SUNE

Good morning. Thank you for standing by. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the SUNation Energy Fourth Quarter and Full Year 2025 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Now I would like to turn the call over to Rich Murdocco, Vice President of Marketing & Client Experience at SUNation Energy. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Good morning. Thank you for joining us today for SUNation Energy's fourth quarter and full year 2025 financial results conference call. My name is Rich Murdocco, Vice President of Marketing at SUNation Energy. Our speakers for today are Scott Maskin, Chief Executive Officer, and Jim Brennan, Chief Financial Officer and Chief Operating Officer. Mr. Maskin will open with prepared remarks, followed by Mr. Brennan, and then we'll open the call for questions. Before we begin, I'd like to remind everyone that remarks made on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.

These forward-looking statements are based largely on current expectations, forecasts, and assumptions, and are subject to risks and uncertainties, many of which are beyond the company's control. Actual results may differ materially from those expressed or implied by these statements. Participants should not place undue reliance on forward-looking statements which speak only of today's date. The company undertakes no obligation to update them except as required by law. Additional information regarding factors that could affect the company's results is included in the company's SEC filings, including its Form 10-K and subsequent filings. This call may also reference certain non-GAAP financial measures, including adjusted EBITDA, and reconciliations to the most comparable GAAP measures can be found in today's earnings release. With that now I'd like to turn the call over to Scott Maskin, Chief Executive Officer of SUNation Energy. Scott, please go ahead.

Thank you, Rich, and good morning, everybody. Happy Thursday. This is actually the call that I've been waiting for for quite a few quarters. I appreciate everybody taking the time to join us today. If I had to sum up the fourth quarter and the full year of 2025 in a few words, it would be this. We did what we said we were going to do, and in today's environment, that's something we're pretty proud of. At the beginning of the year, we told shareholders that the work we were doing, stabilizing the business, cleaning up the balance sheet, reducing costs, and tightening execution, would translate into stronger operating performance. As we close the book on 2025, that's exactly what happened.

I've been in the solar business for more than two decades, and if there's one thing I've learned, it's that the industry keeps you on your toes. Sometimes I call it the solar coaster, and 2025 brought twists and turns, highs and dips like I've never seen. Through all of that, SUNation made real progress. We strengthened the financial foundation of the company, materially reduced debt, improved liquidity, expanded margins, and exited the year in a much more stable position than where we started. Fortunately, we operate in two of the most expensive electricity markets in the country, New York and Hawaii, but they too face their own challenges. The fourth quarter was probably the clearest demonstration yet that our strategy is working.

Our teams in both markets stayed focused, executed at the highest level, and responded to strong residential demand as customers moved to complete projects ahead of the expiration of Section 25D residential tax credit at the end of the year. At the same time, we continued building a strong commercial and service pipeline, which remains a core part of our diversified operating model. Diversification has been one of the themes you've heard from us constantly, consistently, and it continues to be front and center. What I'm especially proud of is that this performance didn't come from pulling just one lever. It came from disciplined execution across the organization. Earlier in the year, we made some tough decisions that pushed us to become leaner and more efficient.

Those decisions translated into improved profitability, lower interest expense, stronger cash generation, and a much cleaner capital structure by the time we closed the year. On the residential side, demand was strong through the finish of the year as customers moved quickly ahead of the federal credit sunset. Our teams worked extremely hard to manage that surge responsibly, keeping installations moving while maintaining the quality and customer experience we're known for. New York and Hawaii remain unique markets because of their high electricity costs. Because of that, we continue to believe the value proposition for solar and storage remains very compelling in both geographies. As financing structures evolve and power prices continue to rise, we believe the long-term demand story here is still very strong.

At the same time, we're not managing the business only for the short term pull forward created by the tax credit change. Much of that second half of 2025 was spent preparing for what comes next. That includes exploring alternative financing structures, expanding our service offerings, continuing to grow the commercial pipeline, and evaluating disciplined acquisition opportunities that can strengthen the SUNation platform over time. That leads into an important point as we look ahead to 2026. One of the major priorities for us moving forward is returning to the roll-up strategy that has always been part of our long-term vision, and the opportunities are out there. The work we did throughout 2025, cleaning up the balance sheet and simplifying our capital structure wasn't just about stabilization, it was about positioning the company to grow again.

With a much healthier capital structure today, we believe we are now able to begin executing on that strategy and bring strong regional operators under the SUNation platform as consolidation continues across the industry. At the same time, we're watching what may be one of the most important structural shifts in energy demand that we've seen in decades. That being the explosion of electricity consumption being driven by AI and data center infrastructure. Data centers are quickly becoming some of the largest energy consumers in the country. In markets like New York, we're already seeing how that demand is beginning to stress existing power capacity. We believe distributed energy, storage, and resilient energy systems will play an increasingly important role in supporting that growth. SUNation is positioned to participate in that opportunity as the energy landscape evolves. On the commercial side, we continue to like our positioning.

We've built strong relationships with developers, institutions, municipalities, and school districts, particularly in New York, and our reputation for execution continues to open doors. Commercial projects naturally move on longer cycles than residential, but the opportunity set remains meaningful and provides an important counterbalance to residential cyclicity. Service is another area that continues to perform well for us. As shakeouts continue across the industry, we're seeing more orphan system opportunities coming to the market. I'd add that the course of our tenure, the opportunities to retrofit and upgrade existing customers is a unique opportunity we've earned. Customers want trusted operators with a long track record, and that plays directly into our strengths. Service remains a high-margin business for us and an increasingly important part of the overall model. Stepping back for a moment, 2025 was really about restoring credibility through execution.

We entered the year saying we would improve our financial condition, reduce debt, grow revenue, and return to positive adjusted EBITDA. By year-end, we had made meaningful progress on each of these goals. Along the way, we simplified the capital structure, reduced total debt by more than $11 million, lowered annual interest expense by roughly $2 million, and expanded consolidated gross margins into the high 30% range. Just as importantly as our operating teams in New York and Hawaii proved that they can grow and execute even in a volatile environment. In the third quarter alone, total sales rose nearly 30% year-over-year, residential sales increased 54%, and service revenue grew more than 70%, all while operating expenses declined as a percentage of revenue, and we delivered positive adjusted EBITDA.

Before I turn the call over to Jim Brennan, I wanna take a moment to thank our employees, our team across New York and Hawaii, along with our customers, vendors, board members, and shareholders. This company has been through a lot over the past few years, and the work done in 2025 has put SUNation on much firmer ground. We're proud of the progress we've made, but we're even more focused on what comes next. With that, I'll turn the call over to Jim Brennan, our CFO, who will walk you through the financial results in more detail. Thank you for your time.

Thank you, Scott, and good morning, everyone. I appreciate you joining us today. Besides Rich and Scott, we are also joined today by Kristin Hlavka, our Chief Accounting Officer and Corporate Treasurer. As Scott said, 2025 was a year of substantial progress for SUNation. The actions we took beginning in 2024 and continuing throughout 2025 meaningfully improved our operating model and financial position. Over the course of the year, we expanded margins, reduced our debt burden, lowered interest expense, strengthened liquidity, and improved profitability. We issued our earnings release yesterday and expect to file the 10-K over the next few days. I encourage everyone to review those materials for full detail, but for now, I'll touch on several highlights from both the fourth quarter and the full year.

For the fourth quarter of 2025, total sales were $27.2 million compared to $15.4 million in the prior year period, an increase of 77%. For the full year of 2025, total sales were $71.9 million compared to $56.9 million in full year 2024, an increase of 26%. This full-year sales result came in roughly $2 million above the top end of the previously stated guidance, which called for 2025 total sales for $65 million-$70 million. Results in the fourth quarter were supported by continued strength in residential demand in both New York and Hawaii as customers accelerated ahead of the Inflation Reduction Act Section 25D sunset.

As we think about the start of 2026, we believe some of that fourth quarter strength reflected pull-forward activity ahead of the tax credit sunset, which means first quarter revenue is likely to decline relative to our normal seasonal pattern, which will also be compounded by the unusually harsh winter we endured in the Northeast this year. We also benefited from ongoing contributions from our service business and continued execution in commercial. Although, as we have consistently noted, commercial timing can vary from quarter to quarter based on project complexity, utility coordination, and installation schedules. Gross profit for the fourth quarter was $11.1 million, or 40.7% of sales, compared to $5.6 million or 36.4% in the prior year quarter. For the full year 2025, gross margin was 38.3%.

Through 2025, margin improvement was driven by stronger residential mix, operating discipline, and better execution in both New York and Hawaii, which continues to trend as we discussed on prior calls. In 2025, we continued to manage our costs with a disciplined approach. Selling, general, and administrative expense was 37.5% relative to sales revenue in 2025, down from 47.5% of sales totals in the prior year, reflecting improved operating leverage on higher revenue. For full year 2025, SG&A was $27.0 million, the same as the prior year full 2024. As we've noted earlier in the year, we expect the cost optimization and efficiency actions implemented in 2024 and 2025 to yield meaningful savings, and those efforts contributed to improving operating leverage as revenue ramped in the second half. Interest expense also continued to improve meaningfully.

Fourth quarter interest expense was $165,000 compared to $775,000 in the prior year fourth quarter, reflecting the substantial debt reduction achieved earlier in the year. We indicated earlier in the year, we expected annual interest expense for 2025 to decline by roughly $2 million versus 2024 as expensive debt was paid off or restructured. That expectation proved accurate, with actual interest down by over $2 million or 66%. Net income for the fourth quarter of 2025 was $2.6 million, compared to a net loss of $6.8 million in the prior year period. For full year 2025, we reported a net loss of $10.9 million, compared to a net loss of $15.9 million for the prior year.

As always, we remind listeners to consider any non-cash items, including fair market, fair value adjustments, and financing-related charges when comparing bottom line results across periods, as prior quarters have included such items. Accordingly, we emphasize adjusted EBITDA as a clearer operating measure. That said, adjusted EBITDA for fourth quarter was $4.1 million compared to an adjusted EBITDA loss of $1.1 million in the prior year quarter. For the full year 2025, adjusted EBITDA was $2.5 million compared to an adjusted EBITDA loss of $4.9 million in 2024. We had previously provided guidance in 2025 full year adjusted EBITDA of $0.5 million-$0.7 million, we are pleased to have significantly exceeded that range.

Turning to the balance sheet, cash and cash equivalents at year-end were $7.2 million compared to $0.8 million on December 31st, 2024, and $5.4 million on September 30th, 2025. That year-end balance exceeds the prior high watermark as we reported at the end of Q3. Total debt at year-end 2025 was $8.1 million compared to $19.1 million on December 31st, 2024, a decrease of 58% and reflective of the significant deleveraging accomplished during the year. We also continued to improve other parts of the balance sheet over the course of 2025, including current liabilities, accounts payable, and shareholders' equity.

The net effect of the SUNation ends 2025 in a much stronger financial position than where it began the year, which has been one of the central objectives of the current management since assuming leadership in May of 2024. On last quarter's earnings call, I described SUNation as being in the strongest financial position in recent history. I can safely say that Q4 of 2025 has continued that trend. Before turning back to Scott, I want to thank you again to the entire team in SUNation, New York, and Hawaii for their hard work and commitment that got us here. It truly was a team effort. The financial progress we made in 2025 reflects a tremendous company-wide effort, and importantly, we believe that progress has translated into real visible momentum across the business.

We have strengthened the balance sheet, improved operational discipline, and positioned SUNation to move forward with a far stronger foundation than we began the year. With that, I'll turn it back to Scott.

Thank you, Jim. Nice job. That was fun. As we look ahead, we're encouraged by the business we have built through 2025, but we're also staying realistic about the market conditions we may face in 2026. This industry will continue to evolve, and as we have said many times before, the solar coaster is not slowing down. We are not assuming a smooth road ahead, but we are entering a year from a position of greater strength than we were just a year ago. From an operating standpoint, our cadence remains important to understand. It's unfortunate, but for decades, Q1 in both New York and Hawaii is a challenging time to manage, usually because of end-of-the-year tax credits, weather, and regulatory changes. We always model to account for this seasonality. It's a marathon, not a race.

What gives us confidence is not any single quarter or one market dynamic. It's the combination of a stronger balance sheet, lower debt, improved margins, better operating discipline, and a more diversified revenue model. We believe those attributes position SUNation to become navigating an evolving solar and broader energy landscape with more resilience and more flexibility than in the past. That flexibility matters. Our strategy is clear and deliberate, but it's not wired to a single fixed outcome. It is direction led by design. We can adapt as the market evolves without losing sight of where we're headed. We know where we're going, but we won't be rigid about the route we take to get there. It's a better path, if a better path presents itself for SUNation, we have the discipline to course correct.

In this kind of environment, the companies that succeed are the ones that can pivot, the ones that can stay disciplined, remain close to their customers, and adjust quickly as market conditions change. We believe SUNation is built for exactly that kind of setting. We also continue to believe that diversification is one of our greatest strengths. Residential will continue to evolve. Commercial remains important, an important opportunity. Service is growing in importance, and additional adjacencies can create new paths for value creation over time. That mix gives us the ability to lean into parts of the business where demand and economics are strongest as conditions shift. While we're not here today to give formal 2026 guidance, we are here to say that we like the position we are in.

We have stronger teams, a cleaner capital structure, a more sustainable financing footing, and a business model that we believe is better equipped to adapt to what comes next. I thank you for your time, and on that note, I will shift back to the operator and get to my favorite time of the earnings call, and that would be answering questions. I believe, operator, we're ready for the lines of questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Julien Dumoulin-Smith with Jefferies. Please proceed.

Hey, good morning. This is Hannah Velásquez on for Julien Dumoulin-Smith. Scott, Jim, thank you for the update. My first question is around 2026 guidance. I know you're not releasing the outlook this early in this fourth quarter, but is that something you could revisit later in the year as you gain more visibility and parse through some of the regulatory noise? And could you also point to specifically what you view as the largest headwinds impacting the space this year? Perhaps across FEOC, maybe 25D expiration, tariffs, et cetera.

Sure. I'll let Jim do the first part of the question on the guidance. Jim?

By the way, Hannah, thank you for joining. I'm not comfortable giving guidance at this point in the year given the turmoil that the solar industry's in. I would say by the end of Q2, we'll have clarity on all the financing options available and so on, and the FEOC layer and everything else that's impacting 2026. The reality is this cliff has hit the industry hard and the entire industry, not just SUNation. It really has nothing to do with SUNation Energy, but the entire industry is pivoting over to this TPO, third-party ownership way of selling, which is transitioning as we speak during Q1. Scott?

Yeah, thanks, Hannah. I would say that, like, the next few weeks are gonna be really important. I think that what's happening now in Q1, you know, based on the tax credit situation in both residential and even the commercial, you know, cliff that's hanging in July. I'm gonna say that the financing companies, the people still, you know, they're getting up to speed. Most of the companies onboarded a lot of people at a lot, you know, very quickly. It's still unsettled on the financing side of the business, and I think that's working itself out on a daily basis, you know, utility and state by state.

Fortunately, as I, you know, I keep saying, New York and Hawaii, you know, the Trump card here, not Trump the president, the Trump card here, if you're drawing out of the deck, is the fact that, you know, it just costs me $70, you know, to fill up my Bronco. Energy rates in New York on the residential side are set to go probably 5%-7% higher. Hawaii is getting blasted, you know, with a $0.46 type of rate. In the markets that we operate in, you know, utility rates are gonna dictate. We're still, you know, I'm proud to say that even in New York and Hawaii, we're far over the 50% mark of sold residential projects that are still purchased product, okay, and not just third-party ownership.

I don't see. I think the finance companies are getting sorted out with, you know, lists of, you know, products that meet FEOC and, you know, things like that, and getting supply. Again, you know, the political environment is working favorably, you know, with the increased energy prices. That's without taking, like, all this summer. You know, again, we're in cyclical. I said seasonality, but, you know, we work cyclically also. You know, the-- We're heading into the highest energy consumption rates of the summertime in both New York and Hawaii, which is a great time to be in. We're on the heels of the highest cost of natural gas in both, you know, in New York. People are really getting battered right now, so solar is. It's just like a tap on the brakes. I don't see massive headwinds. I see a lot of small taps on the brakes.

They're super helpful, and I think that brings me to my next question, just in terms of how you're thinking about the long-term outlook for residential solar. How exactly do we get to a full recovery, perhaps back to pre-NEM 3.0 installation levels, if that's even feasible? Is it the financing options that's going to take us there in terms of the creativity? You know, I know there's a lot of excitement and interest around this prepaid lease plus loan offering, or is it really just coming down to affordability and the ever-rising utility rates?

Yeah. You know, again, I can speak for New York and Hawaii. Third-party ownership is not new. It's been 50% of the market, you know, across the country for a long time. It's just gaining share now because there's less, you know, with this abrupt pull forward in ownership. There are people that own cars, there are people that lease cars. You know, what we focus on most importantly, and what's driven our lead acquisition cost to be the lowest is that we focus on the homeowner and referrals, high quality installations, the service opportunities that come afterwards. You know, again, I think that what's going to happen, the states and the utilities.

If you look to Texas, you look to North Carolina, you look to places that are actually succeeding still with solar and storage, it's because the utilities have gotten, you know, behind this and said, "Hey, we really need that standby power. We need that redundancy." You know, the federal part was only one part of it. It's really at utility and state level that's most important. When we talk about affordability, you know, it has to start at state level. I'm thinking that, you know, they're really starting to see it, right? Like that affordability word is gonna be the central word across the country in the midterms and certainly the next presidential election. You know, it's a word.

It reminds me of like, you know, 20 years ago when green was a word, you know, and everybody, "Oh, we're going green." You know, that's kind of where I think this is happening. I see that residential ownership or adoption of residential solar is all going to circle around how much are the energy prices, how fast are they going up. That's why I think, you know, products are evolving. Installations are, you know, pretty as simple as they can possibly be. I also think there's gonna be a lot of opportunity on the purchase side with, you know, non-FEOC product. There's gonna be a boatload of stuff that's sitting on shelves across the country that is non-FEOC compliant that won't fit into the TPO. I'm fine with that. I hope that answered your question.

I would add that if you look at the recent Wood Mackenzie report on the solar industry, both for residential and commercial, I happen to agree with the authors of that work product. 2026 is expected to be somewhere between 20%-30%, depending on which data you look at, reduction. In 2027 and beyond, we're back in growth mode again. I think that's a logical approach to how this market will respond. Solar is not going away. Residential and commercial solar, especially the service side of our business, will continue to grow with a short-term hiccup in 2026 as everybody pivots to the new regulations.

Okay.

Great question.

Yeah. That's perfect. Thank you. If I can squeeze in one more. Can you just speak very briefly to the addition of Generac to your equipment suite? Is that primarily on the residential solar and storage side, or are you perhaps looking at their home standby products? Then as a follow-up to that, what led to this addition? Was it really a factor of customer demand or more so just expanding and diversifying further your options? Thank you.

I really dig the Generac company. We've used them in Hawaii. You know, they came into the marketplace, stumbled a little bit, but the beauty of that company is they did not abandon their mistake, and they continue to stand behind the product. They brought over some pretty amazing people in the renewable space that I worked with for many years that I trust. They're innovators, and they rebuilt an ecosystem that I think is very interesting. I'm gonna use the word microgrid or be, you know, energy independent, so to speak. I think that, you know, battery storage is super cool, but it has its limitations, like in some of the markets that we serve.

The idea that their ecosystem works with both generation, filling the battery space, and generating from solar is kinda this like, you know, checks all the boxes with a brand that has. I mean, there's 19,000 generator systems operating on Long Island in New York, 19,000+. Many of those will adopt solar. I think that there's a great cross-branding side. I like the diversified revenue stream. As a generator owner myself, the local industry is screaming for somebody who provides service at a level like SUNation does to its customers and KumuKit, Hawaii Energy Connection does to its customers. That's kinda what started the Generac thing. You know, more to come, but I think that they have an interesting product.

They have a tremendous balance sheet, a good team behind them, and, I think they're a dark horse in the race.

Hannah, I would add that in my personal home, I am living the Generac ecosystem experience. I have their solar equipment on the roof. I have their battery. I have their generator, natural gas generator. Inside the house, we have their ecobee thermostats, which controls everything. It is a spectacular product. I believe that others will follow as this industry looks for an integrated solution. Honestly, Generac's a pretty damn good brand. They really stand by their equipment. They're a high-quality manufacturer. They also we were out at the Generac conference recently, and they also have commercial options and other things we haven't really touched yet. I can see a future where we're expanding into those options. Thank you.

Thank you.

Thank you, Hannah.

Okay, it looks like we have some webcast questions. The first one teed up is, what additional services is SUNation Energy also looking to offer to complement the Generac ecosystem?

Well, you know, as we said, thank you for that question. You know, as we said, the diversification is the strength and, you know, really monetizing our referral system, our raving fans and bringing them more products and more things. You know, I've always liked the HVAC and the service market of HVAC. I love the generator market. I think there's a great cross-sell opportunity. You know, there's other things in Hawaii. The service side of Hawaii is growing. The commercial side in Hawaii is growing. So again, you know, the answer is we have loyalty with customers, 22,000 customers, okay? They trust us, and it's our job to maximize their returns. If adding other products and other services into that, I'm all game for that. Yeah, we're not a one-dimensional company and never will be.

To follow up on that question, you know, we currently have many revenue sources. By design, we like the diversified approach. We have residential, commercial, service, roofing. We do electrical work. We have community solar. We're now adding on generator work. We could see in the future of adding on some HVAC stuff, you know, as we continue to mature in that side of the business. By design, we don't want a single source of revenue. Great question, whoever asked that.

Yes. Rich.

Thank you. Now we have another one in the queue here. Where do AI and data centers fit into strategy?

Wow. Thank you for that question. You know, we've been talking about this now for probably six quarters since I took over. I think what everybody is sort of missing, they're seeing gas prices and energy prices rise. They're attributing to political unrest. They're, you know, and that type of stuff. The reality is that, you know, as these AI, these massive consumers of energy come online, you know, a group like, you know, the local utility on Long Island, PSEG Long Island, you know, they're mandated to have, I don't know, six or seven gigawatts of capacity, you know, in the market, right? Like in any.

On Thursday, when it's 110 degrees in, you know, 102 degrees in July, they have to have available power, and they buy contracts from Niagara Mohawk and from wherever else and, you know, possibly wind farms, you know, when they come online. Ultimately, there's only so much power, and when the AI centers more and more come online, they're gonna be taking more and more power away, which means it's gonna be more expensive for the local business and homeowners. That's just the way supply and demand of the economies work. On one hand, on the residential and the commercial side, where we see the opportunity that AI and data center consumption is gonna produce, is going to really drive solar and storage adoption, right?

On the other side, you know, I am giddy, and one of the reasons why, you know, we look at Generac who is, you know, really becoming front and center on the redundancy of these data centers, okay, with these massive tractor trailer standby generation, we see that like we wanna be players in the energy supply side of deploying the solar that we can on these centers because it's smart, people are gonna be in you know, they're going to do it. But we also wanna be more potentially an international expert on how to integrate and maximize that power. You know, we have the models worked out, we have the technology. You know, we have the consultancy and the track record behind us to be a voice, you know, in that thing.

You know, how we monetize that, not sure yet, but, you know, it's gonna drive a lot of stuff and the alignment with some of these companies. The other side of the AI thing that, you know, we're leaning heavily into is, you know, every single piece of the ecosystem from a SUNation lead being generated to the service afterwards and the closeout, there are processes that we could do better with. You know, one standalone AI integration with that is gonna really drop our OpEx considerably also. Not just, you know, I write speeches with it, but it's gonna drop our OpEx.

Yeah. I would add that besides energy prices going up, that if you look at the models that are out there in the industry reports, the demand for new data centers across the country, across the world for that matter, is outpacing the ability for the grid to support it. I just think that any and every source of energy, not just solar, but, you know, small nuclear reactors and wind and you name it, all of it's gonna be needed to supply these data centers as AI and crypto and other things are creating demand on that energy.

Okay. I think that was everything in the queue. Thank you to everyone who submitted. I'll turn it back to the operator.

Thank you everybody for joining us today. Oops, am I the operator?

I think you are.

I'm the operator. Thank you everybody for joining us today and for your continued confidence in SUNation. 2025 was an important year for this company. We focused on stabilizing the business, strengthening the balance sheet, and turning difficult decisions into better operating and financial results. We believe we made real progress on all three fronts in 2025. We know there's still work ahead. We know that the market will continue to evolve, but we are stronger, more disciplined, more diversified, and better prepared for what comes next than we were a year ago. I wanna thank our employees, our customers, our shareholders, our partners, our board of directors for their support throughout this process, and we appreciate your time today, and we look forward to updating you again next quarter. Operator, that concludes our call. Thank you very much for the time today.

Thank you. This concludes today's conference. You may all disconnect your lines at this time, and we thank you for your participation.

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to SUNAtion Energy Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Devin Sullivan, Managing Director of Equity Group. You may begin.

Thank you, Bella. Thank you, everyone, for joining us today for SUNAtion's 2025 Third Quarter Financial Results Conference Call. Our speakers for today are Scott Maskin, Chief Executive Officer; and James Brennan, Chief Financial Officer. Mr. Maskin will open with prepared remarks followed by a question-and-answer session. Before we get started, I'd like to remind everyone that prospects of SUNAtion Energy are subject to uncertainties and risks. Remarks on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. The company intends that such forward-looking statements be subject to the safe harbor provisions provided by the foregoing sections. These forward-looking statements are based largely on the expectations or forecasts of future events can be affected by inaccurate assumptions and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the forward-looking statements contained during this call. The company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. Participants should consider statements that include the words believes, expects, anticipates, intends, estimates, plans, projects, should or other expressions that are predictions of or indicate future events or trends to be uncertain and forward-looking. We caution investors not to place undue reliance upon any such forward-looking statements. The company does not undertake to publicly update or revise forward-looking statements, whether because of new information, future events or otherwise. Additional information respecting factors that could materially affect the company and its operations are contained in the company's filings with the SEC, including its Form 10-K and in subsequent filings, which can be found on the SEC's website at www.sec.gov. With that, I'd now like to turn the call over to Scott Maskin, CEO of SUNAtion Energy. Scott, please go ahead.

Thank you, Devin, and good morning, everybody. Happy Monday. Thank you all for joining me today. This is a call that I've truly been looking forward to for quite some time. Since Jim and I took the helm of SUNAtion about 18 months ago, it felt at times like steering through unpredictable conditions, keeping steady, staying focused and making sure everyone on the team understood where we were headed and why. Now I won't tell you things have calmed down. They absolutely have not. As we look ahead to 2026, there's still a lot of movement in the industry and uncertainty. But the difference is that we're no longer reacting, we're leading. We've got structure, direction and a team that's completely aligned on the mission. And this quarter represents a turning point. For the first time in a long while, our results, our work reflect the impact of our hard work, the discipline and the cultural rebuilding that's taken place inside this organization. If I had to sum up Q3 in one phrase, it's this. We delivered it on our promises. Sales rose, costs came down, margins improved and profitability strengthened. Our capital structure is squeaky clean, and our balance sheet is the strongest it's been in years. That didn't happen by chance. It took tough calls, long hours and people who refused to give up, but it proves what happens when we stay focused and we execute. While many in our industry have struggled to find direction, SUNAtion has moved forward, stronger, leaner and ready for what's next. Those of us who've been in solar for a while know the ride never really smooths out. The One Big Beautiful Bill and the upcoming sunset of Section 25D have created new challenges and new opportunities, and our team is handled both with focus and professionalism. The rush to complete residential installations before the end of 2025 has been intense, and our teams in New York and Hawaii have been extraordinary and really stepped up to the plate. These are 2 of the most expensive energy markets in the country, and our people have helped homeowners take control of both their power and their costs. Residential sales in those markets were up 54% year-over-year in Q3. I want to say that again. Residential sales in those markets were up 54% year-over-year in Q3. And we expect that momentum to continue right through the year-end. At the same time, we're not focused on this surge. We're preparing for what comes after. We've been developing new financing options and lease-to-own programs that will carry us not just in 2026, but far beyond, tried and true approaches that have been part of SUNAtion's success story for more than 2 decades. On the commercial side, we're continuing to see steady demand from institutions and municipalities across Long Island and downstate New York. High energy costs and the longer runway for federal tax credits have supported a solid project pipeline, and we're executing efficiently. Our advantage continues to be our diversification in our people, our markets and our services. And it's what gives us balance and stability moving forward. We stand unique by offering residential solar and storage, commercial solar, roofing and our ever-growing expanding service division. We intend to expand into the energy-efficient HVAC market and stand-alone roofing, while we've doubled down on our service and O&M side, helping both our long-term customers and those left without support when their original installers disappeared. We're also evaluating strategic M&A opportunities that make sense, ones that bring scale, efficiency or exposure to fast-growing sectors like AI, crypto and data centers. These are reshaping how power is used, and we're positioning SUNAtion to play a meaningful role in the future. Through all of this, one thing hasn't changed. We stay calm, focused and deliberate. Running a business much like happening a ship isn't about avoiding rough conditions. It's about knowing your course, trusting you crew and making steady progress no matter what's ahead. Every day, I'm driven by 3 things: our team who show up with great purpose, our customers who trust us to deliver on the promise of solar and of course, our shareholders whose patients and confidence were determined to reward. SUNAtion is stronger than it's been in a long time. We understand the challenges ahead, but we also see tremendous opportunity in front of us. We've built a company that can adapt, grow and lead through whatever comes next. And I'll close with this. God willing, the market will begin to acknowledge and reward our efforts, our resilience and the results that this incredible team has delivered for you in Q3. Thank you all for your time and trust and your continued confidence in SUNAtion. With that, I'll turn it over to our COO, CFO and my steady co-captain, Jim Brennan, who will take us through the numbers. Jim?

Thank you, Scott, and good morning, everyone. I appreciate you joining us today and especially those on the West Coast that are joining us at 6:00 a.m. We are joined today by Kristin Hlavka, SUNAtion's Chief Accounting Officer and Corporate Treasurer; as well as Mitch Sommer, SUNAtion's Corporate Controller. We filed our 10-Q on November 7 and issued our earnings release on Monday, November 10. As we reflect on our performance for the third quarter, I am pleased to report that the actions that we have taken have delivered significant improvements throughout the business as we promised. We ended the third quarter in the strongest financial position in recent history through in-depth planning, disciplined execution and sharp focus on operational efficiencies by the regional leadership teams in both New York and Hawaii. We strengthened our balance sheet, expanded our margins and improved profitability. These much improved results our direct outcome of the hard work of the entire team and the commitment to deliver value to our shareholders in the midst of a rapidly evolving market environment. We are on track to report strong results in the current fourth quarter and have reiterated our 2025 full year financial guidance for higher total sales and a return to positive adjusted EBITDA as compared to full year 2024. On to the review of our Q3 2025 results. Total Q3 sales rose by 29% to $19 million from $14.7 million last year. Sales at SUNAtion in New York and Hawaii rose by 22% and 47%, respectively, with residential sales rising 54% and service sales increasing by 72%. This was driven by an accelerated pace of system installations prior to the expiration of the federal tax credits on December 31, 2025. Although commercial sales declined by $1.7 million, we expect continued stability in this sector as businesses and institutions such as churches and schools continue to take advantage of the longer runway that the One Big Beautiful Bill has offered. Inherently, the commercial sector is more complex and nuanced than residential. So these projects tend to take more time to develop and install. On a consolidated basis, overall kilowatts installed on residential projects increased by 52% in the third quarter of 2025. Revenue per installation increased by 25%. Consolidated gross margins improved to $7.2 million or 38% of sales from gross margin of $5.2 million or 35.6% of sales driven by higher residential margins. SUNAtion New York's gross margin improved to 40.7% from 37.9%, while Hawaii's gross margin increased to 32.1% from 29.5%. We continue to effectively manage costs throughout our organization, while total operating expenses rose $7.5 million from $6.8 million as a percentage of sales, the total operating expenses declined to 39.3% from 46.5%, and we expect the total operating expenses in 2025 to be lower than 2024. Interest expense in the third quarter of 2025 declined to $143,000 from a whopping $812,000 last year, reflecting the continuing benefits of paying off the expense of debt earlier this year. We continue to expect our annual interest expense to decline by approximately $2 million for 2025 as compared to 2024. We operated just below breakeven for the quarter with a net loss of approximately $393,000, which is a $2.9 million improvement from a net loss of $3.3 million in last year's third quarter. Taking all of this into account, Q3 adjusted EBITDA improved to a positive $898,000 from an adjusted EBITDA loss of $1 million in last year's third quarter. With respect to the balance sheet, cash and cash equivalents rose to $5.4 million on September 30, which is our largest or highest cash level since 2022. Our total debt decreased by over $11 million, falling to $7.9 million compared to $19.1 million at the end of 2024. This total debt included an earn-out consideration of $1 million. Other areas of improvement this year through September 30 include accounts payable improved $7.3 million from $8 million on December 31, 2024. Current liabilities improved to $19.0 million from $27.2 million on December 31, 2024. And lastly, shareholders' equity improved to $21.7 million from $8.5 million on December 31, 2024. Based on these Q3 results, solar projects pipeline and general business environment, we are reiterating our guidance for 2025 as follows: Total sales are expected to rise to between $65 million and $70 million, a projected increase of 14% or 23% from total sales of $56.9 million in 2024. Adjusted EBITDA is expected to improve to between $500,000 and $700,000 from an adjusted EBITDA loss in 2024. Before turning things back to Scott, I want to again thank the entire SUNAtion team, both in Hawaii and New York for their hard work and dedication. This process has not been easy. Over the past 6 months, our financial health has improved dramatically. Sales are up, costs are down, profits are higher and our financial position is strong. It's no secret that our industry is in a state of transition and that the challenges we all face are significant, but that's okay. We are embracing these challenges as an opportunity to redefine SUNAtion as a whole and the value we can deliver to our shareholders. The global demand for energy is accelerating, and SUNAtion has over 2 decades of experience in delivering clean, sustainable solar energy. As we look ahead to 2026, we will continue to address these opportunities from a renewed and we believe, sustainable position of financial strength. We are optimistic about our future and look forward to keeping you apprised of any news and progress. I want to thank you for your time, and we'll now turn things back to the most handsomest guy in solar, Scott Maskin.

Thanks, Jim. We're taking calls now, guys. All right. Fire away.

[Operator Instructions] Your first question comes from the line of Julien Dumoulin-Smith with Jefferies.

Hannah Velásquez on for Julien. I had a quick question or rather, yes, just an update on 25D expiration. Curious to see what you all are seeing out there in the market in terms of any pull-forward effect? And then also any reactions to the advent or I suppose the introduction of this new concept prepaid lease plus loan bundle. I think you alluded to it on your call. But any additional detail you can provide there in terms of if it's viable as a replacement of 25D and if you would consider pursuing it?

Sure. Thanks for the time today. So listen, 25D has certainly -- the sunset of that tax credit certainly has a meaningful impact especially in markets like New York and Hawaii with high cost of kilowatt hour. We've traditionally been loan markets. We have done some leasing. And there's been a lot of different tools that are out there. So what I would say is that we're driving to the end of the year, pull forward, yes, there's a ton of people that sat on the fence for a long time, they got off the fence. And they're just -- I mean, there's a lot of angry else out there that were on the fence for too long, and we just simply could not get them installed. I mean my teams in both states are running 6 days a week plus to get this work done. That being said, I believe that there are some significant advances in a lot of different financing tools other than just traditional leasing and loans. So I think a lot is going to evolve as more information comes out on FIAC. When I look at our markets, we could still make a d*** fine financial model for a loan and for owning it. So I don't think it's going to slow things. I think that we're in the in a trough right now of people that rush to move forward and then when they could and they're in pause mode. And then what's going to happen is we'll figure out ways to get them back on the fence through some of these other tools. I think they're all going to be viable. I think that people that are coming out with new and unique financing options are really making sure that their eyes are dotted and their Ts are crossed on the tax side of it. And that's been -- I'd say that's been slower than the anticipated process. Did that answer your question?

Yes, that was perfect. And then maybe just as a follow-up there. So we're hearing with 25D expiring, you're having new entrants, I suppose, in the competitive market, maybe more so on the TPO side. But can you just double-click in terms of what you're seeing out there? Are you seeing new TPOs enter trying to take advantage of the shift towards the leasing market? I know Tesla also joined the space. And so just what are you seeing from a competitive perspective?

When you mentioned the T word, never count Elon Musk out for anything. He's got the bag -- the sheet that he can upend this entire industry on a moment's notice. But I think that as somebody who's been involved for 20-some-odd years, I have seen so many players, financial players kind of circle and circle and they take advantage of opportunities when they're there and then some get smacked down and then they reinvent themselves and they come back. I mean this all boils down to capital and available capital and available tax equity, right? So my understanding in the market, raising capital in solar is difficult right now. It doesn't mean that it's nonexistent, but I think that there's going to be a little bit of a lull. People still want solar, but the players, they -- some of them rename themselves, some of them retreat and then come back. I mean, I'm mindful of how SunPower -- and I'll say that SunPower exited bankrupt and now they're coming back in as a player. So -- and acquiring companies and stuff. I look at some other companies that were in the LMI market that just couldn't get the capital and imploded, right? So it's just like a big -- it's kind of a big vortex, a big circle. But ultimately, everybody comes back to the top, the same players that are involved in the space are the same players that keep rising. They may rename themselves. And listen, we're going to go back. Again, all that needs to happen as the cost of energy continues to rise, it makes every decision even easier and more palatable.

I would add to that, that some of the newer tools that are becoming available based on some of the financial wizards in this market, prepaid leases, synthetic cash, you name it, there's a lot of buzzwords circulating around. But I love it. As long as we have the ability to deliver to these customers some sort of approach that works for them, even though the recent stupidity in Washington got at 100% wrong, we are pivoting to continue to survive. There are -- as Scott mentioned, there are companies in the industry that won't. The reality is New York and Hawaii are not alone with expensive power. Some of the target acquisition markets that we're looking at have even more expensive power than Long Island, which is hard to believe. But those folks are predicting higher revenue this year than -- next year than 2025 because their math continues to work in a purchase to own market even in the absence of the 30% federal ITC.

Okay. And if I could just have one more follow-up question. On that point, maybe on a consolidated basis, how are you thinking about market growth in 2026? I mean you hear the consultants all over the place, right, talking about a 10% decline, best-case scenario and then up to a 20% to 30% decline all in just given 25D expiring. And as like a secondary question there, what's the latest you're hearing on FIAC?

So the first part of your question was about 2026 guidance, and I'm not prepared to give that today. We do predict a lower-than-normal Q1, although as I say those words, I was recently pleasantly surprised from the New York team that they've already booked nearly 100 deals for January, which was surprising given the new set of circumstances that we're dealing with. And -- but by the way, that's the normal cycle of our business. Q1 and Q2 are always low in both New York and Hawaii for different reasons. And then Q3 and Q4, just like this year in 2025, Q3 and Q4 were cranking so much so that we're having trouble keeping up with all the work. And so I suspect that a very similar model will follow in 2026 as well. And Scott, do you want to...

Yes. Just on FIAC, it's still happening, right? Every day, there's a change. Every day somebody is coming out with different -- securing different equipment, different ABLs and stuff like that. I don't think that anybody can securely say this is where it's going to be on January 1. It's just the guidance is just -- it's too fuzzy. I think that we will adapt. We will find products and cash is king also. Those with strong balance sheets are going to be able to get equipment and others are going to implode. And I just want to touch on what Jim said. I have often and the thesis of SUNAtion has always been a regional company. When the analysts say 10% decline, 40% decline, 50%, it's really unfair because you look at some -- you look at California, who's just a gut punch after gut punch. But last year, they blew it out of the door, right? Like with the exit of NEM 3. But North Carolina is growing. Massachusetts is growing. So it's hyper-regional markets and hyper-regional. I've always said we're very -- we're exposed by utilities and state politics. So find me a state that is really pro-energy, find me a state that's going to see a growth of data centers and AI. And I'll show you a state that it's going to grow revenue base because of cost of power is going to be so high.

At this time, I would like to turn the call back over to Devin Sullivan.

Thank you, Bella. We do have a couple of questions from SUNAtion stakeholders that I'd like to ask on their behalf. And the first one to the management team is, what is your long-term vision for SUNAtion following the passage of the One Big Beautiful Bill Act?

Thanks, Devin. And to whoever that shareholder is, thank you. I think harping on the diversification of SUNAtion as one of our strengths, maybe it's our greatest strength. For my shareholders and for our company, we see a rush to the end of the year. We're figuring out a lot of things for 2026 and moving forward. But we see the commercial industry really growing. We see the service industry growing. Residential is going to figure itself out. We've been through these cycles before. So I'm not too -- there's a lot of confidence. Sometimes things like this are also a good gut check. Where can we be better? Where can we be more efficient? And take advantage of that thing. And that's not just with OpEx. That's not just with employees and stuff like that. I mean over time, you kind of float and you look at your software stack and you look at all kinds of things that you spend money on as you're growing, growing and growing. And sometimes it's a good exercise to retool and reshape the company so that you can come back. It's almost like going into the corner of a price line so that you can come out punching after somebody flashes water on you. So I'm not concerned, overly concerned about '26 and '27 because we're in a good spot for it. We have a lot of different revenue streams. There's a lot of different opportunities out there to add revenue to the company, to the listing, to SUNAtion as a whole that may be in the energy field, maybe not, right? So those are the things that give me a lot of confidence moving forward into 2026 and 2027. And at 62 years old, I need those pearls to keep me going.

Devin, I would add to that answer that just for clarification, revenue diversification has been our strength for a long time. The companies that we've seen that have failed over time are ones that have a single source of revenue, and you can name them off the top of your head, I'm sure. In our case, we went out of our way to have 6 or 7, hopefully, even more sources of revenue. So we have a residential revenue stream, commercial service, roofing. We actually do electrical work for some of our solar customers. We have community solar. And in the future, hopefully, if the moons align, we'll add HVAC and some high-efficiency HVAC tools that and so on. So that -- because as Scott mentioned, we'll see in the future a time where another part of our revenue stream slows down. That's fine. That's part of the cycle that we all live through, but we'll have a backfill from other revenue streams. Just like in 2025, the commercial team had lower-than-expected revenue. But I doubt that will be the discussion in 2026 because there's a ton of work that those folks are cranking through right now.

And actually, Jim, that's a good segue into our final question is, can you -- how would you describe the market for commercial in 2026?

Yes. So I'll start with that one. I see that we've -- in New York, we positioned ourselves very well with national developers. We've always taken the approach that it's great to originate your own work. But I make money when trucks roll. Our shareholders win when trucks roll and money comes in. So I don't really care who sells the job, but we're really good at executing on those things. Because of that diversification with the national developers, we're seeing a big inrush in schools, institutional type things. And we're really, really well suited to execute on that kind of stuff. I'm not saying that traditional rooftop solar on an industrial building is going to go away. But we have a very strong pipeline, and that's going to be a major focus for us moving forward because, listen, that's kind of where the sweet spot is in the industry right now also at least until through 2027. So that's -- there's nothing d*** the torpedo's is full speed ahead on that kind of stuff.

Devin, I would just add to that, that because we do a lot of work for these large national developers, and we do a pretty d*** good job at delivering on those projects, we are now getting asked or actually, we've been throughout the year being asked to do work in other states. So we historically have had an acquisition view on growth into new markets. But this is an organic view just simply because the commercial team does a good job of delivering. And then the next thing you know that national developer wants us to go into a different state because they have another project. And so that will definitely be some growth into next year that we'll see on the commercial side.

Thank you, both. That is our final question. So I'll turn things back over to Scott for closing comments.

Well, thanks for everybody that spent a beautiful sunny Monday morning with us. Customers are happy. They're making money today because the sun is out in New York and soon Hawaii. I want to wish everybody a happy holiday season. Let's not forget what's important as we move forward, revenue and shareholders and business is important, but family first, and that's how we treat our business. So I wanted to thank everybody time and the confidence. And man, am I looking forward to that end of year report, okay? So thanks, Devin. Thanks, team.

All right, ladies and gentlemen, that concludes today's conference call. Thank you all for joining, and you may now disconnect. Everyone, have a great day.

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the SUNation Energy Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Devin Sullivan of The Equity Group. You may begin.

Thank you, Desiree, and good morning, everyone. Thank you for joining us today for Sun Nation's 2025 Second Quarter Financial Results Conference Call. Our speakers for today are Scott Maskin, Chief Executive Officer; and James Brennan, the company's Chief Financial Officer. Mr. Maskin will open with prepared remarks, followed by Mr. Brennan and then a question-and-answer session. Before we get started, I'd like to remind everyone that prospects of SUNation Energy are subject to uncertainties and risks. Remarks on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. The company intends that such forward-looking statements be subject to the safe harbor provided by the foregoing section. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the forward-looking statements contained in today's call. The company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. Participants should consider statements that include the words believes, expects, anticipates, intends, estimates, plans, projects, should, or other expressions that are predictions of or indicate future events or trends to be uncertain and forward-looking. We caution investors not to place undue reliance upon. The company does not undertake to publicly update or revise forward-looking statements, whether because of new information, future events or otherwise. Additional information respecting factors that could materially affect the company and its operations, are contained in the company's filings with the SEC, including its Form 10-K and subsequent filings, which can be found on the SEC's website at www.sec.gov. With that said, I'd now like to turn the call over to Scott Maskin, Chief Executive Officer of SUNation Energy. Scott, please go ahead.

Good morning, everyone. I want to thank everybody for this opportunity today. As you know, we just released our Q2 filings, so welcome to our earnings call. I look forward to answering your questions at the end. Feel free throw hard balls or soft balls and I'll be answering them. So I want to take a few minutes to talk about where SUNation stands today, what we're seeing across the solar industry and where I believe we're headed in the back half of 2025 and into early 2026. Let's start at the top. I couldn't be proud of the progress that we've made as a business. We've avoided more than a few icebergs navigating through fabricated headwinds and economic noise. And SUNation has come out stronger. We're stable, we're lean and in my view, we're set up to outperform our peer set. That said, this industry just doesn't quit throwing curveballs. You hear me referring to our industry is riding the solar coaster. And before each earnings call, I look backwards and I ask myself, did I see this coming? Could I have seen this coming? And what changes what I have made? Honestly, nothing could have prepared us for what the post-election solar landscape would look like, but the results of the one big beautiful bill and its impact to the solar industry would have been like predicting COVID. Coming off a brutal 2024, where SUNation and many others saw sales drop 25% to 40%. If they even stayed afloat, I came into this year very optimistic, not because of politics, but because of fundamentals, job growth, domestic manufacturing, energy independence. It just made sense. Solar and storage brought Americans back to work faster than any other sector post-COVID. We delivered the cheapest per kilowatt hour of any energy source, provide grid benefits and diversification while adding benefits unmatched the environment and the local communities we serve. Elon Musk is even in the game. I felt like we're finally going to get a seat at the big table. But instead, we got lumped in with wind and the Green New Deal narrative, and that political baggage has hurt us. I spent the last 2 months in D.C. side-by-side with other industry leaders and lobbyists fighting to preserve key tax credit provisions and so far, no luck. The fragmentation in our sector left us exposed, and we're paying for it. A lesson to be learned for sure. It also didn't help with some of the biggest names in solar collapsed. SunPower filed for bankruptcy in August of '24. Sunnova and Mosaic followed in 2025. And even though those events were finalized in June, investor confidence started taking back in Q1, and it created a ripple effect that dragged down the entire sector. But through it all, one thing has remained true. Our greatest strength at the SUNation is our diversification. We operate in 2 of the most expensive energy markets in the country, New York and Hawaii. Our diversification in the residential, commercial, service and roofing spaces elevate us above all others, and our 22 years of experience are key differentiators. We attract confidence. Our Hawaiian team at HEC is benefiting from our shift towards service and commercial work. And HECO's new battery storage program is helping us make real progress. In New York, commercial projects faced delays due to utility red tape, but we've broken through, boots are finally on the roof, and our pipeline is strong through the end of 2026 already. The shining star is that residential solar is on fire across the country and especially our markets. While I paused to salute the federal government's decision to sunset Section 25D of the ITC at year's end, homeowners are moving fast. Sales are surging in both New York and Hawaii, and our teams are running beyond full speed. We're already planning for the next phase with new financing models lined up for 2026 and beyond. We are prepared to pivot unlike our competition. Behind the scenes, I'm incredibly proud of what we've accomplished corporately. Jim Brandon has shared many of the details, but the highlights are clear. We've cleaned up our capital stack. We built our cash position, and we're relentlessly pursuing our targets of OpEx efficiency and have cleared out debt. I also want to give credit to where credits do. Our Board of Directors has been lockstep with Jim and I, rolling up their sleeves and driving real value every single day. And as our momentum builds, so do our opportunities. Our roll-up strategy is still very much active with multiples of companies dropping considerably. But I'm also looking closely at opportunities for smart strategic consolidation within public markets. This journey as a public CEO over the last 14 months hasn't been easy, but it's been deeply rewarding. What drives us is our team, the 188 SUNation employees across New York and Hawaii, who continue to show up, give their all and push through the noise. They are the heartbeat of this company. And if there's one big takeaway from the first half of 2020 -- the first half of this year, it's this, solar-only companies are vulnerable. Our original thesis of acquiring top-tier regional solar firms still makes sense. But I'm now laser-focused on aligning with diversified energy companies, especially those in the AI, crypto and data center infrastructure. These are the largest emerging consumers of power and they're going to shape the next decade of demand. We need to be part of that evolution. SUNation is strong. We're beating the odds and most importantly, we're growing and winning. So thank you for your continued confidence. Everything we do is aimed at increasing shareholder value, and that mission remains our North Star. I'll see you again in the next quarter, and I thank you for your time today. With that, I'll turn it over to Jim Brennan to get into the nuts and bolts.

Thank you, Scott, and good morning, everyone. From a logistics point of view, Scott Maskin, Kristin Hlavka, SUNation's Chief Accounting Officer and Treasurer, and I are usually in the same room for these earnings calls. However, given Hurricane, Erin's past and expected flight delays. The 3 of us are in separate states, and we'll do our best today to make this call go seamlessly. We issued our earnings release yesterday morning and filed our 10-Q with the SEC on August 15. This has been a remarkable period for the SUNation team. With the support of an incredible team, we have reshaped nearly every aspect of the business operationally, financially and strategically. We gained momentum as the year progressed and delivered our second quarter performance that marked a turning point in our journey to create a new, strong and sustainable SUNation energy. We increased our gross margin, reduced our SG&A expenses and improved our adjusted EBITDA loss compared to the last year's second quarter. We strengthened our balance sheet through aggressive deleveraging, reduced our total debt by 61% from December 31, 2024, and driving down our second quarter interest expense by nearly $600,000. Our cash position improved nearly fourfold. We have built a robust and growing backlog in our residential and commercial business segments that has given us a clear line of sight to significantly improve performance in the second half of the year and the confidence to reiterate our full year financial guidance. In summary, we are addressing the new realities of our industry while maintaining the highest level of customer service, remaining a reliable partner to our suppliers and driving sustainable growth opportunities. We are operating more efficiently and delivering on our business and financial obligations. On to the review of our second quarter of 2025 results. Total Q2 sales were $13.1 million compared to $13.5 million last year. Sales in New York rose to $9.8 million from $9.7 million with residential sales decreasing 6% to $8 million and commercial sales increasing 156% to $1.3 million when compared to Q2 last year. Sales in Hawaii have declined from $3.2 million from $3.8 million. On a consolidated basis, overall kilowatts installed on residential projects decreased by 11% in the second quarter of 2025 with price per watt remaining consistent. On a positive note, revenue per install increased by a whopping 5%. Our backlog has grown considerably, thanks to a large volume of residential customers who are now booking jobs to secure their federal tax credits before they expire at the end of this year. Thanks to the uncertainty from Washington that surrounded the status of these tax credits in both New York and Hawaii markets, our residential backlog improved $27.1 million on June 30 from $26.9 million on December 31, 2024. Residential backlog accelerated to $35.6 million on July 31 of this year, up more than 31% in just 1 month. On the commercial side, we ended July with a backlog of $4.2 million, up nearly fivefold from the prior month. We expect to realize 65% of the commercial backlog by December 31 of this year. Consolidated gross margin for the second quarter increased to 37% from 35.4%. New York's gross margin increased a whopping 210 basis points to 40.3% from 38.2%, while Hawaii's gross margin decreased to 27.1% from 28.3%, primarily due to fixed costs on lower revenue. We continue to drive down cost and improve efficiencies as we are creating significant cost savings. In the second quarter of 2025, SG&A expenses declined $6.4 million from $6.6 million in the prior year period. Total operating expenses rose to $7 million from $6.8 million, which last year's operating expenses benefited from a $450,000 fair value remeasurement of the earn-out consideration. Interest and other expenses in the second quarter of 2025 was $162,000 compared to $736,000 from the last year. This decrease reflects the payoff of some expensive debt earlier this year. Net loss from continued operations was $9.6 million compared to a net loss of $6.9 million in last year's second quarter. However, the net loss in the second quarter of 2025 included a noncash expense from $7.5 million fair value remeasurement of warrant viability this past quarter versus $3.3 million in the prior year period as well as a $560,000 financing fee related to the closing of our direct offering versus none in the prior year period. Taking all this into account, our adjusted EBITDA loss improved to minus $1 million in the second quarter versus minus $1.7 million in the prior year period. Moving to the balance sheet. I am very pleased with the progress we have made along several key metrics since the start of the year. Cash and cash equivalents rose to $3.2 million from $1.4 million on March 31 of this year and $840,000 at the end of last year. Restricted cash has remained stable at approximately $300,000 since the end of last year. Just before we ended the second quarter, we terminated our Series A warrants, which protected investors from a potential dilution of 652,000 shares. We believe this was a meaningful way to deploy our capital while enhancing shareholder value. As noted earlier, over the first 6 months of this year, we reduced our total debt by $11.7 million total debt on June 30, 2025, which included consideration of approximately $500,000 -- the earn-out consideration, sorry, of approximately $500,000, declined to $7.5 million from total debt of $19.1 million on December 31 of last year. This has moved -- removed about an annual drain of approximately $3.4 million through 2025. We continue to expect that annual interest expense to decline by approximately $2 million for 2025. In addition to debt repayments, we also restructured $5.6 million of long-term debt to improve our capital structure, enhance cash flows and provide financial flexibility. Other areas of improvement this year through June 30, 2025, include accounts payable improved to $6.4 million from $8 million. Inventories improved to $2.3 million from $2.7 million, current liabilities improved to $12.8 million from $27.2 million, long-term liabilities improved to $9.2 million of $10 million and lastly, stockholders' equity improved to $22.1 million or $6.49 per share from $8.5 million. Based on our results of our second quarter, project pipeline and general business environment, we are reiterating our guidance for 2025 as follows: Total sales are expected to rise to between $65 million and $70 million, a projected increase between 14% and 23% from total sales of $56.9 million in 2024. Adjusted EBITDA is expected to improve to between $500,000 and $700,000 from an adjusted EBITDA loss in 2024. Before turning things back to Scott, I want to again thank our team at SUNation for all of their hard work and dedication. For those of you that have ever met with us over the years, you would have heard us say that transparency is the foundation of our business. When we initiated nearly 100 restructuring actions starting in May, of 2024, we did so with the intention to stabilize the business and create a solid financial foundation for growth. While it may have seen an impossible task at the time, our second quarter results aligned with what we had said earlier this year. But the actions we took in 2024 and early in 2025, however, difficult would result in a stronger SUNation and that is exactly what has happened. We are excited and optimistic about the future and look forward to keeping you apprised of any news and progress. I feel that this is an exciting time for SUNation Energy as a whole. I want to thank all of you for your time today and turning things back to Scott.

Nice job, Jim. Thank you. And now if anybody has any questions, we're happy to flip back between Jim and I, and answer some questions.

[Operator Instructions] Our first question comes from the line of Julien Dumoulin-Smith with Jefferies.

This is Hannah Velásquez on for Julien. Thanks for the update and nicely done. I have few questions. The first to open it up, you mentioned on the call just some new financing models and potentially financing structures to enter into 2026. Can you provide any further detail in terms of what you're contemplating there?

Yes, thank you for the call. And thank you and Julien for me. I would say that as soon as the guidance came out on 25D and 48E, it was sort of like a scramble. Most companies that we're looking at that were traditionally loan-oriented residential companies knew that they had to pivot. Some of the people that came up was light reach. There's a few of them out there, right, that are really kind of shaping third-party ownership. But what I do believe is that there are significant players that are working behind the scenes to kind of lace a different financing model between TPO and the loan market. Some people talk about prepaid leases, but I think that -- I won't give you names, but I know there's a bunch of people out there right now trying to lace together different ingredients to make it all work that's best for the homeowners that serves everybody's needs. Does that answer the question?

Yes, that's perfect. I understand it's still early innings and everybody is trying to sort through the transition. So commentary is very fair. And then if I could just ask a follow-up. Can you give us a sense of the growth outlook for residential solar in 2026, more so macro growth rather than company growth, in terms of installations, again in 2026 and maybe if you have visibility into 2027, not only taking into account the expiration of 25D, but also the favorable outcome from treasury guidance on Friday of last week?

Yes. Thanks. I mean there's a lot to unpack there. I think that the brace right now over the last couple of months was the race to secure funding materials and everything else so that we could make a commitment to the customers that they would get installed by 12/31, that loan customers would get installed before the end of the year. So that's pretty much taken everybody's effort. And quite frankly, responsible companies right now in the residential space are mitigating that risk, saying, "Hey, listen, you're in the queue. We're 200 projects oversold for 2021, but there's always issues that push people to the sidelines, permitting issues and whatnot. What is surprising is we have not seen a slowdown in sales for people that got the notification that we can't guarantee that -- and I say guaranteed tax credits, I mean that we can guarantee that the system will be installed that if you qualify for the tax credits, you would be able to take advantage of them. We haven't seen a slowdown of applications coming in for people that want solar. That's super promising because I think that in 2026, after the sunset, these people are going to be, well, I'm down the road, I have my permits, talk to me about other financing options, and we'll still move forward as the cost of energy continues to rise and rise. And as I mentioned, the albatross of AI in crypto and power demand negatively impact. They're going to make residential energy costs go up. There's only so much supply right now. So I think that in 2026, it's going to be -- you're going to be limited possibly by supply because I think there's going to be a glut of product that is spoken for. I don't see -- a lot of things are going to happen in the next year. And boy, it didn't -- it only took -- let's put it this way, in 22 years of me in this industry, it only took a couple of months to go from 30% tax credit to no tax credit. If you start talking about 2027, then a lot can happen between now and 2027. And just delivering transparency to what the industry looks like to offtakers is the most important thing and earning their confidence.

Okay. Super fair -- go ahead.

If I may Hannah, I would add that the whole comments Scott made earlier about our diversified approach to this market. I think that's the key answer here, which is residential, it's unclear what the total impact of the entire market will be in 2026 and 2027, because everybody's got a pivot to third-party-owned selling approaches, where historically, at least at SUNation for the last 22 years, we have focused on purchase to own, not third-party owned. And so that will be a pivot. But the good news is that we -- our other sources of revenue. So we have 5 or 6 sources of revenue. Residential is only one of them, commercial roofing, service, electrical services, and adding on additional revenue sources, that's the key to our success here. As residential becomes a question mark in '26 and '27, our commercial business unit is exploding, as I just mentioned in our prepared remarks. And so that's going to be the key. When the government got rid of 25D, which I think was exactly the opposite of logic, 48E actually continues to promote not only residential TPO, but the commercial side of our business. And so I -- we expect to continue to see that to grow.

Right. Super fair. And I think like the safe harbor outcome for smaller solar, it bodes well for both residential and the C&I perspective. Okay. Yes, I was mostly trying to get us the context of some of your peers in the resi space have been sizing 2026 at maybe, call it, down 20% as they take into account loan and cash down meaningfully, but then TPO up. And so I was just looking to see if you agree with that framework or concede it could actually be better again just because you have more visibility into likely 2029 and 2030 on the leasing front for solar?

I think it's going to be better than predictions based on the chatter that I see and especially because we operate in New York and Hawaii. I can't talk for other -- some of the other markets. But for us, the cost of power is absurd. So I see people getting pushed further and further along to join it.

[Operator Instructions] There are no further questions at this time. I would now like to turn the call back over to the management team.

So we have some questions from the investor in box. This one comes from John L. At what point does an installation qualify for the tax credit? In other words, does it have to be completely installed, partially installed or connected to the grid?

Yes. Thanks for that, John. Our read on this is we have to have the system up and operational, ready to connect. That is exclusive of closing out building permits, utility interconnection. This is the residential off-taker. We can't be held accountable for slow utility works and whatnot. So our commitment to the customers that we've made is that you will be up and operational by 12/31. And if you can take advantage of the tax credits, and we do not give tax advice, then we'll absolutely be ready to apply for it.

The next question comes from Ariel C. Do you see any opportunity for solar as part of AI/data centers?

Oh my God, yes. Thank you, Ariel. We keep hearing, we use AI in our own business, right? I write some of my stuff with AI. But I was mindful of a project that I just went to where Microsoft is building a 1 million square foot AI facility in Milwaukee. And that -- the power consumption and water consumption for that building is going to dwarf the 350,000 homes that are in Milwaukee, right? So there's no question, price of electricity in Milwaukee is going to go up for residential offtakers because there's only so much being generated there. What I see is an incredible play is that -- and I mentioned it in the oncoming statements that solar-only and storage-only companies are super vulnerable. It's time for companies that embrace both fossil fuel and renewables to start to work together and use the same property and use the same transmission line and whatnot and cite these things. So I think there's a fabulous opportunity to participate in alongside as fossil fuel, oil, natural gas and whatnot as opposed to being this or that. So yes, and that's exactly where my head is heading right now after the one big beautiful bill.

And then what looks like maybe the final question from Nick B. How do you expect quarterly revenues/adjusted EBITDA to trend over Q3 and Q4?

I'm going to flip that one over to Jim Brennan.

Thank you, Nick. Good question. So we don't give quarterly guidance. As you may recall, this is the first year that we actually gave guidance in a while. And so what I will say is that -- and you've heard me say this on prior earnings calls, is that we happen to be in a little bit of a cyclical business. So Q1 for different reasons, Q1 in New York and Q1 in Hawaii are typically lower revenue, potentially loss of net income quarters for us. Q2, typically in those 2 markets begin to start ramping up. And therefore, might be certainly see some growth on the revenue side, but profitability may be neutral. Q3 starts ramping up hard. We start stockpiling some cash and then Q4 even better. And I wish I didn't have that in our 2 business segments and perhaps as we continue to grow with our roll-up strategy, we can bolt on other companies that have different profiles. But for the New York and Hawaii businesses for different reasons. Q1 low, Q2 better, Q3 and Q4 are off to the races almost every year. Good question there.

And that concludes the investor inbox. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.