- 2Q22 Record-High Funded Loan
Volume of $716 Million - - 2Q22 Total Revenue up 18% to $31.6
Million - - 2Q22 GAAP Net Income up 8% to $5.7 Million - - 2Q22
Adjusted EBITDA of $6.8 Million - - 2Q22 Adjusted Net Income of
$2.3 Million - - 1,472,068 Class A Shares Repurchased as of August
11, 2022 -
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 second quarter 2022.
“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 Matt Potere,
Chief Executive Officer of Sunlight. "This performance continues to
demonstrate the value of our profitable, capital-light,
cash-generative business model."
"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 $716 million, compared with $666 million
in the prior-year period
- Total Revenue of $31.6 million, an 18% increase from the
prior-year period
- GAAP Net Income of $5.7 million, an 8% increase from the
prior-year period
- Adjusted EBITDA of $6.8 million, relative to $11.5 million in
the prior-year period, primarily driven by incremental public
company costs and the delayed sale of funded volume to 2H22
- Adjusted Net Income of $2.3 million or $0.01 per fully-diluted
share, relative to Adjusted Net Income of $9.3 million in the
prior-year period
- Total Platform Fee Margin of 4.7% (up from 4.0% in the
prior-year period) and Solar Direct Channel Platform Fee Margin of
5.4% (up from 4.3% in the prior-year period)
A reconciliation between historical GAAP and non-GAAP
information is provided in the tables below.
Share Repurchase Program
On May 16, 2022, Sunlight’s Board of Directors authorized a
share repurchase program pursuant to which Sunlight may repurchase
up to $50 million of Sunlight’s Class A common stock over an
18-month period from the date of authorization. As of August 11,
2022, Sunlight has repurchased a total of 1,472,068 shares for a
total of $5.6 million, funded through cash on hand and cash from
operations. Sunlight will continue to repurchase shares pursuant to
this plan in a programmatic manner, ensuring it persists as an
efficient use of capital to drive shareholder return.
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 - $3.0 billion (from $2.9
- $3.1 billion)
- Full-Year Total Revenue of $130 - $140 million (from $145 -
$155 million)
- Full-Year Adjusted EBITDA of $35 - $40 million (from $55 - $60
million)
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 5:30 PM ET today, August 15, 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-Q, which Sunlight filed with the SEC on August 15,
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 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 Securities and Exchange
Commission (“SEC”) on March 29, 2022, Form 10-Q as filed with the
SEC on May 16, 2022 and Form 10-Q as filed with the SEC on August
15, 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 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 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 non-GAAP
metrics used herein, including Adjusted EBITDA Margin, Free Cash
Flow, Adjusted Net Income and Adjusted Net Income per Share
(Diluted) or Adjusted EPS (Diluted) 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
June 30, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
68,913
$
91,882
Restricted cash
1,581
2,018
Advances (net of allowance for credit
losses of $3,487 and $238)
91,778
66,839
Financing receivables (net of allowance
for credit losses of $146 and $148)
3,794
4,313
Goodwill
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
Treasury stock, at cost
(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
SUNLIGHT FINANCIAL HOLDINGS
INC.
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
dollars in thousands
Three Months Ended June
30,
Six Months Ended June
30,
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
SUNLIGHT FINANCIAL HOLDINGS
INC.
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Six Months Ended June
30,
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 Ended June
30,
Six Months Ended June
30,
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 Ended June
30,
For the Six Months Ended June
30,
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 Lucia Dempsey investors@sunlightfinancial.com
888.315.0822 Public Relations media@sunlightfinancial.com
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