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SolarMax Technology, Inc. Reports First Quarter 2024 Financial Results

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SolarMax Technology (Nasdaq: SMXT) reported its Q1 2024 financial results, highlighting a significant revenue drop to $5.8 million from $12.9 million in Q1 2023. The gross profit was negative at -$0.5 million, impacted by a one-time stock-based compensation of $1.3 million. Operating expenses surged to $18.4 million due to an additional $15.9 million in stock-based compensation. This led to a net loss of $19.3 million. The CEO attributed the revenue decline to unusual weather and a one-time surge in Q1 2023 due to changes in California solar rebate regulations. The stock-based compensation was triggered by the company's IPO.

Positive
  • Completion of the initial public offering (IPO) strengthens capital structure.
  • One-time stock-based compensation expenses are non-cash and won't repeat.
Negative
  • Revenue fell sharply to $5.8 million from $12.9 million year-over-year.
  • Gross profit turned negative to -$0.5 million from $2.1 million in Q1 2023.
  • Operating expenses soared to $18.4 million from $1.5 million due to one-time compensation.
  • Net loss was significantly high at $19.3 million.

Insights

SolarMax Technology, Inc.'s first-quarter financial results indicate several key points of interest for investors. First, the revenue decline from $12.9 million to $5.8 million year-over-year is significant, primarily attributed to last year's exceptional surge in customer demand due to changes in California's solar rebate regulations. This drop not only highlights the volatility in demand tied to regulatory changes but also suggests a potential over-reliance on such external factors.

Moreover, the inclusion of a one-time stock-based compensation expense, totaling $17.2 million, heavily impacted the company's gross profit and net loss, leading to negative gross profit and a substantial net loss. While this expense is non-cash and tied to the IPO, it underscores the importance of adjusting for such anomalies when evaluating the company's recurring operational performance. For retail investors, it's important to differentiate between these one-time charges and the company's core operational profitability.

In the short term, the stock might experience volatility due to perceived poor performance, but the company's strengthened capital structure post-IPO could provide a foundation for future growth. However, investors should closely monitor how effectively SolarMax leverages its improved capital structure to drive organic growth and navigate any future regulatory challenges.

From a market perspective, SolarMax’s results reveal critical insights into the solar energy sector's dynamics. The dramatic revenue decline due to changes in California’s solar rebate regulations indicates a high sensitivity to regulatory environments. This regulatory-dependent revenue highlights the potential risks and opportunities tied to policy changes for companies operating in this sector.

Additionally, the impact of unusual weather conditions points to another layer of operational risk. For retail investors, understanding these external dependencies is key. The company’s prospects in the market will likely hinge on its ability to adapt to these external factors and diversify its revenue streams to mitigate such risks.

Looking forward, investors should watch for SolarMax's strategic responses, such as potential expansions into less weather-sensitive regions or new product offerings that could stabilize revenue despite regulatory fluctuations. This strategic flexibility will be important for long-term sustainability and growth.

RIVERSIDE, CA / ACCESSWIRE / May 16, 2024 / SolarMax Technology, Inc. (Nasdaq:SMXT) ("SolarMax" or the "Company"), an integrated solar energy company, today reported financial results for the quarter ended March 31, 2024.

First Quarter Highlights

  • Revenues were $5.8 million, compared to $12.9 million in the first quarter of 2023.
  • Cost of revenues included a one-time stock-based compensation expense of $1.3 million, resulted in gross profit of ($0.5) million, compared to $2.1 million in the first quarter of 2023.
  • Total operating expense, which included a one-time stock-based compensation expense of $15.9 million, was $18.4 million, compared to $1.5 million in the first quarter of 2023.
  • Net loss was $19.3 million, which included the one-time, non-cash impact of the total $17.2 million stock-based compensation expense related to the vesting of stock options triggered by the Company's initial public offering.

David Hsu, CEO of SolarMax, stated, "Our year-over-year comparisons were impacted by two key factors. First, the exceptional revenue we reported for the first quarter of 2023 was primarily due to a one-time surge in customer demand as purchases of residential solar systems were accelerated to benefit from favorable solar rebate regulations in California in anticipation of a change in the California solar rebate regulations which became effective in April 2023. This was a unique situation that temporarily boosted our revenues last year. In addition, revenues in the first quarter of 2024 were impacted by unusually heavy and frequent rains in southern California. Additionally, as a result of the completion of our initial public offering in the first quarter of 2024, a major milestone for SolarMax, termination of forfeiture provisions of stock options resulted in a non-cash compensation expense of $17.2 million, representing the value of the stock options, which was allocated between cost of revenue ($1.3 million) and operating expense ($15.9 million). Although this charge significantly impacted the results of our operations for the quarter, it was a one-time, non-cash event associated with the completion of our initial public offering, which has strengthened our capital structure. We remain optimistic about our growth prospects moving forward."

About SolarMax Technology Inc.

SolarMax is an integrated solar and renewable energy company. A solar energy system retains the direct current (DC) electricity from the sun and converts it to alternating current (AC) electricity that can be used to power residential homes and commercial businesses. The solar business is based on the ability of the users of solar energy systems to save on energy costs and reduce their carbon imprint as compared with power purchased from the local electricity utility company. SolarMax was founded in 2008 to engage in the solar business in the United States and commenced operations in China in 2016. SolarMax' United States operations primarily consist of the sale and installation of photovoltaic and battery backup systems for residential and commercial customers and sales of LED systems and services to government and commercial users. SolarMax' China operations consist primarily of identifying and procuring solar farm projects for resale to third parties and performing EPC services primarily for solar farm projects. All of SolarMax' revenues for 2022 and 2023 and the first quarter of 2024 was generated by its United States operations. For more information, visit www.solarmaxtech.com. Any information contained on, or that can be accessed through, our website or any other website or any social media is not a part of this press release.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act") as well as Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created by those sections. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "would," "could," "seek," "intend," "plan," "goal," "project," "estimate," "anticipate," "strategy," "future," "likely" or other comparable terms, although not all forward-looking statements contain these identifying words. All statements other than statements of historical facts included in this press release regarding the Company's strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Important factors that could cause the Company's actual results and financial condition to differ materially from those indicated in the forward-looking statements. Such forward-looking statements are subject to risk and uncertainties, including, but not limited to, those described in "Cautionary Note on Forward-Looking Statements" "Item 1A. Risk Factors," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 16, 2024 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's report on Form 10-Q for the quarter ended March 31, 2024, which was filed with the SEC on May 15, 2024. SolarMax undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events except as required by law. You should read this press release with the understanding that our actual future results may be materially different from what we expect.

Contact:
For more information, contact:
Stephen Brown, CFO

(951) 300-0711

SolarMax Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
As of March 31, 2024 and December 31, 2023

March 31, 2024 December 31, 2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$4,929,781 $2,539,312
Accounts receivable, net
3,980,353 4,176,322
Short-term investments
7,000,000 -
Contract assets, net
292,608 549,118
Receivable from SPIC and project companies (Note 2)
3,651,798 3,728,865
Customer loans receivable, current, net
1,395,744 2,212,574
Inventories, net
1,248,447 1,341,397
Other receivables and current assets, net
4,767,673 5,373,997
Total current assets
27,266,404 19,921,585
Property and equipment, net
267,441 291,416
Operating lease right-of-use assets
4,274,921 5,411,820
Goodwill
7,428,019 7,584,779
Investments in unconsolidated solar project companies
9,557,500 9,698,308
Customer loans receivable, noncurrent, net
4,444,262 4,322,942
Deferred tax assets
186,503 189,226
Restricted cash, noncurrent
356,510 354,504
Other assets
910,502 880,621
Total assets
$54,692,062 $48,655,201
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable
$ 2,042,203 $ 3,384,195
Operating lease liabilities, current
1,465,296 1,497,555
Unsecured loans, current
2,000,000 2,000,000
Secured loans from related parties, current
9,358,658 11,358,658
Secured convertible notes, current
8,580,000 8,680,000
Accrued expenses and other payables
12,947,272 16,480,896
Total current liabilities
36,393,429 43,401,304
Operating lease liabilities, noncurrent
2,901,516 4,078,569
Secured loans from related parties, noncurrent
7,000,000 7,000,000
Secured convertible notes, noncurrent, net of debt discount and issuance costs
6,363,217 7,269,768
Other liabilities
2,619,138 2,793,388
Total liabilities
55,277,300 64,543,029
Commitments and contingencies (Note 17)
Stockholders' deficit:
Preferred stock, par value $0.001 per share; 15,000,000 shares authorized, none issued and outstanding as of March 31, 2024 and December 31, 2023
- -
Common stock, par value $0.001 per share; 297,225,000 shares authorized, 46,231,142 and 40,983,881 shares issued as of March 31, 2024 and December 31, 2023, respectively, and 44,982,797 and 39,735,536 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
46,231 40,984
Additional paid-in capital
90,563,721 55,786,634
Treasury stock, at cost, 1,248,345 shares at March 31, 2024 and December 31, 2023
(1,808,889) (1,808,889)
Accumulated deficit
(87,895,756) (68,623,969)
Accumulated other comprehensive loss
(1,490,545) (1,282,588)
Total stockholders' deficit
(585,238) (15,887,828)
Total liabilities and stockholders' deficit
$ 54,692,062 $ 48,655,201

SolarMax Technology, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2024 and 2023

Three Months Ended
March 31,
2024 2023
(Unaudited)
Revenues
$5,764,074 $12,868,478
Cost of revenues (includes stock-based compensation expense of $1,264,690)
6,228,481 10,796,141
Gross profit (loss)
(464,407) 2,072,337
Operating expenses:
General and administrative (includes stock-based compensation expense of $15,945,597)
18,251,110 1,294,787
Selling and marketing
165,222 250,339
Total operating expense
18,416,332 1,545,126
Operating income (loss)
(18,880,739) 527,211
Other income (expense):
Interest income
15,792 8,676
Interest expense
(384,363) (399,136)
Equity in income of solar project companies
60,163 67,902
Gain on debt extinguishment
53,642 13,410
Gain on early termination of lease
77,207 4,212
Other income (expense), net
(208,688) 319,252
Total other income (expense)
(386,247) 14,316
Income (loss) before income taxes
(19,266,986) 541,527
Income tax provision (benefit)
4,801 (201,288)
Net income (loss)
$(19,271,787) $742,815
Net income (loss) per share
Basic
$(0.46) $0.02
Diluted
$(0.46) $0.02
Weighted average shares used to compute net income (loss) per share
Basic
41,461,502 39,735,536
Diluted
41,461,502 44,533,059

SOURCE: SolarMax Technology



View the original press release on accesswire.com

FAQ

What were SolarMax Technology's revenues for Q1 2024?

SolarMax Technology's revenues for Q1 2024 were $5.8 million.

What caused the net loss for SolarMax Technology in Q1 2024?

The net loss of $19.3 million was mainly due to a one-time stock-based compensation expense of $17.2 million triggered by the company's IPO.

How did SolarMax Technology's gross profit perform in Q1 2024?

SolarMax Technology reported a gross profit of -$0.5 million in Q1 2024 due to a one-time stock-based compensation expense.

What were the operating expenses for SolarMax Technology in Q1 2024?

The operating expenses were $18.4 million in Q1 2024, significantly impacted by a one-time stock-based compensation expense of $15.9 million.

Why did SolarMax Technology's revenue decline in Q1 2024?

The revenue decline was attributed to unusual weather conditions and a one-time surge in Q1 2023 due to changes in California solar rebate regulations.

Solarmax Technology Inc.

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