OneRoof Energy Group, Inc. Announces First Quarter 2014 Financial Results Company Continues Investment in Growth Initiatives

SAN DIEGO, May 28, 2014 /PRNewswire/ -- OneRoof Energy Group, Inc. ("OneRoof Energy" or the "Company") (TSXV:ON) today announced financial and operational results for the first quarter ended March 31, 2014.

"We made significant progress in the quarter as we continued to invest in our operational capabilities and sales channel so that we are positioned to capitalize on the rapid growth within the residential solar market," said David Field, President and Chief Executive Officer of OneRoof Energy Group, Inc.  "We are uniquely positioned to serve a growing ecosystem of channel partners who want to offer residential solar to their customer base, while at the same time reducing the cost of energy to US residential homeowners.  We are pleased to report that we expanded our business into Massachusetts and New York in the quarter and continued to develop our solar leasing fulfillment platform which we believe positions us to accelerate growth and deployment in the quarters ahead.  Our recently announced alliances with energy retailers and home services companies demonstrate early success of our channel strategy, ability to scale our operations, and rapidly increase our acquisition of customers while decreasing the overall cost to do so."

Q1 2014 Operating Highlights

Key operating highlights in the quarter include:

  • Deployed 0.67 megawatts in the first quarter
  • Total cumulative megawatts deployed reached 8 megawatts
  • Gross bookings totaled 337 systems during the quarter, an increase of 112 percent year-over-year
  • Cumulative customers surpassed 1,500 as of March 31

Key strategic milestones since the beginning of the year include:

  • Launched proprietary residential solar API (application programming interface) library
  • Expanded OneRoof Energy operations to Massachusetts and New York
  • Expanded the reach of OneRoof Energy's Professional Affiliate Channel
  • Announced the expansion of our Phoenix call center
  • Launched marketing alliance with Choose Energy
  • Introduced OneRoof Energy SolarSelect® bundled residential energy offering in Massachusetts
  • Continued negotiations with retail energy providers to leverage the OneRoof Energy fulfillment platform

Q1 2014 Income Statement

For the first quarter of 2014, core operating lease revenue was $270,000, up 273 percent from $72,000 in the first quarter of 2013, due to an increase in cumulative operating lease megawatts deployed. In addition, the sold system revenue for the first quarter of 2014 was $517,000, compared to zero in the first quarter of 2013, as the Company started selling systems to third parties in the fourth quarter of 2013.   Total revenue for the first quarter 2014 increased to $1.5 million from $114,000 in Q1 2013.

Gross profit margin on held leases was 22.0 percent and sold systems was 2.1 percent in the first quarter.  Consolidated gross profit (loss) margin was (56.4) percent.

Total operating expenses were $8.1 million for the first quarter of 2014 as compared to $3.8 million in the first quarter 2013.  Consistent with the strategy shift in the Company's business model, headcount increased significantly as the Company transitioned its focus from dealer-led to direct channel sales.  In addition, the Company continued to invest in its sales and marketing infrastructure to support lead generation and other corporate marketing initiatives.

Loss from operations in the first quarter of 2014 was $8.9 million as compared to $9.1 million in the first quarter of 2013.

IFRS net loss attributable to stockholders per basic and diluted share was $(0.66).

"We are deliberately investing for the long-term as we capitalize on the significant opportunity in solar," commented Dan Halvorson, Executive Vice President and Chief Financial Officer.  "As we expand our geographic footprint, focus on operational efficiencies, and build-out our sales and marketing infrastructure, we are investing in a business model that can scale quickly while driving down the costs associated with deploying solar systems."

Earnings Conference Call

An earnings conference call will be held today at 4:30 pm (Eastern Time) or 1:30 pm (Pacific Time). The conference call can be accessed live by dialing 1-855-669-9657 for Canadian callers, 1-412-317-0790 for international callers outside of Canada, and 1-877-870-4263 for callers in the United States.

Please indicate to the operator you are connecting to the "OneRoof Energy Call."  A replay will be available one hour after the call and can be accessed by dialing 1-855-669-9658 for Canadian callers, 1-412-317-0088 for international callers outside of Canada, and 1-877-344-7529 for callers in the United States.  The passcode for the replay is 10046364.  The replay will be available until June 16, 2014 at 9:00 am (Eastern Time).

Interested investors may also listen to a simultaneous webcast of the conference call by logging on at the "Investor Events and Presentations" link of the Investor Relations section of the Company's website at http://oneroofenergy.investorroom.com.  The online replay will be available for a limited time beginning immediately following the call.

Non IFRS Measures

The Company uses certain measures which are not in accordance with IFRS.  Non-IFRS measures are useful supplemental information but may not have a standardized meaning according to IFRS.

Bookings.  Bookings represent a signed agreement and credit approval/bona fide payment source; this is prior to PSA (pre-site analysis) and prior to countersign.

Backlog.  Backlog represents the expected quantity of orders we have received but have not yet executed and that are expected to translate into sales within the next 12 months.  We use backlog to provide an indication of expected future revenues, and bookings to determine our ability to sustain and increase our revenues.

Deployed.  Deployed represents the number of systems that are installed during the period.  An installed system is one that is materially complete with all installation requirements.  This metric includes solar energy systems deployed under energy contracts, as well as for solar energy system direct sales.

MW Deployed.  MW Deployed represents the megawatt production capacity of solar energy systems deployed during the period.  This metric includes solar energy systems deployed under energy contracts, as well as for solar energy system direct sales.

MW or Megawatts.  MW or megawatts represents the DC nameplate production capacity.

About OneRoof Energy

OneRoof Energy Group, Inc. (TSXV:ON), operating through its wholly-owned subsidiary OneRoof Energy, Inc., is a complete solar services provider dedicated to saving homeowners money.  The company offers homeowners everything from traditional and lease financing, superior solar system design and installation project management, to ongoing system monitoring and maintenance services. Utilizing its technology-rich, solar leasing fulfillment platform, OneRoof Energy is partnering with traditional energy retailers and home services companies of all sizes to offer residential customers a wide spectrum of affordable, renewable energy choices.   With its unique end-to-end energy solution, the company has created multiple touch points to offer cost-saving energy products and services that create a seamless experience for the homeowner while fulfilling their unique energy needs.  Currently, the company serves residential customers in five states including Arizona, California, Hawaii, Massachusetts and New York with plans for additional expansion. For more information, visit www.oneroofenergy.com

Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company's customer and market growth opportunities, financial strategies for cash generation and increasing shareholder value, expected future financial results, the timing of the Company becoming net cash flow positive, additional financial and operational forecasts to be discussed during the conference call referenced in this release, and assumptions relating to the foregoing.

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, including the effect of electric utility industry regulations, net metering and related policies, the availability and amount of rebates, tax credits and other financial incentives, the availability and amount of financing from fund investors, the retail price of utility-generated electricity or the availability of alternative energy sources, risks associated with the Company's growth, risks that consumers who have executed energy contracts included in reported nominal contracted payments remaining and backlog may seek to cancel those contracts, the Company's limited operating history, particularly as a new public company, changes in strategic planning decisions by management or reallocation of internal resources, and general market, political, economic and business conditions. You should read the section entitled "Risk Factors" in the Company's most recent  Management's Discussion and Analysis, which has been filed on SEDAR and identifies certain of these and additional risks and uncertainties. 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. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

Investor Relations Contact:
Karen Fisher
OneRoof Energy Group, Inc.
858-926-7541 (direct)
kfisher@oneroofenergy.com

OneRoof Energy Group, Inc.

Interim Consolidated Statements of Financial Position

(Presented in United States Dollars)




March 31,
 2014


December 31,
 2013

Assets












Non-Current assets






Other long-term assets


$

317,716



$

303,785

Capitalized software development


352,673



233,867

Property and equipment, net


392,886



373,707

Note receivable - long term


880,555



Solar energy systems leased, net


18,260,292



17,586,510

Construction in progress, net


2,030,118



3,065,921

Restricted cash


768,268



768,169

Total  non-current assets


23,002,508



22,331,959







Inventory


5,601,965



5,128,367

Prepaid expenses and other current assets


363,065



1,592,664

Receivable from related party


390,651



434,577

Note receivable - short term


84,404



51,479

Treasury grant receivable


10,043



1,519,209

Accounts and rebates receivable, net


1,639,201



2,041,792

Restricted cash


66,000



66,000

Cash and cash equivalents


13,143,627



5,246,545







Total assets


44,301,464



38,412,592







Current liabilities






Accounts payable


$

4,987,396



$

24,791,291

Accrued liabilities


2,020,383



3,648,637

Deferred revenue – current portion


1,629,703



403,635

Deferred grant income - current portion


141,042



151,322

Derivative liabilities


3,620,825



5,849,283

Line of credit, related party


567,365



2,720,710

Promissory notes to related parties


3,590,174



5,083,121

Related party payable


3,887,065



3,843,483

Liability component of convertible debt




31,375,326

Total current liabilities


20,443,953



77,866,808

Non-current liabilities






Deferred revenue – net of current portion


6,770,428



6,857,161

Deferred grant income - net of current portion


4,220,308



4,462,542

Other non-current liabilities


4,124



10,310

Total Non-current liabilities


10,994,860



11,330,013







Total liabilities


31,438,813



89,196,821







Equity attributable to the  shareholders






Common stock


3,788



169

Additional paid-in capital


89,284,309



18,200,310

Accumulated deficit


(70,105,492)



(63,127,896)

Total  (deficit) equity attributable to the Company's shareholders


19,182,605



(44,927,417)

Non-controlling interest


(6,319,954)



(5,856,812)

Total (deficit) equity


12,862,651



(50,784,229)







Total liabilities and equity


$

44,301,464



$

38,412,592


OneRoof Energy Group, Inc.

Interim Condensed Consolidated Statements of Comprehensive Loss

(Presented in United States Dollars)





Three Months Ended



March 31, 2014


March 31, 2013

Revenues:






Sold systems


$

517,339



$

Held systems, lease revenue


269,907



72,417

Rebate revenue


7,161



3,611

Other revenue (inventory sales of $679,196 in 2014)


697,552



38,046

Total revenue


1,491,959



114,074







Cost of revenue:






Depreciation of solar energy systems, leased


210,616



53,544

Impairment of held systems


188,300



1,893,364

Cost of sold systems


506,391



Inventory write-off


321,190



979,193

Other cost of revenue (inventory sales of $680,931 in 2014)


1,106,845



2,493,614

Total cost of revenue


2,333,342



5,419,715

Gross loss


(841,383)



(5,305,641)

Selling, general and administrative expense






Compensation and benefits


4,447,895



2,359,821

Professional and consulting fees


1,178,795



711,822

Marketing and advertising costs


869,765



98,616

Other general and administrative costs


1,579,452



599,022



8,075,907



3,769,281

Other income


9,580



Net loss before net finance costs and income taxes


(8,907,710)



(9,074,922)

Net Finance costs






Change in fair value of derivative liabilities


3,411,093



1,202,486

Interest income


49,937



533

Interest expense


(1,852,175)



(1,155,840)



1,608,855



47,179







Loss before provision for income taxes


(7,298,855)



(9,027,743)

Provision for income taxes




Net loss and comprehensive loss


$

(7,298,855)



$

(9,027,743)

Net loss attributable to:






Shareholders


$

(6,977,596)



$

(7,716,875)

Non-controlling interest


(321,259)



(1,310,868)



$

(7,298,855)



$

(9,027,743)







Net loss per share attributable to common shareholders






Basic and Diluted


$

(0.66)



$

(2.17)

Weighted average number of shares outstanding






Basic and Diluted


$

10,633,910



$

3,553,671



OneRoof Energy Group, Inc.

Interim Condensed Consolidated Statements of Cash Flows

(Presented in United States Dollars)





Three Months Ended



March 31, 2014


March 31, 2013







Cash flows from operating activities






Net loss


$

(7,298,855)



$

(9,027,743)

Adjustments to reconcile net loss to net cash from operating activities:






Depreciation and amortization


253,039



77,730

Impairment of inventory


321,190



979,185

Impairment of solar energy systems, leased and construction in progress


188,300



1,893,366

Amortization of debt discount and deferred financing costs


2,579,325



632,681

Share-based compensation


567,431



218,135

Other non-cash transactions


(72,134)



228,192

Change in fair value of derivative liabilities


(3,411,093)



(1,202,486)

Accrued interest on convertible debt




(106,807)

Accrued interest on promissory notes to related party


27,391



4,673

Changes in operating assets and liabilities:






Accounts and rebates receivable


478,322



(196,701)

Treasury grant receivable


247,071



Proceeds from Treasury grant


1,262,095



Due to related party




81,773

Prepaid expenses and other assets


1,232,711



(614,672)

Inventory


(794,788)



100,708

Deferred revenue


1,139,335



2,099,646

Deferred grant income


(252,514)



Accounts payable and accrued liabilities


(21,499,995)



(7,149,735)







Net cash used in operating activities


(25,033,169)



(11,982,055)







Cash flows from investing activities






Restricted cash


(99)



(902)

Purchase of property and equipment


(47,824)



Issuance of notes receivable


(913,480)



Software development


(127,140)



Construction of solar energy systems - leased


(42,339)



(3,967,899)

Cash received in acquisition


111,746









Net cash used in investing activities


(1,019,136)



(3,968,801)







Cash flows from financing activities






Proceeds from corporate equity transaction, net of financing costs


40,237,438



Proceeds from issuance of convertible of debt




6,099,109

Repayment of convertible debt


(2,511,735)



Proceeds from line of credit


1,422,606



7,451,510

Repayment of line of credit


(3,624,212)



(1,082,696)

Proceeds from issuance of promissory notes to related party


3,580,154



Repayment of related party notes


(5,100,492)



(1,034,359)

Contributions from non-controlling interests




4,482,059

Distributions paid to non-controlling interests


(54,372)



(176,955)







Net cash provided by financing activities


33,949,387



15,738,668







Net (decrease) increase in cash and cash equivalents


7,897,082



(212,188)







Cash and cash equivalents, beginning of year


5,246,545



8,993,020







Cash and cash equivalents, end of year


$

13,143,627



$

8,780,832

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SOURCE OneRoof Energy, Inc.



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