Pineapple Energy (PEGY) - 2024 Q1 - Quarterly Results

Q1 2024 Financial and Operational Overview This section reviews the company's Q1 2024 financial performance and operational activities Management Commentary Management characterized Q1 2024 as the most challenging operating period, ending a positive adjusted EBITDA streak, despite flat residential kilowatt sales and significant expense reductions - CEO Kyle Udseth described Q1 2024 as having the "toughest operating conditions" and noted the end of a four-quarter streak of positive adjusted EBITDA[2] - Despite challenges, residential kilowatts sold were flat year-over-year, which management views as a strong sales performance relative to market trends[2] - CFO Eric Ingvaldson explained that Q1 2023 was an unusually strong quarter due to the installation of projects delayed from Q4 2022, making for a difficult year-over-year comparison[2] - The company successfully reduced operating expenses by 31% year-over-year, which helped to minimize the operating loss in the quarter[2] Q1 2024 Financial Performance Q1 2024 revenue and gross profit declined 40%, leading to a $1.5 million adjusted EBITDA loss despite expense reductions Key Financial Metrics Q1 2024 revenue and gross profit both declined 40%, resulting in a $1.5 million adjusted EBITDA loss and $10.1 million net loss Q1 2024 Key Financial Results (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $13.2M | $22.1M | -40% | | Gross Profit | $4.8M | $8.0M | -40% | | Operating Expenses | $7.0M | $10.2M | -31% | | Operating Loss | ($2.2M) | ($2.1M) | +2% | | Net Income (Loss) | $1.2M | ($2.6M) | +146% | | Net Loss Attributable to Common Shareholders | ($10.1M) | ($2.6M) | +296% | | Adjusted EBITDA | ($1.5M) | $0.4M | -505% | | Diluted Loss per Share | ($0.26) | ($0.26) | 0% | Revenue Analysis Total revenue decreased 40% to $13.2 million, driven by a 37% drop in residential and 65% decline in commercial sales - Total revenue was $13.2 million, a 40% decrease from Q1 2023[6] - Residential contract sales fell by 37% ($6.7 million) due to a 29% reduction in residential kilowatts installed and lower average system prices from reduced financing fees and battery attachment rates[6] - Commercial contract sales decreased by 65% ($1.8 million) because of delays in the start of commercial pipeline projects[6] Profitability and Expense Analysis Gross profit declined 40% to $4.8 million with a stable 36% gross margin, offset by a 31% reduction in operating expenses - Gross profit decreased by 40% to $4.8 million, in line with the revenue decline, with gross margin remaining flat at 36% year-over-year[7] - Total operating expenses decreased by 31% ($3.2 million) to $7.0 million, mainly due to lower amortization, sales and marketing expenses, and personnel costs[8] - Other income increased by $3.8 million, primarily due to a $3.7 million fair value remeasurement gain on warrant liability[10] - Net loss attributable to common shareholders was $10.1 million, which included $11.3 million in deemed dividends related to preferred stock and warrants[11][21] Operational Highlights and Business Outlook Operational metrics softened sequentially, with residential kilowatts installed down 18% and backlog decreasing to $30 million, yet management anticipates core market stability Q1 2024 Pro Forma Operating Metrics (vs. Q4 2023) | Metric | Change | | :--- | :--- | | Residential kW installed | Down 18% | | Residential kW sold | Down 7% | | Residential battery attachment rate | 29% (from 36%) | | Backlog (as of May 1, 2024) | $30M (from $36M) | - Management expects core markets on Long Island, NY, and Oahu, HI, to be stable and strong for the remainder of 2024 and into 2025[2] - The company is actively evaluating opportunities to acquire new businesses and expand into new markets[2] Financial Statements Unaudited condensed consolidated financial statements for Q1 2024 detail balance sheet changes, including a shift to a stockholders' deficit Condensed Consolidated Balance Sheets Total assets decreased to $54.7 million, liabilities increased to $42.5 million, resulting in a $11.2 million stockholders' deficit Selected Balance Sheet Data (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,789,956 | $3,575,283 | | Total Current Assets | $13,146,781 | $15,778,648 | | Total Assets | $54,654,357 | $58,172,811 | | Total Current Liabilities | $20,945,531 | $22,373,482 | | Total Liabilities | $42,492,668 | $37,736,022 | | Total Stockholders' Equity (Deficit) | ($11,171,924) | $20,436,789 | Condensed Consolidated Statements of Operations Q1 2024 sales were $13.2 million, with an operating loss of $2.2 million, but $3.4 million in other income led to $1.2 million net income Statement of Operations Highlights (Unaudited, Three Months Ended March 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Sales | $13,219,197 | $22,065,424 | | Gross profit | $4,805,448 | $8,006,315 | | Total operating expenses | $6,988,402 | $10,155,841 | | Operating loss | ($2,182,954) | ($2,149,526) | | Other income (expense), net | $3,391,767 | ($444,414) | | Net income (loss) from continuing operations | $1,202,651 | ($2,599,672) | | Net loss attributable to common shareholders | ($10,119,988) | ($2,554,989) | Non-GAAP Financial Measures Adjusted EBITDA, a non-GAAP measure, showed a $1.5 million loss in Q1 2024, a significant decline from prior year's profit - Adjusted EBITDA is a non-GAAP measure defined as net income (loss) adjusted for interest, income taxes, depreciation, amortization, transaction costs, stock compensation, and non-cash fair value remeasurement adjustments[22] Reconciliation of Net Income (Loss) to Adjusted EBITDA | | Three Months Ended March 31 | | | :--- | :--- | :--- | | | 2024 | 2023 | | Net Income (Loss) | $1,202,651 | ($2,599,672) | | Interest expense | $764,870 | $458,218 | | Income taxes | $6,162 | $5,732 | | Depreciation & Amortization | $801,792 | $1,377,023 | | Stock compensation | $197,306 | $312,445 | | FV remeasurement adjustments | ($4,454,678) | $1,075,000 | | Other adjustments | ($27,673) | ($242,251) | | Adjusted EBITDA | ($1,509,570) | $372,802 |