Core Insights - Zeo Energy Corp. reported a challenging year in 2024 for the solar industry but remains optimistic about future opportunities and growth strategies [3][4] - The company aims to acquire renewable energy assets to enhance market share and has successfully integrated Lumio's assets acquired in November 2024 [3][7] Financial Performance - Total revenue for 2024 was $73.2 million, a 33.2% decrease from $109.7 million in 2023, primarily due to higher interest rates affecting residential solar sales [6][8] - The company reported a net loss of $9.9 million in 2024 compared to a net income of $4.8 million in 2023, largely due to stock compensation and increased operational costs [8][22] - Adjusted EBITDA for 2024 was $2.0 million, down from $7.0 million in 2023, reflecting the impact of the challenging market environment [8][22] Quarterly Highlights - In Q4 2024, total revenue was $18.6 million, an 18.9% decrease from $23.0 million in Q4 2023, attributed to the ongoing effects of higher interest rates [6][14] - Gross profit for Q4 2024 decreased to $11.2 million (60.1% of total revenue) from $12.7 million (55.1% of total revenue) in Q4 2023, driven by lower sales [14] - Adjusted EBITDA for Q4 2024 increased to $3.1 million (16.8% of total revenue) from approximately $(0.9) million in Q4 2023, indicating improved operational efficiencies [14][15] Operational Developments - The company completed the integration of Lumio's assets, which is part of its market expansion strategy [7] - Zeo secured $4.0 million in December 2024 to develop a year-round sales force, aiming to enhance its market presence and growth trajectory [7] Market Positioning - Zeo Energy focuses on high-growth markets with limited competitive saturation, utilizing a differentiated sales approach to serve customers seeking energy efficiency solutions [11]

Core Points - Zeo Energy Corp. received a notice from Nasdaq indicating non-compliance with periodic filing requirements due to the late submission of its Annual Report on Form 10-K for Fiscal Year 2024, which was due by March 31, 2025 [1][2] - The company has been given 60 calendar days to submit a plan to regain compliance, with a potential extension until October 13, 2025, if the plan is accepted [2] - Zeo Energy is actively working to complete its Fiscal Year 2024 10-K and expects to maintain compliance with SEC reporting obligations following timely submissions of subsequent filings [3] Company Overview - Zeo Energy Corp. is a Florida-based provider of residential solar, distributed energy, and energy efficiency solutions, focusing on high-growth markets with limited competition [4]

Business Operations and Expansion - The company's scalable regional operating platform includes 180 sales agents and 22 independent sales dealers as of September 30, 2024[190] - The company plans to enter new markets selectively where solar penetration is below 7% of the addressable residential market[191] - The company increased installation capacity by investing in new equipment and technology and expanded its workforce by hiring more skilled technicians[191] - The company's sales were primarily generated in Florida, with the remainder in Ohio, Texas, Arkansas, Missouri, and Illinois[191] - The company plans to expand its roofing business, which generated over $2.5 million in 2024, to all future markets[219] - The company intends to double its in-house sales force and external sales dealers in 2024 to target new customers in the Southern U.S. residential markets[220] Financial Performance and Metrics - Revenue, net decreased by $18.2 million (48.1%) in Q3 2024 compared to Q3 2023, primarily due to higher interest rates impacting consumer financing rates and reducing demand for solar products[236] - Gross margin improved to 48.8% in Q3 2024 from 45.8% in Q3 2023, driven by decreased material costs and labor efficiencies[237] - Adjusted EBITDA margin was (5.0%) in Q3 2024 compared to 11.9% in Q3 2023, reflecting operational challenges[212] - Cost of goods sold decreased by $10.7 million (52.2%) in Q3 2024, improving as a percentage of revenue from 55.0% to 51.2%[237] - General and administrative expenses increased by $2.8 million (66.2%) in Q3 2024 due to higher personnel-related costs and professional services[235] - Revenue decreased by $32.1 million (37.0%) for the nine months ended September 30, 2024, primarily due to higher interest rates affecting consumer financing and a shift in sales mix[242][243] - Cost of goods sold decreased by $18.4 million (37.4%) for the nine months ended September 30, 2024, consistent with the decrease in revenue[242][244] - General and administrative expenses increased by $6.2 million (63.6%) for the nine months ended September 30, 2024, primarily due to stock compensation and increased headcount[242][246] - Sales and marketing expenses decreased by $3.6 million (18.3%) for the nine months ended September 30, 2024, due to reduced support costs for fewer salespeople[242][247] - Contribution margin was 17.8% for the nine months ended September 30, 2024, compared to 20.0% in the same period in 2023[263] - Adjusted EBITDA margin reflects the company's Adjusted EBITDA as a percentage of revenues, though specific figures are not provided[264] - Net loss for the three months ended September 30, 2024 was $2.87 million, compared to a net income of $4.00 million in the same period in 2023[266] - Adjusted EBITDA for the three months ended September 30, 2024 was negative $979,845, compared to positive $4.52 million in the same period in 2023[266] - Net loss margin for the three months ended September 30, 2024 was -14.6%, compared to a net income margin of 10.6% in the same period in 2023[266] - Adjusted EBITDA margin for the three months ended September 30, 2024 was -5.0%, compared to 11.9% in the same period in 2023[266] - Stock compensation expense for the three months ended September 30, 2024 was $1.50 million, compared to $0 in the same period in 2023[266] - Depreciation and amortization expense for the three months ended September 30, 2024 was $499,876, compared to $521,289 in the same period in 2023[266] Cash Flow and Financing - Net cash used in operating activities was $12.2 million for the nine months ended September 30, 2024, compared to $5.8 million provided by operating activities in the same period in 2023[255][256] - Net cash provided by financing activities was $8.8 million for the nine months ended September 30, 2024, primarily from the issuance of convertible preferred stock[255][258] - The company's cash and cash equivalents decreased from $8.0 million as of December 31, 2023, to $4.3 million as of September 30, 2024[251] - The company has $2.5 million in trade-credit with solar equipment distributors and $0.9 million of debt on service trucks and vehicles[259] Acquisitions and Business Combinations - The company closed an Asset Purchase Agreement with Lumio Holdings, Inc. and Lumio HX, Inc., acquiring assets for $4 million in cash and 6,206,897 shares of Class A Common Stock[193] - The company's business combination was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded[202] - The company's Primary Sellers retained 83.8% ownership post-Business Combination, down from 98% prior[206] - The company's Sponsor purchased 1,500,000 Convertible OpCo Preferred Units for $15,000,000 in connection with the Business Combination[200] - The company's Class A Common Stock and public warrants are traded on Nasdaq under the ticker symbols "ZEO" and "ZEOWW"[201] Market and Economic Factors - Inflation has increased labor and component costs, particularly raw materials and supply chain constraints, though specific cost increases are unquantified[221] - Higher interest rates have slowed financing-related solar system sales by increasing monthly costs for customers[222] - The company's revenue growth depends on expanding into new residential markets with favorable incentives and net metering policies[218] Intangible Assets and Valuation - No goodwill impairment was recorded for the three and nine months ended September 30, 2024 and 2023[271] - No impairment charges were recorded for intangible assets for the three and nine months ended September 30, 2024 and 2023[273] - The company uses a combination of income and market approaches to estimate fair values in business combinations, which involves significant judgment and estimates[269] - Intangible assets are amortized on a straight-line basis over their estimated useful lives and are subject to annual impairment consideration[272] Solar Service Offerings and Financing - The company's core solar service offerings are financed through third-party long-term lenders, with most customers using affordable loans requiring minimal or no upfront capital[192]

Core Insights - Zeo Energy Corp. reported financial results for Q3 and the first nine months of 2024, highlighting a focus on profitability despite challenges in the solar industry [2][4] - The company experienced a significant revenue decline due to higher interest rates affecting residential solar sales, but managed to achieve some revenue growth quarter-over-quarter [6][7] - Zeo Energy's acquisition of Lumio's assets is part of a strategy to enhance geographic and strategic positioning, particularly in California [3][4] Financial Performance - Q3 2024 revenue was $19.7 million, a decrease of 48.1% from $37.9 million in Q3 2023 [6][7] - Total revenue for the first nine months of 2024 was $54.6 million, down 37.0% from $86.7 million in the same period of 2023 [7] - Gross profit for Q3 2024 decreased to $9.9 million (50.2% of total revenue) from $20.5 million (46.0% of total revenue) in Q3 2023, driven by lower sales but improved operational efficiencies [7][8] Profitability Metrics - The net loss for the first nine months of 2024 was $8.7 million (15.9% of total revenue), compared to a net income of $6.4 million (7.3% of total revenue) in the same period of 2023 [7] - Adjusted EBITDA for the first nine months of 2024 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 [7][12] - The net loss for Q3 2024 was $2.9 million (14.7% of total revenue), compared to a net income of $4.0 million (10.6% of total revenue) in Q3 2023 [13][20] Strategic Outlook - The company is optimistic about its sales and recruitment efforts, expecting to grow at above-industry rates in 2025 and beyond [4][3] - Zeo Energy plans to continue identifying acquisition opportunities to bolster its market presence amid ongoing industry consolidation [3][4]

Core Viewpoint - Zeo Energy has completed the acquisition of substantially all assets of Lumio Holdings, positioning itself for enhanced market presence and expansion in the residential solar industry [1][2][3]. Company Overview - Zeo Energy Corp. is a Florida-based provider of residential solar and energy efficiency solutions, focusing on high-growth markets with limited competition [5]. - The company aims to reduce energy costs for customers while promoting sustainability through its vertically integrated offerings [5]. Acquisition Details - The acquisition of Lumio's assets was approved by the U.S. Bankruptcy Court on November 1, 2024, following Lumio's Chapter 11 filing on September 3, 2024 [2]. - This transaction is expected to allow Zeo Energy to expand its scale and market presence, enabling growth at above-industry rates in 2025 and beyond [3]. Strategic Plans - Zeo Energy plans to complete solar installations under agreements made by Lumio for its customers and financing partners [3]. - The company intends to integrate Lumio's sales representatives into its platform to accelerate growth [3].

Financial Performance - Total revenue for Q2 2024 was $14.7 million, a 51% decrease from $30.1 million in Q2 2023, primarily due to higher interest rates affecting residential solar direct sales[8] - Gross profit for Q2 2024 decreased to $4.4 million (29.8% of total revenue) from $5.6 million (18.7% of total revenue) in Q2 2023, driven by decreased sales but improved operational efficiencies[9] - Net loss for Q2 2024 was $1.3 million (8.8% of total revenue), compared to net income of $0.8 million (2.7% of total revenue) in Q2 2023, largely due to stock compensation expenses[10] - Adjusted EBITDA for Q2 2024 was $0.7 million (4.6% of total revenue), down from approximately $1.3 million (4.4% of total revenue) in Q2 2023, primarily due to decreased gross profit[11] - Total revenue for the first six months of 2024 was $34.6 million, a 29% decrease from $48.8 million in the same period of 2023, attributed to higher interest rates[4] - Gross profit for the first six months of 2024 decreased to $6.0 million (17.3% of total revenue) from $8.6 million (17.7% of total revenue) in the same period of 2023[5] - Net loss for the first six months of 2024 was $3.2 million (9.2% of total revenue), compared to net income of $2.4 million (4.9% of total revenue) in the same period of 2023[6] - Net loss for 2024 was $3,181,873 compared to a net income of $2,400,187 in 2023[24] Strategic Initiatives - The company plans to reignite sales efforts and pursue strategic M&A opportunities as market conditions improve[3] - The recent launch into Ohio and Illinois markets has yielded encouraging initial results, with plans to build on this progress[2] - The appointment of Cannon Holbrook as Chief Financial Officer is expected to enhance the company's strategic capabilities[2] Assets and Liabilities - Total current assets increased to $17,895,800 as of June 30, 2024, from $16,233,331 as of December 31, 2023, reflecting a growth of approximately 10.2%[21] - Total liabilities decreased to $12,205,927 as of June 30, 2024, down from $17,540,167 as of December 31, 2023, a decline of about 30.6%[21] - Cash and cash equivalents decreased to $5,342,120 as of June 30, 2024, from $8,022,306 as of December 31, 2023, a drop of approximately 33.4%[21] - Accounts receivable increased to $7,207,854 as of June 30, 2024, compared to $2,905,205 as of December 31, 2023, an increase of about 147.5%[21] - The total stockholders' equity as of June 30, 2024, was $(51,117,913), a significant decrease from $30,591,065 as of December 31, 2023[21] Cash Flow and Financing - Net cash used in operating activities was $12,338,008, a significant decrease from cash provided of $1,849,251 in 2023[24] - Cash and cash equivalents at the end of the period were $5,342,120, down from $8,022,306 at the beginning of the period[24] - Proceeds from the issuance of convertible preferred stock amounted to $10,277,275, with no such proceeds reported in 2023[24] - Total preferred dividends paid were $8,224,091, with no preferred dividends reported in the previous year[24] - Net cash provided by financing activities was $9,988,651, compared to $79,986 in the previous year[24] Expenses - Operating costs and expenses totaled $16,907,397 for the six months ended June 30, 2024, compared to $29,250,949 in 2023, a reduction of about 42.2%[23] - Depreciation and amortization expenses were $919,542, slightly down from $922,165 in 2023[24] - Cash paid for interest was $70,284, up from $37,851 in 2023[24] Non-Cash Transactions - Non-cash transactions included $3,269,039 in transaction costs and $2,478,480 in Class A common stock issued to vendors[24] - The company recorded a change in the fair value of warrant liabilities amounting to $828,000 for the six months ended June 30, 2024[23]

Business Focus and Strategy - Zeo Energy Corp. is focused on accelerating the transition to renewable energy, providing residential solar energy systems and related services in Florida, Texas, Arkansas, and Missouri[160]. - The company has a capital-light business strategy, relying on drop-shipped equipment to minimize inventory[163]. - The company intends to expand its product offerings and services in residential markets across additional states to drive future revenue growth[194]. - The company plans to expand its workforce by hiring and training more skilled technicians to ensure high standards for quality and safety[165]. - The company plans to double its in-house sales force and external sales dealers in 2024 to target new customers in the Southern U.S. regional residential markets[196]. Sales and Revenue Performance - Revenue decreased by approximately $15.4 million, from $30.1 million in Q2 2023 to $14.7 million in Q2 2024, representing a decline of 51.1%[212]. - Revenue decreased by approximately $14.2 million, or 29.2%, from $48.8 million in the six months ended June 30, 2023 to $34.6 million in the same period of 2024[220]. - Most sales were generated in Florida and Ohio, with plans to enter new markets where solar penetration is below 7% of the addressable residential market[165]. - The company has sold over $2.1 million in roofing replacements in 2024 to facilitate solar installations and plans to expand its roofing business in future markets[195]. Financial Metrics - Adjusted EBITDA for Q2 2024 was $679,000, compared to $1.3 million in Q2 2023, reflecting a margin of 4.6%[189]. - Adjusted EBITDA for the six months ended June 30, 2024 was $(3,033,683), compared to $3,364,064 for the same period in 2023[241]. - Adjusted EBITDA margin for the six months ended June 30, 2024 was (8.8)%, compared to 6.9% for the same period in 2023[244]. - Gross profit for Q2 2024 was $3.9 million, with a gross margin of 26.7%, up from 17.1% in Q2 2023[189]. Costs and Expenses - Cost of goods sold decreased by $14.1 million, improving as a percentage of revenue to 70% in 2024 from 81% in 2023[214]. - Cost of goods sold decreased by $11.6 million, or 29.5%, maintaining a consistent percentage of revenue at 80%[222]. - General and administrative expenses increased by $2.1 million, from $3.8 million in Q2 2023 to $5.9 million in Q2 2024, primarily due to $2.4 million in stock compensation recognized in 2024[216]. - General and administrative expenses increased by $4.4 million, or 86.0%, from $5.2 million to $9.6 million, primarily due to increased stock compensation and headcount[223]. - Sales and marketing expenses decreased by $0.7 million, or 67.9%, from $1.0 million to $0.3 million, reflecting reduced support for fewer sales personnel[224]. Cash Flow and Financing - Net cash used in operating activities was approximately $12.3 million for the six months ended June 30, 2024, compared to net cash provided of approximately $1.8 million in the same period of 2023, a decrease of $14.2 million[233]. - Net cash provided by financing activities was approximately $10.0 million for the six months ended June 30, 2024, primarily from the issuance of convertible preferred stock[235]. - As of June 30, 2024, cash and cash equivalents were approximately $5.3 million, down from $8.0 million as of December 31, 2023[228]. - Interest rate increases have resulted in higher monthly costs for customers, slowing financing-related sales of solar systems[198]. Business Combination and Ownership - Following the Business Combination, the Primary Sellers own 83.8% of the equity of the company, retaining majority control[181]. - The Business Combination was accounted for as a reverse recapitalization, treating ESGEN as the acquired company[176]. - The Class A Common Stock and public warrants are traded on Nasdaq under the ticker symbols "ZEO" and "ZEOWW" respectively[175]. Impairment and Fair Value - Goodwill is recognized as the excess of acquisition-date consideration over the net identifiable assets acquired[248]. - The company conducts annual goodwill impairment tests on December 31, with no impairment recorded for the three months ended June 30, 2024 and 2023[249]. - Intangible assets, including tradenames and customer lists, are amortized on a straight-line basis over their estimated useful life[250]. - No impairment charges for intangible assets were recorded for the three months ended June 30, 2024 and 2023[251]. - Fair value determinations for business combinations are based on estimated fair values at acquisition date, using income and market approaches[247].

Business Overview - Zeo Energy Corp. aims to expedite the transition to renewable energy by providing affordable solar energy systems and related services across Florida, Texas, Arkansas, and Missouri[80]. - The company plans to enter new markets selectively where favorable net metering policies exist[80]. - Future revenue growth is dependent on expanding product offerings and services in underserved residential markets in Florida, Texas, Arkansas, and Missouri[86]. Sales and Marketing - As of March 31, 2024, the company has approximately 337 sales agents and 15 independent sales dealers, contributing to a growing sales pipeline[80]. - Most sales were generated in Florida, with the remainder from Texas, Arkansas, and Missouri, focusing on markets with solar penetration below 7%[80]. - The company has launched a leasing program for residential solar energy systems, catering to homeowners in a higher interest rate environment[80]. - The company intends to increase its in-house sales force and external sales dealers in 2024 to target new customers in the Southern U.S. regional residential markets[88]. Financial Performance - Revenue for the three months ended March 31, 2024, was $19.49 million, a 4.0% increase from $18.73 million in the same period of 2023[87]. - Gross profit decreased to $1.84 million with a gross margin of 9.5%, down from $3.49 million and 18.6% in the prior year[87]. - Adjusted EBITDA for the first quarter of 2024 was $(1.15) million, compared to $2.05 million in the same period of 2023, reflecting a significant decline in performance[87]. - Adjusted EBITDA for Q1 2024 was $(1,151,374), a decrease from $2,046,082 in Q1 2023, indicating a negative margin of (5.9%) compared to a positive margin of 10.9% in the prior year[100][101]. Cost and Expenses - Cost of goods sold increased by $2.37 million to $17.18 million, representing 88.2% of revenue, up from 79.1% in the prior year[94]. - General and administrative expenses rose by 151.5% to $3.34 million, primarily due to increased personnel-related costs[92]. - General and administrative expenses rose by $5.1 million, from $1.3 million in Q1 2023 to $6.4 million in Q1 2024, primarily due to investments in customer support and technology[96]. - Interest expense increased by 138.4% to $(37,054), reflecting higher borrowing costs[92]. - The company is facing inflationary pressures, particularly in labor and raw material costs, which may impact operating margins[88]. Cash Flow and Financing - Net cash used in operating activities was approximately $10.2 million in Q1 2024, compared to a net cash provided of approximately $1.6 million in Q1 2023, reflecting a decrease of $11.7 million[97]. - Net cash provided by financing activities increased significantly to approximately $10.1 million in Q1 2024 from $0.2 million in Q1 2023, primarily due to cash acquired from the Business Combination[98]. - The company anticipates potential additional capital needs through debt or equity financing if proceeds from the Business Combination are insufficient[96]. - The company has $3.0 million payable for professional services related to the business combination, to be paid over the next six quarters[98]. Operational Developments - The company has increased its installation capacity by investing in new equipment and technology to meet growing demand[80]. - The company has expanded its workforce by hiring and training skilled technicians to ensure high standards for quality and safety[80]. - The company plans to expand its roofing business, having sold over $1.3 million in roofing replacements in 2024 to support solar installations[86]. - Depreciation and amortization increased from $432,599 for the three months ended March 31, 2023 to $462,701 for the same period in 2024, attributed to an increase in the vehicle fleet[96]. Business Combination - Following the Business Combination, the Primary Sellers own 83.8% of the equity of the company, retaining majority control[82]. - The Business Combination was accounted for as a reverse recapitalization, with ESGEN treated as the acquired company[85]. - There was no goodwill impairment recorded for the three months ended March 31, 2024 and 2023[104].

Financial Performance - Total revenue for Q1 2024 increased by 4% to $19.5 million compared to $18.7 million in Q1 2023[1] - Gross profit decreased by 47% to $1.8 million, representing 9.5% of net revenue, down from 18.6% in the prior year[5] - Net loss for the quarter was $1.7 million, compared to net income of approximately $1.6 million in Q1 2023, marking a significant decline[6] - Adjusted EBITDA resulted in a loss of $1.2 million, down from a profit of approximately $2.0 million in the same period last year[7] - Related party revenue for Q1 2024 was $8,812,769, compared to $0 in Q1 2023[17] - Net loss for Q1 2024 was $1,699,200, compared to a net income of $1,602,939 in Q1 2023[17] - The company reported a basic and diluted net loss per common unit of $1.20 for Q1 2024[17] Expenses and Cash Flow - Operating expenses increased to $21,102,265 in Q1 2024, up from $17,118,006 in Q1 2023, representing a 23.1% rise[17] - Cash used in operating activities for Q1 2024 was $10,153,821, a significant decrease from cash provided of $1,589,777 in Q1 2023[18] - Cash and cash equivalents at the end of Q1 2024 were $7,731,124, down from $3,418,889 at the end of Q1 2023[18] - The company experienced a net cash decrease of $291,182 in Q1 2024, contrasting with an increase of $1,150,583 in Q1 2023[18] - Proceeds from the issuance of convertible preferred stock in Q1 2024 amounted to $10,277,275[18] - Depreciation and amortization expenses for Q1 2024 were $462,701, compared to $432,599 in Q1 2023[17] Merger and Expansion - Merger transaction expenses totaled $11.7 million related to the business combination with ESGEN Acquisition Corp.[1] - Preferred equity of $15.0 million was provided by Energy Spectrum to cover merger expenses and support ongoing operations[1] - The company expanded its sales and installation capacity into Ohio and Illinois during Q1 2024[1] Future Outlook - Management anticipates more favorable equipment pricing and stable or declining interest rates throughout the year[3] - The company expects profitability to return to historical growth levels in the remaining quarters of 2024[3] - Total assets increased to $51.6 million as of March 31, 2024, compared to $48.0 million at the end of 2023[15] - Total revenue for Q1 2024 was $19,488,190, a 4.05% increase from $18,731,489 in Q1 2023[17]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40927 ZEO ENERGY CORP. (Exact name of registrant as specified in its charter) | --- | --- | |-------------------------------------------------- ...