Distributed Energy Systems Corp. (Nasdaq: DESC), has reported revenues of $9.4 million for the second quarter of 2006. Second-quarter revenues rose from $7.6 million during the first quarter of 2006 but were below record revenues of $12.2 million in the same period last year.
Ambrose L. Schwallie, Distributed Energy’s CEO, commented that “We are solidly on the trajectory that we laid out for our shareholders in March. That trajectory envisioned a sluggish first half due to contract delays, followed by rapid growth to record third and fourth quarters and strong momentum going into 2007. The results we are reporting lay the foundation for that strong second half. Specifically, backlog remains solid at $33 million. Several projects where booking is imminent, along with one project on which significant work has already proceeded even though we are not yet recognizing revenues, give added visibility to revenue growth and margin expansion in the months ahead.”
Financial Summary
For the second quarter ended June 30, 2006, Distributed Energy’s net loss was $6.5 million, or $0.17 per share, on revenues of $9.4 million, compared with last year’s second quarter loss of $4.5 million, or $0.13 per share, on $12.2 million in revenues. Consolidated gross margin fell sharply during the June quarter, reflecting the lower overall volume, and the impact of accelerated staffing in response to backlog growth. This year’s second quarter net loss included approximately $0.03 per share attributable to required compliance with the Statement of Financial Accounting Standard 123 (revised 2004), “share-based payment” or SFAS123 and other non-cash stock compensation charges. (The company adopted SFAS123 in the first quarter 2006 as required, and historical results do not include such charges.)
For the first six months of 2006, the company reported revenue of $17.0 million, and a net loss of $13.9 million, or $0.36 per share including approximately $0.09 per share attributable to compliance with SFAS123 and other non-cash stock compensation charges. One year ago, the company reported six month revenue of $21.7 million, and a net loss of $9.2 million, or $0.26 per share, including less than $0.01 per share attributable to non-cash stock compensation charges.
Cash and marketable securities as of June 30, 2006, totaled $31.9 million, compared with $40.7 million as of December 31, 2005. The decrease of approximately $8.8 million during the first half of 2006, compared with $13.3 million for the same period a year ago, reflects net losses and working capital requirements offset by financing activities completed in the second quarter of 2006. Working capital is defined as current assets minus current liabilities excluding cash and marketable securities.
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