“Our first quarter performance reflects the steps we
have taken to reduce costs in our drive towards cash flow break even,”
said Barry Cinnamon, president and chief executive officer of Akeena Solar.
“We brought operating expenses down by 19.8% from last year and 24.3% from
the fourth quarter through headcount reductions and other expense reduction
measures. As a result, we reduced cash burn to approximately $2.7 million for
the quarter, the lowest level since the second quarter of 2007.
Continued Cinnamon, “First quarter revenue came in at $7.6 million, with residential sales driving results and commercial sales remaining weak. Our diverse mix of business is providing balance in these challenging times. Gross margin increased as expected to 29.7%, reflecting the flow-through of last quarter’s inventory write-down, lower incremental costs for Andalay solar panels and improved installation efficiency. Falling panel prices are driving better solar economics for our customers and creating opportunities for a differentiated product like Andalay.
“During the quarter we moved forward with our strategy
to establish a direct-to-dealer distribution channel to help scale our business
and diversify our revenue streams. We signed several dealers, both large and
small — including MS Solar Solutions Corp. (MSSS), a subsidiary of Morgan
Stanley’s Commodities group. Akeena is MSSS’ exclusive supplier of Andalay AC
solar panels for two years for projects to outfit low-income households
nationwide. As the solar industry continues to evolve, we believe
differentiated products such as Andalay AC solar panels will have the greatest
appeal in new distribution channels,” concluded Cinnamon.
First Quarter Financial Results
Net sales for the first quarter of 2009 were $7.6 million
compared to $12.2 million in net sales in the first quarter of 2008, and $10.9
million in the fourth quarter of 2008. The decline in the first quarter
compared to the same quarter last year and the prior quarter reflects lower
commercial sales of $915,000 in the first quarter of 2009, compared to $7.0
million in the first quarter of 2008, and $2.4 million in the fourth quarter of
2008. Residential installations in the first quarter of 2009 were $6.7 million
or 88% of total revenue, compared to $5.3 million or 43% of total revenue in
the first quarter of 2008 and $8.4 million or 78% of total revenue in the
fourth quarter of 2008.
Gross profit for the first quarter of 2009 was $2.3 million,
or 29.7% of sales, compared to $2.4 million, or 19.7% of sales, in the first
quarter of 2008 and $1.2 million, or 10.7% of sales in the fourth quarter of
2008. On a year-over-year basis and sequentially, the increase in gross margin
was due primarily to lower panel prices and lower direct labor costs.
Total operating expenses for the first quarter of 2009 were
$5.7 million compared to $7.1 million for the same period last year, and $7.5
million in the fourth quarter of 2008. Stock-based compensation expense was
$540,000 in the first quarter of 2009 compared to $1.0 million for the same
period last year, and $578,000 in the fourth quarter of 2008. Cash operating
expenses (adjusted for stock-based compensation expense, depreciation and
amortization expense) were $5.0 million in the first quarter of 2009 compared
to $5.9 million for the same period last year and $6.8 million in the fourth
quarter of 2008. During the first quarter, the company made the decision to
close direct installation offices in Colorado and Connecticut. The company
believes it can grow market share outside of California more profitably through
a distribution model.
Loss from operations for the first quarter of 2009 was $3.5
million, the lowest level since the second quarter of 2007. Net loss for the
first quarter of 2009 was $5.1 million, or $0.17 per share, compared to a net
loss of $4.6 million, or $0.16 per share, in the first quarter of 2008, and a
net loss of $9.2 million or $0.32 per share in the fourth quarter of 2008.
Average common and equivalent shares outstanding during the first quarter of
2009 were 29.2 million.
The first quarter net loss includes a $1.5 million non-cash
charge to adjust the fair value of common stock warrants as required by a new
accounting rule, EITF 07-05, “Determining Whether an Instrument (or
Embedded Feature) is Indexed to an Entity’s Own Stock”. In accordance with
this new rule, stock warrants with certain terms that were previously accounted
for as equity must now be accounted for as a liability with adjustments of the
fair value recorded on the income statement.
Installations for the quarter amounted to approximately 945
kilowatts compared to approximately 1,587 kilowatts in the same quarter last
year and approximately 1,410 kilowatts in the fourth quarter of 2008. Backlog
as of March 31, 2009 was $4.8 million, reflecting lower commercial bookings and
fewer installation offices.
Cash and cash equivalents at March 31, 2009 were $2.9
million. On March 3, 2009, the company closed a $2 million stock offering.
Concurrent with the close, the company paid in full the balance on its existing
line of credit. The $25.0 million Line of Credit facility with Comerica was
replaced with a $1.0 million cash-backed line, which had no balance drawn as of
March 31, 2009.