Zeo Energy Corp. Reports Third Quarter 2024 Financial Results

NEW PORT RICHEY, Fla., Jan. 23, 2025 (GLOBE NEWSWIRE) -- 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 third quarter and nine months ended September 30, 2024. Recent Financial and Operational Highlights Q3 2024 revenue of $19.7 million, a quarter-over-quarter increase of approximately $4.9 millionAdjusted EBITDA performance driven by flexible operating model and disciplined cost managementCompleted acquisition of substantially all of the assets of Lumio Holdings, Inc. (“Lumio”) Management Commentary“In the third quarter we continued to maintain our focus on profitability through our flexible operating model and disciplined expense management,” said Zeo Energy Corp. CEO Tim Bridgewater. “While the broader solar industry remains challenged by several near-term headwinds, we were still able to drive revenue growth quarter over quarter and believe that current performance has largely stabilized in the near to medium-term. “In recognition of the current environment, we’ve continued to survey the market for quality assets to bolster our geographic and strategic positioning over the long term. Our recent acquisition of Lumio’s assets exemplifies this strategy, and we believe it enables us to expand our scale and market presence, which will now include California. Going forward, we expect there will be continued consolidation in the market, and we will be proactive in identifying similar opportunities as they arise. “As we move into the new year, our sales and recruitment efforts are proceeding according to plan, and we should be well positioned for the next sales season. Put together, we believe these actions should have us growing at above-industry rates in 2025 and beyond.” First Nine Months 2024 Financial Results Results compare the nine months ended September 30, 2024 to the nine months ended September 30, 2023. Total revenue was $54.6 million, a 37.0% decrease from $86.7 million in the comparable 2023 period. The decrease was primarily due to higher interest rates creating a challenging environment for residential solar direct sales in 2024.Gross profit decreased to $23.8 million (43.6% of total revenue) from $37.5 million (43.2% of total revenue) in the comparable 2023 period. The decrease in gross profit was driven in part by the decrease in sales compared to the prior period. The improvement in gross profit as a percentage of revenue was the result of improved operational efficiencies in labor and a reduction in materials cost.Net loss for the first nine months was $8.7 million (15.9% of total revenue) compared to net income of $6.4 million (7.3% of total revenue) in the comparable 2023 period. The decrease was primarily due to stock compensation of $7.1 million in the current period compared to none in the comparable 2023 period as well as costs incurred as a result of becoming a public company and software development costs.Adjusted EBITDA, a non-GAAP measurement of operating performance reconciled below, decreased to $(1.2) million (2.2% of total revenue) from approximately $7.9 million (9.1% of total revenue) in the comparable 2023 period. The decrease was primarily due to higher interest rates creating a challenging environment for residential solar direct sales in 2024 and a decrease in sales. Third Quarter 2024 Financial Results Results compare the 2024 third quarter ended September 30, 2024 to the 2023 third quarter ended September 30, 2023. Total revenue was $19.7 million, a 48.1% decrease from $37.9 million in the comparable 2023 period. The decrease was primarily due to higher interest rates creating a challenging environment for residential solar direct sales in 2024.Gross profit decreased to $9.9 million (50.2% of total revenue) from $20.5 million (46.0% of total revenue) in the comparable 2023 period. The decrease in gross profit was driven in part by the decrease in sales compared to the prior period. The improvement in gross profit as a percentage of revenue was the result of improved operational efficiencies in labor and a reduction in materials cost.Net loss for the quarter was $2.9 million (14.7% of total revenue) compared to net income of $4.0 million (10.6% of total revenue) in the comparable 2023 period. This decrease was primarily due to the decrease in gross profit and $1.5 million in stock compensation expense in 2024 compared to none in 2023.Adjusted EBITDA, a non-GAAP measurement of operating performance reconciled below, decreased to $(1.0) million (5.0% of total revenue) from approximately $4.5 million (11.9% of total revenue) in the comparable 2023 period. The decrease was primarily due to a $1.6 million charge in 2024 related to a change in the estimate for the allowance for credit losses. 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 focuses on high-growth markets with limited competitive saturation. With its differentiated sales approach and vertically integrated offerings, Zeo, through its Sunergy business, serves customers who desire to reduce high energy bills and contribute to a more sustainable future. For more information on Zeo Energy Corp., please visit www.zeoenergy.com. 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, and depreciation and amortization, as adjusted to exclude stock-based compensation. 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023Net income (loss) $(2,872,424) $4,000,047 $(8,736,845) $6,441,842 Adjustment: Other income, net (137,508) (9,151) (188,329) (6,982)Change in fair value of warrant liabilities (138,000) - (828,000) 0 Interest expense 209,227 10,396 294,257 62,920 Income tax benefit (44,146) - (235,352) - Stock compensation 1,503,130 - 7,101,818 - Depreciation and amortization 499,876 521,289 1,413,074 1,431,482 Adjusted EBITDA (979,845) 4,522,581 (1,179,377) 7,929,262 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 stock-based compensation 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Total Revenue 19,657,905 37,894,166 54,596,333 86,705,020 Adjusted EBITDA (979,845) 4,522,581 (1,179,377) 7,929,262 Adjusted EBITDA margin (5.0)% 11.9 % (2.2)% 9.1 % Forward-Looking Statements This news release contains certain 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 the Company. Such statements may 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 future financial performance of the Company; the ability to effectively consolidate the assets of Lumio and produce the expected results; changes in the Company’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 the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update such 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, the Company’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 the Company 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 Nasdaq; (iv) limited liquidity and trading of the Company’s securities; (v) geopolitical risk and changes in applicable laws or regulations; (vi) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (vii) operational risk; (viii) litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on the Company’s resources; (ix) the Company’s ability to effectively consolidate the assets of Lumio and produce the expected results; and (x) other risks and uncertainties, including those included under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (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 the Company, its respective directors, officers or employees or any other person that the Company will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this news release represent the views of the Company as of the date of this news release. Subsequent events and developments may cause that view to change. However, while the Company 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 the Company as of any date subsequent to the date of this news release. Zeo Energy Corp. Contacts For Investors:Tom Colton and Greg BradburyGateway GroupZEO@gateway-grp.com For Media: Zach KadletzGateway GroupZEO@gateway-grp.com ZEO ENERGY CORP.CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As ofSeptember 30, As ofDecember 31, 2024 2023 Assets (unaudited) (as restated – see note 3) Current assets Cash and cash equivalents $4,330,062 $8,022,306 Accounts receivable, including $432,898 and $396,488 from related parties, net of allowance for credit losses of $3,145,168 and $862,580, as of September 30, 2024, and December 31, 2023, respectively 8,523,301 2,905,205 Inventories 482,251 350,353 Prepaid installation costs 1,072,090 4,915,064 Prepaid expenses and other current assets 1,178,432 40,403 Total current assets 15,586,136 16,233,331 Other assets 491,164 62,140 Property, equipment and other fixed assets, net 2,126,782 2,289,723 Right -of-use operating lease asset 1,402,462 1,135,668 Right-of-use finance lease asset 481,130 583,484 Intangibles, net - 771,028 Goodwill 27,010,745 27,010,745 Total assets $47,098,419 $48,086,119 Liabilities, mezzanine equity and stockholders’ equity Current liabilities Accounts payable $4,856,529 $4,699,855 Accrued expenses and other current liabilities, including $430,685 and $2,415,966 with related parties at September 30, 2024, and December 31, 2023, respectively 3,556,893 4,646,365 Current portion of long-term debt 291,036 294,398 Current portion of obligations under operating leases 576,890 539,599 Current portion of obligations under finance leases 127,341 118,416 Contract liabilities, including $0 and $1,160,848 with related parties as of September 30, 2024, and December 31, 2023, respectively 601,681 5,223,518 Total current liabilities 10,010,370 15,522,151 Obligations under operating leases, non-current 909,468 636,414 Obligations under finance leases, non-current 382,618 479,271 Other liabilities 1,000,000 - Warrant liabilities 690,000 - Long-term debt 567,563 825,764 Total liabilities 13,560,019 17,463,600 Commitments and contingencies (Note 16) Redeemable noncontrolling interests Convertible preferred units 15,862,110 - Class B Units 57,003,700 - Stockholders’ (deficit) equity Class V common stock 3,523 3,373 Class A common stock 518 - Additional paid-in capital 3,875,899 31,152,491 Accumulated deficit (43,207,350) (533,345)Total stockholders’ (deficit) equity (39,327,410) 30,622,519 Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) equity $47,098,419 $48,086,119 ZEO ENERGY CORP.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (as restated - see note 3) (as restated - see note 3) Revenue, net of financing fees of $4,106,370 and $14,941,988 for the three months ended September 30, 2024, and 2023, respectively, and $9,627,453 and $33,726,283 for the nine months ended September 30, 2024, and 2023, respectively $17,329,201 $37,894,166 $36,457,234 $86,705,020 Related party revenue, net of financing fees of $783,650 and $0 for the three months ended September 30, 2024, and 2023, respectively, and $7,767,491 and $0 for the nine months ended September 30, 2024, and 2023, respectively 2,328,704 - 18,139,099 - Total revenue 19,657,905 37,894,166 54,596,333 86,705,020 Operating costs and expenses: Cost of goods sold (exclusive of depreciation and amortization shown below) 9,787,350 20,473,087 30,805,155 49,245,721 Depreciation and amortization 499,876 521,289 1,413,074 1,431,482 Sales and marketing 5,202,525 8,595,645 16,178,375 19,813,979 General and administrative 7,151,005 4,302,853 15,893,998 9,716,058 Total operating expenses 22,640,756 33,892,874 64,290,602 80,207,240 (Loss) income from operations (2,982,851) 4,001,292 (9,694,269) 6,497,780 Other income (expenses), net: Other income, net 137,508 9,151 188,329 6,982 Change in fair value of warrant liabilities 138,000 - 828,000 - Interest expense (209,227) (10,396) (294,257) (62,920)Total other income (expense), net 66,281 (1,245) 722,072 (55,938)Net (loss) income before taxes (2,916,570) 4,000,047 (8,972,197) 6,441,842 Income tax benefit 44,146 - 235,352 - Net (loss) income (2,872,424) 4,000,047 (8,736,845) 6,441,842 Less: Net loss attributable to Sunergy Renewables, LLC prior to the Business Combination - 4,000,047 (523,681) 6,441,842 Net loss subsequent to the Business Combination (2,872,424) - (8,213,164) - Less: Net loss attributable to redeemable non-controlling interests (2,448,162) - (5,979,621) - Net loss attributable to Class A common stock $(424,262) $- $(2,233,543) $- Basic and diluted net loss per common share $(0.08) $- $(0.60) $- Weighted average units outstanding, basic and diluted 5,053,942 - 3,696,721 - ZEO ENERGY CORP.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months EndedSeptember 30, 2024 2023 (as restated – see note 3) Cash Flows from Operating Activities Net (loss) income $(8,736,845) $6,441,842 Adjustment to reconcile net (loss) income to cash (used in) provided by operating activities Depreciation and amortization 1,310,720 1,366,720 Gain on disposal of fixed assets (91,684) - Change in fair value of warrant liabilities (828,000) - Provision for credit losses 2,282,588 967,148 Noncash operating lease expense 523,821 399,610 Noncash finance lease expense 102,354 64,762 Stock based compensation expense 7,101,818 - Changes in operating assets and liabilities: Accounts receivable (7,864,274) (7,186,538)Accounts receivable due from related parties (36,410) - Inventories (131,898) 34,530 Prepaid installation costs 3,842,974 - Prepaids and other current assets (689,656) (322,568)Other assets (254,806) (566,075)Due from related party - (94,056)Accounts payable (437,190) 3,223,485 Accrued expenses and other current liabilities (1,195,659) 885,228 Accrued expenses and other current liabilities due to related parties (1,985,281) - Contract liabilities (3,460,989) 842,150 Contract liabilities due to related parties (1,160,848) - Operating lease payments (480,270) (389,890)Net cash (used in) provided by operating activities (12,189,535) 5,666,348 Cash flows from Investing Activities Purchases of property, equipment and other assets (285,067) (161,768)Net cash used in investing activities (285,067) (161,768) Cash flows from Financing Activities Proceeds from the issuance of debt - 192,210 Repayments of finance lease liabilities (87,728) (56,822)Proceeds from the issuance of convertible preferred stock, net of transaction costs 9,221,649 - Repayments of debt (261,563) (272,736)Distributions to members (90,000) (3,289,518)Net cash provided by (used in) financing activities 8,782,358 (3,426,866) Net (decrease) increase in cash and cash equivalents (3,692,244) 2,077,714 Cash and cash equivalents, beginning of period 8,022,306 2,268,306 Cash and cash equivalents, end of the period $4,330,062 $4,346,020 Supplemental Cash Flow Information Cash paid for interest $135,980 $39,838 Non-cash transactions Right-of-use assets obtained in exchange for operating lease liabilities $790,615 $653,663 Right-of-use assets obtained in exchange for finance lease liabilities $- $682,365 Deferred equity issuance costs $2,769,039 $- Issuance of Class A common stock to vendors $891,035 $- Issuance of Class A common stock to backstop investors $1,569,463 $- Issuance of Class A common stock for services $255,485 $- Preferred dividends $9,007,034 $-

Zeo Energy Corp. Reports Third Quarter 2024 Financial Results

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