Executive Summary

Q1 2024 was a difficult quarter: revenue fell 40% year over year to $13.22M, gross profit fell 40% to $4.81M, and adjusted EBITDA turned to a loss of $(1.51)M; diluted loss per share was ($0.26) despite positive net income from continuing operations of $1.20M due to $11.3M deemed dividends to common shareholders .
Residential kW sold were “essentially flat” year over year, but installation volumes and battery attachment rates declined; backlog fell to $30M (May 1) from $36M (Dec 31), highlighting near‑term pipeline pressure .
Management attributed the miss to unfavorable market conditions, Hawaii tariff transitions and seasonality, plus idiosyncratic commercial project delays; they emphasized cost control and expect profitability to improve in Q2 2024 while focusing investor attention on gross profit dollars over GAAP revenue .
No formal 2024 guidance was provided; management indicated full‑year 2024 revenue likely below 2023, with potential sequential improvement from Q2 onward; they are actively fundraising to meet 2024 obligations .
Wall Street consensus estimates via S&P Global were unavailable for PEGY; comparisons to Street were not possible (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well

Net income from continuing operations was $1.20M vs a loss of $(2.60)M in Q1 2023, aided by a $3.7M fair value gain on warrant liability and CVR remeasurement gains; gross margin held flat at 36% despite revenue pressure .
Residential sales activity resilient: “kilowatts sold across the residential businesses in Q1 of 2024 were essentially flat year-over-year vs. Q1 of 2023,” supporting forward install visibility and sales team execution .
CEO reiterated strategic focus on profitability and disciplined OpEx while pursuing acquisitions: “We’ve been hard at work in our efforts to get profitability back on-track in Q2… we continue to evaluate opportunities to acquire new businesses and add new markets” .

What Went Wrong

Revenue declined 40% YoY to $13.22M driven by 29% fewer residential kilowatts installed, lower average system pricing (financing fee normalization, lower battery attach) and 65% decline in commercial due to project starts slipping; adjusted EBITDA swung to $(1.51)M .
Hawaii softness: end‑2023 Battery Bonus program ended; successor tariff uncertainty slowed Q1 demand. New York commercial underperformed budget with project‑specific delays, reducing Q1 conversion to revenue .
Shareholder optics: Net loss attributable to common shareholders worsened to $(10.12)M due to $11.32M deemed dividends related to preferred/warrant modifications; diluted loss per share remained ($0.26) despite positive net income in GAAP continuing ops .

Financial Results

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($USD)	$18,288,697	$19,442,296	$13,219,197
Gross Profit ($USD)	$7,032,458	$5,520,482	$4,805,448
Gross Margin (%)	38.5%	28.4%	36%
Operating Expenses ($USD)	$8,596,808	$7,858,152	$6,988,402
Operating Loss ($USD)	$(1,564,350)	$(2,337,670)	$(2,182,954)
Other Income (Expense) ($USD)	$(768,937)	$780,884	$3,391,767
Net Income (Loss) from Continuing Ops ($USD)	$(2,329,053)	$(1,677,358)	$1,202,651
Net Loss Attributable to Common Shareholders ($USD)	$(2,329,053)	$(1,677,358)	$(10,119,988)
Diluted EPS ($)	$(0.23)	$(0.16)	$(0.26)
Adjusted EBITDA ($USD, non‑GAAP)	$336,297 (pro forma)	$207,947 (pro forma)	$(1,509,570)

Segment dynamics and YoY drivers (Q1 2024 vs Q1 2023):

Segment/Item	YoY Change	Commentary
Residential contract sales	$(6,743,799) (-37%)	29% fewer kW installed; lower average price per system from reduced financing fees and lower battery attachment
Commercial contract sales	$(1,830,586) (-65%)	Delay in start of commercial pipeline projects
Software revenue	$(250,000)	One-time Q1’23 license not recurring in Q1’24

KPIs and pipeline:

KPI	Q3 2023	Q4 2023	Q1 2024
Residential kW sold (seq. q/q)	+14% (vs Q2’23)	+2% YoY	Down 7% q/q
Residential kW installed (seq. q/q)	+10% (vs Q2’23)	Down 17% YoY	Down 18% q/q
Battery attachment rate (residential)	37%	38%	29% (vs 36% in Q4’23)
Backlog ($)	$41M (Sep 30, 2023)	$36M (Dec 31, 2023)	$30M (May 1, 2024)
Cash, cash equivalents & restricted cash ($)	$5.59M (Sep 30, 2023)	$5.40M (Dec 31, 2023)	$3.29M (Mar 31, 2024)

Non‑GAAP reconciliation note: Adjusted EBITDA bridges show substantial non‑cash FV remeasurement impacts (warrants/CVRs/earnout), interest and amortization; Q1 2024 negative adjusted EBITDA reflects lower gross profit partially offset by reduced OpEx .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2023	$80–$85M (unchanged through Q3’23)	Actual: $79.63M (GAAP)	Achieved within ~1% of low end
Revenue	FY 2024	Not provided	Not provided; mgmt indicates FY24 likely below FY23; focus on Q2–Q4 improvement	Maintained “no formal guidance”
EBITDA/Adj. EBITDA	FY 2024	Not provided	No formal guidance; aim to restore positive EBITDA beginning Q2	Maintained “no formal guidance”
Other metrics (OpEx, OI&E, tax, dividends)	FY 2024	Not provided	Not provided	No change

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2023)	Previous Mentions (Q4 2023)	Current Period (Q1 2024)	Trend
Profitability focus	“Positive adj. EBITDA third in a row” and cost containment	“Four quarters of positive adj. EBITDA in 2023”	Missed EBITDA in Q1; intent to get back on track in Q2	Deteriorated in Q1; recovery targeted
Hawaii market/tariffs	Strong demand with Battery Bonus program; 90% attach, high referrals	Battery Bonus ended; successor tariff less lucrative; demand lulls after tax season	Battery Bonus ended; successor tariff confusion dampened Q1; economics still strong	Transition friction; expect stabilization
New York TOU rates & batteries	Anticipated TOU rollout to boost batteries; planning/pricing workstreams	TOU rollout delayed by utility IT; full enrollment by 2025	Need better battery value proposition on Long Island; local incentives modest	Slow build; longer path to higher attach
Commercial solar pipeline	Q3 backlog $40.7M; confidence in Q4 installs	Continued pipeline; sequential margin volatility	Projects slipped; corporate oversight strengthened; pipeline healthy	Execution focus; idiosyncratic delays
Macro: rates, demand	High rates pressuring demand; equipment costs falling	Expect rate cuts H2’24; utilities raising prices supports Rooftop PV	Demand desire strong; expect acceleration H2’24 as rates fall	Consistent thesis; timing pushed out
Fundraising & liquidity	Operating cash generation Q3; CVR distributions	Active fundraising to meet 2024 obligations	Actively fundraising to meet 2024 obligations	Ongoing need
M&A/roll‑up strategy	Healthy pipeline; debt over equity given valuation	Strategy intact; accretive targets with EBITDA	Continue evaluating acquisitions; build markets	Persistent strategic priority

Management Commentary

CEO on Q1 headwinds and commitment: “The first quarter of 2024 presented the toughest operating conditions… we did unfortunately break our prior streak of four consecutive quarters with positive adjusted EBITDA… we’re committed to getting profitability back on-track in Q2” .
CEO on residential sales resiliency: “kilowatts sold across the residential businesses in Q1 of 2024 were essentially flat year-over-year vs. Q1 of 2023” .
CEO on Hawaii transition: Battery Bonus ended; successor tariff uncertainty caused customer hesitation in Q1; economics of solar+storage remain compelling .
CEO on New York commercial: “We had a number of projects slip due to extenuating circumstances… healthy pipeline… new project management, tracking and oversight processes” .
CFO on drivers: Residential down $6.7M (‑37%) on 29% fewer kW installed and lower price; Commercial down $1.8M (‑65%); gross margin remained 36%; OpEx down 31% YoY .
CFO on liquidity: “We are actively engaged in fundraising efforts to ensure that we have adequate capital to fund all of the company's obligations for the remainder of 2024” .

Q&A Highlights

Commercial delays: Management emphasized idiosyncratic project factors (studies, permitting, primes/subs, customer pacing). Corporate increased oversight on milestones and forecasting; optimistic for remainder of 2024 with strong nonprofit demand and IRA transferability/direct pay tailwinds .
Outlook and guidance: No formal 2024 guidance yet; likely FY24 revenue below FY23 given Q1, but Q2–Q4 combined could exceed prior year; focus shifting to gross profit dollars vs GAAP revenue as financing fee normalization lowers revenue but can leave gross profit flat/up; strict OpEx discipline required .
Battery attach strategy: Hawaii attach near 100% for new installs under non‑export tariffs; Long Island attach constrained by local incentives and economics vs generators; expect gradual attach rate increases with TOU rollout; need improved customer value proposition and incentives .

Estimates Context

Wall Street consensus (S&P Global) for PEGY was unavailable; therefore, we cannot benchmark Q1 2024 revenue or EPS vs Street or discuss beats/misses (S&P Global consensus unavailable).

Key Takeaways for Investors

Near‑term pressure but improving setup: Q1 2024 shows revenue/margin headwinds and idiosyncratic commercial delays; management expects EBITDA/profitability improvement starting Q2 as pipeline executes and seasonality abates .
Focus on gross profit dollars: Financing fee normalization reduces GAAP revenue but may preserve/enhance gross profit; watch gross profit and OpEx discipline as the primary levers for EBITDA recovery .
Battery attach normalization: Expect lower attach post‑Battery Bonus in Hawaii, gradual improvement tied to successor tariff; Long Island attach likely rises with TOU rollout—monitor incentive evolution and attach rates as margin drivers .
Commercial execution is key: Healthy pipeline on paper; improved oversight should mitigate slippage; conversion of nonprofit/commercial projects is a swing factor for H2 2024 .
Liquidity watch: Active fundraising underway to meet 2024 obligations—track capital raises, terms, and covenant headroom .
M&A optionality remains: Roll‑up strategy intact; market dislocation may provide attractive targets funded with debt rather than dilutive equity at current valuations .
No formal guidance: With Street consensus unavailable and no company guidance, investors should anchor on sequential trends (Q2–Q4) and leading KPIs (kW sold, backlog, attach rate) rather than absolute GAAP revenue growth .

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