Eguana Announces Second Quarter 2024 Financial Results
August 29 2024 - 4:00PM
Eguana Technologies Inc. (TSXV: EGT) (OTCQB:
EGTYF) (“
Eguana” or the
“
Company”), a leading provider of high-performance
energy storage systems, reports financial results for the second
quarter ended June 30, 2024.
Second Quarter 2024
- Q2 2024 revenue of
$0.7 million, a decline from the comparative quarter in June 2022
with revenue of approximately $2.1 million. 2024 revenues remain
constrained by a slower than expected recovery of the residential
rooftop solar market.
- Q2 2024 gross
margin is stronger than prior quarters, at approximately 10% as
compared approximately 0% for the prior comparative quarter for
June 2023. The positive margin gain was driven by a change in
product mix versus the comparative quarter.
- Q2 2024 operating
loss of $2.1 million, a decrease from a $4.1 million operating loss
for the comparative June quarter in 2023. This decrease is due to
lower expenses in all expense categories, related to personnel
reductions and overall cost reductions.
- Working capital at
June 30, 2024 was negative $1.0 million, a decrease from $5.0
million at December 31, 2022. The decrease relates to ongoing cash
used in operations.
- At June 30, 2024,
the Company has a large overdue accounts receivable balance from
one customer of which approximately $7.4 million, which is offset
by an expected credit loss (“ECL”) of $7.4 million, thus showing a
net receivable of only $nil, reflecting slow payments, missed
agreed payments and overall collection risk. Although the customer
has been delayed in making payments, progress payments have been
received consistently over the past 60 days, as the customer
developed a new sales channel and has increased sales. The Company
reviews the expected credit loss quarterly and where appropriate
adjusts the ECL estimate, in line with generally accepted
accounting principles. During the three months ended June 2024, a
price concession was provided to this customer that resulted in a
credit to accounts receivable, with an offset to ECL of $415,000
USD. Based on new market information for inventory previously
sold to the customer, and in good faith, the Company agreed to a
one-time credit, reflecting market pricing through a new sales
channel that is now available but only at a lower special selling
price. This does not impact the Company’s existing inventory.
For the three months ended June 30, 2024, the Company recorded
other small reductions in ECL to reflect value received from
inventory obtained as an offset to net accounts receivable with the
major customer and payments received. As a result, the Company has
an expected credit loss provision for this customer at June 30,
2024, in the amount of $7.4 million.
- During June 2024,
the Company started the formal process for liquidation of its
German subsidiary. The sales opportunities in German did not
materialize and the Company made the decision to cut costs and put
additional focus and resources on North American Virtual Power
Plant (“VPP”) utility markets. At June 30, 2024, the Company took a
$0.2 million write down of stock related to the European market and
recorded $0.3 million of accrued liabilities related to estimated
personnel and closure costs. The German subsidiary is categorized
as discontinued operations and a loss of discontinued operations
was recorded for the six months ended June 30, 2024 of $0.8
million.
- During 2024, the
Company negotiated various payment delays and deferrals with the
lender of its senior long-term debt (the “Lender”). On May 7, 2024,
the Company entered into a forbearance agreement with the Lender
whereby the Lender has agreed to a deferral of payments up to and
including June 1, 2024, predicated on subjective conditions that if
not complied with render the forbearance to be terminated, for
which the Company complied. This agreement covered the period ended
June 30, 2024. Subsequent to this recent quarter end, the Company
missed a negotiated interest only payment in July and an
anticipated August regular amortization payment, moving the loan
into formal default. In August 2024, the Lender provided an
updated forbearance agreement whereby the Lender has agreed to a
deferral of payments up to and including September 1, 2024,
predicated on the same subjective conditions that if not complied
with render the forbearance to be terminated. Negotiations with the
lender remain positive and ongoing and the Lender has not taken any
action.
- In July 2024, the
Company was notified, by the OTCQB in the USA, of the low trading
price for the stock and potential removal of the EGTYF stock from
the OTCQB marketplace. The Company plans to maintain the listing on
the pink market, until such time migration back to the OTCQB is
possible and appropriate.
The Condensed Unaudited Consolidated Financial
Statements and the Management Discussion and Analysis thereof, for
the three and the six months ended June 30, 2024, are available on
SEDAR+ at www.sedarplus.ca.
Annual General and Special Meeting (“AGSM”) Date
Confirmed
The Company has announced the Company’s AGSM.
The AGSM will be held on September 26, 2024, at 10:00 am mountain
time, in Calgary Alberta, and virtually with an online portal.
Further information regarding the AGSM is included in a management
information circular, which has been prepared by the Company and
filed on SEDAR+. Given the upcoming AGSM, the regular quarterly
conference call is deferred and a full company update will be
available immediately after the conference call for the AGSM.
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 Eguana on LinkedIn
and @EguanaTech on X.
Company Inquiries
Justin HollandCEO, Eguana Technologies
Inc.+1.416.728.7635Justin.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.
In particular, forward-looking statements include, among other
things, statements regarding the Company’s ability to collect
overdue accounts receivable, including the timing and likelihood of
such collections or settlements in kind; the impact of the newly
developed sales channel by a major customer on the Company’s
financial performance; any potential effects of the price
concession granted to the customer; the financial implications of
the liquidation of the Company’s German subsidiary, including the
associated costs; the shift in strategic focus to the North
American VPP utility markets; the Company’s ongoing negotiations
and agreements with its long-term debt lender; and the potential
risks related to the Company’s listing status on the OTCQB
marketplace.
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; the timely
collection of accounts receivable; the impact of ongoing market
conditions on inventory valuation; successful negotiations and/or
amendments with and to existing long-term debt lenders; continued
support and success working with vendors and landlords; the
potential effects of late and delayed vendor and contractual
payments and any impact on the company’s reputation, credit
worthiness and supplier relationships; employee morale, departures
and productivity loss when working under constrained financial
conditions; unanticipated effects of any formal long-term debt
default; the financial and operational effects of discontinuing the
German subsidiary; the risk of delisting from the OTCQB
marketplace; potential legal claims; ability of management to
manage cash flow in a low liquidity situation; ability to raise
capital in debt or equity, as needed, on appropriate terms; general
economic, market and business conditions; competitive factors;
achieving strategic objectives; effective implementation and
deployment of Eguana solutions and building additional partnerships
and developing existing partnerships; the Company’s ability to roll
out additional utility pilot and VPP programs and demonstrations or
deployment; the operational effectiveness and efficiency of the
products when in use; a slower adoption of energy storage
technologies; stock performance; and other factors as may be set
out in the Company’s continuous disclosure filings from time to
time , 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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