Pineapple Energy Reports Fourth Quarter and Full Year 2023 Financial Results
Pineapple Energy Inc. (NASDAQ: PEGY) reports a strong Q4 2023 with revenue up 13% and gross profit up 10% from Q4 2022. Operating expenses decreased by 8%, and operating loss decreased by 34%. Net loss from continuing operations decreased by 91%. Pro forma adjusted EBITDA increased by 222%. Positive cash flow from operations in Q4 2023 was $157,937. CEO Kyle Udseth and CFO Eric Ingvaldson express optimism for 2024 despite challenges in the residential solar industry.
Positive
Revenue increased by 13% in Q4 2023 compared to Q4 2022.
Gross profit saw a 10% increase from Q4 2022 to Q4 2023.
Operating expenses decreased by 8% in Q4 2023 from Q4 2022.
Operating loss decreased by 34% from Q4 2022 to Q4 2023.
Net loss from continuing operations decreased by 91% in Q4 2023 from Q4 2022.
Pro forma adjusted EBITDA increased by 222% in Q4 2023 compared to Q4 2022.
Positive cash flow from operations in Q4 2023 was $157,937.
CEO Kyle Udseth and CFO Eric Ingvaldson express optimism for 2024 despite challenges in the residential solar industry.
The reported increase in Pineapple Energy's Q4 revenue by 13% and the 222% rise in adjusted EBITDA reflect a significant improvement in operational efficiency. The reduction in operating expenses by 8% alongside a substantial decrease in net loss from continuing operations suggests a strategic cost management approach. These results could be indicative of a positive trend for the company's financial health and may influence investor confidence positively.
From a financial perspective, the emphasis on positive cash flow from operations and a strong EBITDA is a clear signal that the company is moving towards sustainable growth. However, the decline in backlog from $39M to $36M might raise concerns about future revenues, warranting close monitoring. The solar industry is becoming increasingly competitive and Pineapple Energy's ability to navigate headwinds and capitalize on market opportunities could be pivotal for its stock performance.
Considering the broader renewable energy sector, Pineapple Energy's performance must be contextualized within the industry's supply chain dynamics and policy environment . The company's acknowledgment of challenges such as high interest rates and policy uncertainty is crucial. Yet, their resilience in such an environment is commendable and could position them favorably as the industry expands.
The increase in residential battery attachment rate from 28% to 38% indicates a growing consumer trend towards energy independence and storage solutions. This could signal a shift in market demand, potentially opening new revenue streams for Pineapple Energy. Additionally, the mention of anticipated interest rate declines and hardware cost reductions in 2024 could further bolster the company's financial outlook and market positioning.
The positive operational performance of Pineapple Energy aligns with the ongoing transition to renewable energy sources. The company's ability to deliver a strong Q4 despite the downturn in residential kW installed suggests a robust business model capable of weathering sector-specific challenges. The strategic acquisitions and the increased battery attachment rates reflect an adaptive approach to changing market demands and technological advancements within the energy sector.
Looking ahead, the company's anticipation of utility price increases could strengthen the value proposition for rooftop solar solutions, potentially driving demand. However, the short-term muted demand due to high interest rates may impact investor sentiment. Long-term, the company's growth strategy, including future acquisitions and organic expansion, could be a significant driver for its market share and stock performance, especially if the economic conditions for solar adoption become more favorable.
03/28/2024 - 04:00 PM
Fourth Quarter 2023:
Revenue up 13% from Q4 2022 Gross profit up 10% from Q4 2022 Operating Expenses down 8% from Q4 2022 Operating Loss decreased 34% from Q4 2022 Net Loss from continuing operations decreased 91% from Q4 2022 Pro forma adjusted EBITDA up 222% from Q4 2022 Positive cash flow from operations in Q4 2023 of $157,937 MINNETONKA, Minn., March 28, 2024 (GLOBE NEWSWIRE) -- 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 fourth-quarter and full year ended December 31, 2023.
Pineapple CEO Kyle Udseth commented, “Pineapple Energy, and our two core operating businesses Hawaii Energy Connection and SUNation, were able to power through the adversity impacting the residential solar industry and deliver a strong Q4 to cap off a very strong 2023. Stubbornly high interest rates, uncertainty over state-level policy and incentives, and general consumer malaise around long-term big-ticket items certainly presented challenges. But despite the headwinds, our solar professionals delivered solid results and continued to power the energy transition by helping individual homeowners take control of their electricity production, storage, and consumption. We came in just shy of our revenue guidance range, generating $79.6 million , and more importantly were able to deliver positive adjusted EBITDA over the full year. In 2024, we anticipate interest rates to start to fall, hardware costs to continue to decrease, and utilities to continue their streak of double-digit annual price increases, which will support the value proposition for rooftop solar – ideally paired with a battery. Not only is this expected to continue to drive demand in the markets we already operate in, but the economics and ROI of going solar should improve in more states as well, paving the way for future acquisitions and organic expansion. Until rates start coming down, demand is likely to remain muted, but we are optimistic that the back half of 2024 will shape up to be a period of accelerating growth. We believe our strategy remains sound and will continue to bear out in 2024.”
Pineapple CFO Eric Ingvaldson commented, “We are proud of the results our employees delivered in 2023. Achieving $1.2 million in positive pro forma adjusted EBITDA for the full year shows that we were able to successfully control costs and gain operating leverage. Our number one focus will continue to be generating positive EBITDA and cash flow from operations. We continue to pursue various funding sources to provide working capital for the business and make sure adequate resources are available to meet our obligations in 2024.”
Fourth Quarter Business Highlights
Pro forma operating metrics Residential kW installed down 17% (Q4 2023 vs Q4 2022) Residential kW sold up 2% (Q4 2023 vs Q4 2022) Residential battery attachment rate up to 38% in Q4 2023, from 28% in Q4 2022 Backlog declined to $36M as of December 31, 2023, down from $39M as of October 31, 2023 Full Year Business Highlights
Pro forma operating metrics Residential kW installed up 8% (2023 vs 2022) Residential kW sold down 1% (2023 vs 2022) Residential battery attachment rate up 3% to 40% in 2023, from 37% 2022 Fourth Quarter and Full Year 2023 GAAP Results from Continuing Operations 1
4 th Quarter 2023 4 th Quarter 2022 2023 2022 Revenue $19,442,296 $17,183,616 $79,632,709 $27,522,099 Gross Profit $5,520,482 $5,005,131 $27,696,190 $7,377,445 Operating Expense $7,858,152 $8,550,236 $35,163,055 $17,826,124 Operating Loss ($2,337,670 ) ($3,545,116 ) ($7,466,865 ) ($10,448,679 ) Other Income $780,884 $3,017,849 $646,149 $7,182,860 Net Loss 2 ($1,677,358 ) ($17,403,394 ) ($6,939,892 ) ($20,141,948 ) Cash, restricted cash & investments3 $5,396,343 $7,923,244 $5,396,343 $7,923,244 Diluted Loss per Share ($0.16 ) ($2.58 ) ($0.69 ) ($2.99 )
2 Includes $16,863,892 of deemed dividends attributable to shareholders in the fourth quarter and full year 2022.
3 Includes restricted cash and liquid investments of $1,821,060 as of December 31, 2023, and $5,735,704 as of December 31, 2022, earmarked for payment of contingent value rights.
Total revenue was $19.4 million in the fourth quarter of 2023, up $2.3 million , or 13% , from the fourth quarter of 2022. Total revenue was $79.6 million for the full year of 2023 up, $52.1 million or 189% from the full year of 2022. The increase in revenue in both periods was due primarily to the SUNation acquisition in Q4 of 2022.
Total gross profit was $5.5 million in the fourth quarter of 2023, an increase of $0.5 million , or 10% , from the fourth quarter of 2022. Total gross profit was $27.7 million for the full year of 2023, up $20.3 million , or 275% from the full year of 2022. Gross profit in both periods increased due to increased revenue and an improved gross profit margin. The gross profit margin improvements were due to the SUNation acquisition and an improvement in equipment costs and financing fees.
Total operating expenses were $7.9 million in the fourth quarter of 2023, a decrease of $0.7 million , or 8% , from the fourth quarter of 2022. The decrease in operating expenses was primarily a result of the SUNation acquisition in Q4 of 2022 and related transaction costs incurred because of the acquisition. Operating expenses in the fourth quarter of 2023 included $1.1 million of amortization and depreciation expense, $246,131 of stock-based compensation and a $190,000 unfavorable fair value remeasurement of earnout consideration.
Total operating expenses were $35.2 million for the full year of 2023, up $17.3 million , or 97% from the full year of 2022. The increase in operating expenses was primarily due to increased costs associated with the SUNation business acquired in Q4 of 2022. Operating expenses in 2023 included $5.1 million of amortization and depreciation expense, $1.2 million of stock-based compensation and a $1.35 million unfavorable fair value remeasurement of earnout consideration.
Other income was $780,884 in the fourth quarter of 2023, a decrease of $2.2 million , from the fourth quarter of 2022. Other income decreased primarily due to a $1.8 million decrease in favorable fair value remeasurement of contingent value rights and an increase in interest expense because of debt financing closed in the second quarter of 2023. Other income was $646,149 for the full year of 2023, a decrease of $6.5 million , from the full year of 2022. Other income decreased due to a $4.68 million favorable fair value remeasurement of earnout consideration that occurred in 2022 and a decrease in the gain on sale of assets in 2023 vs 2022.
Net loss from continuing operations was $1.7 million , or ($0.16) per diluted share in the fourth quarter of 2023. This was an improvement from the net loss from continuing operations (after taking into effect $16.9 million in deemed dividends) in the fourth quarter of 2022 of $17.4 million , or ($2.58) per diluted share. Net loss from continuing operations was $6.9 million or ($0.69) per diluted share, for the full year of 2023. This was an improvement from a net loss from continuing operations attributable to common shareholders (after taking into effect $16.9 million in deemed dividends) of $20.1 million or ($2.99) per diluted share for the full year of 2022.
As of December 31, 2023, cash, cash equivalents, and restricted cash were $5.4 million . Of that amount, $1.8 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).
Fourth Quarter and Full Year 2023 Pro Forma Comparisons
To facilitate analysis of the Company’s operating business, below is an unaudited pro forma presentation of results as if the Company had completed the SUNation merger, the CSI merger, and the HEC/E-Gear asset acquisition as of January 1, 2022:
Three Months Ended December 31 Twelve Months Ended December 31 2023 2022 2023 2022 Revenue $ 19,442,296 $ 23,537,582 $ 79,632,709 73,990,209 Gross Profit 5,520,482 7,710,730 27,696,190 23,788,906 Net (Loss) Income (1,677,358 ) 1,005,577 (6,937,872 ) (357,441 ) Adjusted EBITDA* 207,947 (170,536 ) 1,236,048 (3,311,746 )
17% compared to the prior year due to a decrease in residential kW installed of 17% and a 6% decrease in commercial revenue, partially offset by a 6% increase in service and other revenue. Full year pro forma revenue increased 8% compared to the prior year due to an 8% increase in residential kW installed a 4% increase in commercial revenue and a 15% increase in service and other revenue.
Fourth quarter pro forma gross profit decreased 28% from the prior year due to a decrease in revenue, a change in revenue mix and an increase in indirect costs. Full year pro forma gross profit increased 16% from the prior year due to an increase in revenue and margin improvement on reduced equipment costs and financing fees.
Fourth quarter pro forma net loss increased by $2.7 million from the prior year due to the decrease in gross profit and the $1.8 million decrease in favorable fair value remeasurement of contingent value rights. Full year pro forma net loss increased $6.6 million from the prior year due to a $4.7 million decrease in gain on fair value remeasurement of the merger earnout consideration in 2022, a $1.9 million decrease in an employee retention credit recognized by SUNation in the third quarter of 2022, and a $1.7 million increase in interest expense, partially offset by an overall improvement in gross profit on increased revenues.
Fourth quarter pro forma adjusted EBITDA increased 222% , or $378,483 , driven by increased operating leverage by controlling costs at SUNation, HEC (Hawaii Energy Connection) and Corporate. Full year pro forma adjusted EBITDA increased 135% , or $4.7 million , from the prior year.
The unaudited pro forma financial information above is not necessarily indicative of consolidated results of operations of the combined business had the acquisition occurred at the beginning of the respective period, nor is it necessarily indicative of future results of operations of the combined company. The above unaudited pro forma results are not adjusted for the level of corporate overhead costs needed to support the go-forward strategy and instead include a higher cost structure based on operating legacy businesses and the structure in place while carrying out plans to complete the CSI merger transaction. The unaudited pro forma financial information above includes adjustments to amortization expense for intangible assets totaling $0 and $167,708 and excludes transaction costs totaling $0 and $1,003,946 for the three months ended December 31, 2023, and 2022, respectively. The unaudited pro forma financial information above includes adjustments to amortization expense for intangible assets totaling $0 and $1,706,086 and excludes transaction costs totaling $2,020 and $4,208,063 for the twelve months ended December 31, 2023, and 2022, respectively.
Status of Contingent Value Rights $1.7 million and represents the estimated fair value as of that date of the legacy CSI assets to be distributed to CVR holders.
About Pineapple Energy
Forward Looking Statements
Contacts:
Pineapple Energy
Kyle Udseth
Eric Ingvaldson
PINEAPPLE ENERGY INC. CONSOLIDATED BALANCE SHEETS ASSETS December 31 December 31 2023 2022 CURRENT ASSETS: Cash and cash equivalents $ 3,575,283 $ 2,187,540 Restricted cash and cash equivalents 1,821,060 3,068,938 Investments — 2,666,766 Trade accounts receivable, less allowance for credit losses of $94,085 and $108,636 , respectively 5,010,818 5,564,532 Inventories, net 3,578,668 6,054,493 Employee retention credit — 1,584,541 Related party receivables 46,448 116,710 Prepaid expenses 1,313,082 2,152,058 Costs and estimated earnings in excess of billings 57,241 777,485 Other current assets 376,048 634,362 Current assets held for sale — 1,154,099 TOTAL CURRENT ASSETS 15,778,648 25,961,524 PROPERTY, PLANT AND EQUIPMENT, net 1,511,878 1,190,932 OTHER ASSETS: Goodwill 20,545,850 20,545,850 Right of use assets 4,516,102 4,166,838 Intangible assets, net 15,808,333 20,546,810 Other assets 12,000 12,000 Noncurrent assets held for sale — 2,271,533 TOTAL OTHER ASSETS 40,882,285 47,543,031 TOTAL ASSETS $ 58,172,811 $ 74,695,487 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 7,677,261 $ 7,594,181 Accrued compensation and benefits 1,360,148 859,774 Operating lease liabilities 394,042 220,763 Accrued warranty 268,004 276,791 Other current liabilities 867,727 961,986 Related party payables — 2,181,761 Income taxes payable 5,373 1,650 Refundable customer deposits 2,112,363 4,285,129 Billings in excess of costs and estimated earnings 440,089 2,705,409 Contingent value rights 1,691,072 — Earnout consideration 2,500,000 — Current portion of loans payable 1,654,881 346,290 Current portion of loans payable - related party 3,402,522 5,339,265 Current liabilities held for sale — 1,161,159 TOTAL CURRENT LIABILITIES 22,373,482 25,934,158 LONG TERM LIABILITIES: Loans payable and related interest 8,030,562 3,138,194 Loans payable and related interest - related party 2,097,194 4,635,914 Deferred income taxes 41,579 — Operating lease liabilities 4,193,205 3,961,340 Earnout consideration 1,000,000 2,150,000 Contingent value rights — 7,402,714 Long term liabilities held for sale — 250,875 TOTAL LONG-TERM LIABILITIES 15,362,540 21,539,037 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Convertible preferred stock, par value $1.00 per share; 3,000,000 shares authorized; 28,000 shares issued and outstanding 28,000 28,000 Common stock, par value $0.05 per share; 112,500,000 and 75,000,000 shares authorized, respectively; 10,246,605 and 9,915,586 shares issued and outstanding, respectively 512,330 495,779 Additional paid-in capital 46,977,870 45,798,069 Accumulated deficit (27,081,411 ) (19,089,134 ) Accumulated other comprehensive loss — (10,422 ) TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 20,436,789 27,222,292 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 58,172,811 $ 74,695,487
PINEAPPLE ENERGY INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Year Ended December 31 2023 2022 Sales $ 79,632,709 $ 27,522,099 Cost of sales 51,936,519 20,144,654 Gross profit 27,696,190 7,377,445 Operating expenses: Selling, general and administrative expenses 29,072,558 12,211,135 Amortization expense 4,738,477 3,133,460 Transaction costs 2,020 2,231,529 Fair value remeasurement of SUNation earnout consideration 1,350,000 — Impairment loss — 250,000 Total operating expenses 35,163,055 17,826,124 Operating loss from continuing operations (7,466,865 ) (10,448,679 ) Other income (expenses): Investment and other income 191,584 119,634 Gain on sale of assets 437,116 1,229,883 Fair value remeasurement of earnout consideration — 4,684,000 Fair value remeasurement of contingent value rights 2,674,966 2,125,949 Interest and other expense (2,657,517 ) (976,606 ) Other income, net 646,149 7,182,860 Operating loss from continuing operations before income taxes (6,820,716 ) (3,265,819 ) Income tax expense 119,176 12,237 Net loss from continuing operations (6,939,892 ) (3,278,056 ) Net loss from discontinued operations, net of tax (1,192,275 ) (7,074,184 ) Net loss (8,132,167 ) (10,352,240 ) Other comprehensive income (loss), net of tax: Unrealized gains (losses) on available-for-sale securities 10,422 (10,422 ) Total other comprehensive income (loss) 10,422 (10,422 ) Comprehensive loss $ (8,121,745 ) $ (10,362,662 ) Less: Deemed dividend on extinguishment of Convertible Preferred Stock — (13,239,892 ) Less: Deemed dividend on modification of PIPE Warrants — (3,624,000 ) Net loss attributable to common shareholders $ (8,132,167 ) $ (27,216,132 ) Basic net loss per share: Continuing operations $ (0.69 ) $ (2.99 ) Discontinued operations (0.12 ) (1.05 ) $ (0.81 ) $ (4.04 ) Diluted net loss per share: Continuing operations $ (0.69 ) $ (2.99 ) Discontinued operations (0.12 ) (1.05 ) $ (0.81 ) $ (4.04 ) Weighted Average Basic Shares Outstanding 10,035,970 6,741,446 Weighted Average Dilutive Shares Outstanding 10,035,970 6,741,446
For the three months ended December 31, 2023, and 2022, the unaudited pro forma financial information includes adjustments to amortization expense for intangible assets totaling $0 and $167,708 , respectively, and excludes transaction costs totaling $0 and $1,003,946 , respectively. For the years ended December 31, 2023, and 2022, the unaudited pro forma financial information includes adjustments to amortization expense for intangible assets totaling $0 and $1,706,086 , respectively, and excludes transaction costs totaling $2,020 and $4,208,063 , respectively.
This press release also includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S., (United States) generally accepted accounting principles (“GAAP”). Adjusted EBITDA is a non-GAAP financial measure provided in this release, and is net loss, on a pro forma basis calculated in accordance with GAAP, adjusted for pro forma interest, income taxes, depreciation, amortization, 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 Pro Forma Net Loss to Pro Forma Adjusted EBITDA:
Three Months Ended December 31 Twelve Months Ended December 31 2023 2022 2023 2022 Pro Forma Net Loss $ (1,677,358 ) $ 1,005,577 $ (6,937,872 ) $ (357,441 ) Interest expense 789,940 353,961 2,657,517 1,065,945 Interest income (21,619 ) (6,459 ) (139,560 ) (23,188 ) Income taxes 120,572 (5,182 ) 119,176 204,453 Depreciation 95,099 70,421 397,943 317,300 Amortization 1,038,382 1,216,698 4,738,477 4,866,793 Impairment loss - 250,000 - 250,000 Stock compensation 246,131 285,707 1,212,956 309,205 Gain on sale of assets - (750 ) (437,116 ) (1,229,883 ) FV remeasurement of contingent value rights (1,522,693 ) (3,340,509 ) (2,674,966 ) (2,125,949 ) FV remeasurement of earnout consideration 190,000 - 1,350,000 (4,684,000 ) Legacy CSI receivables write off 949,493 - 949,493 - Employee retention credit - - - (1,904,981 ) Pro Forma Adjusted EBITDA $ 207,947 $ (170,536 ) $ 1,236,048 $ (3,311,746 )
Pineapple Energy Inc.'s revenue in Q4 2023 increased by 13% from Q4 2022.
The gross profit of Pineapple Energy Inc. increased by 10% from Q4 2022 to Q4 2023.
Operating expenses for Pineapple Energy Inc. decreased by 8% from Q4 2022 to Q4 2023.
The operating loss for Pineapple Energy Inc. decreased by 34% from Q4 2022 to Q4 2023.
The net loss from continuing operations for Pineapple Energy Inc. decreased by 91% from Q4 2022 to Q4 2023.
The pro forma adjusted EBITDA for Pineapple Energy Inc. increased by 222% in Q4 2023 compared to Q4 2022.
Pineapple Energy Inc. reported positive cash flow from operations of $157,937 in Q4 2023.
The ticker symbol for Pineapple Energy Inc. is PEGY.
