SPRUCE POWER HOLDING CORP
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
SPRU$1.63+28.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001628280-24-037238
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001628280-24-047866
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 69 previous paragraphs and 74 current paragraphs.
45 unchanged; 15 reworded; 14 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
September 30, 2024, we entered into a non-binding letter of intent to acquire a portfolio of approximately 10,000 home solar assets and contracts (the “Potential Acquisition”), which if completed would bring ownership of total home solar assets and contracts to approximately 85,000. While management is pursuing the Potential Acquisition, there is no guarantee that we will complete the intended acquisition.
Current report
Cost of revenues decreased by less than $0.2 million, or 1.6%, to $9.7 million in the three months ended September 30, 2024 from $9.8 million for the three months ended September 30, 2023. The decrease was primarily due to lower cost of operations and maintenance in the current period. Cost of revenues related to our Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Current report
Selling, general and administrative expenses increased by $1.1 million, or 9.1%, to $13.5 million in the three months ended September 30, 2024 from $12.4 million for the three months ended September 30, 2023. The increase was primarily due to various factors including an increase in legal fees incurred in connection with our legal settlements and other ongoing legal proceedings (See Note 14. Commitments and Contingencies) and an increase in compensation expense for the three months ended September 30, 2024 as compared to the prior period. Selling, general and administrative expenses for the three months ended September 30, 2023 include the ongoing operations of our home solar business and corporate functions, as well as certain remaining costs associated with our historic operations, including certain integration related costs. Selling, general and administrative expenses related to the Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Current report
Litigation settlement, net
Current report
Litigation settlement, net decreased by $19.1 million, or 72.6%, to $7.2 million in the three months ended September 30, 2024 from $26.3 million for the three months ended September 30, 2023. The decrease is primarily attributed to $26.0 million incurred during the three months ended September 30, 2023, associated with settlements of the SEC inquiry and shareholder lawsuits, net of related insurance recoveries from third parties, partially offset by $7.2 million in additional settlement costs associated with various settled and ongoing legal proceedings (See Note 14. Commitments and Contingencies) recorded during the three months ended September 30, 2024.
Current report
Impairment of Goodwill
Current report
Impairment of goodwill of $28.8 million was recognized during the three months ended September 30, 2024 due to a continuous decline in our stock price and market capitalization.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
Revenues decreased by $2.3 million, or 3.5%, to $61.9 million in the nine months ended September 30, 2024 from $64.2 million for the nine months ended September 30, 2023. The decrease is primarily due to a decrease in SREC revenue and a decrease in SLA revenue primarily due to higher performance guarantee obligations recorded during the nine months ended September 30, 2024. This decrease was partially offset by an increase in PPA revenues in the current period related to the Tredegar Acquisition.
Current report
Selling, general and administrative expenses decreased by $0.7 million, or 1.5%, to $43.4 million in the nine months ended September 30, 2024 from $44.1 million for the nine months ended September 30, 2023. Selling, general and administrative expenses for the three months ended September 30, 2023 include the ongoing operations of our home solar business and corporate functions, as well as certain remaining costs associated with our historic operations, including certain integration related costs. Selling, general and administrative expenses related to the Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Current report
Litigation settlement, net
Current report
Litigation settlement, net decreased by $19.1 million, or 72.6%, to $7.2 million in the nine months ended September 30, 2024 from $26.3 million for the nine months ended September 30, 2023. The decrease is primarily attributed to $26.0 million incurred during the nine months ended September 30, 2023 associated with settlements of the SEC inquiry and shareholder lawsuits, net of related insurance recoveries from third parties, partially offset by $7.2 million in additional settlement costs associated with various settled and ongoing legal proceedings (See Note 14. Commitments and Contingencies) recorded during the nine months ended September 30, 2024.
Current report
Impairment of Goodwill
Current report
Impairment of goodwill of $28.8 million was recognized during the nine months ended September 30, 2024 due to a continuous decline in our stock price and market capitalization.
Removed paragraphs (9)
Previous report
Cost of revenues increased by $1.5 million, or 18.0%, to $10.1 million in the three months ended June 30, 2024 from $8.6 million for the three months ended June 30, 2023. The increase was primarily attributed to an increase in operating and maintenance costs. Cost of revenues related to our Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Previous report
Selling, general and administrative expenses increased by $0.7 million, or 4.5%, to $16.7 million in the three months ended June 30, 2024 from $16.0 million for the three months ended June 30, 2023. The increase was primarily due to higher compensation expenses of $2.2 million, which included one-time severance costs of $1.9 million recognized in the current period upon separation of the Former CEO from the Company effective April 12, 2024. This increase was partially offset by a reduction of $1.8 million in legal expenses for the three months ended June 30, 2024 resulting from the settlement of certain Legacy XL legal proceedings. Selling, general and administrative expenses related to the Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Previous report
Gain on asset disposal increased by $0.2 million, or 25.8%, to $1.0 million in the three months ended June 30, 2024 from $0.8 million for the three months ended June 30, 2023. The increase is primarily due to a $0.2 million gain recognized during the three months ended June 30, 2024 for insurance proceeds related to the Maui fires, see Note 13. Commitments and Contingencies to the accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Previous report
Interest expense, net decreased by $2.9 million, or 27.4%, to $7.6 million in the three months ended June 30, 2024, from $10.5 million for the three months ended June 30, 2023. The decrease is primarily due to a gain of $3.6 million recognized during the current period associated with the settlement of the Company’s interest rate swaps related to the SP4 Facility (see Note 9. Interest Rate Swaps to the accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), which was partially offset by an increase in interest expense of $0.6 million during the current period.
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Revenues decreased by $0.1 million, or 0.3%, to $40.8 million in the six months ended June 30, 2024 from $40.9 million for the six months ended June 30, 2023. The decrease is primarily due to a $0.1 million decrease in other revenues during the current period.
Previous report
Selling, general and administrative expenses decreased by $1.5 million, or 4.8%, to $30.2 million in the six months ended June 30, 2024 from $31.7 million for the six months ended June 30, 2023. The decrease is primarily due to decreases in legal costs associated with Legacy XL legal matters and certain professional services, partially offset by one-time severance costs of $1.9 million recognized in the current period upon separation of the Former CEO from the Company effective April 12, 2024. Selling, general and administrative expenses related to the Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Previous report
Gain on Asset Disposal
Previous report
Interest Expense, net
Reworded paragraphs (15)
Previous wording
We seek to grow our subscriber revenues by focusing on those channels that have lowest customer acquisition costs and the ability to increase return on assets, including acquiring existing systems from other companies or investment funds, selling additional services to existing subscribers, selling services to new customers online and partnering with selected independent installers to provide a subscription-based solution for their customers.
Current wording
We seek to grow our subscriber revenues by focusing on those channels that have lowest customer acquisition costs and the ability to increase return on assets, including acquiring existing systems from other companies or investment funds, selling additional services to existing subscribers, selling services to new customers online and partnering with selected independent installers to provide a subscription-based solution for their customers. During the three months ended
Previous wording
Revenues decreased by $0.3 million, or 1.5%, to $22.5 million in the three months ended June 30, 2024 from $22.8 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease in SREC revenues during the three months ended June 30, 2024.
Current wording
Revenues decreased by $1.9 million, or 8.1%, to $21.4 million in the three months ended September 30, 2024 from $23.3 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in SREC revenues and a decrease in SLA revenue primarily due to higher performance guarantee obligations recorded during the three months ended September 30, 2024.
Previous wording
Interest income increased by $2.0 million, or 62.3%, to $5.3 million in the three months ended June 30, 2024 from $3.2 million for the three months ended June 30, 2023. The increase is due to incremental interest income of $2.4 million associated with the SEMTH Master Lease, slightly offset by a $0.4 million decrease in interest income earned on investments in U.S. Treasury securities during the current period.
Current wording
Interest income decreased by $2.0 million, or 24.1%, to $6.3 million in the three months ended September 30, 2024 from $8.3 million for the three months ended September 30, 2023. The decrease is primarily due to additional interest income of $2.4 million associated with the SEMTH Master Lease recognized in the prior period, slightly offset by a $0.4 million decrease in interest income earned on investments in U.S. Treasury securities during the current period.
Previous wording
Other (income) expense, net was a $3.1 million expense for the three months ended June 30, 2024, a decrease of $13.1 million from an income of $10.0 million for the three months ended June 30, 2023. The decrease is primarily the result of change in fair value of our interest rate swap agreements.
Current wording
Other (income) expense, net was a $11.3 million expense for the three months ended September 30, 2024, an increase of $19.8 million from an income of $8.5 million for the three months ended September 30, 2023. The increase is primarily the result of change in fair value of our interest rate swap agreements.
Previous wording
Information with respect to our unaudited condensed consolidated statements of operations for the six months ended June 30, 2024 and 2023 are presented below:
Current wording
Information with respect to our unaudited condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 are presented below:
Previous wording
Cost of revenues increased by $2.6 million, or 15.6%, to $19.0 million in the six months ended June 30, 2024 from $16.4 million for the six months ended June 30, 2023. The increase is primarily due to an increase in certain operation and maintenance costs. Cost of revenues related to our Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Current wording
Cost of revenues increased by $2.2 million, or 8.5%, to $28.5 million in the nine months ended September 30, 2024 from $26.3 million for the nine months ended September 30, 2023. The increase is primarily due to an increase in certain operation and maintenance costs. Cost of revenues related to our Drivetrain and XL Grid operations are included in net income (loss) from discontinued operations.
Previous wording
Gain on asset disposal decreased by $2.0 million, or 57.9%, to $1.5 million in the six months ended June 30, 2024 from $3.5 million for the six months ended June 30, 2023. The decrease is primarily the result of updated valuation reports and adjustments to provisional amounts assigned to gain on asset disposal recognized in the prior period, partially offset by a $0.2 million gain recognized in the current period for insurance proceeds related to the Maui fires.
Current wording
Gain on asset disposal decreased by less than $2.2 million, or 51.4%, to $2.1 million in the nine months ended September 30, 2024 from $4.2 million for the nine months ended September 30, 2023. The decrease is primarily the result of updated valuation reports and adjustments to provisional amounts assigned to gain on asset disposal recognized in the prior period, partially offset by a $0.2 million gain recognized in the current period for insurance proceeds related to Maui wildfire.
Previous wording
Interest income increased by $5.1 million, or 90.4%, to $10.6 million in the six months ended June 30, 2024 from $5.6 million for the six months ended June 30, 2023. The increase is primarily due to two full quarters of interest income related to the SEMTH Acquisition, which was completed in March 2023, recognized in the current period as compared to the prior period.
Current wording
Interest income increased by $3.1 million, or 22.1%, to $16.9 million in the nine months ended September 30, 2024 from $13.8 million for the nine months ended September 30, 2023. The increase is primarily due to three full quarters of interest income related to the SEMTH Acquisition, which was completed in March 2023, recognized in the current period as compared to the prior period.
Previous wording
Interest expense, net decreased by $1.1 million, or 5.6%, to $18.5 million in the six months ended June 30, 2024 from $19.6 million for the six months ended June 30, 2023. The decrease is primarily due to a gain of $3.6 million recognized during the current period due to settlement of the Company’s interest rate swaps related to the settlement of SP4 Facility, partially offset by incremental expenses of $2.6 million associated with two full quarters of interest expense related to the SP4 Facility assumed in connection with the SEMTH acquisition completed in 2023.
Current wording
Interest expense, net decreased by $0.9 million, or 3.0%, to $29.9 million in the nine months ended September 30, 2024 from $30.8 million for the nine months ended September 30, 2023. The decrease is primarily due to a gain recognized during the current period due to settlement of our interest rate swaps related to the repayment of SP4 Facility, partially offset by incremental expenses associated with three full quarters of interest expense related to the SP4 Facility assumed in connection with the SEMTH acquisition completed in 2023.
Previous wording
Other income, net was $3.6 million for the six months ended June 30, 2024, a decrease of $1.0 million from an expense of $4.6 million for the six months ended June 30, 2023. The decrease is primarily due to an unfavorable settlement of interest swaps recognized in the prior period.
Current wording
Other (income) expense, net was $7.7 million for the nine months ended September 30, 2024, a decrease of $20.8 million from income of $13.1 million for the nine months ended September 30, 2023. The decrease is primarily due to an unfavorable change in the value of interest swaps in the current period.
Previous wording
Our cash requirements depend on many factors, including the execution of our business strategy. We remain focused on carefully managing costs, including capital expenditures, maintaining a strong balance sheet, and ensuring adequate liquidity. Our primary cash needs are for debt service, acquisition of solar systems, operating expenses, working capital and capital expenditures to support the growth of our business. Working capital is impacted by the timing and extent of the business needs. As of June 30, 2024, we had net working capital of $125.1 million, including cash and cash equivalents and restricted cash of $150.2 million.
Current wording
Our cash requirements depend on many factors, including the execution of our business strategy. We remain focused on carefully managing costs, including capital expenditures, maintaining a strong balance sheet, and ensuring adequate liquidity. Our primary cash needs are for debt service, acquisition of solar systems, operating expenses, working capital and capital expenditures to support the growth of our business. Working capital is impacted by the timing and extent of the business needs. As of September 30, 2024, we had net working capital of $110.2 million, including cash and cash equivalents and restricted cash of $150.0 million.
Previous wording
During the second quarter of 2024, we obtained new term loans in the aggregate principal amount of$130.0 million, the proceeds of which were primarily used to repay$125.0 million related to the SEMTH acquisition. As of June 30, 2024, we had$612.9 million of aggregate non-recourse debt, including current portions. We are required to complete debt service coverage ratio calculations on a quarterly basis as part of our debt covenants. All debt covenant requirements were satisfied as of June 30, 2024. Based on our current liquidity, management believes that no additional capital will be needed to execute its current business plan over the next 12 months. We continually evaluate our cash needs to raise additional funds or seek alternative sources to invest in growth opportunities and other purposes.
Current wording
During the second quarter of 2024, we obtained new term loans in the aggregate principal amount of$130.0 million, the proceeds of which were primarily used to repay$125.0 million related to the SEMTH acquisition. As of September 30, 2024, we had$605.4 million of aggregate non-recourse debt, including current portions. We are required to complete debt service coverage ratio calculations on a quarterly basis as part of our debt covenants. All debt covenant requirements were satisfied as of September 30, 2024. Based on our current liquidity, management believes that no additional capital will be needed to execute its current business plan over the next 12 months. We continually evaluate our cash needs to raise additional funds or seek alternative sources to invest in growth opportunities and other purposes.
Previous wording
The net cash used in continuing operations for the six months ended June 30, 2024 consists of the Company’s corporate costs and certain other costs that were not allocated to our discontinued operations.
Current wording
The net cash used in continuing operations for the nine months ended September 30, 2024 consists of our corporate costs and certain other costs that were not allocated to our discontinued operations.
Previous wording
Cash provided by investing activity related to continuing operations for the six months ended June 30, 2024 primarily includes $10.8 million of proceeds from the SEMTH investment and $2.9 million of proceeds from the sale of solar energy systems.
Current wording
Cash provided by investing activity related to continuing operations for the nine months ended September 30, 2024 primarily includes $18.9 million of proceeds from the SEMTH investment and $4.7 million of proceeds from the sale of solar energy systems.
Previous wording
The net cash used in financing activities related to continuing operations for the six months ended June 30, 2024 primarily includes $136.8 million for the repayment of the Company’s long term non-recourse debt, partially offset by new long term non-recourse debt obtained via the SET Facility of $130.0 million.
Current wording
The net cash used in financing activities related to continuing operations for the nine months ended September 30, 2024 primarily includes $145.8 million for the repayment of our long term non-recourse debt, inclusive of the $125 million of SP4 Facility repayment, partially offset by new long term non-recourse debt obtained via the SET Facility of $130.0 million.