RGS Energy posts $3.7M 1Q loss
LOUISVILLE — RGS Energy (Nasdaq: RGSE), an installer of residential and small-commercial rooftop solar equipment based in Louisville, reported a loss of $3.7 million for its first quarter as it continues to execute a “business-turnaround strategy.”
RGS generated revenue of $4.9 million for the quarter that ended March 31, compared with $10.6 million for the same period a year ago.
The company trimmed selling, operating and administrative expenses to $3.5 million from $5.7 million during the same quarter a year ago, according to the report.
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RGS Energy’s strategy has been to optimize the infrastructure costs of operations and then obtain additional capital necessary for profitable growth. On April 1, the company completed a convertible note and warrant offering of $10 million and received gross cash proceeds of $750,000, with the remaining $9.25 million held in restricted cash.
Earlier this week, RGS Energy and the unaffiliated institutional investors in the convertible note offering agreed to terminate the registration rights granted in the offering, to avoid the time and expense of a Form S-3 registration statement, and agreed on a revised release schedule for the restricted cash.
The parties agreed to delay the first payment of principal and interest due upon the notes to Nov. 1.
The unaffiliated institutional investors agreed that the company can seek additional capital. The new schedule for releases of restricted cash is less than management estimated for the second quarter, which will not allow the company to purchase enough equipment to execute its business turnaround strategy, according to the report.
RGS Energy has retained an investment banking firm to help raise capital that will support its plan to meet the minimum stockholders’ equity requirement of $2.5 million, as required by Nasdaq. RGS Energy’s stock was trading at 45 cents per share when the market closed Thursday. Its 52-week range was 40 cents to $4.80 per share.
“We believe that the convertible note offering and a capital raise would provide the funding necessary to continue our business turnaround strategy,” said Alan Fine, principal financial officer of RGS Energy. “As previously announced in our fourth quarter of 2015 press release, not having access to a sufficient level of capital would adversely affect our operating results for ensuing periods. We look forward to having additional capital in the coming months.”
Dennis Lacey, CEO of RGS Energy, said not having the requisite level of capital in the first half of 2016 has “unfortunately prevented us from demonstrating continuous improvement in financial performance during this period. However, we will continue to use the time until then to pursue select business development initiatives that we expect to benefit from when our cash position is stronger.”
During the first quarter, RGS Energy was awarded several East Coast Solarize programs, including Solarize Rhode Island in Barrington and Middletown, Rhode Island. To date, RGS Energy has won more than 100 contracts to deploy rooftop solar power systems on residential homes.
The company also arranged new programs with third-party homeowner sales organizations for future business in Colorado, Connecticut and New York, and it also began soliciting customers in Maryland, a new territory.
RGS also said it increased its customer-service department and implemented software to track customer contact and issue resolution. Customer cancellations for the first quarter declined 57 percent compared with the fourth quarter of 2015.
