Yahoo Finance Pineapple Energy Inc (PEGY) (Q1 2024) Earnings Call Transcript Highlights: Navigating ...
Total Revenue: $13.2 million in Q1 2024, down 40% from Q1 2023.
Residential Contract Sales: Decreased by $6.7 million or 37%.
Commercial Contract Sales: Decreased by $1.8 million or 65%.
Gross Profit: $4.8 million in Q1 2024, down 40% from Q1 2023.
Gross Margin: Remained flat at 36%.
Total Operating Expenses: $7 million in Q1 2024, down 31% from Q1 2023.
Net Loss from Continuing Operations: $10.1 million in Q1 2024, compared to $2.6 million in Q1 2023.
Net Income from Continuing Operations: $1.2 million in Q1 2024, a 146% increase from a net loss in Q1 2023.
Adjusted EBITDA: Decreased by $1.9 million from Q1 2023.
Cash and Equivalents: $3.3 million as of March 31, 2024, with $1.5 million restricted.
Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Despite a challenging quarter, Pineapple Energy Inc (NASDAQ:PEGY) is optimistic about improving profitability in Q2 and beyond.
The residential business in New York showed positive signs with strong year-over-year growth in new kilowatts sold, setting a good foundation for future success.
Pineapple Energy Inc (NASDAQ:PEGY) has implemented new project management tracking and oversight processes to improve execution in the commercial business unit.
The company has a healthy pipeline of commercial projects scheduled for the remainder of 2024, indicating potential growth in this sector.
Pineapple Energy Inc (NASDAQ:PEGY) remains committed to its strategic vision of consolidating leading local and regional rooftop solar companies, which presents a significant opportunity in the current market environment.
Negative Points
Pineapple Energy Inc (NASDAQ:PEGY) reported a significant decline in revenue, down 40% from the first quarter of 2023, primarily due to unfavorable market conditions and timing of projects.
The company experienced underperformance in its Hawaiian Energy Company (HEC) business, with revenue down both year-over-year and versus budget.
Commercial contract sales decreased by 65% due to delays in the start of pipeline projects, contributing to the overall revenue decline.
The battery attachment rate decreased, impacting the overall performance and potential growth in the residential sector.
Pineapple Energy Inc (NASDAQ:PEGY) faced a net loss from continuing operations attributable to common shareholders of $10.1 million in the first quarter of 2024, a significant decline compared to the previous year.
Q & A Highlights
Q: Can you elaborate on what's driving the delays in the commercial business in New York or Long Island? A: Kyle Udseth, CEO of Pineapple Energy, explained that each commercial project is unique, which makes it difficult to pinpoint a single cause for delays. The issues do not stem from general interconnection delays or grid processing problems. Instead, each project has its own set of challenges, whether it's permitting, environmental issues, or client-related delays. The company is increasing its oversight and implementing more structured processes to improve management and predictability of these projects.
: Given the underperformance in Q1, what is your outlook for the rest of 2024 in terms of revenue and kilowatts installed? A: Kyle Udseth mentioned that it's unlikely that the full year 2024 revenue will exceed 2023 due to the significant downturn in Q1. However, there's potential for Q2, Q3, and Q4 combined to match or exceed the same periods in 2023. The focus will be on maintaining gross profit dollars and controlling operating expenses, particularly personnel costs, to ensure a successful year.
Q: How are you addressing the lower battery attachment rate, and what is your strategy compared to other companies like Sunrun? A: Kyle Udseth highlighted that battery attachment rates are influenced by market-specific factors. In Hawaii, almost all new solar installations include batteries due to local tariffs. The lower overall attachment rate is partly due to a higher proportion of retrofit projects in Q1. In markets like Long Island, the economic incentives for batteries are not as strong, which affects customer uptake. Pineapple Energy aims to improve its approach to selling storage solutions in these areas.
Q: What are the main factors contributing to the net loss in Q1 2024, and what steps are being taken to address this? A: Eric Ingvaldson, CFO of Pineapple Energy, noted that the net loss was primarily due to a significant decrease in revenue and gross profit, although operating expenses were also reduced. The company is actively engaged in fundraising efforts to ensure sufficient capital for 2024 and is focusing on improving project execution and cost management.
Q: Can you provide more details on the financial performance in Q1 2024 compared to Q1 2023? A: Eric Ingvaldson reported that total revenue in Q1 2024 was $13.2 million, down 40% from Q1 2023. This decrease was largely due to fewer residential and commercial installations and lower average prices per system. Gross profit also fell by 40%, but gross margin remained stable at 36%. The company managed to reduce operating expenses by 31%.
Q: What are the projections for the commercial solar market, and how is Pineapple Energy positioned to capitalize on this? A: Kyle Udseth expressed optimism about the commercial solar market, particularly due to favorable changes in tax credit policies from the Inflation Reduction Act. The company is seeing strong demand in New York, especially from non-profits like churches, and is applying similar strategies in Hawaii. Pineapple Energy is focused on improving its project management processes to better capitalize on this demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
