Mergers and Acquisitions - The company has entered into a Merger Agreement with Heliogen, Inc., which includes a two-step merger process with an estimated total merger consideration of $10.0 million[191][193]. - The merger with Heliogen is subject to customary closing conditions, including majority shareholder approval and compliance with Nasdaq listing requirements[195]. - The business combination with ESGEN Acquisition Corp. was completed on March 13, 2024, resulting in the company being renamed Zeo Energy Corp.[196]. - Following the Business Combination, Sunergy's ownership was reduced from 98% to 83.8% of the equity of the Company[207]. Financial Performance - Revenue for the three months ended March 31, 2025, was $8,784,000, a decrease from $20,142,000 in the same period of 2024, representing a decline of approximately 56.4%[212]. - Gross profit for the same period was $3,775,000, with a gross margin of 43.0%, compared to a gross profit of $6,016,000 and a gross margin of 29.9% in 2024[212]. - Adjusted EBITDA for the three months ended March 31, 2025, was $(6,354,000), reflecting an Adjusted EBITDA margin of (72.3)%, compared to $(470,000) and (2.3)% in 2024[212]. - Revenue decreased by approximately $11.4 million, a decline of 56.4%, from $20.1 million in Q1 2024 to $8.8 million in Q1 2025[234][235]. - Contribution profit was $(2.8) million in Q1 2025, compared to $2.1 million in Q1 2024, indicating a negative contribution margin of (31.5)%[254]. - Net loss before taxes increased by 203.1%, from $4.2 million in Q1 2024 to $12.8 million in Q1 2025[234]. Operational Strategy - The company has a scalable regional operating platform with approximately 290 sales agents and 22 independent sales dealers, focusing on capital-efficient growth in underpenetrated markets[189][187]. - The company aims to expedite the transition to renewable energy by providing affordable solar energy solutions, contributing to energy independence for consumers[186]. - The Company plans to expand its residential sales into new markets, targeting states with favorable incentives and net metering policies[218]. - The Company intends to increase its in-house sales force and external sales dealers in 2025 to target new customers in the Southern U.S. regional residential markets[220]. - The company has expanded its customer base across multiple states, including Florida, Texas, and California, and continues to invest in tools for large-scale operations[186][188]. Cost and Expenses - General and administrative expenses increased by $7.2 million, from $3.2 million in Q1 2024 to $10.5 million in Q1 2025, primarily due to increased payroll costs and a $3 million reserve for bad debt[238]. - The Company is experiencing increased costs due to inflation, particularly in raw materials and supply chain constraints, which may pressure operating margins[221]. - Interest rate increases have resulted in higher monthly costs for customers, potentially slowing financing-related sales of solar systems[222]. - Cost of goods sold decreased by $9.2 million, resulting in an improvement from 69.3% to 58.1% as a percentage of revenue[236]. Cash Flow and Capital Needs - Cash and cash equivalents decreased from approximately $5.6 million as of December 31, 2024, to $2.9 million as of March 31, 2025[242]. - Net cash used in operating activities improved by $7.9 million, from $(10.2) million in Q1 2024 to $(2.3) million in Q1 2025[247]. - The company may need to raise additional capital through debt or equity financing if proceeds from the Business Combination are insufficient to support business needs[244][245]. Asset Management - Goodwill is tested for impairment annually, with no impairment recorded for the three months ended March 31, 2025, and 2024[261]. - Intangible assets are amortized on a straight-line basis and are subject to annual impairment consideration, with no impairment charges recorded for the three months ended March 31, 2025, and 2024[262][263]. - The Company evaluates the recoverability of intangible assets by comparing their carrying amounts to future net undiscounted cash flows expected to be generated[263]. Sales and Product Offerings - The company offers residential solar energy systems financed through third-party lenders, with most customers utilizing loans or leases that require minimal or no upfront capital[190]. - The company has a diverse sales partner network and direct-to-consumer sales operations, enhancing its market reach and competitive positioning[187]. - The company’s core offerings include not only solar systems but also roofing, insulation, and energy-efficient appliances, diversifying its revenue streams[189].
ESGEN Acquisition (ESAC) - 2025 Q1 - Quarterly Report