Denver-based Real Goods Solar Inc.'s first-quarter launch of Powerhouse 3.0 solar roof shingles was even tougher than expected, but a multi-pronged plan to energize sales and turn a profit for the struggling company is underway.
Despite International Builders' Show accolades for its attractive, dual-purpose product, which lies flush with the roof and acts as both a shingle and source of energy, Powerhouse sales have been in the basement, in part because roofers have had a backlog of projects caused by a skilled labor shortage.
Powerhouse goes to market through a national network of roofers, which currently stands at 250 roofers in 40 states. The company, which does business as RGS Energy, offered discounts in the first quarter to spur sales but to no avail.
"Until the local roofers close out their backlog they are not prepared to sell new product," CEO Dennis Lacey said in an April 15 conference call.
In the meantime, the 41-year-old company is realigning its business resources and doing what it can to conserve cash. Going forward, all focus is on Powerhouse as the main component of a revenue growth strategy aimed at finally operating at a profit.
In 2018, RGS incurred net losses and had an accumulated deficit of $243 million as of Dec. 31, according to its annual form 10-K filed April 15 with the U.S. Securities and Exchange Commission. Both the company's accounting firm and management have "substantial" doubts about RGS continuing as a going concern and all bets are being placed on Powerhouse to increase sales and achieve profitability.
With a good-looking product that is easy to install and a chance to cash in on California's mandate that all new homes built in 2020 include a solar installation, Lacey sees opportunity on the horizon.
The 65-year-old CEO reduced his contractual-based pay by 50 percent, he said, to demonstrate his personal commitment to the future of the company, which has a 40-year track record of financial struggles. SEC filings show his salary as $375,972 plus option rewards of $211,600.
Founded in 1978, RGS says it sold the first solar photovoltaic panels in the U.S. and has since designed and installed more than 26,000 residential and commercial solar energy systems in the continental U.S. and Hawaii. However, Lacey said RGS hasn't been profitable.
"We have been in the solar industry for over 40 years and have not made money. In fact, we have consistently lost money," he said on the call. "When it became certain we had a product to distinguish ourselves — that product being Powerhouse — and we started manufacturing and commercializing during the first quarter, it seemed like a prudent time to take stock of our situation and assess whether there is a better way to enhance shareholder value."