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

That flips when you get the second acquisition in place where at or above minimum efficient scale now and company will generate cash on 12-month basis going forward. Eric, I don’t know anything more you want to add just in terms of the timing within 2023.

Eric Ingvaldson: Yes. I think we stayed in the earnings release that we anticipate kind of crossing the threshold in the latter half of the year, and that is consistent with our seasonality. It’s typically stronger third and fourth quarters. So that would be the additional color I would give.

Chip Moore: Yes. Okay. No, that makes sense. And then on the installation backlog, I think he called out the $30 million and $17 million for SUNation in Hawaii that year end, I assume. And how is that trended and how does that compare with what they’ve seen in the past? When we think about visibility on that $80 million plus and what you need to book and burn?

Kyle Udseth: Good question. I don’t know offhand, but I think it’s higher. Do you have that Eric or not? Like do we know what the backlog was at the end of 2021?

Eric Ingvaldson: We do not have that information just due to all the acquisitions, but

Kyle Udseth: I feel like it’s up, right? I mean, I think at both businesses €“ and sorry, we can verify this after, but I think at both businesses they had really great install years, but I think the top of funnel was even higher. So while we were pushing through strong growth in revenues and kind of record revenues or recent record revenues and installs, I think the backlog was growing even at the same time because sale, like kilowatts sold for the year were coming in even higher than kilowatts installed. There’s I guess pricing stuff in there and battery attach rate stuff in there, but I think the backlog is even larger year-over-year. And I think that we’ve done some of that analysis before internally and looked at it, I don’t have it at my fingertips, but it’s one of the things that gives us confidence in giving the guidance is that so much of the revenue is already pre-sold and then at the point where people don’t really cancel anymore.

And I think it’s a dynamic that is different in our businesses than some other residential solar businesses. Our cancellation rates are single-digit percentages, whereas I know there are somewhere it’s like 50% plus, right? And I think a lot of that just comes down to when you ask the customer to sign something and what you say that is. And I think that the revenue out of that backlog, when we give these numbers, it’s kind of an expected value weighted average of what we based on historical cancellation rates, truly believe is going to install.

Chip Moore: Yes. That’s very helpful, Kyle. Thanks. And maybe another one on expansion, you talked about opening the Florida office, I think you were leveraging some of the SUNation capabilities. Just maybe talk about there, what kind of investment you need to go after that market and how you think about attacking it?

Kyle Udseth: Yes. Hey, I’m really excited about that one because a lot of our sales team down there is a college hockey team, which as a Minnesotan is pretty exciting for Eric. Moore, I think it’s a few SUNation related and kind of vaccination employees. So it’s a couple who had done marketing, lead gen and selling in New York and Long Island, and one or two of them I think went down to college in Florida and recruited a couple of their teammates and realized they could replicate that model and effectively like .

Chip Moore: Perfect. And that segue to maybe my last question, I’ll take the rest offline. The acquisition funnel, you talked a bit about it being pretty healthy. And then just the balance sheet, that the $5 million obligation and obviously getting that dry powder to make some deals, what are you pursuing and how are those negotiations progressing?