North Coast Solar Stocks

October 22, 2009

Akeena Solar Announces Third Quarter 2009 Results

Filed under: AKNS — Tags: , , , , , — Jason @ 7:59 am

7:59 am EDT, Thursday October 22, 2009

LOS GATOS, Calif., Oct. 22, 2009 (GLOBE NEWSWIRE) — Akeena Solar, Inc. (AKNS), a leading designer and installer of solar power systems, announced results for the third quarter ended September 30, 2009.

“Our third quarter results demonstrate the growing demand for residential solar installations and the improving leverage in our business model,” said Barry Cinnamon, president and chief executive officer of Akeena Solar. “The benefits of our differentiated Andalay panels and lower Andalay installation costs drove gross margin to 24.7%, double last year’s level, and up nicely from 19.7% in the second quarter. Tighter expense management continued and we reduced cash burn to $2.1 million. We ended the quarter with a backlog of $8.3 million, up from $7.5 million at June 30th.”

Cinnamon continued, “During the quarter, we continued advancing our strategy to diversify our revenue streams and scale our business. These initiatives are intended to create a platform for continued revenue growth in 2009 and beyond, while moving us closer to cash flow breakeven. We are making progress expanding our distribution of Andalay panels into four new channels: direct sales to solar installers in the U.S., sales to the low-income housing and new home construction markets, sales to solar installers in Europe and sales to big box retailers.

“Earlier this month, Andalay AC solar panels were named a winner of a Popular Mechanics Breakthrough Product Award, which showcases world-changing innovations. The racking, wiring, grounding and inverters built into Andalay AC panels allow both experienced installers and do-it-yourselfers to install a high performance rooftop solar power system safely and easily. Because of their simplicity and safety, we believe Andalay panels will be a natural fit with big box retailers, and we are advancing our strategy to penetrate that market. Sales to installers are growing steadily; in the quarter, we sold Andalay AC to 29 installers in 15 states and Canada, booking sales of $400,000.”

Concluded Cinnamon, “In all, our strategy to diversify our revenue streams is unfolding according to plan. Though clearly still in the early stages, opportunities in each of the four distribution channels appear very promising. Tight cost controls and continued financial discipline are improving our profitability as we transition the business to a more rapidly scalable model. We are optimistic that 2010 will bring a resumption of revenue growth.”

Third Quarter Financial Results

Net sales for the third quarter of 2009 were $7.7 million compared to $10.6 million in net sales in the third quarter of 2008, and $5.9 million in the second quarter of 2009. The decline in the third quarter compared to the same quarter last year reflects a decline in commercial revenue due to the tight credit market and overall economic conditions. The increase from the second quarter reflects a higher level of residential sales. Residential installations were $6.8 million in both the third quarter of 2009 and the third quarter of last year and $4.7 million in the second quarter of 2009. Commercial sales were $484,000 in the third quarter of 2009 compared to $3.1 million in the third quarter of 2008, and $665,000 in the second quarter. Net sales for the first nine months of 2009 were $21.2 million, compared to $29.9 million in the same period last year reflecting a decline in commercial revenue of $9.5 million and the absence of East coast and Colorado residential installations.

Gross profit for the third quarter of 2009 was $1.9 million, or 24.7% of sales, compared to $1.3 million, or 12.7% of sales, in the third quarter of 2008 and $1.2 million, or 19.7% of sales, in the second quarter of 2009. The increase in gross margin compared to the third quarter last year reflects primarily lower panel prices in the third quarter and lower direct labor costs due to efficiencies gained with Andalay panels, offset somewhat by lower average system prices. The increase in gross margin compared to the second quarter of 2009 reflects lower panel prices and higher subcontractor costs in the second quarter associated with our exit from the Colorado direct installation business. For the first nine months of 2009, gross profit was $5.3 million, compared to $4.8 million for the same period last year; gross profit margin for the first nine months of 2009 was 25.1% compared to 16.1% last year, primarily due to lower panel prices and lower direct labor costs, offset somewhat by lower average system prices.

Total operating expenses for the third quarter of 2009 were $5.1 million compared to $6.8 million for the same period last year, and $4.3 million in the second quarter of 2009. Compared to the third quarter of 2008, the $1.7 million reduction consisted of lower sales and marketing expenses of $874,000 and lower general and administrative costs of $878,000, reflecting the full impact of cost cuts made in the fourth quarter of 2008 and the first quarter of 2009. Stock-based compensation expense was $862,000 in the third quarter of 2009 compared to $1.1 million for the same period last year and $458,000 in the second quarter. Cash operating expenses (adjusted for stock-based compensation expense and depreciation and amortization expense) were $4.0 million in the third quarter of 2009 compared to $5.6 million for the same period last year and $3.7 million in the second quarter of 2009. Total operating expenses for the first nine months of 2009 were $15.1 million compared to $20.1 million in the first nine months of 2008.

The number of employees at quarter end was 137 full time equivalents, an increase from 125 at the end of the second quarter of 2009 and a decrease of 71 from 208 at September 30, 2008.

Net loss for the third quarter of 2009 was $2.4 million, or $0.07 per share, compared to a net loss of $5.5 million, or $0.19 per share, in the third quarter of 2008, and a net loss of $4.7 million, or $0.14 per share, in the second quarter of 2009. The third quarter net loss includes 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. Excluding the adjustment to the fair value of warrants, net loss for the third quarter of 2009 was $3.2 million, or $0.09 per share, an improvement of $0.10 per share compared to the third quarter of 2008 due to operating expense reductions of $1.8 million and the increased gross profit.

Net loss for the first nine months of 2009 was $12.2 million, or $0.39 per share, compared to net loss of $15.2 million, or $0.54 per share, for the same period last year. The non-cash adjustment to the fair value of common stock warrants for the first nine months of 2009 was $2.3 million. Excluding the adjustment to the fair value of warrants, net loss for the first nine months of 2009 was $9.8 million, or $0.31 per share, an improvement of $5.3 million or $0.23 per share compared to the same period last year, due to operating expense reductions of $5.5 million.

Installations for the quarter amounted to approximately 1,027 kilowatts compared to approximately 1,290 kilowatts in the same quarter last year and approximately 716 kilowatts in the second quarter of 2009. Backlog as of September 30, 2009 was $8.3 million reflecting primarily California residential sales.

Cash and cash equivalents at September 30, 2009 were $7.2 million. The $1.0 million cash-backed line had no balance drawn as of quarter end.

Outlook

For the fourth quarter of 2009, management expects installation results to be generally consistent with those in the third quarter, with residential sales representing 90% of installation revenues. Distribution channel sales are expected to grow sequentially and represent an increasing percentage of total revenue.

Conference Call Information

Akeena Solar will host an earnings conference call at 11:00 a.m. PT (2:00 p.m. ET) today to discuss its third quarter 2009 earnings results. Management will discuss strategy, review quarterly activity, provide industry commentary and answer questions.

To access the call in the U.S., please dial 877-866-5534 and for international callers dial 706-634-1178 approximately 10 minutes prior to the start of the conference call. The pass code is 32470955. The conference call is also being webcast and can be accessed from the “Investor Relations” section of the company’s website at http://www.akeena.com. A replay of the call will be available via telephone for one week, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial 800-642-1687 and for international callers, 706-645-9291. The conference ID is the same as above. In addition, the webcast will be archived on the company’s website for 90 days at http://www.akeena.com.

                              Akeena Solar, Inc.
             Condensed Consolidated Statements of Operations
                                 (Unaudited)


                Three Months Ended Sept 30, Nine Months Ended Sept 30,
                    2009          2008          2009          2008
                ------------  ------------  ------------  ------------
 Net sales      $  7,671,420  $ 10,595,632  $ 21,171,370  $ 29,905,703
 Cost of sales     5,775,309     9,249,600    15,858,235    25,101,727
                ------------  ------------  ------------  ------------
  Gross profit     1,896,111     1,346,032     5,313,135     4,803,976

 Operating
  Expenses
 Sales and
  marketing        1,438,299     2,312,006     4,574,208     6,557,229
 General and
  administra-
  tive             3,634,320     4,512,817    10,541,539    13,565,117
                ------------  ------------  ------------  ------------
   Total
    operating
    expenses       5,072,619     6,824,823    15,115,747    20,122,346
                ------------  ------------  ------------  ------------
   Loss from
    operations    (3,176,508)   (5,478,791)   (9,802,612)  (15,318,370)
                ------------  ------------  ------------  ------------
 Other income
  (expense)
 Interest
  income
  (expense),
  net                 13,945       (13,767)      (46,357)      148,172
 Adjustment to
  the Fair
  Value of
  Common Stock
  Warrants           758,352            --    (2,320,167)           --
                ------------  ------------  ------------  ------------
   Total other
    income
    (expense)        772,297       (13,767)   (2,366,524)      148,172
                ------------  ------------  ------------  ------------
    Loss before
     provision
     for income
     taxes        (2,404,211)   (5,492,558)  (12,169,136)  (15,170,198)
 Provision for
  income taxes            --            --            --            --
                ------------  ------------  ------------  ------------
 Net loss         (2,404,211)   (5,492,558)  (12,169,136)  (15,170,198)
                ------------  ------------  ------------  ------------

 Loss per
  common and
  common
  equivalent
  share:

    Basic       $      (0.07) $      (0.19) $      (0.39) $      (0.54)
                ============  ============  ============  ============

    Diluted     $      (0.07) $      (0.19) $      (0.39) $      (0.54)
                ============  ============  ============  ============
 Weighted
  average
  shares used
  in computing
  loss per
  common and
  common
  equivalent
  share:

    Basic         33,368,270    28,254,915    31,349,363    28,039,690
                ============  ============  ============  ============

    Diluted       33,368,270    28,254,915    31,349,363    28,039,690
                ============  ============  ============  ============



                            Akeena Solar, Inc.
                 Condensed Consolidated Balance Sheets


                                             (Unaudited)  December 31,
                                            September 30,     2008
                                                2009           (1)
                                            ------------  ------------
 Assets
 Current assets
  Cash and cash equivalents                 $  7,185,031  $    148,230
  Restricted cash                                     --    17,500,000
  Accounts receivable, net                     4,118,053     7,660,039
  Other receivables                              216,224       331,057
  Inventory, net                               3,775,167    10,495,572
  Prepaid expenses and other current
   assets, net                                 1,465,513     3,704,375
                                            ------------  ------------
     Total current assets                     16,759,988    39,839,273
 Property and equipment, net                   1,352,772     1,806,269
 Goodwill                                        298,500       298,500
 Other assets                                    150,657       194,346
                                            ------------  ------------
     Total assets                           $ 18,561,917  $ 42,138,388
                                            ------------  ------------
 Liabilities and Stockholders' Equity
 Current liabilities
  Accounts payable                          $  3,138,752  $  1,922,480
  Customer rebate payable                         77,839       271,121
  Accrued liabilities                          1,196,765     2,410,332
  Accrued warranty                             1,134,336     1,056,655
  Common stock warrant liability               2,427,685            --
  Deferred revenue                               423,293     1,057,941
  Credit facility                                     --    18,746,439
  Current portion of capital lease
   obligations                                    22,184        23,292
  Current portion of long-term debt              218,915       219,876
                                            ------------  ------------
     Total current liabilities                 8,639,769    25,708,136

 Capital lease obligations, less
  current portion                                  4,217        20,617
 Long-term debt, less current portion            411,113       535,302
 Other long-term liabilities                      25,920            --
                                            ------------  ------------
     Total liabilities                         9,081,019    26,264,055
                                            ------------  ------------

 Commitments and contingencies

 Stockholders' equity:
  Common stock $0.001 par value; 50,000,000
   shares authorized; 34,582,789 and
   29,340,418 shares issued and outstanding
   at September 30, 2009 and
   December 31, 2008                              34,583        29,340
  Additional paid-in capital                  57,592,239    52,820,224
  Accumulated deficit                        (48,145,924)  (36,975,231)
                                            ------------  ------------
     Total stockholders' equity                9,480,898    15,874,333
                                            ------------  ------------
     Total liabilities and stockholders'
      equity                                $ 18,561,917  $ 42,138,388
                                            ------------  ------------

 (1) Derived from our audited financial statements as of
     December 31, 2008.

Contact:

Lippert / Heilshorn & Associates
Investor Relations Contact:
Jody Burfening
Amy Gibbons
  agibbons@lhai.com
(212) 838-3777
Akeena Solar, Inc.
Company Contact:
Barry Cinnamon, President and CEO
(408) 402-9400
bcinnamon@akeena.com
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