Gross Margin Improved Due to Better Revenue Mix
Recent Addition of Assets not yet Reflected in Revenue
Reports First Positive Net Income
NEW YORK, Aug. 16, 2019 (GLOBE NEWSWIRE) -- Alternus Energy Inc. (OTC: ALTN), a global renewable energy company, today announced its financial results for the second quarter ended June 30, 2019.
Key Financial Highlights for Q2 2019:
- Revenues decreased by 4% to $0.934 million, due to closure of lower margin business
- Gross profit increased by 64% to $0.772 million
- Gross margin improved to 83%, up from 48%
- Adjusted EBITDA of $3.8 million, due to gain on bargain purchase
- Net Income increased to $2.3 million, compared to a loss of $0.1 million in prior year
- Shareholders equity increased to $7.8 million, from $5.0 million in prior year
Key Business Highlights for Q2 2019:
- Completed acquisition of additional 4.x MWs of operating solar projects in Italy
- Signed agreement with leading global renewable energy provider, BayWa r.e.
- Closed $9.75 million financing from institutional investor
Management Commentary
“Q2 was another solid quarter for the business in both short term and long term achievements. Revenues only dropped 4% despite the loss of $0.41 million in revenue year on year following the cessation of energy trading activities in Romania. Adjusting for this, revenues would be up 38% year on year. This also resulted in gross margins increasing 83% year on year, which more accurately reflects the gross margins of the business model. The completion of the acquisition of 4.1MW of operating parks in Italy during Q2 immediately improved revenues and gross profit in the period and also added approximately $1.8 million in contracted annual revenues for the next 12 years. The acquisition also increased net assets and resulted in a one-time gain of $4.2 million, reflecting the difference between the fair value of the projects acquired and the price actually paid, which is further proof of our ability to identify and acquire undervalued assets,” commented Vincent Browne, Alternus Energy’s Chief Executive Officer, President and Chairman.
“In addition to the financial performance in the quarter, we also strengthened our operational capabilities with the BayWa r.e. agreement, improved our financial position and funding relationships and expanded our operational footprint with the solar park acquisitions in Italy and, subsequent to the end of the quarter, our contract to acquire 11.75MW in The Netherlands which, when completed, will bring our total park ownership to 40MWs. Our pipeline of additional opportunities remains robust as we push towards our goal of exiting 2019 with over 100 MWs of owned energy assets,” concluded Mr. Browne.
Recently Announced Agreements:
Alternus Energy Agrees to Acquire 11.75 MW Solar Park in Rilland, the Netherlands – July 31
Planned acquisition of Zonepark Rilland B.V. and its 11.75 MW ground-mounted solar photovoltaic (PV) power plant in Rilland, the Netherlands, in exchange for total consideration of $11.76 million (€10.5 million).
The Purchase Price includes the assumption of a third party senior bank financing in the amount of approximately $8.1 million (€7.2 million).In addition to the Purchase Price, the Seller will be entitled to receive an additional cash amount of up to a total of $560k (€500k)in the form of an earn out based on net cash proceeds received by the PV park over and above a set annual power output of 10,865 MwH. The total consideration will be adjusted for working capital movements between April 30, 2019 and Closing.
Rilland enjoys a 15-year government counter-party ‘Feed-in-Tariff’ (“FiT”) contract at fixed sales prices, in addition to a Power Purchase Agreement (“PPA”) with a local energy operator. The combined contracts provide long-term predictable positive cash flows to ALTN and as the park is already operational it will be immediately revenue and income accretive to ALTN on Closing. Based on current energy production Rilland is expected to add approximately $1.4 million (€1.2 million) in annual revenues for at least 15 years at average 75% gross margins to Alternus.
Alternus Energy Signs Agreement with Leading Global Renewable Energy Provider, BayWa r.e. – June 6
Master Operations and Maintenance (O&M) agreement with BayWa r.e. (“BayWa”). BayWa will provide 24/7 monitoring, preventative maintenance and quality inspections for all Alternus solar projects in Germany, Italy, Romania, and Netherlands.
BayWa r.e. (www.baywa-re.com) is a leading global renewable energy developer, service supplier, wholesaler and energy solutions provider. BayWa r.e has operations throughout Europe, North America and Asia-Pacific, and are strategically investing in new and emerging markets. Expertise, creativity and a knowledge base is built on the experience of successfully bringing over 2.5 GW of renewable energy projects online and managing more than 6 GW of renewable assets around the globe. A subsidiary of BayWa AG, a EUR 16 billion business established for over 90 years.
Financial Results for the Three Months Ended June 30, 2019:
Revenue for the three months ended June 30, 2019 was $933,828, a 4.1% decrease compared to $973,692 for the three months ended June 30, 2018. The slightly lower revenue was due to the closure of the Company’s low margin segment in Romania which contributed $0.41 million in the prior year period.
Gross profit for the three months ended June 30, 2019 was $772,250, compared to $469,828 for the three months ended June 30, 2018. The resulting gross margin improved to 82.7% for the three months ended June 30, 2019, from 48.3% for the three months ended June 30, 2018, reflecting the higher margin revenue mix.
Selling, general and administrative expenses for the three months ended June 30, 2019 were $1,319,896, an increase of $1,009,561, compared to $310,335 for the three months ended June 30, 2018. The primary reason for the increase was $301,050 in non-cash stock compensation costs, approximately $150,000 related to the activities associated with the filing of the SEC Form-10 and $100,000 in non capitalized acquisition costs.
Depreciation and amortization for the three months ended June 30, 2019 were $239,408, an increase of $75,737, compared to $163,671 for the three months ended June 30, 2018, reflecting the increased asset ownership.
Operating loss for the three months ended June 30, 2019 was $787,054, an increase of $782,876, compared to $4,178 for the three months ended June 30, 2018, primarily reflecting the increased selling, general and administrative expenses.
Other income and expenses for the three months ended June 30, 2019 totaled $3,144,254 in income, compared to an expense of $102,392 for the three months ended June 30, 2018. For the three months ended June 30, 2019, this consisted of $1,028,009 in interest expense and a $4,172,263 gain on bargain purchase.
Net income for the three months ended June 30, 2019 was $2,357,200, an increase of $2,463,770, compared to a net loss of $106,570 for the three months ended June 30, 2018. The resulting EPS income per share for the three months ended June 30, 2019 was $0.02 per diluted share, compared to an EPS loss of ($0.00) per diluted share for the three months ended June 30, 2018.
Financial Results for the Six Months Ended June 30, 2019:
Revenue for the six months ended June 30, 2019 was $1,303,959, a 7.6% decrease compared to $1,410,782 for the six months ended June 30, 2018. The slightly lower revenue was due to the closure of the Company’s low margin segment in Romania. When adjusted for the lost revenues revenues increased 22% on a like-for-like basis.
Gross profit for the six months ended June 30, 2019 was $985,373, compared to $706,758 for the six months ended June 30, 2018. The resulting gross margin improved to 75.6% for the six months ended June 30, 2019, from 50.1% for the three months ended June 30, 2018, reflecting the higher margin revenue mix and addition of high margin income streams in the period.
Selling, general and administrative expenses for the six months ended June 30, 2019 were $1,862,453, an increase of $1,313,518, compared to $548,935 for the six months ended June 30, 2018. The primary reason for the increase was $463,000 in non-cash stock compensation costs, approximately $150,000 related to the activities associated with the filing of the SEC Form-10 and $100,000 in non capitalized acquisition costs. In addition, Alternus has grown their internal team in order to execute on their growth plan by hiring a CFO, General Counsel and other strategic roles in operations, business development and the public markets that were not in place in 2018.
Depreciation and amortization for the six months ended June 30, 2019 were $406,878, an increase of $105,230, compared to $301,648 for the six months ended June 30, 2018, reflecting the increased asset ownership.
Operating loss for the six months ended June 30, 2019 was $1,283,958, an increase of $1,140,133, compared to $143,825 for the six months ended June 30, 2018, due primarily to the increased selling, general and administrative expenses in the period.
Other income and expenses for the six months ended June 30, 2019 totaled $2,257,554 in income, compared to an expense of $159,338 for the six months ended June 30, 2018. For the six months ended June 30, 2019, this consisted of $1,915,383 in interest expense and a $4,172,263 gain on bargain purchase.
Net income for the six months ended June 30, 2019 was $973,596, an increase of $1,276,759, compared to a net loss of $303,163 for the six months ended June 30, 2018. The resulting EPS income for the six months ended June 30, 2019 was $0.01 per diluted share, compared to an EPS loss of ($0.01) per diluted share for the six months ended June 30, 2018.
For additional information, please see the Q2 2019 Financial Overview’ Supplementary Disclosure document and the complete Q2 2019 reports filed with OTC at: http://www.otcmarkets.com/stock/ALTN/filings
Use of Non-GAAP Financial Measures:
To supplement Alternus’s financial statements presented on a GAAP basis, Alternus provides Adjusted EBITDA as supplemental measures of its performance.
To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro forma operations, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with EBITDA, Adjusted EBITDA as non-GAAP financial measures of earnings. EBITDA represents net income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation. Our management uses EBITDA, and Adjusted EBITDA, as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to access the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. We find this especially useful when reviewing pro forma results of operations, which include stock-based compensation. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.
About Alternus Energy Inc.
Alternus Energy is a global independent power producer (“IPP”). We develop, own and operate solar PV parks that connect directly to national power grids. Our current revenue streams are generated from long-term, government-mandated, fixed price supply contracts with terms of between 15-20 years in the form of government Feed-In-Tariffs (“FiT”) and other energy incentives. Our current contracts deliver annual revenues, of which approximately 75% are generated from these sources with the remaining 25% deriving from revenues generated under contracted Power Purchase Agreements (“PPA”) with other energy operators and by sales to the general energy market in the countries we operate. In general, these contracts generate an average sales rate for every kWh of green energy produced by our solar parks. Our current focus is on the European solar PV market. However, we are also actively exploring opportunities in other countries outside of Europe. For further information please go to: www.AlternusEnergy.com
Forward Looking Statement
This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," “potential” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in the Company's filings with the OTC and the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements
Contact:
p212-220-7434
contact@alternusenergy.com
ALTERNUS ENERGY INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
| Summary Income Statement Six months Ended | June 30, 2019 | June 30, 2018 | |||||
| Revenues | $ | 1,304 | $ | 1,411 | |||
| Cost of revenues | (319 | ) | (704 | ) | |||
| Gross Profit | 985 | 707 | |||||
| 75.6 | % | 50.1 | % | ||||
| Operating Expenses | (2,269 | ) | (851 | ) | |||
| Loss from Operations | (1,284 | ) | (144 | ) | |||
| Other (expense) income | 2,258 | (159 | ) | ||||
| Net Income (Loss) per US GAAP filings | 974 | (303 | ) | ||||
| Depreciation and amortization | 407 | 302 | |||||
| Interest expense | 1,915 | 160 | |||||
| EBITDA | 3,296 | 158 | |||||
| Adjustments to EBITDA: | |||||||
| Stock based compensation | 463 | 28 | |||||
| Adjusted EBITDA (Profit from current operations) | 3,759 | 186 | |||||
| Summary Income Statement Three months ended | June 30, 2019 | June 30, 2018 | |||||
| Revenues | $ | 934 | $ | 974 | |||
| Cost of revenues | (162 | ) | (504 | ) | |||
| Gross Profit | 772 | 470 | |||||
| 82.7 | % | 48.3 | % | ||||
| Operating Expenses | (1,559 | ) | (474 | ) | |||
| Loss from Operations | (787 | ) | (4 | ) | |||
| Other (expense) income | 3,144 | (102 | ) | ||||
| Net Income (Loss) per US GAAP filings | 2,357 | (107 | ) | ||||
| Depreciation and amortization | 239 | 164 | |||||
| Interest expense | 1,028 | 103 | |||||
| EBITDA | 3,625 | 160 | |||||
| Adjustments to EBITDA: | |||||||
| Stock based compensation | 301 | 28 | |||||
| Adjusted EBITDA (Profit from current operations) | 3,926 | 187 | |||||
ALTERNUS ENERGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2019 AND DECEMBER 31, 2018
| June 30, 2019 (audited) | December 31, 2018 | ||||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 1,491,432 | $ | 1,026,533 | |||
| Accounts receivable | 747,048 | 307,307 | |||||
| Other receivables, sale of asset | 429,962 | 531,717 | |||||
| Unbilled energy incentives earned | 311,787 | 164,687 | |||||
| Prepaid expenses and other current assets, short term portion | 525,216 | 334,078 | |||||
| Taxes recoverable | 526,607 | 178,995 | |||||
| Total Current Assets | 4,032,052 | 2,543,317 | |||||
| Investment in Energy Property and Equipment, Net | 24,225,874 | 14,739,767 | |||||
| Construction in Process | 7,612,302 | 6,979,080 | |||||
| Prepaid expenses and other current assets, long term portion | 699,945 | - | |||||
| Restricted cash for Italian acquisition | - | 8,857,966 | |||||
| Total Assets | $ | 36,570,173 | $ | 33,120,130 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 2,158,150 | $ | 1,696,200 | |||
| Convertible and non-convertible promissory notes, current portion | 14,429,836 | 14,510,204 | |||||
| Capital lease, current portion | 84,743 | 85,325 | |||||
| Derivative liability | - | 338,861 | |||||
| Taxes payable | 81,657 | 27,451 | |||||
| Total Current Liabilities | 16,754,386 | 16,658,041 | |||||
| Convertible and non-convertible promissory notes, net of current portion | 10,821,435 | 10,320,240 | |||||
| Capital lease, net of current portion | 983,561 | 1,032,453 | |||||
| Asset retirement obligation | 144,976 | 75,032 | |||||
| Total Liabilities | 28,704,358 | 28,085,766 | |||||
| Commitments and Contingencies | |||||||
| Shareholders' equity | |||||||
| Common stock, $0.001 par value; 450,000,000 shares authorized, 132,892,601 and 110,726,725 shares issued and outstanding as of June 30, 2019 and December 31, 2018 respectively. | 132,892 | 110,727 | |||||
| Additional paid in capital | 15,166,961 | 13,164,601 | |||||
| Other comprehensive income (loss) | (427,094 | ) | (260,424 | ) | |||
| Accumulated deficit | (7,006,944 | ) | (7,980,540 | ) | |||
| Total Shareholders' Equity | 7,865,815 | 5,034,364 | |||||
| Total Liabilities and Shareholders' Equity | $ | 36,570,173 | $ | 33,120,130 | |||
ALTERNUS ENERGY INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2019 | (updated) 2018 | 2019 | (updated) 2018 | |||||||||||||
| Revenues | $ | 933,828 | $ | 973,692 | $ | 1,303,959 | $ | 1,410,782 | ||||||||
| Cost of revenues | (161,578 | ) | (503,864 | ) | (318,586 | ) | (704,024 | ) | ||||||||
| Gross Profit | 772,250 | 469,828 | 985,373 | 706,758 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling, general and administrative | 1,319,896 | 310,335 | 1,862,453 | 548,935 | ||||||||||||
| Depreciation and amortization | 239,408 | 163,671 | 406,878 | 301,648 | ||||||||||||
| Total Operating Expenses | 1,559,304 | 474,006 | 2,269,331 | 850,583 | ||||||||||||
| Loss from Operations | (787,054 | ) | (4,178 | ) | (1,283,958 | ) | (143,825 | ) | ||||||||
| Other (Expense) Income | ||||||||||||||||
| Interest expense | (1,028,009 | ) | (102,884 | ) | (1,915,383 | ) | (159,830 | ) | ||||||||
| Other income | - | 492 | 674 | 492 | ||||||||||||
| Gain on bargain purchase | 4,172,263 | 4,172,263 | - | |||||||||||||
| Total other (expense) income | 3,144,254 | (102,392 | ) | 2,257,554 | (159,338 | ) | ||||||||||
| Net Income (Loss) before Provision for Income Taxes | 2,357,200 | (106,570 | ) | 973,596 | (303,163 | ) | ||||||||||
| Provision for Income Taxes | - | - | - | - | ||||||||||||
| Net Income (Loss) | $ | 2,357,200 | $ | (106,570 | ) | $ | 973,596 | $ | (303,163 | ) | ||||||
| Basic income (loss) per share | $ | 0.02 | ($ | 0.00 | ) | $ | 0.01 | ($ | 0.01 | ) | ||||||
| Diluted income (loss) per share | $ | 0.02 | ($ | 0.00 | ) | $ | 0.01 | ($ | 0.01 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 116,732,161 | 71,594,857 | 113,768,768 | 71,536,834 | ||||||||||||
| Diluted | 139,097,684 | 106,285,107 | 136,134,291 | 106,227,084 | ||||||||||||
| Comprehensive income (loss): | ||||||||||||||||
| Net income (loss) | 2,357,200 | (106,570 | ) | 973,596 | (303,163 | ) | ||||||||||
| Unrealized gain (loss) on currency translation adjustment | 150,994 | (336,033 | ) | (166,670 | ) | (202,192 | ) | |||||||||
| Comprehensive income (loss) | 2,508,194 | (442,603 | ) | 806,926 | (505,355 | ) | ||||||||||
ALTERNUS ENERGY INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 and 2018
| June 30, 2019 | (Updated) June 30, 2018 | ||||||
| Cash Flows from Operating Activities: | |||||||
| Net loss | $ | 973,596 | $ | (303,163 | ) | ||
| Adjustments to reconcile net loss to net cash used in operations | |||||||
| Depreciation and amortization | 406,878 | 301,648 | |||||
| Stock compensation costs | 462,738 | 27,500 | |||||
| Amortization of debt discount | 162,944 | - | |||||
| Derivative liability | (338,861 | ) | - | ||||
| Bargain purchase | (4,172,263 | ) | - | ||||
| Changes in assets and liabilities, net of acquisition and disposals: | |||||||
| Accounts receivable and other short-term receivables | (398,491 | ) | 69,442 | ||||
| Accounts payable & accrued liabilities | 723,943 | (210,250 | ) | ||||
| Energy incentives earned not yet received | (148,200 | ) | 314,850 | ||||
| Vendor deposits & prepayments | (511,741 | ) | (196,983 | ) | |||
| Net Cash (Used in) Provided by Operating Activities | (2,839,457 | ) | 3,044 | ||||
| Cash Flows from Investing Activities: | |||||||
| Additions to investment in energy property | (6,147,827 | ) | - | ||||
| Net Cash (Used In) Investing Activities | (6,147,827 | ) | - | ||||
| Cash Flows from Financing Activities: | |||||||
| Proceeds from debt, related parties | - | 10,344 | |||||
| Payments of debt principal, related parties | (39,112 | ) | - | ||||
| Proceeds from debt, senior debt | 1,726,966 | 411,656 | |||||
| Payments on debt principal, senior debt | (1,043,371 | ) | (341,285 | ) | |||
| Net proceeds from lines of credit | - | 5,158 | |||||
| Payments on leased assets, principal | (41,813 | ) | (31,599 | ) | |||
| Net Cash Provided by Financing Activities | 602,670 | 54,274 | |||||
| Effect of exchange rate on cash | (8,453 | ) | (5,191 | ) | |||
| Net increase in cash, cash equivalents and restricted cash | (8,393,067 | ) | 52,127 | ||||
| Cash, cash equivalents, and restricted cash beginning of the period | 9,884,499 | 130,366 | |||||
| Cash, cash equivalents, and restricted cash end of the period | $ | 1,491,432 | $ | 182,493 | |||