UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 11, 2015
REAL GOODS SOLAR, INC.
(Exact Name of Registrant as Specified in its Charter)
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Colorado |
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001-34044 |
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26-1851813 |
(State or Other Jurisdiction
of Incorporation) |
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(Commission File Number) |
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(IRS Employer
Identification No.) |
833 W. South Boulder Road, Louisville, CO 80027-2452
(Address of Principal Executive Offices, Including Zip Code)
Registrants telephone number, including area code: (303) 222-8400
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On May 11, 2015, Real Goods Solar, Inc. (the Company) issued a press release announcing results for its first quarter
ended March 31, 2015. A copy of the press release is attached as Exhibit 99.1.
This Current Report on Form 8-K and
the earnings press release attached hereto are being furnished by the Company pursuant to Item 2.02 Results of Operations and Financial Condition. In accordance with General Instruction B.2 of Form 8-K, the information
contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of
that section. In addition, this information shall not be deemed incorporated by reference into any of the Companys filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such
filing.
Item 9.01. Financial Statements and Exhibits.
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Exhibit No. |
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Description |
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99.1 |
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Press Release issued by Real Goods Solar, Inc. on May 11, 2015 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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REAL GOODS SOLAR, INC. |
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By: |
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/s/ Dennis Lacey |
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Dennis Lacey |
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Chief Executive Officer and Acting Principal
Financial Officer |
Date: May 11, 2015
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press Release issued by Real Goods Solar, Inc. on May 11, 2015 |
Exhibit 99.1
RGS Energy Reports First Quarter 2015 Results
LOUISVILLE, CO, May 11, 2015 RGS Energy (NASDAQ: RGSE), one of the nations leading rooftop installers of solar equipment, has
reported results for its first quarter ended March 31, 2015. The company also filed today its quarterly report on Form 10-Q.
Restructuring
and Business Climate Effect on 1st Quarter Results
As previously disclosed, the companys first quarter of 2015 operating results were affected
by inclement weather on the East Coast, where the company has its largest concentration of backlog, and by limited access to equipment to convert backlog to revenue. The limited access to equipment arose from the companys recent financial and
cash operating losses and resulting untimely payments to vendors. The company took actions to address these circumstances, including securing new financing of up to $11.5 million, extending its bank facility on improved terms, and reducing its fixed
cash operating infrastructure costs.
As a result of the companys actions to improve its financial condition, including using proceeds received from
a capital raise to reduce its accounts payable, the company has regained access to the solar panels it needs to convert its backlog to revenue, beginning with the start of the second quarter of 2015. In April, residential segment revenue was $4.0
million, as compared to $6.9 million for the entire first quarter of 2015. The strong revenue growth in April is primarily due to the access to panels as well as improved weather conditions.
Gross margin percentage in the first quarter was lower due to the anticipated revenue decline while maintaining the fixed costs of a bi-coastal construction
organization. The gross margin decline was mitigated by the companys cost improvement plans, which in total reduced, on a comparative quarter to quarter basis, selling and operating expenses, general and administrative expenses, and
acquisition-related costs by $3.5 million from the prior year quarter and $3.7 million from the fourth quarter of 2014. The company has since taken action to reduce the fixed cost of its construction organization by closing its California offices
and further establishing relationships with third party integrators for installations.
Cash and Available Borrowings:
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(in thousands) |
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December 31, 2014 |
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March 31, 2015 |
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May 5, 2015 |
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Cash plus availability under current borrowing base |
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$ |
3,001 |
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$ |
2,765 |
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$ |
2,637 |
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Cash plus availability under maximum allowed borrowing base |
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$ |
3,097 |
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$ |
4,032 |
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$ |
3,255 |
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Q1 2015 Financial Summary
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In the first quarter of 2015, net revenue decreased 23% to $10.6 million from the prior year quarter. |
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Residential segment average selling price (ASP) on new sales orders rose 12.4% from the prior year quarter and increased 4% from the fourth quarter of 2014. The increase in ASP is primarily due to the companys
continued focus on pricing discipline. |
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Approximately 33% of the companys revenue for the first quarter of 2014 was from two states, Missouri and Colorado, which previously offered attractive incentives to homeowners. With the repeal of those
incentives, the revenue from these states in the first quarter of 2015 was approximately 1% of revenue. The company grew its backlog in the East Coast since the prior year quarter to offset this decline, but was hampered in converting that backlog
into revenue by the inclement weather in the East Coast during the first quarter of 2015 and the limited access to solar panels. |
1
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Progress on transformative initiatives: |
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Sales orders for E-sales increased 8% to $2.6 million in the first quarter versus the same prior year quarter. |
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Sales orders for leasing decreased $1 million sequentially to $0.4 million in the quarter reflecting the companys decision to optimize its use of working capital by originating leases for sale to third parties.
There are no sales orders for leasing in the first quarter of 2014 given the leasing program was launched in the third quarter of 2014. |
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The company installed solar equipment on 264 roofs in the first quarter, as compared to 516 installations in the prior year quarter. The decline in rooftop installations is due to the reduction in the Missouri and
Colorado markets, the limited availability of solar panels and the adverse weather on the East Coast. |
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In the first quarter, the loss from continuing operations, net of tax, improved to $3.5 million as compared to a loss of $12.0 million from the prior year quarter. |
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Gross margin for the residential segment was 10.3% in the first quarter of 2015, which declined from 20.0% from the prior year quarter. The decline primarily reflects the gross margin percentage declining whenever there
is a decrease in revenue, as there is a fixed cost element in the cost of goods sold, and residential segment revenue declined 48% from the prior year quarter. |
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Sunetric experienced continuing delays in installations arising from the local utility not approving interconnection requests, resulting in a 36% decline in revenue from the fourth quarter of 2014 and causing an adverse
impact on the gross margin percentage. However, in April, the local utility approved for installation approximately 40 projects in Sunetrics backlog. |
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Aggregate selling and operating and general and administrative expenses decreased $2.4 million to $5.6 million in the quarter versus the prior year quarter. The decrease in the selling and operating expenses was in part
attributable to managements decision to create a different commission plan structure, reducing the amount of paid leads purchased by marketing, as well as a decrease in headcount. |
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Acquisition-related costs decreased $1.1 million from the prior year quarter reflecting the companys strategy of not pursuing acquisitions of companies. |
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Depreciation and amortization decreased $0.5 million from the prior year quarter primarily due to the prior year quarter including amortization expense of purchased intangible assets from acquisitions which have
subsequently been impaired. |
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Derivative gain was $1.8 million in the quarter versus a derivative loss of $4.7 million in the first quarter of 2014. The change in derivative liability is principally due to the companys market capitalization
declining from the same prior year quarter. |
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Loss from discontinued operations, net of tax, was $0.2 million, reflecting the run-off of the Large Commercial segment. |
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Including both continuing and non-continuing operations, net loss for the quarter totaled $3.7 million or $(0.06) per share, as compared to a net loss of $14.8 million or $(0.34) per share in the first quarter of 2014.
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2
Backlog and Net Sales Orders
Backlog has increased for transactions from acquired companies at the date of acquisition and thereafter for net sales orders (representing newly signed
contracts with customers, net of contract cancellations or holds), and decreased for installations reflected in revenue.
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Backlog increased 103% to total $45.7 million at March 31, 2015 as compared to total backlog at March 31, 2014. Residential backlog increased 30% to $29.2 million at March 31, 2015 from the prior year
quarter. |
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The year-over-year growth in backlog is primarily due to the Sunetric acquisition as well as new sales orders. |
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Backlog decreased 26% or $16.0 million from backlog at December 31, 2014. |
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Sunetrics backlog declined by $5.5 million from December 31, 2014, primarily due to a $5 million contract, which the company decided to cancel, as the variable expense assumptions in the contract no longer
met the anticipated profit expectations. Residential segment backlog declined $10.5 million from December 31, 2014 primarily due to installations of approximately $7 million with the remainder representing net cancellations for the quarter in
excess of new sales orders for the quarter. The company has historically experienced a higher cancellation rate during the first quarter. On a comparative basis, new sales orders from the prior year quarter declined by $10 million and net
cancellations increased by approximately $2 million. |
The company did not emphasize originating new sales during the first
quarter of 2015 as its strategy was to position the company to be able to convert the existing record backlog to revenue and transform its approach to its sales organization for improved sales efficiency in future periods.
Financing Capacity
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For the quarter, approximately 42% of installations were paid for in-cash by RGS customers, approximately 42% using third-party loan programs, and 16% utilizing company and third-party lease programs. |
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As previously reported, during the first quarter of 2015, the company arranged for additional capital of up to $11.5 million, of which, net of offering costs of $0.8 million, $6.3 and $8.5 have been received as of
March 31, 2015 and May 5, 2015, respectively. The company recorded an initial reduction to equity of approximately $12 million to establish the warrant liability which, over the remaining terms of the warrants, will be reflected in equity.
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During the quarter, the company announced an arrangement with a third party lease financier to facilitate the sale of leases. |
Management Commentary
The first quarter
accomplishments included key milestones in our path to turn around RGS business, stated Dennis Lacey, RGS Energys CEO. These achievements included securing up to $11.5 million in new capital, extending our loan agreements,
and restructuring our business to significantly reduce our selling and operating and general and administrative expenses, which have declined 38% or $3.5 million since the fourth quarter of 2014.
We now have greater access to solar panels and are beginning to convert our backlog to revenue at a faster rate, allowing us to simultaneously redirect
greater resources towards our transformative business initiatives. These initiatives include expanding our entire sales organization, including our call center-based sales model, and seeking financing partners for our leasing program. We are
encouraged by the progress we are making.
3
Earnings Conference Call
RGS Energy will hold a conference call to discuss its first quarter 2015 financial results later today. Management will host the presentation, followed by a
question and answer period.
Date: Monday, May 11, 2015
Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)
Toll-free
dial-in number: 1-888-205-6702
International dial-in number: 1-913-312-0940
Conference ID: 7309081
Webcast:
http://public.viavid.com/index.php?id=114406
The conference call will be webcast live and available for replay via the investor relations section of the
companys website at RGSEnergy.com.
Please call the conference telephone number five 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 7:30 p.m. Eastern time on the same day through May 18, 2015.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 7309081
About RGS Energy
RGS Energy (NASDAQ: RGSE) is one
of the nations leading rooftop installers of solar equipment, serving residential and small business customers in the mainland U.S. and Hawaii. Beginning with one of the very first photovoltaic panels sold in 1978, the company has installed
tens of thousands solar power systems. RGS Energy makes it very convenient 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, visit RGSEnergy.com, on Facebook at www.facebook.com/rgsenergy and on Twitter at www.twitter.com/rgsenergy. RGS Energy
is a trade name and RGS Energy makes filings with the Securities and Exchange Commission under its official name Real Goods Solar, Inc. For more information about the company, visit www.rgsenergy.com.
Forward-Looking Statements and Cautionary Statements
This press release may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they provide our current beliefs, expectations, assumptions and forecasts 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 anticipate, believe, plan, estimate, expect, strive, future,
intend, may, will and similar expressions as they relate to us are intended to identify such forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward- looking
4
statements include, without limitation, the following: the continuation and level of government subsidies and incentives for solar energy, the impacts of worsening economic conditions on
homeowners and small commercial operation that may limit their ability and desire to invest in solar systems, changing and updating technologies and the issues presented by these new technologies related to customer demand and our product offering,
the rates charged by electric utilities that may impact the desirability of our product to customers, the impact of a drop in the price of conventional energy on demand for solar energy systems, new regulations impacting solar installations
including electric codes, access to electric grids, the willingness of electric utilities to allow interconnections and other regulations effecting energy consumption by consumers, factors impacting the timely installations of solar systems,
seasonality and adverse weather conditions inhibiting our ability to install solar systems, our inability to maintain effective disclosure controls and procedures and internal control over financial reporting, our ability to operate with our
existing financial resources and capital available under our debt facility, the impact of our current indebtedness on our financial health, our ability to continue to obtain access to financing and financial concessions when needed from financiers,
loss of key personnel and ability to attract necessary personnel, our history of operating losses, our failure to realize cost savings from restructuring and optimization, geographic concentration of revenue from the sale of solar energy systems in
east coast states, Hawaii and California, our failure to timely or accurately complete financing paperwork behalf of customers, adverse outcomes arising from litigation and contract disputes, disruption of our supply chain from equipment
manufacturers, construction risks and costs, competition, continued access to competitive third party financiers to finance customer solar installations, failure by manufacturers of third party installers to perform under their warranties to us,
failure of customers to pay per contractual terms, potential shortages of supplies for solar energy systems, conditions affecting international trade having an adverse effect on the supply of solar photovoltaic modules, delays or cancellations for
system installations done on a percentage-of-completion, non-compliance with NASDAQ continued listing standards, changing reporting requirements which require significant compliance efforts and resources, volatile market price of our Class A
common stock, lack of coverage of our Class A common stock by securities analysts, the low likelihood that we will pay any cash dividends on our Class A common stock for the foreseeable future, possibility of future dilutive issuances of
securities, anti-takeover provisions in out organizational documents, the significant ownership and voting power of our Class A commons stock held by Riverside Renewable Energy Investments, LLC, and such other factors as discussed throughout
Part I, Item 1A, Risk Factors and Part II, Item 7, Managements Discussion and Analysis of Financial Conditions and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2014.
Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which
it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. These documents are
available on both the EDGAR section of the SECs website at www.sec.gov and the Investor Relations section of the companys website at www.rgsenergy.com.
5
RGS Energy
Consolidated Condensed Balance Sheets
(in thousands, except per share amountsunaudited)
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March 31, 2015 |
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December 31, 2014 |
|
Cash |
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$ |
992 |
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$ |
1,947 |
|
Accounts Receivable |
|
|
6,521 |
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|
|
8,293 |
|
Inventory |
|
|
3,713 |
|
|
|
4,639 |
|
Other Current Assets |
|
|
7,554 |
|
|
|
5,847 |
|
Assets of Discontinued Operations |
|
|
3,698 |
|
|
|
8,427 |
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|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
22,478 |
|
|
|
29,153 |
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Goodwill and Intangibles |
|
|
1,338 |
|
|
|
1,338 |
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Other Assets |
|
|
3,873 |
|
|
|
3,533 |
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Assets of Discontinued Operations |
|
|
997 |
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|
|
1,082 |
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|
|
|
|
|
|
|
|
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Total Assets |
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$ |
28,686 |
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|
$ |
35,106 |
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|
|
|
|
|
|
|
|
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Line of Credit and Term Loan |
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|
1,960 |
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|
|
4,350 |
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Related Party Debt |
|
|
3,150 |
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|
|
3,150 |
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Accounts Payable |
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|
11,373 |
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|
|
13,398 |
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Other Current Liabilities |
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|
7,326 |
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|
|
8,575 |
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Liabilities of Discontinued Operations |
|
|
6,237 |
|
|
|
7,984 |
|
|
|
|
|
|
|
|
|
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Total Current Liabilities |
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30,046 |
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|
|
37,457 |
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Warrant Liability |
|
|
9,909 |
|
|
|
2,491 |
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Other Liabilities |
|
|
108 |
|
|
|
132 |
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Liabilities of Discontinued Operations |
|
|
237 |
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|
|
326 |
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|
|
|
|
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|
|
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Total Liabilities |
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|
40,300 |
|
|
|
40,406 |
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Stockholders Equity (deficit) |
|
|
(11,614 |
) |
|
|
(5,300 |
) |
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|
|
|
|
|
|
|
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Liabilities and Stockholders Equity |
|
$ |
28,686 |
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|
$ |
35,106 |
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6
RGS Energy
Consolidated Summary Statements of Operations
(in thousands, except per share amountsunaudited)
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Three Months Ended March 31, |
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|
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2015 |
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2014 |
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Net Revenue |
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$ |
10,610 |
|
|
$ |
13,767 |
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Cost of Goods Sold |
|
|
9,713 |
|
|
|
10,956 |
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|
|
|
|
|
|
|
|
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Gross Margin |
|
|
897 |
|
|
|
2,811 |
|
Gross Margin (%) |
|
|
8.45 |
% |
|
|
20.42 |
% |
Selling and Operating |
|
|
4,071 |
|
|
|
5,936 |
|
General and Administrative |
|
|
1,557 |
|
|
|
2,073 |
|
Stock option compensation |
|
|
245 |
|
|
|
203 |
|
Acquisition-related Costs |
|
|
|
|
|
|
1,110 |
|
Asset Impairment |
|
|
|
|
|
|
|
|
Depreciation and Amortization |
|
|
150 |
|
|
|
631 |
|
Restructuring Costs |
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses |
|
|
6,044 |
|
|
|
9,953 |
|
Operating Loss from Continuing Operations |
|
|
(5,147 |
) |
|
|
(7,142 |
) |
Interest Income (Expense), Net |
|
|
(225 |
) |
|
|
(221 |
) |
Derivative Gain (Loss) |
|
|
1,755 |
|
|
|
(4,667 |
) |
Income Tax Expense (Benefit) |
|
|
(65 |
) |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
(Loss) from Continuing Operations, net of tax |
|
|
(3,552 |
) |
|
|
(12,036 |
) |
(Loss) From Discontinued Operations, net of tax |
|
|
(182 |
) |
|
|
(2,792 |
) |
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(3,734 |
) |
|
$ |
(14,828 |
) |
|
|
|
|
|
|
|
|
|
Earnings per share |
|
$ |
(0.06 |
) |
|
$ |
(0.34 |
) |
Weighted average shares outstanding |
|
|
57,421 |
|
|
|
43,600 |
|
7
RGS Energy
Segment Results
(in
thousandsunaudited)
|
|
|
|
|
|
|
|
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|
|
First quarter Results |
|
|
|
2015 |
|
|
2014 |
|
Residential: |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
6,857 |
|
|
$ |
13,274 |
|
COGS |
|
|
6,148 |
|
|
|
10,616 |
|
|
|
|
|
|
|
|
|
|
Gross Margin |
|
|
709 |
|
|
|
2,658 |
|
GM% |
|
|
10.34 |
% |
|
|
20.02 |
% |
Sunetric: |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
3,753 |
|
|
$ |
|
|
COGS |
|
|
3,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin |
|
|
188 |
|
|
|
|
|
GM% |
|
|
5.01 |
% |
|
|
0.00 |
% |
RGS Energy
Supplemental Information
|
|
|
|
|
|
|
|
|
|
|
First quarter Results |
|
|
|
2015 |
|
|
2014 |
|
Rooftop Installations: |
|
|
|
|
|
|
|
|
Residential |
|
|
222 |
|
|
|
516 |
|
Sunetric |
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
264 |
|
|
|
516 |
|
kW Installed: |
|
|
|
|
|
|
|
|
Residential |
|
|
1,657 |
|
|
|
3,643 |
|
Sunetric |
|
|
904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,561 |
|
|
|
3,643 |
|
Net Orders (dollars in thousands): |
|
|
|
|
|
|
|
|
Residential |
|
$ |
(3,811 |
) |
|
$ |
7,765 |
|
Sunetric |
|
$ |
(1,582 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(5,393 |
) |
|
$ |
7,765 |
|
Net Orders (kW): |
|
|
|
|
|
|
|
|
Residential |
|
|
(954 |
) |
|
|
1,607 |
|
Sunetric |
|
|
(363 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
(1,317 |
) |
|
|
1,607 |
|
8
|
|
|
|
|
|
|
|
|
|
|
First quarter results 2015 |
|
|
|
Backlog Rooftops |
|
|
Backlog Value ($000s) |
|
Backlog Information |
|
|
|
|
|
|
|
|
Residential |
|
|
876 |
|
|
$ |
29,187 |
|
Sunetric |
|
|
168 |
|
|
$ |
16,484 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,044 |
|
|
$ |
45,671 |
|
|
|
|
|
First quarter results 2014 |
|
Residential |
|
|
699 |
|
|
$ |
22,533 |
|
Sunetric |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
699 |
|
|
$ |
22,533 |
|
Media and Investor Relations Contact
Ron Both
Liolios Group, Inc.
Tel 1-949-574-3860
RGSE@liolios.com
9