Spruce Power Holding Corporation (NYSE: SPRU) (“Spruce” or the
“Company”), a leading owner and operator of distributed solar
energy assets across the United States, today reported financial
results for the quarter ended March 31, 2023.
Business Highlights
- Added cash flows from 22,500 residential solar customer
contracts through the Spruce Power 4 Portfolio acquisition,
bringing total home solar assets and contracts to over 72,000
- Announced a new common share repurchase program for the
repurchase of up to $50 million of the Company's outstanding common
stock
- Reported 1Q total revenue of $18.1 million, Net Loss of $19.4
million, Adjusted EBITDA of $4.7 million
- Ended quarter with strong liquidity position for future growth
and shareholder return initiatives, with $173 million of
unrestricted cash
- Announced that Sarah Wells will become Chief Financial Officer
effective on May 19th
Management Commentary and Outlook
“We started the year off with Spruce Power's largest acquisition
in history which grew our ownership and control of home solar
assets and contracts by about 44%,” said Christian Fong, Spruce
Power’s Chief Executive Officer. “The Spruce Power 4 acquisition is
transformative as it substantially bolstered our stream of
contracted customer payments and allowed for line of sight to
positive run rate cash flow for the Company. Looking ahead, we
expect to utilize our increased financial flexibility in a
disciplined manner to further enhance shareholder value, be it
through buying high quality portfolios of residential solar assets,
through the repurchase of shares under our newly announced share
repurchase program, or through additional debt reduction.”
“Strong first quarter results reflect the high margin, recurring
revenue nature of our portfolio of home solar assets and
contracts,” said Sarah Wells, incoming Chief Financial Officer of
Spruce Power. “Results from continuing operations improved
sequentially, reflecting the wind down of spending associated with
the integration and transition of corporate functions. With these
underlying initiatives largely in the rear-view mirror, we look
forward to the quarters ahead when we expect results to more fully
reflect Spruce Power's stand-alone residential solar business and
the positive financial benefits of the Spruce Power 4
acquisition.”
Consolidated Financial Results
Revenues totaled $18.1 million for the first quarter of 2023 and
the same amount for the fourth quarter of 2022. Lower sequential
revenues from portfolio generation as a result of outsized weather
impact during the quarter were offset by higher-than-expected
proceeds from solar renewable energy credit revenue.
Operating expenses (excluding depreciation and amortization),
including both selling, general & administrative expenses and
operations & maintenance, were $17.6 million compared to $30.6
million for the fourth quarter of 2022. SG&A expense dropped to
$15.7 million for the first quarter of 2023, compared to $28.6
million for the fourth quarter of 2022. Primarily contributing to
the sequential decline, SG&A expense in the fourth quarter of
2022 was impacted by $8.4 million restructuring related charges.
SG&A expense during the first quarter of 2023 includes $8.0
million of combined expenses associated with legacy XL Fleet,
including legal expenses associated with the previously disclosed
SEC inquiry and shareholder lawsuits and severance expense for
exiting employees.
For the first quarter of 2023, net loss attributable to
stockholders was $19.4 million, which includes a loss from
continuing operations of $15.0 million and loss from discontinued
operations of $3.9 million. Adjusted net loss for the first quarter
of 2023 was $7.7 million and included adjustments for certain items
as detailed in the below Reconciliation of Net Loss to Adjusted Net
Loss.
Adjusted EBITDA totaled $4.7 million for the first quarter of
2023, compared to $3.5 million for the fourth quarter of 2022.
Common Share Repurchase Program
The Board of Directors of the Company has authorized a share
repurchase program for the repurchase of up to $50 million of the
Company's outstanding common stock. The share repurchase program is
effective immediately and lasts through May 15, 2025. The shares
may be repurchased from time to time in open market transactions or
privately negotiated transactions at the Company's discretion,
subject to market conditions and other factors, including
regulatory considerations.
Balance Sheet and Capital
Total cash and cash equivalents as of March 31, 2023 were $205
million, compared to $240 million as of December 31, 2022. Cash
used in the first quarter of 2023 included $10.2 million for
principal and interest payments and $23.1 million of net cash paid
for the acquisition of Spruce Power 4. Total outstanding debt as of
March 31, 2023, was $652 million. Spruce Power had 148.4 million
shares of Common Stock outstanding as of March 31, 2023.
Key Operating Metrics
As of March 31, 2023, Spruce Power owned over 72,000 home solar
assets and contracts across 18 U.S. states with an average
remaining contract life of approximately 13 years. Combined
portfolio generation for the three months ended March 31, 2023, was
83 thousand MWh of power. In addition, the Company also serviced
7,500 third-party owned residential solar systems and third-party
loans as of March 31, 2023. Gross Portfolio Value was $938 million
as of March 31, 2023.
Conference Call Information
The Spruce Power management team will host a conference call to
discuss its first quarter 2023 financial results today at 2:30 p.m.
Mountain Time. The call can be accessed live over the telephone by
dialing (888) 210-2654 and referencing Conference ID 2486267.
Alternatively, the call can be accessed via a live webcast
accessible on the Events & Presentations page in the Investor
Relations section of the Company’s website at www.sprucepower.com.
A replay will be available shortly after the call and can be
accessed by dialing (800) 770-2030. The passcode for the replay is
2486267. The replay will be available until May 29, 2023.
About Spruce Power
Spruce Power is a leading owner and operator of distributed
solar energy assets across the United States. We provide
subscription-based services that make it easy for homeowners to
benefit from rooftop solar power and battery storage. Our
as-a-service model allows consumers to access new technology
without making a significant upfront investment or incurring
maintenance costs. Our company owns over 72,000 home solar assets
and contracts across the United States. For additional information,
please visit www.sprucepower.com.
Forward Looking Statements
Certain statements in this press release may constitute
“forward-looking statements” within the meaning of the federal
securities laws. Forward-looking statements generally are
accompanied by words such as “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “expect,” “should,” “would,”
“plan,” “predict,” “potential,” “seem,” “seek,” “future,”
“outlook,” and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters.
Forward-looking statements in this release include statements
regarding future repurchases under the stock repurchase program,
potential future acquisitions and debt reductions, and the
Company's prospects for long-term growth in revenues and earnings.
Repurchases under the stock repurchase program will depend upon
market prices, trading volume, available cash and other factors,
and, therefore, there is no guarantee as to the number of shares
that may be purchased. These statements are based on various
assumptions, whether or not identified in this press release, and
on the current expectations of management and are not predictions
of actual performance. Forward-looking statements are subject to a
number of risks and uncertainties that could cause actual results
to differ materially from the forward looking statements, including
but not limited to: expectations regarding the growth of the solar
industry, home electrification, electric vehicles and distributed
energy resources; the ability to successfully integrate XL Fleet
and Spruce Power; the ability to identify and complete future
acquisitions; the ability to develop and market new products and
services; the effects of pending and future legislation; the highly
competitive nature of the Company’s business and markets; the
ability to execute on and consummate business plans in anticipated
time frames; litigation, complaints, product liability claims,
government investigations and/or adverse publicity; cost increases
or shortages in the components or chassis necessary to support the
Company’s products and services; the introduction of new
technologies; the impact of natural disasters and other events
beyond our control, such as hurricanes or pandemics on the
Company’s business, results of operations, financial condition,
regulatory compliance and customer experience; privacy and data
protection laws, privacy or data breaches, or the loss of data;
general economic, financial, legal, political and business
conditions and changes in domestic and foreign markets; risks
related to the rollout of the Company’s business and the timing of
expected business milestones; the effects of competition on the
Company’s future business; the availability of capital; and the
other risks discussed under the heading “Risk Factors” in the
Company’s Annual Report on Form 10-K filed on March 30, 2023,
subsequent Quarterly Reports on Form 10-Q and other documents that
the Company files with the SEC in the future. If any of these risks
materialize or our assumptions prove incorrect, actual results
could differ materially from the results implied by these
forward-looking statements. These forward-looking statements speak
only as of the date hereof and the Company specifically disclaims
any obligation to update these forward-looking statements.
Use of Non-GAAP Financial Information
To supplement its consolidated financial statements, which are
prepared and presented in accordance with U.S. generally accepted
accounting principles (“GAAP”), Spruce Power reports certain
non-GAAP financial information which have been reconciled to the
nearest GAAP measures in the tables within this press release. This
prospective financial information was not prepared with a view
toward compliance with published guidelines of the SEC or the
guidelines established by the American Institute of Certified
Public Accountants for preparation and presentation of prospective
financial information or U.S. GAAP with respect to forward looking
financial information. We believe that these non-GAAP measures,
viewed in addition to and not in lieu of our reported GAAP results,
provides useful information to investors by providing a more
focused measure of operating results, enhances the overall
understanding of past financial performance and future prospects,
and allows for greater transparency with respect to key metrics
used by management in its financial and operational decision
making. The non-GAAP measures presented herein may not be
comparable to similarly titled measures presented by other
companies.
Earnings (loss) Before Interest, Income Taxes, Depreciation,
and Amortization (“EBITDA”):
We define EBITDA as our consolidated net income (loss) and
adding interest expense, income taxes, and depreciation and
amortization. We believe EBITDA provides meaningful information to
the performance of our business and therefore we use it to
supplement our GAAP reporting. We have chosen to provide this
supplemental information to investors, analysts and other
interested parties to enable them to perform additional analyses of
operating results.
Adjusted EBITDA and Adjusted Net Income (Loss):
We believe that adjusted EBITDA and Adjusted Net Income (loss),
which excludes certain identified items that we do not consider to
be part of our ongoing business, improves the comparability of year
to year results, and is representative of our underlying
performance. Management uses this information to assess and measure
the performance of our operating segments. We have chosen to
provide this supplemental information to investors, analysts and
other interested parties to enable them to perform additional
analyses of operating results, to illustrate the results of
operations giving effect to the non GAAP adjustments shown in the
below reconciliations, and to provide an additional measure of
performance.
Portfolio Value Metrics
We believe Portfolio Value Metrics are helpful to management,
investors, and analysts to understand the value of our business and
to evaluate the estimated remaining value of our customer
contracts, including present value implied from future,
uncontracted sales of solar renewable energy credits generated from
assets that the Company owns today.
- Gross Portfolio Value reflects the remaining projected net cash
flows from current customers discounted at 6% (“PV6”)
- Projected cash flows include the customer’s initial agreement
plus renewal
($ in millions)
As of March 31, 2023
Contracted Portfolio Value (1)
$
708
Renewal Portfolio Value (2)
214
Uncontracted Renewable Energy Credits
(3)
16
Gross Portfolio Value (4)
$
938
(1) Contracted Portfolio Value represents the present value of
the remaining net cash flows discounted at 6% during the initial
term of the company’s customer agreements as of the measurement
date. It is calculated as the present value of cash flows
discounted at 6% that the company expects to receive from customers
in future periods as set forth in customer agreements, after
deducting expected operating and maintenance costs, equipment
replacements costs, distributions to tax equity partners in
consolidated joint venture partnership flip structures, and
distributions to third party project equity investors. The
calculation includes cash flows the company expects to receive in
future periods from state incentive and rebate programs, contracted
sales of solar renewable energy credits, and awarded net cash flows
from grid service programs with utilities or grid operators.
(2) Renewal Portfolio Value is the forecasted net present value
the company would receive upon or following the expiration of the
initial customer agreement term, but before the 30th anniversary of
the system’s activation in the form of cash payments during any
applicable renewal period for customers as of the measurement date.
The company calculates the Renewal Portfolio Value amount at the
expiration of the initial contract term assuming either a system
purchase or a renewal and a 30-year customer relationship (although
the customer may renew for additional years, or purchase the
system), at a contract rate equal to 90% of the customer’s
contractual rate in effect at the end of the initial contract term.
After the initial contract term, a majority of the company's
customer agreements automatically renew on an annual basis and the
rate is initially set at up to a 10% discount to then-prevailing
utility power prices.
(3) Uncontracted sales of solar renewable energy credits (RECs)
based on forward market REC pricing curves, adjusted for liquidity
discounts.
(4) Gross Portfolio Value represents the sum of Contracted
Portfolio Value, Renewal Portfolio Value and Uncontracted Renewable
Energy Credits.
Spruce Power Holding Corporation
Consolidated Statements of
Operations
For the Three Months Ended March 31, 2023
and 2022
Three Months Ended
March 31,
(In thousands, except per share and share
amounts)
2023
2022
Revenues
$
18,095
$
—
Operating expenses:
Cost of revenues
7,853
—
Selling, general, and administrative
expenses
15,717
7,734
Total operating expenses
23,570
7,734
Loss from operations
(5,475
)
(7,734
)
Other (income) expense:
Interest expense, net
6,816
12
Gain on extinguishment of debt
—
(4,527
)
Gain on assets disposal
(2,658
)
—
Change in fair value of obligation to
issue shares of common stock to sellers of World Energy
—
(361
)
Change in fair value of warrant
liability
(115
)
(2,717
)
Change in fair value of interest rate
swaps
5,588
—
Other income, net
(128
)
(7
)
Net loss from continuing operations
(14,978
)
(134
)
Net loss from discontinued operations
(including loss on disposal of $(3,083))
(3,866
)
(15,943
)
Net loss
(18,844
)
(16,077
)
Less: Net income attributable to
redeemable noncontrolling interests and noncontrolling
interests
551
—
Net loss attributable to stockholders
$
(19,395
)
$
(16,077
)
Net loss attributable to stockholders per
share, basic
$
(0.13
)
$
(0.11
)
Net loss attributable to stockholders per
share, diluted
$
(0.13
)
$
(0.11
)
Net loss from discontinued operations -
basic
$
(0.03
)
$
(0.11
)
Net loss from discontinued operations -
diluted
$
(0.03
)
$
(0.11
)
Weighted-average shares outstanding,
basic
146,207,666
141,274,249
Weighted-average shares outstanding,
diluted
146,207,666
141,274,249
Spruce Power Holding
Corporation
Reconciliation of Non-GAAP
Financial Measures
For the Three Months Ended
March 31, 2023, and December 31, 2022
Three Months Ended March
31,
Three Months Ended December
31,
(In thousands)
2023
2022
Reconciliation of Net (Loss) Income to
EBITDA and Adjusted EBITDA
Net (loss) income attributable to
stockholders
$
(19,395
)
$
(43,151
)
Net income attributable to noncontrolling
interests
551
721
Interest expense, net
6,816
7,920
Impairment of goodwill and intangibles
—
877
Depreciation and amortization
5,507
5,507
EBITDA
(6,521
)
(28,126
)
Loss on discontinued operations
3,866
14,719
Restructuring charges
672
8,394
Legal charges related to SEC investigation
and shareholder lawsuits
2,153
3,809
Accreted contingent compensation
obligation to sellers of World Energy
—
36
(Gain) loss on disposal of assets
(2,658
)
(851
)
Change in fair value of interest rate
swaps
5,588
2,978
Change in fair value of obligation to
issue shares of common stock
—
5
Meter upgrade campaign
554
483
Other one-time costs (1)
720
216
Change in fair value warrant
liabilities
(115
)
(2
)
Non-recurring acquisition/divestment
expenses
409
1,828
Adjusted EBITDA
$
4,668
$
3,489
(1) Amount for the three months ended March 31, 2023 represents
billing platform transition costs of $0.6 million and one-time IT
and office relocation costs of $0.1 million.
Spruce Power Holding
Corporation
Reconciliation of Non-GAAP
Financial Measures
For the Three Months Ended
March 31, 2023
Three Months Ended March
31,
(In thousands)
2023
Reconciliation of Net (Loss) Income to
Adjusted Net Loss
Net (loss) income attributable to
stockholders
$
(19,395
)
Net income attributable to noncontrolling
interests
551
Net loss on discontinued operations
3,866
Restructuring charges
672
Legal charges related to SEC investigation
and shareholder lawsuits
2,153
(Gain) loss on disposal of assets
(2,658
)
Change in fair value of interest rate
swaps
5,588
Meter upgrade campaign
554
Other one-time costs (1)
720
Change in fair value warrant
liabilities
(115
)
Non-recurring acquisition/divestment
expenses
409
Adjusted Net Loss
$
(7,655
)
(1) Amount for the three months ended March 31, 2023 represents
billing platform transition costs of $0.6 million and one-time IT
and office relocation costs of $0.1 million.
Spruce Power Holding Corporation
Consolidated Balance Sheets
March 31, 2023 and December 31, 2022
As of
(In thousands, except share and per share
amounts)
March 31, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
172,797
$
220,321
Restricted cash
33,128
19,823
Accounts receivable, net
11,395
8,336
Interest rate swap assets, current
11,263
10,183
Prepaid expenses and other current
assets
7,046
5,316
Current assets of discontinued
operations
71
10,977
Total current assets
235,700
274,956
Investment under SEMTH master lease
agreement
147,836
—
Property and equipment, net
487,248
396,168
Interest rate swap assets, non-current
16,474
22,069
Intangible assets, net
10,843
—
Deferred rent assets
1,961
1,626
Right-of-use assets
3,184
2,802
Goodwill
28,757
128,548
Other assets
257
383
Total assets
$
932,260
$
826,552
Liabilities, redeemable
noncontrolling interests and stockholders’ equity
Current liabilities:
Current portion of long-term debt
$
25,674
$
25,314
Accounts payable
2,206
2,904
Deferred revenue, current
63
39
Lease liability, current
1,279
834
Accrued expenses and other current
liabilities
23,001
21,509
Current liabilities of discontinued
operations
802
9,097
Total current liabilities
53,025
59,697
Long-term debt, net of current portion
594,395
474,441
Deferred revenue
718
452
Lease liability, non-current
2,832
2,426
Warrant liabilities
142
256
Unfavorable solar renewable energy
agreements
9,363
—
Other long-term liabilities
1,478
10
Long-term liabilities of discontinued
operations
—
294
Total liabilities
661,953
537,576
Redeemable noncontrolling interests
178
85
Stockholders’ equity
Common stock, $0.0001 par value;
350,000,000 shares authorized at March 31, 2023 and December 31,
2022; 148,395,370 and 144,375,226 issued and outstanding at March
31, 2023 and December 31, 2022, respectively
14
14
Additional paid-in capital
477,613
473,277
Noncontrolling interests
3,954
8,942
Accumulated deficit
(211,452
)
(193,342
)
Total stockholders’ equity
270,129
288,891
Total liabilities, redeemable
noncontrolling interests and stockholders’ equity
$
932,260
$
826,552
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version on businesswire.com: https://www.businesswire.com/news/home/20230515005756/en/
For More Information Investor Contact:
investors@sprucepower.com Head of Investor Relations: Bronson
Fleig
Media Contact: PR@sprucepower.com
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