Q3 Revenue Increased 22% Year-Over-Year
Gross Margin Improved to 75.3% Due to Better Revenue Mix
NEW YORK, Nov. 19, 2019 (GLOBE NEWSWIRE) -- Alternus Energy Inc. (OTC: ALTN), a global renewable energy company, today announced its financial results for the third quarter ended September 30, 2019.
Key Financial Highlights for Q3 2019:
- Revenues increased by 22% to $0.993 million
- Gross profit increased by 71% to $0.748 million
- Gross margin improved to 75%, up from 54%
- Adjusted EBITDA (a non-GAAP measurement) declined to a loss of $0.132 million from a positive $0.212 million in 2018
Key Business Highlights for Q3 2019:
- Filed a SEC Form 10 on August 13 to become a SEC reporting company
- Filed first SEC Form 10-Q with SEC for three and nine months ended September 30, 2019
“We are very pleased with our strong third quarter results year-over-year, led by favorable trends in a number of key metrics and underpinning our growth strategy. Our current installed revenue generating capacity of 15.3MW in Germany, Italy and Romania, is up 50% from year end 2018. The acquisition of 4.1MW of operating parks in Italy during the second quarter of this year plus improved gross margins in Romania along with certain of our German parks commencing operations all served to improved revenues and gross profit year-over-year. The additional 13.7MW of projects that are under construction and are expected to become revenue generating throughout 2020 delivering over 20 years of income to the group,” commented Vincent Browne, Alternus Energy’s Chief Executive Officer, President and Chairman.
“We remain excited about our growing pipeline of additional opportunities as we push towards our next milestone of 100MWs of owned energy assets. Our finance team is working tirelessly to continue sourcing capital atattractive low interest rates which enables our business to grow to maximize benefits to our shareholders. Finally, we are proud to have become SEC compliant with this being our first quarterly 10Q filing and we look forward to the increased transparency and communications with our shareholders and prospective shareholders that comes along with becoming a fully reporting U.S. listed public company,” concluded Mr. Browne.
Our management commentary from our 10-Q is included in Exhibit 1, and our financial statements are included in Exhibit 2.
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, plus costs relating to acquisitions of additional assets that are not capitalized under US GAAP, plus the change in fair value of derivative liabilities, plus any loss on disposal of assets, and less any goodwill payments on acquisition. 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 co-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
EXHIBIT 1
Financial Results for the Three Months Ended September 30, 2019:
Revenue for the three months ended September 30, 2019 was $993,005, a 22% increase compared to $811,738 for the three months ended September 30, 2018. The increase is driven exclusively by the long term contracted revenues generated from the additional solar parks we acquired in 2019.
| For the Three Months Ended | |||||||
| September 30, | |||||||
| Net Revenue, by Offtake Type | 2019 | 2018 | |||||
| Feed in Tariff – (Government Mandated Contracts) | $ | 694,331 | $ | 273,478 | |||
| Green Certificates – (Energy subsidies) | 227,157 | 194,519 | |||||
| Energy Offtake Agreements (with local utility companies) | 71,517 | 343,741 | |||||
| Total | $ | 993,005 | $ | 811,738 | |||
Gross profit for the three months ended September 30, 2019 was $747,812, compared to $437,329 for the three months ended September 30, 2018. The resulting gross margin improved to 75.3% for the three months ended September 30, 2019, from 53.9% for the three months ended September 30, 2018, reflecting the higher margin revenue mix. In January of 2019, we executed a new operations and maintenance agreement with Baywa, which lowered our operations and maintenance cost in Romania.
Selling, general and administrative expenses for the three months ended September 30, 2019 were $926,514, an increase of $701,184, compared to $225,330 for the three months ended September 30, 2018. The primary reason for the increase was the addition of key executive manangement and eight new team members and associated costs during the twelve months period along with $134,073 in non-cash stock compensation costs, and accounting and consulting fees of $272,066 related to our audits and Form 10.
Depreciation and amortization for the three months ended September 30, 2019 was $344,980, an increase of $192,901, compared to $152,079 for the three months ended September 30, 2018. The increase is directly related to larger amount of assests now owned.
Operating loss for the three months ended September 30, 2019 was $523,682, an increase of $231,879, compared to $291,803 for the three months ended September 30, 2018, primarily reflecting the increased selling, general and administrative expenses.
Interest expense for the three months ended September 30, 2019 was $563,812, an increase of $423,186, compared to $140,626 for the three months ended September 30, 2018. This increase is primarily due to short-term borrowings used to acquire the 4MW’s of Italian parks plus charges for warrants and banking fees related to these financings. ALTN expects to refinance this short term debt in Q4 2019 with project finance debt that will be amortized over twelve years at low cost interest expected to be circa 2.5% per annum.
Other expenses for the three months ended September 30, 2019 totaled $87,442 in expense, compared to $0 for the three months ended September 30, 2018, the expense was due to the change in foreign currency valuation related to the bargain purchase gain.
Net loss for the three months ended September 30, 2019 was $1,174,936, an increase of $742,507, compared to a net loss of $432,429 for the three months ended September 30, 2018. The resulting EPS loss per share for the three months ended September 30, 2019 was ($0.01) per diluted share, compared to an EPS loss of ($0.01) per diluted share for the three months ended September 30, 2018.
Adjusted EBITDA (a non-GAAP measurement) for the three months ended September 30, 2019 was negative $(132,701), compared to an positive $211,999 for the three months ended September 30, 2018.
| For the Three Months Ended | |||||||
| September 30, | September 30, | ||||||
| 2019 | 2018 | ||||||
| Net (Loss) | $ | (1,174,936 | ) | $ | (432,429 | ) | |
| Depreciation and amortization | 344,980 | 152,079 | |||||
| Interest expense | 563,812 | 140,626 | |||||
| EBITDA | (266,144 | ) | (139,724 | ) | |||
| Adjustments to EBITDA: | |||||||
| Stock based compensation | 134,073 | - | |||||
| Acquistions cost not capitalized | - | - | |||||
| Loss on disposal | - | 351,723 | |||||
| Adjusted EBITDA | $ | (132,071 | ) | $ | 211,999 | ||
Financial Results for the Nine Months Ended September 30, 2019:
Revenue for the nine months ended September 30, 2019 was $2,296,964, a 3% increase compared to $2,222,437 to the same period last year. Geographic breakdown of revenue for the nine months ended September 30, 2019 was $1,397,061 in Italy, $777,237 in Romania and $122,666 in Germany, as compared to $772,429 in Italy, $1,450,008 in Romania and $0 in Germany for the nine months ended September 30, 2018.
| For the Nine Months Ended | |||||||
| September 30, | |||||||
| Net Revenue, by Offtake Type | 2019 | 2018 | |||||
| Feed in Tariff – (Government Mandated Contracts) | $ | 1,519,727 | $ | 772,429 | |||
| Green Certificates – (Energy subsidies) | 522,957 | 658,183 | |||||
| Energy Offtake Agreements (with local utility companies) | 254,280 | 791,825 | |||||
| Total | $ | 2,296,964 | $ | 2,222,437 | |||
Gross profit for the nine months ended September 30, 2019 was $1,733,185, compared to $1,144,004 for the nine months ended September 30, 2018. The resulting gross margin improved to 75.5% for the nine months ended September 30, 2019, from 51.5% for the same period last year. This reflects the higher margun revenue mix and addition of high margin income streams in the period. In January of 2019, we executed a new operations and maintenance agreement with Baywa, which lowered our operations and maintenance cost in Romania.
Selling, general and administrative expenses for the nine months ended September 30, 2019 were $2,978,418, an increase of $2,204,153, compared to $774,265 for the nine months ended September 30, 2018. The primary reason for the increase was the addition of executive manangement and a doubling of team members supporting our continued growth activities during the period, plus $73,703 of transaction costs relating to acquisitions that that are classed as expenses under US GAAP, stock compensation costs of $786,262 in addition to associated accounting and consulting fees of $659,015 related to our audits and Form 10 filings.
Depreciation and amortization for the nine months ended September 30, 2019 were $831,184, a increase of $289,870, compared to $541,314 for the nine months ended September 30, 2018. The increase is directly related to larger amount of assets now owned.
Operating loss for the nine months ended September 30, 2019 was $2,076,417, an increase of $1,553,119, compared to $523,298 for the nine months ended September 30, 2018, due primarily to the increased selling, general and administrative expenses in the period.
Interest expense for the nine months ended September 30, 2019 was $2,478,521, an increase of $1,490,878, compared to $987,643 for the nine months ended September 30, 2018. This increase is primarily due to short-term borrowings used to acquire the 4MW’s of Italian parks plus charges for warrants and banking fees related to these financings. ALTN expects to refinance this short term debt in Q4 2019 with project finance debt that will be amortized over twelve years at low cost interest expected to be circa 2.5% per annum.
Other income and expenses for the nine months ended September 30, 2019 totaled $3,951,845 in income, compared to $0 for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, this consisted of a $4,084,821 gain on bargain purchase related to the Italian acquisitions in Q2 2019 reflecting the company purchasing these assets at below market value.
Net loss for the nine months ended September 30, 2019 was $603,093, a decrease of $907,848, compared to a net loss of $1,510,941 for the nine months ended September 30, 2018. The resulting EPS loss for the nine months ended September 30, 2019 was ($0.01) per diluted share, compared to an EPS loss of ($0.02) per diluted share for the nine months ended September 30, 2018.
Adjusted EBITDA (a non-GAAP measurement) for the nine months ended September 30, 2019 was $3,566,577, an increase of $3,169,338 or 800% compared to $ 397,239 for the nine months ended September 30, 2018. This is due primarily to the bargain purchase gain on Italian asset acquisition offset against increased selling, general and administrative expenses and interest charges in the period.
| For the Nine Months Ended | |||||||
| September 30, | September 30, | ||||||
| 2019 | 2018 | ||||||
| Net (Loss) | $ | (603,093 | ) | $ | (1,510,941 | ) | |
| Depreciation and amortization | 831,184 | 541,314 | |||||
| Interest expense | 2,478,521 | 987,643 | |||||
| EBITDA | 2,706,612 | 18,016 | |||||
| Adjustments to EBITDA: | |||||||
| Stock based compensation | 786,262 | 27,500 | |||||
| Acquistions cost not capitalized | 73,703 | - | |||||
| Loss on disposal | - | 351,723 | |||||
| Adjusted EBITDA | $ | 3,566,577 | $ | 397,239 | |||
For additional information, please see the Company’s SEC Form 10-Q for its 3rd quarter of 2019 filed with the SEC at: https://www.sec.gov/cgi-bin/browse-edgar?company=Alternus&owner=exclude&action=getcompany
EXHIBIT 2
ALTERNUS ENERGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018
| September 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 822,639 | $ | 1,026,533 | ||||
| Accounts receivable | 949,849 | 307,307 | ||||||
| Other receivables, sale of asset | 412,934 | 531,717 | ||||||
| Unbilled energy incentives earned | 61,771 | 164,687 | ||||||
| Prepaid expenses and other current assets, short term portion | 401,132 | 334,078 | ||||||
| Taxes recoverable | 535,140 | 178,995 | ||||||
| Total Current Assets | 3,183,465 | 2,543,317 | ||||||
| Investment in Energy Property and Equipment, Net | 23,205,969 | 14,739,767 | ||||||
| Construction in Process | 7,144,143 | 6,979,080 | ||||||
| Prepaid expenses and other current assets, long term portion | 482,849 | - | ||||||
| Restricted cash for Italian acquisition | - | 8,857,966 | ||||||
| Total Assets | $ | 34,016,426 | $ | 33,120,130 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 2,610,834 | $ | 1,696,200 | ||||
| Convertible and nonconvertible promissory notes, current portion | 13,779,018 | 14,510,204 | ||||||
| Capital lease, current portion | 81,387 | 85,325 | ||||||
| Derivative liability | - | 338,861 | ||||||
| Taxes payable | 50,766 | 27,450 | ||||||
| Total Current Liabilities | 16,522,005 | 16,658,040 | ||||||
| Convertible and nonconvertible promissory notes, net of current portion | 10,388,120 | 10,320,240 | ||||||
| Capital lease, net of current portion | 924,139 | 1,032,453 | ||||||
| Asset retirement obligation | 140,779 | 75,031 | ||||||
| Total Liabilities | 27,975,043 | 28,085,765 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholder’s Equity | ||||||||
| Preferred Shares, $0.001 par value; 50,000,000 shares authorized, 5,000,000 issued and outstanding (Liquidation value of $5,000 as of September 30, 2019) | 5,000 | - | ||||||
| Common stock, $0.001 par value; 450,000,000 shares authorized, 82,892,601 and 110,726,725 shares issued and outstanding as of September 30, 2019 and December 31, 2018 respectively. | 82,893 | 110,727 | ||||||
| Additional paid in capital | 15,387,308 | 13,164,601 | ||||||
| Other comprehensive loss | (850,184 | ) | (260,424 | ) | ||||
| Accumulated deficit | (8,583,634 | ) | (7,980,539 | ) | ||||
| Total Shareholders' Equity | 6,041,383 | 5,034,365 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 34,016,426 | $ | 33,120,130 | ||||
| See accompanying notes to the unaudited condensed consolidated financial statements | ||||||||
ALTERNUS ENERGY INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPETEMBER 30, 2019 AND 2018
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Revenues | $ | 993,005 | $ | 811,738 | $ | 2,296,964 | $ | 2,222,437 | ||||
| Cost of revenues | (245,193 | ) | (374,409 | ) | (563,779 | ) | (1,078,433 | ) | ||||
| Gross Profit | 747,812 | 437,329 | 1,733,185 | 1,144,004 | ||||||||
| Operating Expenses | ||||||||||||
| Selling, general and administrative | 926,514 | 225,330 | 2,978,418 | 774,265 | ||||||||
| Loss on disposal of investment in energy asset | - | 351,723 | - | 351,723 | ||||||||
| Depreciation and amortization | 344,980 | 152,079 | 831,184 | 541,314 | ||||||||
| Total Operating Expenses | 1,271,494 | 729,132 | 3,809,602 | 1,667,302 | ||||||||
| Loss from Operations | (523,682 | ) | (291,803 | ) | (2,076,417 | ) | (523,298 | ) | ||||
| Other income (expense) | ||||||||||||
| Interest expense | (563,812 | ) | (140,626 | ) | (2,478,521 | ) | (987,643 | ) | ||||
| Change in fair value of derivative liability | - | - | (132,976 | ) | - | |||||||
| Gain on bargain purchase | (87,442 | ) | - | 4,084,821 | - | |||||||
| Total other income (expense) | (651,254 | ) | (140,626 | ) | 1,473,324 | (987,643 | ) | |||||
| Net Loss before Provision for Income Taxes | (1,174,936 | ) | (432,429 | ) | (603,093 | ) | (1,510,941 | ) | ||||
| Provision for Income Taxes | - | - | - | - | ||||||||
| Net Loss | $ | (1,174,936 | ) | $ | (432,429 | ) | $ | (603,093 | ) | $ | (1,510,941 | ) |
| Basic and diluted loss per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) |
| Weighted average shares outstanding: | ||||||||||||
| Basic and diluted | 94,216,514 | 71,726,725 | 108,370,612 | 71,600,361 | ||||||||
| Comprehensive loss: | ||||||||||||
| Net loss | $ | (1,174,936 | ) | $ | (432,429 | ) | $ | (603,093 | ) | $ | (1,510,941 | ) |
| Unrealized gain (loss) on currency translation adjustment | (421,960 | ) | 59,450 | (589,760 | ) | (193,113 | ) | |||||
| Comprehensive Loss | $ | (1,596,896 | ) | $ | (372,979 | ) | $ | (1,192,853 | ) | $ | (1,704,054 | ) |
| See accompanying notes to the unaudited condensed consolidated financial statements | ||||||||||||
ALTERNUS ENERGY INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018
| September 30, | September 30, | ||||||
| 2019 | 2018 | ||||||
| Cash Flows from Operating Activities: | |||||||
| Net loss | $ | (603,093 | ) | $ | (1,510,941 | ) | |
| Adjustments to reconcile net loss to net cash used in operations | |||||||
| Depreciation and amortization | 831,184 | 541,314 | |||||
| Stock compensation costs | 1,458,114 | 27,500 | |||||
| Amortization of debt discount | 269,922 | 707,603 | |||||
| Change in fair value of derivative liability | 132,976 | - | |||||
| Loss on sale of investment in energy asset | - | 351,723 | |||||
| Gain on Bargain purchase | (4,084,821 | ) | - | ||||
| Changes in assets and liabilities, net of acquisition and disposals: | |||||||
| Accounts receivable and other shortterm receivables | (650,496 | ) | (579,803 | ) | |||
| Accounts payable & accrued liabilities | 1,142,599 | 46,862 | |||||
| Energy incentives earned not yet received | 94,523 | 427,390 | |||||
| Vendor deposits & prepayments | (800,207 | ) | (41,141 | ) | |||
| Net Cash Used in Operating Activities | (2,209,300 | ) | (29,493 | ) | |||
| Cash Flows from Investing Activities: | |||||||
| Additions to construction in process | (284,301 | ) | - | ||||
| Cash used for investment in energy asset | - | (619,723 | ) | ||||
| Proceeds from sale of fixed assets | - | 3,799,615 | |||||
| Acquisition of solar energy parks | (6,665,240 | ) | - | ||||
| Net Cash (Used In) Provided by Investing Activities | (6,949,541 | ) | 3,179,892 | ||||
| Cash Flows from Financing Activities: | |||||||
| Proceeds from debt, related parties | - | 10,344 | |||||
| Payments of debt principal, related parties | (98,262 | ) | - | ||||
| Proceeds from debt, senior debt | 13,618,477 | 1,380,009 | |||||
| Payments on debt principal, senior debt | (13,322,287 | ) | (3,248,001 | ) | |||
| Net proceeds from lines of credit | - | 4,969 | |||||
| Payments on leased assets, principal | (61,782 | ) | (50,888 | ) | |||
| Restricted cash for future acquisitions | - | (745,561 | ) | ||||
| Net Cash Provided by (Used In) Financing Activities | 136,146 | (2,649,128 | ) | ||||
| Effect of exchange rate on cash | (39,165 | ) | (2,024 | ) | |||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (9,061,860 | ) | 499,248 | ||||
| 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 | $ | 822,639 | $ | 629,614 | |||
| See accompanying notes to the unaudited condensed consolidated financial statements | |||||||