iSun, Inc.

Thank you, operator. Good afternoon, everyone and welcome to The Peck Company Holding’s yearend 2019 earnings conference call.

By now, everyone should have access to the earnings press release which was issued earlier today after the market closed at 04:00 'O Clock Eastern Time. This call is also being webcast and is available for replay for replay.

In our remarks today, we will include statements that are considered forward-looking within the meaning of the securities laws including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers, market and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions.

Forward-looking statements are based on management's current knowledge, expectations as of today are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the most recent Form 10-Q, Form 10-K and other reports filed with the SEC.

The company undertakes no obligation to update any forward-looking statements. On this call we will refer to some non-GAAP measures that when used in combination with GAAP results provide us with additional analytical tools to understand our operations.

We have provided reconciliations to the most directly comparable GAAP financial measures in our earnings press release which will also be posted on the Investor section of our website. And with that, I will now hand the call over to The Peck Company Holding's Chief Executive Officer, Jeffrey Peck.

Thank you, Stephen and good afternoon, everybody and we appreciate you joining us on today's call. I will provide a recap of highlights for 2019, followed by our CFO, John Sullivan to give a summary of our 2019 financials.

Then our Head of Corporate and Business Development, Michael d'Amato will provide insight into some of our strategic initiatives and I will end with our outlook for continued growth and profitability for 2020 and beyond, all with our plans to increase our shareholder awareness and visibility. We'll then open the call for live question and answers.

2019 was a tremendous year for our business as demonstrated by our strong 77% revenue growth and continued profitability. We continue to retain our business from referrals, customers and partners and thus spent very little money on sales and marketing efforts.

Our company was awarded a very high percentage of the product we reviewed for construction and in 2019, we completed a total of 25 solar projects aggregating more than 35 MW ranging from a 44.4 KWDC roof-mounted solar array to a 7.1 MW ground-mounted solar array. We also commenced an additional growth strategy of acquiring Solar Arrays to resell or operate with recurring revenue, successfully executing a 7 MW agreement with a customer who also had a substantial backlog of solar projects in the development phase.

Our entire team's hard work and success paid off by being named the Solar Power World's Top Solar Contractors List, the most recognized annual listing of the top US solar contractors working in utility, commercial and residential markets. We were also ranked the number one solar EPC in Vermont.

We are strategically positioned geographically as one of the largest commercial solar EPCs in the Northeast. Historically, we have operated exclusively in Vermont, which is one of the most attractive states for investment in solar arrays.

In fact much of the Northeast region of the country is ranked in top 10 markets based on return metrics for the solar array. The road recognizing the need to transition to reliable, renewable energy grid in the next 50 years.

Vermont and Hawaii are leading the way in the United States with renewable energy goals of 75% by 2032 and 100% by 2045 respectively. California committed to 100% carbon free energy by 2045.

The majority of the other states in the US also have renewable energy goals. Industry reports forecast a sharp acceleration in solar installations through 2050 and the US Energy Information Association noted in its 2019 outlook that they expect solar energy production to reach 48% of the overall mix of renewable energy production by 2050 of just 13% since 2018.

The drivers of this acceleration include the declining cost of solar array equipment, a heightened focus on clean renewable energy production and the consistent increase in demand of our solar energy. The Peck Company Holding's is uniquely positioned to benefit from this rapid escalation and solar array installation given our 48-year history of the full-service electrical contractor in our existing highly scalable and profitable solar installation business in Vermont.

After installing more than 125 million MW of solar energy, we believe that we are positioned for what we believe will be the coming revolution toward a renewable energy economy. We now have a platform that will support our expected growth from our existing business partners new strategic partners and financial partners.

Is was also a transformational year of growth for our company as we became publicly traded with the NASDAQ listing. Our desire to be public was driven by improved access to capital, to grow our business and the potential ability to utilize our stock as currency for acquisitions.

I'll now like to pass the call over to John Sullivan, our Chief Financial Officer to discuss our year-end 2019 financial performance.

Thank you, Jeff. We are extremely pleased with our continued growth and profitability in 2019.

Revenue for the year ended December 31, 2019 was $28.2 million an increase of $12.3 million or 77% compared to $15.9 million for the year ended December 31, 2018. The increase in revenue was primarily due to an increase in the number of projects and megawatts completed.

Approximately 77% of the revenue in the year ended December 31, 2019 was from solar installations compared to 62% of revenues in the year ended December 31, 2018. Gross profit for the year ended December 31, 2019 was $4.2 million, an increase of $1 million or 33% compared to $3.1 million for the year ended December 31, 2018.

The resulting gross margin was 14.8% for the year ended December 31, 2019 compared to 19.8% for the year ended December 31, 2018. Gross margins for the year ended December 31, 2019 were lower as a result of acquiring projects directly from our development partners at the notice to proceed phase.

This strategy results in an increase in revenue and gross profit, but does erode the gross margin. The company will continue to deploy this strategy to gain control of projects at an earlier stage and increase the predictability of its revenue stream.

General and administrative expenses for the year ended December 31, 2019 were $2.3 million, an increase of $1.1 million or 89% compared to $1.2 million for the year ended December 31, 2018. Operating income for the year ended December 31, 2019 was $1 million, a decrease of $0.2 million or 17% compared to $1.2 million for the year ended December 31, 2018.

The decrease in operating income was primarily due to the cost associated with being a public company, as the expenses for accounting, legal and professional services increased significantly in the year ended December 31, 2019 compared to the year ended December 31, 2018. Depreciation expenses for the year ended December 31, 2019 were $0.6 million an increase of $0.1 million or 16% compared to $0.5 million for the year ended December 31, 2018.

Depreciation expenses increased primarily due to a full year of service of Peck's solar array assets. Interest expense for the year ended December 31, 2019 was $0.3 million an increase of $0.2 million or a 132% compared to $0.1 million for the year ended December 31, 2018.

Interest expenses increased primarily due to increased utilization of Peck's line of credit to support the growth trajectory. Net loss for the year ended December 31, 2019 was $0.4 million compared to a net income of $1.1 million for the year ended December 31, 2018.

The net loss for the year ended December 31, 2019 was primarily due to a $1.1 million provision for income taxes compared to nil for the year ended December 31, 2018. Pro forma net income excluding such a provision for income taxes but taking into effect a normalized tax rate for the year ended December 31, 2019 was $0.5 million compared to a net income of $0.8 million for the year ended December 31, 2018.

The resulting pro forma earnings per share for the year ended December 31, 2019 was $0.11 per diluted share compared to $0.33 per diluted share for the year ended December 31, 2018. Adjusted EBITDA for the year ended December 31, 2019 was $1.9 million an increase of $0.2 million or 12% compared to $1.7 million for the year ended December 31, 2018.

I would now like to introduce Michael d'Amato, our Head of Corporate and Business Development for insights into some of our strategic initiatives that we expect will contribute to our growth.

Thank you, John. Our strategic areas for growth include one; organic growth by leveraging existing relationships to expand across the Northeast, two; accretive mergers and acquisitions of other profitable businesses to expand geographic footprint capability and cash flow and three, investment into new solar arrays that produce a steady stream of recurring revenue.

Organic growth from our existing customers will come from national developers requesting EPC services for the project sizes ranging from residential to utility scale. Our ideal project size range is from 100 kilowatts to 10 MW, which is considered commercial to small utility scale where we believe the margins and risks are optimized.

In addition, we can remain opportunistic for a small residential projects where marketing costs are minimized or for larger utility scale projects where margins can be preserved. Accretive acquisitions and mergers activity is an important focus for the company in order to accelerate revenue growth and cash flow, while geographic expansion is prioritized for the Northeast, prudent acquisitions and other geographies will also be considered depending on the strategic fit and the profitability characteristics.

Please stay tuned for more updates about this topic. The goal of the solar array asset investments for us is for long-term recurring revenue from the sale of power produced by the array assets.

Our EPC capabilities provide the company with a unique investment opportunity in the renewable energy space because we can enter the solar array value chain at any stage along the way. For example, a de-risked fully operational solar array with reliable off takers can be purchased by us and operated by us.

We believe that this end-stage in IRR probably achievable around 9% to 13% however, higher returns up to 20% IRR may be achieved with prudent investments in development projects with permitting and off takers that only require the construction by EPC our capability. Further returns maybe 20% IRR or more may be achieved if we develop targeted projects internally with low risk and long-term off takers.

What's important here is that our core solar EPC capabilities allow us to strategically enter the value chain at any point. Currently, we own 3 MW of operating solar arrays, operating under long-term power purchase agreements that enjoy the reliability of these long-term recurring revenue streams.

Our goal here is to acquire enough solar assets with recurring revenue to offset our corporate overhead thereby moving our gross margins down to net margins. I'll now hand the call back to Jeffrey Peck for closing remarks.

Thank you, Michael. Unfortunately, our nation and the entire world are having to confront this global coronavirus pandemic as witnessed by the latest week's unprecedented 3.3 million job lost plants in the US.

Power sector leaders are pushing Congress to address hits to the industry in its stimulus package and as renewable and transmission buildouts could be the first jobs to start hiring. Reed Hundt, who served on Pres.

Obama's transition team is now Founder and CEO of the Coalition for Green Capital believes that as the economy faces what could be the fastest increase in front in US history, the power sector has a critical role to play in employment with the greatest opportunities in communications, transportation and electricity infrastructure. We recognize that the coronavirus pandemic has disrupted the economy and has created a lot of uncertainty.

While we've not had any projects or contracts canceled due to this global pandemic, we do believe that some are likely to have their timing pushed back. As the US figures out when to open the country back up for business again and regain normalcy.

We do remain very optimistic for 2020 and beyond with our multipronged growth strategy of organic growth by leveraging existing relationships to expand across the Northeast, accretive M&A of profitable businesses to expand geographic footprint, capabilities and cash flow and acquisition of Solar Arrays to construct and resell or to hold for recurring revenue. The sum of Peck's backlog projects currently under construction and anticipated contracts to date are already near $30 million.

Peck is not typically bidding competitively for these projects but instead engaging with its customers over the long-term basis to develop projects, project designs and help customers reduce project costs. Historically, Peck has been awarded a very high percentage of these projects and is reviewed for construction.

In addition, Peck is engaging existing customers and new partners outside of Vermont as part of its planned 2020 expansion across the Northeast. Peck has already identified over $20 million of opportunities in other states that could add to our 2020 and 2021 projections.

Additionally, for 2020 we'll be raising our visibility within the investment community by strengthening our relationships and increasing awareness with a goal of enhancing shareholder value. We have recently hired Hayden [ph] a highly regarded Investor Relations firm known for its ability to connect under followed and undervalued emerging growth companies with sophisticated institutional investors, buy side and sell side analysts, retail brokerage firms and accredited investor -- accredited individual investors.

Leveraging decades of cumulative experience, Hayden developed strategies to help clients effectively communicate with the investment community and works to increase their exposure through targeted outreach and transparent positioning. Over time, Hayden, helps its clients navigate up the Wall Street value chain and help them secure a reasonable valuation by broadening their audience, expanding institutional ownership and ensuring clear consistent communication with the public.

We're glad to have Hayden IR support and gain exposure since we believe Peck is an undiscovered -- Peck is undiscovered and certainly undervalued. In closing, I want to thank all of our customers and all of our employees for their hard work and dedication and their trust and shared enthusiasm and commitment for the renewable solar energy.

I also want to thank our shareholders for their confidence in us to deliver long-term shareholder value. Thank you again for joining us on today's call.

We look forward to communicating our progress in the coming quarters and years and we are grateful for your interest in our growing business.

Hi everybody. Congrats on the very good quarter.

The backlog looks very good. I think you addressed everything as best as you possibly could during the conference call.

I did have a question I know your earnings would been a lot higher if you didn't have all the publicly traded expenses factored in there, but you still are able to generate $1 million in operating income which I thought was very good. But going forward I know the backlog is good, talking about other growth factors you mentioned you identified opportunities outside the State of Vermont and you're talking about potential acquisitions.

So can you give us an idea on what types of acquisitions you'd be looking at? Are they in-state are they out-of-state, can you define that criteria a little bit more for us.

Yeah absolutely, Andrew. Thanks for the question.

Our initial plans to grow throughout the Northeast looking at Maine, New Hampshire and what we are looking for an acquisition is electrical contractors that may have been much like we were years ago who we can acquire bringing their local workforce and their skill set at our local -- at our solar customer base to what they already haven’t and help them help grow that part of our business in those new territories.

Great. And how are you going to finance the acquisitions you are going to do with stock, debt?

Have you thought about that?

I'll jump here and take this one. So we have given a lot of consideration to how we would fund those acquisitions.

As Jeff alluded to, the types of acquisitions that we're looking for is typically a long-term electrical contractor that has been in the business, but may not have a succession plan in place but does want to keep the business continuing forward. So from that perspective, we're looking at potential foreign earn-out and then would utilize some combination of cash and debt and potential equity to fund it given the size of the organization, but ideally we would look to transition those businesses with an earn-out provision.

Okay. Thank you and congrats again.

Thanks everyone for your support and joining us on the call today for our year-end 2019 conference call. We look forward to speaking to you again in May when we report our first quarter 2020 results.

Thank you.