Zeo Energy Corp. Reports First Quarter 2024 Financial Results

NEW PORT RICHEY, Fla., May 15, 2024 (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 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 Results
Results 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 EBITDA
Zeo 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:

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:

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-Poku
Gateway Group
ZEO@gateway-grp.com

For Media:
Zach Kadletz and Anna Rutter
Gateway Group
ZEO@gateway-grp.com

-Financial Tables to Follow-