Sarasota, FL 3/28/2008 7:19:05 PM
314% Revenue Growth at Solar Power Inc.
Pennycents Magazine Reports on Solar Power Inc. (SOPW)
Pennycents Magazine, the market’s most valuable research tool covering micro-cap, penny stocks and otcbb equities, issued the following daily column by Brian Kline.
Solar Power Inc. (SOPW) is completely vertically integrated within the solar power industry. Manufacturing of all components, from solar cells to cables and support racks, occurs at a dedicated factory in China. The company designs solar systems to meet individual project requirements and then assembles, installs, and maintains the system.
Solar Power Inc. delivers all sizes of systems including residential, business, large commercial, and government projects. Its vertical integration model includes operating from energy outlet stores, of which the first one opened in California in October 2007. The model is also based on selling territorial franchises.
This week, the company released their 2007 SEC 10K annual report for small businesses. Revenues increased 314% to $18.1 Million compared to 2006. Gross profit was $2.1 million, or 11.7% of sales compared to gross profit of $1.5 million, or 33.9% of sales in 2006. The decrease in the gross profit margin reflects costs associated with building manufacturing and installation infrastructure. Administration expenses were also up significantly during 2007. The administration expense increase reflects the effort needed to establish the franchise operation. The first franchise agreement was signed this month.
Management believes most of the infrastructure for planned growth is now in place so that operating and administration expenses will now decline as a percentage of sales revenue. Management estimates 2008 revenue will dramatically grow to $60 million compared to 2007’s strong growth to $18.1 million.
As part of its full vertical integration model, Solar Power Inc. helps buyers arrange financing in creative ways. For large-scale commercial projects, Solar Power Inc. will arrange for a third-party to purchase the electricity generated from the solar grid. The original customer takes ownership of the solar grid after enough electricity is generated to pay for it. The third-party benefits from tax credits associated with the solar power purchase while the customer is still able to depreciate of the system.
Because non-profit organizations cannot benefit from the tax credits, Solar Power Inc. arranges for a third-party wanting the tax benefits to purchase the system and the non-profit receives the electricity. At a future date, the third-party transfers ownership to the non-profit organization.
Rapid manufacturing expansion will soon be necessary and is already planned. Currently only one-half of the China factory capacity is being used with the remaining half reserved for the expected expansion.
All users of solar power benefit financially as well as from knowing they made a good environmental choice. Not only do they generate their own electricity during the day but when the sun goes down the electricity they use from the fossil fuel grid is much cheaper, if not free. During sunlight hours, any excess electricity not used is fed into the fossil fuel grid through inverters. The dial on their eclectic meter literally turns backwards.
With the manufacturing, assembly, installation, maintenance, and financing pieces in place, Solar Power Inc. appears to be in an advantageous position as the energy debate tilts rapidly towards renewable resources. Hopefully they will not find a way to integrate the sunlight itself.
The writer does not own shares in the above stocks.
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