Alternus Energy Inc (OTCMKTS:ALTN) said Thursday that its long-term prospects were bright with the acquisition of seven photovoltaic plants in Italy, and the winding down of low-margin trading activities in Romania.
“Now that we have completed the acquisition of 4 megawatts of additional parks in Italy during the 2Q, we will have over $1 million in additional recurring annual revenues at 85% gross margins going forward,” said Alternus Energy CEO Vincent Browne in a statement.
The addition of seven photovoltaic plants in Italy brings Alternus Energy’s solar projects in Europe to 29.1 megawatts of installed capacity.
The New York renewable energy company said the Italian solar parks will help it secure and bank on long-term government counter-party contracts that provide “predicable positive cash flows.”
The projects have “over 12 years left to run on these contracts meaning that Alternus will have over $20 million of backlog revenues contracted for the next 12 years,” said the company. Once the long-term contracts are fulfilled, the plants will sell energy to the power grid.
Largely in line quarter
“The first quarter was largely in line with what we had expected, given the cessation of the loss-making energy trading activities in Romania and the delay in closing the recent acquisitions in Italy that were originally planned to be complete in the 1Q,” said Browne. “Had these acquisitions been completed as planned we would have reported increased revenues and gross margins for the period.”
For the quarter ended March 2019, the company’s posted a net loss of $1.34 million on $370,000 in revenue.
The company explained that “90% of the increase in losses” was due to interest charges incurred to complete the Italian acquisitions that did not have matching revenue in the quarter.
“The higher cost short term acquisition funds used to complete the purchases are expected to be replaced with lower cost long-term debt in the third quarter of 2019,” said the company.
Investors also have to bear in mind that low-margin energy trading activities in Romania contributed $140,000 in revenue in the fourth quarter of 2018.
“Despite reducing topline revenues this will increase profitability and cash generation over a full year,” said management in a filing.
In a sign of things to come, the dip in quarterly revenue was partially offset by the first time revenue clocked in Germany for the connected parks there.
As at March 2019, Alternus Energy owns 24 megawatts of solar assets, with 13 megawatts connected and revenue generating.
The remaining 11 megawatts are in Germany and will be connected over the coming months, said the company.
Once connected, Alternus Energy said that annual recurring revenues is expected to rise by approximately $850,000 at an average of 90% gross margins.
“We do not operate our business on a quarter by quarter basis, but with long term shareholder value creation as a priority,” said Browne.
If all goes according to plan, Alternus will finish 2019 with over 100 megawatts of installed power that should deliver over $300 million in contracted revenue backlog over 15 to 20 years.
Alternus Energy is a renewable energy company that owns and operates solar parks. Each park generates clean energy that is sold to national power grids under long term, government counterparty, fixed price contracts.
Contact Uttara Choudhury at [email protected]