Some of the key factors and scenarios that could cause actual results to differ from our expectations include, among others, If demand for solar energy projects diminishes, we may not be able to grow; if we fail to accurately estimate the potential losses related to the wire insulation shrinkback matter, or fail to recover the costs and expenses incurred by us from the supplier; the interruption of the flow of raw materials from international vendors has disrupted our supply chain, including as a result of the imposition of additional duties, tariffs, and other charges on imports and exports; the imposition of trade restrictions, import tariffs, anti-dumping, and countervailing duties; we have modified, and in the future may modify, our business strategy to abandon lines of business or implement new lines of business, and modifying our business strategy could have an adverse effect on our business and financial results; amounts included in our backlog and awarded orders may not result in actual revenue or translate into profits; defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death; we have experienced, and may experience in the future, delays, disruptions, quality control, or reputational problems in our manufacturing operations in part due to our vendor concentration; if we fail to retain our key personnel and attract additional qualified personnel; our products are primarily manufactured and shipped from our production facilities in Tennessee, and any damage or disruption at these facilities may harm our business; we may face difficulties with respect to the planned consolidation and relocation of our Tennessee-based manufacturing and distribution operations, and may not realize the benefits thereof; safety issues may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover; the market for our products is competitive, and we face increased competition as new and existing competitors introduce EBOS system solutions and components; macroeconomic conditions, including high inflation, high interest rates, and geopolitical instability, impact our business and financial results; we are subject to risks associated with the patent infringement complaints that we filed with the U.S.
Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income andAdjusted Diluted Earnings per Share ("EPS”) (Unaudited) Reconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands): Three Months Ended March 31, 2025 2024 Revenue$80,361 $90,807 Cost of revenue 52,221 54,347 Gross profit$28,140 $36,460 Gross profit percentage 35.0% 40.2% Wire insulation shrinkback expenses (a)$— $— Adjusted gross profit$28,140 $36,460 Adjusted gross profit percentage 35.0% 40.2% Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands): Three Months Ended March 31, 2025 2024 Net income (loss)$(282) $4,774 Interest expense 2,415 4,475 Interest income (118) (113)Income tax expense 2,297 2,448 Depreciation expense 1,391 1,106 Amortization of intangibles 1,896 1,896 Equity-based compensation 2,661 5,023 Wire insulation shrinkback expenses(a) — — Wire insulation shrinkback litigation expenses (b) 2,529 849 Adjusted EBITDA$12,789 $20,458 Reconciliation of Net Income (Loss) to Adjusted Net Income (in thousands): Three Months Ended March 31, 2025 2024 Net income (loss)$(282) $4,774 Amortization of intangibles 1,896 1,896 Amortization / write-off of deferred financing costs 156 2,626 Equity-based compensation 2,661 5,023 Wire insulation shrinkback expenses(a) — — Wire insulation shrinkback litigation expenses (b) 2,529 849 Tax impact of adjustments (c) (1,767) (2,547)Adjusted Net Income$5,193 $12,621 (a) For the three months ended March 31, 2025 and 2024, there were no expenses related to warranty for wire insulation shrinkback relating to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback.
International Trade Commission ("ITC”) and District Courts; if we fail to, or incur significant costs in order to obtain, maintain, protect, defend, or enforce our intellectual property portfolio and other proprietary rights, including the patents we are asserting in ongoing patent infringement litigation; acquisitions, joint ventures, and/or investments and the failure to integrate acquired businesses could disrupt our business; a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment could harm our business; a significant drop in the price of electricity may harm our business; the unauthorized access to our information technology systems or the disclosure of personal or sensitive data or confidential information, whether through a breach of our computer system or otherwise, could severely disrupt our business; failure of our information technology systems, including those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations; our expansion outside the U.S.could subject us to additional business, financial, regulatory, and competitive risks; our indebtedness could adversely affect our financial flexibility, restrict our current and future operations, and our competitive position; existing electric utility industry, federal, state, and municipal renewable energy and solar energy policies and regulations, including zoning and siting laws, and any subsequent changes, present technical, regulatory, and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our products or harm our ability to compete; changes in tax laws or regulations that are applied adversely to us, or our customers could materially adversely affect our business, financial condition, results of operations, and prospects; and the market price of our Class A common stock may decline and may continue to be subject to significant volatility.
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