Spruce Power Reports Fourth Quarter and Full-Year 2023 Results
Business Highlights
- Added approximately 25,000 customer contracts in 2023, for nearly 50% year-on-year growth, to reach over 75,000 home solar assets and contracts.
-
Launched 'Spruce Pro' brand, expanding
Spruce Power's best-in-class residential servicing technology platform to the fast-growing commercial solar market. -
Total cash of
$173 million at year end. Subtracting$17 million of net total cash costs and reserves tied to legacyXL Fleet items results in pro-forma cash of$156 million . -
Initiated 2024 Operating EBITDA guidance between
$68 -$86 million and 2024 Adjusted Free Cash Flow guidance between$0 -$5 million .
Management Commentary and Outlook
"Spruce's strategy is to be the dominant owner and operator of distributed solar assets. We entered 2024 with an enviable level of cash liquidity to continue our disciplined growth,” said
Consolidated Financial Results
Revenues totaled
Core operating expenses (excluding depreciation), including both selling, general & administrative expenses ("SG&A") and operations & maintenance, were
Net loss attributable to stockholders was
Management considers Operating EBITDA as a key measure in evaluating Spruce's operating performance. For the fourth quarter of 2023, Operating EBITDA was
Balance Sheet and Liquidity
The Company's total principal amount of outstanding debt as of
Total cash as of
Initiating 2024 Guidance
Growth and Capital Allocation
Spruce is committed to maximizing long-term value for our shareholders through a disciplined approach that includes strategic acquisitions, capital expenditure projects, debt repayment, and shareholder return initiatives.
During
During the fourth quarter of 2023, Spruce repurchased 0.1 million shares of common stock at a weighted average price per share of
Legal Proceedings
As previously disclosed, in
As previously disclosed, in
In the fourth quarter of 2023, Spruce was able to estimate its exposure in three previously disclosed lawsuits related to Spruce's predecessor company,
Key Operating Metrics
As of
Conference Call Information
The Spruce management team will host a conference call for analysts and investors to discuss its 2023 financial results and business outlook today at
About
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 can be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intends,” “may,” “opportunity,” “plans,” “goals,” “target” “predict,” “potential,” “estimate,” “should,” “will,” “would,” “continue,” “likely” or the negative of these terms or other words of similar meaning. These statements are based upon our current plans and strategies and reflect our current assessment of the risks and uncertainties. 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, business cash inflows 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
Use of Non-GAAP Financial Information
This press release includes references to certain non-GAAP financial measures. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of current period performance on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to, the GAAP financial measures presented in this press release, our financial statements, and other publicly filed reports. This prospective financial information was not prepared with a view toward compliance with published guidelines of the
Definitions of Non-GAAP Financial Information
Earnings (Loss) Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”):
We define EBITDA as our consolidated net income (loss) and adding back interest expense, net, 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 believe that Adjusted EBITDA, 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 segment. 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.
Operating EBITDA:
We define Operating EBITDA as Adjusted EBITDA plus Proceeds from Investment in Lease Agreement, Net, Proceeds from Buyouts / Prepayments and Interest Earned on Cash Investments. Proceeds from Investment in Lease Agreement, Net, represent cash flows from the Company's
Adjusted Free Cash Flow:
We define Adjusted Free Cash Flow as Operating EBITDA less Project Finance Debt Service, Platform Capital Expenditures, and Other non-cash items. Project Finance Debt Service represents principal and interest payments, including sweeps where applicable, on Spruce's non-recourse, project finance debt facilities. Other non-cash items represent miscellaneous non-cash income or expense associated with our various operating portfolios of residential solar assets.
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
|
|
Contracted Portfolio Value (1) |
|
709 |
Renewal Portfolio Value (2) |
$ |
59 |
Uncontracted Renewable Energy Credits (3) |
|
17 |
Gross Portfolio Value (4) |
$ |
784 |
(1) Contracted Portfolio Value represents the present value of the remaining net cash flows discounted at 6% per annum 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 that, on average, Spruce's customers choose to renew 50% of the time at a contract rate representing a 35% discount to the contract rate in effect at the end of the initial contract term, for a term of 7-years.
(3) Uncontracted sales of Solar Renewable Energy Credits (SRECs) 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 SRECs.
|
|||||||||||||||
Consolidated Statements of Operations |
|||||||||||||||
For the Three Months and Years Ended |
|||||||||||||||
|
Three Months Ended
|
|
Years Ended |
||||||||||||
(In thousands, except per share and share amounts) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues |
$ |
15,701 |
|
|
$ |
18,113 |
|
|
$ |
79,859 |
|
|
$ |
23,194 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenues |
|
11,339 |
|
|
|
7,975 |
|
|
|
37,596 |
|
|
|
9,949 |
|
Selling, general and administrative expenses |
|
12,454 |
|
|
|
28,586 |
|
|
|
56,547 |
|
|
|
73,118 |
|
Litigation settlements, net |
|
1,126 |
|
|
|
— |
|
|
|
27,465 |
|
|
|
— |
|
Gain on asset disposal |
|
(499 |
) |
|
|
(851 |
) |
|
|
(4,724 |
) |
|
|
(580 |
) |
Total operating expenses |
|
24,420 |
|
|
|
35,710 |
|
|
|
116,884 |
|
|
|
82,487 |
|
Loss from operations |
|
(8,719 |
) |
|
|
(17,597 |
) |
|
|
(37,025 |
) |
|
|
(59,293 |
) |
Other (income) expense: |
|
|
|
|
|
|
|
||||||||
Interest income |
|
(5,688 |
) |
|
|
(1,338 |
) |
|
|
(19,534 |
) |
|
|
(1,339 |
) |
Interest expense, net |
|
11,121 |
|
|
|
9,258 |
|
|
|
41,936 |
|
|
|
11,401 |
|
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,527 |
) |
Change in fair value of obligation to issue shares of common stock to sellers of World Energy |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
(535 |
) |
Change in fair value of warrant liabilities |
|
(21 |
) |
|
|
(2 |
) |
|
|
(239 |
) |
|
|
(5,148 |
) |
Change in fair value of interest rate swaps |
|
16,479 |
|
|
|
2,978 |
|
|
|
4,816 |
|
|
|
(5,554 |
) |
Other income, net |
|
(65 |
) |
|
|
(787 |
) |
|
|
(1,305 |
) |
|
|
(912 |
) |
Net loss from continuing operations |
|
(30,545 |
) |
|
|
(27,711 |
) |
|
|
(62,699 |
) |
|
|
(52,679 |
) |
Net income (loss) from discontinued operations |
|
130 |
|
|
|
(14,719 |
) |
|
|
(4,123 |
) |
|
|
(40,112 |
) |
Net loss |
|
(30,415 |
) |
|
|
(42,430 |
) |
|
|
(66,822 |
) |
|
|
(92,791 |
) |
Less: Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests |
|
(15 |
) |
|
|
721 |
|
|
|
(779 |
) |
|
|
1,140 |
|
Net loss attributable to stockholders |
$ |
(30,400 |
) |
|
$ |
(43,151 |
) |
|
$ |
(66,043 |
) |
|
$ |
(93,931 |
) |
Net loss attributable to stockholders per share, basic and diluted |
$ |
(1.60 |
) |
|
$ |
(2.40 |
) |
|
$ |
(3.59 |
) |
|
$ |
(5.27 |
) |
Net income (loss) from discontinued operations, basic and diluted |
$ |
0.01 |
|
|
$ |
(0.82 |
) |
|
$ |
(0.22 |
) |
|
$ |
(2.25 |
) |
Weighted-average shares outstanding, basic and diluted |
|
18,990,603 |
|
|
|
18,015,402 |
|
|
|
18,391,436 |
|
|
|
17,836,500 |
|
|
|||||||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||||
For the Three Months and Years Ended |
|||||||||||||||
|
Three Months Ended
|
|
Years Ended |
||||||||||||
(In thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
|
||||||||
Net loss attributable to stockholders |
$ |
(30,400 |
) |
|
$ |
(43,151 |
) |
|
$ |
(66,043 |
) |
|
$ |
(93,931 |
) |
Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests |
|
(15 |
) |
|
|
721 |
|
|
|
(779 |
) |
|
|
1,140 |
|
Interest income |
|
(5,688 |
) |
|
|
(1,338 |
) |
|
|
(19,534 |
) |
|
|
(1,339 |
) |
Interest expense, net |
|
11,121 |
|
|
|
9,258 |
|
|
|
41,936 |
|
|
|
11,401 |
|
Impairment of goodwill and intangibles |
|
— |
|
|
|
877 |
|
|
|
— |
|
|
|
9,483 |
|
Depreciation and amortization |
|
4,686 |
|
|
|
5,507 |
|
|
|
20,164 |
|
|
|
8,419 |
|
EBITDA |
|
(20,296 |
) |
|
|
(28,126 |
) |
|
|
(24,256 |
) |
|
|
(64,827 |
) |
Net (income) loss from discontinued operations |
|
(130 |
) |
|
|
14,719 |
|
|
|
4,123 |
|
|
|
40,112 |
|
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,527 |
) |
Restructuring charges |
|
— |
|
|
|
8,394 |
|
|
|
965 |
|
|
|
9,939 |
|
Legal charges related to |
|
1,713 |
|
|
|
3,809 |
|
|
|
31,400 |
|
|
|
9,553 |
|
Accreted contingent compensation obligation to sellers of World Energy |
|
— |
|
|
|
36 |
|
|
|
— |
|
|
|
(77 |
) |
Gain on asset disposal |
|
(499 |
) |
|
|
(851 |
) |
|
|
(4,724 |
) |
|
|
(580 |
) |
Change in fair value of interest rate swaps |
|
16,479 |
|
|
|
2,978 |
|
|
|
4,816 |
|
|
|
(5,554 |
) |
Change in fair value of obligation to issue shares of common stock |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
(535 |
) |
Meter upgrade campaign |
|
1,423 |
|
|
|
483 |
|
|
|
4,353 |
|
|
|
663 |
|
Other one-time costs |
|
106 |
|
|
|
216 |
|
|
|
2,367 |
|
|
|
332 |
|
Change in fair value warrant liabilities |
|
(21 |
) |
|
|
(2 |
) |
|
|
(239 |
) |
|
|
(5,148 |
) |
Stock based compensation |
|
836 |
|
|
|
5,883 |
|
|
|
2,885 |
|
|
|
9,996 |
|
Bad debt expense |
|
262 |
|
|
|
860 |
|
|
|
2,698 |
|
|
|
1,839 |
|
Accretion expense |
|
150 |
|
|
|
— |
|
|
|
150 |
|
|
|
— |
|
Non-recurring acquisition/divestment expenses |
|
367 |
|
|
|
1,828 |
|
|
|
1,577 |
|
|
|
16,544 |
|
Adjusted EBITDA |
$ |
390 |
|
|
$ |
10,232 |
|
|
$ |
26,115 |
|
|
$ |
7,730 |
|
|
||||||||
Consolidated Balance Sheets |
||||||||
|
||||||||
|
|
As of |
||||||
(In thousands, except share and per share amounts) |
|
2023 |
|
2022 |
||||
Assets |
|
|
|
|
||||
Current assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
141,354 |
|
|
$ |
220,321 |
|
Restricted cash |
|
|
31,587 |
|
|
|
19,823 |
|
Accounts receivable, net of allowance of |
|
|
9,188 |
|
|
|
8,336 |
|
Interest rate swap assets, current |
|
|
11,333 |
|
|
|
10,183 |
|
Prepaid expenses and other current assets |
|
|
9,879 |
|
|
|
5,316 |
|
Current assets of discontinued operations |
|
|
— |
|
|
|
10,977 |
|
Total current assets |
|
|
203,341 |
|
|
|
274,956 |
|
Investment related to SEMTH master lease agreement |
|
|
143,096 |
|
|
|
— |
|
Property and equipment, net |
|
|
483,759 |
|
|
|
396,168 |
|
Interest rate swap assets, non-current |
|
|
16,550 |
|
|
|
22,069 |
|
Deferred rent assets |
|
|
2,454 |
|
|
|
1,626 |
|
Intangible assets, net |
|
|
10,196 |
|
|
|
— |
|
Right-of-use assets, net |
|
|
5,933 |
|
|
|
2,802 |
|
|
|
|
28,757 |
|
|
|
128,548 |
|
Other assets |
|
|
257 |
|
|
|
383 |
|
Long-term assets of discontinued operations |
|
|
31 |
|
|
|
— |
|
Total assets |
|
$ |
894,374 |
|
|
$ |
826,552 |
|
|
|
|
|
|
||||
Liabilities, redeemable noncontrolling interests and stockholders’ equity |
|
|
|
|
||||
Current liabilities |
|
|
|
|
||||
Non-recourse debt, current |
|
$ |
27,914 |
|
|
$ |
25,314 |
|
Accounts payable |
|
|
1,120 |
|
|
|
2,904 |
|
Deferred revenue, current |
|
|
878 |
|
|
|
39 |
|
Lease liability, current |
|
|
1,166 |
|
|
|
834 |
|
Accrued expenses and other current liabilities |
|
|
40,634 |
|
|
|
21,509 |
|
Current liabilities of discontinued operations |
|
|
— |
|
|
|
9,097 |
|
Total current liabilities |
|
|
71,712 |
|
|
|
59,697 |
|
Non-recourse debt, non-current |
|
|
590,866 |
|
|
|
474,441 |
|
Deferred revenue, non-current |
|
|
1,858 |
|
|
|
452 |
|
Lease liability, non-current |
|
|
5,731 |
|
|
|
2,426 |
|
Warrant liabilities |
|
|
17 |
|
|
|
256 |
|
Interest rate swap liabilities, non-current |
|
|
843 |
|
|
|
— |
|
Other long-term liabilities |
|
|
2,184 |
|
|
|
10 |
|
Unfavorable solar renewable energy agreements, net |
|
|
6,108 |
|
|
|
— |
|
Long-term liabilities of discontinued operations |
|
|
170 |
|
|
|
294 |
|
Total liabilities |
|
|
679,489 |
|
|
|
537,576 |
|
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Redeemable noncontrolling interests |
|
|
— |
|
|
|
85 |
|
Stockholders’ equity: |
|
|
|
|
||||
Common stock, |
|
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
|
475,654 |
|
|
|
473,289 |
|
Noncontrolling interests |
|
|
2,325 |
|
|
|
8,942 |
|
Accumulated deficit |
|
|
(257,672 |
) |
|
|
(193,342 |
) |
|
|
|
(5,424 |
) |
|
|
— |
|
Total stockholders’ equity |
|
|
214,885 |
|
|
|
288,891 |
|
Total liabilities, redeemable noncontrolling interests and stockholders’ equity |
|
$ |
894,374 |
|
|
$ |
826,552 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240314244556/en/
Investor Contact: investors@sprucepower.com
Head of Investor Relations:
Media Contact: publicrelations@sprucepower.com
Source: