Vertically-integrated Solar3D, which uses a three-dimensional design to trap sunlight inside micro-photovoltaic structures, has said it will acquire Elite Solar for US$7.15 million, comprising $2.5 million in cash and $4.65 million in common stock.
Additional consideration "The total purchase price, including earnouts, is intended to [be] slightly over four times the trailing 12-month EBITDA for 2015" will be made, said the Californian start-up, if earnings milestones are met: $20 million in revenues, representing a 140% increase on 2014, and an EBITA of $2.2 million.
Elite Solar, also based in California, is a designer and installer of solar PV systems for residential, commercial and industrial clients. It will remain intact, and operate as a wholly-owned subsidy of Solar3D upon completion of the transaction, expected on or around November 1.
"This purchase is consistent with our plan to acquire profitable companies that give us a competitive advantage in the high-growth solar landscape," said Solar3D CEO, Jim Nelson. "By combining Elite Solar’s experience and reach with Solar3D’s proven execution, we are significantly expanding the scale of our solar energy platform to become a leader in California’s commercial solar industry, especially within the fast growing agricultural sector," he added.
Elite Solar is just the latest acquisition for Solar3D in the last two years, with the company taking SUNworks over last February; and MD Energy this March for $3.5 million. Both are Californian-based solar installers.
In Q1 2015, Solar3D recorded revenues of $5.7 million, but an operating loss of $1 million. For the year 2015, revenues should be up from $20.2 million in 2014, to between $40 million and $45 million; and a positive EBITDA.
In a recent note issued on the company, Aegis Capital Corp remarks it is an "emerging regional player in US solar," with its initial sights set on the Californian and Nevada markets.
With its totally vertically-integrated business model, the analysts state the company is "well positioned" to benefit both from consolidation and growth in grid-connected solar projects between 1 and 10 MW, and in the residential market. Its strategy of focusing on small, independent companies with stable financials, but lacking the resources to scale up, is also noteworthy.
Aegis also praises the company’s "superior" management team and quality of work. It adds that the cost for Solar3D to acquire customers is below the industry average, with the company "excellent at canvassing and lead generation but really excels with informing the customer about solar technology, products through its ‘Smart Energy’ Radio show and showing great detail and knowledge during presentations."