Pineapple Energy Inc. (NASDAQ:PEGY) Q4 2022 Earnings Call Transcript

Eric Ingvaldson: Yes. I would just add that you see that we’re reporting discontinued operations for two business segments that our legacy CSI, as we divest of those and continue to integrate SUNation, we certainly believe there are €“ there’s operating leverage to be attained there. I also would note that in Hawaii, due to some equipment failures, we did have a lot of additional truck roles and service calls that aid into our EBITDA margins that we do not anticipate occurring in 2023. So yes, can’t comment specifically, but certainly do anticipate gaining additional operating leverage as we continue throughout the year.

Donovan Schafer: Okay. And I don’t know to kind of €“ maybe I’m not trying to back you guys into a corner or pick on you here, but I guess €“ so just as logic behind it, does it make sense €“ in the fourth quarter you had the $6.4 million in SG&A, which is a partial quarter for SUNation. So does it make sense to think of that as something that would actually be €“ more likely to be something that would be increasing? Or does that include enough kind of one-off or unusual things in SG&A where we would actually think SG&A would be relatively lower? Just kind of going north of that or down €“ headed upward or headed downward just near-term?

Eric Ingvaldson: I think it’ll really vary depending on the quarter.

Donovan Schafer: Okay.

Eric Ingvaldson: As a percentage of revenue though, we do feel that there is operating leverage to be attained.

Donovan Schafer: Got it. Okay. That is helpful.

Kyle Udseth: Yes. There’s kind of corporate overhead that has some seasonality to it, but it’s kind of the fixed cost, and then there’s the pieces of the operating businesses that flex more with revenue and the work being done. But yes, I think that the topline guidance is healthy, company is performing well there, gross margin strong. I think if anything putting more of an eye to that going forward and just making sure we preserve that healthy margin into the future and then certainly some opportunity to improve on SG&A.

Donovan Schafer: Okay. And then I want to talk

Kyle Udseth: Okay. Donovan, I think €“ sorry, I think we probably go to jump. I think I see Chip on the screen. I might be misreading this thing, but maybe if we could go to the queue and I’ll try to cut you off, but we’re around €“ after two, if you don’t get your questions.

Donovan Schafer: Absolutely. I’ll take the rest of my questions offline. Thank you, guys.

Kyle Udseth: Yes. Thanks.

Eric Ingvaldson: Thanks, Donovan.

Operator: Our next question comes from the line of Chip Moore from EF Hutton. Please proceed.

Chip Moore: Good morning. Hey, Kyle and Eric. Thanks for taking the question. Welcome to your first call. Just a couple from me to follow-up on Donovans. I guess first around guidance, anyway to help us think about line of sight on that path to cash breakeven, particularly, I guess we touched on seasonality, but maybe around margins given some of the moving pieces with battery bonus program and permitting in Hawaii you talked about?

Kyle Udseth: I guess what I would say, and then I’ll defer to Eric too on maybe anything more we can provide on the timing of it like in the year. But effectively my view is once we closed on the SUNation acquisition November 9, any 12-month period going forward from that point, the company is going to be positive cash flow from operations. But within a given year, there’s seasonality there. And on which specific day of the year it flips from positive to negative or how much cash did you collect that day versus invoices going out. These eyes a little bit of wiggle room. But I think the key thing and the trend is that any 12-month period you look at going forward, SUNation got us to €“ we were subscale before in a sense where the operating cash flow wasn’t covering the corporate overhead.