North Coast Solar Stocks

November 6, 2008

Akeena Solar Announces Third Quarter 2008 Results

Filed under: AKNS, KYO, STP — Tags: , , , , — Jason @ 8:15 am

Thursday November 6, 8:15 am ET

LOS GATOS, Calif., Nov. 6, 2008 (GLOBE NEWSWIRE) — Akeena Solar, Inc. (AKNS), a leading designer and installer of solar power systems, today announced results for the third quarter of 2008.

“Akeena bounced back in the third quarter with our second best revenue quarter ever,” said Barry Cinnamon, president and chief executive officer. “Revenue rose 31% from last year’s third quarter and 50% from the second quarter on the strength of commercial installations. In fact, commercial revenues quadrupled versus the third quarter a year ago and more than doubled from the second quarter as installation crews focused on commercial jobs with year end deadlines.”

“Our transition to Andalay is nearly complete, and demand for our proprietary panels continues to expand in both residential and commercial markets. As a result, we ended the quarter with a record backlog of $16.7 million,” Cinnamon added. “With the passage of the ITC, many commercial jobs are progressing to the installation stage. Residential customers are contracting with us now before state rebates decline, then they are simply interconnecting their systems in 2009 so that they are eligible for the uncapped 30% ITC. These factors support our expectation that we will generate revenue growth this year in the range of 30% to 40%, consistent with prior guidance.”

“As we begin planning for 2009 with an uncapped ITC for residential customers, a restoration of the commercial tax credit and new utility opportunities, we’re anticipating substantial growth in the U.S. market. We are laying the groundwork for significant sales in the burgeoning utility market now that utilities can take advantage of the 30% ITC. Since our Andalay flat roof system is both light-weight and non-penetrating, it is ideally suited for flat rooftops leased by utilities,” added Cinnamon. “Our gross margins are expected to improve as we gain greater operational efficiency with the installation of Andalay and we achieve Andalay cost reductions in the second year of production from our OEM partners. We also expect to reduce our operational expenses in 2009 as we improve our sales and marketing efficiencies, and reduce our customer acquisition costs.”

Cinnamon concluded, “Worldwide conditions in the solar industry have put us in an enviable position in the solar value chain. Supply of solar modules exceeds demand, especially since manufacturing capacity continues to increase and shipments to Europe have slowed down. As a result, module manufacturers are now looking towards the U.S., which is expected to be the largest worldwide market. There are only three ways to differentiate solar modules: low price (which generally is an unprofitable strategy), high efficiency (which is expensive and technically challenging), or superior aesthetics, reliability and fast installation times. Our patented Andalay technology excels in these latter dimensions, and our current OEM partners Suntech (STP) and Kyocera (KYO) understand these benefits.”

Financial Results

Net sales for the third quarter of 2008 were $10.6 million, an increase of 31% compared to $8.1 million in net sales in the third quarter of 2007 and an increase of 50% compared to $7.1 million of net sales in the second quarter of 2008. Commercial installations in the third quarter of 2008 more than quadrupled over the same quarter last year and more than doubled from the second quarter of 2008. Residential installations were down 10.9% compared to the third quarter of 2007, but increased 16.6% from the second quarter of 2008.

Gross profit for the third quarter 2008 was $1.3 million, or 12.7% of sales, compared to $1.7 million, or 21.0% of sales, in the third quarter of 2007 and compared to $1.0 million, or 14.8% of sales, in the second quarter of 2008. Gross margin declined over the prior year third quarter and from the second quarter due to: a higher mix of commercial installations in the third quarter; liquidation of non-Andalay panels at a 9.7% margin and start-up costs associated with the transition to Andalay for residential installations.

Total operating expenses for the third quarter of 2008 were $6.8 million compared to $5.4 million for the same period last year and $6.2 million in the second quarter of 2008. Compared to the third quarter of 2007, the $1.4 million variance was due to sales-related compensation and higher customer acquisition costs in connection with serving more customers, higher general and administrative expenses including $151,000 in non-recurring costs associated with terminating certain employment agreements and severance and a $297,000 increase in stock-based compensation. Compared to the second quarter of 2008, operating expenses were higher primarily due to $151,000 in non-recurring costs associated with terminating certain employment agreements and severance. Excluding these expenses, stock-based compensation costs and depreciation and amortization, cash operating costs were up $106,000, or 2.0%, from the second quarter of 2008, with sales and marketing expenses up $66,000, or 3.3%, and general and administrative expenses up $40,000, or 1.2%. On this same basis, cash operating expenses were 51.5% of revenue in the third quarter of 2008, down from 75.8% in the second quarter of 2008 and from 55.6% in the third quarter of 2007.

Net loss for the third quarter of 2008 was $5.5 million, or $0.19 per share, compared to a net loss of $3.7 million, or $0.16 per share, in the third quarter of 2007 and a net loss of $5.1 million, or $0.18 per share in the second quarter of 2008.

Installations for the quarter amounted to approximately 1,290 kilowatts compared to approximately 989 kilowatts last year and approximately 854 kilowatts in the second quarter of 2008. Backlog as of September 30, 2008 was $16.7 million.

Outlook

Management continues to anticipate 2008 revenue will increase by 30% to 40% over 2007. With the recent passage of the ITC, management also continues to expect to achieve EBITDA breakeven, adjusted for stock-based compensation expense, in the second half of 2009.

Conference Call Information

Akeena Solar will host an earnings conference call today at 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) to discuss its third 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 http://www.akeena.com. If you do not have Internet access, please dial 877-225-1676 (706-643-9669 for international callers). The passcode is 69299817. 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 weeks, 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 69299817

                          AKEENA SOLAR, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                     Three Months Ended          Nine Months Ended
                        September 30,              September 30,
                     2008          2007         2008          2007
                 ------------  -----------  ------------  -----------

 Net sales       $ 10,595,632  $ 8,088,320  $ 29,905,703  $21,891,611
 Cost of sales      9,249,600    6,392,850    25,101,727   16,926,811
                 ------------  -----------  ------------  -----------
     Gross profit   1,346,032    1,695,470     4,803,976    4,964,800
                 ------------  -----------  ------------  -----------
 Operating
  expenses
 Sales and
  marketing         2,312,006    1,793,616     6,557,229    3,876,032
 General and
  administrative    4,512,817    3,593,406    13,565,117    7,589,641
                 ------------  -----------  ------------  -----------
     Total
      operating
      expenses      6,824,823    5,387,022    20,122,346   11,465,673
                 ------------  -----------  ------------  -----------
     Loss from
      operations   (5,478,791)  (3,691,552)  (15,318,370)  (6,500,873)
                 ------------  -----------  ------------  -----------
 Other income
  (expense)
 Interest income
  (expense), net      (13,767)     (31,620)      148,172      (80,015)
                 ------------  -----------  ------------  -----------
     Total other
      income
      (expense)       (13,767)     (31,620)      148,172      (80,015)
                 ------------  -----------  ------------  -----------
     Loss before
      provision
      for income
      taxes        (5,492,558)  (3,723,172)  (15,170,198)  (6,580,888)
 Provision for
  income taxes             --           --            --           --
                 ------------  -----------  ------------  -----------
 Net loss        $ (5,492,558) $(3,723,172) $(15,170,198) $(6,580,888)
                 ============  ===========  ============  ===========

 Loss per common
  and common
  equivalent
  share:
   Basic         $      (0.19) $     (0.16) $      (0.54) $     (0.33)
                 ============  ===========  ============  ===========
   Diluted       $      (0.19) $     (0.16) $      (0.54) $     (0.33)
                 ============  ===========  ============  ===========

 Weighted average
  shares used in
  computing loss
  per common and
  common equivalent
  share:
   Basic           28,254,915   22,995,430    28,039,690   19,652,136
                 ============  ===========  ============  ===========
   Diluted         28,254,915   22,995,430    28,039,690   19,652,136
                 ============  ===========  ============  ===========

                          AKEENA SOLAR, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS

                                           (Unaudited)
                                           September 30, December 31,
                                               2008          2007
                                           ------------  ------------
 Assets
 Current assets
   Cash and cash equivalents               $  2,602,717  $ 22,313,717
   Restricted cash                           14,949,491            --
   Accounts receivable, net                  10,560,845     9,465,055
   Other receivables                            484,588       278,636
   Inventory, net                            12,167,504     8,848,467
   Prepaid expenses and other current
    assets, net                               7,206,397     3,055,787
                                           ------------  ------------
     Total current assets                    47,971,542    43,961,662
 Property and equipment, net                  1,970,988     1,796,567
 Customer list, net                                  --        84,698
 Goodwill                                       298,500       318,500
 Other assets                                   211,203       162,880
                                           ------------  ------------
     Total assets                          $ 50,452,233  $ 46,324,307
                                           ============  ============
 Liabilities and Stockholders' Equity
 Current liabilities
 Accounts payable                          $  4,513,713  $  6,716,475
   Customer rebate payable                      287,702       346,097
   Accrued liabilities                        2,529,204     1,431,880
   Accrued warranty                             883,378       647,706
   Deferred purchase price payable                   --        20,000
   Deferred revenue                           1,895,611     1,442,834
   Credit facility                           14,949,491            --
   Current portion of capital lease
    obligations                                  25,146        24,130
   Current portion of long-term debt            221,184       191,845
                                           ------------  ------------
     Total current liabilities               25,305,429    10,820,967

 Capital lease obligations, less current
  portion                                        30,280        46,669
 Long-term debt, less current portion           587,831       644,595
                                           ------------  ------------
     Total liabilities                       25,923,540    11,512,231
                                           ------------  ------------

 Commitments, contingencies and
  subsequent events

 Stockholders' equity:
   Preferred stock, $0.001 par value;
    1,000,000 shares authorized; none
    issued and outstanding at
    September 30, 2008 and
    December 31, 2007                                --            --
   Common stock $0.001 par value;
    50,000,000 shares authorized;
    28,323,597 and 27,410,684 shares
    issued and outstanding at
    September 30, 2008 and
    December 31, 2007                            28,323        27,411
   Additional paid-in capital                52,298,421    47,412,518
   Accumulated deficit                      (27,798,051)  (12,627,853)
                                           ------------  ------------
     Total stockholders' equity              24,528,693    34,812,076
                                           ------------  ------------
     Total liabilities and
      stockholders' equity                 $ 50,452,233  $ 46,324,307
                                           ============  ============

Contact:

          Lippert / Heilshorn & Associates
          Investor Relations:
          Jody Burfening
          Amy Gibbons
            agibbons@lhai.com
          (212) 838-3777

          Akeena Solar, Inc.
          Barry Cinnamon, President and CEO
          (408) 402-9400
          bcinnamon@akeena.com

Source: Akeena Solar Inc.

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