Quarterly Revenue Growth Up 287% Versus Prior Year; almost Doubles Sequentially
Andalay Solar, Inc. (OTCQB:WEST), a designer and supplier of integrated solar power systems, today announced its third quarter 2014 financial results.
"We have had a strong start to executing on a new business strategy, and I am pleased to report strong improvement in our third quarter revenues, which are nearly double our second quarter 2014 results and nearly quadruple of our year-over-year third quarter 2013 results," commented Steven Chan, CEO of Andalay Solar. "New customer interest in the cost and time-saving attributes of our patented residential solar products was quite evident during the Solar Power International trade show in Las Vegas in October. We also achieved some important milestones such as getting the residential solar industry's first United States patent for an integrated rail-less mounting technology as well as migrating our supply chain to a Buy American Act compliant solar system."
Third Quarter Financial Results
Revenue for the quarter ended September 30, 2014 was $606,000, compared to $157,000 in the third quarter of 2013 and $307,000 in the second quarter of 2014. Year-over-year revenue in the third quarter of 2014 increased $449,000 or 287.0%, compared to the same period in the prior year. The sequential increase in revenue of $299,000 as compared to the second quarter of 2014 was due to additional sales to new and established customers.
Gross profit for the third quarter of 2014 was $55,000 or 9.1% of net revenue, compared to a gross loss of $11,000 or 7.2% of net revenue for the third quarter of 2013, and a gross profit of $10,000 or 3.3% of net revenue for the second quarter of 2014. The year-over-year increase in gross margin was due to lower panel costs in the current year and higher volume that enabled allocations of fixed cost of goods sold to be attributed to a larger base of revenues; this was partially offset by lower average selling prices in the current quarter. The gross margin sequentially improved in the current quarter as compared to the second quarter of 2014, also due to allocating of fixed cost of goods sold to a larger revenue base.
Total operating expenses in the third quarter of 2014 were $575,000, compared to $797,000 for the same period last year and $613,000 for the second quarter of 2014. The year-over-year decrease is due to lower sales and marketing costs of $108,000, and lower general and administrative expenses of $114,000. The year-over-year decline in sales and marketing costs of $108,000 was due to a decrease in licensing fees due to the termination of the license agreement with Westinghouse Electric in August of 2013, partially offset by higher payroll and commission costs due to increase in revenue volume. The year-over-year decrease in general and administrative expenses of $114,000 was due to a decrease in shareholder meeting costs, rent, and patent fees partially offset by an increase in professional fees. Compared to the second quarter of 2014, total operating expenses decreased $37,000 due to a decrease in general and administrative expense of $56,000, partially offset by an increase in sales and marketing expense of $19,000. The sequential decrease in general and administrative expenses was primarily due to lower payroll and stock-based compensation and patent fees, and partially offset by an increase in professional fees. The sequential increase in sales and marketing costs was due to higher payroll and commission costs and expenditures for travel related to higher revenue. Stock-based compensation expense included in total operating expenses was $50,000 for the third quarter of 2014, compared to $107,000 for the same period of 2013 and $105,000 in the second quarter of 2014. Cash operating expenses (adjusted to exclude stock-based compensation expense and depreciation and amortization expense) were $493,000 for the third quarter of 2014, compared to $654,000 for the same period last year and $476,000 for the second quarter of 2014.
Net loss from continuing operations was $571,000 in the third quarter of 2014 compared to $809,000 in the same period last year, and a net loss of $631,000 in the second quarter of 2014. Net loss for the third quarter of 2014 includes a favorable non-cash adjustment to the fair value of embedded derivatives of $49,000. Net loss for the third quarter of 2013 includes a gain from operations of discontinued component of $3,000. Net loss for the second quarter of 2014 includes a favorable non-cash adjustment to the fair value of embedded derivatives of $85,000. Excluding the non-cash adjustments in all years, net loss from continuing operations was $520,000 in the third quarter of 2014 compared to $808,000 in the third quarter of 2013 and $602,000 in the second quarter of 2014.
Net loss attributable to common shareholders (which includes discontinued operations, preferred stock dividends and preferred deemed dividends) was $571,000 or $0.00 per share in the third quarter of 2014 compared to $1,337,000 or $0.02 per share in the third quarter of 2013 and $636,000 or $0.00 per share in the second quarter of 2014.
Cash as of September 30, 2014 was $439,000. There was a $500,000 balance drawn on the Company's $500,000 line of credit as of the end of the quarter. A customer accounts receivable of $517,000 that was overdue was paid to the Company in August 2014. Common shares outstanding as of September 30, 2014 were 249.3 million compared to 91.9 million as of September 30, 2013 and 116.3 million as of December 31, 2013.
