Zeo Energy Corp. (ESAC)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 net revenue rose 4.0% year over year to $19.49M, but gross profit fell 47% to $1.80M (9.5% margin) and the company swung to a net loss of $1.70M as G&A and merger-related costs weighed on results .
• Adjusted EBITDA turned negative to $(1.15)M (−5.9% margin) versus $2.05M (10.9%) a year ago, reflecting incremental costs tied to the business combination and public listing .
• Management expects profitability to return to historical levels over the remainder of 2024, citing dissipating industry headwinds, more favorable equipment pricing, and stable or declining interest rates; sales and installation capacity expanded into Ohio and Illinois .
• No Q1 2024 earnings call transcript or additional Q1 press releases were available; S&P Global consensus estimates were unavailable due to mapping, so estimate comparisons cannot be provided for this quarter .

What Went Well and What Went Wrong

• What Went Well

  • Net revenue increased 4.0% YoY to $19.49M, driven by reducing backlog through installation completions .
  • Geographic expansion: “expanded our operations in two new markets: Ohio and Illinois” to support growth in sales and installations .
  • Tone on macro/industry: “positive signs that the headwinds facing our industry are starting to dissipate… anticipate more favorable equipment pricing… stable or declining interest rates,” underpinning confidence in profitability recovery .

• What Went Wrong

  • Gross margin compressed sharply to 9.5% from 18.6% YoY, with gross profit down 47% to $1.80M, partly due to deferred installation costs from 2023 .
  • Net loss of $1.70M vs. net income of ~$1.60M a year ago, with higher G&A from software investments and public company costs (personnel, legal, accounting, investment banking) .
  • Adjusted EBITDA fell to $(1.15)M vs. $2.05M last year as business combination costs and listing expenses pressured operating performance .

Financial Results

Segment/Revenue Composition

Selected KPIs and Cash

Actual vs. Estimates (Q1 2024)

Note: S&P Global estimate data was unavailable due to missing CIQ mapping for ESAC, so consensus comparisons cannot be provided for Q1 2024.

Guidance Changes

No quantitative guidance ranges (revenue, margins, OpEx, OI&E, tax rate, segment-specific, dividends) were disclosed in Q1 2024 materials .

Earnings Call Themes & Trends

No Q1 2024 earnings call transcript was available, so themes are drawn from press releases; prior quarter Q3 2023 materials were not found.

Management Commentary

• “We see positive signs that the headwinds facing our industry are starting to dissipate… and anticipate more favorable equipment pricing throughout the year as well as stable or declining interest rates.”
• “With transaction costs from our successful business combination behind us, we expect that our profitability will return to historical levels of growth throughout the remainder of the year.”
• “We have historically operated as a seasonal sales and installation company… our focus in Q1 was on completing installations from the prior sales season… and staffing operations as we anticipate growth through the following three quarters.”
• “We are already returning a significant number of successful sales managers as well as new representatives to the field, indicating growth in our overall numbers for 2024 across sales and installations.”
• “Overall, we believe that residential solar adoption is in its early innings in the United States.”

Q&A Highlights

• No Q1 2024 earnings call transcript was available, so Q&A highlights and any guidance clarifications cannot be provided .

Estimates Context

• S&P Global consensus estimates for ESAC were unavailable due to missing CIQ mapping, preventing comparisons of actuals vs. consensus for revenue, EPS, and EBITDA for Q1 2024 [GetEstimates error].
• Given the absence of consensus, investors should focus on sequential and year-over-year trends and management’s qualitative guidance indicating expected profitability recovery and improving macro inputs .

Key Takeaways for Investors

• Revenue grew 4.0% YoY to $19.49M, supported by backlog reduction; however, gross margin compressed to 9.5%, and net loss was $(1.70)M as G&A and transaction-related costs weighed on results .
• Adjusted EBITDA flipped to a $(1.15)M loss (−5.9% margin), highlighting near-term operating pressure from merger/public company transition costs; watch for these costs to abate in Q2–Q3 .
• Management’s narrative turned more constructive: industry headwinds dissipating, equipment pricing improving, and rates stabilizing/declining—key drivers for margin recovery and sales velocity in the peak install season (May–Sep) .
• Expansion into Ohio and Illinois should lift sales capacity; monitor installation conversion and working capital (contract liabilities fell to $0.59M at Q1-end) to gauge cash cycle normalization .
• Operating cash flow was $(10.15)M in Q1; track OCF and G&A trajectory as public company infrastructure ramps, with the $15M preferred equity providing near-term liquidity .
• No quantitative guidance or consensus estimates are available this quarter; reassess the thesis after Q2 when seasonality kicks in and transaction costs roll off, focusing on gross margin trajectory and adjusted EBITDA normalization .
• Potential stock catalysts: evidence of margin recovery in Q2–Q3, improved equipment pricing, and stable/declining rates supporting financing affordability and consumer adoption .

Sources: Q1 2024 8‑K 2.02 press release and financial statements ; Q4 2023 corrected 8‑K 2.02 press release and financial statements .