Spruce Power (SPRU) - 2025 Q1 - Quarterly Report

Financial Performance - Revenues for Q1 2025 were $23.8 million, a 30.5$18.3 million in Q1 2024[16] - Net loss attributable to stockholders for Q1 2025 was $15.3 million, compared to a loss of$2.5 million in Q1 2024, representing a significant increase in losses[16] - Total operating expenses increased to $25.5 million in Q1 2025, up from$21.9 million in Q1 2024, reflecting a 16.5% rise[16] - The Company generates revenues primarily through long-term Customer Agreements, third-party contracts for solar renewable energy credits (SRECs), and servicing third-party owned solar energy systems[22] - Power Purchase Agreement (PPA) revenues were $7.9 million in Q1 2025, up from$7.5 million in Q1 2024, representing a growth of 5.0%[49] - Service Level Agreement (SLA) revenues increased significantly to $9.9 million in Q1 2025 from$7.3 million in Q1 2024, marking a growth of 36.4%[49] - Solar renewable energy credit revenues rose to $3.9 million in Q1 2025, compared to$1.8 million in Q1 2024, reflecting a growth of 109.5%[49] - The Company recognized interest income of $4.6 million for the three months ended March 31, 2025, compared to$3.8 million for the same period in 2024[39] Cash Flow and Liquidity - Cash and cash equivalents decreased to $61.9 million as of March 31, 2025, down from$72.8 million at the end of 2024, a decline of 15.9%[14] - The company reported a net cash used in operating activities of $9.1 million for Q1 2025, compared to$22.2 million in Q1 2024, indicating improved cash flow management[19] - As of March 31, 2025, the Company had cash and cash equivalents of $61.9 million and restricted cash of$34.5 million, totaling $96.5 million[37] - The company expects that its current cash and cash equivalents, along with future cash generated from operations, will be sufficient to meet cash requirements for the next 12 months[158] - Net cash used in continuing operating activities decreased by$13.1 million to $(9.1 million) for the three months ended March 31, 2025, compared to$(22.2 million) for the same period in 2024[159] - Net cash provided by continuing investing activities was $4.2 million for the three months ended March 31, 2025, primarily from$4.5 million of proceeds from investments and $1.4 million from the sale of solar energy systems[161] - Net cash used in continuing financing activities was$7.7 million for the three months ended March 31, 2025, mainly due to $6.8 million for repayments of non-recourse long-term debt[162] Assets and Liabilities - Total assets as of March 31, 2025, were$878.0 million, a decrease of 2.7% from $898.5 million at the end of 2024[14] - Total stockholders' equity decreased to$130.8 million as of March 31, 2025, down from $146.2 million at the end of 2024, a decline of 10.5$700.122 million, a decrease from $705.331 million as of December 31, 2024[78] - The fair value of the Company's non-recourse debt was estimated at$718.1 million as of March 31, 2025, compared to $723.8 million as of December 31, 2024[86] - As of March 31, 2025, accrued expenses and other current liabilities totaled$28.096 million, slightly down from $28.125 million as of December 31, 2024[77] - The Company reported current assets of$1.5 million as of March 31, 2025, down from $2.1 million as of December 31, 2024, indicating a decrease of about 29.3$1.8 million, a decrease from $2.0 million as of December 31, 2024, reflecting a decline of about 12.5$808,000 during the quarter, indicating a strategy to return value to shareholders[18] - The Board of Directors approved a Repurchase Program in May 2023, authorizing the repurchase of up to $50.0 million of outstanding common stock through May 15, 2025[188] - As of March 31, 2025, approximately$43.0 million remains available under the Repurchase Program[189] - A total of 298,952 shares were repurchased during the three months ended March 31, 2025, at an average price of $2.68 per share[188] - The repurchase activity included 97,380 shares in January 2025 at$2.91, 86,594 shares in February 2025 at $2.55, and 114,978 shares in March 2025 at$2.59[188] Operational Developments - The Company has approximately 85,000 home solar assets and customer contracts, enhancing its market presence in the renewable energy sector[21] - The Company ceased its Drivetrain and XL Grid operations in late 2022, which are now classified as discontinued operations[24] - The Company is contracted to service approximately 60,000 systems owned by third parties, in addition to its own 85,000 home solar assets[128] - The Company aims to leverage its platform to grow revenues through subscription-based solutions for distributed energy resources, focusing on customer acquisition cost efficiency[129] - The Company has entered into a new operating lease agreement for a servicing center in New Jersey with annual rental payments of approximately $0.1 million[122] Challenges and Risks - The Company has experienced recurring net losses and negative cash flows from operations, raising doubt about its ability to continue as a going concern[26] - The company identified a material weakness in internal control over financial reporting as of March 31, 2025, affecting the reliability of financial statements[171] - The company is actively hiring qualified personnel to strengthen internal controls and address previously disclosed material weaknesses[177] - The company has experienced turnover in key management positions, including the CFO, which may disrupt business operations and affect market perception[185] - The company continues to face challenges in attracting and retaining highly qualified personnel, which is critical for executing its global business strategy[186] Legal Matters - The Company is involved in ongoing legal proceedings, including a securities class action settlement amounting to$19.5 million, with a net payment of $15.0 million made in February 2024[101] - BMZ USA, Inc. obtained a judgment for$3.9 million against XL Hybrids, with a potential loss estimated at approximately $1.2 million accrued as of March 31, 2025[105] Future Outlook - The Company plans to extend or refinance the SP1 Facility, which has a maturity date of April 30, 2026, and believes this is highly likely to be completed[25] - The Company plans to adopt ASU 2024-03 regarding expense disaggregation disclosures in its annual financial statements for the year ended December 31, 2027[66] - The expected amortization of intangible assets for the remainder of 2025 is projected to be$845,000, with a total expected amortization of $8.675 million over the next five years[76]