Real Goods Solar chief executive this week admitted that 2012 should have been “a much better year” for the company given the remarkable growth of solar in the US.
The solar installation company released its final quarter 2012 earnings on Monday, showing that net revenue was $26.8m, a 33% decrease from $40.3m in the fourth quarter of 2011.
“It is quite remarkable to note that in 2010, total installations were about 850MW,” said CEO Kam Mofid, who joined the company last July. “In 2012, the industry ended the year with about 3.1GW in total installations. By any measure this is truly an astounding rate of growth.
“Solar is an exciting industry to be in with substantial runway especially in the downstream part of the value chain where opportunity to sell and change the game remains the greatest. Against that backdrop, 2012 should have been a much better year for us. The headwinds we had were not market-based, but were internally induced.”
Tony DiPaolo, Real Goods Solar's chief financial officer, said that the declines were due to “safe harbour” component sourcing and the expiration of tax benefits.
“The decline in revenue is attributable in part to the direct supplying to customers by financing companies of certain components used in residential installation,” he said. “Sourcing of such components in conjunction with the associated financing allowed residential customers to take advantage of certain expiring tax benefits, and are referred to as 'safe harbour' installations.
“The 4th quarter of 2011 reflects the one-time impact of the expiration of certain tax benefits which occurred at the end of 2011. In some cases our customers accelerated construction of commercial projects into Q4 2011 in order to take advantage of the expiring tax benefit.”
In the last quarter of 2011, the company completed more than 7MW of residential and commercial projects, bringing the total to 26 MW of installations for the full year. Since 1978, the company has installed more than 14,500 solar power systems with 100MW cumulative capacity.
Real Goods Solar also secured more than 6MW of new commercial projects in Q4, including 5MW in solar power projects across Arizona and California in education, municipal, and commercial market segments, including the Crane school district in Arizona to provide 1.7MW of solar on five school sites.
In 2011, Real Goods Solar merged with Alteris Renewables. Mofid said that this acquisition had boosted the company's expertise in the school installations within the commercial sector, which he said had seen higher sales than residential.
Real Goods Solar also entered into financing partnerships with Clean Power Finance and Sunrun.
“In 2013, I expect our relationships with CPF and Sunrun to account for a significant portion of our total transactions,” he said. “Likely well over half of our volume will be financing transactions through CPF and Sunrun.”
Mofid insisted that the company had “turned a corner” since he became CEO thanks to improvements in capital performance and cash flow, reductions in operating expenses as a share of revenues and increases in the sales pipeline.
“We expect to see strong improvement compared to 2012 both in our topline and bottomline results. The task in front of us is not easy. But we are in a much stronger position than we were a few months ago.”