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Akeena Solar Announces Third Quarter 2008 Results
LOS GATOS, Calif., Nov. 6, 2008 -- Akeena Solar, Inc. (NasdaqCM:AKNS), a leading designer and installer of solar power systems, today announced results for the third quarter of 2008.
"Akeena bounced back in the third quarter with our second best revenue quarter ever," said Barry Cinnamon, president and chief executive officer. ``Revenue rose 31% from last year's third quarter and 50% from the second quarter on the strength of commercial installations. In fact, commercial revenues quadrupled versus the third quarter a year ago and more than doubled from the second quarter as installation crews focused on commercial jobs with year end deadlines.''
"Our transition to Andalay is nearly complete, and demand for our proprietary panels continues to expand in both residential and commercial markets. As a result, we ended the quarter with a record backlog of $16.7 million,'' Cinnamon added. ``With the passage of the ITC, many commercial jobs are progressing to the installation stage. Residential customers are contracting with us now before state rebates decline, then they are simply interconnecting their systems in 2009 so that they are eligible for the uncapped 30% ITC. These factors support our expectation that we will generate revenue growth this year in the range of 30% to 40%, consistent with prior guidance."
"As we begin planning for 2009 with an uncapped ITC for residential customers, a restoration of the commercial tax credit and new utility opportunities, we're anticipating substantial growth in the U.S. market. We are laying the groundwork for significant sales in the burgeoning utility market now that utilities can take advantage of the 30% ITC. Since our Andalay flat roof system is both light-weight and non-penetrating, it is ideally suited for flat rooftops leased by utilities,'' added Cinnamon. ``Our gross margins are expected to improve as we gain greater operational efficiency with the installation of Andalay and we achieve Andalay cost reductions in the second year of production from our OEM partners. We also expect to reduce our operational expenses in 2009 as we improve our sales and marketing efficiencies, and reduce our customer acquisition costs."
Cinnamon concluded, ``Worldwide conditions in the solar industry have put us in an enviable position in the solar value chain. Supply of solar modules exceeds demand, especially since manufacturing capacity continues to increase and shipments to Europe have slowed down. As a result, module manufacturers are now looking towards the U.S., which is expected to be the largest worldwide market. There are only three ways to differentiate solar modules: low price (which generally is an unprofitable strategy), high efficiency (which is expensive and technically challenging), or superior aesthetics, reliability and fast installation times. Our patented Andalay technology excels in these latter dimensions, and our current OEM partners Suntech and Kyocera understand these benefits.''
Financial Results
Net sales for the third quarter of 2008 were $10.6
million, an increase of 31% compared to $8.1 million in
net sales in the third quarter of 2007 and an increase
of 50% compared to $7.1 million of net sales in the
second quarter of 2008. Commercial installations in the
third quarter of 2008 more than quadrupled over the same
quarter last year and more than doubled from the second
quarter of 2008. Residential installations were down
10.9% compared to the third quarter of 2007, but
increased 16.6% from the second quarter of 2008.
Gross profit for the third quarter 2008 was $1.3
million, or 12.7% of sales, compared to $1.7 million, or
21.0% of sales, in the third quarter of 2007 and
compared to $1.0 million, or 14.8% of sales, in the
second quarter of 2008. Gross margin declined over the
prior year third quarter and from the second quarter due
to: a higher mix of commercial installations in the
third quarter; liquidation of non-Andalay panels at a
9.7% margin and start-up costs associated with the
transition to Andalay for residential installations.
Total operating expenses for the third quarter of 2008
were $6.8 million compared to $5.4 million for the same
period last year and $6.2 million in the second quarter
of 2008. Compared to the third quarter of 2007, the $1.4
million variance was due to sales-related compensation
and higher customer acquisition costs in connection with
serving more customers, higher general and
administrative expenses including $151,000 in
non-recurring costs associated with terminating certain
employment agreements and severance and a $297,000
increase in stock-based compensation. Compared to the
second quarter of 2008, operating expenses were higher
primarily due to $151,000 in non-recurring costs
associated with terminating certain employment
agreements and severance. Excluding these expenses,
stock-based compensation costs and depreciation and
amortization, cash operating costs were up $106,000, or
2.0%, from the second quarter of 2008, with sales and
marketing expenses up $66,000, or 3.3%, and general and
administrative expenses up $40,000, or 1.2%. On this
same basis, cash operating expenses were 51.5% of
revenue in the third quarter of 2008, down from 75.8% in
the second quarter of 2008 and from 55.6% in the third
quarter of 2007.
Net loss for the third quarter of 2008 was $5.5 million,
or $0.19 per share, compared to a net loss of $3.7
million, or $0.16 per share, in the third quarter of
2007 and a net loss of $5.1 million, or $0.18 per share
in the second quarter of 2008.
Installations for the quarter amounted to approximately
1,290 kilowatts compared to approximately 989 kilowatts
last year and approximately 854 kilowatts in the second
quarter of 2008. Backlog as of September 30, 2008 was
$16.7 million.
Outlook
Management continues to anticipate 2008 revenue will
increase by 30% to 40% over 2007. With the recent
passage of the ITC, management also continues to expect
to achieve EBITDA breakeven, adjusted for stock-based
compensation expense, in the second half of 2009.
Conference Call Information
Akeena Solar will host an earnings conference call today at 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) to discuss its third quarter 2008 earnings results. Management will discuss strategy, review quarterly activity, provide industry commentary and answer questions.
The call is being webcast and can be accessed from the ``Investor Relations'' section of the company's website at http://www.akeena.com . If you do not have Internet access, please dial 877-225-1676 (706-643-9669 for international callers). The passcode is 69299817. If you are unable to participate in the call at this time, the webcast will be archived on the company's website. In addition, a telephonic replay will be available for two weeks, beginning two hours after the call. To listen to the replay, in the U.S., please dial 800-642-1687. International callers should dial 706-645-9291. The passcode is 69299817
About Akeena Solar, Inc.
Founded in 2001, Akeena Solar's philosophy is simple: We believe producing clean electricity directly from the sun is the right thing to do for our environment and economy. Akeena Solar has grown to become one of the largest national installers of residential and commercial solar power systems in the United States. The company's new integrated solar panel system, Andalay, is the only solar panel system with integrated racking, wiring and grounding. Andalay panels offer unprecedented reliability, performance and aesthetics. For more information, visit Akeena Solar's website at http://www.akeena.com .
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