Net Revenue for the First Nine Months 2023 Increased 31% to $86.7 Million
Amended Terms of Business Combination Agreement with ESGEN Acquisition Corp. Position the Combined Company for Growth Once Publicly Listed on Nasdaq
DALLAS and NEW PORT RICHEY, Fla., Feb. 08, 2024 (GLOBE NEWSWIRE) -- Sunergy Renewables, LLC ("Sunergy" or the "Company"), a leading Florida-based provider of residential solar and energy efficiency solutions, today reported financial results for the third quarter and nine months ended September 30, 2023.
Recent Financial and Operational Highlights
- Net revenue for the first nine months of 2023 increased 31% to $86.7 million
- Gross profit for the first nine months of 2023 increased 30% to $17.1 million
- Adjusted EBITDA for the first nine months of 2023 increased 12% to $9.9 million
- Solar system installations for the first nine months of 2023 increased by approximately 35% compared to the same year-ago period
- Amended the terms of its business combination agreement with ESGEN Acquisition Corp. (the "Business Combination") that will result in the combined company becoming publicly listed on the Nasdaq Stock Exchange
Management Commentary
"Our team delivered a strong and resilient third quarter," said Sunergy CEO Tim Bridgewater. "Even as our industry faced significant headwinds, we maintained consistent revenue of $37.9 million in the quarter. We saw solar system installations increase across geographies and opened a new market, Missouri, during the quarter as well. New geography expansion remains a pillar of our growth strategy, and we're confident that our success across these markets is a sign of continued market share expansion in the coming quarters.
"As we look to 2024, we remain focused on completing our business combination with ESGEN Acquisition Corp. and on our successful listing on Nasdaq," Bridgewater continued. "Also, we are expanding into three additional states in 2024, including Ohio, Illinois, and Virginia. We've maintained a strong track record of financial performance and profitability in recent years, and are confident that we'll be able to continue driving growth with our differentiated approach to selling residential solar systems. As we announced last week, we believe that our updated transaction terms empower us to continue investing in our long-term strategy. We look forward to increasing sales and profitability for Sunergy."
Third Quarter 2023 Financial Results
Results compare the 2023 fiscal third quarter ended September 30, 2023 to the 2022 fiscal third quarter ended September 30, 2022 unless otherwise indicated.
- Net revenue totaled $37.9 million, a 3% decrease from $38.9 million in the comparable 2022 period. This decrease was primarily due to the impact of higher interest rates slowing sales volume over the previous two quarters.
- Gross profit decreased to $8.4 million (22.2% of net revenue) from $10.0 million (25.9% of net revenue) for the comparable 2022 period. The decrease in gross profit was primarily due to increased equipment and materials costs during the quarter.
- Net income decreased to $4.0 million (10.5% of net revenue) from a net income of approximately $7.6 million (19.6% of net revenue) in the comparable 2022 period. This decrease was primarily due to higher equipment and materials costs as well as legal, accounting, and consulting expenses related to the Business Combination.
- Adjusted EBITDA, a non-GAAP measurement of operating performance reconciled below, decreased to $5.4 million (14.2% of net revenue) from approximately $8.1 million (20.8% of net revenue) in the comparable 2022 period.
First Nine Months 2023 Financial Results
Results compare the nine months ended September 30, 2023 to the nine months ended September 30, 2022 unless otherwise indicated.
- Net revenue totaled $86.7 million, a 31% increase from $66.1 million in the comparable 2022 period. This increase was primarily due to recruiting a greater number of sales reps and sales dealerships to the Sunergy sales organization.
- Gross profit increased to $17.1 million (19.7% of net revenue) from $13.1 million (19.9% of net revenue) for the comparable 2022 period.
- Net income decreased to $6.4 million (7.3% of net revenue) from a net income of approximately $7.6 million (11.5% of net revenue) in the comparable 2022 period. This decrease was primarily due to one-time costs associated with the Business Combination.
- Adjusted EBITDA, a non-GAAP measurement of operating performance reconciled below, increased to $9.9 million (11.4% of net revenue) from approximately $8.8 million (13.3% of net revenue) in the comparable 2022 period.
- As of September 30, 2023, cash totaled $4.3 million, compared to $3.4 million at June 30, 2023 and $2.3 million at December 31, 2022.
The closing of the proposed Business Combination is expected to take place in the first half of 2024, subject to stockholder approval. For more information, please visit the ESGEN investor relations website at esgen-spac.com.
About Sunergy
Sunergy is a Florida-based regional provider of residential solar, distributed energy, and energy efficiency solutions focused on high growth markets with limited competitive saturation. With its differentiated sales approach and vertically integrated offerings, Sunergy serves customers who desire to reduce high energy bills and contribute to a more sustainable future.
About ESGEN Acquisition Corp.
ESGEN (NASDAQ:ESACU, ESAC, ESACW)) is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization, or similar business combination with one or more businesses or entities. ESGEN is led by Chief Executive Officer, Andrejka Bernatova and Chief Financial Officer, Nader Daylami, and is affiliated with Energy Spectrum Capital, a Dallas-based private investment firm with long-standing experience building companies across the energy infrastructure landscape over multiple decades.
Non-GAAP Financial Measures
Adjusted EBITDA
Sunergy defines Adjusted EBITDA, a non-GAAP financial measure, as net income (loss) before interest and other expenses, net, income tax expense, depreciation and amortization, as adjusted to exclude stock-based compensation and merger and acquisition expenses ("M&A expenses"). Sunergy utilizes Adjusted EBITDA as an internal performance measure in the management of the Company's operations because the Company believes the exclusion of these non-cash and non-recurring charges allows for a more relevant comparison of Sunergy's results of operations to other companies in the 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.
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for the periods presented:
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income (loss) | $ | 3,969,690.29 | $ | 7,627,304.64 | $ | 6,369,877.34 | $ | 7,584,357.74 | |||||||
Adjustment: | |||||||||||||||
Other income, net | (8,856 | ) | 14,224 | 32,856 | (38,277 | ) | |||||||||
Depreciation and amortization | 524,461 | 450,099 | 1,446,626 | 1,262,207 | |||||||||||
Income tax expense | - | - | - | - | |||||||||||
M&A Expenses | 891,662 | 2,053,426 | |||||||||||||
Adjusted EBITDA | $ | 5,376,956.43 | $ | 8,091,626.98 | $ | 9,902,784.46 | $ | 8,808,287.90 | |||||||
Adjusted EBITDA Margin
Sunergy defines 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 and other expenses, net, income tax expense, depreciation and amortization, as adjusted to M&A expenses and is expressed as a percentage of revenue. In the table above, Adjusted EBITDA is reconciled to the most comparable GAAP measure, net income (loss). Sunergy utilizes Adjusted EBITDA margin as an internal performance measure in the management of the Company's operations because the Company believes the exclusion of these non-cash and non-recurring charges allows for a more relevant comparison of the Company's results of operations to other companies in Sunergy's industry.
The following table sets forth Sunergy's calculations of Adjusted EBITDA margin for the periods presented:
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Numerator: Adjusted EBITDA | $ | 5,376,956.43 | $ | 8,091,626.98 | $ | 9,902,784.46 | $ | 8,808,287.90 | |||||||
Denominator: Revenue, net | $ | 37,894,165.59 | $ | 38,873,310.27 | $ | 86,705,019.71 | $ | 66,069,255.67 | |||||||
Ratio of Adjusted EBITDA to revenue, net | 14.19 | % | 20.82 | % | 11.42 | % | 13.33 | % | |||||||
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act of 1934, as amended, that are based on beliefs and assumptions and on information currently available to ESGEN and Sunergy. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about ESGEN's and Sunergy's ability to effectuate the proposed business combination discussed in this news release; the benefits of the proposed business combination; the future financial performance of the combined company following the transactions; changes in ESGEN's or Sunergy's strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, the ability to raise additional funds prior to the closing of the business combination and plans and objectives of management. These forward-looking statements are based on information available as of the date of this news release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing ESGEN's or Sunergy's views as of any subsequent date, and none of ESGEN or Sunergy undertakes any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, ESGEN's and Sunergy's actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include: (i) the timing to complete the proposed business combination; (ii) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreements relating to the proposed business combination; (iii) the outcome of any legal proceedings that may be instituted against ESGEN, Sunergy or others following announcement of the proposed business combination; (iv) the inability to complete the proposed business combination due to the failure to obtain the approval of ESGEN stockholders; (v) the combined company's success in retaining or recruiting, or changes required in, its officers, key employees or directors following the proposed business combination; (vi) the combined company's ability to obtain the listing of its common stock and warrants on the Nasdaq following the proposed business combination; (vii) the risk that the proposed business combination disrupts current plans and operations of Sunergy as a result of the announcement and consummation of the proposed business combination; (viii) the ability to recognize the anticipated benefits of the proposed business combination; (ix) unexpected costs related to the proposed business combination; (x) the amount of any redemptions by public stockholders of ESGEN being greater than expected; (xi) the management and board composition of the combined company following the proposed business combination; (xii) limited liquidity and trading of the combined company's securities; (xiii) the use of proceeds not held in ESGEN's trust ...