Real Goods Solar, Inc. (NASDAQ:RGSE) Q3 2018 Earnings Conference Call Transcript

Nov 07, 2018 • 04:30 pm ET

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Real Goods Solar, Inc. (NASDAQ:RGSE) Q3 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions). We will take our first question from Ishfaque Faruk with WestPark Capital.

Analyst
Ishfaque Faruk

First of all, congrats on the -- receiving the UL certification, huge home run. My question is related to the gross margin. Dennis, you updated your deck again and it says that your gross margin percentages are now going to be in the low to mid-30s. So is it -- is that just based on your conversations with the manufacturers? Or can you give a little more color on that?

Executive
Dennis Lacey

Sure. If you were -- the last one we issued for the financial model is in our October 1 corporate presentation that we filed under 8-K. And I think the margin in two of those periods might have increased by 1 percentage point, 100 basis points. So it wasn't that much from the last time we did anything. But yes, to answer your question, this reflects the pricing we've got at this time.

Analyst
Ishfaque Faruk

And is that -- so your current reservation is $127 million, right? But do you have a sense for what percentage of the reservations would actually translate into revenue in a given year?

Executive
Dennis Lacey

Well, we're certainly hopeful that all of that happens next year. We believe -- the form that -- the roofers, their reservations is for the 12-month period. So we like to believe we're going to get that next year. I mean, things always happen differently, they don't hold to the full amount that they say. But like I said in my scripted comments, we expect other roofers to come along, and we expect home-builders to come along. So we're in the early innings, I mean, we're in very early stages.

Analyst
Ishfaque Faruk

Okay, now with the UL certification in hand, when do you reasonably expect home-builders to come on-board?

Executive
Dennis Lacey

Well, I think the process with roofers is rather quick-turn. The time to negotiate contract with a home-builder for a new community will be a little more involved process. So we certainly expect to see conversations commence shortly, but what subdivision will be ready for us in time. So we're not really expecting a lot for -- in terms of actual shipments in the first half of next year. But the second of half of next year, it gives us plenty of runway to meet that sort of need. We hope it's faster but we don't expect it right out of the box.

Analyst
Ishfaque Faruk

Okay, and my last question. Okay. So you briefly mentioned that you might -- POWERHOUSE might generate some revenues in the December quarter. So do you have a sense for when will you start shipping your products? Do you have a time line for that?

Executive
Dennis Lacey

Well, I hope -- as I said in my scripted comments, I hope it's December. That's what we're hoping for. Our earlier guidance was January for revenue. We -- there's only 50 days to go. And we're jimmying up manufacturing now because we did not want to manufacture before we had UL approval. That would not