SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 15, 2019
REAL GOODS SOLAR, INC.
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction
|(Commission File Number)||
110 16th Street, Suite 300, Denver, CO 80202
(Address of Principal Executive Offices, Including Zip Code)
Registrant’s telephone number, including area code: (303) 222-8300
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|¨||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|¨||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|¨||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|¨||Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
|Title of Each Class (1)||Trading Symbol(s)||Name of Each Exchange on Which Registered|
|Class A Common Stock, $.0001 par value||RGSE||None|
(1) The Registrant’s Class A common stock is currently registered pursuant to Section 12(b) of the Act. On March 12, 2019, The Nasdaq Stock Market LLC filed a Form 25-NSE with the Securities and Exchange Commission which delisted the Class A common stock from Nasdaq on March 22, 2019 and is expected to deregister the Class A common stock from Section 12(b) of the Act on June 10, 2019. The Registrant plans to register the Class A common stock under Section 12(g) of the Act before June 10, 2019.
Item 7.01. Regulation FD Disclosure.
Real Goods Solar, Inc. (the “Company”) has posted the attached corporate presentation and business update related to the Company’s business to the investor relations section of its website on May 15, 2019. Copies of the corporate presentation and business update are attached to this Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
The information under this Item 7.01 and the corporate presentation attached hereto as Exhibit 99.1 and Exhibit 99.2 are being furnished by the Company pursuant to Item 7.01. In accordance with General Instruction B.2 of Form 8-K, the information contained under this Item 7.01 and the corporate presentation attached hereto as Exhibit 99.1 and the business update attached hereto as Exhibit 99.2 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. In addition, this information shall not be deemed incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
|99.1||Corporate presentation, dated May 2019|
|99.2||Business Update for 30-Day Period Since Last Conference Call|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|REAL GOODS SOLAR, INC.|
|By:||/s/ Alan Fine|
|Chief Financial Officer|
Date: May 15, 2019
Corporate Presentation May 2019 OTCQX: RGSE
2 Wind in Our Sails We reinvented America’s Original Solar Company (40 years) • Exclusive worldwide manufacturer of POWERHOUSE™ , an innovative and visually stunning in - roof solar shingle using technology developed by The Dow Chemical Company • UL and IEC certified third generation POWERHOUSE™ solar shingle • Redesigned for higher panel efficiency and a lower price to homeowner Moats around the business - patents Efficient business model • Contract manufacturing • Contract sales & installation Well - positioned to take advantage of government mandates • Starting in 2020 Solar will be required on new houses in California Growing a nationwide network of local roofers and EPC companies to sell and install • Marketing to Homebuilders RGS vs Tesla for ownership of solar shingle market Simple cap structure, no debt
3 Strong Supply Chain Partners Producing Now Solar Component • Top 10 Tier 1 solar cell & module manufacturer in China. • Current annual manufacturing capacity of over 8.6 gigawatts. Plastic Resin • One of the fastest growing multi - national thermoplastic resin distributors serving custom injection molders in North America. Base Plate Molder & Shingle Assembly • One of the nation’s top injection molders. Nationwide Distribution Partner • Providing cutting - edge 3PL services for POWERHOUSE™. • Including network optimization, warehousing, final packaging and distribution to all 50 states.
4 Right Product, Right Time POWERHOUSE™ has a competitive advantage with new construction and roof replacements projects “Moats” Around the Business • Limited competition in the BIPV market space • Need for patents & manufacturing capability leads to high barriers of entry • Patented POWERHOUSE™ 3.0 solar shingles technology • Exclusively licensed to RGS until 2034 • International patents Demand Addressable Annual Target Market Our Target Customers Reroof – Age 1 ~4,400,000 Local Roofer/EPC Solar Installer Reroof – Insurance Claims 2 ~1,400,000 Local Roofer/EPC Solar Installer New Homebuilder 3 ~1,100,000 Homebuilders Total projects where POWERHOUSE™ is competitive: ~6,900,000 1) Q3 2017 US Bureau Estimated of total US housing units divided by 20 year average roof life, 2) ISO 2011 to 2015 Homeowner Los ses Ranked by Claim Frequency, 3) US Census Bureau – Monthly New Residential Construction, March 2019)
5 RGS' job now is to prove it in the field 1 out of 1,200 Projects go with POWERHOUSE™ 1 out of 600 Projects go with POWERHOUSE™ 1 out of 300 Projects go with POWERHOUSE™ 1 out of 150 Projects go with POWERHOUSE™ Company Capitalization POWERHOUSE™ annual revenue $125,000,000 $250,000,000 $500,000,000 $1,000,000,000 Common Stock ~110,300,000 Anticipated gross profit percentage 31% 32% 33% 34% Warrants ~27,300,000 POWERHOUSE™ gross profit 39,369,000 79,426,000 163,396,000 344,502,000 Stock Options ~ 1,300,000 Anticipated POWERHOUSE™ Division expenses (3,636,000) (7,777,000) (14,782,000) (25,706,000) Fully Diluted Shares of Class A Common Stock ~ 138,900,000 POWERHOUSE™ license fee (2,989,000) (5,490,000) (10,270,000) (19,455,000) Corporate segment expenses (6,100,000) (6,300,000) (6,500,000) (6,800,000) Incentive compensation (2,500,000) (5,000,000) (7,000,000) (9,000,000) Pre - tax income 24,144,000 54,859,000 124,844,000 283,541,000 Taxes @ 25% (6,063,000) (13,715,000) (31,211,000) (70,885,000) Hypothetical net income $18,108,000 $41,144,000 $93,633,000 $212,656,000 Hypothetical Fully Diluted Shares Outstanding: 138,900,000 138,900,000 138,900,000 138,900,000 Hypothetical EPS $0.13 $0.30 $0.67 $1.53 Hypothetical examples of earnings per share at different levels of market penetration in future years
6 Commercialization Plans Customers Segments: Local Roofers EPC Solar Installers Custom Homebuilders Mass Market Homebuilders Equipment Distributors Currently the Company has a network of over 280 local roofers, EPC solar installers and homebuilders across 48 States
7 Value of Our Nationwide Roofer Network Currently the Company has a network of over 280 local roofers, EPC solar installers and homebuilders across 48 States Let’s say each year only 12 of their customers (or 4%) go with POWERHOUSE™ then: 1 system a month Annual number of one Roofer’s customers that go with POWERHOUSE™ 12 Annual number of current Roofer Network customers that go with POWERHOUSE™ 3,360 Potential annual POWERHOUSE™ revenue* $73,248,000 *Estimated based on 7.2kW POWERHOUSE™ system $21,800 average system price
8 Priced to Win Traditional Rack & Mount Solar Tesla Solar Roof RGS POWERHOUSE™ Solar Shingle The Home: Square Footage of roof 1 2,000 2,000 2,000 Roof size in Squares 20 20 20 9.8kW Solar System: Squares used by Solar System 0 20 9 Asphalt roof squares 20 0 11 Roof Costs: Cost for Homebuilder to Install Asphalt Roof 1 : $10,069 $0 $5,538 Solar System: Tesla Solar Roof 2 50,000 Rack & Mount at per Watt cost of 3 $3.56 34,888 RGS POWERHOUSE™ POWERHOUSE™ Kit at per watt cost of 4 $3.03 29,694 Labor & Electrical BOS at per watt cost of 5 $0.50 4,900 Design & Engineering at per watt cost of 5 $0.15 1,470 Electrical Permit $0.04 389 Interconnection $0.05 467 Homebuilder’s Total Cost of Roof & Solar Energy System $44,957 $50,000 $42,458 (1) National Association of Homebuilder Special Study dated November 2, 2015, new construction cost of roofing for 2,800 squa re foot home; (2) Inverse, "Tesla Solar Roof: Elon Musk Reveals Version 3 Production Will Speed Up Soon", posted April 23, 2019; (3) Solar Reviews, "How much do solar panels cost to install for the average house in the US in 20 19?", posted April 2019; (4) POWERHOUSE™ kit includes shingles, inverter, monitoring, freight and non - electrical balance - of - system; (5) pickmysolar.com , “The Cost of Solar”, posted on October 21, 2016
9 Recent Developments March 7, 2019 - Seeking Strategic Alternatives • “Over the past year, we made significant strides reinventing RGS Energy around the POWERHOUSE™ solar shingle that we believe will enable us to enjoy future growth and profitability. Acknowledging our previously stated view that it will require time, years in fact, to grow the POWERHOUSE™ brand and revenue streams, to ensure we are best positioned to address this opportunity with increased television advertising, services, access to customer bases, access to capital and the like, we believe now is an opportune time to consider whether pursuing complementary paths may enhance shareholder value.” March 29, 2019 - Exiting Mainland Residential EPC Business • “We announced earlier this month that we were exploring strategic alternatives focusing on maximizing shareholder value, and at this time have determined that we will exit our mainland residential solar EPC business, a large component of our annual cash outflow. We will retain two facets of our legacy solar EPC business that do not require material use of our cash, our small commercial business where our pipeline has grown considerably, and our Hawaii - based subsidiary Sunetric which has been growing sales.”
10 RGS in the News NAHB Announces Finalists for Best of IBS Awards Winner Best Green Building Product – RGS Energy Finalist Best Energy Efficient Product – RGS Energy - nahb.org , Jan 28, 2019 RGS Energy Revives Dow’s Solar Roof, Claiming Better Efficiency & Lower Costs “RGS' sales strategy is notable for what the company chose not to do itself. It designs and assembles the tiles in the U.S., but sources the solar components from manufacturing partners. “The arithmetic of savings for a new roof paired with solar tiles makes sense, in theory. RGS' job now is to prove it in the field. That's a tall order, based on the history of the market, but at least the field isn't very crowded.” - greentechmedia.com , Jan 25, 2019 Real Goods Solar Plows Ahead With Energy Plans “Real Goods Solar Inc. received a boost Wednesday on news the California Energy Commission approved the selling of its 3.0 solar shingle system in California, the nation's largest solar market” - thestreet.com , Jan 16, 2019 Powerhouse 3.0 Solar Shingles Head To The Roof ““May the best shingle prevail.” - Cleantechnica.com , Dec 28, 2018 Tesla and RGS set for solar roof tile market share battle in US “Having two companies being public listed with two competing products in one country should make things more interesting and hopefully transparent. We could all soon be watching the birth of a new mainstream solar market or the trial and tribulations of a niche play.” - pvtech.org , Nov 9, 2018
Contact Us RGS Energy Headquarters 110 16 th Street, Suite 300 Denver, CO 80202 Company Contact Tyler Clarke Director, Investor Relations Tel 303.222.8344 Investor Relations Contact Capital Market Access, LLC (CMA) Ron Both, Managing Partner Tel 949.432.7566 RGSE@cma.team 11 www.rgsenergy.com www.facebook.com/rgsenergy www.twitter.com/rgsenergy Disclaimer: Information on websites listed above is not incorporated by reference into this presentation.
12 Forward Looking Statements This presentation contains forward - looking that involve risks and uncertainties, including statements regarding RGS Energy’s res ults of operations and financial positions, and RGS Energy’s business and financial strategies. Forward - looking statements are neither historical facts nor assurances of future performance. Instead, they provide RGS Energy’s current beliefs, expectations, assumptions, forecasts, and hypothe tic al constructs about future events, and include statements regarding our future results of operations and financial position, business strat egy , budgets, projected costs, plans and objectives of management for future operations. The words “plan,” “future,” “may,” “will,” “expect,” “Poten tia l,” “hypothetical,” believe and similar expressions as they relate to us are intended to identify such forward - looking statements. Forward - looking statements should not be read as a guarantee of future performance or results and will not necessarily be accura te indications of the times at, or by, which such performance or results will be achieved, if at all. Forward looking statements are subject to ri sks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward - looking statements. Therefore, RGS Energy cautions you against relying on any of these forward - looking statements. Key risks and uncertainties that may cause a change in any forward - looking statement or that could cause our actual results and financial condition to differ materially from those indicated in the forward - looking statements include: the ability to obtain requisite i nternational product certification of POWERHOUSE™ 3.0; RGS Energy’s ability to successfully commercialize POWERHOUSE™ 3.0 and achieve market share ; R GS Energy’s ability to satisfy the conditions and obligations under the POWERHOUSE™ 3.0 license agreement; RGS Energy’s ability to manage su pply chain in order to have production levels and pricing of the POWERHOUSE™ 3.0 shingles to be competitive; the ability of RGS Energy to s ucc essfully expand its operations and employees and realize profitable revenue growth from the sale and installation of POWERHOUSE™ 3.0, and to the extent, anticipated; RGS Energy’s ability to realize revenue from sales of POWERHOUSE™ arising from the California Energy Commissions ’ m andate for solar systems with new home building commencing in 2020; RGS Energy’s ability to realize revenue from written reservations fo r i nitial POWERHOUSE™ deliveries; RGS Energy’s ability to obtain future purchase orders for POWERHOUSE™ deliveries; competition in the bui lt - in photovoltaic solar system business; RGS Energy’s ability to successfully and timely expand its POWERHOUSE™ 3.0 business outsi de of the United States; foreign exchange risks associated with the POWERHOUSE™ 3.0 business; intellectual property infringement claims and wa rra nty claims related to the POWERHOUSE™ 3.0 business; the performance of the Solar Division; cost and availability of raw materials includ ing the impact from changes in the price of oil and the foreign currency exchange rate for Chinese yuan; RGS Energy’s ability to successfully imp lem ent its revenue growth strategy, achieve its target level of sales, generate cash flow from operations, and achieve break - even and better result s; the adequacy of, and access to, capital necessary to implement its revenue growth strategy; whether RGS Energy will receive any proceeds f rom exercise of common stock warrants; rules, regulations and policies pertaining to electricity pricing and technical interconnection of cus tom er - owned electricity generation such as net energy metering; the continuation and level of government and utility incentives for solar en ergy; changes in general economic, business and political conditions, including tariffs on imported solar cells and changes in the financial m ark ets; the future price of RGS Energy’s Class A common stock; and other risks and uncertainties included in the Company’s filings with the Securities an d Exchange Commission. You should read the section entitled “Risk Factors” in our 2018 Annual Report on Form 10 - K of which has been filed with the Secu rities and Exchange Commission, which identify certain of these and additional risks and uncertainties. Any forward - looking statements mad e by us in this presentation speak only as of the date of this presentation. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake any obligation to publicly update or revise a ny forward - looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. POWERHOUSE™ is a trademark of The Dow Chemical Company, used under license. RGS Energy is the Company’s registered trade name. The Company files periodic and other reports with the Securities and Excha nge Commission under its official name “Real Goods Solar, Inc.” © Copyright 2019 - 2018 Real Goods Solar, Inc. All Rights Reserved.
Business Update for 30-Day Period Since Last Conference Call
As of April 15th
Last Conference Call
As of May 15th
Today’s Conference Call
|Number of participants in POWERHOUSE™ network||262||288|
|Number of states||40||48|
Period 30 Days before
Last Conference Call
Last 30 Days
|Sales pipeline at date of conference call||$2,225,296||$6,576,507|
Company Break-Even Analysis:
|Per Quarter||Per Month|
|Number of orders per roofer currently in network to break-even (288 participants)||~1||~1/3|
This break-even analysis assumes no contribution from small commercial and Sunetric towards recovery of overhead. Number of orders per roofer is estimated based on current orders averages - a 7.2kW system with a $21,800 system price.
Achieving Break-Even Results:
|EPC Solar |
|Sales pipeline at May 15, 2019||$||1,951,475||$||1,948,684||$||1,149,201||$||1,527,147||$||6,576,507|
|Number of network participants quoting||14||2||37||23||76|
|Number of roofs quoted||69||60||46||65||240|
|Average size of quote per kits||$||28,282||$||32,478||$||24,983||$||23,495||$||27,309|
|Number of participants in network||49||5||152||82||288|
|Estimated sales cycle time after equilibrium||90||180||60||60|
|Hypothetical at equilibrium average monthly revenue||$||650,492||$||324,781||$||574,601||$||763,574||$||2,313,446|
|Estimated break-even monthly revenue||$||2,375,000|
|Potential percentage after equilibrium represented by results for 1st 30 days of busy season||97||%|
POWERHOUSE™ Brand & Network Supporting Activities:
Period 30 Days before
Last 30 Days
|Number of national TV show tapings||0||1|
|Number of local TV show appearances||0||1|
|Software for roofers to design systems “up & running”||Not in place||In place|
|Quick quote proposal tool version 2.0||Not in place||In place|
Period 30 Days before
Last Conference Call
Last 30 Days
|Sales added to backlog||$||344,439||$||386,007|
|Backlog of signed contracts at date of conference call||$||1,629,011||$||1,970,659|
Small Commercial Division:
Period 30 Days before
Last Conference Call
Last 30 Days
|Sales added to backlog||$||928,945||$||1,068,300|
|Backlog of signed contracts at date of conference call||$||7,819,079||$||8,844,085|
Run-off of Mainland Residential Division:
Period 30 Days before
Last Conference Call
Last 30 Days
|Backlog of signed contracts at date of conference call||$||8,351,998||$||6,633,126|
POWERHOUSE™ network – Participants actively offering or being trained to offer POWERHOUSE™:
Local roofers – Local roofers typically buy full kits, which include inverters, rapid shut down, and monitoring equipment.
EPC solar installers – EPC solar installers typically only buy the solar shingles without inverters and monitoring equipment.
Custom homebuilders - Homebuilders constructing under 50 new homes a year.
Large homebuilders - Homebuilders constructing over 50 new homes a year.
POWERHOUSE™ purchase orders – RGS has received a signed purchase order for a POWERHOUSE™ kits(s) and deposit has been paid.
POWERHOUSE™ revenue – Revenue is recognized when the POWERHOUSE™ kit has been shipped.
POWERHOUSE™ sales pipeline – Estimated purchase orders from local roofers, solar installers and homebuilders where (i) roofers and solar installers have designed the solar systems and quotes are in process and (ii) homebuilders have planned for solar systems in their communities and quotes are in process. The Company’s methodology for determining sales pipeline may not be comparable to methodologies used by other companies in determining their sales pipeline amounts. Sales pipeline may not be indicative of future operating results, and projects in RGS Energy’s sales pipeline may not result in an executed contract.
Sales cycle time - Expected days from a network participant engaging in a quote into the sales pipeline until the date of shipment and revenue recognition.
At equilibrium - A date in the future where POWERHOUSE™ has progressed beyond the start-up phase and increasing pipeline generation, demand, purchase orders, and supply for the product are operationally balanced. At equilibrium, expected monthly revenue from prior sales offset typical sales cycle time, such that higher revenue will be consistently generated on a monthly basis.
Busy season – Traditionally the spring through summer seasons when RGS has experienced an increase in consumer purchases of solar energy systems.
Backlog - Represents the dollar amount of revenue that may be recognized in the future from signed contracts for solar energy systems projects without taking into account possible future cancellations. Backlog is not a measure defined by generally accepted accounting principles and is not a measure of contract profitability. The backlog amounts we disclose are net of cancellations received and include anticipated revenues associated with (i) the original contract amounts, and (ii) change orders for which we have received written confirmations from customers. Backlog may not be indicative of future operating results, and projects in our backlog may be cancelled, modified or otherwise altered by customers.
Forward Looking Statements
This presentation contains forward-looking that involve risks and uncertainties, including statements regarding RGS Energy’s results of operations and financial positions, and RGS Energy’s business and financial strategies. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they provide RGS Energy’s current beliefs, expectations, assumptions, forecasts, and hypothetical constructs about future events, and include statements regarding our future results of operations and financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “potential,” “hypothetical,” “estimated,” “will,” “expected,” “future”and similar expressions as they relate to us are intended to identify such forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Therefore, RGS Energy cautions you against relying on any of these forward-looking statements.
Key risks and uncertainties that may cause a change in any forward-looking statement or that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include: RGS Energy’s ability to manage supply chain in order to have production levels and pricing of the POWERHOUSE™ 3.0 shingles to be competitive; the ability of RGS Energy to successfully expand its operations and employees and realize profitable revenue growth from the sale and installation of POWERHOUSE™ 3.0, and to the extent, anticipated; RGS Energy’s ability to realize revenue from sales pipeline for POWERHOUSE™; RGS Energy’s ability to increase the rate of participation within its network; RGS Energy’s ability to obtain future purchase orders for POWERHOUSE™ deliveries; whether RGS Energy will realize increased market penetration from its brand and network supporting activities; competition in the built-in photovoltaic solar system business; RGS Energy’s ability to successfully implement its revenue growth strategy, achieve its target level of sales, generate cash flow from operations, and achieve break-even and better results; and the adequacy of, and access to, capital necessary to implement its revenue growth strategy; and other risks and uncertainties included in the RGS Energy’s filings with the SEC
You should read the section entitled “Risk Factors” in our 2018 Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the quarter ended March 30, 2019, of which has been filed with the Securities and Exchange Commission, which identify certain of these and additional risks and uncertainties. Any forward-looking statements made by us in this presentation speak only as of the date of this presentation. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
POWERHOUSE™ is a trademark of The Dow Chemical Company, used under license.
RGS Energy is the Company’s registered trade name. The Company files periodic and other reports with the Securities and Exchange Commission under its official name “Real Goods Solar, Inc.”