SUNL Spartan Acquisition Corp II

- 2021 Funded Loan Volume up 72% to $2.5 Billion - - 2021 Total Revenue up 73% to $120.6 Million - - GAAP Net Loss in 2021 of $(241.0) Million - - 2021 Adjusted EBITDA up 121% to $52.9 Million -

Sunlight Financial Holdings Inc. (“Sunlight Financial”, "Sunlight" or the “Company”) (NYSE: SUNL), a premier, technology-enabled point-of-sale financing company, today provided financial results for the fourth quarter and full year ended December 31, 2021.

“2021 was a momentous year for Sunlight Financial as we delivered outstanding year-over-year growth," said Matt Potere, Chief Executive Officer of Sunlight. "Despite various challenges in the residential solar space and broader market, we executed on our growth plan, adding 433 new contractors, facilitating loans for 70,938 borrowers, and growing average solar loan balances to $41,983 by the end of the year. We also leveraged our strong capital provider relationships to improve our platform fee margins, leading to significant improvement in the second half of the year and resulting in a Total Platform Fee Percentage of 5.3% in the fourth quarter of 2021."

"In 2022, we will build on our success by focusing on the pillars that make Sunlight a leading point-of-sale finance platform," added Potere. "Sunlight's industry-leading credit quality earns the trust of capital providers, increasing our access to attractive and low-cost capital, ultimately enabling us to offer attractive pricing and diverse products to our contractors. This virtuous cycle drives our scalable, capital-light, cash-generative business model and positions Sunlight for continued success this year and for years to come."

Full-Year 2021 Key Financial Metrics

• Total Funded Loans of $2.5 billion, up 72% from the prior year
• Total Revenue of $120.6 million, a 73% increase from the prior year
• GAAP Net Loss of $(241.0) million, relative to GAAP Net Income of $10.6 million in the prior year, driven by non-cash business combination-related accounting and a material write-down in the fourth quarter of business combination-related goodwill
• Adjusted EBITDA of $52.9 million, a 121% increase from $24.0 million in the prior year
• Adjusted EBITDA Margin of 43.9%, up materially from 34.4% in the prior year
• Total Platform Fee Percentage of 4.4% and Solar Direct Channel Platform Fee Margin of 5.1% compared with 4.7% and 5.3%, respectively, in the prior year
• Free Cash Flow of $44.3 million and a 84% Adjusted EBITDA to Free Cash Flow conversion rate, relative to Free Cash Flow of $9.0 million and a 37.6% conversion rate in the prior year
• Cash and cash equivalents at December 31, 2021, of $91.9 million, relative to $49.6 million at December 31, 2020

Fourth Quarter 2021 Key Financial Metrics

• Total Funded Loans of $638 million, compared with $636 million in the prior-year period
• Total Revenue of $36.6 million, a 27% increase from the prior-year period
• GAAP Net Loss of $(226.7) million, relative to GAAP Net Income of $7.3 million in the prior-year period, driven by non-cash business combination-related accounting and a material write-down of business combination-related goodwill in the fourth quarter of 2021
• Adjusted EBITDA of $18.5 million, an 18% increase from $15.7 million in the prior-year period
• Adjusted EBITDA Margin of 50.6% compared with 54.4% from the prior-year period
• Total Platform Fee Margin of 5.3% (up from 4.8% in the prior-year period) and Solar Direct Channel Platform Fee Margin of 5.7% (up from 4.9% in the prior-year period)

A reconciliation between historical GAAP and non-GAAP information is provided in the tables below.

Full-Year 2022 Outlook

The company is initiating 2022 guidance ranges for the following key metrics:

• Full-Year Funded Loan Volume of $2.9 - $3.1 billion
• First Quarter 2022 Funded Loan Volume between $580 and $590 million
• Full-Year Total Revenue of $145 - $155 million
• Full-Year Adjusted EBITDA of $55 - $60 million

The company does not intend to regularly provide quarterly funded loan volume guidance but considers it useful for the first quarter of 2022 given the timing of this release and the impacts of normal seasonality, as well as the Omicron variant, on first quarter 2022 funded volume.

Conference Call Information

Sunlight will host a conference call and webcast to discuss its fourth quarter and full year 2021 financial and operational results and business outlook at 5:00 PM ET today, March 29, 2022. The conference call will be webcast live from the Company's investor relations website at ir.sunlightfinancial.com. A replay will be available on the investor relations website following the call.

Earnings Presentation

A supplemental earnings presentation is available at ir.sunlightfinancial.com. Additional information is available in the Form 10-K, which Sunlight filed with the SEC on March 29, 2022.

About Sunlight Financial

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, as amended. Forward-looking statements may generally be identified by the use of words such as “could,” “should,” “would,” “will,” “may,” “believe,” “anticipate,” “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; 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 Securities and Exchange Commission (“SEC”) on March 29, 2022, and other documents of Sunlight filed, or to be filed, with the SEC. Should one or more of the risks or uncertainties described herein occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Sunlight’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Non-GAAP Financial Measures

Some of the operating and financial information and data contained in this press release, such as Total Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Sunlight believes these non-GAAP measures of financial and business results provide useful information to management and the reader regarding certain financial and business trends relating to Sunlight’s financial condition and results of operations. Sunlight further believes that the use of these non-GAAP financial and business measures provides an additional tool for use in evaluating projected operating results and trends and in comparing Sunlight’s financial and operating measures with other similar companies, many of which present similar non-GAAP financial and operating measures to their investors and potential investors. While Adjusted EBITDA, in particular, is relevant and widely used across industries and in the industries in which Sunlight participates, they may contain or exclude adjustments, exclusions and one-time items that third parties may or may not adjust for in connection with such measure, and such measure should not be considered an alternative to any GAAP measures in evaluating the profitability of an investment in, or whether to invest in or consummate a transaction involving, Sunlight. The principal limitation of the Adjusted EBITDA non-GAAP financial measure is that it excludes significant items of income and expense that are required by GAAP to be recorded in Sunlight’s financial statements. In addition, it is subject to inherent limitations as it reflects the exercise of judgment by Sunlight’s management about which items of income and expense are excluded or included in determining this non-GAAP financial measure. The Adjusted EBITDA non-GAAP financial measure and other metrics used herein, including Adjusted EBITDA Margin, should not be relied on or considered an alternative to any GAAP measures or other measures related to the liquidity, financial condition or financial results of Sunlight. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this release.

SUNLIGHT FINANCIAL HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

 

dollars in thousands

 

December 31, 2021

 

December 31, 2020

 

 

 

 

Assets

 

 

 

 

Cash and cash equivalents

 

$

91,882

 

 

$

49,583

 

Restricted cash

 

 

2,018

 

 

 

3,122

 

Advances

 

 

66,839

 

 

 

35,280

 

Financing receivables

 

 

4,313

 

 

 

5,333

 

Goodwill

 

 

445,756

 

 

 

—

 

Intangible assets, net

 

 

365,839

 

 

 

4,533

 

Property and equipment, net

 

 

4,069

 

 

 

1,192

 

Other assets

 

 

21,531

 

 

 

7,030

 

Total Assets

 

$

1,002,247

 

 

$

106,073

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

Accounts payable and accrued expenses

 

$

23,386

 

 

$

15,782

 

Funding commitments

 

 

22,749

 

 

 

18,386

 

Debt

 

 

20,613

 

 

 

14,625

 

Distributions payable

 

 

—

 

 

 

7,522

 

Deferred tax liabilities

 

 

36,686

 

 

 

—

 

Warrants, at fair value

 

 

19,007

 

 

 

5,643

 

Other liabilities

 

 

843

 

 

 

1,502

 

Total liabilities

 

$

123,284

 

 

$

63,460

 

 

 

 

 

 

Temporary Equity

 

 

—

 

 

 

664,516

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

Other ownership interests' capital (predecessor)

 

 

—

 

 

 

1,439

 

Class A Common Stock

 

 

9

 

 

 

—

 

Additional paid-in capital

 

 

764,366

 

 

 

—

 

Accumulated deficit

 

 

(186,022

)

 

 

(623,342

)

Total Capital

 

 

578,353

 

 

 

(621,903

)

Treasury stock, at cost

 

 

(15,535

)

 

 

—

 

Total Stockholders' Equity

 

 

562,818

 

 

 

(621,903

)

Noncontrolling interests in consolidated subsidiaries

 

 

316,145

 

 

 

—

 

Total Equity

 

 

878,963

 

 

 

(621,903

)

 

 

 

 

 

Total Liabilities and Equity

 

$

1,002,247

 

 

$

106,073

 

SUNLIGHT FINANCIAL HOLDINGS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

dollars in thousands

 

For the Three Months Ended December 31,

 

For the Year Ended December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue

 

$

35,154

 

 

$

29,045

 

 

$

114,738

 

 

$

69,564

 

Costs and Expenses

 

 

 

 

 

 

 

 

—

 

Cost of revenues (exclusive of items shown separately below)

 

 

5,032

 

 

 

4,996

 

 

 

20,429

 

 

 

13,711

 

Compensation and benefits

 

 

12,214

 

 

 

6,703

 

 

 

62,158

 

 

 

26,174

 

Selling, general, and administrative

 

 

4,089

 

 

 

1,079

 

 

 

10,869

 

 

 

3,806

 

Property and technology

 

 

1,586

 

 

 

1,150

 

 

 

5,878

 

 

 

4,304

 

Depreciation and amortization

 

 

22,848

 

 

 

801

 

 

 

45,077

 

 

 

3,231

 

Goodwill impairment

 

 

224,701

 

 

 

—

 

 

 

224,701

 

 

 

—

 

Provision for losses

 

 

963

 

 

 

562

 

 

 

2,389

 

 

 

1,350

 

Management fees to affiliate

 

 

—

 

 

 

100

 

 

 

204

 

 

 

400

 

Total Costs and Expenses

 

 

271,433

 

 

 

15,391

 

 

 

371,705

 

 

 

52,976

 

Operating income (loss)

 

 

(236,279

)

 

 

13,654

 

 

 

(256,967

)

 

 

16,588

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

 

 

 

 

 

 

 

—

 

Interest income

 

 

72

 

 

 

150

 

 

 

411

 

 

 

520

 

Interest expense

 

 

(263

)

 

 

(237

)

 

 

(1,158

)

 

 

(829

)

Change in fair value of warrant liabilities

 

 

12,467

 

 

 

(5,444

)

 

 

17,079

 

 

 

(5,510

)

Change in fair value of contract derivatives, net

 

 

149

 

 

 

589

 

 

 

(24

)

 

 

1,435

 

Realized gains on contract derivatives, net

 

 

1,489

 

 

 

(188

)

 

 

5,858

 

 

 

103

 

Other realized losses, net

 

 

—

 

 

 

(171

)

 

 

—

 

 

 

(171

)

Other income (expense)

 

 

(121

)

 

 

(220

)

 

 

435

 

 

 

(634

)

Business combination expenses

 

 

(1,987

)

 

 

(880

)

 

 

(10,091

)

 

 

(878

)

Total Other Income (Expense), Net

 

 

11,806

 

 

 

(6,401

)

 

 

12,510

 

 

 

(5,964

)

Net Income (Loss) Before Income Taxes

 

 

(224,473

)

 

 

7,253

 

 

 

(244,457

)

 

 

10,624

 

Income tax benefit (expense)

 

 

(2,180

)

 

NA

 

 

3,504

 

 

 

—

 

Net Income (Loss)

 

 

(226,653

)

 

 

7,253

 

 

 

(240,953

)

 

 

10,624

 

Noncontrolling interests in loss of consolidated subsidiaries

 

 

78,511

 

 

 

—

 

 

 

87,528

 

 

 

—

 

Net Income (Loss) Attributable to Class A Shareholders

 

$

(148,142

)

 

$

7,253

 

 

$

(153,425

)

 

$

10,624

 

 

 

 

 

 

 

 

 

 

Loss Per Class A Share

 

 

 

 

 

 

 

 

Net loss per Class A share

 

 

 

 

 

 

 

 

Basic

 

$

(1.75

)

 

 

 

$

(1.81

)

 

 

Diluted

 

$

(1.13

)

 

 

 

$

(1.17

)

 

 

Weighted average number of Class A shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

84,824,109

 

 

 

 

 

84,824,109

 

 

 

Diluted

 

 

131,146,326

 

 

 

 

 

131,146,326

 

 

 

SUNLIGHT FINANCIAL HOLDINGS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

Cash Flows From Operating Activities

 

 

 

 

Net income (loss)

 

$

(240,953

)

 

$

10,624

 

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

 

45,171

 

 

 

3,338

 

Goodwill impairment

 

 

224,701

 

 

 

—

 

Provision for losses

 

 

2,389

 

 

 

1,350

 

Change in fair value of warrant liabilities

 

 

(17,079

)

 

 

5,510

 

Change in fair value of contract derivatives, net

 

 

24

 

 

 

(1,435

)

Other expense (income)

 

 

(435

)

 

 

634

 

Share-based payment arrangements

 

 

29,664

 

 

 

126

 

Deferred income tax expense (benefit)

 

 

(5,524

)

 

 

—

 

Increase (decrease) in operating capital:

 

 

 

 

Increase in advances

 

 

(31,533

)

 

 

(17,877

)

Decrease (increase) in due from affiliates

 

 

—

 

 

 

—

 

Decrease (increase) in other assets

 

 

(14,238

)

 

 

(3,000

)

Increase (decrease) in accounts payable and accrued expenses

 

 

(1,149

)

 

 

6,918

 

Increase (decrease) in funding commitments

 

 

4,363

 

 

 

(1,123

)

Increase (decrease) in other liabilities

 

 

390

 

 

 

(40

)

Net cash provided by (used in) operating activities

 

 

(4,209

)

 

 

5,025

 

 

 

 

 

 

Cash Flows From Investing Activities

 

 

 

 

Return of investments in loan pool participation and loan principal repayments

 

 

1,542

 

 

 

1,316

 

Payments to acquire loans and participations in loan pools

 

 

(1,886

)

 

 

(2,839

)

Payments to acquire property and equipment

 

 

(4,502

)

 

 

(3,280

)

Payments to acquire Sunlight Financial LLC, net of cash acquired

 

 

(304,570

)

 

 

—

 

Net cash used in investing activities

 

 

(309,416

)

 

 

(4,803

)

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

Proceeds from borrowings under line of credit

 

 

20,746

 

 

 

8,713

 

Repayments of borrowings under line of credit

 

 

(14,758

)

 

 

(5,899

)

Proceeds from issuance of private placement

 

 

250,000

 

 

 

—

 

Payments of stock issuance costs

 

 

(19,618

)

 

 

—

 

Payments for share-based payment tax withholding

 

 

(26,424

)

 

 

—

 

Payment of capital distributions

 

 

(7,522

)

 

 

(1,987

)

Payment of debt issuance costs

 

 

(491

)

 

 

—

 

Net cash provided by (used in) financing activities

 

 

201,933

 

 

 

827

 

 

 

 

 

 

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

 

 

(111,692

)

 

 

1,049

 

 

 

 

 

 

Cash, Cash Equivalents, and Restricted Cash, Beginning of Period

 

 

52,705

 

 

 

51,656

 

 

 

 

 

 

Cash, Cash Equivalents, and Restricted Cash, End of Period

 

$

93,900

 

 

$

52,705

 

RECONCILIATION OF GAAP MEASURES TO ADJUSTED FINANCIAL MEASURES

 

TOTAL REVENUE, ADJUSTED EBITDA AND FREE CASH FLOW RECONCILIATIONS

 

 

 

For the Three Months Ended December 31,

 

For the Year Ended December 31,

dollars in thousands

 

2021

 

2020

 

2021

 

2020

GAAP Revenue

 

$

35,154

 

$

29,045

 

 

$

114,738

 

$

69,564

(+) Realized gain on contract derivatives, net

 

 

1,489

 

 

(188

)

 

 

5,858

 

 

103

Total Revenue

 

$

36,643

 

$

28,857

 

 

$

120,596

 

$

69,667

 

 

 

For the Three Months Ended December 31,

 

For the Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net Income (Loss)

 

$

(226,653

)

 

$

7,253

 

 

$

(240,953

)

 

$

10,624

 

Amortization of Business Combination intangibles

 

 

22,693

 

 

 

—

 

 

 

43,152

 

 

 

—

 

Accelerated postcombination compensation expense

 

 

—

 

 

 

—

 

 

 

20,979

 

 

 

—

 

Non-cash change in financial instruments

 

 

(12,471

)

 

 

5,075

 

 

 

(17,492

)

 

 

4,709

 

Intangible impairment

 

 

224,701

 

 

 

—

 

 

 

224,701

 

 

 

—

 

Expenses from the Business Combination

 

 

1,987

 

 

 

880

 

 

 

10,091

 

 

 

878

 

Adjusted Net Income (Loss)

 

$

10,257

 

 

$

13,208

 

 

$

40,478

 

 

$

16,211

 

Depreciation and amortization

 

$

155

 

 

$

801

 

 

 

1,925

 

 

$

3,231

 

Interest expense

 

 

263

 

 

 

237

 

 

 

1,158

 

 

 

829

 

Income tax expense (benefit)

 

 

2,180

 

 

 

—

 

 

 

(3,504

)

 

 

—

 

Equity-based compensation

 

 

4,825

 

 

 

14

 

 

 

8,685

 

 

 

126

 

Fees paid to brokers

 

 

867

 

 

 

1,434

 

 

 

4,162

 

 

 

3,561

 

Adjusted EBITDA

 

$

18,547

 

 

$

15,694

 

 

$

52,904

 

 

$

23,958

 

Interest expense

 

$

(263

)

 

$

(237

)

 

$

(1,158

)

 

$

(829

)

Income tax expense (benefit)

 

 

(2,180

)

 

 

—

 

 

 

3,504

 

 

 

—

 

Fees paid to brokers

 

 

(867

)

 

 

(1,434

)

 

 

(4,162

)

 

 

(3,561

)

Expenses from the Business Combination

 

 

(1,987

)

 

 

(880

)

 

 

(10,091

)

 

 

(878

)

Provision for losses

 

 

963

 

 

 

562

 

 

 

2,389

 

 

 

1,350

 

Changes in operating capital and other

 

 

15,143

 

 

 

3,667

 

 

 

(47,595

)

 

 

(15,015

)

Net Cash Provided by (Used in) Operating Activities

 

$

29,356

 

 

$

17,372

 

 

$

(4,209

)

 

$

5,025

 

Capital expenditures

 

$

(1,313

)

 

$

(747

) 

 

$

(3,168

)

 

$

(3,280

)

Changes in advances, net of funding commitments

 

 

(6,232

)

 

 

7,552

 

 

28,969

 

 

 

19,000

 

Changes in restricted cash

 

 

241

 

 

 

(511

)

 

 

1,718

 

 

 

(1,193

)

Payments of Business Combination costs

 

 

802

 

 

 

—

 

 

 

8,319

 

 

 

—

 

Other changes in working capital

 

 

(7,328

)

 

 

(11,089

)

 

 

12,720

 

 

 

(10,552

)

Free Cash Flow

 

$

15,526

 

 

$

12,577

 

 

$

44,349

 

 

$

9,000

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income (Loss)

 

$

10,257

 

 

$

13,208

 

 

$

40,478

 

 

$

16,211

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income (Loss) per Class A Share, Diluted

 

$

0.08

 

 

 

 

$

0.31

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220329005980/en/

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