Pineapple Energy Reports Third Quarter 2023 Financial Results

  • Revenue up 211% from Q3 2022
  • Gross profit up 401% from Q3 2022
  • Operating Expenses up 125% from Q3 2022
  • Net Loss from continuing operations decreased 8% from Q3 2022
  • Pro forma adjusted EBITDA up 156% from Q3 2022
  • Positive cash flow from operations of $869,851

MINNETONKA, Minn., Nov. 09, 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 third quarter ended September 30, 2023.

Pineapple CEO Kyle Udseth commented, “My main message is quite similar to three months ago. We were able to deliver a strong third quarter, which is a nice counter to the reports of underperformance from some of our larger public peers who have already reported. The residential solar industry does continue to face challenges, principal among them the expectations of a higher-for-longer interest rate environment. But fundamental demand for clean, affordable, and resilient rooftop solar, ideally paired with battery storage, remains strong. And a higher interest rate environment increases the cost of capital for electric utilities as well, which we expect they will pass on to consumers in the form of ongoing steep annual increases to their electric bills. Couple this with the continuing declines in hardware and equipment costs, and I believe companies like Pineapple, who sell and install residential solar, are reaching an inflection point. And then beyond the macro factors, our commitment to operational discipline and a focus on driving positive EBITDA and operating cash-flow remain bedrock principles, and further differentiate us from competitors. We are leaving previous guidance unchanged, for 2023 revenue between $80-$85 million and positive adjusted EBITDA. I am grateful to all our Pineapple employees for their dedication and sacrifices – this has not been an easy quarter, and further challenges remain in Q4. But we believe our strategy is sound and will continue to bear out into 2024.”

Pineapple CFO Eric Ingvaldson commented, “In the third quarter, we were again able to achieve meaningful year-over-year revenue growth of more than 200% due to the SUNation acquisition in the fourth quarter of 2022 and strong organic growth in Hawaii. Gross profit margins increased due to lower equipment prices and financing fees. While gross profit increased 401% year-over-year, operating expenses increased 125% year-over-year, resulting in positive cash flow from operations for the quarter and our third consecutive quarter of positive adjusted EBITDA. Although third quarter pro-forma revenue declined 10% from the prior year, pro-forma gross profit increased 9% due to margin expansion. Year-to-date we have achieved 20% proforma revenue growth, and 38% pro-forma gross profit growth over the prior year leading to a $4.2 million year-over-year improvement in pro-forma adjusted EBITDA. We are grateful to our employees for delivering these results.”

Third Quarter Business Highlights

  • Pro forma operating metrics
    • Residential kW installed +10% sequentially (Q3 2023 vs Q2 2023)
    • Residential kW sold +14% sequentially (Q3 2023 vs Q2 2023)
    • Residential battery attachment rate declined to 37% in Q3 2023, down from 42% in Q2 2023
    • Backlog increased to $41M as of September 30, 2023, up from $38M as of June 30, 2023

Third Quarter 2023 GAAP Results from Continuing Operations1

 3rd Quarter 20233rd Quarter 20223
Revenue$18,288,697 $5,888,162 
Gross Profit$7,032,458 $1,404,173 
Operating Expense$8,596,808 $3,827,944 
Operating Loss($1,564,350)($2,423,771)
Other Expense($768,937)($119,017)
Net Loss ($2,329,053)($2,542,788)
Cash, restricted cash & investments2$5,593,402 $10,236,453 
Diluted Loss per Share($0.23)($0.34)

1 Includes continuing operations and excludes discontinued operations.

2 Includes restricted cash and liquid investments of $2,175,753 as of September 30, 2023, and $4,578,099 as of September 30, 2022, earmarked for payment of contingent value rights.

3 As the determination for discontinued operations was made for the period ending December 31, 2022, the 3rd Quarter 2022 numbers have been adjusted to reflect continuing operations only.

Total revenue was $18.3 million in the third quarter of 2023, up $12.4 million, or 211%, from the third quarter of 2022. The increase in revenue was a result of the SUNation acquisition in Q4 of 2022 and organic growth in Hawaii.

Total gross profit was $7.0 million, an increase of $5.6 million, or 401%, year-over-year. Gross profit increased due to increased revenue and an improved gross profit margin. The gross profit margin improvements were a result of the SUNation acquisition and an improvement in equipment costs and financing fees.

Total operating expenses were $8.6 million, an increase of $4.8 million, or 125%, year-over-year. The increase in operating expenses was primarily a result of the SUNation acquisition in Q4 of 2022. Operating expenses in the third quarter of 2023 included $1.3M of amortization and depreciation expense, $353,843 of stock-based compensation and a $230,000 unfavorable fair value remeasurement of earnout consideration.

Other expenses were $768,937, an increase of $649,920, year-over-year. Other expenses increased primarily due to an increase in interest expense because of debt financing closed in the second quarter and a $239,922 unfavorable fair value remeasurement of contingent value rights.

Net loss from continuing operations attributable to common stockholders was $2.3 million, or ($0.23) per diluted share in the third quarter of 2023. This was an improvement from net loss from continuing operations in the third quarter of 2022 of $2.5 million or ($0.34) per diluted share.

As of September 30, 2023, cash, cash equivalents, restricted cash, and investments were $5.6 million. Of that amount, $2.2 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 CVRs (Contingent Value Rights).

Third 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 September 30  Nine Months Ended September 30
  2023   2022   2022   2021 
Revenue$18,288,697  $20,289,487  $60,190,413   50,209,437 
Gross Profit 7,032,458   6,453,090   22,175,708   16,078,176 
Net Loss (2,329,053)  (217,898)  (5,260,514)  (1,363,018)
Adjusted EBITDA* 336,297   (601,932)  1,028,100   (3,133,723)

* 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.

Third quarter pro forma revenue declined 10% compared to the prior year due to a decrease in kW installed of 10%, a decrease in the residential battery attachment rate to 37% from 47%, offset by a 3% increase in service and other revenue, and a 1% increase in commercial revenue.

Third quarter pro forma gross profit increased 9% due to reduced equipment costs and financing fees.

Third quarter pro forma net loss increased by $2.1M from the prior year due to a $1.9M employee retention credit recognized by SUNation in the third quarter of 2022.

Third quarter pro forma adjusted EBITDA increased 156% or $938,229 driven by overall margin improvement and increased operating leverage by controlling costs at SUNation, HEC (Hawaii Energy Connection) and Corporate.

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 $303,125 and excludes transaction costs totaling $0 and $292,174 for the three months ended September 30, 2023, and 2022, respectively. The unaudited pro forma financial information below includes adjustments to amortization expense for intangible assets totaling $0 and $1,538,378 and excludes transaction costs totaling $2,020 and $3,204,118 for the nine months ended September 30, 2023, and 2022, respectively.


For the full year 2023, the Company leaves unchanged 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 (Contingent Value Rights) liability as of September 30, 2023, was estimated at $3.2 million 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 cost reductions, 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

 September 30 December 31
  2023   2022 
Cash and cash equivalents$3,417,649  $2,187,540 
Restricted cash and cash equivalents 2,175,753   3,068,938 
Investments    2,666,766 
Trade accounts receivable, less allowance for     
credit losses of $177,662 and $108,636, respectively 5,743,630   5,564,532 
Inventories, net 4,626,764   6,054,493 
Prepaid income taxes 27,431    
Employee retention credit    1,584,541 
Related party receivables 50,479   116,710 
Prepaid expenses 1,720,937   2,152,058 
Costs and estimated earnings in excess of billings 369,881   777,485 
Other current assets 790,275   634,362 
Current assets held for sale    1,154,099 
TOTAL CURRENT ASSETS 18,922,799   25,961,524 
PROPERTY, PLANT AND EQUIPMENT, net 1,565,722   1,190,932 
Goodwill 20,545,850   20,545,850 
Operating lease right of use asset 4,622,387   4,166,838 
Intangible assets, net 16,846,714   20,546,810 
Other assets, net 12,000   12,000 
Non-current assets held for sale    2,271,533 
TOTAL OTHER ASSETS 42,026,951   47,543,031 
TOTAL ASSETS$62,515,472  $74,695,487 
Accounts payable$7,083,759  $7,594,181 
Accrued compensation and benefits 944,196   859,774 
Operating lease liability 384,581   220,763 
Accrued warranty 300,000   276,791 
Other accrued liabilities 937,608   961,986 
Related party payables    2,181,761 
Income taxes payable    1,650 
Refundable customer deposits 3,363,901   4,285,129 
Billings in excess of costs and estimated earnings 1,750,256   2,705,409 
Contingent value rights 3,213,765    
Earnout consideration 2,370,000    
Current portion of loans payable 1,461,228   346,290 
Current portion of loans payable - related party 360,723   5,339,265 
Current liabilities held for sale    1,161,159 
TOTAL CURRENT LIABILITIES 22,170,017   25,934,158 
Loans payable and related interest 8,264,318   3,138,194 
Loans payable and related interest - related party 4,984,458   4,635,914 
Operating lease liability 4,295,406   3,961,340 
Earnout consideration 940,000   2,150,000 
Contingent value rights    7,402,714 
Long term liabilities held for sale    250,875 
TOTAL LONG-TERM LIABILITIES 18,484,182   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;     
10,182,723 and 9,915,586 shares issued and outstanding, respectively 509,136   495,779 
Additional paid-in capital 46,773,844   45,798,069 
Accumulated deficit (25,449,707)  (19,089,134)
Accumulated other comprehensive loss    (10,422)
TOTAL STOCKHOLDERS' EQUITY 21,861,273   27,222,292 

 Three Months Ended
September 30
 Nine Months Ended
September 30
  2023   2022   2023   2022 
Sales$18,288,697  $5,888,162  $60,190,413  $10,338,483 
Cost of sales 11,256,239   4,483,989   38,014,705   7,966,159 
Gross profit 7,032,458   1,404,173   22,175,708   2,372,324 
Operating expenses:           
Selling, general and administrative expenses 7,150,110   2,702,005   22,442,789   5,792,270 
Amortization expense 1,216,698   863,574   3,700,095   2,084,470 
Transaction costs    262,365   2,020   1,399,147 
Fair value remeasurement of SUNation earnout consideration 230,000      1,160,000    
Total operating expenses 8,596,808   3,827,944   27,304,904   9,275,887 
Operating loss (1,564,350)  (2,423,771)  (5,129,196)  (6,903,563)
Other (expense) income:           
Investment and other income 88,163   8,215   143,452   106,974 
Gain on sale of assets 192,845   14,573   437,116   1,229,133 
Fair value remeasurement of merger earnout consideration    13,000      4,684,000 
Fair value remeasurement of contingent value rights (239,922)     1,152,273   (1,214,560)
Interest and other expense (810,023)  (154,805)  (1,867,576)  (640,536)
Other (expense) income, net (768,937)  (119,017)  (134,735)  4,165,011 
Net loss before income taxes (2,333,287)  (2,542,788)  (5,263,931)  (2,738,552)
Income tax benefit (4,234)     (1,396)   
Net loss from continuing operations (2,329,053)  (2,542,788)  (5,262,535)  (2,738,552)
Net (loss) income from discontinued operations, net of tax (33,983)  22,792   (1,206,235)  (222,426)
Net loss (2,363,036)  (2,519,996)  (6,468,770)  (2,960,978)
Other comprehensive gain (loss), net of tax:           
Unrealized gain (loss) on available-for-sale securities (34,108)  38   10,422   (32,760)
Total other comprehensive gain (loss) (34,108)  38   10,422   (32,760)
Comprehensive loss$(2,397,144) $(2,519,958) $(6,458,348) $(2,993,738)
Basic net loss per share:           
Continuing operations$(0.23) $(0.34) $(0.53) $(0.45)
Discontinued operations (0.01)     (0.12)  (0.04)
 $(0.24) $(0.34) $(0.65) $(0.49)
Diluted net loss per share:           
Continuing operations$(0.23)  (0.34)  (0.53)  (0.45)
Discontinued operations (0.01)     (0.12)  (0.04)
 $(0.24) $(0.34) $(0.65) $(0.49)
Weighted Average Basic Shares Outstanding 10,050,015   7,435,586   9,973,311   6,049,611 
Weighted Average Dilutive Shares Outstanding 10,050,015   7,435,586   9,973,311   6,049,611 


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 September 30, 2023, and 2022, the unaudited pro forma financial information includes adjustments to amortization expense for intangible assets totaling $0 and $303,125, respectively, and excludes transaction costs totaling $0 and $292,174, respectively. For the nine months ended September 30, 2023, and 2022, the unaudited pro forma financial information includes adjustments to amortization expense for intangible assets totaling $0 and $1,538,378, respectively, and excludes transaction costs totaling $2,020 and $3,204,118, respectively.

This press release also includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S., (United States) 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 September 30 Nine Months Ended September 30
  2023   2022   2023   2022 
Pro Forma Net Loss$(2,329,053) $(217,898) $(5,260,514) $(1,363,018)
Interest expense 810,023   185,345   1,867,576   719,545 
Interest income (79,430)  (8,959)  (117,941)  (16,729)
Income taxes (4,234)  95,793   (1,396)  209,561 
Depreciation 91,373   86,144   302,844   246,879 
Amortization 1,216,698   1,166,699   3,700,095   3,650,095 
Stock compensation 353,843   23,498   966,825   23,498 
Gain on sale of assets (192,845)  (14,573)  (437,116)  (1,229,133)
FV remeasurement of contingent value rights 239,922   -   (1,152,273)  1,214,560 
FV remeasurement of earnout consideration 230,000   (13,000)  1,160,000   (4,684,000)
Employee retention credit -   (1,904,981)  -   (1,904,981)
Pro Forma Adjusted EBITDA$336,297  $(601,932) $1,028,100  $(3,133,723)