Pineapple Energy Inc. (PEGY) Q4 2023 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed financial performance: while there are improvements in net loss and EBITDA, key metrics like pro forma revenue and gross profit have declined. The Q&A section highlights concerns about declining gross margins and lack of guidance for 2024, contributing to uncertainty. Additionally, the end of the Battery Bonus Program in Hawaii could impact future demand. These factors, combined with vague management responses, suggest a negative sentiment, likely leading to a stock price decline of -2% to -8% over the next two weeks.
Key Financial Performance
Total Revenue $19.4 million, up $2.3 million or 13% from Q4 2022. The increase in revenue was primarily due to the SUNation acquisition in Q4 of 2022.
Total Gross Profit $5.5 million, an increase of $515,000 or 10% year-over-year. Gross profit increased primarily due to the SUNation acquisition and an increase in revenue.
Total Operating Expenses $7.9 million, a decrease of $692,000 or 8% year-over-year. The decrease was primarily due to transaction-related expenses from the SUNation acquisition in Q4 2022.
Operating Loss $2.3 million, a decrease of $1.2 million or 34% improvement from the prior year.
Other Income $781,000, a decrease of $2.2 million from the prior year, primarily due to a $1.8 million decrease in favorable fair value remeasurement of contingent value rights and an increase in interest expense.
Net Loss from Continuing Operations $1.7 million, or a loss of $0.16 per diluted share, an improvement from a net loss of $17.4 million or $2.58 per diluted share in Q4 2022.
Pro Forma Revenue (Q4) Declined 17% compared to the prior year, due to a 20% decline in residential revenue and a 6% decrease in commercial revenue.
Pro Forma Gross Profit (Q4) Decreased 28% compared to the prior year, as the reduction in equipment costs was outpaced by an increase in indirect costs.
Pro Forma Net Loss (Q4) Increased by $2.7 million compared to the prior year, primarily due to a $1.8 million decline in favorable fair value remeasurement of the contingent value right liability.
Pro Forma Adjusted EBITDA (Q4) Positive $208,000, improved 222% from negative $171,000 in the prior year, achieved through operating leverage from managing operating costs.
Year-to-Date Pro Forma Revenue Up 8% from $74 million last year to $79.6 million, due to increases in residential, commercial, and service revenue.
Year-to-Date Pro Forma Gross Profit Increased 16% due to an increase in revenue and margin improvement from reduced equipment costs.
Year-to-Date Pro Forma Adjusted EBITDA $1.2 million, improved by $4.5 million or 137% from negative $3.3 million in the prior year.
Cash Available for Operations $3.6 million, compared to $3.4 million at the end of Q3 2023.
Net Cash Generated from Operating Activities (Q4) $160,000, resulting from changes in net working capital.
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Operating Highlights
Battery Attachment Rate: The company reported an improved battery attachment rate, contributing additional revenue despite a decline in residential revenue.
Residential Revenue: Residential revenue declined by 20% due to a decrease in residential kilowatts installed by 17%.
Commercial Revenue: Commercial revenue decreased by 6%.
Service and Other Revenue: Service and other revenue increased by 6%.
Adjusted EBITDA: Pro forma adjusted EBITDA improved by 222% from negative $171,000 to positive $208,000, achieved through active management of operating costs.
Operating Expenses: Total operating expenses decreased by 8% year-over-year, primarily due to reduced transaction-related expenses.
Cash Position: The company ended the quarter with $3.6 million in cash available for operations, up from $3.4 million in the previous quarter.
Acquisition Strategy: Pineapple Energy continues to focus on organic growth while pursuing the roll-up of leading local and regional residential solar and storage companies.
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Risk or Challenges
Bankruptcies in the Industry: Numerous longstanding operators in the solar space have gone bankrupt, indicating a challenging environment for companies in this sector.
Interest Rates and Economic Conditions: High interest rates and general economic malaise are causing potential customers to stay on the sidelines, impacting demand for solar installations.
Regulatory Uncertainty: Regulatory uncertainty is contributing to hesitance among consumers to invest in solar technology.
Declining Residential Revenue: Pro forma revenue declined 17% compared to the prior year, with a 20% decline in residential revenue attributed to a decrease in residential kilowatts installed.
Increased Operating Costs: Indirect costs included in gross profit have increased, outpacing reductions in equipment costs and financing fees.
Interest Expense: An increase in interest expense has negatively impacted net income, contributing to a larger pro forma net loss compared to the prior year.
Cash Flow Management: The company is actively engaged in fundraising efforts to ensure adequate capital to fund obligations in 2024, indicating potential liquidity risks.
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Guidance & Outlook
Focus on Cost Containment and Margins: Pineapple Energy emphasizes a relentless focus on cost containment and margins, which is critical for profitability and cash management.
Organic Growth and Strategic Roll-Up: The company aims to drive organic growth while pursuing a strategic roll-up of leading local and regional residential solar and storage companies across the country.
Acquisition Opportunities: The current market environment presents a tremendous buying opportunity for experienced consolidators to find and integrate the right companies.
Revenue Expectations: Demand for solar and battery storage is expected to rebound, with a significant acceleration anticipated in the second half of the year as interest rates potentially decrease.
Pro Forma Revenue Growth: For the full year 2023, pro forma revenue increased by 8% to $79.6 million, driven by growth in residential, commercial, and service revenues.
Adjusted EBITDA: Pro forma adjusted EBITDA for the full year 2023 was $1.2 million, reflecting a 137% improvement from the previous year.
Cash Position: Pineapple ended the quarter with $3.6 million in cash available for operations and is actively engaged in fundraising efforts to ensure adequate capital for 2024.
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Shareholder Return Plan
Share Repurchase Program: None
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Key Q&A
Q:What drove the difference in gross margins quarter-over-quarter?
A:The decrease in gross margins is related to indirect costs allocated into gross margin, such as rent, indirect labor, and insurance, rather than direct costs.
Q:What specific items contributed to the change in gross margins?
A:Indirect allocations to gross margin include overhead costs, which have increased sequentially.
Q:Can you provide updates on market trends in Hawaii and New York?
A:Hawaii had a strong fourth quarter, but the successor tariff is less lucrative. Long Island remains healthy, with a shift towards increased battery storage.
Q:Will you provide revenue guidance for 2025?
A:No guidance is being provided this quarter; the decision will be revisited next quarter.
Q:What happened with the $1 million write-off for legacy CSI receivables?
A:The receivable is due from a government entity, and the likelihood of collection is low. If collected, it would be distributed to CVR holders.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding specific items contributing to the gross margin changes, using vague language about 'overhead costs' without detailing which costs increased. Additionally, they did not provide clarity on the potential for future revenue guidance, indicating it would be discussed internally without a firm commitment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Battery Bonus
Bonus Program
CVR holder
Electric
SUNation acquisition
accounting
acquisition SUNation
acquisition increase
afternoon Pineapple
allocation margin
asset CVR
battery storage
change working
claim
course
date forma
demand
desire
discussion
equipment financing
financing fee
improvement
industry
insurance
investor
labor
legacy
liability
market valuation
rate cut
receivable
release today
shoot
state
stock
technology
value remeasurement
PEGY Transcript
Pineapple Energy Inc. (PEGY) Q1 2024 Earnings Call Transcript
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Pineapple Energy Inc. (PEGY) Q4 2023 Earnings Call Transcript
Unknown3-29
The earnings call reveals a mixed financial performance: while there are improvements in net loss and EBITDA, key metrics like pro forma revenue and gross profit have declined. The Q&A section highlights concerns about declining gross margins and lack of guidance for 2024, contributing to uncertainty. Additionally, the end of the Battery Bonus Program in Hawaii could impact future demand. These factors, combined with vague management responses, suggest a negative sentiment, likely leading to a stock price decline of -2% to -8% over the next two weeks.
Pineapple Energy Inc. (PEGY) Q3 2023 Earnings Call Transcript
Positive11-10
The earnings call summary shows strong financial performance with a 211% increase in total revenue and a 401% increase in gross profit. Despite some regional revenue declines, overall financial health is improving, evidenced by a positive adjusted EBITDA. The Q&A section reveals confidence in future revenue, with a strong backlog and potential margin growth. However, management's unclear responses about certain timelines introduce some uncertainty. Considering these factors, the overall sentiment is positive, with potential for stock price appreciation over the next two weeks.
Pineapple Energy Inc. (PEGY) Q2 2023 Earnings Call Transcript
Neutral8-11
PEGY Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
