Pineapple Energy Inc. (NASDAQ: PEGY), a leading provider of
sustainable solar energy and back-up power to households and small
businesses, today announced financial results for the first quarter
ended March 31, 2024.
Pineapple CEO Kyle Udseth commented, “The first quarter of 2024
presented the toughest operating conditions we’ve faced in our time
as a public company. Negative Q1 EBITDA is not uncommon in the
rooftop solar industry due to seasonality and timing, but we did
unfortunately break our prior streak of four consecutive quarters
with positive adjusted EBITDA. We’ve been hard at work in our
efforts to get profitability back on-track in Q2, and one positive
data point I can share is that kilowatts sold across the
residential businesses in Q1 of 2024 were essentially flat
year-over-year vs. Q1 of 2023, which shows strong performance from
our sales teams, especially relative to broader market and industry
trends. As we continue to optimize our lead-generation and
conversion funnel and accelerate the sales engine, we believe we
can continue pushing healthy volumes through our installation
pipelines while simultaneously right-sizing our overhead expenses.
We currently expect that our core markets of Long Island in New
York and Oahu in Hawaii should be stable and strong for the
remainder of the year and into 2025. We continue to evaluate
opportunities to acquire new businesses and add new markets to
further build off this strong foundation."
Pineapple CFO Eric Ingvaldson commented, “In addition to
unfavorable market conditions in the first quarter of 2024, the
first quarter of 2023 was a tough comparison for Pineapple. In late
2022, permitting issues in Hawaii and delayed equipment deliveries
in New York led to a significant number of projects originally
scheduled for the fourth quarter of 2022 being installed in the
first quarter of 2023. These timing issues led to a robust first
quarter in the prior year during the period which is normally a
seasonal low point for the business. Despite the year-over-year
decline in revenue and gross profit, we were able to minimize the
operating loss in the quarter by achieving a 31% reduction in
operating expenses from the prior year.”
First Quarter Business Highlights
- Pro forma operating metrics
- Residential kW installed down 18% (Q1 2024 vs Q4 2023)
- Residential kW sold down 7% (Q1 2024 vs Q4 2023)
- Residential battery attachment rate down to 29% in Q1 2024,
from 36% in Q4 2023
- Backlog declined to $30M as of May 1, 2024, down from $36M as
of December 31, 2023
First Quarter 2024 Results from Continuing
Operations1
|
1st Quarter
2024 |
1st Quarter
2023 |
Revenue |
$13,219,197 |
$22,065,424 |
Gross Profit |
$4,805,448 |
$8,006,315 |
Operating Expense |
$6,988,402 |
$10,155,841 |
Operating Loss |
$(2,182,954) |
($2,149,526) |
Other Income (Expense) |
$3,391,767 |
($444,414) |
Net Income (Loss) |
$1,202,651 |
$(2,599,672) |
Net Loss Attributable to Common Shareholders
2 |
($10,119,988) |
($2,554,989) |
Cash, restricted cash & investments3 |
$3,292,451 |
$7,610,981 |
Diluted Loss per Share 2 |
($0.26) |
($0.26) |
Adjusted EBITDA4 |
$(1,509,570) |
$372,802 |
1 Includes continuing operations and excludes discontinued
operations.
2 Includes $11,322,639 of deemed dividends attributable to
shareholders in the first quarter of 2024.
3 Includes restricted cash and liquid investments of $1,502,495
as of March 31, 2024, and $5,690,567 as of March 31, 2023,
earmarked for payment of contingent value rights.
4 Adjusted EBITDA is a non-GAAP financial measure. See “Non-GAAP
Financial Measures” and the reconciliations in this release for
further information.
Total revenue was $13.2 million in the first quarter of 2024,
down $8.8 million, or 40%, from the first quarter of 2023.
Residential contract sales decreased $6,743,799, or 37%, due to a
29% reduction in residential kilowatts installed and also a
decrease in average price per system installed as result of lower
financing fees and lower battery attachment rate. Commercial
contract sales decreased $1,830,586, or 65%, due to a delay in the
start of commercial pipeline projects. In addition, there was
software revenue of $250,000 in the first quarter of 2023 is
related to a one-time licensing arrangement that did not recur in
the first quarter of 2024.
Total gross profit was $4.8 million in the first quarter of
2024, a decrease of $3.2 million, or 40%, from the first quarter of
2023. Gross profit decreased due primarily to decreased revenue.
Gross margin remained flat at 36% during the first quarter of 2024
as compared to the first quarter of 2023.
Total operating expenses were $7.0 million in the first quarter
of 2024, a decrease of $3.2 million, or 31%, from the first quarter
of 2023. The decrease in operating expenses was primarily due to
lower amortization expense and lower sales and marketing expense,
including commissions, on lower revenue in the quarter and
decreased personnel expenses. Operating expenses in the first
quarter of 2024 included $801,792 of amortization and depreciation
expense, $197,306 of share-based compensation and a $350,000
favorable fair value remeasurement of earnout consideration.
Other income (expense) was $3.4 million in the first quarter of
2024, an increase of $3.8 million, from the first quarter of 2023.
The increase was primarily due to a $3.7 million fair value
remeasurement gain on the warrant liability, and a $626,085
increase in favorable fair value remeasurement of contingent value
rights, partially offset by a $306,652 increase in interest expense
because of debt financing closed in the second quarter of 2023.
Net loss from continuing operations attributable to common
shareholders was $10.1 million, or ($0.26) per diluted share in the
first quarter of 2024. This was a decline from the net loss from
continuing operations attributable to common shareholders in the
first quarter of 2023 of $2.6 million, or ($0.26) per diluted
share. The net loss from continuing operations attributable to
common shareholders in the first quarter of 2024 included $11.3
million in deemed dividends attributable to common shareholders.
Net income from continuing operations in the first quarter of 2024
was $1,202,651, a 146% increase from a net loss from continuing
operations of $2,599,672 in the first quarter of 2023.
First quarter 2024 adjusted EBITDA decreased 505%, or
$1,882,372, compared to the first quarter of 2023, due primarily to
the decline in gross profit, partially offset by the decline in
operating expenses.
As of March 31, 2024, cash, cash equivalents, and restricted
cash were $3.3 million. Of that amount, $1.5 million was held as
restricted cash and investments that can only be used for the
legacy CSI business and will be distributed to holders of CVRs
(Contingent Value Rights).
Status of Contingent Value RightsThe CVR
(Contingent Value Rights) liability as of March 31, 2024, was
estimated at $1.3 million and represents the estimated fair value
as of that date of the legacy CSI assets to be distributed to CVR
holders.
First Fiscal Quarter 2024 Conference Call
DetailsAs announced on May 6, 2024, Pineapple will discuss
its first fiscal quarter results via a webcast and conference call
on Friday, May 10, 2024 at 08:30 a.m. ET. The call will be hosted
by Kyle Udseth, Chief Executive Officer and Eric Ingvaldson, Chief
Financial Officer.
When: |
Friday, May 10 |
Time: |
8:30am ET |
Dial-In: |
(646) 307-1963 or toll free (800)
715-9871Conference ID: 6873571 |
Webcast: |
https://edge.media-server.com/mmc/p/pfj2geyk |
|
|
An archived webcast will be accessible from the “Recent Events”
section of Pineapple’s Investor Relations website for on-demand
viewing at https://ir.pineappleenergy.com/news-events.
About Pineapple EnergyPineapple is focused on
growing leading local and regional solar, storage, and energy
services companies nationwide. Our vision is to power the energy
transition through grass-roots growth of solar electricity paired
with battery storage. Our portfolio of brands (SUNation, Hawaii
Energy Connection, E-Gear, Sungevity, and Horizon Solar Power)
provide homeowners and small businesses with an end-to-end product
offering spanning solar, battery storage, and grid services.
Forward Looking StatementsThis press release
includes certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including,
among others, statements regarding future financial performance,
future growth or growth opportunities, future opportunities, future
cost reductions, future flexibility to pursue acquisitions, future
cash flows and future earnings. These statements are based on the
Company’s current expectations or beliefs and are subject to
uncertainty and changes in circumstances. Actual results may vary
materially from those expressed or implied by the statements here
due to changes in economic, business, competitive or regulatory
factors, and other risks and uncertainties, including those set
forth in the Company’s filings with the Securities and Exchange
Commission. The forward-looking statements in this press release
speak only as of the date of this press release. The Company does
not undertake any obligation to update or revise these
forward-looking statements for any reason, except as required by
law.
Contacts:
Pineapple Energy
Kyle UdsethChief Executive Officer+1 (952)
996-1674Kyle.Udseth@pineappleenergy.com
Eric IngvaldsonChief Financial Officer+1 (952)
996-1674Eric.Ingvaldson@pineappleenergy.com
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|
PINEAPPLE ENERGY INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
|
|
|
|
|
|
ASSETS |
|
March 31 |
|
December 31 |
|
|
2024 |
|
|
|
2023 |
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
$ |
1,789,956 |
|
|
$ |
3,575,283 |
|
Restricted cash and cash equivalents |
|
1,502,495 |
|
|
|
1,821,060 |
|
Trade accounts receivable, less allowance for |
|
|
|
|
|
credit losses of $132,586 and $94,085, respectively |
|
4,976,483 |
|
|
|
5,010,818 |
|
Inventories, net |
|
2,919,861 |
|
|
|
3,578,668 |
|
Related party receivables |
|
27,387 |
|
|
|
46,448 |
|
Prepaid expenses |
|
1,630,106 |
|
|
|
1,313,082 |
|
Costs and estimated earnings in excess of billings |
|
6,570 |
|
|
|
57,241 |
|
Other current assets |
|
293,923 |
|
|
|
376,048 |
|
TOTAL CURRENT ASSETS |
|
13,146,781 |
|
|
|
15,778,648 |
|
PROPERTY, PLANT AND EQUIPMENT,
net |
|
1,442,561 |
|
|
|
1,511,878 |
|
OTHER ASSETS: |
|
|
|
|
|
Goodwill |
|
20,545,850 |
|
|
|
20,545,850 |
|
Operating lease right of use asset |
|
4,408,207 |
|
|
|
4,516,102 |
|
Intangible assets, net |
|
15,098,958 |
|
|
|
15,808,333 |
|
Other assets, net |
|
12,000 |
|
|
|
12,000 |
|
TOTAL OTHER ASSETS |
|
40,065,015 |
|
|
|
40,882,285 |
|
TOTAL ASSETS |
$ |
54,654,357 |
|
|
$ |
58,172,811 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) |
CURRENT LIABILITIES: |
|
|
|
|
|
Accounts payable |
$ |
6,993,067 |
|
|
$ |
7,677,261 |
|
Accrued compensation and benefits |
|
1,311,762 |
|
|
|
1,360,148 |
|
Operating lease liability |
|
404,744 |
|
|
|
394,042 |
|
Accrued warranty |
|
253,176 |
|
|
|
268,004 |
|
Other accrued liabilities |
|
915,975 |
|
|
|
867,727 |
|
Income taxes payable |
|
11,535 |
|
|
|
5,373 |
|
Refundable customer deposits |
|
1,818,487 |
|
|
|
2,112,363 |
|
Billings in excess of costs and estimated earnings |
|
202,867 |
|
|
|
440,089 |
|
Contingent value rights |
|
1,314,987 |
|
|
|
1,691,072 |
|
Earnout consideration |
|
2,500,000 |
|
|
|
2,500,000 |
|
Current portion of loans payable |
|
1,762,300 |
|
|
|
1,654,881 |
|
Current portion of loans payable - related party |
|
3,456,631 |
|
|
|
3,402,522 |
|
TOTAL CURRENT LIABILITIES |
|
20,945,531 |
|
|
|
22,373,482 |
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
Loans payable and related interest |
|
7,708,979 |
|
|
|
8,030,562 |
|
Loans payable and related interest - related party |
|
2,195,940 |
|
|
|
2,097,194 |
|
Deferred income taxes |
|
41,579 |
|
|
|
41,579 |
|
Operating lease liability |
|
4,087,012 |
|
|
|
4,193,205 |
|
Earnout consideration |
|
650,000 |
|
|
|
1,000,000 |
|
Warrant liability |
|
6,863,627 |
|
|
|
- |
|
TOTAL LONG-TERM LIABILITIES |
|
21,547,137 |
|
|
|
15,362,540 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
MEZZANINE EQUITY: |
|
|
|
|
|
Redeemable convertible
preferred stock, par value $1.00 per share;3,000,000 shares
authorized; 20,597 and no shares issued and outstanding,
respectively |
|
23,333,613 |
|
|
|
— |
|
STOCKHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
|
Convertible preferred stock, par value $1.00 per share;3,000,000
shares authorized; no and 28,000 shares issued and outstanding,
respectively |
|
— |
|
|
|
28,000 |
|
Common stock, par value $0.05 per share; 112,500,000 shares
authorized; |
|
|
|
|
|
64,154,286 and 10,246,605 shares issued and outstanding,
respectively |
|
3,207,714 |
|
|
|
512,330 |
|
Additional paid-in capital |
|
11,470,950 |
|
|
|
46,977,870 |
|
Accumulated deficit |
|
(25,850,588 |
) |
|
|
(27,081,411 |
) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
|
(11,171,924 |
) |
|
|
20,436,789 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) |
$ |
54,654,357 |
|
|
$ |
58,172,811 |
|
PINEAPPLE ENERGY INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
2024 |
|
|
|
2023 |
|
Sales |
$ |
13,219,197 |
|
|
$ |
22,065,424 |
|
Cost of sales |
|
8,413,749 |
|
|
|
14,059,109 |
|
Gross profit |
|
4,805,448 |
|
|
|
8,006,315 |
|
Operating expenses: |
|
|
|
|
|
Selling, general and administrative expenses |
|
6,629,027 |
|
|
|
8,062,123 |
|
Amortization expense |
|
709,375 |
|
|
|
1,266,698 |
|
Transaction costs |
|
— |
|
|
|
2,020 |
|
Fair value remeasurement of SUNation earnout consideration |
|
(350,000 |
) |
|
|
825,000 |
|
Total operating expenses |
|
6,988,402 |
|
|
|
10,155,841 |
|
Operating loss |
|
(2,182,954 |
) |
|
|
(2,149,526 |
) |
Other income (expense): |
|
|
|
|
|
Investment and other income |
|
45,841 |
|
|
|
19,533 |
|
Gain on sale of assets |
|
6,118 |
|
|
|
244,271 |
|
Fair value remeasurement of warrant liability |
|
3,728,593 |
|
|
|
— |
|
Fair value remeasurement of contingent value rights |
|
376,085 |
|
|
|
(250,000 |
) |
Interest and other expense |
|
(764,870 |
) |
|
|
(458,218 |
) |
Other income (expense), net |
|
3,391,767 |
|
|
|
(444,414 |
) |
Net income (loss) before
income taxes |
|
1,208,813 |
|
|
|
(2,593,940 |
) |
Income tax expense |
|
6,162 |
|
|
|
5,732 |
|
Net income (loss) from
continuing operations |
|
1,202,651 |
|
|
|
(2,599,672 |
) |
Net income from discontinued
operations, net of tax |
|
— |
|
|
|
44,683 |
|
Net income (loss) |
|
1,202,651 |
|
|
|
(2,554,989 |
) |
|
|
|
|
|
|
Other comprehensive income
(loss), net of tax: |
|
|
|
|
|
Unrealized gain on available-for-sale securities |
|
— |
|
|
|
24,405 |
|
Total other comprehensive
income |
|
— |
|
|
|
24,405 |
|
Comprehensive income
(loss) |
$ |
1,202,651 |
|
|
$ |
(2,530,584 |
) |
|
|
|
|
|
|
Less: Deemed dividend on extinguishment of Convertible Preferred
Stock |
|
(751,125 |
) |
|
|
— |
|
Less: Deemed dividend on modification of PIPE Warrants |
|
(10,571,514 |
) |
|
|
— |
|
Net loss attributable to
common shareholders |
$ |
(10,119,988 |
) |
|
$ |
(2,554,989 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per share: |
|
|
|
|
|
Continuing operations |
$ |
(0.26 |
) |
|
$ |
(0.26 |
) |
Discontinued operations |
|
— |
|
|
|
— |
|
|
$ |
(0.26 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
Diluted net loss per
share: |
|
|
|
|
|
Continuing operations |
$ |
(0.26 |
) |
|
$ |
(0.26 |
) |
Discontinued operations |
|
— |
|
|
|
— |
|
|
$ |
(0.26 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
Weighted Average Basic Shares
Outstanding |
|
39,410,206 |
|
|
|
9,919,650 |
|
Weighted Average Dilutive
Shares Outstanding |
|
39,410,206 |
|
|
|
9,919,650 |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial MeasuresThis press release
also includes non-GAAP financial measures that differ from
financial measures calculated in accordance with United States
generally accepted accounting principles (“GAAP”). Adjusted EBITDA
is a non-GAAP financial measure provided in this release, and is
net income (loss) calculated in accordance with GAAP, adjusted for
interest, income taxes, depreciation, amortization, transaction
costs, stock compensation, gain on sale of assets, and non-cash
fair value remeasurement adjustments as detailed in the
reconciliations presented below in this press release. These
non-GAAP financial measures are presented because the Company
believes they are useful indicators of its operating performance.
Management uses these measures principally as measures of the
Company’s operating performance and for planning purposes,
including the preparation of the Company’s annual operating plan
and financial projections. The Company believes these measures are
useful to investors as supplemental information and because they
are frequently used by analysts, investors, and other interested
parties to evaluate companies in its industry. The Company also
believes these non-GAAP financial measures are useful to its
management and investors as a measure of comparative operating
performance from period to period. The non-GAAP financial measures
presented in this release should not be considered as an
alternative to, or superior to, their respective GAAP financial
measures, as measures of financial performance or cash flows from
operations as a measure of liquidity, or any other performance
measure derived in accordance with GAAP, and they should not be
construed to imply that the Company’s future results will be
unaffected by unusual or non-recurring items. In addition, these
measures do not reflect certain cash requirements such as tax
payments, debt service requirements, capital expenditures and
certain other cash costs that may recur in the future. Adjusted
EBITDA contains certain other limitations, including the failure to
reflect our cash expenditures, cash requirements for working
capital needs and cash costs to replace assets being depreciated
and amortized. In evaluating non-GAAP financial measures, you
should be aware that in the future the Company may incur expenses
that are the same as or similar to some of the adjustments in this
presentation. The Company’s presentation of non-GAAP financial
measures should not be construed to imply that its future results
will be unaffected by any such adjustments. Management compensates
for these limitations by primarily relying on the Company’s GAAP
results in addition to using non-GAAP financial measures on a
supplemental basis. The Company’s definition of these non-GAAP
financial measures is not necessarily comparable to other similarly
titled captions of other companies due to different methods of
calculation.
Reconciliation of Non-GAAP to GAAP Financial
Information
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 |
|
Interest income |
|
(21,555 |
) |
|
|
(13,693 |
) |
Income taxes |
|
6,162 |
|
|
|
5,732 |
|
Depreciation |
|
92,417 |
|
|
|
110,325 |
|
Amortization |
|
709,375 |
|
|
|
1,266,698 |
|
Transaction costs |
|
- |
|
|
|
2,020 |
|
Stock compensation |
|
197,306 |
|
|
|
312,445 |
|
Gain on sale of assets |
|
(6,118 |
) |
|
|
(244,271 |
) |
FV remeasurement of contingent value rights |
|
(376,085 |
) |
|
|
250,000 |
|
FV remeasurement of earnout consideration |
|
(350,000 |
) |
|
|
825,000 |
|
FV remeasure of warrant liability |
|
(3,728,593 |
) |
|
|
- |
|
Adjusted
EBITDA |
$ |
(1,509,570 |
) |
|
$ |
372,802 |
|
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