$RGSE Management Commentary:
"Our performance this quarter was in-line with expectations we set in our last business update," said Dennis Lacey, CEO of RGS Energy. "We made progress on what we see are the foundations for profitability, such as lowering customer acquisition expense and residential cycle time. To grow sales and continue to lay the groundwork for profitability, we have been expending cash as expected.
However, we believe that we have sufficient working capital to build a business that will operate profitably and generate positive cash flow in the future."
"With our last update, we advised that installation revenue would lag sales growth and that occurred this quarter," continued Lacey. "Our residential segment gross margin percentage reflecting only actual construction crew time was approximately 22%, less than our target of upper 20's because we cannot absorb well the fixed construction organization costs when our revenue is low. Further, we are maintaining a larger construction organization than we would need for our current backlog because we are confident we will grow sales and require a larger construction organization."
"We've said the process of achieving profitability will take some time," continued Lacey. "Given our $16 million capital raise in February, it is important to note that this is our first full quarter of operating with what we feel is appropriate working capital in place. As this is the first quarter on this basis, we are heartened by the positive trends."
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