Recent Financial and Operational Highlights
Recent launch into Ohio and Illinois markets have yielded encouraging initial results
Appointment of experienced finance and accounting executive Cannon Holbrook as Chief Financial Officer
Decline in revenue for residential solar in the quarter to $14.7 million
Positive adjusted EBITDA for the second quarter 2024 at $0.7 million driven by flexible operating model and disciplined cost management
Management Commentary
"While the second quarter of 2024 presented well-documented and significant challenges across the solar industry, we believe we have successfully navigated through this turbulent period thanks to our flexible operating model and disciplined expense management," said Zeo Energy Corp. CEO Tim Bridgewater. "We also believe that our strategic decision to emphasize profitability in the current environment has us positioned to benefit long-term as the market recovers and consolidation opportunities present themselves. Additionally, our recent launch into the Ohio and Illinois markets has been encouraging, and we'll be looking to build on our initial progress over the coming months as we continue pursuing expansion plans.
"As macroeconomic and industry pressures eventually dissipate, we plan to take advantage of the consolidating and more favorable market environment. We anticipate that this offensive stance will mean reigniting our sales efforts through the return of a significant number of successful sales managers as well as bringing new representatives to the field later this year. Additionally, with the appointment of our new CFO Cannon Holbrook, we believe we have the necessary experience and team resources to pursue strategic M&A opportunities currently available in the market. Put together, we are executing a plan that will we hope will enable us to emerge from this period with a stronger overall position in the residential solar market."
First Six Months 2024 Financial Results
Results compare the six months ended June 30, 2024 to the six months ended June 30, 2023, unless otherwise indicated.
Total revenue was $34.6 million, a 29% decrease from $48.8 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 $6.0 million (17.3% of total revenue) from $8.6 million (17.7% of total revenue) in the comparable 2023 period. The decrease in gross profit was primarily due to the decrease in revenue.
Net loss was $3.2 million (9.2% of total revenue) compared to net income of $2.4 million (4.9% of total revenue) in the comparable 2023 period. The decrease was primarily due to stock compensation of $2.9 million in the current period compared to none in the prior period as well as public company required costs and software development costs.
Adjusted EBITDA, a non-GAAP measurement of operating performance reconciled below, decreased to a loss of $0.1 million (0.3% of total revenue) from $3.4 million (6.9% of total revenue) in the comparable 2023 period. The decrease was primarily due to higher interest rates resulting in lower demand and a decrease in sales.
Second Quarter 2024 Financial Results
Results compare the 2024 second quarter ended June 30, 2024 to the 2023 second quarter ended June 30, 2023, unless otherwise indicated.
Total revenue was $14.7 million, a 51% decrease from $30.1 million in the comparable 2023 period. This decrease was primarily due to higher interest rates creating a challenging environment for residential solar direct sales in 2024.
Gross profit decreased to $4.4 million (29.8% of total revenue) from $5.6 million (18.7% 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 $1.3 million (8.8% of total revenue) compared to net income of $0.8 million (2.7% of total revenue) in the comparable 2023 period. This decrease was primarily due to the decrease in gross profit and a decrease in operating expenses, offset by $2.4 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 $0.7 million (4.6% of total revenue) from approximately $1.3 million (4.4% of total revenue) in the comparable 2023 period. This decrease was primarily attributable to the decrease in gross profit and a decrease in operating expenses, offset by $2.4 million in stock compensation expense in 2024 compared to none in 2023.
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 June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Adjustments to net income
Net income
$
(1,289,798
)
$
797,248
$
(3,181,873
)
$
2,400,187
Interest expense
34,233
23,999
71,287
39,543
Taxes
(61,185
)
0
(101,818
)
0
Depreciation and amortization
456,841
489,566
919,542
922,165
EBITDA
(859,909
)
1,310,813
(2,292,862
)
3,361,895
Other Income
(50,821
)
7,169
(50,821
)
2,169
Change in fair value of warrant liabilities
(828,000
)
0
(690,000
)
0
Stock compensation expense
2,417,888
0
2,922,722
0
Adjusted EBITDA
$
679,158
$
1,317,982
$
(110,961
)
$
3,364,064
Adjusted EBITDA MarginZeo 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 June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Total Revenue
$
14,711,826
$
30,079,365
$
34,575,616
$
48,810,854
Adjusted EBITDA
$
679,158
$
1,317,982
$
(110,961
)
$
3,364,064
Adjusted EBITDA margin
4.6
%
4.4
