RGS shrinks from C&I, shares tank
Shares in RGS Energy continued their sharp downward decline on Friday, as the company closed out a tough week in which it replaced its chief executive and announced it would back away from the commercial rooftop sector.
Shares in Colorado-based RGS, one of the oldest downstream PV players in the US, had fallen nearly 11% by mid-day on Friday to $1.64, capping a week in which the company released grim second-quarter results.
Earlier this month RGS delayed releasing those results to give itself more time for preparation.
RGS reported a net loss of $36.2m during the first half of 2014 – including an $18.8m repairment charge – on revenues of $57.3m.
By comparison, it lost $6.7m during the same period last year on revenues of $37.5m.
RGS shares have more than halved during the past six months, leaving it with a market cap of less than $100m. The company went public in 2008, more than four years before rooftop rival SolarCity, which is now valued at $6.5bn.
Shares of RGS are down nearly 70% since hitting a 2014 peak of $5.23 in March.
As part of its turnaround plan, RGS this week replaced Kam Mofid, CEO since 2012, with Dennis Lacey, a turnaround specialist who served previously as president of RGS Energy’s residential rooftop division.
As part of that announcement, Lacey revealed the company will heavily de-emphasise its commercial rooftop business – which accounted for nearly 45% of revenues in the most recent quarter – due to increasingly brutal competition in that sector.
The commercial rooftop unit remains core to RGS's business, taking in roughly the same amount of revenue as its residential division in the last quarter. Yet while the gross margin for its residential business was 22%, for its commercial business it was a negative 4.1%.
RGS also said this week that it has begun testing an in-house residential leasing product in some markets, with an eye towards launching a full leasing platform soon. The company has previously relied on outside financing partners in order to offer its customers such leases, allowing RGS to focus on its core EPC competency.
New CEO Lacey, who took questions from analysts after the company’s second-quarter results were published, called RGS’s recent performance “simply unacceptable”.
The company has not reported a full-year profit since 2010.
As part of his turnaround plan, Lacey revealed that RGS has closed three unprofitable sales offices, located in Colorado and Missouri, to focus on the two coasts.
“We’ve placed ourselves in a position where we really have to get very tactical and focus on running our business well and profitably,” Lacey says.