SPI Energy Co., Ltd. (SPI) Earnings Call Transcript & Summary

[Operator Instructions] Hello, everyone. This is Craig with RedChip. Thank you for joining today's event with SPI Energy Company, which trades on the NASDAQ under the ticker SPI. With us today, we have Denton Peng, Chairman and CEO of SPI Energy. We will begin with a brief presentation in a moment, and then we'll open the event for Q&A. [Operator Instructions] Before we begin, let me read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical facts should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. With that said, I now turn the webinar over to Denton Peng.

Hello, and thank you for joining me today as I share a view of SPI Energy. In recent years, we have established a solid trend of strong revenue growth that has placed us on a clear path to near-term profitability. We anticipate this trend will be certain moving forward as we benefit from strong industry talents, including incentive under the Inflation Reduction Act in the U.S. and other provisions that continue to boast the global renewable energy market. Importantly, our operational sets are generated consistent cash flow and our solar project pipeline in the U.S. is very strong and continue to grow. Solar4America already expanding American made solar module manufacturing business began production in 2022 in 140,000 square feet state-of-the-art facility in California. This cutting-edge facility boast the latest M10, there's 182-millimeter cell technologies, which allow us to produce high-efficiency solar module for various markets. To meet increasing demand, we resent this additional 56,000 feet of space to expand our production facility even further. With addition of our 270,000 square feet facility in South Carolina, we expect adding 500 megawatts top technology solar cell production capacity in the near term. Our customers at the Solar4America have diverted needs. We have developed a wide range of products to serve the residential, commercial and industrial and utility markets. We have started top brand organization and with well-established sales channel across largest dollar, regional distributors and the national distribution channels and also utility customers and commercial customers, which position us well for continued growth. Our Solar Juice subsidiary has established itself as a market leader in Australia, proudly serving over 5,000 customers to date, leverage our long-standing suppliers and customers relationships in Australia. We are now expanding our reach to New Zealand and the Pacific Islands. This strategic growth allows us to capitalize our new market opportunities. While continue to provide exceptional service and support to our existing customer base. As an independent power producer, Orange Power focus on generating stable operating cash flow by owning an operational renewable energy assets. Currently Orange Power boast impressive 43.84 megawatts in operation. Before we open up the call for question-and-answer. I would like to share an update on our financial performance. We reported a $177 million in revenue for fiscal year 2022. We announced this afternoon, we now expect to generate $204 million to $214 million in revenue for the fiscal year 2023, representing a year-over-year growth between 15% to 21%. This revised guidance is a result of solar projects that were delayed into 2024. Looking ahead, key growth driver for 2024 will be continued ramping of our solar cell and solar module manufacturing capacity in the U.S. which on track to reach 2.4 gigawatt annual production capacity. The continued growth of our solar business through the Asia Pacific region as well as post from our solar project pipeline, which is expected to driving improving profitabilities. Our Orange Power business will provide stable cash flow and further strengthen our overall profitabilities. Overall, we are well positioned in the renewable energy sector with a diversified performing solar and renewable energy technologies. Our operating asset generator systems, cash flow and our solar project pipeline in the U.S. is robust and continue to grow. We believe that the completion of our strong financial performance, strategic position and exceptional leadership team will enable us to continue exiting our mission of creating as a simple energy solution by also delivering a strong return for our shareholders. With that, we can now open the call for questions.

[Operator Instructions] Denton, we have received some questions. One is, can you talk more about the 3- to 5-year plan for the EV business and the competitive landscape?

We have 5.5 million shares on Phoenix Motorcars, we are second largest shareholder of EV business. The Phoenix EV business continued from end of September. For the next 1 to 3 years, we believe SPI will be well positioned in the solar module and solar cell manufacturing and also solar way of manufacturing in the U.S. We were ramping up to become one of the leader in the solar module manufacturing in the U.S. and continue to grow our solar business to growing from Australia to New Zealand and the Pacific area in the distribution business. We will continue to grow our solar project development billings from current Hawaii, Oregon, Massachusetts to Illinois and Maryland and other areas to continue to grow our solar project development. In the meantime, we have a very big investment in Europe, in Greece and in Italy, the United Kingdom and Hawaii. Solar project under the Orange Power portfolio. We see this as also continued growing our business and for the independent power producing. Most of our business are already profitable, and we see the company will become a profit company in the near term, focus on renewable energy, especially on the solar project that we already have developed in the last few years.

Can you repeat the change in guidance? Maybe they didn't hear it.

Our guidance for 2023 fiscal year is we now expect to generate $204 million to $214 million in revenue. This represents year-over-year growth between 15% and 21% than last year's fiscal year 2022, we reported $177 million. This is even in the market, most of our business continue to grow, especially our business in the solar module made in the U.S. and our Australian business and our power project development business in the U.S.

Are there any M&A plans Denton?

We have not any M&A plan in current. If any further news, we will report to you immediate delay. Now we have no any plan in this moment.

Do you still expect positive net income in 2024?

We believe 2024 will be a very important year. We see according to 45x, just recently probably by the U.S. according to IRA $0.07 manufacturing, IRA want producing U.S. $0.07 incentive. This is what we have already produced in 2023, this revenue, this $0.07 will go into 2024 as accounting or booking. Also, we have a lot of growing profit in most of our business in solar module manufacturing. Solar cell manufacturing. We will be coming online this year in South Carolina. Also our Australia business is continued growing the business and profitabilities. Also, our already power business is this year, we're expanding from Europe, Greece, United States, United Kingdom, Italy and also growing additional portfolio to Hawaii. This is all adding the profitability for the solar electricity producing. We also see some projects we develop in Oregon and Massachusetts will be also recurrent revenue in 2024. We believe we have a big increase in revenue and the most important is the probability in 2024 for SPI Energy. Also, because we said we are doing something very importantly. The EV business loss will be not in the book of SPI. Will be doing in the decision in end of September. If you take a consideration of the Phoenix EV business loss, we're already profitable in the last quarter, we reported in Q3. The company will be continuing to increase the profitability on our key business.

Approximately how long of a runway do we have right now without any external funding from additional equity or debt sources?