The Peck Company Reports Second Quarter 2019 Results, 36.7% Increase in Revenue

The Peck Company (NASDAQ:PECK), a leading commercial solar engineering, procurement and construction (EPC) company, today reported results for the second quarter 2019 ended June 30, 2019.

Revenue during the second quarter of 2019 increased 36.7% to $6.3 million, compared to $4.6 million in the prior year period. Higher revenue in the quarter was driven by increased project work.

On a GAAP basis, second quarter operating income was $0.6 million, compared to $0.7 million in the prior year period. Lower operating income was the result of higher depreciation relating to equipment and solar arrays, of which the majority was placed into service in the second quarter of 2018.

Adjusted EBITDA in the second quarter was $0.8 million, or 13.2% of sales, compared to the prior year period of $0.8 million, or 17.4% of sales. The decrease as a percentage of sales was the result of the volume of new projects, as revenue recognized prior to breaking ground is mostly attributable to material costs that is booked at lower margin relative to higher margin labor as the project matures.

The Peck Company's Chief Executive Officer, Jeff Peck commented, "We are pleased to report revenue growth of 36.7% in our first quarter as a public company. This momentum reflects strong demand for renewable energy solutions as favorable market dynamics drastically improve the value proposition for installation of renewable energy systems."

Peck continued, "As we look ahead to the balance of the year, we see significant opportunity to execute on our organic growth strategy as we invest in our business to increase our geographic footprint, expanding our reach and the total addressable market. Long term, we are committed to delivering on our growth plans and focused on creating long-term shareholder value."

Second Quarter Results of Operations

Consolidated revenue increased 36.7% to $6.3 million, compared to $4.6 million in the prior year period.

Gross profit increased 8.0% to $1.5 million, compared to $1.4 million in the prior year period. Gross margin as a percentage of sales was 23.5%, compared to 29.7% in the prior year period. Lower gross margin in the quarter was the result of increased material and sub-contractor purchases in the quarter to support planned projects in the peak season.

Total operating expenses in the second quarter were $0.9 million, or 14.4% of sales, compared to $0.7 million in the prior-year period, or 14.6% of sales. The increase in operating expenses was the result of higher depreciation relating to equipment and solar arrays, of which the majority was placed into service in the second quarter of 2018.

Second quarter 2019 income taxes were $1.5 million compared to the prior-year period of $0.0 million. The increase in income taxes was the result of the conversion from an S Corporation to a C Corporation as part of the transition to a public company. The conversion to a C corporation caused the company to record an initial deferred tax liability and expense of $1.5 million. This was primarily triggered from accelerated tax depreciation taken on assets while the company was an S corporation in excess of financial statement depreciation under U.S. GAAP.

The Company reported a second quarter 2019 net loss of ($1.0) million, or ($0.29) per diluted share, compared to net income of $0.7 million, or $0.19 per diluted share, in the prior year period.

Backlog for the quarter ended June 30, 2019 was $21.5 million, compared to the prior year period of $7.8 million. The Company expects to realize 100% of backlog in the next 12 months. In addition to the $21.5 million in contracted backlog, the company also has a substantial project pipeline.

Conference Call Information

The company will host a conference call today at 5:00 p.m. ET to discuss the results. A live webcast of the call can be accessed via the webcast link on The Peck Company's Investor Relations website. To access the call, participants may dial toll-free at 1-877-407-0789 or 1-201-689-8562 (international) and request to join The Peck Company earnings call.

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 13693409. The telephonic replay will be available beginning at 8:00 p.m. ET on Wednesday, August 14, 2019, and will last through 11:59 p.m. ET on Wednesday, August 28, 2019. The call will also be available for replay via the webcast link on The Peck Company's Investor Relations website.

Forward-Looking Statements

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 filings 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.

Certain Non-GAAP Measures

We periodically review the following key non-GAAP measures to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions.

EBITDA, Adjusted EBITDA

Included in this presentation are discussions and reconciliations of earnings before interest, income tax and depreciation and amortization ("EBITDA") and EBITDA adjusted for certain non-cash, non-recurring or non-core expenses ("Adjusted EBITDA") to net income in accordance with GAAP.Adjusted EBITDA excludes certain non-cash and other expenses, certain legal services costs, professional and consulting fees and expenses, and one-time Business Combination expenses and certain adjustments. We believe that these non-GAAP measures illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals.

These non-GAAP measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute or superior to, the other measures of financial performance prepared in accordance with GAAP. Using only the non-GAAP financial measures, particularly Adjusted EBITDA, to analyze our performance would have material limitations because such calculations are based on a subjective determination regarding the nature and classification of events and circumstances that investors may find significant. We compensate for these limitations by presenting both the GAAP and non-GAAP measures of our operating results. Although other companies may report measures entitled "Adjusted EBITDA" or similar in nature, numerous methods may exist for calculating a company's Adjusted EBITDA or similar measures. As a result, the methods that we use to calculate Adjusted EBITDA may differ from the methods used by other companies to calculate their non-GAAP measures.

The reconciliations of EBITDA and Adjusted EBITDA to net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, are shown in the table below:

About The Peck Company

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 the largest commercial solar contractor in the Northeast and one of the largest in U.S., The Peck Company provides engineering, procurement and construction (EPC) services to solar energy customers for projects ranging in size from several kilowatts for residential loads to multi-megawatt systems for large commercial and public works projects. The Peck Company has installed over 100MW of solar systems since inception and is focused on profitable growth opportunities. Please visit www.peckcompany.com for additional information.