Eguana Technologies Inc. (TSXV: EGT) (OTCQB:
EGTYF) (“
Eguana” or the
“
Company”), a leading provider of high-performance
energy storage systems, announces its annual financial results for
the year ended December 31, 2023.
Fiscal 2023 Summary Results
The Company’s year-end was previously changed
from September 30 to December 31. Consequently, the financial
statements for the twelve-month period ended December 31, 2023
(“F2023”), are being presented with comparative information for the
fifteen-month year ended December 31, 2022 (“F2022”).
- Sales decreased 32.1% to $11,458,590 in F2023 in comparison to
$16,826,875 in F2022. On a simple 12 month prorated basis, F2022
would equate to $13,461,500, or a normalized 15% decrease. In early
2023, the solar industry was negatively impacted by macro-economic
factors, including high interest rates and difficult consumer
credit markets, causing elevated inventories throughout major
distribution channels and overall, the market contracted. After the
first quarter, in F2023 sales declined, due to this demand shift
and this low demand market is continuing.
- Overall gross margins remain low as consumers continue to be
price sensitive, resulting in aggressive pricing for competitors’
products and services, in a much lower demand environment. Gross
margin decreased to negative 17.9%, or negative $2,120,555, for the
year ended December 31, 2023, compared to the period ended December
31, 2022, wherein gross margins were $233,219, or 1.4%. Margins in
F2023 were negatively impacted by inventory impairment charges
recorded by the Company of $2,052,274.
- Operating costs, excluding amortization and share-based
compensation expense, in F2023 were $13,011,943, up from
$11,525,441 for the fifteen months in F2022 representing a 12.9%
increase period over period. However, normalized on a simple 12
month prorated basis, F2022 would equate to $9,220,353, or a 41.1%
increase. Expenses in almost all categories increased slightly.
Higher expenses were experienced from increased headcount, which
was adjusted downward in the fourth quarter of F2023, responding to
the slower than expected market recovery, and higher headcount and
operational costs with the Australian branch expansion in F2023, to
include rooftop solar services.
- Additional provisions were recorded throughout F2023, with
respect to a large slow paying customer of Eguana. Total expected
credit loss for the year ended December 31, 2023, was $9.9 million
(2022 – $1.4 million).
- The net loss before tax for the year ended December 31, 2023 of
$35,558,524, increased by $16,815,380. The increase in net loss
before tax can primarily be attributed to low margins, with
slightly higher expenses, the large expected credit loss recorded
and also the increase in financing costs associated with the new
Senior Loan and ITOCHU debentures, both issued in the later part of
F2022.
Strategic Steps
- Much of the strategic activity in early 2023 related to growing
USA distribution channels and on-boarding and training installation
partners. Eguana University, a robust online training platform, was
rolled out with over 1,300 trained installers throughout the
year.
- The Company added rooftop solar installation services in
Australia, in order to be a turn-key solution, allowing Eguana to
secure a contract with a major Australian utility.
- As industry demand slowed and sell-through stalled, the Company
strategically shifted to focus on grid connectivity and the value
proposition within virtual power plant (“VPP”) applications. For
the later part of 2023 and into the 2024 strategic plan, Eguana
will remain focused on demonstrating the value of demand response,
load management, auxiliary power, and voltage and frequency control
for utility companies.
- With a focus on VPP applications, product development shifted
to updating cloud services and enhancing cloud solutions, which
resulted in the recent launch of Eguana Edge™. The suite of Eguana
Cloud solutions is positioning the Company as a power grid software
solution, in addition to the existing hardware products like
Evolve™, Enduro™ and the Duracell branded microinverters.
- Utility engagement gained traction, as the Company announced
partnerships with Virtual Peaker and AutoGrid, along with utility
partners, including a Portland General Electric and Massachusetts
Municipal Wholesale Electric Company and a major utility company in
Australia.
- The collapse of the consumer driven residential solar market
created significantly elevated inventories through distribution
channels in 2023 and 2024, which led to cancelled and delayed
orders, throughout the solar industry supply chains. All industry
players were negatively impacted. High interest rates, high
inflation and unclear policy and/or tax incentives remain negative
factors. The lower demand and a slower than predicted recovery,
have created near-term liquidity risk for the Company. Eguana
continues to closely manage liquidity, including working with its
senior lenders and reviewing additional strategies, to increase
liquidity and to allow for execution of the 2024 business
strategy.
“After a very difficult year in the residential
solar sector, we launched our VPP utility accelerator program,
including Eguana Edge™, which provides utilities real time feeder
line balancing and voltage control capabilities. To date the
program has rollouts in process with multiple utilities across
Canada and the US, growing additional utility interest in the
Eguana energy storage solutions,” commented Justin Holland, CEO.
“Success of our technology in these utility channels, where
financial markets are less impactful on purchasing decisions, is
expected to drive higher storage sales with stronger margins, plus
deliver future recurring revenues.”
The Consolidated Financial Statements and the
Management Discussion and Analysis thereof are available on SEDAR+
at www.sedarplus.com and the Company’s website at
www.EguanaTech.com.
The Company will host a shareholders’ call, in
connection with the filing of its financial statements for the
interim period ended March 31, 2024, which are anticipated to be
filed by May 30, 2024 and in combination with the recent filing of
its financial statements for the annual period ended December 31,
2023. Details will be provided with a news release, in advance of
the scheduled call.
About Eguana Technologies
Inc.
Eguana’s vision is to accelerate grid
modernization and resilience, by delivering flexible, modular, and
cost-effective alternatives to traditional grid upgrades. Our
technology provides value to all key stakeholders - from the
consumer, to the electricity retailer, the distribution utility,
and the system operator.
Eguana Technologies connects utilities with
consumers, through its high-performance commercial and residential
energy storage solutions. Eguana’s vertically integrated product
suite has been designed from the ground up, with both the end user
and the utility in mind, to transition the power grid
seamlessly.
Manufactured in local facilities across the
globe to ensure compliance and quality, Eguana’s standardized
platform allows the flexibility to ensure each product solution is
optimized for use in major grid modernization markets.
To learn more, visit
www.EguanaTech.com or follow us on LinkedIn and
@EguanaTech on X.
Company Inquiries
Justin Holland, CEOEguana Technologies Inc. +1.416.728.7635
Justin.Holland@EguanaTech.com
Forward Looking Statements
The reader is advised that all information
herein, other than statements of historical fact, may constitute
forward-looking statements and forward-looking information
(together, "forward- looking statements") within
the meaning assigned by National Instrument 51-102 - Continuous
Disclosure Obligations and other relevant securities
legislation.
Forward-looking statements are included to
provide information about management’s current expectations and
plans that allows investors and others to have a better
understanding of the Company’s business plans and financial
performance and condition. All statements, other than statements of
historical fact included in this news release, regarding the
Company’s strategy, future operations, prospects, plans and
objectives of management are forward-looking statements that
involve risks and uncertainties. Forward-looking statements are
typically identified by words such as “plan”, “expect”, “estimate”,
“intend”, “anticipate”, “believe”, or variations of such words and
phrases or statements that certain actions, events or results
“may”, “could”, “would”, “might” or “will” be taken, occur or be
achieved. Forward looking statements in this news release include,
but are not limited to: that the Company will remain focused on
demonstrating the value of demand response, load management and
auxiliary power, and voltage and frequency control for utility
companies; and, that the Company’s VPP utility accelerator program,
including Eguana Edge™, is expected to drive higher storage sales
with stronger margins and deliver future recurring revenues.
Forward-looking statements are not a guarantee
of future performance and involves a number of risks and
uncertainties. Many factors could cause the Company's actual
results, performance or achievements, or future events or
developments, to differ materially from those expressed or implied
by the forward-looking information. Such factors include, but are
not limited to, risks associated with: failure by the Company to
improve cash flow which would have a material adverse impact on the
viability of the business to continue operating; timely collection
of accounts receivable; ability to raise capital in debt or equity,
as needed, on appropriate terms; unanticipated effects of the
reduction to headcount; effective implementation and deployment of
Eguana solutions and building additional partnerships and
developing existing partnerships; general economic, market and
business conditions; competitive factors; achieving strategic
objectives; engagement and adoption of the VPP solutions with
utilities; obtaining additional revenue, recurring revenue and
higher margins; inability to or delays in sourcing materials;
production delays or certification delays: the Company’s ability to
roll out additional utility pilot programs and demonstrations or
deployment; the operational effectiveness and efficiency of the
products when in use by utilities; a slower adoption of energy
storage technologies and other factors set out in the "Risk
Factors" section of the Company's management's discussion and
analysis for the three and nine months ended September 30, 2023 and
annual information form dated May 1, 2023, which may be found on
its website or at www.sedarplus.ca. Readers are cautioned not to
place undue reliance on forward-looking information, which speaks
only as of the date hereof. The Company does not undertake any
obligation to release publicly any revisions to forward-looking
statements contained herein to reflect events or circumstances that
occur after the date hereof or to reflect the occurrence of
unanticipated events, except as may be required under applicable
securities laws.
Neither the TSXV nor its Regulation
Services Provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this
news release.
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