Zeo Energy Corp. (ZEO) September 2026 Conference Transcript

Hello, everyone. Welcome to H.C. Wainwright's 28th Annual Global Investment Conference. I'm thrilled to introduce Tim Bridgewater, the Chairman and CEO of ZioEnergy.

Thank you so much. I'm grateful to be here. Thanks to H.C. Wainwright for hosting this conference and giving us an opportunity to share a little bit about our company, ZioEnergy. ZioEnergy was started as a solar sales company. So door knockers going around, knocking on doors, selling residential solar to consumers in Florida. And we started in 2019 and we grew very quickly. The market was growing at a 60 percent kegger at the time. And we benefited from that, decided to acquire an installation company in 2021. So it would be fully integrated. So we would sell, we would install, and then we would service residential solar systems over in Florida, Texas, and Arkansas initially, and then grew the business to a point where we were approached by a SPAC to merge with them. In 2024, we closed on a de-SPAC process, which was the worst time in the history of the SPACs, 2024, and also a downturn in the solar industry because of hockey stick interest rates that shot up very rapidly. So timing is everything, as they say. And we got in and into the mix and went through a turbulent time in the residential solar business. But we managed our cash flow well. We continued to expand, even though it was difficult because of the slowed growth and the higher interest rates. But we acquired the assets of a competitor through bankruptcy in 2024. at the end of the year and then in 2025 we're going along and wanting to diversify because residential solar had been quite bumpy and we bought a heliogen with a stock transaction which was a company that was based in houston doing energy storage systems and concentrated solar so we acquired them for cash on the balance sheet and for the team that is now helping us to develop commercial projects so our business is divided into two different parts here's the safe harbor uh give you two seconds to read that and then we have two separate components we have long duration energy storage which is our commercial division focusing on supporting data centers and commercial users who need storage utilities need storage end users need storage data centers needs storage. So we provide long duration energy storage, and then the residential solar business. And I think that we have licenses in about eight states, but we're really focused in four core states for the residential solar business. Virginia, Ohio, Illinois, Pennsylvania have been where we've been the most active, as well as our origin of Florida. um we expect the market next year to recover uh we are uh despite the market being down this year about you know 20 to 40 percent we grew in the first half of the year at nine percent and we expect that to continue through the rest of uh this year um from a residential solar perspective the TAM is awesome um because there's only about eight percent penetration out of about 95 million homes in America. And in other countries in Europe and other places around the world, Australia, it's approaching 15% to 25% penetration. So there's lots of room to grow in the US. And the shakeout with a lot of companies like SunPower, Freedom, Titan, a lot of other big companies that have gone bankrupt has left a great landscape for smaller companies like us to seize the opportunity and we're regionally focused we think that's the better strategy than trying to be a national company so we're pared down to really four or five states that we focus on specifically just to kind of describe our business a little bit what separates us is our engine our sales engine. We're a summer sales organization. We send out door knockers. We recruit them, college students that go out in the summertime, knock doors. It's hard work. They have a grit, they grind, and they make great money. And then they come back and go to school or go travel, do whatever they want to do because they made great money in the summertime. And that's really the engine, this differentiated sales model. We've run a profitable business. We we went public. We were one of seven SPACs that was cashflow positive at that time. But for turbulent times, I think we would have had a really continued hockey stick growth. But we feel poised now for the residential business to recover. But we didn't have to take on a lot of debt. We only have $1.7 million of debt on a convert on the balance sheet right now. And we look forward to a great 2027 in the future. How our system works is we have a sales manager who runs an office. He has three or four closers that work with him. And then they have about 15 setters that go out and those setters knock doors every day. They'll go through, they'll take 45 no's before they get an appointment set. And they just know how to grind through that number. And then we have been in our CRM adopting AI more and more to be more and more efficient. And I saw a Formula One pit stop video, if you ever get a chance to look at this. And, you know, 20 years ago, it was about a seven cent pit stop to get in and get tires changed and get back out onto the racetrack. And today, through efficiencies over time and just being more methodical, it's less than two seconds. and it's so fast and that's what our industry is doing it's getting more and more efficient it's very sloppy a lot of growth it's like west texas uh gas and oil industry and there were a lot of failures when things downturned but the market is really strong and good there's high demand as the market comes back and the more efficient uh operators have stayed in business and now are poised to thrive which we are one of those um what's our value proposition to the homeowner so utility prices continue to to go up and ai data centers have just put more pressure but they've typically been going up anywhere from three to ten percent in different utilities across the country and you're going to continue to see that so there's going to be continued demand for residential solar because customers want stability they want predictability they want to be independent of the grid. And we provide all that. We can go sell with a commission sales agent with a finance company that provides a lease. Those two make a profit. We make a profit. And we can still beat the utilities price to that customer. And that's where the niche, the benefit for residential solar comes to play. There's tax equity money there. It was paused because of the big, beautiful bill for about six months. But that tax equity has come back into the market. And that continues to be The engine or the rocket fuel for our industry is tax equity money is coming in and supporting solar sales. The tax equity. Lightreach, one of our bigger partners, got about five hundred million dollars in June, which does about one point eight billion dollars of residential solar. And so it was on the sidelines for the most part because of domestic content issues and the changes in the big, beautiful bill. And now, you know, there's as far as we can tell, there's plenty of capital coming back in on the tax equity for us. So, you know, we're seamless in that we sell to the customer. We get it designed, permitted, and we install it, and then we maintain it over the long period of time for the customers. So those are some of the benefits that the customers have in working with our company. So on the commercial side of the business, we bought Heliogen in August of 2025, and they had cash on the balance sheet, and they had 10 really good engineers in the Houston office. So we've kept them and we've been hunting, pursuing a wide range of commercial related projects, primarily with long duration, 10, 12, 14 hour battery storage as our niche with molten salt, compressed CO2, zinc batteries, non-lithium solutions is kind of what our engineering team is. We don't have any proprietary technology, but we have know-how, and so we're a developer to help provide, especially behind-the-meter power, for small, medium-sized data centers. We announced our first project in MREU with a gigasite in February, just getting a feasibility study done on 280 megawatt storage, which is really a gigawatt of solar. That's a massive project. You see a lot of those. But where we're seeing the niche evolve is in the 20 to 50 megawatt sites, some of which we can put renewable energy on solar, but they all need storage for that baseload power. So you have gas firming it up. You have renewable energy sources coming in to provide that. And so I don't think I have to tell this group the demand for AI data centers and power is off the charts. States are putting in moratoriums for a pause. There's lots of things going on. But in the smaller scale, finding small data center power, abandoned power plants, ways that we can quickly get power to a data center partner is what we are focusing on now in our commercial division. It's early innings, but we have a half a dozen projects under development. and we expect to see some good progress in the next quarter on a couple of those projects. Really amazing how much power is going to be sucked off the grid for these data centers. So the Secretary Wright said, we're pro data center, but it's bring your own power. You've got to have your own power and do it behind the meter because the grid cannot sustain support the level of demand. And if we can't build them here in the U.S., they're going to go somewhere else. And so the demand right now is to build the capability. There's not enough engineers and electricians. There just aren't enough to keep up with the demand that's coming. We have a nice niche. We have our guys that have worked for us. They're on our payroll, and they can expand to the electrical side of the data center power needs. So this is the first project that I mentioned. we announced in February. This is a giga site in central Utah. The company is Creekstone that's building this. They're working to get hyperscalers attracted to it. It's arguably touted as a 10 gigawatt site in the future. But the first phase, which is already in progress, is 300 megawatts of gas-fired turbines. It's all behind the meter, and we are phase two with PV plus storage. So as they fill up that first 300 megawatts, they have commitments for about a third of it now, and they're working with hyperscalers to bring them on for the gigawatt demand that they have. Utah is a great place for data centers because the governor, the state, is inviting and welcoming to the to those data centers and they have a project gigawatt that the governor has launched and that's attracting lots of companies stratos was one that kind of got sideways with how they launched and you heard a lot about uh mr o'leary's efforts and uh that's stalled that project up in northern utah but we're in central utah with this project and we have two other projects in our pipeline that are also in in utah so the benefits of storage uh the technology that our team has is unique in that it's long duration and when you get out past 10 to 12 to 14 hours lithium isn't as cost competitive and so these larger scale molten salt co2 types of energy solutions are preferable from a cost perspective. You can still get power delivered, baseload power for $0.08 a kilowatt hour in putting these things out. And if you're powering them with solar, you need to be in the West where there's lots of land where you can put solar on cost effectively. It's hard to do that in New Jersey, for example. But that's the niche that our technical team has uh we're running a lot of feasibility studies right now to that end um just to kind of wrap up the data center demand i don't have to go too much into that but you know what the behind the meter people need is reliable base load power that doesn't fluctuate with wind or solar that has to be in a storage system in order to deliver that constant flow of of energy So this is just a diagram saying where we play in here is in the bringing the power to the storage system, ultimately can be used on the grid, can be used at the customer's facility, a data center or a commercial manufacturing plant. And we can help combine all of these pieces, gas turbines, battery storage, and the sources of energy into one deliverable grid or delivering electrons. So the market trends for our industry right now are very favorable. Just go through seven of them real quickly. The load growth that's on the grid is just, you know, it's too much. It's just too much. You've got to find people that are playing in our space that can help fill small pockets of demand. And that's what we're focusing on. Long term, I think solar is the most cost effective, reliable, easiest to maintain energy source. And if you see the mix in the U.S., the percentage of solar is going up every year of the overall product mix because it's so easy, so quick to get built. Utilities are building more and more of that. The demand for utility and commercial-scale solar continues to be quite high. Utility price inflation, we talked a little bit about that. It's a big tailwind because they're just forcing new costs on the grid and raising prices. Also, VPPs are getting more and more traction. A VPP is you have the energy storage. You have a Tesla battery in your house. You put solar on. You can get a capacity payment from the utility for having that battery that they can draw on at different times. So that technology is evolving. That's also beneficial to us. More financing platforms are coming on. HDM and Propel from Enphase are coming in with prepaid lease structures to kind of fit with the big, beautiful bill. And those prepaid lease structures allow more capital for homeowners to buy and put solar on their home. And then batteries that the ITC for batteries goes till 2032, long past the deadline or the sunset for the residential solar panels. And then we think that the shakeup in our market right now has given us lots of M&A opportunities with companies in our space, in the resi space, as well as some people with pipelines in the larger commercial space that we've looked at acquiring as well. So we grow our business organically with more sales guys that we send out every year. We're up, as I said, 9% in the first half of the year at a time when the rest of the market is contracting. We also are adding HVAC and roofing as an adder so that we can provide additional services to the homeowner. Once we own the customer, we can deliver additional services to them at a much lower cost of acquisition. And then finally, M&A. We have a team that's capable. We've already done two M&As with bankrupt assets of Lumio and with Heliogen. And we're poised to do more in the future. And we're constantly looking at opportunistic ways to grow our business that way. So just to give you an idea, we went from 89 when the market was hot. 89, we went up to 110 million in 2023. And then when the turmoil hit in 24 and 25, we were down. Sonova went bankrupt. That took a huge chunk of money that was owed to us from Sonova. So we took a hit on them with a big write-off. but we're poised we'll do you know 10% growth over 2025 numbers this year or better and we expect to have a great year in 27 continue to grow in these in these areas so with that I'll I'll end and open it up for questions