RGS Energy (NASDAQ:RGSE), a residential and small business
commercial solar company since 1978, provided a business update
following its presentation at the 29th Annual Roth Conference on
March 15, 2017. A copy of the presentation is available on the
company’s website.
“I feel good about the progress we are making since
we presented our strategy for top line revenue growth at the Roth
conference,” said Dennis Lacey, CEO of RGS Energy. “Our
vision remains to grow top line revenue by growing the size of our
sales organizations, and supporting them with training and cost
effective marketing leads.”
RGS Energy’s positive outlook is supported by strong tailwinds
emerging in the U.S. residential solar market, which is projected
to grow at 9% in 2017, per GTM Research, with direct ownership
predicted to overtake leasing for the first time. GTM projects
total installed U.S. solar PV capacity to nearly triple over the
next five years.
“We made the strategic decision not to adopt the business model
of major solar companies whereby it appears to us the more they
grow, the more they lose,” said Dennis Lacey, RGS Energy’s
CEO. “I feel we have been making the right calls. We
were the first public residential focused solar company to adopt
direct ownership versus leasing. We also made the call early
on that the industry model for customer acquisition costs was too
expensive, exited unprofitable markets such as large commercial,
and physically exited the highly saturated costly California
market. We have already taken the painful steps to optimize our
operating cost structure and are the only debt-free public
residential focused solar company in the United States.”
Update on Company Sales:
(000’s
omitted) |
1st
QuarterPreliminaryMar.
31, 2017 |
Last
QuarterReported Dec.
31, 2016 |
Gross sales |
$ |
3,017 |
$ |
2,556 |
Cancellations |
|
1,047 |
|
1,886 |
Net sales: |
$ |
1,960 |
$ |
670 |
|
|
|
|
|
The company increased net sales 194%.
“We have a long history with community solarize programs having
done 39 in our history in which we have typically enjoyed higher
lead to sales rates,” noted Tom Champlin, RGS Energy’s Head of East
Coast Sales. “On April 5, we launched the Granby, Connecticut
solarize program; the township has set a four-month selling
period. We typically enjoy higher lead to sale rates for
community solarize programs. The traditional season for
community solarize programs is just beginning, and we expect to bid
on additional programs in the coming months.”
Update on Residential Sales Organization:
|
1st
QuarterPreliminaryMar.
31, 2017 |
Last
QuarterReported Dec.
31, 2016 |
Sales managers |
8 |
6 |
Direct sales people
|
36 |
21 |
Sales support |
12 |
6 |
Total: |
56 |
33 |
|
The company increased the size of the residential segment sales
organization by 70%.
“The number one driver of our top line revenue growth strategy
is the hiring and training of our sales teams,” said Karen Rainone,
RGS Energy’s Director of Human Resources. “We are meeting our
sales force growth objectives, and to match our training
capabilities with this growth, we recently added a senior leader
with an extensive training record.”
Update on Sunetric Organization:
The company reported April 17, 2017 on the very timely ruling by
the Hawaii Public Utility Commission (“PUC”) authorizing an
estimated 20 megawatts of additional capacity for its customer
grid-supply solar program. This has coincided with Sunetric’s focus
on building its sales and construction teams in Hawaii for
growth.
“As previously disclosed, the market in Hawaii has been quite
challenging for solar companies,” said Alan Fine, RGS Energy’s
Principal Financial Officer. “However, our view has recently
become bullish due to the recent announcement by the PUC and our
new local management team, who for the first 19 days of April, have
already sold $125k, more than the entire first quarter.”
Update on Residential Segment Operations:
|
1st
QuarterPreliminaryMar.
31, 2017 |
Last
QuarterReported Dec.
31, 2016 |
Operations construction
team |
|
36 |
|
38 |
Operations support
team |
|
35 |
|
34 |
Total |
|
71 |
|
72 |
|
|
|
|
|
Average COGS cost per
watt |
$ |
3.26 |
$ |
3.07 |
Average cycle time |
|
143 |
|
216 |
|
|
|
|
|
“We plan to add to our construction crews very soon to meet the
growth in sales,” said Brad Bentzen, RGS Energy’s Director of
Residential Operations. “To maximize the customer experience, we
have set and are meeting the goal of reducing our cycle time for
installations.”
“As the first quarter is seasonally a challenge for
construction, the average cost per watt is higher during this
period,” continued Bentzen. “We expect this metric to decline
throughout the year as our revenue grows.”
Update on Cost Effective Residential
Marketing:
|
1st Quarter Preliminary
Mar. 31, 2017 |
Last
QuarterReported Dec.
31, 2016 |
Avg. number of lead
program providers |
37 |
|
27 |
|
Cost effective lead
programs paid on performance – percentage of total lead mix
|
36 |
% |
2 |
% |
|
|
|
|
|
“For profitability, we set the goal to move away from the
industry approach of purchasing paid lead lists, regardless of
whether it results in a signed customer contract," said Seth
Wiggins, RGS Energy’s Vice President of Sales. “We are currently
signing vendor contracts where we pay for performance, meaning it
results in a signed customer contract.”
Wiggins further stated: “As announced on April 20, 2017, we
achieved a significant milestone this month, switching from our
in-house digital marketing to launching a digital marketing program
with Madwire’s Marketing 360 customer acquisition platform.
We have enjoyed a better lead-to-sale rate with digital marketing
than paid lead vendor programs and expect this milestone will allow
our growing sales teams to be more successful and grow our revenue
at a lower cost.”
Update on Installation Revenue:
(000’s omitted) |
1st
QuarterPreliminary
Mar. 31, 2017 |
Last
QuarterReported Dec.
31, 2016 |
Residential segment
|
$ |
3,629 |
$ |
4,800 |
Sunetric segment |
|
12 |
|
338 |
Total |
$ |
3,641 |
$ |
5,138 |
|
Targets and Expectations:
- Achieving break-even results in the fourth quarter of 2017 or
the first quarter of 2018.
- Steady and improving progress in sales growth for the remainder
of 2017, with installation revenue growth delayed a quarter due to
typical construction cycle time.
- Expand into new states for sales of solar systems.
- Digital and content marketing, not vendor lead programs, to be
the principal source of customer sourcing.
- A reduction in construction cycle time.
- Cash outflow from operations until break-even results are
achieved. The company preliminarily expects to report working
capital at March 31, 2017 of approximately $16 million.
About RGS EnergyRGS Energy (NASDAQ:RGSE) is a
residential and small business commercial solar Company since 1978
which has installed more than 25,000 solar power systems. RGS
Energy makes it very convenient for customers to save on their
energy bill by providing turnkey solar solutions - from system
design, construction planning, customer financing assistance,
installation, to interconnection and warranty.
For more information, visit RGSEnergy.com, on Facebook at
www.facebook.com/rgsenergy and on Twitter at
www.twitter.com/rgsenergy. Information on such websites is not
incorporated by reference into this press release.
RGS Energy is the Company’s registered trade name. The Company
files periodic and other reports with the Securities and Exchange
Commission under its official name “Real Goods Solar, Inc.”
Forward-Looking Statements and Cautionary
Statements The preliminary financial data discussed above
consists of estimates derived from RGS Energy’s internal books and
records and has been prepared by, and are the responsibility of,
the company’s management. The preliminary estimates discussed above
are subject to the completion of financial closing procedures,
final adjustments and other developments that may arise between now
and the time the financial results for the first quarter ended
March 31, 2017 are finalized. Therefore, actual results may differ
materially from these estimates and all of these preliminary
estimates are subject to change.
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 that involve risks and uncertainties, including statements
regarding the RGS Energy’s results of operations and financial
positions, and RGS Energy’s business and financial
strategies. Forward-looking statements are neither historical
facts nor assurances of future performance. Instead, they
provide our current beliefs, expectations, assumptions, forecasts,
and hypothetical constructs about future events, and include
statements regarding our future results of operations and financial
position, business strategy, budgets, projected costs, plans and
objectives of management for future operations. The words
"expect," "target,"
"plan," "future," "believe," "may," "will" and
similar expressions as they relate to us are intended to identify
such forward-looking statements.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved, if at all. Forward looking
statements are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those
expressed in or suggested by the forward looking statements.
Therefore, RGS Energy cautions you against relying on any of these
forward-looking statements.
Key risks and uncertainties that may cause a change in any
forward-looking statement or that could cause our actual results
and financial condition to differ materially from those indicated
in the forward-looking statements include: the effect of electric
power generation industry regulations in the states where RGS
Energy operates, net electric power metering and related policies;
the level of demand for RGS Energy’s solar energy systems; RGS
Energy’s ability to implement its growth strategy, achieve its
target level of sales, to generate cash flow from operations and to
be awarded community solarize programs; RGS Energy’s ability to
achieve break-even and better results; and RGS Energy’s ability to
acquire cost-effective marketing leads, reduce cycle time for
installations and expand its product offerings.
You should read the section entitled “Risk Factors” in our 2016
Annual Report on Form 10-K, as amended, which has been filed with
the Securities and Exchange Commission, which identify certain of
these and additional risks and uncertainties. Any
forward-looking statements made by us in this press release speak
only as of the date of this press release. Factors or events
that could cause our actual results to differ may emerge from time
to time, and it is not possible for us to predict all of them.
We do not undertake any obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by law.
Investor Relations Contact
Ron Both
Managing Partner, CMA
Tel 1-949-432-7566
RGSE@cma.team