RGS Energy Reports Fourth Quarter and Full Year 2015 Results

Transcription

1 RGS Energy Reprts Furth Quarter and Full Year 2015 Results LOUISVILLE, CO, April 1, 2016 RGS Energy (NASDAQ: RGSE), a residential and small cmmercial slar cmpany since 1978, has reprted results fr its furth quarter and full year ended December 31, The cmpany plans t file its annual reprt n Frm 10-K tday. Business Turnarund and Liquidity Update Cmmencing in the furth quarter f 2014, the cmpany has been executing a business turnarund strategy. The cmpany s strategy has been t reduce its indebtedness and increase its stckhlders equity, as well as reduce its perating cst infrastructure with the bjective f reducing the level f required sales necessary t achieve breakeven r better results in perating incme. During 2015, the cmpany imprved key financial metrics as shwn in the fllwing table (in millins, except percentage changes): % Change Net Incme (Lss) ($10.8) ($57.1) 81% Ttal Debt % Stckhlder Equity (Deficit) (1.0) (5.3) - Revenue % Selling & Operating Expenses % We made strng prgress with ur turnarund and psitining the cmpany fr the future, reducing the net lss frm $57 millin t $11 millin in just a ne-year perid, said Dennis Lacey, CEO f RGS Energy. We als significantly reduced debt and increased the net wrth f the cmpany. Our year-ver-year revenue declined fr reasns previusly disclsed, but we were able t mitigate the financial effect f declining revenue by reducing expenses at a faster rate. Our multi-step plan has been t first ptimize the infrastructure csts f peratins, and thereafter btain additinal capital necessary fr prfitable grwth. The cmpany disclsed with its third quarter 2015 earnings release that it had engaged an investment banking firm t assist the cmpany with raising additinal capital thrugh debt r equity financing and that such financing was expected t be raised by Nvember 30, In the first quarter f 2016, as reprted n Frm 8-Ks filed with the Securities and Exchange Cmmissin, the cmpany has replaced its prir senir lender, Silicn Valley Bank, with Slar Slutins under a facility that the cmpany believes ffers better terms, as well as raised $10 millin f cnvertible ntes. As a result f ur recent financing activities, we believe we have access t sufficient financial capital t cntinue ur business turnarund strategy, said Alan Fine, principal financial fficer f RGS Energy. Given we did nt clse these financings in the time frame we had anticipated, ur perating results fr the ensuing perid will reflect the lack f access t adequate capital during that perid. Q Financial Summary Net revenue in the furth quarter f 2015 decreased t $9.7 millin frm $10.4 millin in the previus quarter and $18.4 millin in the furth quarter f The cmpany did nt emphasize riginating new sales during the majrity f 2015, as it fcused n cnverting its lng-standing backlg t revenue and achieving a better balance between sales and cnstructin. Nw that the cmpany has reduced its backlg and expects t have access t additinal financial capital, it is refcusing n new sales rder generatin. 1

2 Residential segment average selling price (ASP) n new sales rders increased 0.9% frm the previus quarter and rse 0.4% frm the furth quarter f The cmpany installed slar equipment n 205 rfs in the furth quarter f 2015, as cmpared t 253 installatins in the previus quarter and 496 installatins in the furth quarter f In the furth quarter f 2015, lss frm cntinuing peratins, net f tax, was $3.9 millin, as cmpared t a lss f $3.9 millin in the previus quarter and a lss f $13.3 millin in the furth quarter f Grss margin fr the residential segment was 16.2% in the furth quarter f 2015, which increased frm 12.5% in the previus quarter and 11.8% in the furth quarter f The increase frm the year-ag quarter primarily reflects the cmpany s ability t be mre efficient and the benefits f better pricing n materials. The imprvement in margin frm last quarter als arse frm a decrease in cancellatins and imprved inventry management. Grss margin fr the Sunetric segment was 15.1% in the furth quarter f 2015, which decreased frm 19.6% in the third quarter f 2015 and increased frm 11.8% in the furth quarter f The increase frm the prir year quarter primarily reflects increased residential installatins, as well as the cmpany s refcus n its Hawaiian Island business fr cmmercial prjects. The Sunetric segment generated a lss f $145,000 in the furth quarter f 2015, as cmpared t a lss f $11.4 millin in the same year-ag quarter that included an asset impairment charge f $10.4 millin. The imprvement, ther than nt recrding an asset impairment charge in the current perid, is attributable t an increased level f residential installatins and imprved integratin with crprate f business activities, including cst saving initiatives. Selling and perating plus general and administrative expenses, in the aggregate, decreased $4.3 millin t $4.7 millin in the furth quarter versus the prir year quarter. The decrease frm the prir year quarter was primarily attributable t a decrease in headcunt; general and administrative cst saving initiatives; the restructuring f the sales rganizatin and cmmissin plan; and, reducing the cst f custmer leads. Litigatin expenses related t the respnding t the SEC subpena regarding the cmpany s July 2014 capital raise were $0.4 millin in the furth quarter f Derivative gain, net, was $0.2 millin in the quarter versus $0.7 millin in the previus quarter and $6.0 millin in the furth quarter f Lss frm discntinued peratins, net f tax, was $0.3 millin, reflecting the winding dwn f the cmpany s Large Cmmercial segment. Fr the prir year quarter, lss frm discntinued peratins was $2.8 millin, underscring management s earlier annunced strategic decisin t exit the Large Cmmercial business in mainland U.S. Net lss ttaled $4.2 millin r $(0.52) per share, as cmpared t a net lss f $16.2 millin r $(6.76) per share in the furth quarter f Full Year 2015 Financial Summary Net revenue decreased 35.7% t $45.5 millin in 2015 versus $70.8 millin in Slar system installatins n hmes and small businesses decreased 48% t 1,106 installatins in 2015, as cmpared t 2,127 installatins in Operating lss frm cntinuing peratins decreased 58.5% t $16.8 millin in 2015, versus $40.6 millin in

3 Lss frm discntinued peratins, net f tax, was $1.0 millin in 2015, as cmpared t a lss f $30.9 millin in Net lss was $10.8 millin r $(1.32) per share in 2015, as cmpared t a lss f $57.1 millin r $(23.87) per share in The imprvement frm the prir year is primarily attributable t management s decisin t exit the Large Cmmercial segment perating in the mainland U.S. and actins that reduced perating csts. Backlg and Net Sales Orders Backlg is increased fr net new sales rders (newly signed cntracts with custmers, net f cntract cancellatins r hlds), backlg frm acquired cmpanies at the date f acquisitin, and decreased fr installatins, which are reflected in revenue. Backlg decreased 72.9% t $16.7 millin at December 31, 2015, as cmpared t $61.5 millin at December 31, Residential backlg decreased 76.1% t $9.5 millin at December 31, 2015 versus $39.7 millin at December 31, As mentined abve, the cmpany did nt fcus n new sales rder generatin during As such, new sales rders fr the cmpany s residential segment declined by $17.8 millin. Backlg declined due t custmer cancellatins arising frm the backlg nt being installed at a faster rate, as well as decreased due t installatins. Backlg decreased 25.6% t $16.7 millin at December 31, 2015 versus $22.5 millin at September 30, Sunetric s backlg declined t $7.2 millin at December 31, 2015 versus $10.9 millin at September 30, The decline was due t the cmpletin f multiple cmmercial prjects. Residential segment backlg declined 17.4% t $9.5 millin at December 31, 2015 versus $11.5 millin at September 30, The decline was primarily due t installatins f apprximately $5 millin. New sales rders decreased 3.5% t $5.6 millin during the furth quarter f 2015 as cmpared t $5.8 millin in the prir quarter. Net cancellatins decreased 49.2% t $2.6 millin in the furth quarter f 2015 as cmpared t $5.2 millin in the third quarter f Q and Subsequent Event Financing Capacity Highlights Cash and cash equivalents were $0.6 millin at December 31, 2015 versus $1.9 millin at December 31, As reprted tday, the cmpany entered int an agreement with private investrs fr a cnvertible nte capital raise f $10 millin f grss prceeds, f which the cmpany will receive within ne business day $750,000 f grss prceeds with the remainder t be depsited in a restricted cash accunt, t be released in future perids subject t release cnditins as described in a Frm 8-K t be filed tday. Fr installatins during the quarter, 58% were paid fr in-cash, 33% were financed with third-party lan prgrams, and 9% utilized cmpany and third-party lease prgrams. In March f 2016, RGS Energy amended and restated its revlving line f credit with ne f its equipment suppliers, allwing the cmpany t brrw against assets such as inventry, leases and ther receivables. The revised revlving credit facility is an imprtant first step t accessing sufficient wrking capital t finance peratins and thereby increase the cmpany s installatin capability. Management Cmmentary We have been preparing fr the influx f new capital s that we can increase the size f ur sales rganizatin and expand int new states f peratin, said Seth Wiggins, vice president f sales f RGS Energy. We have recently cmpleted several small cmmercial prjects in the mainland U.S. and expect t increase ur small cmmercial sales during

4 Sunetric General Manager Melissa Watsn cmmented: Our Hawaii peratins have been adjusted t reflect the current lcal utility cnditins. We see grwth pprtunities fr ur cmmercial sales and cnstructin crews in Hawaii, which we can pursue with ur influx f new capital. Dennis Lacey, RGS Energy s CEO, cmmented: We have faced, and met, many challenges with ur effrts t turnarund RGS Energy s results. The recent new financings were critical and necessary steps fr ur effrt t achieve future prfitable grwth. Our fcus is nw n sales grwth fr the remainder f 2016, and we believe that meeting ur gal became mre achievable with the recent 5-year extensin f the slar investment tax credit t hmewners, which is enjyed by rughly 90% f ur custmers wh chse t wn their slar systems rather than lease the systems. RGS Energy Natinal Ftprint RGS Energy serves residential and small business custmers in nine mainland U.S. states and Hawaii. The cmpany markets its slar pwer systems thrugh a mix f field sales teams and e-sales call center apprach, as well as installs its systems using in-huse and third-party integratrs. Fr Hawaii and East Cast peratins, the cmpany primarily utilizes field sales and in-huse cnstructin crews. In Califrnia and Clrad, the cmpany markets slely thrugh its e-sales, call center-based apprach and installs nly thrugh its authrized third-party integratrs. Cnference Call RGS Energy will hld a cnference call t discuss its furth quarter and full year 2015 financial results later tday. Management will hst the presentatin, fllwed by a questin and answer perid. Date: Friday, April 1, 2016 Time: 4:30 p.m. Eastern time (2:30 p.m. Muntain time) Tll-free dial-in number: Internatinal dial-in number: Cnference ID: Webcast: The cnference call will be webcast live and available fr replay via the investr relatins sectin f the cmpany's website at RGSEnergy.cm. Please call the cnference telephne number five minutes prir t the start time. An peratr will register yur name and rganizatin. If yu have any difficulty cnnecting with the cnference call, please cntact Lilis Grup at A replay f the call will be available after 7:30 p.m. Eastern time n the same day thrugh April 8, Tll-free replay number: Internatinal replay number: Replay ID: Abut RGS Energy RGS Energy (NASDAQ: RGSE) a rftp installer f slar equipment, serving residential and small business custmers in the mainland U.S. and Hawaii. Beginning with ne f the very first phtvltaic panels sld in 1978, the cmpany has installed ver 25,000 slar energy systems. RGS Energy makes it pssible fr custmers t save n their energy bill by prviding a cmprehensive slar slutin, frm design, financing, permitting and installatin t nging mnitring, maintenance and supprt. Fr mre infrmatin, visit RGSEnergy.cm, n Facebk at and n Twitter at RGS Energy is a trade name and RGS Energy makes filings with the Securities and 4

5 Exchange Cmmissin under its fficial name Real Gds Slar, Inc. Fr mre infrmatin abut the cmpany, visit Frward-Lking Statements and Cautinary Statements This press release may cntain frward-lking statements that invlve risks and uncertainties. Frward-lking statements are neither histrical facts nr assurances f future perfrmance. Instead, they prvide ur current beliefs, expectatins, assumptins and frecasts abut future events, and include statements regarding ur future results f peratins and financial psitin, business strategy, budgets, prjected csts, plans and bjectives f management fr future peratins. The wrds anticipate, believe, plan, estimate, expect, strive, future, intend, may, will and similar expressins as they relate t us are intended t identify such frwardlking statements. Because frward-lking statements relate t the future, they are subject t inherent uncertainties, risks and changes in circumstances that are difficult t predict and many f which are utside f ur cntrl. Our actual results and financial cnditin may differ materially frm thse indicated in the frward-lking statements. Therefre, yu shuld nt rely n any f these frward-lking statements. Imprtant factrs that culd cause ur actual results and financial cnditin t differ materially frm thse indicated in the frwardlking statements include, withut limitatin, the fllwing: the Cmpany s ability t pay interest and principal n the cnvertible ntes due April 1, 2019, the Cmpany s ability t satisfy the cnditins under the cnvertible ntes due April 1, 2019 permitting release f funds frm the restricted cllateral accunt and fr payments t be made in shares f Cmmn Stck, ur ability t perate with ur existing financial resurces r raise funds t meet ur financial bligatins and implement ur strategy, ur histry f perating lsses, ur ability t achieve prfitability, ur success in implementing ur plans t increase future sales, installatins and revenue and decrease csts, the impact f ur present indebtedness and prjected future brrwings n ur financial health, restrictins impsed by ur present indebtedness, rules, regulatins and plicies pertaining t electricity pricing and technical intercnnectin f custmer-wned electricity generatin such as net energy metering, the cntinuatin and level f gvernment subsidies and incentives fr slar energy, ur failure t timely r accurately cmplete financing paperwrk behalf f custmers, the adptin and general demand fr slar energy, the impact f a drp in the price f cnventinal energy n demand fr slar energy systems, new regulatins impacting slar installatins including electric cdes, delays r cancellatins fr system installatins dne n a percentage-f-cmpletin, seasnality f custmer demand and adverse weather cnditins inhibiting ur ability t install slar energy systems, changing and updating technlgies and the issues presented by these new technlgies related t custmer demand and ur prduct ffering, gegraphic cncentratin f revenue frm the sale f slar energy systems in east cast states, Hawaii and Califrnia, lss f key persnnel and ability t attract necessary persnnel, adverse utcmes arising frm litigatin and cntract disputes, the ptential impact f the nging U.S. Securities and Exchange Cmmissin s investigatin, ur ability t cntinue t btain services and cmpnent frm suppliers, installers and ther vendrs, disruptin f ur supply chain frm equipment manufacturers and ptential shrtages f cmpnents fr slar energy systems, cnditins affecting internatinal trade having an adverse effect n the supply r pricing f cmpnents fr slar energy systems, factrs impacting the timely installatin f slar energy systems such as installatin cst increases, cmpetitin, cnstructin risks and csts, cntinued access t cmpetitive furth party financiers t finance custmer slar installatins, ur ability t meet custmer expectatins, risks and liabilities assciated with placing emplyees and technicians in ur custmers hmes and businesses, prduct liability claims, warranty claims and failure f manufacturers t perfrm under their warranties t us, increases in interest rates and tightening credit markets, nn-cmpliance with NASDAQ cntinued listing requirements, ur inability t maintain effective disclsure cntrls and prcedures and internal cntrl ver financial reprting, vlatile market price f ur Class A cmmn stck, pssibility f future dilutive issuances f securities, the lw likelihd that we will pay any cash dividends n ur Class A cmmn stck fr the freseeable future, changing reprting requirements which require significant cmpliance effrts and resurces, anti-takever prvisins in ur rganizatinal dcuments, the significant wnership and vting pwer f ur Class A cmmn stck held by Riverside Renewable Energy Investments, LLC and such ther factrs as discussed thrughut Part I, Item 1A, Risk Factrs and Part II, Item 7, Management s Discussin and Analysis f Financial Cnditins and Results f Operatins f ur Annual Reprt n Frm 10-K fr the year ended December 31, 2015 and Part I, Item 2, Management s Discussin and Analysis f Financial Cnditin and Results f Operatins and Part II, Item 1A, Risk Factrs included in ur Quarterly Reprts n Frm 10-Q. 5

6 Any frward-lking statement made by us in this press release is based nly n infrmatin currently available t us and speaks nly as f the date n which it is made. We undertake n bligatin t publicly update any frwardlking statement, whether written r ral, that may be made frm time t time, whether as a result f new infrmatin, future develpments r therwise. These dcuments are available n bth the EDGAR sectin f the SEC's website at and the Investr Relatins sectin f the cmpany's website at RGS Energy Cndensed Cnslidated (in thusands) December December 31, , 2014 Cash & cash equivalents $ 594 $ 1,947 Accunts Receivable 4,374 8,293 Inventry 2,051 4,639 Other Current Assets 2,527 5,884 Assets f Discntinued Operatins 2,853 8,427 Ttal Current Assets 12,399 29,190 Gdwill and Intangibles 1,338 1,338 Other Assets 2,420 2,635 Assets f Discntinued Operatins 878 1,082 Ttal Assets $ 17,035 $ 34,245 Line f Credit $ 774 $ 4,350 Related Party Debt - 3,150 Accunts Payable 9,121 13,398 Other Current Liabilities 3,054 7,714 Liabilities f Discntinued Operatins 4,510 7,984 Ttal Current Liabilities 17,459 36,596 Cmmn stck warrant liability 342 2,491 Other Liabilities Liabilities f Discntinued Operatins Ttal Liabilities 18,048 39,546 Stckhlder s Equity (deficit) (1,013) (5,301) Liabilities and Stckhlders' Equity $ 17,035 $ 34,245 6

7 RGS Energy Cnslidated Summary Statements f Operatins (in thusands, except per share amunts) Three Mnths Ended Dec 31, Twelve Mnths Ended Dec 31, Net Revenue $ 9,749 $ 18,444 $ 45,527 $ 70,775 Cst f Gds Sld 8,220 16,199 39,091 58,018 Grss Margin 1,529 2,245 6,436 12,757 Grss Margin (%) 15.68% 12.17% 14.14% 18.02% Selling and Operating 3,506 7,319 13,924 27,405 General and Administrative 1,239 1,728 5,818 8,284 Stck ptin cmpensatin ,294 Acquisitin-related Csts - (76) Restructuring Csts Litigatin 420-2,004 - Depreciatin and amrtizatin ,176 Asset Impairment - 10,400-11,765 Ttal Expenses 5,549 20,828 23,261 53,319 Operating Lss frm Cntinuing Operatins (4,020) (18,583) (16,825) (40,562) Other Incme (36) (83) Interest Expense (65) (374) (487) (1,170) Derivative Gain, Net 203 5,956 7,127 14,160 Incme Tax Expense/(Benefit) (1,240) Incme/(Lss) frm Cntinuing Operatins, net f tax (3,949) (13,339) (9,808) (26,201) (Lss) Frm Discntinued Operatins, net f tax (260) (2,839) (972) (30,910) Net Incme/(Lss) $ (4,209) $ (16,178) $ (10,780) $ (57,111) Earnings per share $ (0.52) $ (6.76) $ (1.32) $ (23.87) Weighted average shares utstanding 8,154 2,392 8,154 2,392 7

8 RGS Energy Supplemental Infrmatin (in thusands) Furth quarter Results YTD Results Residential: Revenue $ 5,344 $ 12,242 $ 30,205 $ 55,818 COGS 4,480 10,798 26,082 45,366 Grss Margin 864 1,444 4,123 10,452 GM% 16.17% 11.80% 13.65% 18.73% Operating Expenses 2,101 6,364 10,147 22,715 Business Unit Cntributin $ (1,237) $ (4,920) $ (6,024) $ (12,263) Furth quarter Results YTD Results Sunetric: Revenue $ 4,405 $ 5,868 $ 15,319 $ 12,742 COGS 3,740 5,176 13,009 11,092 Grss Margin ,310 1,650 GM% 15.10% 11.79% 15.08% 12.95% Operating Expenses ,112 2,507 14,615 Business Unit Cntributin $ (145) $ (11,420) $ (197) $ (12,965) Rftps kw $ 2014 Year End Backlg - unaudited $ 61,543, Year End Backlg - unaudited $ 16,697,523 Investr Relatins Cntact Rn Bth, Senir Managing Directr Lilis Grup, Inc. Tel RGSE@lilis.cm 8