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 19.49million,a4.018.73 million in the same period of 2023[87]. - Gross profit decreased to 1.84millionwithagrossmarginof9.53.49 million and 18.6% in the prior year[87]. - Adjusted EBITDA for the first quarter of 2024 was (1.15)million,comparedto2.05 million in the same period of 2023, reflecting a significant decline in performance[87]. - Adjusted EBITDA for Q1 2024 was (1,151,374),adecreasefrom2,046,082 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 2.37millionto17.18 million, representing 88.2% of revenue, up from 79.1% in the prior year[94]. - General and administrative expenses rose by 151.5% to 3.34million,primarilyduetoincreasedpersonnel−relatedcosts[92].−Generalandadministrativeexpensesroseby5.1 million, from 1.3millioninQ12023to6.4 million in Q1 2024, primarily due to investments in customer support and technology[96]. - Interest expense increased by 138.4% to (37,054),reflectinghigherborrowingcosts[92].−Thecompanyisfacinginflationarypressures,particularlyinlaborandrawmaterialcosts,whichmayimpactoperatingmargins[88].CashFlowandFinancing−Netcashusedinoperatingactivitieswasapproximately10.2 million in Q1 2024, compared to a net cash provided of approximately 1.6millioninQ12023,reflectingadecreaseof11.7 million[97]. - Net cash provided by financing activities increased significantly to approximately 10.1millioninQ12024from0.2 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 3.0millionpayableforprofessionalservicesrelatedtothebusinesscombination,tobepaidoverthenextsixquarters[98].OperationalDevelopments−Thecompanyhasincreaseditsinstallationcapacitybyinvestinginnewequipmentandtechnologytomeetgrowingdemand[80].−Thecompanyhasexpandeditsworkforcebyhiringandtrainingskilledtechnicianstoensurehighstandardsforqualityandsafety[80].−Thecompanyplanstoexpanditsroofingbusiness,havingsoldover1.3 million in roofing replacements in 2024 to support solar installations[86]. - Depreciation and amortization increased from 432,599forthethreemonthsendedMarch31,2023to462,701 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].
