Zeo Energy Corporation(ZEO) - 2024 Q4 - Annual Report

Business Combination and Corporate Changes - Following the Business Combination on March 13, 2024, the company changed its name from "ESGEN Acquisition Corporation" to "Zeo Energy Corp."[361] - The Business Combination was accounted for as a reverse recapitalization, with Sunergy being treated as the accounting acquirer[367]. - The primary sellers retained 83.8% ownership of the company immediately following the Business Combination, ensuring no change in control[372]. Financial Performance - Revenue decreased by approximately $36.4 million, from$109.7 million in 2023 to $73.2 million in 2024, a decline of 33.2$49.8 million in 2023 to $34.4 million in 2024, resulting in a gross margin increase from 45.4$6.98 million in 2023 to $1.96 million in 2024, with the adjusted EBITDA margin dropping from 6.4$19.7 million in 2023 to $14.6 million in 2024, with the contribution margin increasing from 18.0$21.4 million, from $59.4 million in 2023 to$38.0 million in 2024, maintaining a cost of goods sold percentage of 52.4%[401]. - General and administrative expenses increased by $8.7 million, from$12.9 million in 2023 to $21.6 million in 2024, primarily due to stock compensation expenses[404]. - Sales and marketing expenses decreased by$10.7 million, from $30.3 million in 2023 to$19.6 million in 2024, attributed to reduced commissions from lower revenue[403]. - Total revenue for 2024 was $73.2 million, down from$109.7 million in 2023, reflecting a decline in overall sales[419]. Cash Flow and Financial Position - As of December 31, 2024, cash and cash equivalents were approximately $5.6 million, down from$8.0 million in 2023[407]. - Net cash used in operating activities was approximately $8.7 million in 2024, a decrease of$20.7 million compared to a net cash provided of approximately $12.0 million in 2023[412]. - Net cash provided by financing activities was approximately$13.7 million in 2024, a significant increase of $18.9 million compared to a net cash used of$5.2 million in 2023[414]. - The company incurred approximately $7.4 million in net cash used in investing activities in 2024, compared to$1.0 million in 2023, primarily due to asset purchases[413]. - The company cannot assure that its cash and cash equivalents will be sufficient for its business needs over the next twelve months, indicating potential future financing requirements[410]. Sales and Market Strategy - The company has approximately 290 sales agents and 22 independent sales dealers as of December 31, 2024, focusing on a capital-light business strategy[358]. - The majority of sales in 2023 were generated in Florida, with a significant split between Florida and Ohio in 2024, indicating a focus on operational efficiency due to revenue decreases[359]. - The company aims to expand into new markets with favorable net metering policies and cost incentives, enhancing its customer base[359]. - The company plans to expand its residential sales into new markets, currently operating in eight states and servicing customers in 16 states[384]. - The company intends to expand its roofing business alongside solar installations to improve processing times and customer financing options[385]. - Revenues from lease arrangements accounted for 64% of sales in 2024, up from 21% in 2023, indicating a significant shift in customer financing preferences[412]. Operational Developments - The company has built a scalable regional operating platform to support rapid sales and installation growth through a multi-channel marketing approach[356]. - The company entered into a Promissory Note for $2.4 million in December 2024 to fund the creation of a year-round sales team[409]. - The company has approximately$3.6 million in trade-credit with solar equipment distributors and $2.4 million in a convertible promissory note with a related party[415].