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Real Goods Solar (RSOL)
Q4 2012 Earnings Call
April 02, 2013 11:00 am ET
Kamyar Mofid - Chief Executive Officer
Anthony M. DiPaolo - Chief Financial Officer
Philip Shen - Roth Capital Partners, LLC, Research Division
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I would now like to turn the call over to turn the call over to the Chief Executive Officer of Real Goods Solar, Mr. Kam Mofid. Please go ahead, sir.
Thank you very much, Ian. Good morning, everyone. Thank you for joining us. Today, we are going to talk about the operational progress we made during the fourth quarter, which included setting the stage for future growth, as well as advancing our position as a leader in one of the nation's fastest-growing industries.
Before we begin, I would like to introduce Tony DiPaolo, our new CFO. Angy Chin, who had been acting as our Interim CFO since August has completed her advisory role with us. I'm very thankful for Angy's support and contributions, and especially for going through a very smooth and seamless transition with Tony in the past few weeks.
I'm really pleased and glad to have Tony on board. Tony is a seasoned and a solid finance executive with a strong background in supporting companies in periods of change and rapid growth. Tony will now walk us through the financial results, after which, I will cover some of the key operational highlights from the quarter. Thank you.
Anthony M. DiPaolo
Thank you, Kam, and thank you, everyone, for joining our call today. Our net revenue in the fourth quarter of 2012 was $26.8 million, which was slightly above our top line performance of $26.4 million in the previous quarter. However, revenue decreased 33% from $40.3 million in the fourth quarter of 2011, primarily due to 2 factors. The first factor was an unusual component sourcing activity we refer to as safe harbor. In a safe harbor transaction, certain components used in a residential solar installation are provided to the customer directly by the finance company in order to take advantage of certain expiring tax incentives. As a result, the revenue we recognize from a safe harbor installation is lower than for conventional residential installations. But it's important to note that while we recognize lower revenue from safe harbor transactions, there's no material impact on our gross profit in terms of dollars.
The second factor in the decline of revenue was that the fourth quarter of 2011 reflects the one-time impact of the expiration of certain tax benefits, which occurred at the end of 2011. In some cases, our customers accelerated the construction of commercial projects into fourth quarter 2011 in order to take advantage of the expiring tax benefit. For the fourth quarter 2012, our gross profit decreased to $5.5 million, which was 20.7% of revenue compared to $9.6 million or 23.9% in the same period of last year. The decrease in both gross profit dollars and margin percentage, primarily reflects the impact of lower selling price for commercial projects in the 2012 fourth quarter compared to the same quarter for 2011.
Operating expenses were $8.9 million for the fourth quarter of the 2012 compared to $9.5 million in the same period last year. The decrease in operating expenses reflects lower compensation expense and improving productivity as a result of process improvements and the impact of the consolidation of support operations at our corporate headquarters in Colorado.
Net loss for the fourth quarter of 2012 was $3.8 million, which was $0.14 per share, compared to net income of $116,000, which is breakeven on a per share basis for the same quarter of 2011.
Now turning to the balance sheet. We ended the fourth quarter of the 2012 with $10.4 million in cash. This is a significant improvement compared with the prior quarter ended September 30, 2012. We finished that quarter with $3.8 million of cash on hand. Our improved cash position is primarily the result of our focus on working capital management, including inventory control, efforts to shorten our cash-to-cash cycle and like [ph] receivables and instilling greater overall fiscal responsibility of our fiscal management.
I'm also glad to report that in the last week of March, we renewed our $6.5 million revolving line of credit with Silicon Valley Bank. The renewal provides us an extension through September 30, 2013 and it's on substantially the same terms under which we have been operating.
In addition, working with our 2 major shareholders, we extended the due date of their related party debt of $6.85 million to beyond December 31, 2013. There are several individual notes represented in the related party debt and the maturities are now all on or about April 30, 2014.