Zeo Energy Corp. (Nasdaq: ZEO) (“Zeo”,
“Zeo Energy”, or the “Company”), a leading Florida-based
provider of residential solar and energy efficiency solutions,
today reported financial results for the first quarter ended March
31, 2024.
Recent Financial and Operational Highlights
- Total revenue for the first quarter 2024
increased 4% to $19.5 million year-over-year
- Gross profit for the first quarter 2024
decreased 47% to $1.8 million year-over-year
- Adjusted EBITDA for the first quarter 2024
resulted in a loss of $1.2 million
- Completed merger with ESGEN Acquisition Corp.
on March 13, 2024 (the “Business Combination”), resulting in shares
and warrants trading on the Nasdaq Capital Market under the tickers
ZEO and ZEOWW, respectively
- Merger Transaction Expenses totaled $11.7
million for the Business Combination
- Preferred Equity in the amount of $15.0
million was provided by Energy Spectrum, ESGEN’s Sponsor, which
covered merger transaction expenses and provided capital to the
Company for ongoing operations
- Expanded sales and installation capacity into
Ohio and Illinois during the first quarter 2024
Management Commentary“Our 2024 first quarter
was highlighted by our completed merger with ESGEN Acquisition
Corporation and our emergence as Zeo Energy Corp., and we look
forward to the opportunities that are now open to us in the public
markets,” said Zeo Energy Corp. CEO Tim Bridgewater. “Despite the
complexities of the merger, we closed our first quarter with a
quarterly sales increase year-over-year, and expanded our
operations in two new markets: Ohio and Illinois. We have
historically operated as a seasonal sales and installation company,
so our focus in Q1 was on completing installations from the prior
sales season, planning, recruiting, and engaging our sales teams
for the coming season, and staffing operations as we anticipate
growth through the following three quarters.
“As we look ahead, we believe that Zeo is well positioned for
the second and third quarters of 2024,” Bridgewater continued. “We
see positive signs that the headwinds facing our industry are
starting to dissipate in many regions around the country, and
anticipate more favorable equipment pricing throughout the year as
well as stable or declining interest rates. Traditionally, our
sales force drives the largest share of our yearly installation
volume in the summer months from May to September. We are already
returning a significant number of successful sales managers as well
as new representatives to the field, indicating growth in our
overall numbers for 2024 across sales and installations. With
transaction costs from our successful business combination behind
us, we expect that our profitability will return to historical
levels of growth throughout the remainder of the year as well.
“Overall, we believe that residential solar adoption is in its
early innings in the United States. We are confident that with our
disciplined, quality-driven sales approach and simple business
model, we are poised for another year of sustainable growth in
2024.”
First Quarter 2024 Financial ResultsResults
compare the 2024 fiscal first quarter ended March 31, 2024, to the
2023 fiscal first quarter ended March 31, 2023, unless otherwise
indicated.
- Total revenue totaled $19.5 million, a 4.0% increase from $18.7
million in the comparable 2023 period. This increase was primarily
due to the company reducing its backlog of jobs through the
completion of installations during the quarter.
- Gross profit decreased to $1.8 million (9.5% of net revenue)
from $3.4 million (18.6% of net revenue) in the comparable 2023
period. The decrease in gross profit was driven in part by deferred
installation costs from 2023.
- Net loss for the quarter was $1.7 million (-8.7% of net
revenue) compared to net income of approximately $1.6 million (8.6%
of net revenue) in the comparable 2023 period. This decrease was
primarily due to the decrease in gross profit followed by higher
general and administrative costs incurred for investments in
software to support sales and installation teams as well as costs
associated with managing the publicly traded company, such as
new personnel, legal, accounting and investment banking costs.
- Adjusted EBITDA, a non-GAAP measurement of operating
performance reconciled below, decreased to a loss of $1.2 million
(-5.2% of total revenue) from approximately $2.0 million (10.9% of
total revenue) in the comparable 2023 period. This decrease was
primarily attributable to additional costs incurred from the
Company’s successful business combination and public listing on the
Nasdaq Capital Market.
For more information, please visit the Zeo Energy Corp. investor
relations website at investors.zeoenergy.com.
About Zeo Energy Corp. Zeo Energy Corp. is a
Florida-based regional provider of residential solar, distributed
energy, and energy efficiency solutions. Zeo is focused on high
growth markets with limited competitive saturation. With its
differentiated sales approach and vertically integrated offerings,
Zeo, through its subsidiary, Sunergy by Zeo Energy, serves
customers who desire to reduce high energy bills and contribute to
a more sustainable future.
Non-GAAP Financial Measures
Adjusted EBITDAZeo Energy defines Adjusted
EBITDA, a non-GAAP financial measure, as net income
(loss) before interest and other expenses, net, income tax expense,
depreciation and amortization, as adjusted to exclude stock-based
compensation and merger and acquisition expenses (“M&A
expenses”). Zeo utilizes Adjusted EBITDA as an internal
performance measure in the management of the Company’s operations
because the Company believes the exclusion of
these non-cash and non-recurring charges allows
for a more relevant comparison of Zeo’s results of operations to
other companies in the industry. Adjusted EBITDA should not be
viewed as a substitute for net loss calculated in accordance with
GAAP, and other companies may define Adjusted EBITDA
differently.
The following table provides a reconciliation of net income
(loss) to Adjusted EBITDA for the periods presented:
|
|
Three Months Ended March 31, |
|
|
2024 |
|
|
2023 |
Net income
(loss) |
$ |
(1,699,200 |
) |
|
$ |
1,602,939 |
Adjustment: |
|
|
|
|
|
|
Other income (expense), net |
|
175,054 |
|
|
|
10,544 |
|
Income tax benefit |
|
(89,929 |
) |
|
|
- |
|
Depreciation and
amortization |
|
462,701 |
|
|
|
432,599 |
Adjusted
EBITDA |
$ |
(1,151,374 |
) |
|
$ |
2,046,082 |
|
Adjusted EBITDA Margin
Zeo Energy defines Adjusted EBITDA margin,
a non-GAAP financial measure, expressed as a percentage,
as the ratio of Adjusted EBITDA to revenue, net. Adjusted EBITDA
margin measures net income (loss) before interest and other
expenses, net, income tax expense, depreciation and amortization,
as adjusted to exclude M&A expenses and is expressed as a
percentage of revenue. In the table above, Adjusted EBITDA is
reconciled to the most comparable GAAP measure, net income (loss).
Zeo utilizes Adjusted EBITDA margin as an internal performance
measure in the management of the Company’s operations because the
Company believes the exclusion of
these non-cash and non-recurring charges allows
for a more relevant comparison of the Company’s results of
operations to other companies in Zeo’s industry.
The following table sets forth Zeo’s calculations of Adjusted
EBITDA margin for the periods presented:
|
|
Three Months Ended March 31, |
|
|
2024 |
|
2023 |
Numerator: Adjusted EBITDA |
$ |
(1,151,374 |
) |
|
|
$ |
2,046,082 |
|
Denominator: Total
revenue |
|
19,488,190 |
|
|
|
|
18,731,489 |
|
Ratio of Adjusted
EBITDA to total revenue |
|
(5.9 |
)% |
|
|
|
10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the
Exchange Act of 1934, as amended, that are based on beliefs and
assumptions and on information currently available to Zeo.
Forward-looking statements include, but are not limited to,
statements that refer to projections, forecasts, or other
characterizations of future events or circumstances, including any
underlying assumptions. The words “anticipate,” “intend,” “plan,”
“goal,” “seek,” “believe,” “project,” “estimate,” “expect,”
“strategy,” “future,” “likely,” “may,” “should,” “will,” and
similar references to future periods may identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. Forward-looking statements may
include, for example, statements about the benefits of the Business
Combination; the future financial performance of Zeo; changes in
Zeo’s strategy, future operations, financial position, estimated
revenues and losses, projected costs, prospects, the ability to
raise additional funds, and plans and objectives of management.
These forward-looking statements are based on information available
as of the date of this news release, and current expectations,
forecasts, and assumptions, and involve a number of judgments,
risks, and uncertainties. Accordingly, forward-looking statements
should not be relied upon as representing Zeo’s views as of any
subsequent date, and Zeo does not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made, whether as a result of
new information, future events, or otherwise, except as may be
required under applicable securities laws. You should not place
undue reliance on these forward-looking statements. As a result of
a number of known and unknown risks and uncertainties, Zeo’s actual
results or performance may be materially different from those
expressed or implied by these forward-looking statements. Some
factors that could cause actual results to differ include: (i) the
outcome of any legal proceedings that may be instituted against Zeo
or others; (ii) the company’s success in retaining or recruiting,
or changes required in, its officers, key employees, or directors;
(iii) the Company’s ability to maintain the listing of its common
stock and warrants on the Nasdaq; (iv) the ability to recognize the
anticipated benefits of the Business Combination; (v) limited
liquidity and trading of the Company’s securities; (vi)
geopolitical risk and changes in applicable laws or regulations;
(vii) the possibility that Zeo may be adversely affected by other
economic, business, and/or competitive factors; (viii) operational
risk; (ix) litigation and regulatory enforcement risks, including
the diversion of management time and attention and the additional
costs and demands on Zeo’s resources; and (x) other risks and
uncertainties, including those included under the heading “Risk
Factors” in the Annual Report on Form 10-K filed with the SEC for
the year ended December 31, 2023 and in its subsequent periodic
reports and other filings with the SEC. In light of the significant
uncertainties in these forward-looking statements, you should not
regard these statements as a representation or warranty by Zeo,
their respective directors, officers or employees or any other
person that Zeo will achieve their objectives and plans in any
specified time frame, or at all. The forward-looking statements in
this news release represent the views of Zeo as of the date of this
news release. Subsequent events and developments may cause that
view to change. However, while Zeo may elect to update these
forward-looking statements at some point in the future, there is no
current intention to do so, except to the extent required by
applicable law. You should, therefore, not rely on these
forward-looking statements as representing the views of Zeo as of
any date subsequent to the date of this news release.
Zeo Energy Corp. Contacts
For Investors:Tom Colton and Chris Adusei-PokuGateway
GroupZEO@gateway-grp.com
For Media: Zach Kadletz and Anna RutterGateway
GroupZEO@gateway-grp.com
-Financial Tables to Follow-
ZEO ENERGY CORP. |
CONDENSED CONSOLIDATED BALANCE SHEET |
(Unaudited) |
|
|
|
|
|
|
|
|
|
As of March 31, |
|
As of December 31, |
|
|
|
2024 |
|
|
|
2023 |
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,731,124 |
|
|
$ |
8,022,306 |
Accounts receivable, including $3,089,328 and $396,488 from related
parties, net of allowance for credit losses of $2,420,620 and
$2,270,620, as of March 31, 2024 and December 31, 2023,
respectively |
|
|
7,392,075 |
|
|
|
2,970,705 |
Inventories |
|
|
379,321 |
|
|
|
350,353 |
Prepaid installation costs |
|
|
424,792 |
|
|
|
4,705,519 |
Prepaid expenses and other current assets |
|
|
4,004,532 |
|
|
|
40,403 |
Total current assets |
|
|
19,931,844 |
|
|
|
16,089,286 |
Other assets |
|
|
207,846 |
|
|
|
62,140 |
Property, equipment and other fixed assets, net |
|
|
2,938,703 |
|
|
|
2,918,320 |
Operating lease right of use assets |
|
|
982,951 |
|
|
|
1,135,668 |
Intangibles, net |
|
|
514,020 |
|
|
|
771,028 |
Goodwill |
|
|
27,010,745 |
|
|
|
27,010,745 |
Total
assets |
|
$ |
51,586,109 |
|
|
$ |
47,987,187 |
|
|
|
|
|
|
|
Liabilities, mezzanine
equity and stockholders' equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
4,604,583 |
|
|
$ |
3,785,755 |
Accrued expenses and other current liabilities, including $267,006
and $2,415,966 with related parties at March 31, 2024 and December
31, 2023, respectively |
|
|
2,788,460 |
|
|
|
3,874,697 |
Current portion of long-term debt |
|
|
412,834 |
|
|
|
404,871 |
Current operating lease liabilities |
|
|
487,348 |
|
|
|
539,599 |
Contract liabilities, including $106,585 and $1,160,848 with
related parties as of March 31, 2024 and December 31, 2023,
respectively |
|
|
585,809 |
|
|
|
5,023,418 |
Total current liabilities |
|
|
8,879,034 |
|
|
|
13,628,340 |
Non-current operating lease liabilities |
|
|
529,015 |
|
|
|
636,414 |
Other liabilities |
|
|
1,500,000 |
|
|
|
0 |
Warrant liabilities |
|
|
1,656,000 |
|
|
|
- |
Long-term debt |
|
|
1,283,022 |
|
|
|
1,389,545 |
Total
liabilities |
|
|
13,847,071 |
|
|
|
15,654,299 |
Commitments and contingencies
(Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests |
|
|
|
|
|
|
Convertible preferred
units |
|
|
15,079,167 |
|
|
|
- |
Class B Units |
|
|
192,261,000 |
|
|
|
- |
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
|
|
|
|
Class V common stock |
|
|
3,523 |
|
|
|
3,373 |
Class A common stock |
|
|
503 |
|
|
|
- |
Additional paid in capital |
|
|
- |
|
|
|
31,152,491 |
(Accumulated deficit) Retained earnings |
|
|
(169,605,155 |
) |
|
|
1,177,024 |
Total stockholders'
equity |
|
|
(169,601,129 |
) |
|
|
32,332,888 |
Total liabilities,
mezzanine equity and stockholders' equity |
|
$ |
51,586,109 |
|
|
$ |
47,987,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZEO ENERGY CORP. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2024 |
|
|
2023 |
|
Revenue, net of financing fees of $4,081,358 and $6,269,033 for the
three months ended March 31, 2024 and 2023, respectively |
$ |
10,675,421 |
|
|
$ |
18,731,489 |
|
Related party revenue, net of
financing fees of $3,856,219 and $0 for the three months ended
March 31, 2024 and 2023, respectively |
|
8,812,769 |
|
|
|
- |
|
Total revenue |
|
19,488,190 |
|
|
|
18,731,489 |
|
Operating costs and
expenses: |
|
|
|
|
|
Cost of goods sold (exclusive of items shown below) |
|
17,183,740 |
|
|
|
14,809,215 |
|
Depreciation and amortization |
|
462,701 |
|
|
|
432,599 |
|
Sales and marketing |
|
118,983 |
|
|
|
549,605 |
|
General and administrative |
|
3,336,841 |
|
|
|
1,326,587 |
|
Total operating expenses |
|
21,102,265 |
|
|
|
17,118,006 |
|
(Loss) income from
operations |
|
(1,614,075 |
) |
|
|
1,613,483 |
|
Other (expenses) income,
net: |
|
|
|
|
|
Other income, net |
|
- |
|
|
|
5,000 |
|
Change in fair value of warrant liabilities |
|
(138,000 |
) |
|
|
- |
|
Interest expense |
|
(37,054 |
) |
|
|
(15,544 |
) |
Total other expense, net |
|
(175,054 |
) |
|
|
(10,544 |
) |
Net (loss) income
before taxes |
|
(1,789,129 |
) |
|
|
1,602,939 |
|
Income tax benefit |
|
89,929 |
|
|
|
- |
|
Net (loss)
income |
|
(1,699,200 |
) |
|
|
1,602,939 |
|
Net (loss) attributable to Sunergy Renewables LLC prior to the
Business Combination |
|
(759,936 |
) |
|
|
1,602,939 |
|
Net (loss) income for
the period March 13, 2024 through March 31, 2024 |
|
(939,264 |
) |
|
|
- |
|
Net (loss) income attributable to redeemable non-controlling
interests |
|
249,267 |
|
|
|
- |
|
Net (loss) income
attributable to Class A common stock |
$ |
(1,188,531 |
) |
|
$ |
- |
|
|
|
|
|
|
|
Basic and diluted net (loss) income per common unit |
$ |
(1.20 |
) |
|
|
|
Weighted average units outstanding, basic and diluted |
|
994,345 |
|
|
|
|
|
|
|
|
|
|
ZEO ENERGY CORP. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2024 |
|
|
2024 |
|
Cash Flows from
Operating Activities |
|
|
|
|
|
Net (loss) income |
$ |
(1,699,200 |
) |
|
$ |
1,602,939 |
|
Adjustment to reconcile net
(loss) income to cash (used in) provided by operating
activities |
|
|
|
|
|
Depreciation and amortization |
|
462,701 |
|
|
|
432,599 |
|
Change in fair value of warrant liabilities |
|
138,000 |
|
|
|
- |
|
Gain on preferred stock forward |
|
- |
|
|
|
- |
|
Provision for credit losses |
|
150,000 |
|
|
|
240,486 |
|
Stock issued to vendors |
|
- |
|
|
|
- |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
Accounts receivable |
|
(1,878,529 |
) |
|
|
(770,981 |
) |
Accounts receivable due from related parties |
|
(2,692,841 |
) |
|
|
- |
|
Inventories |
|
(28,968 |
) |
|
|
(53,674 |
) |
Prepaid installation costs |
|
4,280,727 |
|
|
|
- |
|
Prepaids and other current assets |
|
(1,420,528 |
) |
|
|
(180,286 |
) |
Other assets |
|
(84,704 |
) |
|
|
- |
|
Accounts payable |
|
(330,661 |
) |
|
|
(1,914 |
) |
Accrued expenses and other current liabilities |
|
(456,316 |
) |
|
|
313,286 |
|
Accrued expenses and other current liabilities due to related
parties |
|
(2,148,960 |
) |
|
|
- |
|
Contract liabilities |
|
(3,383,346 |
) |
|
|
(14,789 |
) |
Contract liabilities due to related parties |
|
(1,054,263 |
) |
|
|
- |
|
Operating lease payments |
|
(6,933 |
) |
|
|
22,111 |
|
Net cash (used in) provided by operating
activities |
|
(10,153,821 |
) |
|
|
1,589,777 |
|
|
|
|
|
|
|
Cash flows from
Investing Activities |
|
|
|
|
|
Purchases of property,
equipment and other assets |
|
(226,076 |
) |
|
|
(605,874 |
) |
Net cash used in investing activities |
|
(226,076 |
) |
|
|
(605,874 |
) |
|
|
|
|
|
|
Cash flows from
Financing Activities |
|
|
|
|
|
Proceeds from the issuance of
debt |
|
- |
|
|
|
408,003 |
|
Proceeds from the issuance of
convertible preferred stock, net of transaction costs |
|
10,277,275 |
|
|
|
- |
|
Repayments of debt |
|
(98,560 |
) |
|
|
(75,000 |
) |
Transaction costs |
|
- |
|
|
|
- |
|
Distributions to members |
|
(90,000 |
) |
|
|
(166,323 |
) |
Net cash provided by financing activities |
|
10,088,715 |
|
|
|
166,680 |
|
Net (decrease) increase in
cash and cash equivalents |
|
(291,182 |
) |
|
|
1,150,583 |
|
Cash and cash equivalents,
beginning of period |
|
8,022,306 |
|
|
|
2,268,306 |
|
Cash and cash
equivalents, end of the period |
$ |
7,731,124 |
|
|
$ |
3,418,889 |
|
|
|
|
|
|
|
Supplemental Cash Flow
Information |
|
|
|
|
|
Cash paid for interest |
$ |
35,894 |
|
|
$ |
71,258 |
|
|
|
|
|
|
|
Non-cash
transactions |
|
|
|
|
|
Transaction costs |
$ |
3,269,039 |
|
|
$ |
- |
|
Issuance of Class A common
stock to vendors |
$ |
2,478,480 |
|
|
$ |
- |
|
Issuance of Class A common
stock to backstop investors |
$ |
1,569,440 |
|
|
$ |
- |
|
Accretion of preferred
units |
$ |
8,224,091 |
|
|
$ |
- |
|
|
|
|
|
|
|
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