- 2022 Funded Loan Volume of $2.9 Billion -

- 2022 Total Revenue of $101.1 Million -

- 2022 GAAP Net Loss of $(511.9) Million -

- 2022 Adjusted EBITDA of $(35.7) Million -

- 2022 Adjusted Net Loss of $(22.2) Million -

Sunlight Financial Holdings Inc. (“Sunlight Financial”, "Sunlight" or the “Company”) (NYSE: SUNL), a premier, technology-enabled point-of-sale finance company, today announced its results for the fourth quarter and full-year 2022.

“While 2022 was a challenging year for the Company and the residential solar industry overall, Sunlight continued to execute on its operational metrics, funding 15% more loans than in 2021, increasing the average solar loan balance to $46 thousand and serving over 79 thousand borrowers throughout 2022," said Matt Potere, Chief Executive Officer of Sunlight. "As we turn to 2023, I am excited to return to profitability, supported by the comprehensive financing agreement we recently signed with Cross River Bank."

Full Year 2022 Key Operational and Financial Metrics

• Funded loans of $2.9 billion, up 15% from $2.5 billion in the prior-year period
• Average solar loan balance of $45,507, up 13% from $40,436 in the prior-year period
• 79,302 borrowers served, up 12% from 70,938 in the prior-year period
• Total Revenue of $101.1 million, relative to $120.6 million in the prior-year period, primarily driven by the impact of higher interest rates on our Indirect Channel
• GAAP Net Loss of $(511.9) million, relative to $(241.0) million in the prior-year period, primarily due to a $445.8 million non-cash impairment of Goodwill driven by challenges in the macro-economic environment
• Adjusted EBITDA of $(35.7) million, relative to $52.9 million in the prior-year period, primarily driven by the deterioration of the Indirect Channel and increased provisions for losses
• Total Platform Fee Margin of 3.7% (relative to 4.4% in the prior-year period), Direct Channel Platform Fee Margin of 5.6% (up from 5.1% in the prior-year period) and Indirect Channel Platform Fee Margin of (2.4)% (relative to 3.1% in the prior-year period)
• Total cumulative funded loans of $9.0 billion as of December 31, 2022

Fourth Quarter 2022 Key Operational and Financial Metrics

• Funded loans of $752.7 million, up 18% from $637.6 million in the prior-year period
• Average solar loan balance of $47,367, up 13% from $41,983 in the prior-year period
• 19,399 borrowers served, up 6% from 18,225 in the prior-year period
• 1,997 active contractor relationships, up 32% from 1,509 in the prior-year period
• Total Revenue of $6.3 million, relative to $36.6 million in the prior-year period, driven by a $(24) million loss in the Indirect Channel
• GAAP Net Loss of $(79.5) million, including a $61.4 million non-cash impairment of Goodwill, relative to GAAP Net Loss of $(226.7) million in the prior-year period
• Adjusted EBITDA of $(23.3) million, relative to $18.5 million in the prior-year period, primarily driven by the deterioration of the Indirect Channel and increased provisions for losses
• Total Platform Fee Margin of 0.5% (relative to 5.3% in the prior-year period), Direct Channel Platform Fee Margin of 6.2% (up from 5.7% in the prior-year period) and Indirect Channel Platform Fee Margin of (10.5)% (relative to 4.2% in the prior-year period)

First Quarter 2023 Key Operational Metrics

• Funded loans of $627.4 million, up 6% from $592.6 million in the prior-year period; however, volume headwinds expected for full-year 2023
• Average solar loan balance of $46,810, up 6% from $43,999 in the prior-year period
• 2,070 active contractor relationships, up 30% from 1,589 in the prior-year period
• 15,799 borrowers served relative to 16,757 in the prior-year period

A reconciliation between historical GAAP and non-GAAP information is provided in the tables below.

Update on Key Priorities

• Enhance Indirect Channel Execution: Sunlight completed an Indirect Channel loan sale of $228 million in December 2022. As of March 31, 2023 the Cross River Bank (CRB) Warehouse Facility balance was $764 million which has been partially reduced by a $296 million sale of Indirect Channel loans in April 2023. In addition, the recently-closed CRB Financing Agreements provide for an increase in the loan cap for the CRB Warehouse Facility and extends its maturity for an additional two years, enabling Sunlight to continue originating loans in the Indirect Channel.
• Bolster Liquidity: The CRB Financing Agreements include an $89 million New Term Loan to pay fees, accrued interest and deferred proceeds to CRB, and for general corporate purposes.
• Ensure Profitable Pricing: Since the third quarter of 2022, the Company has been eliminating unprofitable products and materially raising pricing, ensuring that recently credit-approved loans are profitable in both the Direct and Indirect Channels.
• Right-Size Expense Base: Since the fourth quarter of 2022, Sunlight has been implementing expense reduction actions to save on costs related to vendors, technology, and compensation.
• Reduce Contractor Advance Program: In the fourth quarter of 2022, Sunlight re-underwrote all advance program partners and tightened advance criteria. In the first quarter of 2023, the Company suspended the Contractor Advance Program and has significantly reduced outstanding advances.
• Address SVB Credit Facility Maturity: Sunlight's revolving credit facility with Silicon Valley Bank was set to mature in April 2023. Upon closing of the CRB Financing Agreements, outstanding borrowings under the SVB Facility of $3.6 million were paid off with the New Term Loan.

Review of Strategic Alternatives

As previously announced on November 14, 2022, Sunlight's Board of Directors has undertaken a review of strategic alternatives for the Company. The Cross River Bank financing agreement aligns with the goals of the strategic alternatives process and the Board is continuing to review additional actions to maximize value.

Conference Call Information

Sunlight will host a conference call and webcast to discuss its fourth quarter and full-year 2022 financial and operational results and business outlook at 5:30 PM ET today, May 4, 2023. The conference call will be webcast live from the Company's investor relations website at ir.sunlightfinancial.com. A replay will be available on the investor relations website following the call.

Earnings Presentation

A supplemental earnings presentation is available at ir.sunlightfinancial.com. Additional information is available in the 2022 Form 10-K, which Sunlight filed with the SEC on May 4, 2023.

About Sunlight Financial

Sunlight Financial is a premier, technology-enabled point-of-sale finance company. Sunlight partners with contractors nationwide to provide homeowners with financing for the installation of residential solar systems and other home improvements. Sunlight’s best-in-class technology and deep credit expertise simplify and streamline consumer finance, ensuring a fast and frictionless process for both contractors and homeowners. For more information, visit www.sunlightfinancial.com.

Forward-Looking Statements

The information included herein and in any oral statements made in connection herewith may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may generally be identified by the use of words such as “could,” “should,” “would,” “will,” “may,” “believe,” “anticipate,” "outlook," "2022 guidance," “intend,” “estimate,” “expect,” “project,” “plan,” “continue,” or the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Sunlight disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date hereof. Sunlight cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Sunlight. Such risks and uncertainties include, among others: the ability to consummate a strategic alternative in the timeframe and on terms and conditions favorable to the Company and its stakeholders, material adverse impacts from macro-economic conditions including unprecedented interest rate increases on business, profitability and cash-flow, risks relating to our ability to secure relief from our current bank covenants, risks relating to the uncertainty of the projected operating and financial information with respect to Sunlight; risks related to Sunlight’s business and the timing of expected business milestones or results; global supply chain shortages, competition for skilled labor, and permitting delays; the effects of competition and regulatory risks, and the impacts of changes in legislation or regulations on Sunlight’s future business; the expiration, renewal, modification or replacement of the federal solar investment tax credit, rebates and other incentives; the effects of the COVID-19 pandemic on Sunlight’s business or future results; Sunlight’s ability to sustain profitability and to attract and retain its relationships with third parties, including Sunlight’s capital providers and solar contractors; the financial performance of Sunlight’s capital providers and contractors; the willingness of Sunlight’s capital providers to fund loans on terms desired by relevant markets and economically favorable to Sunlight; the impact of inflation and increased interest rates on Sunlight’s capital providers and the cost and availability of credit from our capital providers as well as on the demand for solar panel installation and home improvement; changes in the retail prices of traditional utility generated electricity; the availability of solar panels, batteries and other components and raw materials; and such other risks and uncertainties discussed in the “Risk Factors” section of Sunlight’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on May 4, 2023. Should one or more of the risks or uncertainties described herein occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Sunlight’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Non-GAAP Financial Measures

Some of the operating and financial information and data contained in this press release, such as Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Class A Share have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Sunlight believes these non-GAAP measures of financial and business results provide useful information to management and the reader regarding certain financial and business trends relating to Sunlight’s financial condition and results of operations. Sunlight further believes that the use of these non-GAAP financial and business measures provides an additional tool for use in evaluating projected operating results and trends and in comparing Sunlight’s financial and operating measures with other similar companies, many of which present similar non-GAAP financial and operating measures to their investors and potential investors. While Adjusted EBITDA, in particular, is relevant and widely used across industries and in the industries in which Sunlight participates, they may contain or exclude adjustments, exclusions and one-time items that third parties may or may not adjust for in connection with such measure, and such measure should not be considered an alternative to any GAAP measures in evaluating the profitability of an investment in, or whether to invest in or consummate a transaction involving, Sunlight. The principal limitation of the Adjusted EBITDA non-GAAP financial measure is that it excludes significant items of income and expense that are required by GAAP to be recorded in Sunlight’s financial statements. In addition, it is subject to inherent limitations as it reflects the exercise of judgment by Sunlight’s management about which items of income and expense are excluded or included in determining this non-GAAP financial measure. The Adjusted EBITDA non-GAAP financial measure and other non-GAAP metrics used herein, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Class A Share should not be relied on or considered an alternative to any GAAP measures or other measures related to the liquidity, financial condition or financial results of Sunlight. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this release.

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