RGS Energy (Nasdaq: RGSE) is America’s Original Solar Company providing solar, storage and energy services whose mission is clean energy savings. The company is the exclusive manufacturer of POWERHOUSE™, an innovative in-roof solar shingle using technology developed by The Dow Chemical Company. RGS Energy also sells, designs and installs solar systems for residential homeowners, commercial businesses, non-profit organizations, and government entities.

 

On November 6th, the company announced results for its third quarter ended September 30, 2018. The company reported a significant transformation in its business and financial risk profile over the last year and how it is positioned for 2019. More importantly, the commercial launch of POWERHOUSE is a major game changer for the company and is likely to drive strong growth and profits in 2019.

 

Key achievements and catalysts:

• Reinvented Company Focused on POWERHOUSE™: RGS received UL certification for its next-generation POWERHOUSE™ 3.0 solar shingles earlier this month, and immediately began taking purchase orders. The company has received over $127 million to date in written reservations from roofing companies. The company anticipates the revenue from an average POWERHOUSE™ kit sold to a roofer, including shingles, inverter, monitoring, the non-electrical balance of system components and freight charges to be $19,000.
• As the manufacturer of POWERHOUSE™ 3.0, RGS believes it will be the first real mover and the industry leader of built-in photovoltaic shingles. The company’s manufacturing supply chain and distribution channel are already in place for the nationwide rollout of POWERHOUSE™ 3.0. Recent legislation such as the California Solar Mandate is expected to place the company in a position to significantly grow revenue.
• “We have POWERHOUSE™ manufacturing capacity lined up to cover our annual written reservations, and we believe these reservations exceed the amount of potential annual revenue for us to operate at a profit for 2019,” said Alan Fine, CFO of RGS Energy. “The commercial launch of POWERHOUSE™ is a major game changer for us that will drive strong growth and profits.”
• The company needed financial capital to commercially launch POWERHOUSE™ 3.0, which it obtained from an April convertible notes and common stock warrants offering. As of September 30, 2018, the company reported shareholders’ equity of $6.6 million.

 

Key Demand Drivers: The solar future is POWERHOUSE™

• Exclusive worldwide license to manufacture POWERHOUSE™ until 2034
• POWERHOUSE™ 3.0. will have an attractive price point to customers

The addressable market for POWERHOUSE™ is huge

• Building integrated photovoltaics with high barriers to entry – “moats.”
• Opportunity to materially grow future income

Solar Mandate in California in 2020 on all new homes

Manufacturing supply chain in place

POWERHOUSE™ Revenue expected the first quarter of 2019

 

Analysts tracking the stock believes that the POWERHOUSE is the solar product that homeowners, roofers, and homebuilders have been waiting for. Moreover, RGSE’s product stacks up exceptionally well against the potential competition, as shown in various news publications that have compared the company’ product to other solar shingles in the marketplace.

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The company is in a unique position to be the first real mover in the solar shingle marketplace. With recent legislation like the California 2020 Solar Mandate and over $100 million in written reservations from roofing companies, the market is extremely bullish about the future of the company. Furthermore, the company also see the opportunity for international expansion, and it will pursue International Electrotechnical Commission testing to address the global market.

 

Analyst views and brokerage actions: Per www.marketbeat.com, Their average twelve-month price target is $2.00, suggesting that the stock has a possible upside of 441.86%.

 

Below are the excerpts of recent ratings by brokerage house:

 

About the POWERHOUSETM 3.0: The POWERHOUSETM Solar Shingles are engineered to address the actual unmet needs of the residential homeowners by functioning differently from any other product available to homeowners with asphalt rooftops – which represent approximately 85 percent of U.S. homes. It operates as both a roof and solar product and is installed directly onto the roof deck along with standard asphalt roofing shingles.

 

Crucial and unique differentiating factor of POWERHOUSETM 3.0:

Key demand and offtake drivers:

 

Q3 Financial Summary: The company expects to receive revenue from POWERHOUSE™ beginning in December 2018 and, accordingly, the results for the third quarter of 2018 do not reflect what the company believes the reinvented company will operate at in future periods.

Guidance/Future Financial Position: 

Key risk factors and potential stock drivers:

• The company’ business risk profile would continue to remain constrained due to the competition and regulated nature of the industry which could restrict its growth and margins to a certain extent.
• The stock performance can improve significantly if substantial growth in revenue and profitability strengthen the financial risk profile and overall debt metrics of the company.
• The company’ revenue and operating results for solar energy system installations are difficult to predict and have, in the past, and may, in the future, fluctuate from quarter to quarter as a result of changes in state, federal, or private utility company subsidies, as well as weather, economic trends and other factors.
• The company’ business is still at a nascent stage, and it will be bumpy as it starts to manufacture and balance product demand with its manufacturing capability.

 

Stock Chart:

 

Comments:

• On Friday, November 9th, 2018, RGSE closed at $0.425 (Up by 15.14%), with a substantial volume of 13.8 million shares exchanging hands. Market capitalization is $21.289 million. The current RSI is trending at 58.88
• In the past 52 weeks, shares of RGSE have traded as low as $0.30 and as high as $1.95
• At $0.425, shares of RGSE are trading above its 50-day moving average (MA) at $0.38 and below its 200-day moving average (MA) at $0.75.
• The present support and resistance levels for the stock are at $0.33 & $0.48 respectively.

 

 

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