Merger and Business Combination - The company has entered into a Merger Agreement with Heliogen, Inc., which includes a two-step merger process with a total merger consideration of $10.0 million[191]. - The Exchange Ratio for the merger is based on Heliogen's fully diluted share count of 6,616,949 and the Parent Stock Price of $1.5859[193]. - The business combination with ESGEN Acquisition Corp. was completed on March 13, 2024, resulting in the name change to Zeo Energy Corp.[196]. - The completion of the merger is subject to customary closing conditions, including shareholder approval and regulatory compliance[195]. - The shares of Zeo Energy Class A Common Stock to be issued in connection with the mergers will be listed on the Nasdaq Stock Market LLC[194]. - The Business Combination resulted in a total issuance of 1,500,000 Convertible OpCo Preferred Units and an equal number of shares of Class V Common Stock for an aggregate consideration of $15,000,000[201]. - Following the Business Combination, the Sellers now own 83.8% of the equity of the Company, down from 98% prior to the transaction[207]. Financial Performance - For the three months ended March 31, 2025, net revenue 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, from $20.1 million in Q1 2024 to $8.8 million in Q1 2025, representing a decline of 56.4%[234]. - Cost of goods sold decreased by $9.2 million, improving as a percentage of revenue from 69.3% in Q1 2024 to 58.1% in Q1 2025[236]. - 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]. - Net loss before taxes increased to $12.8 million in Q1 2025 from $4.2 million in Q1 2024, a rise of 203.1%[234]. - Adjusted EBITDA for Q1 2025 was $(6.4) million compared to $(0.5) million in Q1 2024, reflecting a significant decline in operational performance[256]. - Contribution profit for Q1 2025 was $(2.8) million, compared to $2.1 million in Q1 2024, indicating a decline in profitability[254]. 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]. - The company offers residential solar energy systems financed through third-party lenders, with most customers requiring minimal or no upfront capital[190]. - The company aims to expedite the transition to renewable energy by providing affordable and sustainable energy solutions[186]. - The Company plans to expand its residential sales into new markets, targeting states like Florida, Texas, Arkansas, Missouri, Illinois, and Ohio[218]. - In 2025, the Company continued its roofing replacements to facilitate solar installations and plans to expand its roofing business in all future markets[219]. - 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]. Challenges and Risks - 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 financing their solar systems, potentially slowing sales[222]. - 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 to approximately $2.3 million in Q1 2025 from $10.2 million in Q1 2024, an increase of $7.9 million[247]. - The company may need to raise additional capital through debt or equity financing if proceeds from the Business Combination are insufficient[244]. Asset Management - The increase in depreciation and amortization was $4.4 million, primarily due to the amortization of acquired contracts from the Lumio Asset Purchase Agreement[237]. - Goodwill is tested for impairment annually, with no impairment recorded for the three months ended March 31, 2025, and 2024[261]. - Intangible assets are subject to amortization on a straight-line basis and are reviewed for impairment whenever events indicate potential recoverability issues[262][263]. - No impairment charges were recorded for intangible assets for the three months ended March 31, 2025, and 2024[263].
Zeo Energy Corporation(ZEO) - 2025 Q1 - Quarterly Report