RGS Energy Issues Business Update: Reports Progress on Top Line Growth Strategy
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Denver, CO, 2017 – RGS Energy (NASDAQ:RGSE), a residential and small business commercial solar company since 1978, provided a business update following its presentation at the 29th Annual Roth Conference on March 15, 2017. A copy of the presentation is available on the company’s website.
“I feel good about the progress we are making since we presented our strategy for top line revenue growth at the Roth conference,” said Dennis Lacey, CEO of RGS Energy. “Our vision remains to grow top line revenue by growing the size of our sales organizations, and supporting them with training and cost effective marketing leads.”
RGS Energy’s positive outlook is supported by strong tailwinds emerging in the U.S. residential solar market, which is projected to grow at 9% in 2017, per GTM Research, with direct ownership predicted to overtake leasing for the first time. GTM projects total installed U.S. solar PV capacity to nearly triple over the next five years.
“We made the strategic decision not to adopt the business model of major solar companies whereby it appears to us the more they grow, the more they lose,” said Dennis Lacey, RGS Energy’s CEO. “I feel we have been making the right calls. We were the first public residential focused solar company to adopt direct ownership versus leasing. We also made the call early on that the industry model for customer acquisition costs was too expensive, exited unprofitable markets such as large commercial, and physically exited the highly saturated costly California market. We have already taken the painful steps to optimize our operating cost structure and are the only debt-free public residential focused solar company in the United States.”
Update on Company Sales: (000’s omitted)
1st Quarter Preliminary Mar. 31, 2017
Gross sales: $3,017
Net sales: $1,960
Last Quarter Reported Dec. 31, 2016
Gross sales: $2,556
Net sales: $670
The company increased net sales 194%.
“We have a long history with community solarize programs having done 39 in our history in which we have typically enjoyed higher lead to sales rates,” noted Tom Champlin, RGS Energy’s Head of East Coast Sales. “On April 5, we launched the Granby, Connecticut solarize program; the township has set a four-month selling period. We typically enjoy higher lead to sale rates for community solarize programs. The traditional season for community solarize programs is just beginning, and we expect to bid on additional programs in the coming months.”
Targets and Expectations:
- Achieving break-even results in the fourth quarter of 2017 or the first quarter of 2018.
- Steady and improving progress in sales growth for the remainder of 2017, with installation revenue growth delayed a quarter due to typical construction cycle time.
- Expand into new states for sales of solar systems.
- Digital and content marketing, not vendor lead programs, to be the principal source of customer sourcing.
- A reduction in construction cycle time.
- Cash outflow from operations until break-even results are achieved. The company preliminarily expects to report working capital at March 31, 2017 of approximately $16 million.