Zeo Energy Corp.
For the period ended Sep 30, 2024. Filed Jan 23, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Jan 23, 2025
ZEO$0.21-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-19.
0001213900-24-070714
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2025-01-23.
0001213900-25-006070
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 129 current paragraphs.
77 unchanged; 35 reworded; 16 added; 14 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Recent Developments
Current report
On October 25, 2024, the Company closed an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Lumio Holdings, Inc., a Delaware corporation (“Lumio”), and Lumio HX, Inc., a Delaware corporation (together with Lumio, the “Sellers”), pursuant to which, subject to the terms and conditions set forth in the Asset Purchase Agreement, the Company agreed to acquire certain assets of the Sellers on an as-is, where-is basis, including uninstalled residential solar energy contracts, certain inventory, intellectual property and intellectual property rights, equipment, records, goodwill and other intangible assets (collectively, the “Assets”), free and clear of any liens other than certain specified liabilities of the Sellers that are being assumed (collectively, the “Liabilities” and such acquisition of the Assets and assumption of the Liabilities together, the “Transaction”) for a total purchase price of (i) $4 million in cash and (ii) 6,206,897 shares of the Company’s Class A Common Stock, par value $0.0001, to be paid to LHX Intermediate, LLC, a Delaware limited liability company (“LHX”). The Asset Purchase Agreement contains customary representations, warranties and covenants of the parties for a transaction involving the acquisition of assets from a debtor in bankruptcy, including the condition that the bankruptcy court enter an order authorizing and approving the Transaction.
Current report
We define gross profit as revenue, net less cost of goods sold and depreciation and amortization related to cost of goods sold, and define gross margin, expressed as a percentage, as the ratio of gross profit to revenue, net. See “—Non-GAAP Financial Measures” for a reconciliation of Gross Profit and Gross Margin.
Current report
Contribution Profit and Contribution Margin
Current report
Components of Condensed Consolidated Statements of Operations
Current report
During 2024, costs of goods sold decreased in association with a reduction in revenues. Revenues declined because of the effect of higher interest rates on the consumer financing rates. The increased cost of consumer lending has reduced the advantage provided by financed solar power relative to standard utility costs, which has negatively affected the demand for our products.
Current report
Other income (expenses), net
Current report
Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023
Current report
Revenue, net decreased by approximately $18.2 million. Several factors affected the reduction in sales. The primary reason is due to the effect of higher interest rates on the consumer financing rates. This increased cost of consumer lending has reduced the advantage provided by financed solar power relative to standard utility costs, which has negatively affected the demand for our products. The second factor affecting revenue is an increase in sales volume from our internal sales teams and decreases in sales volume from sales by our dealer network, which sales mix improves our profitability.
Current report
Other income (expense), net
Current report
Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023
Current report
Revenue, net decreased by approximately $32.1 million. Several factors affected the reduction in sales. The primary reason is due to the effect of higher interest rates on the consumer financing rates. This increased cost of consumer lending has reduced the advantage provided by financed solar power relative to standard utility costs, which has negatively affected the demand for our products. The second factor affecting revenue is an increase in sales volume from our internal sales teams and decreases in sales volume from sales by our dealer network, which sales mix improves our profitability.
Current report
Depreciation and amortization
Current report
Other income (expense), net
Current report
Net cash used in operating activities was approximately $12.2 million during the nine months ended September 30, 2024 compared to a net cash provided by operating activities of approximately $5.8 million during nine months ended September 30, 2023. The decrease was primarily due to a decrease in net income due to the decrease in revenue and the closing of the Business Combination.
Current report
Contribution Profit and Contribution Margin
Removed paragraphs (14)
Previous report
Emerging Growth Company
Previous report
We are an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Previous report
Components of Consolidated Statements of Operations
Previous report
During 2023, supply chain challenges and an increase in demand for our products resulted in increased equipment costs and delays. As a result, our installation and sales growth were less than we had projected. During 2024, the increase in interest rates has slowed customer interest in solar products. In this environment, the sales process is more challenging resulting in fewer sales people and sales dealers making sales. As a result, our sales are less than we had projected.
Previous report
Other (expenses) income, net
Previous report
Three Months Ended June 30, 2024 Compared to Year Ended June 30, 2023
Previous report
Revenue, net decreased by approximately $15.4 million. In the higher interest environment, it is more challenging to make sales. We are seeing less volume from our internal sales teams resulting in higher attrition of sales personnel than in previous years. We are also seeing less volume from our sales dealer partners.
Previous report
Other (expense) income, net
Previous report
Six Months Ended June 30, 2024 Compared to Year Ended June 30, 2023
Previous report
Revenue, net decreased by approximately $14.2 million. In the higher interest environment, it is more challenging to make sales. We are seeing less volume from our internal sales teams resulting in higher attrition of sales personnel than in previous years. We are also seeing less volume from our sales dealer partners.
Previous report
Other (expense) income, net
Previous report
Net cash used in operating activities was approximately $12.3 million during the six months ended June 30, 2024 compared to a net cash provided by operating activities of approximately $1.8 million during six months June 30, 2024. The decrease was due primarily to an increase in accounts receivable and contract liabilities. Accounts receivables have increased as our financing partners have become more conservative in how soon they fund a customer contract after completion. Contract liabilities decreased as a result of completing jobs in the first quarter for which we had received funding but deferred revenue because we had not yet achieved the revenue recognition milestones.
Previous report
Adjusted EBITDA Margin
Previous report
The following table sets forth our calculations of Adjusted EBITDA margin for the periods presented:
Reworded paragraphs (35)
Previous wording
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current wording
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (as restated)
Previous wording
References to the “Company,” “our,” “us” or “we” refer to Zeo Energy Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Current wording
References to the “Company,” “our,” “us” or “we” refer to Zeo Energy Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Previous wording
We have focused to date on a simple, capital light business strategy utilizing, as of June 30, 2024, approximately 170 sales agents and approximately 27 independent sales dealers to produce a growing sales pipeline. We engineer and design projects and process building permit applications on behalf of our customers to timely install their systems and assist their connections to the local utility power grid. Most of the equipment we install is drop-shipped to the installation site by our regional distributors, requiring minimal inventory to be held by the Company during any given period. We depend on our distributors to timely handle logistics and related requirements in moving equipment to the installation sites. In addition to our main offering of residential solar energy systems, we sell and install products such as roofing, insulation, energy efficient appliances and battery storage systems for the residential market.
Current wording
We have focused to date on a simple, capital light business strategy utilizing, as of September 30, 2024, approximately 180 sales agents and approximately 22 independent sales dealers to produce a growing sales pipeline. We engineer and design projects and process building permit applications on behalf of our customers to timely install their systems and assist their connections to the local utility power grid. Most of the equipment we install is drop-shipped to the installation site by our regional distributors, requiring minimal inventory to be held by the Company during any given period. We depend on our distributors to timely handle logistics and related requirements in moving equipment to the installation sites. In addition to our main offering of residential solar energy systems, we sell and install products such as roofing, insulation, energy efficient appliances and battery storage systems for the residential market.
Previous wording
We believe that continued government policy support of solar energy and increasing conventional utility costs provide the solar energy market with material headwinds for accelerating adoption in the United States, which currently lags other international markets, including Australia and Europe. We offer our products and services throughout Florida, Texas, Arkansas, Missouri, Ohio and Illinois and plan to enter new markets selectively where favorable net metering policies exist and solar penetration is below 7% of the addressable residential market. Most of our sales were generated in Florida and Ohio through June 30, 2024 and 2023 with the remainder for each period generated in Texas, Arkansas, Missouri and Illinois. We have focused on improving our operational efficiency to meet the growing demand for our services and have increased our installation capacity by investing in new equipment and technology. We have also expanded our workforce by hiring more skilled technicians and training them extensively to ensure that they meet our high standards for quality and safety.
Current wording
We believe that continued government policy support of solar energy and increasing conventional utility costs provide the solar energy market with material headwinds for accelerating adoption in the United States, which currently lags other international markets, including Australia and Europe. We offer our products and services throughout Florida, Ohio, Texas, Arkansas, Missouri, and Illinois and plan to enter new markets selectively where favorable net metering policies exist and solar penetration is below 7% of the addressable residential market. Most of our sales were generated in Florida through September 30, 2024, and 2023 with the remainder for each period generated in Ohio, Texas, Arkansas, Missouri, and Illinois. We have focused on improving our operational efficiency to meet the growing demand for our services and have increased our installation capacity by investing in new equipment and technology. We have also expanded our workforce by hiring more skilled technicians and training them extensively to ensure that they meet our high standards for quality and safety.
Previous wording
We define Adjusted EBITDA, a non-GAAP financial measure, as earnings (loss) before interest expense, income tax expense (benefit), depreciation and amortization, other income (expenses), net, and stock compensation, as adjusted to exclude merger transaction related expenses. We define Adjusted EBITDA margin, a non-GAAP financial measure, expressed as a percentage, as the ratio of Adjusted EBITDA to revenue, net. See “Non-GAAP Financial Measures” for a reconciliation of GAAP net loss to Adjusted EBITDA and a ratio of GAAP net loss to revenue, net.
Current wording
We define Adjusted EBITDA, a non-GAAP financial measure, as earnings (loss) before interest expense, income tax expense (benefit), depreciation and amortization, other income (expenses), net, and stock compensation, as adjusted to exclude merger transaction related expenses. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. See “—Non-GAAP Financial Measures” for a reconciliation of GAAP net loss to Adjusted EBITDA and Adjusted EBITDA Margin.
Previous wording
Expansion of New Products and Services. In 2024 we have sold over $2.1 million in roofing replacements to facilitate our solar installations and to repair rooftops on homes in Florida damaged by severe weather. We plan to expand our roofing business in all markets we enter in the future. Roofing facilitates a faster processing time for our solar installations in cases where the customer is in need of a roof replacement prior to installing a solar system. In addition, to provide more financing options for our prospective residential solar energy customers, in 2023, we launched a program that allows customers to choose a leasing option to finance their systems from a third party. We expect selling systems utilizing third party leases under this and other similar programs to be a growing portion of our customer finance offerings in the future.
Current wording
Expansion of New Products and Services. In 2024 we sold over $2.5 million in roofing replacements to facilitate our solar installations and to repair rooftops on homes in Florida damaged by severe weather. We plan to expand our roofing business in all markets we enter in the future. Roofing facilitates a faster processing time for our solar installations in cases where the customer is in need of a roof replacement prior to installing a solar system. In addition, to provide more financing options for our prospective residential solar energy customers, in 2023, we launched a program that allows customers to choose a leasing option to finance their systems from a third party. We expect selling systems utilizing third party leases under this and other similar programs to be a growing portion of our customer finance offerings in the future.
Previous wording
Managing our Supply Chain. We rely on contract manufacturers and suppliers to produce our components. We have seen supply chain challenges and logistics constraints increase, including component shortages, which have, in certain cases, caused delays in the delivery of critical components and inventory, created longer lead times, and resulted in increased costs on jobs that were impacted by these issues. We experienced material shortages and an increase in pricing in 2022 and the beginning of 2023. In the second half of 2023 purchases saw a correction in the supply chain. Our suppliers are generally meeting our materials needs and we are realizing a decrease in pricing for our solar components. Our ability to grow depends, in part, on the ability of our contract manufacturers and suppliers to provide high quality services and deliver components and finished products on time and at reasonable costs. In the event we are unable to mitigate the impact of delays and/or price increases in raw materials, electronic components and freight, it could delay the manufacturing and installation of our systems, which would adversely impact our cash flows and results of operations, including revenue and gross margin.
Current wording
Managing our Supply Chain. We rely on contract manufacturers and suppliers to produce our components. Our suppliers are generally meeting our materials needs and we are realizing a decrease in pricing for our solar components compared to the prior year. Our ability to grow depends, in part, on the ability of our contract manufacturers and suppliers to provide high quality services and deliver components and finished products on time and at reasonable costs. In the event we are unable to mitigate the impact of delays and/or price increases in raw materials, electronic components and freight, it could delay the manufacturing and installation of our systems, which would adversely impact our cash flows and results of operations, including revenue and contribution margin.
Previous wording
Our primary source of revenue is the sale of our residential solar systems. Our systems are fully functional at the time of installation and require an inspection prior to interconnection to the utility power grid. We sell our systems primarily direct to end user customers for use in their residences. Upon installation inspection, we satisfy our performance obligation and recognize revenue. Many of the Company’s customers finance their obligations with third parties. In these situations, the finance company deducts their financing fees and remits the net amount to the Company. Revenue is recorded net of these financing fees (and/or dealer fees). The volume of sales and installations of rooftop solar systems, our primary product, increase from April to September when a majority of our sales teams are most active in our areas of service. In addition to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances, upgraded insulation and/or energy storage systems. All adders consisted of less than 10% of the total revenue, net in each of the three and six months ended June 30, 2024 and 2023.
Current wording
Our primary source of revenue is the sale of our residential solar systems. Our systems are fully functional at the time of installation and require an inspection prior to interconnection to the utility power grid. We sell our systems primarily direct to end user customers for use in their residences. Upon installation inspection, we satisfy our performance obligation and recognize revenue. Many of the Company’s customers finance their obligations with third parties. In these situations, the finance company deducts their financing fees and remits the net amount to the Company. Revenue is recorded net of these financing fees (and/or dealer fees). The volume of sales and installations of rooftop solar systems, our primary product, increase from April to September when a majority of our sales teams are most active in our areas of service. In addition to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances, upgraded insulation and/or energy storage systems. All adders consisted of less than 10% of the total revenue, net in each of the three and nine months ended September 30, 2024, and 2023.
Previous wording
Our revenue is affected by changes in the volume and average selling prices of our solutions and related accessories, supply and demand, sales incentives and fluctuating interest rates that increase or decrease the monthly payments for customers purchasing systems through third party financing. Approximately 5% of our sales were paid in cash by the customer in each of the three and six months ended June 30, 2024 and 2023. Our revenue growth is dependent on our ability to compete effectively in the marketplace by remaining cost competitive, developing and introducing new sales teams within existing and new territories, scaling our installation teams to keep up with demand and maintaining a strong internal operations team to process orders while working with building departments and utilities to permit and interconnect our customers to the utility grid.
Current wording
Our revenue is affected by changes in the volume and average selling prices of our solutions and related accessories, supply and demand, sales incentives and fluctuating interest rates that increase or decrease the monthly payments for customers purchasing systems through third party financing. Approximately 5% of our sales were paid in cash by the customer in each of the three and nine months ended September 30, 2024, and 2023. Our revenue growth is dependent on our ability to compete effectively in the marketplace by remaining cost competitive, developing and introducing new sales teams within existing and new territories, scaling our installation teams to keep up with demand and maintaining a strong internal operations team to process orders while working with building departments and utilities to permit and interconnect our customers to the utility grid.
Previous wording
Cost of goods sold consists primarily of product costs (including solar panels, inverters, metal racking, connectors, shingles, wiring, warranty costs and logistics costs), sales commissions, installation labor and permitting costs.
Current wording
Cost of goods sold consists primarily of product costs (including solar panels, inverters, metal racking, connectors, shingles, wiring, warranty costs and logistics costs), installation labor and permitting costs.
Previous wording
Sales and marketing expenses consist primarily of personnel-related expenses, as well as advertising, travel, trade shows, marketing, customer support and other indirect costs. We expect to continue to make the necessary investments to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our base sales teams, installers and strategic sales dealer and partner network.
Current wording
Sales and marketing expenses consist primarily of personnel-related expenses including sales commissions, as well as advertising, travel, trade shows, marketing, customer support and other indirect costs. We expect to continue to make the necessary investments to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our base sales teams, installers and strategic sales dealer and partner network.
Previous wording
Depreciation and amortization consist primarily of deprecation of our vehicles, furniture and fixtures, internally developed software and amortization of our acquired intangibles.
Current wording
Depreciation and amortization consist primarily of depreciation of our vehicles, furniture and fixtures, internally developed software and amortization of our acquired intangibles.
Previous wording
Other (expenses) income, net primarily consists of interest expense and fees under our equipment and vehicle term loans. It also includes interest income on our cash balances, and accrued interest on tariffs previously paid and approved for a refund.
Current wording
Other income (expenses), net primarily consists of change in fair value of warrant liabilities and interest expense and fees under our equipment and vehicle term loans. It also includes interest income on our cash balances, and accrued interest on tariffs previously paid and approved for a refund.
Previous wording
Cost of goods sold decreased by $14.1 million. The decrease was a result of the decrease in revenue. As a percentage of revenue, cost of goods improved to 70% in 2024 from 81% in 2023. This improvement was driven by a decrease in the cost of materials and efficiencies in labor.
Current wording
Cost of goods sold decreased by $10.7 million. The decrease was a result of the decrease in revenue as noted above offset by an increase in the cost of labor and materials during the three months ended September 30, 2024 as compared to 2023. As a percentage of revenue, cost of goods sold improved from 55.0% for the three months ended September 30, 2023 to 51.2% for the three months ended September 30, 2024. This improvement was driven by a decrease in the cost of materials and efficiencies in labor.
Previous wording
Depreciation and amortization decreased by a nominal amount, from $489,566 for the three months ended June 30, 2023 to $456,841 for the three months ended June 30, 2024. The decrease was due to to a decrease in the amortization of intangible assets which became fully depreciated..
Current wording
Depreciation and amortization decreased by a nominal amount, from $521,289 for the three months ended September 30, 2023 to $499,875 for the three months ended September 30, 2024. The decrease was due to a decrease in the amortization of intangible assets which became fully amortized.
Previous wording
General and administrative expenses increased by $2.1 million from $3.8 million for the three months ended June 30, 2023 to $5.9 million for the three months ended June 30, 2024. The increase was primarily due to $2.4 million in stock compensation recognized in 2024. There was no stock compensation expense in 2023.
Current wording
General and administrative expenses increased by $2.8 million from $4.3 million for the three months ended September 30, 2023 to $7.2 million for the three months ended September 30, 2024. The increase was primarily due to stock compensation recognized in 2024. There was no stock compensation expense in 2023.
Previous wording
Sales and marketing expenses decreased by $275,683, from $490,875 for the three months ended June 30, 2023 to $215,192 for the three months ended June 30, 2024. The decrease was a result of a reduction in cost to support fewer sales people and less revenue.
Current wording
Sales and marketing expenses decreased by $3.4 million. The decrease was a result of a reduction in cost to support fewer sales people and less revenue.
Previous wording
Other (expense) income, net increased from an expense of $(31,168) for the three months ended June 30, 2023 to income of $844,588 for the three months ended June 30, 2024. The increase in income was due primarily to a gain on fair value of warrant liabilities.
Current wording
Other income (expense), net increased from expense of $1,245 for the three months ended September 30, 2023 to income of $66,281 for the three months ended September 30, 2024. The increase was due to a gain on fair value of warrant liabilities.
Previous wording
Cost of goods sold decreased by $11.6 million. The decrease was a result of the decrease in revenue. As a percentage of revenue, cost of goods was consistent period to period at 80%.Depreciation and amortization
Current wording
Cost of goods sold decreased by $18.4 million. The decrease was a result of the decrease in revenue. As a percentage of revenue, the cost of goods sold was 57.2% for the nine months ended September 30, 2024, which was consistent with the nine months ended September 30, 2023.
Previous wording
Depreciation and amortization decreased by a nominal amount, from $922,165 for the six months ended June 30, 2023 to 919,542 for the six months ended June 30, 2024. The decrease was due to a decrease in the amortization of intangible assets which became fully depreciated.
Current wording
Depreciation and amortization decreased by a nominal amount, from $1,431,482 for the nine months ended September 30, 2023, to $1,413,074 for the nine months ended September 30, 2024. The decrease was due to a decrease in the amortization of intangible assets which became fully depreciated.
Previous wording
General and administrative expenses increased by $4.4 million from $5.2 million for the six months ended June 30, 2023 to $9.6 million for the six months ended June 30, 2024. The increase was primarily due to a $2.9 million increase in stock compensation and an increase in headcount, infrastructure-related expenses to support increased revenues and expenses related to the Business Combination.
Current wording
General and administrative expenses increased by $6.2 million from $9.7 million for the nine months ended September 30, 2023 to $15.9 million for the nine months ended September 30, 2024. The increase was primarily due to stock compensation and an increase in headcount, infrastructure-related expenses to support increased revenues and expenses related to the Business Combination.
Previous wording
Sales and marketing expenses decreased by $0.7 million, from $1.0 million for the six months ended June 30, 2023 to $0.3 million for the six months ended June 30, 2024. The decrease was a result of a reduction in cost to support fewer sales people and less revenue.
Current wording
Sales and marketing expenses decreased by $3.6 million, from $19.8 million for the nine months ended September 30, 2023 to $16.2 million for the nine months ended September 30, 2024. The decrease was a result of a reduction in cost to support fewer sales people and less revenue.
Previous wording
Other expense (income), net decreased from a net expense of $(41,712) to income of $669,534. The improvement in income was due primarily to a gain on fair value of warrant liabilities of $690,000.
Current wording
Other income (expense), net increased from $55,938 of other expense to $722,072 of other income primarily due to a gain on fair value of warrant liabilities of $828,000.
Previous wording
As of June 30, 2024 and December 31, 2023, our cash and cash equivalents balance were approximately $5.3 million and $8.0 million, respectively. The Company maintains its cash in checking and savings accounts.
Current wording
As of September 30, 2024 and December 31, 2023, our cash and cash equivalents balance were approximately $4.3 million and $8.0 million, respectively. The Company maintains its cash in checking and savings accounts.
Previous wording
Net cash used in investing activities was approximately $0.3 million for the six months ended June 30, 2024, primarily relating to the development of software of $0.3 million. Net cash used in investing activities for the six months ended June 30, 2023 was approximately $0.8 million primarily relating to purchases of vehicles.
Current wording
Net cash used in investing activities was approximately $0.3 million for the nine months ended September 30, 2024, relating to purchases of property and equipment. Net cash used in investing activities for the nine months ended September 30, 2023 was approximately $0.2 million, relating to purchases of vehicles.
Previous wording
Net cash provided by financing activities was approximately $10.0 million for the six months ended June 30, 2024, primarily relating to the net proceeds from the issuance of convertible preferred stock. Net cash provided by financing activities for the six months ended June 30, 2023 was approximately $0.1 million, primarily relating to proceeds from the issuance of debt to purchase vehicles offset by distributions to members.
Current wording
Net cash provided by financing activities was approximately $8.8 million for the nine months ended September 30, 2024, primarily relating to the net proceeds from the issuance of convertible preferred stock. Net cash used in financing activities for the nine months ended September 30, 2023 was approximately $3.5 million, primarily relating to distributions to members.
Previous wording
The Company has utilized internally generated positive cashflow to grow the business. Other than approximately $1.9 million in trade-credit with solar equipment distributors, the Company has only approximately $1.6 million of debt on service trucks and vehicles valued at approximately $1.9 million net of depreciation.
Current wording
The Company has utilized internally generated positive cashflow to grow the business. Other than approximately $2.5 million in trade-credit with solar equipment distributors, Sunergy has only approximately $0.9 million of debt on service trucks and vehicles valued at approximately $1.3 million, net of depreciation.
Previous wording
We define gross profit as revenue, net less direct costs of revenue and depreciation and amortization, and define gross margin, expressed as a percentage, as the ratio of gross profit to revenue, net. Gross profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward.
Current wording
We define contribution profit as revenue, net less direct costs of revenue, commissions expense and depreciation and amortization, and define contribution margin, expressed as a percentage, as the ratio of contribution profit to revenue, net. Contribution profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward. Contributions margin reflects our Contribution profit as a percentage of revenues.
Previous wording
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for the periods presented:
Current wording
The following table provides a reconciliation of gross profit to contribution profit for the periods presented:
Previous wording
We define Adjusted EBITDA, a non-GAAP financial measure, as net income (loss) before interest and other income (expenses), net, income tax expense, and depreciation and amortization, as adjusted to exclude merger and acquisition expenses (“M&A expenses”). We utilize Adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry. Adjusted EBITDA should not be viewed as a substitute for net loss calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently.
Current wording
We define Adjusted EBITDA, a non-GAAP financial measure, as net income (loss) before interest and other income (expenses), net, income tax expense, depreciation and amortization, as adjusted to exclude merger and acquisition expenses (“M&A expenses”). We utilize Adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry. Adjusted EBITDA should not be viewed as a substitute for net (loss) income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. The following table provides a reconciliation of net (loss) income to Adjusted EBITDA for the periods presented:
Previous wording
The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates and assumptions that affect our reported amounts of assets and liabilities at the date of the consolidated financial statements. These financial statements include some estimates and assumptions that are based on informed judgments and estimates of management. We evaluate our policies and estimates on an on-going basis and discuss the development, selection and disclosure of critical accounting policies with those charged with governance. Predicting future events is inherently an imprecise activity and as such requires the use of judgment. Our consolidated financial statements may differ based upon different estimates and assumptions.
Current wording
The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates and assumptions that affect our reported amounts of assets and liabilities at the date of the condensed consolidated financial statements. These financial statements include some estimates and assumptions that are based on informed judgments and estimates of management. We evaluate our policies and estimates on an on-going basis and discuss the development, selection and disclosure of critical accounting policies with those charged with governance. Predicting future events is inherently an imprecise activity and as such requires the use of judgment. Our condensed consolidated financial statements may differ based upon different estimates and assumptions.
Previous wording
We discuss our significant accounting policies in Note 3, Summary of Significant Accounting Policies, to our consolidated financial statements. Our significant accounting policies are subject to judgments and uncertainties that affect the application of such policies. We believe these financial statements include the most likely outcomes with regard to amounts that are based on our judgment and estimates. Our financial position and results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from the actual amounts, adjustments are made in subsequent periods to reflect more current information. We believe the following accounting policies are critical to the preparation of our consolidated financial statements due to the estimation process and business judgment involved in their application:
Current wording
We discuss our significant accounting policies in Note 3, Summary of Significant Accounting Policies, to our condensed consolidated financial statements. Our significant accounting policies are subject to judgments and uncertainties that affect the application of such policies. We believe these financial statements include the most likely outcomes with regard to amounts that are based on our judgment and estimates. Our financial position and results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from the actual amounts, adjustments are made in subsequent periods to reflect more current information. We believe the following accounting policies are critical to the preparation of our consolidated financial statements due to the estimation process and business judgment involved in their application:
Previous wording
Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. First, the Company assesses qualitative factors to determine whether or not it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative goodwill impairment test comparing the fair value of the applicable reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, the Company recognizes an impairment loss in the consolidated statements of operations for the amount by which the carrying amount exceeds the fair value of the reporting unit. The Company performs its annual goodwill impairment test at December 31 of each year. There was no goodwill impairment recorded for the three months ended June 30, 2024 and 2023.
Current wording
Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. First, the Company assesses qualitative factors to determine whether or not it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative goodwill impairment test comparing the fair value of the applicable reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, the Company recognizes an impairment loss in the condensed consolidated statements of operations for the amount by which the carrying amount exceeds the fair value of the reporting unit. The Company performs its annual goodwill impairment test at December 31 of each year. There was no goodwill impairment recorded for the three and nine months ended September 30, 2024, and 2023.
Previous wording
Intangible assets include tradename, customer lists and non-compete agreements. Amounts are subject to amortization on a straight-line basis over the estimated period of benefit and are subject to annual impairment consideration. Costs incurred to renew or extend the term of a recognized intangible asset, such as the acquired trademark, are capitalized as part of the intangible asset and amortized over its revised estimated useful life.
Current wording
Intangible assets include tradename, customer lists and non-compete agreements. Amounts are subject to amortization on a straight-line basis over the estimated period of benefit and are subject to annual impairment consideration. Costs incurred to renew or extend the term of a recognized intangible asset, such as the acquired tradename, are capitalized as part of the intangible asset and amortized over its revised estimated useful life.
Previous wording
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. The Company evaluates the recoverability of intangible assets by comparing their carrying amounts to future net undiscounted cash flows expected to be generated by the intangible assets. If such intangible assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the intangible assets exceeds the fair value of the assets. The Company determines fair value based on discounted cash flows using a discount rate commensurate with the risk inherent in the Company’s current business model for the specific intangible asset being valued. No impairment charges were recorded for the three months ended June 30, 2024 and 2023.
Current wording
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. The Company evaluates the recoverability of intangible assets by comparing their carrying amounts to future net undiscounted cash flows expected to be generated by the intangible assets. If such intangible assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the intangible assets exceeds the fair value of the assets. The Company determines fair value based on discounted cash flows using a discount rate commensurate with the risk inherent in the Company’s current business model for the specific intangible asset being valued. No impairment charges were recorded for the three and nine months ended September 30, 2024, and 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We define contribution profit as revenue, net less direct costs of revenue, commissions expense and depreciation and amortization, and define contribution margin, expressed as a percentage, as the ratio of contribution profit to revenue, net. Contribution profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward. Contributions margin reflects our Contribution profit as a percentage of revenues. See “—Non-GAAP Financial Measures” for a reconciliation of Gross Profit to Contribution Profit and Contribution Margin.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We define Adjusted EBITDA margin, a non-GAAP financial measure, expressed as a percentage, as the ratio of Adjusted EBITDA to revenue, net. Adjusted EBITDA margin measures net income (loss) before interest expense, other expenses, net, depreciation and amortization, and M&A expenses. In the table above, Adjusted EBITDA is reconciled to the most comparable GAAP measure, net income (loss). We utilize Adjusted EBITDA margin as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry.