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Alternus Energy Reports Second Quarter 2019 Results

Gross Margin Improved Due to Better Revenue Mix

Recent Addition of Assets not yet Reflected in Revenue

Reports First Positive Net Income

NEW YORK, Aug. 16, 2019 (GLOBE NEWSWIRE) -- Alternus Energy Inc. (ALTN), a global renewable energy company, today announced its financial results for the second quarter ended June 30, 2019.

Key Financial Highlights for Q2 2019:

  • Revenues decreased by 4% to $0.934 million, due to closure of lower margin business
  • Gross profit increased by 64% to $0.772 million
  • Gross margin improved to 83%, up from 48%
  • Adjusted EBITDA of $3.8 million, due to gain on bargain purchase
  • Net Income increased to $2.3 million, compared to a loss of $0.1 million in prior year
  • Shareholders equity increased to $7.8 million, from $5.0 million in prior year

Key Business Highlights for Q2 2019:

  • Completed acquisition of additional 4.x MWs of operating solar projects in Italy
  • Signed agreement with leading global renewable energy provider, BayWa r.e.
  • Closed $9.75 million financing from institutional investor

Management Commentary
“Q2 was another solid quarter for the business in both short term and long term achievements. Revenues only dropped 4% despite the loss of $0.41 million in revenue year on year following the cessation of energy trading activities in Romania. Adjusting for this, revenues would be up 38% year on year. This also resulted in gross margins increasing 83% year on year, which more accurately reflects the gross margins of the business model. The completion of the acquisition of 4.1MW of operating parks in Italy during Q2 immediately improved revenues and gross profit in the period and also added approximately $1.8 million in contracted annual revenues for the next 12 years. The acquisition also increased net assets and resulted in a one-time gain of $4.2 million, reflecting the difference between the fair value of the projects acquired and the price actually paid, which is further proof of our ability to identify and acquire undervalued assets,” commented Vincent Browne, Alternus Energy’s Chief Executive Officer, President and Chairman.

“In addition to the financial performance in the quarter, we also strengthened our operational capabilities with the BayWa r.e. agreement, improved our financial position and funding relationships and expanded our operational footprint with the solar park acquisitions in Italy and, subsequent to the end of the quarter, our contract to acquire 11.75MW in The Netherlands which, when completed, will bring our total park ownership to 40MWs. Our pipeline of additional opportunities remains robust as we push towards our goal of exiting 2019 with over 100 MWs of owned energy assets,” concluded Mr. Browne.

Recently Announced Agreements:

Alternus Energy Agrees to Acquire 11.75 MW Solar Park in Rilland, the Netherlands – July 31
Planned acquisition of Zonepark Rilland B.V. and its 11.75 MW ground-mounted solar photovoltaic (PV) power plant in Rilland, the Netherlands, in exchange for total consideration of $11.76 million (€10.5 million).

The Purchase Price includes the assumption of a third party senior bank financing in the amount of approximately $8.1 million (€7.2 million).In addition to the Purchase Price, the Seller will be entitled to receive an additional cash amount of up to a total of $560k (€500k)in the form of an earn out based on net cash proceeds received by the PV park over and above a set annual power output of 10,865 MwH. The total consideration will be adjusted for working capital movements between April 30, 2019 and Closing. 

Rilland enjoys a 15-year government counter-party ‘Feed-in-Tariff’ (“FiT”) contract at fixed sales prices, in addition to a Power Purchase Agreement (“PPA”) with a local energy operator. The combined contracts provide long-term predictable positive cash flows to ALTN and as the park is already operational it will be immediately revenue and income accretive to ALTN on Closing. Based on current energy production Rilland is expected to add approximately $1.4 million (€1.2 million) in annual revenues for at least 15 years at average 75% gross margins to Alternus.

Alternus Energy Signs Agreement with Leading Global Renewable Energy Provider, BayWa r.e. – June 6
Master Operations and Maintenance (O&M) agreement with BayWa r.e. (“BayWa”). BayWa will provide 24/7 monitoring, preventative maintenance and quality inspections for all Alternus solar projects in Germany, Italy, Romania, and Netherlands.

BayWa r.e. (www.baywa-re.com) is a leading global renewable energy developer, service supplier, wholesaler and energy solutions provider. BayWa r.e has operations throughout Europe, North America and Asia-Pacific, and are strategically investing in new and emerging markets. Expertise, creativity and a knowledge base is built on the experience of successfully bringing over 2.5 GW of renewable energy projects online and managing more than 6 GW of renewable assets around the globe.  A subsidiary of BayWa AG, a EUR 16 billion business established for over 90 years.

Financial Results for the Three Months Ended June 30, 2019:
Revenue for the three months ended June 30, 2019 was $933,828, a 4.1% decrease compared to $973,692 for the three months ended June 30, 2018. The slightly lower revenue was due to the closure of the Company’s low margin segment in Romania which contributed $0.41 million in the prior year period.

Gross profit for the three months ended June 30, 2019 was $772,250, compared to $469,828 for the three months ended June 30, 2018. The resulting gross margin improved to 82.7% for the three months ended June 30, 2019, from 48.3% for the three months ended June 30, 2018, reflecting the higher margin revenue mix.

Selling, general and administrative expenses for the three months ended June 30, 2019 were $1,319,896, an increase of $1,009,561, compared to $310,335 for the three months ended June 30, 2018. The primary reason for the increase was $301,050 in non-cash stock compensation costs, approximately $150,000 related to the activities associated with the filing of the SEC Form-10 and $100,000 in non capitalized acquisition costs.

Depreciation and amortization for the three months ended June 30, 2019 were $239,408, an increase of $75,737, compared to $163,671 for the three months ended June 30, 2018, reflecting the increased asset ownership.

Operating loss for the three months ended June 30, 2019 was $787,054, an increase of $782,876, compared to $4,178 for the three months ended June 30, 2018, primarily reflecting the increased selling, general and administrative expenses.

Other income and expenses for the three months ended June 30, 2019 totaled $3,144,254 in income, compared to an expense of $102,392 for the three months ended June 30, 2018. For the three months ended June 30, 2019, this consisted of $1,028,009 in interest expense and a $4,172,263 gain on bargain purchase.

Net income for the three months ended June 30, 2019 was $2,357,200, an increase of $2,463,770, compared to a net loss of $106,570 for the three months ended June 30, 2018. The resulting EPS  income per share for the three months ended June 30, 2019 was $0.02 per diluted share, compared to an EPS loss of ($0.00) per diluted share for the three months ended June 30, 2018.

Financial Results for the Six Months Ended June 30, 2019:
Revenue for the six months ended June 30, 2019 was $1,303,959, a 7.6% decrease compared to $1,410,782 for the six months ended June 30, 2018. The slightly lower revenue was due to the closure of the Company’s low margin segment in Romania. When adjusted for the lost revenues revenues increased 22% on a like-for-like basis.

Gross profit for the six months ended June 30, 2019 was $985,373, compared to $706,758 for the six months ended June 30, 2018. The resulting gross margin improved to 75.6% for the six months ended June 30, 2019, from 50.1% for the three months ended June 30, 2018, reflecting the higher margin revenue mix and addition of high margin income streams in the period.

Selling, general and administrative expenses for the six months ended June 30, 2019 were $1,862,453, an increase of $1,313,518, compared to $548,935 for the six months ended June 30, 2018. The primary reason for the increase was $463,000 in non-cash stock compensation costs, approximately $150,000 related to the activities associated with the filing of the SEC Form-10 and $100,000 in non capitalized acquisition costs. In addition, Alternus has grown their internal team in order to execute on their growth plan by hiring a CFO, General Counsel and other strategic roles in operations, business development and the public markets that were not in place in 2018.

Depreciation and amortization for the six months ended June 30, 2019 were $406,878, an increase of $105,230, compared to $301,648 for the six months ended June 30, 2018, reflecting the increased asset ownership.

Operating loss for the six months ended June 30, 2019 was $1,283,958, an increase of $1,140,133, compared to $143,825 for the six months ended June 30, 2018, due primarily to the increased selling, general and administrative expenses in the period.

Other income and expenses for the six months ended June 30, 2019 totaled $2,257,554 in income, compared to an expense of $159,338 for the six months ended June 30, 2018. For the six months ended June 30, 2019, this consisted of $1,915,383 in interest expense and a $4,172,263 gain on bargain purchase.

Net income for the six months ended June 30, 2019 was $973,596, an increase of $1,276,759, compared to a net loss of $303,163 for the six months ended June 30, 2018. The resulting EPS income for the six months ended June 30, 2019 was $0.01 per diluted share, compared to an EPS loss of ($0.01) per diluted share for the six months ended June 30, 2018.

For additional information, please see the Q2 2019 Financial Overview’ Supplementary Disclosure document and the complete Q2 2019 reports filed with OTC at: http://www.otcmarkets.com/stock/ALTN/filings

Use of Non-GAAP Financial Measures:

To supplement Alternus’s financial statements presented on a GAAP basis, Alternus provides Adjusted EBITDA as supplemental measures of its performance.

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro forma operations, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with EBITDA, Adjusted EBITDA as non-GAAP financial measures of earnings. EBITDA represents net income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation. Our management uses EBITDA, and Adjusted EBITDA, as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to access the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. We find this especially useful when reviewing pro forma results of operations, which include stock-based compensation. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

About Alternus Energy Inc.
Alternus Energy is a global independent power producer (“IPP”). We develop, own and operate solar PV parks that connect directly to national power grids. Our current revenue streams are generated from long-term, government-mandated, fixed price supply contracts with terms of between 15-20 years in the form of government Feed-In-Tariffs (“FiT”) and other energy incentives. Our current contracts deliver annual revenues, of which approximately 75% are generated from these sources with the remaining 25% deriving from revenues generated under contracted Power Purchase Agreements (“PPA”) with other energy operators and by sales to the general energy market in the countries we operate. In general, these contracts generate an average sales rate for every kWh of green energy produced by our solar parks. Our current focus is on the European solar PV market. However, we are also actively exploring opportunities in other countries outside of Europe.  For further information please go to: www.AlternusEnergy.com

Forward Looking Statement
This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," “potential” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in the Company's filings with the OTC and the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements

Contact:
p212-220-7434
contact@alternusenergy.com


ALTERNUS ENERGY INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

Summary Income Statement Six months Ended June 30, 2019
  June 30, 2018
Revenues $ 1,304     $ 1,411  
Cost of revenues   (319 )     (704 )
Gross Profit   985       707  
    75.6 %     50.1 %
Operating Expenses   (2,269 )     (851 )
Loss from Operations   (1,284 )     (144 )
Other (expense) income   2,258       (159 )
Net Income (Loss) per US GAAP filings     974         (303 )
               
Depreciation and amortization   407       302  
Interest expense   1,915       160  
EBITDA     3,296         158  
               
Adjustments to EBITDA:              
Stock based compensation   463       28  
Adjusted EBITDA (Profit from current operations)     3,759         186  
               
Summary Income Statement Three months ended June 30, 2019
  June 30, 2018
Revenues $ 934     $ 974  
Cost of revenues   (162 )     (504 )
Gross Profit   772       470  
    82.7 %     48.3 %
Operating Expenses   (1,559 )     (474 )
Loss from Operations   (787 )     (4 )
Other (expense) income   3,144       (102 )
Net Income (Loss) per US GAAP filings     2,357         (107 )
               
Depreciation and amortization   239       164  
Interest expense   1,028       103  
EBITDA     3,625         160  
               
Adjustments to EBITDA:              
Stock based compensation   301       28  
Adjusted EBITDA (Profit from current operations)     3,926         187  
               
               

ALTERNUS ENERGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2019 AND DECEMBER 31, 2018

  June 30, 2019
(audited)
  December 31, 2018
ASSETS              
Current Assets              
Cash and cash equivalents $   1,491,432     $   1,026,533  
Accounts receivable     747,048         307,307  
Other receivables, sale of asset     429,962         531,717  
Unbilled energy incentives earned     311,787         164,687  
Prepaid expenses and other current assets, short term portion     525,216         334,078  
Taxes recoverable     526,607         178,995  
Total Current Assets     4,032,052         2,543,317  
               
Investment in Energy Property and Equipment, Net    24,225,874         14,739,767  
Construction in Process     7,612,302         6,979,080  
               
Prepaid expenses and other current assets, long term portion     699,945         -   
Restricted cash for Italian acquisition     -          8,857,966  
Total Assets $   36,570,173     $   33,120,130  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current Liabilities              
Accounts payable and accrued liabilities $   2,158,150     $   1,696,200  
Convertible and non-convertible promissory notes, current portion     14,429,836         14,510,204  
Capital lease, current portion     84,743         85,325  
Derivative liability     -          338,861  
Taxes payable     81,657         27,451  
Total Current Liabilities   16,754,386         16,658,041  
               
Convertible and non-convertible promissory notes, net of current portion    10,821,435         10,320,240  
Capital lease, net of current portion     983,561         1,032,453  
Asset retirement obligation     144,976         75,032  
Total Liabilities    28,704,358         28,085,766  
               
Commitments and Contingencies              
               
Shareholders' equity              
Common stock, $0.001 par value; 450,000,000 shares authorized,  132,892,601
and 110,726,725 shares issued and outstanding as of June 30, 2019 and
December 31, 2018 respectively.
    132,892         110,727  
Additional paid in capital    15,166,961         13,164,601  
Other comprehensive income (loss)     (427,094 )       (260,424 )
Accumulated deficit    (7,006,944 )       (7,980,540 )
Total Shareholders' Equity     7,865,815         5,034,364  
Total Liabilities and Shareholders' Equity $   36,570,173     $   33,120,130  
               
               

ALTERNUS ENERGY INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

    For the Three Months Ended
June 30,
  For the Six Months Ended
June 30,
      2019     (updated)
 2018
     2019     (updated)
2018
Revenues   $   933,828     $   973,692     $   1,303,959     $   1,410,782  
Cost of revenues       (161,578 )       (503,864 )       (318,586 )       (704,024 )
Gross Profit       772,250       469,828         985,373         706,758  
                                 
Operating Expenses                                
Selling, general and administrative       1,319,896         310,335         1,862,453         548,935  
Depreciation and amortization       239,408         163,671         406,878         301,648  
Total Operating Expenses       1,559,304         474,006         2,269,331         850,583  
                                 
Loss from Operations       (787,054 )       (4,178 )      (1,283,958 )       (143,825 )
                                 
Other (Expense) Income                                
Interest expense       (1,028,009 )       (102,884 )      (1,915,383 )       (159,830 )
Other income       -         492         674         492  
Gain on bargain purchase       4,172,263                 4,172,263        
Total other (expense) income       3,144,254         (102,392 )       2,257,554         (159,338 )
Net Income (Loss) before Provision for Income Taxes       2,357,200         (106,570 )       973,596         (303,163 )
Provision for Income Taxes       -         -         -         -  
Net Income (Loss)   $   2,357,200     $   (106,570 )   $   973,596     $   (303,163 )
                                 
Basic income (loss) per share   $ 0.02     ($ 0.00 )   $ 0.01     ($ 0.01 )
Diluted income (loss) per share   $ 0.02     ($ 0.00 )   $ 0.01     ($ 0.01 )
                                 
Weighted average shares outstanding:                                
Basic      116,732,161        71,594,857       113,768,768       71,536,834  
Diluted     139,097,684       106,285,107       136,134,291       106,227,084  
                                 
Comprehensive income (loss):                                
Net income (loss)       2,357,200         (106,570 )       973,596         (303,163 )
Unrealized gain (loss) on currency translation adjustment     150,994         (336,033 )       (166,670 )     (202,192 )
Comprehensive income (loss)       2,508,194         (442,603 )       806,926         (505,355 )
                                 
                                 

ALTERNUS ENERGY INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 and 2018

  June 30, 2019
  (Updated)
June 30, 2018
Cash Flows from Operating Activities:              
Net loss $   973,596     $   (303,163 )
               
Adjustments to reconcile net loss to net cash used in operations              
Depreciation and amortization   406,878       301,648  
Stock compensation costs   462,738       27,500  
Amortization of debt discount   162,944       -  
Derivative liability   (338,861 )     -  
Bargain purchase   (4,172,263 )     -  
Changes in assets and liabilities, net of acquisition and disposals:              
Accounts receivable and other short-term receivables   (398,491 )     69,442  
Accounts payable & accrued liabilities   723,943       (210,250 )
Energy incentives earned not yet received   (148,200 )     314,850  
Vendor deposits & prepayments   (511,741 )     (196,983 )
Net Cash (Used in) Provided by Operating Activities   (2,839,457 )       3,044  
               
Cash Flows from Investing Activities:              
Additions to investment in energy property   (6,147,827 )     -  
Net Cash (Used In) Investing Activities     (6,147,827 )       -  
               
Cash Flows from Financing Activities:              
Proceeds from debt, related parties   -       10,344  
Payments of debt principal, related parties   (39,112 )     -  
Proceeds from debt, senior debt   1,726,966       411,656  
Payments on debt principal, senior debt   (1,043,371 )     (341,285 )
Net proceeds from lines of credit   -       5,158  
Payments on leased assets, principal   (41,813 )     (31,599 )
Net Cash Provided by Financing Activities   602,670         54,274  
               
Effect of exchange rate on cash   (8,453 )     (5,191 )
               
Net increase in cash, cash equivalents and restricted cash   (8,393,067 )     52,127  
Cash, cash equivalents, and restricted cash beginning of the period   9,884,499       130,366  
Cash, cash equivalents, and restricted cash end of the period $ 1,491,432     $   182,493