Company Overview - Spruce Power owns the cash flows from approximately 85,000 home solar assets and contracts representing 515 MW of capacity[6] - The company also provides management services to approximately 60,000 stand-alone systems owned by other companies, totaling approximately 145,000 systems and customer contracts[7] Financial Performance (1Q'25) - Revenue reached $24 million, a 30% year-over-year increase[9] - Adjusted Operating Margin was 24%[38] - Adjusted EBITDA Margin was 26%[38] - Total Cash was $96 million[9] Market Opportunity - The projected U.S solar build is 737 GW between 2024-2035[5] - U.S electricity consumption is expected to double by 2050[11] Acquisition Strategy - The company has acquired contracts related to over 67,000 home solar systems in 14 separate transactions since 4Q'18[22] - Spruce Power 5 Acquisition added cash flows from over 9,800 residential solar contracts in New Jersey[37] Debt and Portfolio Value - The company's debt has minimal exposure to interest rate fluctuations over the near-to-medium term as all debt is either floating rate debt that is hedged with interest rate swaps or fixed rate debt[45] - Spruce has $201 million in Net Portfolio Value as of 1Q'25, including Total Cash, Net Portfolio Value was $297 million[47]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $23.8 million, up from $20.2 million in Q4 2024 and $18.3 million in Q1 2024, reflecting a 30% year-over-year growth [26][27] - Operating EBITDA increased to $12.3 million in Q1 2025 from $10.7 million in the prior year period, primarily due to the NJR acquisition [28][29] - The company reported a GAAP net loss attributable to stockholders of $15.3 million [28] Business Line Data and Key Metrics Changes - The acquisition of rooftop assets from NJR contributed significantly to revenue growth, with approximately 9,800 installations acquired [6][12] - Spruce Pro, the third-party solar servicing platform, is expected to ramp up revenue gradually, with a significant partnership with ADT covering 60,000 systems [8][15] - Portfolio O&M expenses were $3.9 million in Q1 2025, down from $5.3 million in Q4 2024, indicating a sequential decline of over 25% [27] Market Data and Key Metrics Changes - The company is experiencing a cautious approach to new growth opportunities due to uncertainty in market conditions [8] - The SREC market in New Jersey is characterized by deep liquidity and high prices, which is expected to continue benefiting the company [38] Company Strategy and Development Direction - The company aims to achieve positive free cash flow through growth in solar installations and prudent cost containment [7][11] - Spruce is focused on opportunistic M&A and programmatic off-take partnerships to drive profitable expansion [12][14] - The company is enhancing operational efficiencies through strategic sourcing and better vendor management [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to identify and execute new agreements that add shareholder value despite near-term profitability challenges [20] - The company is not heavily dependent on aggressive new customer acquisition strategies, which differentiates it from many peers [24] - Management remains optimistic about the liquidity profile and ability to refinance upcoming debt [37][42] Other Important Information - Sarah Wells, the CFO, is leaving the company after seven years, and an interim CFO will be announced soon [25][40] - The company has a robust cash position with approximately $96.5 million in total cash, including $61.9 million in unrestricted cash [29] Q&A Session Summary Question: Thoughts on Spruce Pro's revenue opportunity and lead times - Management indicated that Spruce Pro is a capital-light endeavor with a deep pipeline of prospects and expects to make further announcements soon [34][35] Question: Environment for refinancing the FC1 loan - Management is confident in obtaining like-for-like terms for refinancing and is exploring more favorable credit options [37] Question: Insights on SRECs for the SP Five acquisition - Management noted that New Jersey has high liquidity and prices in the SREC market, which is expected to continue [38] Question: CFO transition and its implications - Management acknowledged the contributions of the outgoing CFO and is actively searching for a replacement [40][41] Question: Durability of the business model under the new administration - Management believes the company is less affected by policy changes due to its operational model, which focuses on maximizing existing solar assets [42][43]

Financial Data and Key Metrics Changes - Revenue for the first quarter of 2025 was $23.8 million, up from $20.2 million in the fourth quarter and $18.3 million in the prior year period, reflecting a 30% year-over-year growth [26][27] - Operating EBITDA increased to $12.3 million for the first quarter, compared to $10.7 million in the prior year period, primarily due to the NJR acquisition [28][29] - The company reported a GAAP net loss attributable to stockholders of $15.3 million [28] Business Line Data and Key Metrics Changes - The acquisition of rooftop assets from NJR positively impacted revenue and operating EBITDA, with the company owning and operating approximately 85,000 home solar assets and servicing around 60,000 residential solar systems [5][6] - Portfolio O&M expenses were $3.9 million in the first quarter, down from $5.3 million in the fourth quarter, indicating a sequential decline of over 25% [27] - SG&A expenses were $14.1 million in the first quarter, down from $15.5 million in the fourth quarter but up from $13.5 million in the prior year period [27] Market Data and Key Metrics Changes - The company is experiencing a cautious approach to new growth opportunities due to uncertainty in the market, which has affected cash burn and revenue collection timing [7][29] - The New Jersey market has deep liquidity in the SREC market, which is expected to continue supporting revenue generation [39] Company Strategy and Development Direction - The company aims to achieve positive free cash flow through growth in solar installations, prudent cost containment, and disciplined acquisition strategies [6][11] - Spruce Pro is identified as a key revenue driver, leveraging existing infrastructure to provide services to third-party owners of solar assets [15][16] - The company is focused on operational enhancements through strategic sourcing and better vendor management to improve efficiency and margin expansion [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current market challenges, emphasizing the predictability of cash flows from existing solar assets [20][23] - The company is optimistic about achieving profitability and positive cash flow through reduced spending and operational efficiencies [31] - Management highlighted the unique position of Spruce Power as a third-party operator, which mitigates risks associated with aggressive customer acquisition strategies [23][44] Other Important Information - The company has approximately $96.5 million in total cash, with $61.9 million being unrestricted cash at the end of the first quarter [29] - The Board of Directors has approved the renewal of the company's share repurchase program [22] Q&A Session Summary Question: What is the scale of revenue opportunity for Spruce Pro and the lead times to build that business? - Management indicated that Spruce Pro is a capital-light endeavor with a deep pipeline of prospects and expects to make further announcements in the next quarter [35][36] Question: What does the refinancing environment look like for the FC1 loan? - Management expressed confidence in obtaining like-for-like terms for refinancing and is exploring more favorable credit options [38] Question: Why are SRECs for the SP Five acquisition so high compared to other assets? - Management explained that New Jersey has deep liquidity and high prices in the SREC market, which is expected to continue [39] Question: What drove the decision for the CFO transition? - Management noted that the CFO's decision to move to a private company aligns with her personal objectives, and they are actively searching for a replacement [40][41] Question: How durable is the business model compared to industry peers under the new administration? - Management highlighted that being a third-party operator allows them to mitigate risks associated with new installations and tax credits, maintaining a strong liquidity profile [43][44]

Financial Performance - Revenues for Q1 2025 were $23.8 million, a 30.5% increase from $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%[15] - The total non-recourse debt as of March 31, 2025, was $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%[99] - The total liabilities of the Company as of March 31, 2025, were $1.8 million, a decrease from $2.0 million as of December 31, 2024, reflecting a decline of about 12.5%[99] Shareholder Activities - The company repurchased 298,952 shares at a cost of $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]

[First Quarter 2025 Performance Overview](index=1&type=section&id=First%20Quarter%202025%20Performance%20Overview) Spruce Power reported strong Q1 2025 results with significant revenue and Operating EBITDA growth driven by strategic acquisitions, maintaining a robust cash position while focusing on further acquisitions, service expansion, and cost efficiency [Business Highlights](index=1&type=section&id=Business%20Highlights) Spruce Power reported strong year-over-year growth in the first quarter of 2025, with a 30% increase in revenue to $23.8 million and a 15% rise in Operating EBITDA to $12.3 million. The company ended the quarter with a total cash balance of $96.5 million and a portfolio of approximately 85,000 home solar assets Q1 2025 Key Metrics | Metric | Value | | :--- | :--- | | Revenues | $23.8 million (up 30% YoY) | | Net loss attributable to stockholders | $15.3 million | | Operating EBITDA | $12.3 million (up 15% YoY) | | Total cash balance (as of Mar 31, 2025) | $96.5 million | | Home solar assets and contracts | ~85,000 | | Spruce PRO third-party systems serviced | ~60,000 | | Quarterly portfolio generation | ~121 thousand MWh | [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) The CEO attributed the positive Q1 results, including a 30% revenue growth, to the acquisition of assets from NJR Clean Energy Ventures. The company maintains a strong balance sheet with nearly $100 million in cash and is actively pursuing new acquisitions, expanding its Spruce PRO servicing business with ADT as a new client, and focusing on cost management to improve profitability - The acquisition of rooftop assets from NJR Clean Energy Ventures was a primary driver for the **30% year-over-year revenue growth** and **15% increase in Operating EBITDA**[4](index=4&type=chunk) - The company is focused on three key strategic areas for 2025: - Actively seeking new, disciplined acquisition opportunities - Expanding the Spruce PRO servicing business, having recently signed ADT as its first third-party client - Implementing cost management actions to enhance profitability[4](index=4&type=chunk) [Financial Results](index=1&type=section&id=Financial%20Results) Spruce Power's Q1 2025 financial results show increased revenues and Operating EBITDA, a strong cash position with non-recourse debt, ongoing share repurchases, and a substantial portfolio of home solar assets generating significant power [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) For Q1 2025, revenues increased to $23.8 million, up 30% year-over-year, primarily due to the NJR portfolio acquisition. Total operating expenses rose to $25.5 million from $21.9 million in the prior year, driven by higher SG&A and O&M costs. The company recorded a net loss attributable to stockholders of $15.3 million, while Operating EBITDA grew to $12.3 million from $10.7 million year-over-year Q1 Revenue Comparison | Period | Revenue | | :--- | :--- | | Q1 2025 | $23.8 million | | Q4 2024 | $20.2 million | | Q1 2024 | $18.3 million | Q1 Operating Expenses Comparison (YoY) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Operating Expenses | $25.5 million | $21.9 million | | Core Operating Expenses | $18.0 million | $16.6 million | | - SG&A | $3.9 million | $3.1 million | | - O&M | $14.1 million | $13.5 million | - Operating EBITDA increased to **$12.3 million** in Q1 2025 from **$10.7 million** in Q1 2024, mainly due to the NJR acquisition, though partially offset by higher expenses and lower interest income. The company expects Operating EBITDA to improve in all quarters of 2025 compared to the prior year[9](index=9&type=chunk) [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity) As of March 31, 2025, Spruce Power held $96.5 million in total cash, down from $109.1 million at year-end 2024, with the decrease attributed to collections timing, seasonality, and share repurchases. The company's total outstanding debt was $723.8 million, all of which is non-recourse project finance debt with a blended interest rate of 6.0% Cash Position as of March 31, 2025 | Cash Category | Amount | | :--- | :--- | | Total Cash | $96.5 million | | Cash and Cash Equivalents | $61.9 million | | Restricted Cash | $34.5 million | - Total principal debt outstanding was **$723.8 million** with a blended interest rate of **6.0%**. All debt is non-recourse to the company, meaning it is secured at the project level and does not impact corporate cash balances[10](index=10&type=chunk) [Growth and Capital Allocation](index=3&type=section&id=Growth%20and%20Capital%20Allocation) Spruce Power is focused on maximizing shareholder value through strategic acquisitions, capital projects, debt repayment, and shareholder returns. During Q1 2025, the company repurchased 0.3 million shares for $0.8 million, leaving $43.0 million remaining under its $50.0 million share repurchase authorization - In Q1 2025, the company repurchased **0.3 million shares** of common stock at an average price of **$2.70 per share**, for a total cost of **$0.8 million**[13](index=13&type=chunk) - As of March 31, 2025, **$43.0 million** remained available under the company's **$50.0 million** share repurchase program[13](index=13&type=chunk) [Key Operating Metrics](index=3&type=section&id=Key%20Operating%20Metrics) As of Q1 2025, Spruce's portfolio consisted of approximately 85,000 home solar assets with an average remaining contract life of 11 years, which generated 121 thousand MWh of power during the quarter. The company also services an additional 60,000 third-party systems. The Gross Portfolio Value, calculated on a PV6 basis, was $901.0 million Operating Portfolio as of March 31, 2025 | Metric | Value | | :--- | :--- | | Owned home solar assets/contracts | ~85,000 | | Average remaining contract life | ~11 years | | Third-party systems serviced | ~60,000 | | Q1 2025 portfolio generation | ~121 thousand MWh | | Gross Portfolio Value (PV6) | $901.0 million | [Financial Statements and Non-GAAP Reconciliations](index=8&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section details Spruce Power's Q1 2025 financial statements, including consolidated statements of operations and balance sheets, alongside definitions and reconciliations of non-GAAP financial measures like Operating EBITDA [Use and Definitions of Non-GAAP Financial Information](index=8&type=section&id=Use%20and%20Definitions%20of%20Non-GAAP%20Financial%20Information) The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, and Operating EBITDA to provide supplemental information on business performance. Operating EBITDA is a key metric defined as Adjusted EBITDA plus cash flows from master lease agreements, contract buyouts, and interest on cash investments. Core Operating Expenses are defined as the sum of SG&A and O&M expenses. Portfolio Value Metrics are used to estimate the remaining value of customer contracts - Operating EBITDA is a key non-GAAP metric used by management, defined as Adjusted EBITDA plus proceeds from master lease agreements, buyouts/prepayments, and interest earned on cash investments[24](index=24&type=chunk) Gross Portfolio Value Composition (as of March 31, 2025) | Component | Value (in millions) | | :--- | :--- | | Contracted Portfolio Value | $786 | | Renewal Portfolio Value | $71 | | Uncontracted Renewable Energy Credits | $44 | | **Gross Portfolio Value** | **$901** | [Condensed Consolidated Statements of Operations](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, Spruce Power reported revenues of $23.8 million, an increase from $18.3 million in the prior-year period. The company posted a loss from operations of $1.7 million and a net loss attributable to stockholders of $15.3 million, or ($0.84) per share, compared to a net loss of $2.5 million, or ($0.13) per share, in Q1 2024 Q1 Statement of Operations Summary (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $23,818 | $18,287 | | Total operating expenses | $25,512 | $21,884 | | Loss from operations | $(1,694) | $(3,597) | | Net loss attributable to stockholders | $(15,338) | $(2,454) | | Net loss per share, basic and diluted | $(0.84) | $(0.13) | [Reconciliation of Non-GAAP Financial Measures](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) The company provides a reconciliation from GAAP Net Loss to non-GAAP metrics. For Q1 2025, the net loss attributable to stockholders of $15.3 million was reconciled to an Operating EBITDA of $12.3 million. This compares to a net loss of $2.5 million and an Operating EBITDA of $10.7 million in Q1 2024 Reconciliation to Operating EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss attributable to stockholders | $(15,338) | $(2,454) | | EBITDA | $(1,377) | $8,094 | | Adjusted EBITDA | $6,162 | $3,771 | | **Operating EBITDA** | **$12,290** | **$10,703** | [Condensed Consolidated Balance Sheets](index=16&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, Spruce Power had total assets of $878.0 million, down from $898.5 million at the end of 2024. Total liabilities stood at $747.2 million, and total stockholders' equity was $130.8 million. Key assets included $61.9 million in cash and cash equivalents and $582.8 million in net property and equipment Balance Sheet Summary (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $125,870 | $136,430 | | Total assets | $877,987 | $898,479 | | Total current liabilities | $59,396 | $59,569 | | Total liabilities | $747,208 | $752,327 | | Total stockholders' equity | $130,779 | $146,152 | [Other Information](index=5&type=section&id=Other%20Information) This section provides details for the Q1 2025 conference call, an overview of Spruce Power's business as a leading distributed solar energy asset owner, and a cautionary note regarding forward-looking statements [Conference Call Information](index=5&type=section&id=Conference%20Call%20Information) Spruce Power management will host a conference call for analysts and investors to discuss the first quarter 2025 financial results and business outlook. The release provides details for accessing the live call and a subsequent audio replay - A conference call to discuss Q1 2025 results is scheduled for **May 14, 2025, at 2:30 p.m. Mountain Time**. Access details for the live call and replay are provided[16](index=16&type=chunk) [About Spruce Power](index=5&type=section&id=About%20Spruce%20Power) Spruce Power is a leading owner and operator of distributed solar energy assets in the U.S., providing subscription-based services for rooftop solar and battery storage. The company owns the cash flows from approximately 85,000 home solar assets and contracts - Spruce Power's business model is a power as-a-service subscription that allows homeowners to access solar technology without significant upfront investment or maintenance costs[17](index=17&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a cautionary note regarding forward-looking statements, which are based on current expectations and are subject to numerous risks and uncertainties. It advises readers not to place undue reliance on these statements and refers them to the company's SEC filings for a more detailed discussion of risk factors - Forward-looking statements in the release, including management's outlook and expectations for growth, are subject to significant risks and uncertainties detailed in the company's SEC filings, such as the Annual Report on Form 10-K[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $20.2 million, up from $15.7 million in the prior year, primarily due to the NJR acquisition and conservative revenue recognition for delinquent accounts [30] - For the full year 2024, GAAP revenue was $82.1 million compared to $79.9 million in 2023 [30] - GAAP net loss attributable to stockholders was $5.9 million for the quarter [31] - Operating EBITDA for Q4 was $10.8 million, down from $11.3 million in the prior year, with full year operating EBITDA at $53.9 million [32] Business Line Data and Key Metrics Changes - The company owns and manages approximately 85,000 home solar assets, with a significant acquisition of 9,800 systems from NJR Clean Energy Ventures [10][12] - The NJR acquisition increased the gross portfolio value to $910 million in Q4, compared to $749 million without the acquisition [14] - Customer satisfaction (CSAT) score improved to 83% in 2024, up from 74% in 2023 [15] Market Data and Key Metrics Changes - The company operates in 18 states, with New Jersey becoming its second largest market after the NJR acquisition, now serving approximately 16,000 customers [13] Company Strategy and Development Direction - The corporate strategy is built on three pillars: acquiring installed systems, leveraging the Spruce Pro channel for capital-light growth, and expanding subscription-based solutions for distributed energy [20][23] - The company prioritizes long-term financial stability over short-term sales growth, focusing on operational efficiency and cost optimization strategies in 2025 [24][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the residential solar market but emphasized Spruce Power's stability and predictability compared to peers [8] - The company plans to optimize cash flow and manage operating expenses to improve efficiency in 2025 [36] Other Important Information - Total cash at the end of Q4 was approximately $109.1 million, with unrestricted cash at $72.8 million, down from $113.6 million at the end of Q3 [34] - The total principal balance of long-term debt was $730.6 million, with a blended interest rate of 6% [35] Q&A Session Summary Question: No questions were asked during the Q&A session - There were no questions from participants [37]

Financial Data and Key Metrics Changes - Fourth quarter revenue increased to $20.2 million from $15.7 million year-over-year, primarily due to higher revenues from the NJR acquisition [30] - Full year 2024 GAAP revenue was $82.1 million compared to $79.9 million in 2023 [30] - GAAP net loss attributable to stockholders was $5.9 million for the quarter [31] - Operating EBITDA for the fourth quarter was $10.8 million, down from $11.3 million in the prior year [32] - Total cash at the end of the fourth quarter was approximately $109.1 million, with unrestricted cash at $72.8 million [34] Business Line Data and Key Metrics Changes - The company owns and manages approximately 85,000 home solar assets and customer contracts, with a gross portfolio value of $910 million, up from $749 million without the NJR transaction [10][14] - Portfolio O&M expense decreased to $5.3 million in the fourth quarter from $5.6 million in the prior year [30] - SG&A expense increased to $15.5 million in the fourth quarter from $12 million in the prior year, impacted by professional services related to the NJR acquisition [30][31] Market Data and Key Metrics Changes - The NJR acquisition expanded Spruce's presence in New Jersey, now the company's second largest market with approximately 16,000 customers [12][13] - Customer satisfaction (CSAT) score rose to 83% in 2024, up from 74% in 2023 [15] Company Strategy and Development Direction - The corporate strategy is built on three pillars: acquiring portfolios of installed systems, maximizing return on assets through the Spruce Pro channel, and expanding subscription-based solutions for distributed energy [19][20][23] - The company prioritizes long-term financial stability over short-term sales growth, focusing on operational efficiency and shareholder value creation [24][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the residential solar market but emphasized Spruce Power's stability and predictability compared to peers [8][27] - The company plans to implement cost optimization strategies in 2025, particularly focusing on reducing O&M costs [25][26] - Management decided not to provide financial guidance due to the volatile residential solar environment and macroeconomic factors [33] Other Important Information - The company successfully launched its third-party servicing channel, Spruce Pro, which is gaining traction with a significant agreement with ADT Solar [17][18] - All long-term debt is non-recourse and serviced by customer collections, with a total principal balance of $730.6 million at the end of the fourth quarter [35] Q&A Session Summary Question: No questions were asked during the session - There were no questions from participants during the Q&A session [37]

Business Operations and Strategy - Spruce Power operates approximately 85,000 home solar assets and customer contracts, generating revenues primarily through long-term customer agreements and third-party contracts for solar renewable energy credits[18]. - The company completed the acquisition of approximately 2,400 home solar assets from a regulated utility company, with an average remaining contract life of approximately 11 years[22]. - Following the NJR Acquisition, Spruce Power's portfolio consists of 14 portfolios of home solar assets with a combined capacity of approximately 514 MWdc[24]. - The average remaining contract term for home solar assets in Spruce Power's portfolio is approximately 11 years as of December 31, 2024[34]. - Spruce Power's corporate strategy focuses on subscription-based solutions for distributed energy resources, aiming to deliver predictable revenues and profits[25]. - The company has a dedicated M&A team that has successfully acquired high-quality portfolios of solar energy systems, minimizing customer acquisition costs[30]. - Spruce Power's portfolio is geographically diverse across 18 states in the U.S., reducing exposure to localized risks and providing stable cash flows[35]. - The company aims to grow customer revenues by focusing on channels with the lowest customer acquisition costs, including acquiring existing systems and selling additional services[26]. Financial Performance - For the year ended December 31, 2024, the company's revenues totaled $82.1 million, compared to $79.9 million for the year ended December 31, 2023, reflecting a year-over-year increase of approximately 2.8%[184]. - The net loss attributable to stockholders for the year ended December 31, 2024, was $70.5 million, compared to a net loss of $65.8 million for the previous year, indicating an increase in losses of approximately 10.7%[184]. - Revenues increased by $2.2 million, or 3%, to $82.1 million in 2024 compared to 2023, primarily due to increased PPA revenues from the Tredegar Acquisition[201]. - Total operating expenses rose by $15.8 million, or 14%, to $132.5 million in 2024, driven by increased costs in operations and maintenance, selling, general and administrative expenses, and impairment of goodwill[200]. - Impairment of goodwill increased by $28.8 million, or 100%, to $28.8 million in 2024 due to a continuous decline in stock price and market capitalization[206]. - Interest income increased to $22.8 million in 2024 from $19.5 million in 2023, attributed to a full year of interest from the SEMTH Master Lease[207]. - Interest expense, net decreased by $1.7 million, or 4%, to $40.2 million in 2024, primarily due to net realized gains from interest rate swaps[208]. - Working capital as of December 31, 2024, was $76.9 million, with cash and cash equivalents totaling $109.1 million[212]. - The company had a debt balance of $705.3 million as of December 31, 2024, all of which is non-recourse project-level debt[214]. - Net cash used in continuing operating activities was $(41.7) million in 2024, compared to $(31.7) million in 2023[216]. Market and Regulatory Environment - Federal, state, and local government incentives support the adoption of solar energy, allowing Spruce Power to lower prices for customers and enhance return on investment[49]. - The Inflation Reduction Act (IRA) enacted on August 16, 2022, includes significant policy initiatives to enhance the clean energy industry, but potential revisions or delays in funding could negatively impact the company's business[50]. - The solar energy industry is still developing, and the company faces competition from traditional energy companies and other renewable energy firms, which could adversely affect its business growth[63]. - The company is subject to various risks related to regulatory changes, legal proceedings, and compliance costs, which could adversely affect business operations[61]. - Regulatory challenges in various states may limit the company's ability to deliver solar energy and qualify for incentives, impacting growth opportunities[121]. - Changes in laws regarding rebates and net metering could reduce the attractiveness of solar energy systems, affecting customer acquisition[122]. - The evolving regulatory landscape concerning electricity pricing and competition with utilities may reduce demand for the company's solar energy systems[127]. - Adverse changes in solar-related policies could negatively impact the company's financial condition and operational results[128]. Risks and Challenges - The company is exposed to risks related to the performance and reliability of solar energy systems, which could lead to warranty claims and product liability issues, adversely impacting financial performance[67]. - A material reduction in the retail price of traditional utility-generated electricity could harm the company's financial condition and results of operations[58]. - Rising interest rates could adversely affect the company's financial condition, and the effectiveness of hedging strategies may be limited[58]. - The company faces significant risks related to climate change, which could adversely affect energy production and revenue generation from solar energy systems[71]. - The company typically bears the risk of loss and maintenance costs for solar energy systems, which could lead to unforeseen expenses if repairs exceed estimates[72]. - The company may experience a reduction in the residual value of solar energy systems at the end of customer agreements, potentially impairing financial performance[73]. - Tariffs and trade restrictions imposed by the U.S. government on solar products from China could increase costs and reduce competitive pricing capabilities[75]. - The company competes with traditional energy companies and vertically integrated solar companies, which may have greater resources and market advantages[77][78]. - There is a risk of increased customer credit defaults, particularly during economic downturns, which could adversely affect revenue and financial condition[104]. - The company faces significant fluctuations in customer demand, which could affect operating results and growth potential[95]. - The company may require additional financing to support growth strategies, and failure to secure such financing could adversely affect operations[88][90]. - The company does not have direct control over supplier costs for solar energy system components, which may hinder competitive pricing[91]. - The company faces challenges in managing growth effectively, which could impact customer service and operational efficiency[86]. Management and Governance - The recent CEO transition occurred on April 12, 2024, with Christopher Hayes appointed as President and CEO, which may create uncertainty and impact business operations[98]. - Management has limited experience in operating a public company, which may hinder effective growth management and compliance with regulatory obligations[99]. - The company is subject to risks associated with proxy contests and actions of activist stockholders, which can be costly and time-consuming, potentially disrupting operations[153]. - The company has a comprehensive cybersecurity risk management program integrated into its overall enterprise risk management framework, overseen by the Audit Committee[156]. - The Audit Committee receives quarterly reports on cybersecurity matters and related risk exposures, ensuring ongoing oversight[157]. - The ability to attract and retain qualified personnel is critical, as competition for skilled employees is intense, impacting the execution of business strategies[97]. Legal and Compliance Issues - The company agreed to a settlement amount of $19.5 million to resolve class action litigation, with a net payment of $15.0 million after insurance recoveries[115]. - The SEC imposed a civil money penalty of $11.0 million for violations of federal securities laws, which has been paid[117]. - The company is currently involved in multiple legal proceedings, which could result in significant costs and resource diversion[118]. - The company faces potential patent infringement claims that could materially affect its business and financial condition[120]. - The company has received subpoenas from state attorneys general regarding its business practices, which may result in fines or penalties[131]. - The company has identified material weaknesses in internal control over financial reporting, which could lead to inaccurate financial reporting and a decline in stock price[132][133]. - The company is subject to evolving laws and regulations related to data privacy and security, which could increase operational costs and impact business[130]. Shareholder and Stock Information - The average closing price of the company's common stock was below $1.00 per share for 30 consecutive trading days in 2022 and 2023, raising the risk of delisting from the NYSE[141]. - The company has the ability to issue up to 324,696,266 shares of common stock under its 2020 Equity Incentive Plan, which could dilute existing stockholders' interests[146]. - The company has no current plans to declare cash dividends, meaning investors may need to rely on share price appreciation for future gains[139]. - Clayton Capital Appreciation Fund, L.P. and its affiliates owned approximately 2.1% of the company's outstanding shares and nominated two candidates for election as directors at the 2024 Annual Meeting of Stockholders[152]. - The company entered into a Cooperation Agreement with Clayton, agreeing to increase the Board size from six to seven directors and appoint Clara Nagy McBane to the Board[152].

Financial Performance - Total revenues for the three months ended September 30, 2024, were $21,378 thousand, a decrease of 8.0% compared to $23,250 thousand for the same period in 2023[22]. - The net loss attributable to stockholders for the three months ended September 30, 2024, was $53,529 thousand, compared to a net loss of $19,313 thousand for the same period in 2023, indicating a significant increase in losses[22]. - The company reported a loss from operations of $37,159 thousand for the three months ended September 30, 2024, compared to a loss of $24,517 thousand in the same period last year[22]. - The company reported a net loss from continuing operations of $53,550 thousand for the three months ended September 30, 2024, compared to a loss of $18,963 thousand for the same period in 2023[22]. - Net loss for the nine months ended September 30, 2024, was $64,577,000, compared to a net loss of $36,407,000 for the same period in 2023, representing an increase of 77.5%[5]. - The net loss attributable to stockholders for the three months ended September 30, 2024, was $53,529,000, compared to a net loss of $19,313,000 for the same period in 2023, representing an increase of 177%[141]. - The basic and diluted net loss per share for the three months ended September 30, 2024, was $(2.88), compared to $(1.11) for the same period in 2023, indicating a significant decline in earnings[141]. Operating Expenses - Operating expenses increased to $58,537 thousand for the three months ended September 30, 2024, compared to $47,767 thousand in the prior year, representing a 22.6% increase[22]. - Selling, general and administrative expenses increased by $1.1 million, or 9.1%, to $13.5 million for the three months ended September 30, 2024, compared to $12.4 million for the same period in 2023[166]. Cash and Assets - Cash and cash equivalents decreased to $113,658 thousand as of September 30, 2024, down from $141,354 thousand as of December 31, 2023, reflecting a decline of 19.6%[19]. - Total current assets were $173,006 thousand as of September 30, 2024, a decrease of 14.9% from $203,341 thousand as of December 31, 2023[19]. - As of September 30, 2024, total cash, cash equivalents, and restricted cash amounted to $149.981 million, a decrease of 22.1% from $192.733 million on September 30, 2023[46]. - Accounts receivable at the end of the period was $940 thousand, down from $1.693 million at the beginning of the period, reflecting a write-off of uncollectible accounts of $1.881 million[48]. - As of September 30, 2024, net solar energy systems amounted to $464.2 million, down from $483.9 million as of December 31, 2023[94]. - Intangible assets, net, as of September 30, 2024, were $9.3 million, down from $10.2 million as of December 31, 2023[95]. Liabilities and Equity - The company’s total liabilities decreased to $655,138 thousand as of September 30, 2024, down from $680,352 thousand as of December 31, 2023, representing a reduction of 3.7%[22]. - The accumulated deficit increased to $(322,449) thousand as of September 30, 2024, compared to $(257,888) thousand at the end of the previous year[20]. - As of September 30, 2024, total stockholders' equity was $151.636 million, down from $204.563 million at June 30, 2024, reflecting a net loss of $53.554 million for the quarter[24]. Acquisitions and Investments - The company acquired Legacy Spruce Power for $32.6 million, with the purchase price allocated to various assets including $495.6 million for solar energy systems after adjustments[84]. - The SEMTH acquisition on March 23, 2023, involved a cash payment of approximately $23.0 million and the assumption of $125.0 million in senior indebtedness, acquiring rights to customer payment streams from approximately 22,500 home SLAs and PPAs[88]. - The Tredegar acquisition on August 18, 2023, involved the purchase of approximately 2,400 home solar assets for $20.9 million, with an average remaining contract life of about 11 years[91]. Revenue Streams - PPA revenues for the three months ended September 30, 2024, were $11.458 million, slightly up from $11.370 million in the same period last year[64]. - SLA revenues decreased to $6.702 million for the three months ended September 30, 2024, from $7.596 million in the prior year[64]. - Solar renewable energy credit revenues were $1.222 million for the three months ended September 30, 2024, down from $2.072 million in the same period last year[64]. - The company generated $4,712,000 from the sale of solar energy systems during the nine months ended September 30, 2024, compared to $5,068,000 in the same period of 2023, showing a decline of 7%[5]. Legal and Settlement Matters - The company reached a settlement of $19.5 million related to a securities class action, with a net payment of $15.0 million after insurance recoveries[125]. - A settlement-in-principle for shareholder derivative actions was reached, providing for corporate governance enhancements without monetary payments[128]. - The company paid a civil monetary penalty of $11.0 million to the SEC as part of a settlement regarding allegations related to its business combination[129]. - A settlement agreement was reached with US Bank for $2.3 million regarding reimbursement obligations under a tax recapture guaranty agreement[130]. Future Outlook and Strategy - The company aims to grow subscriber revenues by focusing on channels with the lowest customer acquisition costs, including acquiring existing systems from other companies[155]. - The company’s future growth is significantly dependent on acquiring operating home solar energy systems in bulk from other companies[159]. - Management believes no additional capital will be needed to execute its current business plan over the next 12 months[185].

Investor Presentation November 2024 % spruce Disclaimer 2 2 Use of Forward-Looking Statements Certain statements in this presentation may constitute "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements generally are accompanied by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "predict," "potential," "seem," "seek," "future," "outlook," and similar expressions that predict or i ...