Market Overview

Real Goods Solar Reports Third Quarter 2012 Results

Share:

LOUISVILLE, Colo., Nov. 5, 2012 (GLOBE NEWSWIRE) -- Real Goods Solar, Inc. (Nasdaq: RSOL), a leading provider of turnkey solar energy solutions, reported results for its third quarter ended September 30, 2012.

Q3 2012 Highlights

  • Partnered with Gestamp Solar to expand Vermont's solar footprint with 4.8MW of solar projects.
     
  • Partnered with Eastman Companies to design and to install a 500 kW solar power system. Eastman Companies is a recognized leader in high quality real-estate developments with properties throughout New Jersey.
     
  • Led the design and installation of a 343kW solar power system at Big Y Foods, one of the largest independently owned supermarket chains in New England and Massachusetts. The solar power system offsets approximately 15% of the building's annual electricity needs.
     
  • Partnered with the Southeastern Environmental Education Alliance and the Connecticut Clean Energy Finance & Investment Authority to drive residential adoption of solar power systems in Massachusetts and Connecticut.
     
  • Appointed Angy Chin as interim CFO, bringing nearly a decade of executive management experience at public and private companies, including solar, e-commerce and retail.

Q3 2012 Financial Results as Compared to the Same Year-Ago Quarter

Net revenue for the third quarter of 2012 decreased 16.5% to $26.4 million from $31.6 million recorded in the same period last year. The revenue decline was primarily attributable to the direct supplying to customers by financing companies of certain components used on residential projects in order for the financiers to take advantage of expiring tax benefits (safe harbor). This unusual sourcing activity during the third quarter of 2012 reduced net revenues, but had no material impact on the company's gross profit.

Gross profit decreased by $2.1 million to $5.7 million, or 21.8% of net revenue, for the third quarter of 2012 from $7.9 million, or 24.9% of net revenue, in the same period last year. The 310 basis point decrease in gross margin primarily reflects the reduction in the mix of residential projects which produce higher gross margins over commercial projects. The company expects a higher mix of commercial projects in 2012 over 2011.

Operating expenses were approximately 42.2% of net revenue for the third quarter of 2012 compared to 25.7% in the same period last year. The increase in operating expense is due to the unusual revenue sourcing activity, the transitional cost of centralizing resources at the company's Colorado headquarters in preparation for the next phase of growth.

Operating loss for the third quarter of 2012 was $27.5 million compared to $0.7 million for the same quarter last year. The operating loss for the third quarter of 2012 included goodwill and other asset impairments of $22.0 million, which were evaluated based on the company's stock trading price, recent operating losses, and financial forecast.

Net loss for the third quarter of 2012 was $39.0 million, or $1.46 per share compared to a loss of $0.5 million, or $0.02 per share, for the same quarter last year. Income tax expense was $11.5 million for the third quarter of 2012 and included a provision to establish a valuation allowance of $14.5 million to offset the company's net deferred tax assets. Net loss for the third quarter was largely due to the aforementioned goodwill and other asset impairments charges, and the valuation allowance for our net deferred tax assets, which together amounted to $36.5 million.

Real Goods Solar has maintained its good standing with Silicon Valley Bank (SVB) and has signed a commitment letter with SVB to extend the relationship through March 2013.

First Nine Months of 2012 Financial Results

For the first nine months of 2012, net revenue decreased 4.2% to $66.1 million from $69.0 million for the same period last year. The net loss of $43.4 million for the first nine months of 2012 over the same period in the prior year is largely due to goodwill and asset impairments charges of $22.0 million, establishment of a valuation allowance for the company's net deferred tax assets of $14.5 million, integration and reorganization costs associated with the Alteris acquisition, and the centralization of support services to Colorado.

Management Commentary

"I am excited to support the company as the interim CFO and work with Kam to deliver improved results," said Angy Chin, Real Goods Solar interim CFO. "During the third quarter of 2012, we focused on operational excellence and greater fiscal responsibility, which included evaluating key end-to-end business processes that drove shorter lead times and cash-to-cash cycle. Furthermore, we improved controls over financial reporting which included an in-depth review of our balance sheet. We also developed matrixes for monitoring key performance indicators to drive accountability. We believe these efforts set the stage for the company to move forward with greater tenacity in delivering results."

Kam Mofid, Real Goods Solar CEO commented, "Although the third quarter of 2012 included a number of unusual expenses and large non-cash items like goodwill impairment and deferred tax assets, it was also a quarter where we made substantial process and organizational improvements. These improvements will help us rebuild the company's historical positive momentum in growth and profitability that we began to lose last year. We believe our momentum in the fourth quarter will pick up and will have meaningful impact on our results going forward. As an industry, the solar sector is going through a challenging time. However, the downstream business remains robust and a great part of the value chain. As one of the largest players in the downstream sector, Real Goods Solar is in a favorable position for double-digit revenue growth next year and significant improvements in financial performance."

Conference Call and Webcast

Real Goods Solar will hold a conference call to discuss its third quarter 2012 financial results tomorrow, Tuesday, November 6, 2012 at 11:00 a.m. Eastern time. Management will host the presentation, followed by a question and answer period.

Date: Tuesday, November 6, 2012
Time: 11:00 a.m. Eastern time (9:00 a.m. Mountain time)
Dial-In Number: 1-877-941-2068
International: 1-480-629-9712
Conference ID#: 4568314
Webcast: http://public.viavid.com/index.php?id=101987

The conference call will be webcast live and available for replay via the investor relations section of the company's website at RealGoodsSolar.com.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available after 2:00 p.m. Eastern time on the same day and until November 13, 2012.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin number: 4568314

About Real Goods Solar, Inc.

Real Goods Solar, Inc. (Nasdaq: RSOL) is the nation's pioneer in delivering commercial, residential and utility turn-key solar energy solutions. Beginning with the very first photovoltaic panel sold in the U.S. in 1978, the company has installed more than 13,000 solar power systems representing 75 megawatts of clean energy. As one of the nation's largest and most experienced solar power installers, the company has 15 offices across the West and the Northeast. Real Goods Solar makes it easy for customers to save on their energy bill by providing a comprehensive solar solution, from design, financing, permitting and installation to ongoing monitoring, maintenance and support. For more information about Real Goods Solar, go to RealGoodsSolar.com or call (888) 507-2561.

The Real Goods Solar, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6455

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as "expect," "intend," "believe," "will," "should" or comparable terminology or by discussions of strategy. While Real Goods Solar believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, introduction of new products and services, completion and integration of acquisitions, the possibility of negative economic conditions, and other risks and uncertainties included in Real Goods Solar's filings with the Securities and Exchange Commission. Real Goods Solar assumes no duty to update any forward-looking statements.  

         
 
REAL GOODS SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   
     
(Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30, 2012
Three Months Ended
September 30, 2011
Net revenue  $ 26,358  100.0 % $ 31,586  100.0 %
Cost of goods sold   20,621  78.2 %  23,733  75.1 %
Gross profit   5,737  21.8 %  7,853  24.9 %
Operating expenses   11,138  42.3%  8,105  25.7 %
Acquisition-related costs  —   — %  383  1.2 %
Goodwill and other asset impairments   22,012  83.5 %  —  — %
Loss from operations  (27,413)  -104.0%  (635 )  -2.0 %
Interest expense  (136 )  -0.5 %  (104 )  -0.3 %
Loss before income taxes  (27,549 )  -104.5%  (739 )  -2.3 %
Income tax expense (benefit)   11,468  43.5 %  (261 )  -0.8 %
Net loss $ (39,017)  -148.0% $ (478 )  -1.5 %
Weighted-average shares outstanding:        
Basic   26,677    26,655  
Diluted   26,677    26,655  
Net loss per share:        
Basic  $ (1.46 )   $ (0.02 )  
Diluted  $  (1.46)   $ (0.02 )  
         
     
REAL GOODS SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   
     
(Unaudited)
(In thousands, except per share data)
Nine Months Ended
September 30, 2012
Nine Months Ended
September 30, 2011
Net revenue  $ 66,061  100.0 % $ 68,965  100.0 %
Cost of goods sold   48,578  73.5 %  50,723  73.5 %
Gross profit   17,483  26.5 %  18,242  26.5 %
Operating expenses   29,847  45.2 %  18,292  26.5 %
Acquisition-related costs  —   —  %  2,393  3.5 %
Goodwill and other asset impairments   22,012  33.3 %  —  — %
Loss from operations  (34,376)   -52.0%  (2,443 )  -3.5 %
Interest expense  (295 )  -0.5 %  (111 )  -0.2 %
Loss before income taxes  (34,671 )   -52.5%  (2,554 )  -3.7 %
Income tax expense (benefit)  8,720  13.2 %  (538 )  -0.8 %
Net loss  $ (43,391) -65.7 % $ (2,016 )  -2.9 %
Weighted-average shares outstanding:        
Basic   26,672    22,534  
Diluted   26,672    22,534  
Net loss per share:        
Basic  $ (1.63)   $ (0.09 )  
Diluted  $ (1.63 )   $ (0.09 )  
     
     
REAL GOODS SOLAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
   
     
(Unaudited)
(In thousands)
September 30,
2012
December 31,
2011
  
Assets    
Current assets:    
Cash  $ 3,827 $ 11,813 
Restricted cash   —   172 
Accounts receivable, net   15,411  21,539 
Costs in excess of billings on uncompleted contracts   8,156  5,411 
Inventory, net   6,430  12,264 
Deferred costs on uncompleted contracts   723  1,313 
Receivable and deferred tax assets   228  3,333 
Other current assets   1,306  1,014 
Total current assets   36,081  56,859 
Property and equipment, net   4,517  6,930 
Deferred tax assets   —  5,444 
Goodwill   —  19,885 
Other intangibles, net   —  390 
Other assets   80  41 
Total assets  $40,678  $ 89,549 
Liabilities and shareholders' equity    
Current liabilities:    
Line of Credit  $ 6,500 $ — 
Accounts payable   15,220  27,785 
Accrued liabilities   2,978  3,292 
Billings in excess of costs on uncompleted contracts   1,890  2,144 
Payable to Gaiam   83  476 
Debt   144  197 
Capital lease obligations   161  126 
Deferred revenue and other current liabilities   621  2,388 
Total current liabilities   27,597  36,408 
Related party debt   4,850  1,700 
Debt, net of current portion   95  202 
Capital lease obligations, net of current portion   462  433 
Total liabilities   33,004  38,743 
Total shareholders' equity   7,674  50,806 
Total liabilities and shareholders' equity  $ 40,678  $ 89,549 
CONTACT: Investor Relations: Ron Both Liolios Group, Inc. Tel (949) 574-3860 RSOL@liolios.com

Real Goods Solar, Inc. Logo

View Comments and Join the Discussion!