“…we offer a business plan to drive long-term shareholder value…”
SOUTH BURLINGTON, Vt.–(BUSINESS WIRE)–The Peck Company (NASDAQ:PECK), a leading commercial solar engineering, procurement and construction (EPC) company, held a conference call on November 12, 2019 to discuss the Company’s third quarter results and its strategic plan.
To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or 1-412-317-6671 (international) and enter confirmation code 10007978. The telephonic replay will be available beginning at 11:15 a.m. ET on Tuesday, November 12, 2019, and will last through 11:59 p.m. ET on Tuesday, November 26, 2019.
Jeffrey Peck, Chief Executive Officer
John Sullivan, Chief Financial Officer
Good morning everyone, and welcome to The Peck Company Holding’s Third Quarter 2019 Earnings Call.
Joining me today is Jeffrey Peck, Chief Executive Officer, and John Sullivan, Chief Financial Officer. If you’ve not received the earnings release, it is available on our website at www.peckcompany.com. This call is being recorded. A replay of today’s call will be available and details on how to access the replay are in the earnings release.
Various remarks that Management may make about the Company’s future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the Company’s prospectus, which is on file with the Securities Exchange Commission, as well as in other documents that the Company files with the commission from time to time.
In addition, any forward-looking statements represent Management’s view as of today and should not be relied upon as representing views of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so, even if estimates change, and therefore, you should not rely on these forward-looking statements as representing views as of any date subsequent to today.
During this call, GAAP and non-GAAP financial measures will be discussed. A reconciliation between the two is available in today’s earnings release and on the Company’s website at www.peckcompany.com. Please note that unless otherwise stated all references to third quarter 2019 comparisons are being made against the third quarter of 2018.
I would now like to turn the call over to our Chief Executive Officer, Jeffrey Peck
Thank you, Operator. Good morning everyone and thank you for joining us on today’s call.
While we have been in business for nearly 50 years, we only recently became a public company on NASDAQ after our merger in June, this is now our second earnings call with you. As a leading and profitable solar EPC, we offer a business plan to drive long-term shareholder value as we capitalize on the trends in the growing solar market to increase our revenue and profitability. Specifically, we believe that our core solar EPC function in the industry is the ideal and most strategic platform to execute our plan which includes organic growth with existing and new customers across the northeast; accretive M&A to consolidate the market, expand geographically and enhance profitability; and with solar project acquisition, we will construct and sell or capitalize on our balance sheet those assets to create recurring revenue.
To accomplish our goals, we have been investing in the necessary internal resources in order to operate successfully as a public company and to build our solar EPC platform on a solid foundation while, continuing to remain profitable. To that point, I am pleased to report that we achieved a 194% increase in quarterly revenue compared to last year while continuing to remain profitable despite all the additional expenses related to our growth initiatives. Moreover, we have accomplished this without raising any equity capital, and we remain confident in executing our plan without the need to raise additional equity capital.
This accomplishment is something that we are proud of and grateful for as we recognize the efforts of our team and the strong relationships that we continue to cultivate that support our growth. We are in a unique position to expand and are intensely focused on performance.
I would now like to introduce John Sullivan, our Chief Financial Officer, for more details about the quarter.
Thank you, Jeff.
We are pleased with our growth during our third quarter, as revenue increased 194% to $11.7 million, compared to the prior year period of $3.9 million. Our higher growth in the quarter was driven by increased project work.
GAAP operating income was $0.179 million, or 1.5% of sales, compared to the prior year period of $0.543 million, or 13.9% of sales. During the quarter, we incurred several one-time costs relating to our transition to a public company and our third quarter 2019 Adjusted EBITDA was $0.413 million, compared to the prior year period of $0.640 million.
Additionally, due to the large volume of new projects, we experienced higher material costs for projects that have not yet broken ground. As is typically the case in all of our contracts, we take a conservative approach to overall project margin due to the potential for unplanned expenditures during the construction phase. As the project nears completion, we are able to release certain contingencies consistent with contract milestones. Therefore, we expect to see margins increase as projects move toward completion.
Thank you, John.
We are pleased with the progress we have made by increasing and diversifying our project base. At the end of the third quarter, we continue to see strong bookings with a contracted backlog of $16 million and a solid solar project pipeline of $55 million as demand remains strong for new solar arrays into 2020.
As we look towards 2020 and beyond, our strategic growth remains the same: expand into adjacent markets, while serving our existing customers and executing on pipeline and backlog; continue our success with acquiring solar projects for construction and sale or for our own balance sheet; and search for acquisition targets in growing markets that will be accretive to earnings
We will expand by building solar projects throughout the Northeast, leveraging our existing customer base and creating new relationships. We have been working with developers on projects throughout New England and the Northeast. I would anticipate some success coming from working with these developers and expect to have projects outside of the state of Vermont in 2020.
We have been receiving and reviewing many M&A opportunities and will continue to look for acquisitions that can help grow top and bottom lines of the business. As one of the only profitable publicly traded solar EPCs, we feel we have a strategic advantage to consolidate the industry through acquisitions and ultimately increase overall efficiency.
I would like to expand more on our strategy to acquire solar projects from developers at notice to proceed. We have acquired or have the rights to acquire seven such projects already. We will construct these and turn them over to financial buyers.
We sit in a unique position where we can work with developers who wish to sell their projects at NTP, as it allows the developers to stay focused on development, and we can take over the construction risk which is our expertise. By purchasing these projects we are able to drive higher top line revenue and higher project profits per kilowatt installed, however there is a small decrease in overall project gross margin since part of the project is purely transactional.
I want to reiterate that over the long-term we are focused on remaining a profitable company while investing in the development of our people and business to continue our growth as an industry leader. In our nearly 50-year history, we have always focused on being a profitable company, successfully managing our way through down cycles while providing the best in class service to our customers.
While we are dedicated to expanding our business into new areas to increase our revenue and cash flow, we are laser focused to maintain the same standard of quality and customer service that has made us successful since 1972.
I want to thank all of our employees for their hard work and dedication. I also want to thank our shareholders for their confidence in us to deliver long-term shareholder value.
As a public company we understand and appreciate the importance of transparency with the investment community. As such, we invite our investors to contact us through the Investor section of our website, or by sending a request for a follow up call to [email protected].
Thank you again for joining us on today’s call. We look forward to communicating our progress in the coming quarters and years and we are very grateful for your interest in our growing business.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as “may,” “should,” “expects,” “could,” “intends,” “plans,” “anticipates,” “estimates,” “believes,” “forecasts,” “predicts” or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, effective tax rate, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.
The forward-looking statements included in this press release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the risk factors described from time to time in our lings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.
All forward-looking statements included in this press release are based on information currently available to us, and we assume no obligation to update any forward-looking statement except as may be required by law.
About The Peck Company Holdings, Inc.
Headquartered in South Burlington, VT, The Peck Company is a 2nd-generation family business founded in 1972 and rooted in values that align people, purpose, and profitability. Ranked by Solar Power World as one of the leading commercial solar contractors in the Northeast, The Peck Company provides engineering, procurement and construction (EPC) services to solar energy customers for projects ranging in size from several kilowatts for residential properties to multi-megawatt systems for large commercial and utility scale projects. The Peck Company has installed over 125 megawatts worth of solar systems since it started installing solar in 2012 and continues its focused on profitable growth opportunities. Please visit www.peckcompany.com for additional information.
J. Charles Assets