CALGARY, Alberta, May 27, 2024 (GLOBE NEWSWIRE) — Eguana Technologies, Inc. (TSXV: EGT) (OTCQB: EGTYF) (“Eguana” or “companyEnergy Solutions Corporation (Headquarters: Minato-ku, Tokyo; President and CEO: Takeshi Osawa), a leading provider of high-performance energy storage systems, has announced its financial results for the fiscal year ending December 31, 2023.
FY2023 Financial Results Summary
The Company's fiscal year end, previously from September 30 to December 31, has changed. As a result, financial statements for the twelve months ended December 31, 2023 (“F2023”) are presented with comparative information for the fifteen months ended December 31, 2022 (“F2022”).
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Revenues decreased 32.1% in F2023 to $11,458,590 compared to $16,826,875 in F2022. On a simple trailing twelve-month pro rata basis, F2022 would equate to $13,461,500, a standardized 15% decrease. In early 2023, the solar industry was adversely affected by macroeconomic factors, including high interest rates and a difficult consumer credit market, which led to increased inventory across major distribution channels and a contracting market overall. After the first quarter, revenues decreased in F2023 due to this shift in demand and the continuation of this lower demand market.
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Overall gross margins remain weak as consumers remain price sensitive and competitors become more aggressive in pricing their products and services in an environment of significantly reduced demand. Gross margins for the year ended December 31, 2023 decreased to negative 17.9%, or negative $2,120,555, compared to gross margins of $233,219, or 1.4%, for the period ended December 31, 2022. Margins for fiscal 2023 were negatively impacted by an inventory impairment charge of $2,052,274 recorded by the Company.
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F2023 operating expenses, excluding amortization and stock-based compensation expense, were $13,011,943, up from $11,525,441 for the 15 months of F2022, representing a 12.9% sequential increase. However, when normalized on a trailing 12-month simple pro rata basis, F2022 would equate to $9,220,353, an increase of 41.1%. Nearly all categories of expenses increased slightly. The increase in expenses was driven by headcount increases, which were revised downward in the fourth quarter of F2023 in response to a slower than expected market recovery, as well as increased headcount and higher operating costs associated with F2023's Australian branch expansion to include rooftop solar services.
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Additional provisions were recorded in respect of Eguana's past due large customers throughout 2023. Total expected credit losses for the year to 31 December 2023 were $9.9 million (2022: $1.4 million).
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Net loss before taxes was $35,558,524 for the year ended December 31, 2023, an increase of $16,815,380. The increase in net loss before taxes was primarily due to lower margins, slightly higher expenses, the recognition of significant expected credit losses and increased financing costs related to the issuance of new senior loans and ITOCHU notes in the second half of fiscal 2022.
Strategic Steps
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Much of the strategic activity in early 2023 was related to expanding distribution channels in the U.S. and onboarding and training installation partners. A robust online training platform, Eguana University, was rolled out, resulting in over 1,300 trained installers throughout the year.
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The company launched its rooftop solar installation services in Australia as a turnkey solution, helping Eguana win contracts with major Australian power companies.
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As industry demand slows and sales stagnate, the company has strategically shifted focus to its value proposition within grid connection and virtual power plant (VPP) applications. Through its strategic plan for the second half of 2023 and into 2024, Eguana will continue to focus on demonstrating the value of demand response, load management, auxiliary power and voltage and frequency control for utilities.
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With a strong focus on VPP applications, product development has shifted to updating cloud services and enhancing cloud solutions, culminating in the recent release of Eguana Edge™. The Eguana Cloud solutions suite positions the company as a power grid software solution in addition to its existing hardware products, including Evolve™, Enduro™ and Duracell branded microinverters.
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The company has ramped up its utility engagement by announcing partnerships with Virtual Peaker and AutoGrid, as well as utility partners including Portland General Electric, Massachusetts Municipal Wholesale Electric Company and a major Australian utility company.
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The collapse of the consumer-driven residential solar market has caused significant inventory buildup through distribution channels in 2023 and 2024, leading to order cancellations and delays across the solar industry supply chain. All industry participants have been adversely affected. High interest rates, high inflation and unclear policy and tax incentives remain negative factors. Weaker demand and a slower than expected recovery creates short-term liquidity risks for the Company. Eguana continues to closely manage its liquidity, including working with senior lenders and considering additional strategies to enhance liquidity and enable it to execute its 2024 business strategy.
“After an extremely challenging year for the residential solar sector, we launched our VPP utility accelerator program, which includes Eguana Edge™, which provides utilities with real-time line balancing and voltage control capabilities. To date, the program has been deployed with multiple utilities in Canada and the United States, further driving utility interest in Eguana energy storage solutions,” commented CEO Justin Holland. “If our technology is successful in these utility channels, where financial markets have less influence on purchasing decisions, we expect to generate increased, high-margin storage sales and future recurring revenue generation.”
The consolidated financial statements and associated analysis of operations are available on SEDAR+ at www.sedarplus.com and on the Company's website at www.sedarplus.com. Eguanatech.
The Company will hold a conference call for shareholders in conjunction with the filing of its financial statements for the interim period ended March 31, 2024, which are scheduled to be filed by May 30, 2024, and its recently filed financial statements for the annual period ending December 31, 2023. More details will be provided in a news release in advance of the scheduled conference call.
About Eguana Technologies Inc.
Eguana's vision is to accelerate grid modernization and resilience by providing a flexible, modular and cost-effective alternative to traditional grid upgrades. Our technology delivers value to all key stakeholders, from consumers to energy retailers, distribution companies and system operators.
Eguana Technologies connects utilities and consumers through high performance commercial and residential energy storage solutions. Eguana's vertically integrated product suite is designed from the ground up with both end users and utilities in mind to seamlessly transition the power grid.
Manufactured in local facilities around the world to ensure compliance and quality, Eguana's standardized platform allows flexibility for each product solution to be optimized for use in key grid modernization markets.
For more information, please visit www.Eguanatech Or follow us on LinkedIn Eguanatech About X.
Corporate Inquiries
Justin Holland CEO
Eguana Technologies, Inc.
+1.416.728.7635
JustinHolland@EguanaTech.com
Forward-Looking Statements
Readers should be aware that all information, other than statements of historical fact, contained herein is forward-looking statements and forward-looking information (collectively, “forward-looking statements”).Forward-Looking Statements(“) means a corporation within the meaning of National Regulation 51-102; Ongoing Disclosure Obligations and other relevant securities laws.
Forward-looking statements are included to provide information about management's current expectations and plans to enable investors and others to better understand the Company's business plans, financial performance and financial condition. All statements, other than statements of historical fact, contained in this news release regarding the Company's strategy, future operations, prospects and management's plans and objectives are forward-looking statements that involve risks and uncertainties. Forward-looking statements are generally identified by words such as “plans,” “expects,” “estimates,” “intends,” “anticipates,” “believes” or variations of these words and phrases, or statements that certain actions, events or results “may,” “might,” “will,” “might” or “will occur.” Forward-looking statements in this news release include, but are not limited to, the Company's continued focus on demonstrating the value of demand response, load management and auxiliary power, as well as voltage and frequency control for utility companies. The Company's VPP Utility Accelerator Program, including Eguana Edge™, is also expected to drive increased storage sales and improved margins, resulting in recurring revenue in the future.
Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. A number of factors could cause the actual results, performance or achievements of the Company, or future events or developments, to differ materially from those expressed or implied by the forward-looking information. Such factors include, but are not limited to, risks relating to: the Company's inability to improve cash flows, which could have a material adverse effect on the viability of its operations; the timely collection of accounts receivable; the ability to raise debt or equity capital, if necessary, on adequate terms; unanticipated effects of workforce reductions; the effective implementation and deployment of the Eguana solution, and the formation of additional partnerships and the development of existing partnerships; general economic, market and business conditions; competitive factors; the achievement of strategic objectives; contracting and adoption of the VPP solution with utilities; obtaining additional revenues, recurring revenues and higher profit margins; inability to procure or delays in procuring materials; production delays or certification delays; and the Company's ability to develop additional utility pilot programs and demonstrations or deployments. the operational effectiveness and efficiency of our products when used in utilities, slower adoption of energy storage technologies, and other factors described in the “Risk Factors” section of our management's discussion and analysis for the three and nine months ended September 30, 2023, and our Annual Information Form dated May 1, 2023, which are available on our website or at www.sedarplus.ca. Readers are cautioned not to place undue reliance on any forward-looking information. Forward-looking information speaks only as of the date hereof. We undertake no obligation to publicly revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events, except as required by applicable securities laws.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.
