November 6, 2008

Los Gatos, CA, USA: Akeena Solar Announces Third Quarter 2008 Results

Akeena Solar, a designer and installer of solar power systems, today announced results for the third quarter of 2008.

Net sales for the third quarter of 2008 were $10.6 million, an increase of 31% compared to $8.1 million in net sales in the third quarter of 2007 and an increase of 50% compared to $7.1 million of net sales in the second quarter of 2008. Commercial installations in the third quarter of 2008 more than quadrupled over the same quarter last year and more than doubled from the second quarter of 2008. Residential installations were down 10.9% compared to the third quarter of 2007, but increased 16.6% from the second quarter of 2008.

Gross profit for the third quarter 2008 was $1.3 million, or 12.7% of sales, compared to $1.7 million, or 21.0% of sales, in the third quarter of 2007 and compared to $1.0 million, or 14.8% of sales, in the second quarter of 2008. Gross margin declined over the prior year third quarter and from the second quarter due to: a higher mix of commercial installations in the third quarter; liquidation of non-Andalay panels at a 9.7% margin and start-up costs associated with the transition to Andalay for residential installations.

Net loss for the third quarter of 2008 was $5.5 million, or $0.19 per share, compared to a net loss of $3.7 million, or $0.16 per share, in the third quarter of 2007 and a net loss of $5.1 million, or $0.18 per share in the second quarter of 2008.

Installations for the quarter amounted to approximately 1,290 kilowatts compared to approximately 989 kilowatts last year and approximately 854 kilowatts in the second quarter of 2008. Backlog as of September 30, 2008 was $16.7 million.

"Akeena bounced back in the third quarter with our second best revenue quarter ever,'' said Barry Cinnamon, president and chief executive officer. "Revenue rose 31% from last year's third quarter and 50% from the second quarter on the strength of commercial installations. In fact, commercial revenues quadrupled versus the third quarter a year ago and more than doubled from the second quarter as installation crews focused on commercial jobs with year end deadlines.''

"Our transition to Andalay is nearly complete, and demand for our proprietary panels continues to expand in both residential and commercial markets. As a result, we ended the quarter with a record backlog of $16.7 million,'' Cinnamon added. ``With the passage of the ITC, many commercial jobs are progressing to the installation stage. Residential customers are contracting with us now before state rebates decline, then they are simply interconnecting their systems in 2009 so that they are eligible for the uncapped 30% ITC. These factors support our expectation that we will generate revenue growth this year in the range of 30% to 40%, consistent with prior guidance.''

"As we begin planning for 2009 with an uncapped ITC for residential customers, a restoration of the commercial tax credit and new utility opportunities, we're anticipating substantial growth in the U.S. market. We are laying the groundwork for significant sales in the burgeoning utility market now that utilities can take advantage of the 30% ITC. Since our Andalay flat roof system is both light-weight and non-penetrating, it is ideally suited for flat rooftops leased by utilities,'' added Cinnamon. "Our gross margins are expected to improve as we gain greater operational efficiency with the installation of Andalay and we achieve Andalay cost reductions in the second year of production from our OEM partners. We also expect to reduce our operational expenses in 2009 as we improve our sales and marketing efficiencies, and reduce our customer acquisition costs.''

Cinnamon concluded, "Worldwide conditions in the solar industry have put us in an enviable position in the solar value chain. Supply of solar modules exceeds demand, especially since manufacturing capacity continues to increase and shipments to Europe have slowed down. As a result, module manufacturers are now looking towards the U.S., which is expected to be the largest worldwide market. There are only three ways to differentiate solar modules: low price (which generally is an unprofitable strategy), high efficiency (which is expensive and technically challenging), or superior aesthetics, reliability and fast installation times. Our patented Andalay technology excels in these latter dimensions, and our current OEM partners Suntech and Kyocera understand these benefits.''

Management continues to anticipate 2008 revenue will increase by 30% to 40% over 2007. With the recent passage of the ITC, management also continues to expect to achieve EBITDA breakeven, adjusted for stock-based compensation expense, in the second half of 2009.

Further details about: Akeena Solar