatory risks, and the impacts of changes in legislation or regulations on Sunlight’s future business; the expiration, renewal, modification or replacement of the federal solar investment tax credit, rebates and other incentives; the effects of the COVID-19 pandemic on Sunlight’s business or future results; Sunlight’s ability to sustain profitability and to attract and retain its relationships with third parties, including Sunlight’s capital providers and solar contractors; the financial performance of Sunlight’s capital providers and contractors; the willingness of Sunlight’s capital providers to fund loans on terms desired by relevant markets and economically favorable to Sunlight; the impact of inflation and increased interest rates on Sunlight’s capital providers and the cost and availability of credit from our capital providers as well as on the demand for solar panel installation and home improvement; changes in the retail prices of traditional utility generated electricity; the availability of solar panels, batteries and other components and raw materials; and such other risks and uncertainties discussed in the “Risk Factors” section of Sunlight’s Form 10-K as filed with the
Non-GAAP Financial Measures
Some of the operating and financial information and data contained in this press release, such as Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Net Income and Adjusted Net Income per Share (Diluted) or Adjusted EPS (Diluted) have not been prepared in accordance with
|
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
dollars in thousands |
|
|
|
|
||||
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
68,913 |
|
|
$ |
91,882 |
|
Restricted cash |
|
|
1,581 |
|
|
|
2,018 |
|
Advances (net of allowance for credit losses of |
|
|
91,778 |
|
|
|
66,839 |
|
Financing receivables (net of allowance for credit losses of |
|
|
3,794 |
|
|
|
4,313 |
|
|
|
|
445,756 |
|
|
|
445,756 |
|
Intangible assets, net |
|
|
335,343 |
|
|
|
365,839 |
|
Property and equipment, net |
|
|
1,681 |
|
|
|
4,069 |
|
Other assets |
|
|
22,533 |
|
|
|
21,531 |
|
Total Assets |
|
$ |
971,379 |
|
|
$ |
1,002,247 |
|
|
|
|
|
|
||||
Liabilities and Equity |
|
|
|
|
||||
|
|
|
|
|
||||
Liabilities |
|
|
|
|
||||
Accounts payable and accrued expenses |
|
$ |
16,082 |
|
|
$ |
23,386 |
|
Funding commitments |
|
|
16,568 |
|
|
|
22,749 |
|
Debt |
|
|
20,613 |
|
|
|
20,613 |
|
Distributions payable |
|
|
1,521 |
|
|
|
— |
|
Deferred tax liabilities |
|
|
32,637 |
|
|
|
36,686 |
|
Warrants, at fair value |
|
|
10,281 |
|
|
|
19,007 |
|
Other liabilities |
|
|
10,009 |
|
|
|
843 |
|
Total liabilities |
|
$ |
107,711 |
|
|
$ |
123,284 |
|
|
|
|
|
|
||||
Stockholders' Equity |
|
|
|
|
||||
Class A Common Stock |
|
|
9 |
|
|
|
9 |
|
Additional paid-in capital |
|
|
765,284 |
|
|
|
764,366 |
|
Accumulated deficit |
|
|
(195,642 |
) |
|
|
(186,022 |
) |
Total Capital |
|
|
569,651 |
|
|
|
578,353 |
|
|
|
|
(15,638 |
) |
|
|
(15,535 |
) |
Total Stockholders' Equity |
|
|
554,013 |
|
|
|
562,818 |
|
Noncontrolling interests in consolidated subsidiaries |
|
|
309,655 |
|
|
|
316,145 |
|
Total Equity |
|
|
863,668 |
|
|
|
878,963 |
|
|
|
|
|
|
||||
Total Liabilities and Equity |
|
$ |
971,379 |
|
|
$ |
1,002,247 |
|
|
||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
dollars in thousands |
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue |
|
$ |
29,590 |
|
|
$ |
26,203 |
|
|
$ |
57,821 |
|
|
$ |
50,990 |
|
Costs and Expenses |
|
|
|
|
|
|
|
|
||||||||
Cost of revenues (exclusive of items shown separately below) |
|
|
5,773 |
|
|
|
5,337 |
|
|
|
11,002 |
|
|
|
10,191 |
|
Compensation and benefits |
|
|
14,138 |
|
|
|
8,108 |
|
|
|
27,263 |
|
|
|
16,120 |
|
Selling, general, and administrative |
|
|
4,546 |
|
|
|
1,204 |
|
|
|
11,018 |
|
|
|
3,120 |
|
Property and technology |
|
|
1,984 |
|
|
|
1,420 |
|
|
|
3,912 |
|
|
|
2,628 |
|
Depreciation and amortization |
|
|
9,694 |
|
|
|
801 |
|
|
|
32,141 |
|
|
|
1,610 |
|
Provision for losses |
|
|
4,042 |
|
|
|
436 |
|
|
|
4,680 |
|
|
|
1,172 |
|
Management fees to affiliate |
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
200 |
|
Total Costs and Expenses |
|
|
40,177 |
|
|
|
17,406 |
|
|
|
90,016 |
|
|
|
35,041 |
|
Operating income (loss) |
|
|
(10,587 |
) |
|
|
8,797 |
|
|
|
(32,195 |
) |
|
|
15,949 |
|
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense), Net |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
|
87 |
|
|
|
112 |
|
|
|
171 |
|
|
|
253 |
|
Interest expense |
|
|
(296 |
) |
|
|
(317 |
) |
|
|
(556 |
) |
|
|
(572 |
) |
Change in fair value of warrant liabilities |
|
|
13,610 |
|
|
|
(1,451 |
) |
|
|
8,726 |
|
|
|
(4,065 |
) |
Change in fair value of contract derivatives, net |
|
|
320 |
|
|
|
69 |
|
|
|
93 |
|
|
|
(787 |
) |
Realized gains on contract derivatives, net |
|
|
2,055 |
|
|
|
719 |
|
|
|
3,964 |
|
|
|
2,986 |
|
Other realized losses, net |
|
|
(176 |
) |
|
|
— |
|
|
|
(373 |
) |
|
|
— |
|
Other income (expense) |
|
|
(1,004 |
) |
|
|
209 |
|
|
|
(828 |
) |
|
|
621 |
|
Business combination expenses |
|
|
— |
|
|
|
(2,895 |
) |
|
|
— |
|
|
|
(6,482 |
) |
Total Other Income (Expense), Net |
|
|
14,596 |
|
|
|
(3,554 |
) |
|
|
11,197 |
|
|
|
(8,046 |
) |
Net Income (Loss) Before Income Taxes |
|
|
4,009 |
|
|
|
5,243 |
|
|
|
(20,998 |
) |
|
|
7,903 |
|
Income tax benefit (expense) |
|
|
1,650 |
|
|
|
— |
|
|
|
4,051 |
|
|
|
— |
|
Net Income (Loss) |
|
|
5,659 |
|
|
|
5,243 |
|
|
|
(16,947 |
) |
|
|
7,903 |
|
Noncontrolling interests in loss of consolidated subsidiaries |
|
|
(1,543 |
) |
|
|
— |
|
|
|
7,089 |
|
|
|
— |
|
Net Income (Loss) Attributable to Class A Shareholders |
|
$ |
4,116 |
|
|
$ |
5,243 |
|
|
$ |
(9,858 |
) |
|
$ |
7,903 |
|
|
|
|
|
|
|
|
|
|
||||||||
Loss Per Class A Share |
|
|
|
|
|
|
|
|
||||||||
Net loss per Class A share |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.05 |
|
|
|
|
$ |
(0.11 |
) |
|
|
||||
Diluted |
|
$ |
0.05 |
|
|
|
|
$ |
(0.11 |
) |
|
|
||||
Weighted average number of Class A shares outstanding |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
84,635,413 |
|
|
|
|
|
84,717,117 |
|
|
|
||||
Diluted |
|
|
84,668,201 |
|
|
|
|
|
131,433,095 |
|
|
|
|
||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
|
For the Six Months Ended |
||||||
dollars in thousands |
|
2022 |
|
2021 |
||||
Cash Flows From Operating Activities |
|
|
|
|
||||
Net income (loss) |
|
$ |
(16,947 |
) |
|
$ |
7,903 |
|
Depreciation and amortization |
|
|
32,141 |
|
|
|
1,698 |
|
Provision for losses |
|
|
4,680 |
|
|
|
1,172 |
|
Change in fair value of warrant liabilities |
|
|
(8,726 |
) |
|
|
4,065 |
|
Change in fair value of contract derivatives, net |
|
|
(93 |
) |
|
|
787 |
|
Other expense (income) |
|
|
828 |
|
|
|
(621 |
) |
Share-based payment arrangements |
|
|
8,652 |
|
|
|
18 |
|
Deferred income tax expense (benefit) |
|
|
(4,051 |
) |
|
|
— |
|
Increase (decrease) in operating capital: |
|
|
|
|
||||
Increase in advances |
|
|
(25,206 |
) |
|
|
(5,673 |
) |
Decrease (increase) in due from affiliates |
|
|
— |
|
|
|
(1,839 |
) |
Decrease (increase) in other assets |
|
|
2,927 |
|
|
|
2,190 |
|
Increase (decrease) in accounts payable and accrued expenses |
|
|
(4,077 |
) |
|
|
2,664 |
|
Increase (decrease) in funding commitments |
|
|
(6,182 |
) |
|
|
3,779 |
|
Increase (decrease) in due to affiliates |
|
|
— |
|
|
|
761 |
|
Increase (decrease) in other liabilities |
|
|
(1,946 |
) |
|
|
202 |
|
Net cash provided by (used in) operating activities |
|
|
(18,000 |
) |
|
|
17,106 |
|
|
|
|
|
|
||||
Cash Flows From Investing Activities |
|
|
|
|
||||
Return of investments in loan pool participation and loan principal repayments |
|
|
586 |
|
|
|
832 |
|
Payments to acquire loans and participations in loan pools |
|
|
(1,438 |
) |
|
|
(1,170 |
) |
Payments to acquire property and equipment |
|
|
(1,265 |
) |
|
|
(1,066 |
) |
Net cash used in investing activities |
|
|
(2,117 |
) |
|
|
(1,404 |
) |
|
|
|
|
|
||||
Cash Flows From Financing Activities |
|
|
|
|
||||
Proceeds from borrowings under line of credit |
|
|
— |
|
|
|
20,746 |
|
Repayments of borrowings under line of credit |
|
|
— |
|
|
|
(14,758 |
) |
Payments for share-based payment tax withholding |
|
|
(103 |
) |
|
|
— |
|
Payments for repurchase of redeemable convertible preferred stock |
|
|
(2,004 |
) |
|
|
— |
|
Payment of capital distributions |
|
|
(1,182 |
) |
|
|
(7,522 |
) |
Payment of debt issuance costs |
|
|
— |
|
|
|
(491 |
) |
Net cash provided by (used in) financing activities |
|
|
(3,289 |
) |
|
|
(2,025 |
) |
|
|
|
|
|
||||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
|
|
(23,406 |
) |
|
|
13,677 |
|
|
|
|
|
|
||||
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period |
|
|
93,900 |
|
|
|
52,705 |
|
|
|
|
|
|
||||
Cash, Cash Equivalents, and Restricted Cash, End of Period |
|
$ |
70,494 |
|
|
$ |
66,382 |
|
RECONCILIATION OF GAAP MEASURES TO ADJUSTED FINANCIAL MEASURES |
||||||||||||||||
ADJUSTED EBITDA AND FREE CASH FLOW RECONCILIATIONS |
||||||||||||||||
|
|
Three Months
|
|
Six Months
|
||||||||||||
dollars in thousands |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Revenue |
|
$ |
29,590 |
|
|
$ |
26,203 |
|
|
$ |
57,821 |
|
|
$ |
50,990 |
|
(+) Realized gain on contract derivatives, net |
|
|
2,055 |
|
|
|
719 |
|
|
|
3,964 |
|
|
|
2,986 |
|
Total Revenue |
|
$ |
31,645 |
|
|
$ |
26,922 |
|
|
$ |
61,785 |
|
|
$ |
53,976 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months
|
|
For the Six Months
|
||||||||||||
dollars in thousands |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net Income (Loss) |
|
$ |
5,659 |
|
|
$ |
5,243 |
|
|
$ |
(16,947 |
) |
|
$ |
7,903 |
|
Amortization of Business Combination intangibles |
|
|
9,385 |
|
|
|
— |
|
|
|
31,584 |
|
|
|
— |
|
Non-cash change in financial instruments |
|
|
(12,926 |
) |
|
|
1,173 |
|
|
|
(7,991 |
) |
|
|
4,232 |
|
Expenses from the Business Combination and Other |
|
|
141 |
|
|
|
2,895 |
|
|
|
490 |
|
|
|
6,482 |
|
Adjusted Net Income (Loss) |
|
$ |
2,259 |
|
|
$ |
9,311 |
|
|
$ |
7,136 |
|
|
$ |
18,617 |
|
Depreciation and amortization |
|
|
309 |
|
|
$ |
801 |
|
|
|
557 |
|
|
$ |
1,610 |
|
Interest expense |
|
|
296 |
|
|
|
317 |
|
|
|
556 |
|
|
|
572 |
|
Income tax expense (benefit) |
|
|
(1,650 |
) |
|
|
— |
|
|
|
(4,051 |
) |
|
|
— |
|
Equity-based compensation |
|
|
4,792 |
|
|
|
7 |
|
|
|
8,652 |
|
|
|
18 |
|
Fees paid to brokers |
|
|
780 |
|
|
|
1,059 |
|
|
|
1,745 |
|
|
|
2,169 |
|
Adjusted EBITDA |
|
$ |
6,786 |
|
|
$ |
11,495 |
|
|
$ |
14,595 |
|
|
$ |
22,986 |
|
Interest expense |
|
$ |
(296 |
) |
|
$ |
(317 |
) |
|
$ |
(556 |
) |
|
$ |
(572 |
) |
Fees paid to brokers |
|
|
(780 |
) |
|
|
(1,059 |
) |
|
|
(1,745 |
) |
|
|
(2,169 |
) |
Expenses from the Business Combination and Other |
|
|
(141 |
) |
|
|
(2,895 |
) |
|
|
(490 |
) |
|
|
(6,482 |
) |
Provision for losses |
|
|
4,042 |
|
|
|
436 |
|
|
|
4,680 |
|
|
|
1,172 |
|
Changes in advances, net of funding commitments |
|
|
(5,769 |
) |
|
|
(2,654 |
) |
|
|
(31,388 |
) |
|
|
(1,799 |
) |
Changes in operating capital and other |
|
|
(712 |
) |
|
|
1,600 |
|
|
|
(3,096 |
) |
|
|
3,970 |
|
Net Cash Provided by (Used in) Operating Activities |
|
$ |
3,130 |
|
|
$ |
6,606 |
|
|
$ |
(18,000 |
) |
|
$ |
17,106 |
|
Capital expenditures |
|
$ |
(820 |
) |
|
$ |
(357 |
) |
|
$ |
(1,665 |
) |
|
$ |
(1,066 |
) |
Changes in advances, net of funding commitments |
|
|
5,769 |
|
|
|
2,654 |
|
|
|
31,388 |
|
|
|
1,799 |
|
Changes in restricted cash |
|
|
(774 |
) |
|
|
915 |
|
|
|
(438 |
) |
|
|
(125 |
) |
Payments of Business Combination costs |
|
|
— |
|
|
|
2,012 |
|
|
|
— |
|
|
|
6,482 |
|
Other changes in working capital |
|
|
1,609 |
|
|
|
(566 |
) |
|
|
4,082 |
|
|
|
(199 |
) |
Free Cash Flow |
|
$ |
8,914 |
|
|
$ |
11,264 |
|
|
$ |
15,367 |
|
|
$ |
23,997 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income (Loss) |
|
$ |
2,259 |
|
|
$ |
9,311 |
|
|
$ |
7,136 |
|
|
$ |
18,617 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income (Loss) per Class A Share, Diluted |
|
$ |
0.01 |
|
|
|
|
$ |
0.04 |
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220815005646/en/
Investor Relations
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FAQ
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