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Pineapple Energy Reports First Quarter 2023 Financial Results

  • Revenue up 28% from Q4 2022
  • Gross profit up 60% from Q4 2022
  • Positive adjusted EBITDA and cash flow from continuing operations
  • $7.6 million of cash, restricted cash and investments

MINNETONKA, Minn., May 11, 2023 (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 first quarter ended March 31, 2023.

Pineapple CEO Kyle Udseth commented, “The strength of our Q1 results – the first full quarter with SUNation in the fold – showcases the value of our acquisition strategy and demonstrates our ability to execute operationally in integrating our businesses and driving accelerated performance. We’re ahead of schedule on our organic growth initiatives, and more importantly we reached the critical milestone of positive operating cash flow from continuing operations even earlier than we’d been forecasting. This is a huge step for Pineapple and is a testament to the strong performance of both our HEC and E-Gear businesses in Hawaii and our SUNation business in New York. I want to express my gratitude to all our employees for their hard work in getting the company to this key point. We’re excited about our momentum and look forward to reporting consistently positive results in the quarters ahead.”

First Quarter Business Highlights

  • Strong operating metrics in all geographies (pro forma Q1 2023 vs pro forma Q1 2022)
    • kW sold +60%
    • kW installed +52%
    • Sales referral rate of 50%
    • Battery attachment rate of 40%
  • Solid sequential growth in revenue and gross profit; positive cash flow from continuing operations and positive pro forma adjusted EBITDA
  • Launched “new build” strategy: SUNation awarded contract with Baiting Hollow Development Group, to outfit sustainable homes
  • E-Gear licensed proprietary Energy Management Controller to energy storage leader Eguana
  • Started program with Suffolk County Community College for labor force training
  • Rang the Closing Bell at Nasdaq to commemorate one-year listing anniversary

Subsequent Events

  • In April 2023, SUNation reached the milestone of 100 MW of solar installed since its founding.

First Quarter 2023 GAAP Results from Continuing Operations1

 1st Quarter 20234th Quarter 20221st Quarter 20223
Revenue$22,065,424 $17,183,617 $231,868 
Gross Profit$8,006,315 $5,005,122 $65,708 
Operating Expense$10,155,841 $8,550,236 $1,599,718 
Net Loss$(2,599,672)$(539,502)$(1,889,536)
Cash, restricted cash & investments2$7,610,981 $7,923,244 $10,506,026 
Diluted Loss per Share($0.26)($0.06)($0.58)

1 Includes continuing operations and excludes discontinued operations.

2 Includes restricted cash and liquid investments of $4,190,567 as of March 31, 2023, and $4,463,089 as of December 31, 2022, earmarked for payment of contingent value rights.

3 As the determination for discontinued operations was made on December 31, 2022, the 1st Quarter 2022 numbers have been adjusted to reflect continuing operations only.

Note that due to the timing of the acquisition of SUNation, fourth quarter 2022 GAAP results include only 53 days of SUNation operations.

Below, all figures are for the first quarter of 2023 unless noted otherwise. All comparisons are to the fourth quarter of 2022, unless otherwise noted. Comparisons with first quarter of 2022 GAAP results are not meaningful because Q1 2022 included only 3 days of meaningful operations.   

Revenue of $22.1 million was up 28% sequentially and gross profit of $8.0 million was up 60% sequentially as Q1 2023 represented the first full quarter of SUNation results.

Operating expenses of $10.2 million were up 19% sequentially, driven by a full quarter of SUNation and a $825 thousand unfavorable fair value remeasurement of the SUNation earnout consideration. Fourth quarter 2022 operating expenses included one-time items related to the SUNation acquisition.

Net loss of $2.6 million or $(0.26) per diluted share was greater sequentially due to a $3.34 million favorable fair value remeasurement of the contingent value right liability in the fourth quarter of 2022.

As of March 31, 2023, cash, cash equivalents, and restricted cash were $7.6 million. Of that amount, $4.2 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 contingent value rights (“CVRs”).

First Quarter 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 March 31
  2023   2022 
Revenue$             22,065,424  $             13,794,605 
Net Loss (2,597,652)  (2,634,695)
Adjusted EBITDA*                 372,802   (880,910)

* Adjusted EBITDA is a non-GAAP financial measure. See “Pro Forma Results and Non-GAAP Financial Measures” and the reconciliations in this release for further information.

Pro forma revenue was up 60% due to a 52% increase in kWs installed and an increase in residential battery attach rates.

Pro forma adjusted EBITDA increased $1.25 million driven by increased EBITDA at both SUNation and HEC/E-Gear, offset by a slight increase in corporate expenses.

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 $838,161 and excludes transaction costs totaling $2,020 and $2,698,548 for the three months ended March 31, 2023 and 2022, respectively.


For the full year 2023, the Company reiterates its revenue guidance of $80 to $85 million, positive adjusted EBITDA and cash flow from operations in 2023.

Status of Contingent Value Rights
The CVR liability as of March 31, 2023, was estimated at $7,652,714 and represents the estimated fair value as of that date of the legacy CSI assets to be distributed to CVR holders.

About Pineapple Energy
Pineapple is focused on growing leading local and regional solar, storage, and energy services companies nationwide. Our vision is to power the energy transition through grass-roots growth of solar electricity paired with battery storage. Our portfolio of brands (SUNation, Hawaii Energy Connection, E-Gear, Sungevity, and Horizon Solar Power) provide homeowners and small businesses with an end-to-end product offering spanning solar, battery storage, and grid services.

Forward Looking Statements
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth or growth opportunities, future opportunities, future flexibility to pursue acquisitions, future cash flows and future earnings. These statements are based on the Company’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements here due to changes in economic, business, competitive or regulatory factors, and other risks and uncertainties, including those set forth in the Company’s filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this press release. The Company does not undertake any obligation to update or revise these forward-looking statements for any reason, except as required by law.

Pineapple Energy

Kyle Udseth
Chief Executive Officer
+1 (952) 996-1674 

Eric Ingvaldson
Chief Financial Officer
+1 (952) 996-1674

 March 31 December 31
 2023  2022
Cash and cash equivalents$1,920,414  $2,187,540 
Restricted cash and cash equivalents 3,672,510   3,068,938 
Investments 2,018,057   2,666,766 
Trade accounts receivable, less allowance for     
     credit losses of $112,581 and $108,636, respectively 6,118,196   5,564,532 
Inventories, net 5,679,961   6,054,493 
Employee retention credit    1,584,541 
Related party receivables 76,847   116,710 
Prepaid expenses 1,663,536   2,152,058 
Costs and estimated earnings in excess of billings 507,564   777,485 
Other current assets 634,095   634,362 
Current assets held for sale 1,301,823   1,154,099 
TOTAL CURRENT ASSETS 23,593,003   25,961,524 
PROPERTY, PLANT AND EQUIPMENT, net 1,473,464   1,190,932 
Goodwill 20,545,850   20,545,850 
Operating lease right of use asset 4,672,439   4,166,838 
Intangible assets, net 19,280,111   20,546,810 
Other assets, net 12,000   12,000 
Non-current assets held for sale 2,264,810   2,271,533 
TOTAL OTHER ASSETS 46,775,210   47,543,031 
TOTAL ASSETS$71,841,677  $74,695,487 
Accounts payable$7,748,143  $7,594,181 
Accrued compensation and benefits 737,793   859,774 
Operating lease liability 322,378   220,763 
Other accrued liabilities 1,328,544   1,238,777 
Related party payables 549,720   2,181,761 
Income taxes payable 1,318   1,650 
Refundable customer deposits 2,752,156   4,285,129 
Billings in excess of costs and estimated earnings 3,104,435   2,705,409 
Current portion of loans payable 371,264   346,290 
Current portion of loans payable - related party 5,413,170   5,339,265 
Current liabilities held for sale 1,069,199   1,161,159 
TOTAL CURRENT LIABILITIES 23,398,120   25,934,158 
Loans payable and related interest 3,444,316   3,138,194 
Loans payable and related interest - related party 4,731,778   4,635,914 
Operating lease liability 4,379,432   3,961,340 
Earnout consideration 2,975,000   2,150,000 
Contingent value rights 7,652,714   7,402,714 
Long term liabilities held for sale 262,455   250,875 
TOTAL LONG-TERM LIABILITIES 23,445,695   21,539,037 
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; 75,000,000 shares authorized;     
     9,948,836 and 9,915,586 shares issued and outstanding, respectively 497,442   495,779 
Additional paid-in capital 46,088,941   45,798,069 
Accumulated deficit (21,630,504)  (19,089,134)
Accumulated other comprehensive income (loss) 13,983   (10,422)
TOTAL STOCKHOLDERS' EQUITY 24,997,862   27,222,292 

 Three Months Ended March 31
 2023  2022 
Sales$22,065,424  $231,868 
Cost of sales 14,059,109   166,160 
Gross profit 8,006,315   65,708 
Operating expenses:     
Selling, general and administrative expenses 8,062,123   273,750 
Amortization expense 1,266,698   357,463 
Transaction costs 2,020   968,505 
Fair value remeasurement of SUNation earnout consideration 825,000    
Total operating expenses 10,155,841   1,599,718 
Operating loss (2,149,526)  (1,534,010)
Other income (expense):     
Investment and other income (expense) 19,533   (5,144)
Gain on sale of assets 244,271    
Fair value remeasurement of contingent value rights (250,000)   
Interest and other expense (458,218)  (350,382)
Other expense, net (444,414)  (355,526)
Net loss before income taxes (2,593,940)  (1,889,536)
Income tax expense 5,732    
Net loss from continuing operations (2,599,672)  (1,889,536)
Net income from discontinued operations, net of tax 44,683   5,902 
Net loss (2,554,989)  (1,883,634)
Other comprehensive gain (loss), net of tax:     
Unrealized gain (loss) on available-for-sale securities 24,405   (17,067)
Total other comprehensive gain (loss) 24,405   (17,067)
Comprehensive loss$(2,530,584) $(1,900,701)
Basic net loss per share:     
Continuing operations$(0.26) $(0.58)
Discontinued operations     
 $(0.26) $(0.58)
Diluted net loss per share:     
Continuing operations$(0.26)  (0.58)
Discontinued operations     
 $(0.26) $(0.58)
Weighted Average Basic Shares Outstanding 9,919,650   3,231,461 
Weighted Average Dilutive Shares Outstanding 9,919,650   3,231,461 

 Three Months Ended March 31
 2023  2022
Net loss$(2,554,989) $(1,883,634)
Net income from discontinued operations, net of tax 44,683   3,874 
Net loss from continuing operations (2,599,672)  (1,887,508)
Adjustments to reconcile net loss to net cash used in operating activities:     
Depreciation and amortization 1,377,023   358,230 
Share based compensation 312,445    
Fair value remeasurement of earnout consideration 825,000    
Fair value remeasurement of contingent value rights 250,000    
Gain on sale of assets (244,271)   
Interest and accretion expense 458,218   336,405 
Changes in assets and liabilities:     
Trade accounts receivable (513,802)  (50,165)
Inventories 624,532   71,754 
Prepaid income taxes (332)   
Other assets, net 2,274,326   285,880 
Accounts payable 153,962   (2,528,599)
Accrued compensation and benefits (121,982)  (502,869)
Customer deposits (1,532,973)  (47,367)
Other accrued liabilities (1,129,141)  (1,091,411)
Accrued interest (85,893)   
   Net cash provided by (used in) operating activities 47,440   (5,055,650)
   Net cash (used in) provided by operating activities - discontinued operations (173,019)  13,209 
   Net cash used in operating activities (125,579)  (5,042,441)
Capital expenditures (329,657)  (245)
Acquisition of business, net of cash acquired    (10,256,865)
Proceeds from the sale of investments 673,114   49,194 
Net cash provided by (used in) investing activities 343,457   (10,207,916)
Net cash used in investing activities - discontinued operations (3,681)   
Net cash provided by (used in) investing activities 339,776   (10,207,916)
Borrowings against working capital note payable    150,000 
Borrowings of loans payable 226,361    
Payments against loan payable principal (97,821)  (4,500,000)
Payments related to equity issuance costs    (2,699,370)
Proceeds from the issuance of preferred stock upon closing of private placement    32,000,000 
Purchase of common stock (6,291)   
Net cash provided by financing activities 122,249   24,950,630 
Income taxes paid$332  $ 
Interest paid 80,578   1,070,853 
Issuance of common stock for conversion of related party payables    2,350,000 
Issuance of common stock for conversion of working capital note payable    500,000 
Issuance of common stock for the acquisition of HEC and E-Gear    12,781,234 
Effect of reverse capitalization    1,594,779 
Operating right of use assets obtained in exchange for lease obligations 596,093   127,902 

Pro Forma Results and Non-GAAP Financial Measures

This press release includes unaudited pro forma information, which represents the results of operations as if the Company had completed the CSI merger, the HEC and E-Gear asset acquisitions and the SUNation acquisition as of January 1, 2022. The unaudited pro forma financial information presented in this press release is not necessarily indicative of consolidated results of operations of the combined business had the acquisitions occurred at the beginning of the respective period, nor is it necessarily indicative of future results of operations of the combined company.

For the three months ended March 31, 2023 and 2022, the unaudited pro forma financial information includes adjustments to amortization expense for intangible assets totaling $0 and $838,161, respectively, and excludes transaction costs totaling $2,020 and $2,698,548, respectively.

This press release also includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. 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 March 31
  2023   2022 
Pro Forma Net Loss$ (2,597,652) $ (2,634,695)
Interest expense 458,218   376,937 
Interest income (13,693)  (2,625)
Income taxes 5,732   85,806    
Depreciation 110,325   70,936 
Amortization 1,266,698   1,222,731 
Stock compensation 312,445   - 
Gain on sale of assets (244,271)  - 
FV remeasurement of contingent value rights 250,000   - 
FV remeasurement of earnout consideration 825,000   - 
Pro Forma Adjusted EBITDA$ 372,802   $ (880,910)

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