Pineapple Energy reports financial results for the first quarter of 2023 (2023)

• Sales increased by 28% compared to the fourth quarter of 2022
• Gross profit increased by 60% compared to the fourth quarter of 2022
• Positive adjusted EBITDA and cash flow from continuing operations
• $7.6 million in cash, restricted cash and investments

MINNETONKA, Minnesota, May 11, 2023 (GLOBE NEWSWIRE) -- Pineapple Energy Inc. (NASDAQ: PEGY), a leading provider of renewable solar energy and backup power for 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 first quarter results – the first full quarter with SUNation in the fold – demonstrates the value of our acquisition strategy and demonstrates our ability to execute operationally as we integrate our businesses and driving accelerated performance. We are 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 expected. This is an important 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 would like to express my gratitude to all of our employees for their hard work in driving the business forward on this important point We are excited about our momentum and image. I look forward to reporting consistently positive results in the coming quarters."

First Quarter Business Highlights

• Strong operational numbers in all geographies (pro forma Q1 2023 vs pro forma Q1 2022)
  • kW solves +60 %
  • kW installed +52%
  • 50% referral rate
  • Battery connection at 40%
• Solid sequential growth in sales and gross profit; positive cash flows from continuing operations and positive pro forma adjusted EBITDA
• Strategy for "new construction" launched: SUNation awards the Baiting Hollow Development Group a contract for the equipment of sustainable houses
• E-Gear licensed proprietary energy management controller for energy storage manager Eguana
• Started a program at Suffolk County Community College for staff training
• The closing bell on the Nasdaq rang to celebrate the listing's one-year anniversary

Later events

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

First Quarter 2023 GAAP Results from Continuing Operations¹

¹Including continuing operations and excluding discontinued operations.

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

³Since the decision to cease operations was taken on December 31, 2022, 1.^stFigures for the quarter of 2022 have been adjusted to reflect continuing operations only.

Please note that due to the timing of the SUNation acquisition, Q4 2022 GAAP results include only 53 days of SUNation business.

Below are all figures for the first quarter of 2023, unless otherwise stated. All comparisons are for Q4 2022 unless otherwise stated. Comparisons with Q1 2022 GAAP results are not meaningful because Q1 2022 included only three days of meaningful operations.

Revenue of $22.1 million increased sequentially by 28% and gross profit of $8.0 million increased sequentially by 60% as the first quarter of 2023 represented SUNation's first full quarter of results.

Operating expenses of $10.2 million increased sequentially by 19%, driven by a full quarter of SUNation and an unfavorable fair value valuation of $825 thousand of SUNation's earnout consideration. Operating expenses in the fourth quarter of 2022 included one-time items related to the acquisition of SUNation.

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

As of March 31, 2023, cash, cash equivalents and restricted cash were $7.6 million. Of this amount, $4.2 million has been held as restricted cash and investments that can only be used for the existing CSI business and will be distributed to holders of Contingent Value Rights (“CVRs”).

Pro forma comparisons in the first quarter of 2023

To facilitate the analysis of the Company's operations, below is an unaudited pro forma presentation of the results as if the Company had completed the SUNation merger, the CSI merger and the HEC/E-Gear Asset acquisition from January 1, 2022.

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

Pro forma revenues increased by 60% due to a 52% increase in installed kW and an increase in connection rates for residential batteries.

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

The unaudited pro forma financial information above is not necessarily indicative of the consolidated results of operations of the combined company if the acquisition occurred early in the relevant period, nor is it necessarily indicative of future results of operations of the combined company. The above unaudited pro forma results have not been adjusted for the level of operating overheads required to support the forward-looking strategy, but instead include a higher cost structure based on existing operations and structure as plans to complete the CSI merger have been completed. . transaction. The unaudited pro forma financial information above includes adjustments to the amortization expense of 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.

Outlook

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 conditional value rights
The CVR liability as of March 31, 2023 was estimated at $7,652,714 and represents the estimated fair value at that date of the Legacy CSI Assets that will be distributed to CVR holders.

To Pineapple Energy
Pineapple is focused on growing leading local and regional solar, storage and energy services companies across the country. Our vision is to drive the energy transition through the base growth of solar energy in combination with battery storage. Our portfolio of brands (SUNation, Hawaii Energy Connection, E-Gear, Sungevity and Horizon Solar Power) provides homeowners and small businesses with an end-to-end product that includes solar energy, battery storage and grid services.

Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about future financial results, future growth or growth potential, 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 changing circumstances. Actual results may differ materially from those expressed or implied by the statements herein as a result of changes in economic, business, competitive or regulatory factors and other risks and uncertainties, including those disclosed in the documents the company has filed 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 undertakes no obligation to update or revise these forward-looking statements for any reason, except as required by law.

Pro forma results and non-GAAP financial measures

This press release contains unaudited pro forma information that 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 the consolidated results of operations of the combined company if the acquisitions were made early in the period, nor is it necessarily indicative of future results of operations for the merged company.

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

This press release also contains non-GAAP financial measures that differ from financial measures calculated in accordance with United States Generally Accepted Accounting Principles ("GAAP").

Reconciliation of non-GAAP to GAAP financial information

Reconciliation of pro forma net loss and pro forma adjusted EBITDA: