LOS GATOS, Calif.--(BUSINESS WIRE)--Akeena Solar, Inc. (NASDAQ: AKNS), a leading designer and installer of solar power systems, today announced results for the first quarter of 2008.“We delivered 95% revenue growth in the first quarter compared to the first quarter of 2007, as expected, on the strength of an increase in both residential and commercial projects. Many of these installations are with Andalay, our proprietary solar panel system. The rollout of Andalay is proceeding extremely well and customers continue to respond very positively to the systems’ reliability and performance benefits. In addition, Andalay is now reaching customers in Europe through our license arrangement with Suntech,” said Barry Cinnamon, president and chief executive officer of Akeena Solar.
“Although installations were at a record level this quarter and customer inquiries were also at a record high, bookings did not keep pace. Since the beginning of the second quarter we have seen signs that a looming recession and tightening credit are weighing on consumers’ decisions to invest in residential solar installations – even with the price of energy skyrocketing. In addition, the uncertainty surrounding the extension of the federal investment tax credit (ITC) is restricting the availability of financing for future commercial projects,” continued Cinnamon. “We now expect demand for the rest of the year to be weaker than we had originally envisioned and full year revenue to grow by 40% to 50% over last year.
“To responsibly manage the business while demand remains weak, we have taken actions to reduce costs across the board,” added Cinnamon. “We are taking steps to streamline the organization, reduce headcount and redeploy assets to higher performing locations. The full benefit of these reductions will be apparent in the third quarter. Moreover, the ongoing rollout of Andalay is continuing to yield productivity improvements.”
Concluded Cinnamon, “In the short term, the recession and ITC uncertainty will dampen investments in solar power; in the medium term, the escalating cost of energy will only serve to stimulate demand. In the meantime, we will continue to promote the benefits of solar power while applying strict cost discipline to managing our business.”
Financial Results
Net sales for the first quarter of 2008 were $12.2 million, an increase of 94.7% compared to $6.3 million in net sales in the first quarter of 2007 and an increase of 18.7% compared to $10.3 million in sales in the fourth quarter of 2007. Growth in the first quarter of 2008 over the same quarter last year reflects a higher volume of residential and commercial installations.
Gross profit for the first quarter 2008 was $2.4 million, or 19.7% of sales, compared to $1.5 million, or 23.8% of sales, in the first quarter of 2007 and compared to $1.9 million, or 18.2% of sales, in the fourth quarter of 2007. Compared to the prior year, gross margin declined due to a higher average panel price associated with the mix of products. The sequential increase in gross margin reflects improved efficiency associated with the record level of installations.
Total operating expenses for the first quarter of 2008 were $7.1 million compared to $2.4 million for the same period last year and $6.5 million in the fourth quarter of 2007. Compared to the first quarter of 2007, the $4.7 million variance consisted of $3.1 million in compensation expense of which $937,000 was non-cash stock-based compensation expense. The balance of the increase was primarily due to costs associated with having ten offices this year compared to three offices in the first quarter of 2007. The $674,000 variance from the fourth quarter of 2007 was primarily due to Andalay installation training, labor costs associated with weather interruptions and insurance costs.
Net loss for the first quarter of 2008 was $4.6 million, or $0.16 per share, compared to a net loss of $933,000, or $0.06 per share, in the first quarter of 2007 and a net loss of $4.5 million, or $0.18 per share in the fourth quarter of 2007. The reduced per share loss in the first quarter of 2008 compared to the fourth quarter of 2007 reflects an increase in the average shares outstanding during the first quarter of 2008 associated with the $26.1 million capital raise completed last November.
Installations for the quarter amounted to approximately 1,587 kilowatts compared to approximately 827 kilowatts last year and approximately 1,316 kilowatts in the fourth quarter of 2007. Backlog as of March 31, 2008 was $11.9 million.
Outlook
In addition to continued recessionary conditions and continued increases in energy prices, management’s 2008 forecast now assumes that the ITC will not be extended this year. As a result, management anticipates revenue will increase by approximately 40% to 50% over 2007 revenue and that EBITDA breakeven, adjusted for stock-based compensation expense, will not be achieved this year.
Conference Call Information
Akeena Solar will host an earnings conference call at 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) today to discuss its first quarter 2008 earnings results. Management will discuss strategy, review quarterly activity, provide industry commentary, and answer questions.
The call is being webcast and can be accessed from the “Investor Relations” section of the company’s website at www.akeena.com. If you do not have Internet access, please dial 877-225-1676 in the U.S. International callers should dial 706-643-9669. The passcode is 46479337. If you are unable to participate in the call at this time, the webcast will be archived on the company’s website. In addition, a telephonic replay will be available for two business days, beginning two hours after the call. To listen to the replay, in the U.S., please dial 800-642-1687. International callers should dial 706-645-9291. The passcode is 46479337.
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