Business Strategy and Market Expansion - 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[157]. - The company plans to enter new markets selectively where favorable net metering policies exist and solar penetration is below 7%[161]. - The company plans to expand its residential sales into new markets, targeting underserved areas in Florida, Texas, Arkansas, and Missouri[185]. - In 2024, the company sold over $1.3 million in roofing replacements to support solar installations, with plans to expand this business[186]. - The company intends to increase its in-house sales force and external sales dealers in 2024 to capture new customers in the Southern U.S. residential markets[187]. 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[181]. - Gross profit decreased to $1.84 million with a gross margin of 9.5%, down from $3.49 million and 18.6% respectively in the prior year[181]. - Adjusted EBITDA was $(1.15) million, reflecting an adjusted EBITDA margin of (5.9)%, compared to $2.05 million and 10.9% in the previous year[181]. - The company reported a net loss of $1.7 million for the three months ended March 31, 2024, compared to a net income of approximately $1.6 million in the same period of 2023[222]. - Adjusted EBITDA for the three months ended March 31, 2024, was $(1.15) million, a decrease from $2.05 million in the same period of 2023[222]. - The Adjusted EBITDA margin for the three months ended March 31, 2024, was (5.9)%, compared to 10.9% in the same period of 2023[224]. Cost and Expenses - Cost of goods sold increased by 16.0% to $17.18 million, resulting in a cost of goods sold percentage of 88.2%, up from 79.1% in the prior year[201][203]. - General and administrative expenses surged by 151.5% to $3.34 million, primarily due to investments in customer support and technology[201][206]. - The company is facing inflationary pressures, with increased costs of labor and materials impacting operating margins[188]. Cash Flow and Financing - As of March 31, 2024, cash and cash equivalents were approximately $7.7 million, down from $8.0 million at the end of 2023[210]. - Net cash used in operating activities was approximately $10.2 million for the three months ended March 31, 2024, a decrease of $11.7 million compared to a net cash provided of approximately $1.6 million in the same period of 2023[215]. - Net cash used in investing activities was approximately $0.2 million for the three months ended March 31, 2024, primarily related to purchases of property and equipment of $0.3 million, compared to $0.6 million in the same period of 2023[216]. - Net cash provided by financing activities was approximately $10.1 million for the three months ended March 31, 2024, primarily due to cash acquired from the Business Combination of $10.4 million, compared to approximately $0.2 million in the same period of 2023[217]. - The company utilized internally generated positive cash flow to grow the business, with significant cash inflows from financing activities[217]. Corporate Structure and Governance - Following the Business Combination, the Sellers own 83.8% of the equity of the company, indicating no change in control[175]. - The Business Combination was treated as a reverse recapitalization, with ESGEN being considered the acquired company[171]. - The Class A Common Stock and public warrants are traded on Nasdaq under the ticker symbols "ZEO" and "ZEOWW," respectively[170]. - The company has $3.0 million payable for professional services related to the business combination, to be paid over the next six quarters[218]. - There was no goodwill impairment recorded for the three months ended March 31, 2024, and 2023[229]. Compliance and Operational Efficiency - Ongoing public company costs are expected to increase due to compliance requirements and additional expenses related to legal, accounting, and investor relations[179]. - The company has focused on improving operational efficiency and expanding its workforce to ensure high standards for quality and safety[161]. - The company emphasizes the use of non-GAAP financial measures to evaluate performance and facilitate comparisons with other companies in the industry[220].
ESGEN Acquisition (ESAC) - 2024 Q1 - Quarterly Report