Akeena Solar, Inc., a leading installer of solar power systems and designer of AC solar panels, today announced its financial results for the fourth quarter and year ended December 31, 2009.
“2009 was a turning point for Akeena Solar as we diversified our revenue streams by launching the distribution sales of Andalay AC solar panels. Our patented Andalay technology, new distribution channels, and growing brand awareness provide the foundations for rapid growth in the rooftop solar market,” stated Barry Cinnamon, CEO. “The traction we are gaining with our new distribution partners — including our growing network of Andalay dealers, Lowe’s home improvement stores, Morgan Stanley Solar Solutions and Highland Solar — is a strong validation of our technology. Andalay AC panel’s built-in monitoring, ease of installation, superior aesthetics and better safety characteristics make it a natural choice for new distribution partners in 2010, including new home builders, as well as HVAC and electrical contractors, seeking opportunities to tap into the solar energy marketplace.”
He continued, “It was a challenging year from a top line revenue standpoint; nevertheless, our other financial metrics showed strong improvement from 2008 to 2009: net cash position (cash and cash equivalents net of credit facility) improved from a negative $1.1 million to a positive $5.8 million, our gross margins improved from 14.6% to 23.3%, and total operating expenses declined from $27.7 million to $19.9 million.”
“In the fourth quarter, we met a number of important operational objectives,” commented Gary Effren, president of Akeena Solar. “First, we made good progress developing new distribution channels. Since launching our distribution strategy in the second quarter, we have shipped to 54 Andalay dealers in 23 states, and our dealer network continues to grow steadily. The distribution partnership with Highland Solar marks our first distribution arrangement outside of the United States. Our partnership with Lowe’s marks our first foray into retail outlets. Andalay AC panels are a key part of Lowe’s new in-store Energy Center, which was introduced in December to 21 stores in California. For the year, we accomplished our strategic goal of concentrating our installation business in California and expanding our geographic reach through distribution, which more than offset the decline from last year’s non-California installation revenues.”
“Fourth quarter revenue reflected residential installations that were softer than we would have liked, and as we expected, commercial installations continued to lag. However, we had good bookings momentum throughout the quarter, without the usual fourth quarter dip. As a result, we ended the year with a backlog of $9.4 million. Offsetting the weakness in our installation business was the tripling of distribution revenue which contributed $1.4 million in the quarter, a level that included a few large orders with key new customers as well as repeat orders from existing customers,” added Effren.
Net sales for the fourth quarter totaled $7.0 million, a decrease of 35.2% compared to $10.9 million in the comparable period of 2008, and a decrease of 8.3% from the third quarter sales of $7.7 million. The decline reflects the absence of East coast and Colorado installations and lower commercial revenue due to the tight credit market partially offset by an increase in distribution revenue.
Gross profit for the fourth quarter 2009 was $1.3 million, or 18.0% of sales, compared to a negative $1.5 million in the fourth quarter of 2008, and $1.9 million, or 24.7% of sales in the third quarter of 2009. Gross profit before the revaluation of inventory in the fourth quarter of 2008 was $1.2 million, or 10.7% of sales. The year-over-year increase in gross margin is primarily the result of lower panel prices, lower direct labor costs due to efficiencies gained with Andalay panels and lower Andalay component costs, offset somewhat by lower average system prices.
Total operating expenses for the quarter totaled $4.8 million, compared to $7.5 million for the same period last year, and $5.1 million in the third quarter of 2009. The year-over-year improvement consisted of lower general and administrative costs of $2.3 million and lower sales and marketing expenses of $451,000. The decline in general and administrative expenses is the result of cost cuts made in the fourth quarter of 2008 and the first quarter of 2009, and the absence of prior year charges including a $1.0 million reserve for past due accounts and a $200,000 reserve for future lease payments related to two vacated offices in California.
Fourth quarter net loss was $3.7 million, or $0.11 per share, compared to a net loss of $9.2 million, or $0.31 per share, in the fourth quarter of 2008, and a net loss of $2.4 million or $0.07 per share in the third quarter of 2009. The third quarter of 2009 net loss included a favorable $758,000 non-cash adjustment to reflect the fair value of common stock warrants accounted for as a liability in accordance with provisions of the warrant agreements. The fourth quarter of 2009 net loss included an unfavorable $168,000 non-cash charge to reflect the fair value of common stock warrants.
Looking forward to reporting this year’s first quarter financial results, management anticipates revenue levels to be slightly above the fourth quarter of 2009 due to the negative impact of inclement weather on installations and seasonality of distribution sales, especially on the East Coast. Management projects achieving quarterly EBITDA (excluding non-cash stock-based compensation) breakeven in the fourth quarter of 2010 with revenues of approximately $18 million.
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