WSR: Could you begin with a brief history and overview of the company?
SIT: Solar Integrated is a relative newcomer to the solar industry. We are a spin-off from a company called SCR Group, which is a 75-year old industrial roofing company which saw an opportunity in the late 90’s to integrate solar technology into their roofing products to offer a wider range of solutions to their customers. As SCR began developing the new technology using the new thin-film photovoltaic technology that became commercially available in the past few years, they saw the solar side of the business take off very, very rapidly. That prompted SCR to spin off Solar Integrated as a separate entity in 2003. In 2004, we took the company public on the London Stock Exchange, on the AIM, and began growing very rapidly. Our first full year was last year, and we had about $7.8 million in sales. We exited the year with about $80.5 million in actual orders. So, this year, 2005, is going to be a very robust year for us, and we’re all very excited.
WSR: Describe for us these technologies, systems and solutions, and the potential you see within your target markets.
SIT: Of course, the origins of our company are in industrial roofing. So, our commercial relationships are with all of the big-box companies: Coca-Cola, Frito-Lay, Wal-Mart, Boeing, and so forth; companies that have large physical facilities with large flat roofs, such as distribution centers, warehouses, bottling plants, manufacturing plants, and so forth. In all of those facilities, we have, for many, many years with our other company, replaced or installed new roofs as required over many years. So, obviously, we are selling into that same group of premium companies and have been very successful in selling to Frito-Lay, to Coca-Cola, to other blue chip companies, and installing solar panels on their rooftops to provide them renewable energy in addition to a very well produced roof. The core technology is that we use is based on thin-film flexible PV laminates as opposed to the traditional thing that most people see -- the crystalline glass panel PV arrays that are mounted into aluminum frames and hard mounted into a surface. We don’t drill any holes into the roof. What we do is fuse the very thin-film PV into our roofing membranes as a single contiguous roof, and there are no holes or punctures made to the roof. It just simply becomes a continuous system of power generation as well as a watertight roof. At this point, we’re the only ones using this technology, having pioneered this whole approach. And while it’s new, you can see, with an $80 million first year sales ramp, there is an awful lot of interest in our business model. The other thing that I have found very exciting is that our big customers are not just doing one project -- they are giving us multiple projects. We have, for example, seven projects currently underway with Coca-Cola Bottling in plants in different parts of the United States. We have a project right now that we announced last week, which include 14 campuses of the San Diego Unified School District. All of these are multiple sites creating a tremendous financial opportunity as well as efficiencies in our operations. And the same thing has happened with Frito-Lay where we are working on our sixth project with them. So, all of these projects are multiple sites, large-scale, representing many, many millions of dollars. So we’re making headway very rapidly.
WSR: Do you have the infrastructure in place to handle all this additional growth and demand?
SIT: We do. We used the proceeds of our IPO to build capacity and to prepare for the future. This year, 2005, for example, we will install about 10 megawatts of solar panels on rooftops. Next year, we expect that to be on the order of probably about 14 to 15 megawatts. And our plant that we just commissioned a year ago has a capacity for up to 50 megawatts. So, we have near-term ability over the next three years to keep pace with about as much growth as we can probably handle. And then beyond that, of course, we have plans for multiple plants in different locations.
WSR: Will the company look to M&A activities as a catalyst towards that continued growth?
SIT: We already have begun that. Earlier this year we acquired an interest in a German company, so we could get a foothold in that very lucrative market. As you may know or may not know, Germany has installed about five times the amount of solar power than all of the United States combined, and France and Spain and other markets in Europe are similarly robust for us. So, that’s where we see a lot of our growth, at least half of our growth coming from. So, yes, I think M&A is certainly something we can do, but I would just as well achieve this through partnering with companies, and we’ve been very successful at that as well.
WSR:What can you tell us about the key players onboard, the present management team at the company?
SIT: We have a combination of new and tenured people on the team. The two founders of Solar Integrated Technologies were those same guys that built the roofing business to a very substantial business, and they are both active in the company. They work with me on a daily basis to build the business. They’re both very significant shareholders of the company. In fact, combined, they control more than 70% of the shares. So, they have a tremendous influence and a tremendous contribution that they make to the company on a daily basis. I joined the company as CEO in February of this year principally because they just wanted a CEO that had public company experience in growing small companies into large companies, and I’ve had that success in my career. So, I was brought in for the purpose of growing the business in a disciplined fashion. We also hired a COO for our European operation that also has similar background. And so, a combination of new blood and seasoned blood in the same organization really has put together a very, very strong management team.
WSR: Do you feel the investment community understands this company and the direction here, given the current stock price?
SIT: I think so. I mean the price of the shares have been pretty low since going public, with anticipation that we were going to land a structured financing deal for projects with a major player. And we announced that last Monday, for example, where we signed on to a $500 million structured finance program with GE Capital. GE Commercial Finance, their Energy Financial Services group, have agreed to be our strategic partners on the project finance side of things, which the market liked a lot. I mean, the stock jumped about 60% last week alone on the news of this agreement, and so we’re very pleased with that, and it’s immediately affecting cash flow. Our first project is funding these 14 campuses, for example, at the Unified Schools in San Diego, and that’s going to be a $17 million tranche. And over the next 120 days, we’ll see about $50 million in cash flow coming from these structured finance deals. So, it’s a very significant thing. It’s going to fuel our growth quite dramatically, and the market, I think, has been waiting for that. Now, to answer your question, in the U.S., do they know much about us? No, they don’t. We’re largely invisible, and we need to change that, and we are looking at strategies to make ourselves much more visible within the U.S. markets and to create an opportunity for U.S. investors to be able to have access to our shares.
WSR: In closing, recap for us why investors should consider Solar Integrated Technologies as a long-term investment opportunity?
SIT: SIT again has the pedigree of being an industrial roofing company, which is unlike everybody else experience in this industry. We’re not after-market solar installers. What we do is build energy producing roofs, and we are very good at it. We are the only ones to do that so far. We have proprietary technology. We have the skill sets and a global customer base to make this a very, very strong growth story. So, I think that for investors that are interested in solar technology and are looking at the industrial side of things, we are the company to bet on. |
