Sunworks (SUNWQ) 8-K Sunworks Reports First Quarter 2017 Results

Exhibit 99.1

Sunworks Reports First Quarter 2017 Results

- Record Backlog of $59.8 Million -

- Wet Weather Impacts Quarterly Revenues -

ROSEVILLE, Calif. May 11, 2017- Sunworks, Inc. (Nasdaq: SUNW), a provider of solar power solutions for agriculture, commercial and industrial (ACI) and residential markets, today announced financial results for the quarter ended March 31, 2017.

Q1 2017 Summary:

●    Revenue of $14.4 million, compared to $19.4 million in the year-ago quarter

●    Gross margin of 19.4% compared to 28.7% in the year-ago quarter

●    Net loss of $2.9 million compared to net loss of $0.4 million in the year-ago quarter

●    New sales of $25.7 million compared to $9.9 million in the year-ago quarter

●    Backlog of $59.8 million compared to $39.8 million in the year-ago quarter

“The first quarter marked an important transition for Sunworks,” said Chuck Cargile, Sunworks Chief Executive Officer. “The unusually rainy weather limited the number of days our teams could spend installing, particularly in the ACI part of our business. As a result, our revenue was relatively low and we incurred a loss for the quarter. However, our new sales more than doubled and our backlog is at a record level. In addition, as drier weather returns to California, we expect our installation revenue to increase significantly in the second quarter.”

Mr. Cargile added, “We continued to transition our business to a more variable cost model to be more nimble in responding to variability in revenue. We expect to benefit from this improved cost structure and return to profitability as we convert our record backlog to revenue.”

The company’s cash balance was $4.2 million as of March 31, 2017. Total debt outstanding (including convertible debt) was $2.2 million at the end of the first quarter of 2017.

Backlog:

										Q1’ 17 - Q4 ’16			Q1’ 17 - Q1 ’16
	Q1 2017			Q4 2016			Q1 2016			% Change			% Change
(in Millions USD)
Beginning backlog	$	48.5		$	42.7		$	49.3			13.6	%		-1.6	%
New sales		25.7			24.2			9.9			6.2	%		159.6	%
Revenue		(14.4	)		(18.4	)		(19.4	)		-21.7	%		-25.8	%
Ending backlog	$	59.8		$	48.5		$	39.8			23.3	%		50.3	%
(In Megawatts)
Beginning backlog		15.8			13.8			16.1			14.5	%		-1.9	%
New sales		12.5			8.1			3.2			54.3	%		290.6	%
Revenue		(4.7	)		(6.1	)		(6.3	)		-23.0	%		-25.4	%
Ending backlog		23.6			15.8			13.0			49.4	%		81.5	%

Adjusted EBITDA:

Adjusted EBITDA is a supplemental non-GAAP financial measure that the Company believes is an important measure of operating performance.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period.

The following is a non-GAAP measure of cash flow, or adjusted EBITDA, which adds back non-cash items including interest, taxes, stock based compensation and depreciation.

(in Thousands USD)										Q1’ 17 - Q4 ’16			Q1’ 17 - Q1 ’16
Adjusted EBITDA	Q1 2017			Q4 2016			Q1 2016			$ Change			$ Change
Net (loss)	$	(2,905	)	$	(3,660	)	$	(378	)	$	755		$	(2,527	)
Add back:
Interest		244			294			266			(50	)		(22	)
Taxes		0			0			0			0			0
Stock based compensation		217			277			28			(60	)		189
Depreciation		103			105			21			(2	)		82
Adjusted EBITDA (loss)	$	(2,341	)	$	(2,984	)	$	(63	)	$	643		$	(2,278	)

Conference Call Details:

Management will host a conference call to discuss these results today, Thursday May 11, 2017 at 10:00 a.m. ET. To access the call, please dial 1-(866) 682-6100 (toll free) or 1-(862) 255-5401 (international). The conference call will also be broadcast live over the Internet, which can be accessed via the Investor Relations section of Sunworks’ web site athttp://ir.sunworksusa.com. All participants should call or access the website approximately 5 minutes before the conference begins.

The webcast will be available for replay for at least 90 days. A telephonic replay of this conference call will also be available by dialing 1-877-481-4010 (toll free) or 1-919-882-2331 (International) using Replay ID 10362, until 11:59 p.m. ET onMay 25, 2017.

About Sunworks, Inc.

Founded in 1983, Sunworks, Inc. is a premier provider of solar power solutions for both consumers and businesses. We’re committed to quality construction practices that always exceed industry standards and uphold our ideals of ethics and safety.

Today, Sunworks continues to grow its presence, expanding nationally with regional and local offices. We strive to consistently deliver high quality, performance oriented solutions for the agriculture, commercial, federal, public works, residential, and utility industries. Our dedication to excellence is reflected in our 25-year warranty, a benchmark that we stand by in order to support our customers above and beyond their expectations.

Sunworks fields a diverse, seasoned workforce that includes distinguished veterans who are devoted to providing the very best customer experience. All of our employees, from technicians to executives, uphold our company’s guiding principles each day. Sunworks is a member of the Solar Energy Industries Association (SEIA) and is a proud advocate for the advancement of solar power. For more information, visit www.sunworksusa.com

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These risks include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, products, and prospects for sales, failure to commercialize our technology, failure of technology to perform as expected, failure to earn profit or revenue, higher costs than expected, persistent operating losses, ownership dilution, inability to repay debt, failure of acquired businesses to perform as expected, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

Investor Relations Contact:

Rob Fink/John Roginski

Hayden IR

646-415-8972 / 570-569-2479 

rob@haydenir.com /john@haydenir.com

SUNWORKS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2017, DECEMBER 31, 2016 AND MARCH 31, 2016

(in thousands, except share and per share data)

(unaudited)

	Three months ended
	March 31, 2017			December 31, 2016			March 31, 2016
Sales	$	14,350		$	18,440		$	19,428
Cost of Goods Sold		11,572			15,695			13,845
Gross Profit		2,778			2,745			5,583
Operating Expenses
Selling and marketing expenses		1,747			3,191			2,561
General and administrative expenses		3,329			2,592			2,880
Stock based compensation		217			277			28
Depreciation and amortization		103			105			21
Total Operating Expenses		5,396			6,165			5,490
(Loss) Income before Other Income/(Expenses)		(2,618	)		(3,420	)		93
Other Income/(Expenses)
Other income (expenses)		(43	)		54			(205	)
Interest expense		(244	)		(294	)		(266	)
Total Other Income/(Expenses)		(287	)		(240	)		(471	)
(Loss) before Income Taxes		(2,905	)		(3,660	)		(378	)
Income Tax Expense		—			—			—
Net (Loss)	$	(2,905	)	$	(3,660	)	$	(378	)
LOSS PER SHARE:
Basic	$	(0.14	)	$	(0.18	)	$	(0.02	)
Diluted	$	(0.14	)	$	(0.18	)	$	(0.02	)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic		21,264,046			20,853,921			18,811,871
Diluted		21,264,046			20,853,921			18,811,871

SUNWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2017 AND DECEMBER 31, 2016

(in thousands, except share and per share data)

	March 31, 2017			December 31, 2016
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	4,196		$	11,069
Restricted cash		37			37
Accounts receivable, net		11,541			9,665
Inventory		3,980			3,394
Costs in excess of billings		3,735			4,307
Other current assets		255			117
Total Current Assets		23,744			28,589
Property and Equipment, net		1,612			1,674
Other Assets
Other deposits		61			53
Goodwill		11,364			11,364
Total Other Assets		11,425			11,417
Total Assets	$	36,781		$	41,680
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	9,152		$	12,979
Billings in excess of costs		6,221			4,997
Customer deposits		277			64
Loan payable, current portion		222			218
Acquisition convertible promissory notes, net of beneficial conversion feature of $590 and $807, respectively		1,177			959
Total Current Liabilities		17,049			19,217
Long Term Liabilities
Loan payable		438			496
Warranty liability		131			116
Convertible promissory notes		384			654
Total Long Term Liabilities		953			1,266
Total Liabilities		18,002			20,483
Shareholders’ Equity
Preferred stock Series B, $.001 par value; 5,000,000 authorized shares; 1,506,024 shares issued and outstanding, respectively		2			2
Common stock, $.001 par value; 200,000,000 authorized shares; 22,440,664 and 20,853,921 shares issued and outstanding, respectively		22			21
Additional paid in capital		70,803			70,317
Accumulated Deficit		(52,048	)		(49,143	)
Total Shareholders’ Equity		18,779			21,197
Total Liabilities and Shareholders’ Equity	$	36,781		$	41,680