Spruce Power (US:SPRU)2022-08-09 21:09Financial Performance - Total revenues for the three months ended June 30, 2022, were $3,010,000, a decrease of 18.5% compared to $3,694,000 for the same period in 2021[20]. - Gross profit for the six months ended June 30, 2022, was $132,000, compared to $246,000 for the same period in 2021, reflecting a decline of 46.4%[20]. - The net loss for the six months ended June 30, 2022, was $28,775,000, compared to a net income of $51,445,000 for the same period in 2021[25]. - The company reported a net loss of $12,698,000 for the three months ended June 30, 2022, compared to a net loss of $10,469,000 for the same period in 2021, reflecting an increase in losses of approximately 11.7%[132]. - Revenues decreased by $0.7 million, or 18.5%, to $3.0 million for the three months ended June 30, 2022, compared to $3.7 million for the same period in 2021, primarily due to a net decrease in the Drivetrain segment[160]. - For the six months ended June 30, 2022, revenues increased by $3.4 million, or 77.9%, to $7.8 million, driven by higher revenues in the XL Grid segment[169]. Cash and Assets - Cash and cash equivalents as of June 30, 2022, were $322,371,000, down from $351,676,000 as of December 31, 2021, representing a decrease of 8.5%[16]. - Total assets decreased to $353,806,000 as of June 30, 2022, from $393,221,000 as of December 31, 2021, a decline of 10.0%[16]. - Total stockholders' equity decreased to $335,116,000 as of June 30, 2022, from $361,810,000 as of December 31, 2021, a decrease of 7.4%[18]. - As of June 30, 2022, the company had working capital of $333.2 million, including cash and cash equivalents of $322.5 million[176]. Operating Expenses - Operating expenses for the three months ended June 30, 2022, were $15,205,000, an increase of 12.1% compared to $13,631,000 for the same period in 2021[20]. - The company incurred total commission expenses of $218 and $496 during the three and six months ended June 30, 2022, respectively, compared to $(57) and $199 in the same periods of 2021[92]. - Selling, general, and administrative expenses increased by $1.5 million, or 13.4%, to $12.3 million for the three months ended June 30, 2022, primarily due to a full three months of expenses from World Energy[164]. - Selling, general, and administrative expenses rose by $5.2 million, or 27.4%, to $23.9 million for the six months ended June 30, 2022, primarily due to the acquisition of World Energy and severance charges[173]. Segment Performance - The Company operates under two reportable segments: Drivetrain and XL Grid, reorganized for better resource allocation and performance measurement[76]. - The Drivetrain segment generated revenues of $808,000 for the three months ended June 30, 2022, down from $1,282,000 in the same period of 2021, a decrease of about 37%[140]. - The XL Grid segment reported revenues of $2,202,000 for the three months ended June 30, 2022, compared to $2,412,000 in the same period of 2021, a decline of approximately 8.7%[140]. - The XL Grid segment revenues increased by $4.0 million to $6.4 million for the six months ended June 30, 2022, reflecting a full six months of activity from World Energy[169]. Impairments and Charges - The company incurred an impairment of goodwill amounting to $8,606,000 during the six months ended June 30, 2022[20]. - The company recognized an impairment charge of $8.6 million for goodwill in the first quarter of 2022 due to a decline in stock price and market capitalization[174]. - The company incurred an inventory obsolescence charge of $1,518,000 in the first quarter of 2022, with an additional $193,000 recognized in the second quarter[119]. Legal and Regulatory Matters - The Company intends to vigorously defend against multiple lawsuits alleging breaches of fiduciary duty and other claims, but is currently unable to estimate potential losses related to these legal matters[128][130]. - The company is currently involved in several legal proceedings, including a Securities and Exchange Commission investigation and two class action complaints, which may have a material adverse impact on its financial statements and cash flows[210]. Economic and Operational Risks - The invasion of Ukraine by Russia has led to increased costs for components, particularly nickel and aluminum, which are essential for electric vehicle batteries, potentially affecting the company's production and sales[208]. - The company faces risks related to supply chain disruptions, including potential shortages of battery cells, which could negatively impact production of electrified powertrain solutions[207]. - Recent inflationary pressures have increased the costs of energy and raw materials, which could adversely influence customer purchasing decisions and affect sales[209]. - The uncertain global economic conditions and ongoing supply chain constraints may negatively impact the company's results of operations[209]. - The costs associated with defending against legal proceedings and cooperating with investigations are expected to be material and could adversely impact the company's financial performance[210].