CALGARY, Alberta, Aug. 29, 2023 (GLOBE NEWSWIRE) -- Eguana Technologies Inc. ("Eguana" or the "Company") (TSX- V: EGT, OTCQB: EGTYF) today announced results for its second quarter ended June 30, 2023.
“Utilities have begun rolling out virtual power plant (“VPP”) pilots across the US and Australia, including attractive rebate and bill credit programs for consumers, while at the same time opening up recurring revenue opportunities for energy storage fleet aggregators, like the Eguana Cloud platform,” commented Eguana CEO Justin Holland. “We believe this industry engagement will drive technology mass adoption and put a focus on energy storage product platforms that have the control and accuracy to respond to utility signals, as we transition to a distributed power grid.”
Utility companies will promote energy storage solutions, where the Eguana energy storage platform has demonstrated key advantages with its advanced power control platform specific to accuracy and measurement, to remove renewable generation intermittency, to enhance grid reliability, and to build out required infrastructure, supporting massive projections for electric vehicle and growing energy demand. The International Energy Association (IEA) report estimates global electricity demand will rise by 20 to 30 percent by 20301. Eguana fits well between the utility companies and the consumer to ensure seamless, cost efficient and renewable energy solutions for the distributed power grid.
Mr. Holland added, “Increased inventory levels resulting from distributor investment throughout the second half of 2022, coupled with sequential interest rate increases impacting consumer access to capital, slowed consumer spending through the first half of the year. However, we are now seeing increasing shipments from our partners, a trend we expect to continue through the second half of 2023 and into 2024, where VPP adoption is expected to be a key growth driver.”
Business Highlights
- Modernized and expanded the Eguana Cloud platform, developed fleet control API, and added features to the onsite energy management system used in the Evolve energy storage product line to enhance VPP capabilities.
- Advanced Virtual Peaker partnership, a cloud-based DERMS (distributed energy resource management system) company that empowers modern utilities, aiming to be the most responsive distributed energy platform in the market. The partnership provides utilities and consumers with dynamic options to leverage batteries to benefit the power grid, while reducing energy costs and providing recurring revenue opportunities for the Company.
- Completed utility integration, testing and acceptance into Portland General Electric’s (PGE) Smart Battery program, and now listed as a preferred supplier on PGE’s website. Progressive utility companies are expected to accelerate and drive mass adoption through VPP programs, adding controlled renewables to strengthen grid reliability, to add electricity supply and to transition to a distributed energy system.
- Began software integration with additional DERMS providers, in various markets, to pursue VPP opportunities, spanning the US and Canadian markets.
- Completed the UL 1741 SB certification of redesigned 5kW PCS, to provide simplified whole home installations for installer partners.
- Simplified energy storage installation processes with the completion of two new Eguana hubs, 100 and 200 amp, which removes the need to install backup load panels during product installation.
- Surpassed the 500 plus enrollment target in Eguana University, Eguana’s comprehensive partner training platform, which includes system design, sales, installation, and commissioning.
- Completed frequency control auxiliary services (FCAS) VPP services in Australia, including accuracy and reporting, for the major utility company Simply Energy.
- Recertified our European Enduro ESS, with additional battery module options and commenced shipments.
“The team had another busy quarter across the business, with multiple DERMS software integrations completed, attaining UL1741SB product certification, and exceeding our September Eguana university installer enrollment target of +500, which all drive towards distribution channel growth and VPP program execution in the second half. With utility engagements now spanning US, Canada, Australia, and European markets, and installer training metrics ahead of schedule, our storage technology solutions are positioned for success.” commented Eguana COO Brent Harris.
Fiscal Q2 2023 Financial Highlights
- As a general reference note, the Company changed its fiscal year-end from September 30 to December 31, with December 31, 2022 being the first financial year-end with the new date and comprised of five quarters. As a result, the comparative period for the second quarter of 2023 is technically the third quarter of 2022, both at June 30th, in the respective years.
- Q2 2023 revenue of $2.1 million, a slight decline from the comparative quarter in June 2022 with revenue of approximately $2.3 million. This is related to macro-economic factors in the industry, and in general, with respect to consumer spending, which has slowed sell-through within renewable distribution networks. Generally, the rate of change related to consumer interest rates quelled consumer spending, and, in the industry, peer companies have been impacted by elevated inventory positions within the distribution network. Management remains cautious in near-term market growth, however, we anticipate that the second half of 2023 will be stronger, driven by the early success of our partner training programs and in line with cyclical year-end demand. Currently, we are seeing increased inventory movement and some easing of these negative factors, which may take into early 2024 to see a return to normal.
- Q2 2023 gross margin is eroded at these low levels of activity and was approximately 0%, the same as the prior comparative quarter for June 2022. Management anticipates 4%- 6% margin growth in the coming quarters, as a result of lower freight costs, battery price reductions, and the removal of import tariffs, resulting from a prior shift of certain components and sub-assemblies out of China. The increases in margin are expected to take effect when current inventories procured in 2022 are consumed. Longer-term cost reduction activities are also planned, with battery module and advanced power electronics cost reductions, which are expected to drive an additional 12%-14% margin in 2024.
- Q2 2023 operating loss of $4.2 million, an increase from a $2.6 million operating loss for the comparative June quarter in 2022. This increase is largely due to higher expenses in product development of approximately $0.8 million and for sales, marketing, and business development of approximately $0.6 million, both expenditures are expected to support strategic growth objectives.
- Working capital at June 30, 2023 was $22.6 million, a decrease from $33.7 million at December 31, 2022. The decrease relates to ongoing cash used in operations, and the inventory loss from the product theft, which is detailed below.
- At June 30, 2023, the Company has a large accounts receivable balance from one customer of which approximately $14.5 million is over 90 days, The customer continues to be delayed in making payments however, progress payments have been increasing steadily as the market gradually opens up. The Company originally recognized an expected credit loss provision at year-end December 31, 2022 and adjusts the estimate on a quarterly basis, in line with generally accepted accounting principles. For the three months ended June 30, 2023, an additional estimated credit loss was recognized of $503,516. The expected credit loss is calculated based on customer-specific factors, expected timing of future cash receipts, and discount rates to account for time value of money when required, taking into consideration historical default rates, and forecasted economic conditions, amongst other factors. As a major customer, the Company continues to work with the customer to collect payments and review future sales and ordering. Given the close working relationship between the two parties, management believes the full amount will be collected.
- In June 2023, the Company experienced a theft of three truckloads of inventory components, when it was being transferred between warehouse locations. Through the initial investigation it was discovered that additional truckloads, impacting several companies, including Eguana, were redirected to unknown locations. The Eguana inventory items had a cost of $2.1M and were written off in the Company records, resulting in a loss reported in Other Expense of $2.1 million. The theft was immediately reported to the police and all pertinent documentation sent to insurers. The Company is insured and is anticipating full recovery, however at period end, it had not received any proceeds. Subsequent to June 30, 2023, the Company received partial insurance proceeds of $623,913 USD and further proceeds are expected and being pursued with the insurer for the balance of the loss.
The Condensed Unaudited Consolidated Financial Statements and the Management Discussion and Analysis thereof, for the three and the six months ended June 30, 2023, are available on SEDAR at www.sedarplus.ca.
1 IEA (2022), World Energy Outlook 2022, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2022, License: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)
Conference Call
Eguana will also host a conference call on Aug 29, 2023, at 5:30 p.m. eastern time (EDT) to discuss the results, provide a business update, and hold a question and answer period.
Canada/USA Toll Free: 1-800-319-4610
International Toll: +1-604-638-5340
https://services.choruscall.ca/links/eguanatechnology2023q2.html
Annual General Meeting (“AGM”) Date Confirmed
The Company is pleased to announce that the Board of Directors have set a date for the Company’s AGM. The AGM will be held on November 2, 2023, at 4:00 pm mountain time, in Calgary Alberta, and virtually with an online portal. Further information regarding the AGM will be included in a management information circular, being prepared by the Company that will be distributed to shareholders, in advance of the AGM.
About Eguana Technologies Inc.
Based in Calgary, Alberta Canada, Eguana Technologies Inc. (EGT: TSX.V) (OTCQB: EGTYF) designs and manufactures high performance residential and commercial energy storage systems. Eguana has two decades of experience delivering grid-edge power electronics for fuel cell, photovoltaic and battery applications, and delivers proven, durable, high-quality solutions, from its high-capacity manufacturing facilities in Europe, Australia and North America.
With thousands of its proprietary energy storage inverters deployed in the European and North American markets, Eguana is one of the leading suppliers of power controls for solar self- consumption, grid services and demand charge applications at the grid edge.
To learn more, visit www.EguanaTech.com or follow us on Twitter @EguanaTech.
Company Inquiries
Justin Holland
CEO, Eguana Technologies Inc.
+1.416.728.7635
Justin.Holland@EguanaTech.com
Forward Looking Information
The reader is advised that some of the information herein may constitute forward-looking information or forward-looking statements (collectively, “forward-looking information”) within the meaning assigned by National Instruments 51-102 and other relevant securities legislation. Other than statements of historical fact, we include information and statements contained herein constitute forward-looking information, including but not limited to the value of our power controls to the energy storage market, estimates of global energy demand, expected credit losses, achieving strategic growth objectives, the Company’s margin in 2024, management’s expectations regarding consumer interest rates and market growth, and statements concerning future financings, the use of proceeds, future sales, recurring revenue opportunities, gross margin, expenses, operating results, capital management, market opportunities, liquidity, including collection of outstanding accounts receivable and future insurance recoveries and the Company's ability to obtain necessary approvals from the TSX Venture Exchange.
Forward-looking information is not a guarantee of future performance and involves a number of risks and uncertainties. Many factors could cause the Company's actual results, performance or achievements, or future events or developments, to differ materially from those expressed or implied by the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date hereof. Readers are also directed to the Risk Factors section of the Company’s most recently audited Financial Statements which may be found on its website or at sedar.com. The Company does not undertake any obligation to release publicly any revisions to forward-looking information contained herein to reflect events or circumstances that occur after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
