Peck reports 1Q 2020 results, $40.8 million backlog

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Peck reports 1Q 2020 results, $40.8 million backlog

Sat, 05/16/2020 - 4:27am -- tim

Vermont Business Magazine The Peck Company Holdings, Inc (NASDAQ: PECK), a leading commercial solar engineering, procurement and construction (EPC) company based in South Burlington, has announced the company’s financial results for the first quarter ended March 31, 2020 (“Q1 2020”).

Key Financial Highlights for Q1 2020

  • Revenues increased 4% to $4.0 million
  • Gross profit decreased 66% to $0.3 million
  • Backlog and pipeline increased to $40.8 million

Subsequent to the End of Q1 2020

On April 22, 2020, Peck and GreenBond Advisors formed a strategic Green Bond partnership to align capital for construction of new solar projects. The partnership will acquire, build and own the new solar projects. The new investment partnership is designed to increase Peck’s access to capital for the construction of new solar projects and to scale its existing pipeline of new EPC business. Peck has partnered with GreenSeed Investors LLC and its affiliate GreenBond Advisors LLC to gain access to the rapidly growing Green Bond segment of the fixed income markets. Of note, this partnership provides Peck with access to project growth capital through additional EPC contract work from Green Bond proceeds while improving working capital and strengthening liquidity ratios.

GreenBond Advisors was recently formed to deliver financial product innovation into the Green Bond market. They have created a new Green Bond product that allows risk-adverse investment capital to be more easily directed into new green energy infrastructure development at an earlier stage of the project development cycle than is typically the case for existing Green Bonds. This innovation by Green Bond Advisors will provide Peck with a strategic advantage in the marketplace as an EPC company, because Peck can bring a level of funding certainty to developers for early stage projects that will meet the project performance criteria.

Management Commentary

The Peck Company Holdings Chief Executive Officer, Jeffrey Peck, commented, “The first quarter is seasonally our slowest time of the year, and given the outbreak of the COVID-19 pandemic in the U.S., we are pleased with our single-digit revenue growth. We continue to execute on our strategic plan while we navigate through this uncertain economic landscape brought upon by the COVID-19 pandemic. Our before-mentioned Green Bond partnership exemplifies that as we have implemented a differentiated strategy to increase our involvement in development-stage solar projects. The GreenBond Advisors partnership enables us to accelerate the growth of our business and become a part-owner of the solar project’s recurring cash flows without additional equity dilution to our shareholders and without incurring debt on our balance sheet. The partnership and strategy reinforce our disciplined financial and operational approach to find opportunities to advance our mission to be a leader in the commercial solar EPC industry.”

Mr. Peck, continued, “We are starting to see the light at the end of the tunnel as the region of New England begins to open back up; albeit in stages. Vermont, which has been home to the majority of our business has announced gradual reopening of business will begin on May 18, with an additional opening phase set for June 1. Vermont, with less than 1,000 total cases and 5 people currently hospitalized, is likely to be one of the earliest states to return to pre-COVID-19 business activity. We expect other New England states to follow that trend as well, with Maine ranking sixth lowest in the nation in terms of positive cases and New Hampshire having already moved to a second phase of business re-opening.”

Mr. Peck, concluded, “Given our role in critical infrastructure, including utilities and telecommunications and our support for the local IBEW 300, we expect a smooth transition once new construction projects resume. I want to personally thank our dedicated team which has allowed us to continue providing service and maintenance in support of critical infrastructure, including utilities and telecommunications during these difficult times. We look forward to getting back to work on new projects, hiring additional employees and contractors and continuing on the path of the transition to clean, renewable energy for the U.S.”

Financial Results for the Three Months Ended March 31, 2020

Revenue for the three months ended March 31, 2020 was $3.98 million, an increase of $0.13 million, or 4%, compared to $3.85 million for the three months ended March 31, 2019. The Company had a few projects that were ceased or delayed due to the current COVID-19 pandemic. The Company anticipates that these projects will continue or begin once the current Stay at Home orders are lifted or relaxed.

Backlog and pipeline at March 31, 2020 was $40.8 million.

Gross profit for the three months ended March 31, 2020 was $0.3 million, a decrease of $0.5 million, or 66%, compared to $0.8 million for the three months ended March 31, 2019. The resulting gross margin was 7.5% for the three months ended March 31, 2020, compared to 23.0% for the three months ended March 31, 2019. Lower gross margin for the three months ended March 31, 2020 was the result of inefficiencies in labor costs due to the uncertainty of the COVID-19 pandemic. In addition, the Company incurred unplanned expenditures on two large solar projects due to the winter conditions in the Northeast.

General and administrative expenses for the three months ended March 31, 2020 were $0.6 million, an increase of $0.3 million, or 134%, compared to $0.3 million for the three months ended March 31, 2019. The increase in general and administration expenses were primarily due to activities related to administrative expenses costs of becoming a public company as well as supporting infrastructure expansion in the three months ended March 31, 2020, compared to the three months ended March 31, 2019.

Warehousing and other operating expenses for the three months ended March 31, 2020 were $0.2 million, compared to $0.2 million for the three months ended March 31, 2019. Warehousing and other operating expenses include Company-owned solar array depreciation and salaries associated with Company-owned solar arrays, general warehousing costs, project-related travel and performance related expenses.

Operating loss for the three months ended March 31, 2020 was $0.6 million, compared to an operating income of $0.4 million for the three months ended March 31, 2019. The decrease in operating income was primarily due to an increase in the operational infrastructure required to support the current growth trajectory as well as the additional expense of being a publicly listed company.

Depreciation expenses for the three months ended March 31, 2020 were $155,012, compared to $150,483 for the three months ended March 31, 2019. Depreciation expenses were stable when compared to the three months ended March 31, 2019 as the Company has not had significant capital expenditures for the three months ended March 31, 2020.

Income tax benefit for the three months ended March 31, 2020 was $142,311 compared to the income tax provision for the three months ended March 31, 2019 of $500.

Net loss for the three months ended March 31, 2020 was $0.4 million, compared to a net income of $0.4 million for the there months ended March 31, 2019. The net loss was the result of inefficiencies in labor costs due to the uncertainty of the COVID-19 pandemic. In addition, the Company incurred unplanned expenditures on two large solar projects due to the winter conditions in the Northeast. The resulting earnings per share (EPS) for the three months ended March 31, 2020 was a loss of ($0.08) per diluted share, compared to $0.12 for the three months ended March 31, 2019.

Adjusted EBITDA for the three months ended March 31, 2020 was a loss of $0.3 million, compared to income of $0.6 million for the three months ended March 31, 2019.

Adjusted EPS for the three months ended March 31, 2020 was a loss of ($0.06), compared to $0.18 for the three months ended December 31, 2019.

The reconciliations of EBITDA, Adjusted EBITDA to net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, are shown in the table below:

 

 

Three months ended March 31,

 

 

 

2020

 

 

2019

 

Net (loss) income

 

$

(432,632

)

 

$

376,652

 

Depreciation and amortization

 

 

155,012

 

 

 

150,483

 

Other (income) expense, net

 

 

80,766

 

 

 

44,659

 

Income tax (benefit) provision

 

 

(142,311

)

 

 

500

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

(339,165

)

 

 

572,294

 

 

 

 

 

 

 

 

 

 

Weighted Average shares outstanding

 

 

5,298,159

 

 

 

3,234,501

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

 

$

(0.06

)

 

$

0.18

 

Certain Non-GAAP Measures

We periodically review the following key non-GAAP measures to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions.

EBITDA, Adjusted EBITDA and Earnout Adjusted EBITDA

Included in this presentation are discussions and reconciliations of earnings before interest, income tax and depreciation and amortization (“EBITDA”) and EBITDA adjusted for certain non-cash, non-recurring or non-core expenses (“Adjusted EBITDA”) to net income in accordance with GAAP. Adjusted EBITDA excludes certain non-cash and other expenses, certain legal services costs, professional and consulting fees and expenses, and one-time business combination expenses and certain adjustments. We believe that these non-GAAP measures illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals.

These non-GAAP measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute or superior to, the other measures of financial performance prepared in accordance with GAAP. Using only the non-GAAP financial measures, particularly Adjusted EBITDA, to analyze our performance would have material limitations because such calculations are based on a subjective determination regarding the nature and classification of events and circumstances that investors may find significant. We compensate for these limitations by presenting both the GAAP and non-GAAP measures of our operating results. Although other companies may report measures entitled “Adjusted EBITDA” or similar in nature, numerous methods may exist for calculating a company’s Adjusted EBITDA or similar measures. As a result, the methods that we use to calculate Adjusted EBITDA may differ from the methods used by other companies to calculate their non-GAAP measures.

About The Peck Company Holdings, Inc.

Headquartered in South Burlington, VT, The Peck Company Holdings, Inc. is a 2nd-generation family business founded in 1972 and rooted in values that align people, purpose, and profitability. Ranked by Solar Power World as one of the leading commercial solar contractors in the Northeastern United States, the Company provides EPC services to solar energy customers for projects ranging in size from several kilowatts for residential properties to multi-megawatt systems for large commercial and utility scale projects. The Company has installed over 125 megawatts worth of solar systems since it started installing solar in 2012 and continues its focus on profitable growth opportunities. Please visit www.peckcompany.com for additional information.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, effective tax rate, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this press release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the risk factors described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

All forward-looking statements included in this press release are based on information currently available to us, and we assume no obligation to update any forward-looking statement except as may be required by law.

The Peck Company Holdings, Inc.

Condensed Balance Sheets (Unaudited)

March 31, 2020 and December 31, 2019

             

 

 

March 31, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

56,548

 

 

$

95,930

 

Accounts receivable, net of allowance

 

 

7,127,680

 

 

 

7,294,605

 

Costs and estimated earnings in excess of billings

 

 

1,470,076

 

 

 

1,272,372

 

Other current assets

 

 

139,048

 

 

 

201,326

 

Total current assets

 

 

8,793,352

 

 

 

8,864,233

 

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

 

Building and improvements

 

 

672,727

 

 

 

672,727

 

Vehicles

 

 

1,283,364

 

 

 

1,283,364

 

Tools and equipment

 

 

517,602

 

 

 

517,602

 

Solar arrays

 

 

6,386,025

 

 

 

6,386,025

 

 

 

 

8,859,718

 

 

 

8,859,718

 

Less accumulated depreciation

 

 

(2,348,019

)

 

 

(2,193,007

)

 

 

 

6,511,911

 

 

 

6,666,711

 

Other Assets:

 

 

 

 

 

 

 

 

Captive insurance investment

 

 

198,105

 

 

 

140,875

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

15,503,156

 

 

$

15,671,819

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable, includes bank overdrafts of $631,936 and $1,496,695 at March 31, 2020 and December 31, 2019, respectively

 

$

2,496,275

 

 

$

4,274,517

 

Accrued expenses

 

 

138,125

 

 

 

119,211

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

287,451

 

 

 

126,026

 

Due to stockholders

 

 

51,315

 

 

 

342,718

 

Line of credit

 

 

5,622,691

 

 

 

3,185,041

 

Current portion of deferred compensation

 

 

27,880

 

 

 

27,880

 

Current portion of long-term debt

 

 

376,814

 

 

 

426,254

 

Total current liabilities

 

 

9,000,551

 

 

 

8,501,647

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Deferred compensation, net of current portion

 

 

81,133

 

 

 

88,883

 

Deferred tax liability

 

 

955,420

 

 

 

1,098,481

 

Long-term debt, net of current portion

 

 

1,881,923

 

 

 

1,966,047

 

Total liabilities

 

 

11,919,027

 

 

 

11,655,058

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock – 0.0001 par value 1,000,000 shares authorized, 0 issued and outstanding

 

 

-

 

 

 

-

 

Common stock – 0.0001 par value 49,000,000 shares authorized, 5,298,159 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

 

 

529

 

 

 

529

 

Additional paid-in capital

 

 

412,356

 

 

 

412,356

 

Retained earnings

 

 

3,171,244

 

 

 

3,603,876

 

Total Stockholders’ equity

 

 

3,584,129

 

 

 

4,016,761

 

Total liabilities and stockholders’ equity

 

$

15,503,156

 

 

$

15,671,819

 

The Peck Company Holdings, Inc.

Condensed Statements of Operations (Unaudited)

For the three months ended March 31, 2020 and 2019

       

 

 

Three Months ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Earned revenue

 

$

3,984,680

 

 

$

3,850,477

 

Cost of earned revenue

 

 

3,668,167

 

 

 

2,963,450

 

Gross profit

 

 

316,513

 

 

 

887,027

 

 

 

 

 

 

 

 

 

 

Warehousing and other operating expenses

 

 

192,942

 

 

 

207,507

 

General and administrative expenses

 

 

617,748

 

 

 

257,709

 

Total operating expenses

 

 

810,690

 

 

 

456,216

 

Operating (loss) income

 

 

(494,177

)

 

 

421,811

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

Interest expense

 

 

(80,766

)

 

 

(44,659

)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(574,943

)

 

 

377,152

 

(Benefit) provision for income taxes

 

 

(142,311

)

 

 

500

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(432,632

)

 

$

376,652

 

 

 

 

 

 

 

 

 

 

Proforma information

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

$

377,152

 

Income tax expense

 

 

 

 

 

 

104,547

 

 

 

 

 

 

 

$

272,605

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

5,298,159

 

 

 

3,234,501

 

Diluted

 

 

5,298,159

 

 

 

3,234,501

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.08

)

 

$

0.12

 

Diluted

 

$

(0.08

)

 

$

0.12

 

The Peck Company Holdings, Inc.

Condensed Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

             

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(432,632

)

 

$

376,652

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

155,012

 

 

 

150,483

 

Deferred finance charge amortization

 

 

1,535

 

 

 

-

 

Deferred tax benefit

 

 

(143,061

)

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

166,925

 

 

 

(585,222

)

Other current assets

 

 

62,278

 

 

 

-

 

Costs and estimated earnings in excess of billings

 

 

(197,704

)

 

 

-

 

Accounts payable

 

 

(1,778,242

)

 

 

136,232

 

Accrued expenses

 

 

18,914

 

 

 

(2,025

)

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

161,425

 

 

 

-

 

Deferred compensation

 

 

(7,750

)

 

 

(13.376

)

Net cash (used in) provided by operating activities

 

 

(1,993,300

)

 

 

62,744

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of solar arrays and equipment

 

 

-

 

 

 

(18,798

)

Investment in captive insurance

 

 

(57,230

)

 

 

(58,215

)

Net cash used in investing activities

 

 

(57,230

)

 

 

(77,013

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net borrowings on line of credit

 

 

2,437,650

 

 

 

317,568

 

Payments of long-term debt

 

 

(135,099

)

 

 

(124,428

)

Payments to stockholders

 

 

(291,403

)

 

 

(112,968

)

Stockholder distributions paid

 

 

-

 

 

 

(190,199

)

Net cash provided by (used in) financing activities

 

 

2,011,148

 

 

 

(110,027

)

Net decrease in cash

 

 

(39,382

)

 

 

(124,296

)

Cash, beginning of period

 

 

95,930

 

 

 

313,217

 

Cash, end of period

 

$

56,548

 

 

$

188,921

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Interest

 

$

79,231

 

 

$

44,659

 

Income taxes

 

 

366

 

 

 

250

 

Source: SOUTH BURLINGTON, Vt.--(BUSINESS WIRE)--The Peck Company Holdings, Inc 5.14.2020