Spruce Power Holding Corp (SPRU) Q3 2024 Earnings Call Highlights: Strategic Acquisitions and ...

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Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Spruce Power Holding Corp (NYSE:SPRU) reported solid third-quarter results with revenue of $21.4 million and operating EBITDA of $17.7 million, supported by predictable cash flows from over 75,000 solar assets.

  • The company maintains a strong balance sheet with total cash of $150 million at quarter-end, unchanged from the previous quarter.

  • Spruce Power Holding Corp (NYSE:SPRU) signed a nonbinding letter of intent to acquire a portfolio of nearly 10,000 home solar systems, expected to close in the fourth quarter, which could generate impressive cash returns.

  • The company is ramping up its Spruce Pro servicing business, entering a memorandum of understanding with a large residential solar installer to provide servicing solutions, indicating strong growth potential.

  • Spruce Power Holding Corp (NYSE:SPRU) plans to resume its common stock repurchase program, reflecting confidence in its growth prospects and capital allocation strategy.

Negative Points

  • Third-quarter revenue decreased compared to the prior year period, primarily due to lower SREC revenues and higher performance guarantee payments.

  • The company reported a GAAP net loss attributable to stockholders of $53.5 million, partly due to increased legal costs and ongoing legal proceedings.

  • Spruce Power Holding Corp (NYSE:SPRU) recorded a noncash goodwill impairment charge of approximately $29 million due to a decline in stock price and market capitalization.

  • The company adjusted its full-year 2024 guidance, expecting adjusted operating EBITDA to be $60 million and adjusted free cash flow to be negative $10 million, below previous expectations.

  • Higher than expected non-routine operations and maintenance expenses and corporate-level expenses, including legal costs, have negatively impacted financial performance.

Q & A Highlights

Q: Can you share any perspective details about the financial impact of the announced acquisition? How should we think about the profitability of this asset compared to your existing portfolio? A: (Chris Hayes, CEO) We're excited about this opportunity. If completed, it will build on our high-margin cash flow base and realize synergies within our servicing organization. We can't comment on specific deal economics, but any acquisition activity should align with our historical framework. We're working to close the acquisition efficiently and will provide details at the appropriate time.

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