SPRUCE POWER HOLDING CORP
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
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FY2024 · Filed Mar 31, 2025
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Item 3.
Consolidated Statements of Cash Flows
| Years Ended December 31, | ||
|---|---|---|
| (In thousands) | 2024 | 2023 |
| Operating activities: | ||
| Net loss | $(70,053) | $(66,610) |
| Add back: Net (income) loss from discontinued operations | (25) | 4,123 |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Stock-based compensation, net | 2,712 | 2,885 |
| Bad debt expense | 1,386 | 1,841 |
| Amortization of deferred revenue | (1,193) | (91) |
| Depreciation and amortization expense | 21,284 | 21,586 |
| Impairment of goodwill | 28,757 | — |
| Accretion expense | 236 | 300 |
| Change in fair value of interest rate swaps | 2,753 | 4,816 |
| Change in fair value of warrant liabilities | (17) | (239) |
| Interest income related to SEMTH master lease agreement | (16,823) | (11,486) |
| Gain on disposal of assets | (2,504) | (4,724) |
| Change in operating right-of-use assets | 26 | 120 |
| Amortization of debt discount and deferred financing costs | 6,026 | 5,863 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable, net | (3,490) | 85 |
| Deferred rent assets | (1,263) | (828) |
| Prepaid expenses and other current assets | 3,707 | (2,390) |
| Other assets | 2 | 126 |
| Accounts payable | (133) | (1,784) |
| Accrued expenses and other current liabilities | (15,571) | 13,624 |
| Other long-term liabilities | (9) | 5 |
| Deferred revenue | 2,506 | 1,064 |
| Net cash used in continuing operating activities | (41,686) | (31,714) |
| Net cash used in discontinued operating activities | (125) | (1,947) |
| Net cash used in operating activities | (41,811) | (33,661) |
| Investing activities: | ||
| Proceeds from sale of solar energy systems | 6,091 | 6,297 |
| Proceeds from investment related to SEMTH master lease agreement | 25,614 | 20,239 |
| Cash paid for acquisitions, net of cash acquired | (132,763) | (43,097) |
| Purchases of other property and equipment | (354) | (499) |
| Net cash used in continuing investing activities | (101,412) | (17,060) |
| Net cash provided by discontinued investing activities | — | 325 |
| Net cash used in investing activities | (101,412) | (16,735) |
| Financing activities: | ||
| Proceeds from issuance of non-recourse debt | 239,842 | 21,396 |
| Payment of deferred financing costs | (3,374) | (391) |
| Repayments of non-recourse debt | (155,943) | (32,843) |
| Repayments under financing leases | — | (165) |
| Proceeds from issuance of common stock | — | 150 |
|---|---|---|
| Proceeds from exercise of stock options | — | 1,004 |
| Share repurchases | (853) | (5,424) |
| Capital distributions to redeemable noncontrolling interests and noncontrolling interests | (323) | (479) |
| Buyout of redeemable non-controlling interest | — | (55) |
| Net cash provided by (used in) continuing financing activities | 79,349 | (16,807) |
| Net cash provided by discontinued financing activities | 81 | — |
| Net cash provided by (used in) financing activities | 79,430 | (16,807) |
| Net change in cash and cash equivalents and restricted cash: | (63,793) | (67,203) |
| Cash and cash equivalents and restricted cash, beginning of period | 172,941 | 240,144 |
| Cash and cash equivalents and restricted cash, end of period | $109,148 | $172,941 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid for interest | $35,060 | $37,482 |
| Supplemental disclosures of noncash investing and financing information: | ||
| Right-of-use assets obtained in exchange for lease liability | $— | $933 |
| Settlement of operating lease liability | $— | $436 |
| Settlement of finance lease liability | $— | $43 |
Notes to Consolidated Financial Statements
Note 1. Organization and Description of Business
Description of Business
Spruce Power Holding Corporation and its subsidiaries (“Spruce Power” or the “Company”) is a leading owner and operator of distributed solar energy assets across the United States (the “U.S.”), offering subscription-based services to approximately 85,000 home solar assets and customer contracts, making renewable energy more accessible to everyone. The Company is engaged in the ownership and maintenance of home solar energy systems for homeowners in the U.S.
The Company’s primary customers are homeowners and its core solar service offerings to these customers generate revenues primarily through (i) the sale of electricity generated by its home solar energy systems to homeowners pursuant to long-term Customer Agreements as defined below, which require the homeowners to make recurring monthly payments, (ii) third party contracts to sell solar renewable energy credits (“SRECs”) generated by the Company’s home solar energy systems for contracted prices, and (iii) the servicing of third-party owned solar energy systems through the Company’s Spruce Pro servicing platform, which is contracted to offer portfolio managed services to third party owners, as well as to the Company’s portfolio of home solar energy systems (the “Portfolio”). These portfolio managed services include (a) billing and collections/asset recovery, (b) account support services, (c) financial asset management, (d) homeowner support and servicing technology, (e) asset operations, and (f) transaction and execution services related to SRECs.
In addition to the Company’s core solar service offerings, the Company generates cash flows and earns interest income from customer contracts related to the SEMTH Master Lease, defined below.
The Company holds subsidiary fund companies, defined below as the Funds, that own and operate the Company’s portfolio of home solar energy systems, which are subject to solar lease agreements (“SLAs”) and power purchase agreements (“PPAs”, together with the SLAs, “Customer Agreements”) with residential customers who benefit from the production of electricity generated by the Company’s Portfolio, which may qualify for subsidies, renewable energy credits and other incentives as provided by various states and local agencies. These benefits have generally been retained by the Company's subsidiaries that own the systems, with the exception of the investment tax credit (“ITCs”) under Section 48 of the Internal Revenue Code, as amended, (the “IRC”), which were generally passed through to the various financing partners of the solar energy systems.
Corporate History and Discontinued Operations
Historically, as XL Fleet Corp. (“XL Fleet”), the Company provided fleet electrification solutions for commercial vehicles in North America, offering its systems for vehicle electrification (the “Drivetrain” business) and offering and installing charging stations to enable customers to develop charging infrastructure required for electrified vehicles (the “XL Grid” business). In early 2022, the Company performed a strategic review of its overall business operations, which resulted in (i) the sale of the Company’s Drivetrain and XL Grid businesses in January 2023, and (ii) the decision to pursue merger and acquisition (“M&A”) opportunities. On September 9, 2022, the Company acquired 100% of the membership interests of Spruce Holding Company 1 LLC, Spruce Holding Company 2 LLC, Spruce Holding Company 3 LLC and Spruce Manager LLC (collectively and together with their subsidiaries, “Legacy Spruce Power”) (See Note 3. Business Combinations), which was one of the largest privately held owner and operator of home solar energy systems in the U.S. at the time of the transaction. In November 2022, following the acquisition of Legacy Spruce Power, the Company changed its corporate name from “XL Fleet Corp.” to “Spruce Power Holding Corporation.” Additionally, the Company changed its ticker symbol from “XL” to “SPRU.”
After the acquisition of Legacy Spruce Power, the Company also commenced a review of its XL Grid business to evaluate its strategic fit with Legacy Spruce Power, and in the fourth quarter of 2022, the Company entered into a non-binding letter of intent for the sale of World Energy Efficiency Services, LLC (“World Energy”) for an immaterial amount. The divestiture of World Energy closed in January 2023 and the Company subsequently ceased its XL Grid operations.
Both the Drivetrain and XL Grid operations are presented as discontinued operations in the consolidated financial statements.
Notes to Consolidated Financial Statements
In the first quarter of 2023, the Company completed the acquisition of all issued and outstanding interests in SS Holdings 2017, LLC and its subsidiaries (“SEMTH”) from certain funds managed by HPS Investment Partners, LLC, pursuant to a membership interest purchase and sale agreement as of that date (the “SEMTH Acquisition”). The SEMTH related asset includes a 20-year use rights to customer payment streams of approximately 22,500 customer contracts (the “SEMTH Master Lease”). Subsequently on August 18, 2023, the Company acquired approximately 2,400 home solar assets and customer contracts, with an average remaining contract life of approximately 11 years, from a publicly traded, regulated utility company (the “Tredegar Acquisition”).
In the fourth quarter of 2024, the Company completed the acquisition of a residential solar portfolio consisting of approximately 9,800 home solar assets and customer contracts, with an average remaining contract life of over 11 years, from a publicly traded energy services company (the “NJR Acquisition”).
With the completion of the NJR Acquisition, the Company has, in the aggregate,14 portfolios of rooftop solar Customer Agreements. In the aggregate, as of December 31, 2024, the Company offered subscription-based services and owned the cash flows from approximately 85,000 home solar assets and customer contracts.
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