Jim Nelson on Bloomberg radio.
I apologize in advance if I missed or misheard anything, I was trying to type very fast.
TRANSCRIPT:
Reporter: We are joined right now by the CEO of a company called Solar 3D, or was called Solar 3D, now called SunWorks. Jim Nelson joins us right now, he’s in our New York studio. Jim, talk to me about the name change.
JN: Sure! We were four different companies. Solar 3D, MD Energy, SUNworks, and Elite Solar. And we had acquired those companies over the course of the last couple of years. And now we’ve merged all together and we’ve rebranded the company as SunWorks effective Monday and our symbol changed yesterday to SUNW.
R: And why did the change now?
JN: Well, we feel it better reflects what we are really about. We are growing very rapidly at over 100% a year organically and we are also profitable, so it’s very different than a lot of other solar companies in the business. We feel that the new name, SunWorks, gives us a better footprint, more recognition, and allows us operate together as one company.
R: Describe what you guys do.
JN: We are solar integrators. We supply solar systems to commercial operations including agricultural, industrial, retail etc. and also to residences. We’re primarily in the western United States, we do most of our business in California and we’re headquartered in Roseville, CA.
R: You say ‘profitable’. Profitable as if….
JN: We make money!
R: Free cash flow, cash flow from operations, net income?
JN: Yes, all of those. In fact, we’ve given guidance for 2015 to 48-58…. 48-53 million and profitable. We’ll be announcing earnings next Monday, we’re gonna be really happy with that. And we’ve given guidance for 2016 to a 100 million dollars in revenue and profitable with current portfolio that we have. Plus we’re looking to doing additional acquisitions and growing dramatically on an organic basis.
R: Now, I’m looking at company’s history. It looks like you went public … the ticker must have existed… Was it reverse merger brought you out in 2010-2011?
JN: No, we actually were… It was a public company and I wasn’t with the company until 2010. It was a public company with a different technology. And then in 2010 we repurposed the company
R: Machine Talker?
JN: Yes, Machine Talker is right. That never really took. And so we changed the technology within the company, refocused on solar. And then in 2014 we bought our first solar integrator up in Roseville, the company named SUNworks, and began growing really rapidly. And the reason why we did it is we think there is a tremendous opportunity in America in solar integration, and we think it’s going to be the fastest growing business in America for the next 20 years.
R: It is interesting, we see what’s going on with solar. ‘Cause we.. You know, there is more solar out in capacity last year even than natural gas which is fairly amazing in this country. But how much of this is driven by subsidies? What do you think the long term likelihood of subsidies, ‘cause they’ve been such a benefit to the industry. But I wonder… Certainly a benefit to my power bill, my rooftop as well. I wonder what you think the drivers, how important that is as a driver and how long that’s gonna go on.
JN: Well, I think it supports the solar industry, but at this point it’s not necessary for the solar industry. We’re at grid parity in maybe 40 different states. And the cost of solar keeps coming down. Whereas the cost of electricity produced by utilities will stay relatively flat to increasing over the next several years.
R: Well, it certainly has gone down with natural gas coming down so much
JN: Yeah, and frankly though, with gas coming down, gas is going to fluctuate around horizontal line overtime, whereas the cost of solar will legitimately reduce overtime, and the lower the cost gets, the more penetration there will be of solar into the electrical market. Right now in the country we’re probably at 2%, maybe even less than that. 2% of electricity is supplied by solar. The DOE did some forecast years ago, they showed as the cost come down that can go as high as 20-25% so there is an opportunity to be a huge business in America
R: Yeah, it’s interesting to the ways the business has played out. We’ve seen a lot of struggles with companies like Sun Edison and Solar City. Borrowing money, or even promising returns on aggregated parts to solar portfolio that may be greater than those portfolios will ultimately give. And we’ve seen a weakness in the stocks of both Sun Edison and Solar City as that’s been recognized. I wonder what your take is on that. That world and that business model approach.
JN: I’m glad you asked. Actually, we’re completely different business model in terms of the way we deliver our product. We have nothing bad to say about those companies. They really softened up the market for us, and allowed people to be ready for us to go out and deliver our systems. However, one of the things the do is they promote third-party ownership of the solar systems. We really promote the user-ownership of the solar system. And the reason for that is when people own their own system, the economics are just better for them. Also there are a lot of intangible hassles of having a lease or a power purchase agreement as some of the bigger companies offer. So when we promote ownership, we just feel like we focus on what the customer really needs and we deliver better value and frankly we deliver exactly what we will, as well.
R: Let me ask you a question really quick. What is the average… How many home owners who have solar are likely to renew a lease?
JN: You know, there is no way of telling because the lease is way out there, but I think it’s probably close to zero. Especially when it’s 20 years from now, somebody will be wanting to put a new technology up on that roof.
R: ‘Cause Solar City says it’s a 100%.
JN: …Good luck. Good luck.
R: These are the bets that you have to make in the long-term process. Very interesting stuff. What’s the one thing (we have only 20 seconds left) that we should be looking for in the world of solar.
JN: I think that the fact that the cost of solar is continuing to come down and there are going to be better companies coming out with really good business models that will allow the customers to get exactly what they want.
AI
