Spruce Power (US:SPRU)2023-03-24 00:56Financial Data and Key Metrics Changes - For the fourth quarter, the company's revenue was $18.1 million, a significant increase from $5.1 million in the third quarter of 2022, which only included 21 days of contribution from Spruce [77] - Adjusted EBITDA totaled $3.5 million compared to negative $8.3 million in the prior year quarter [103] - The total principal balance of long-term debt as of December 31 was $533 million, with a weighted average interest cost of approximately 5.5% [11][63] Business Line Data and Key Metrics Changes - The company aims to grow its customer portfolio by about 80% over the next two years, targeting over 90,000 rooftops [6][22] - The SEMTH acquisition increased system ownership by 40%, contributing to a projected annual cash flow of about $23 million [26][57] - Customer satisfaction improved significantly, with the average CSAT score rising from 54% in Q1 2022 to 81% in Q4 2022 [5][25] Market Data and Key Metrics Changes - The company operates rooftop solar assets and contracts in 18 states, powering over 70,000 homes [4] - The average customer FICO score is 738, indicating solid credit risk [89] - The company is among the top five owner-operators of U.S. residential solar companies based on 2022 revenue [4] Company Strategy and Development Direction - The company is focused on enhancing customer experience through technology investments, including a new billing system that improves efficiency [23][100] - The strategic goal includes maintaining a balanced use of capital, allocating 10% to 20% of EBITDA for capital improvements [24] - The company plans to build an integrated enterprise technology stack to improve customer interactions and service [8][100] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in having access to substantial growth capital, starting 2023 with over $200 million in cash [4] - The company anticipates a more active market for acquisitions due to recent industry turbulence, with opportunities arising from struggling private installers [17] - Management emphasized the importance of cash flow and the flexibility it provides for future growth and debt management [7][74] Other Important Information - The company has zero corporate recourse debt, with all debt being non-recourse project debt [7][11] - Fourth quarter selling, general, and administrative expenses were $28.6 million, which included restructuring charges of $8.4 million [28] - The company is transitioning from legacy XL businesses to focus solely on residential rooftop solar [96] Q&A Session Summary Question: Does acquiring a portfolio come with existing debts? - The company often assumes existing debt with acquisitions, which can be favorable depending on market conditions [31] Question: What is the current landscape for potential deals? - The company is in active discussions and sees an opportunity in the market due to some private installers needing to sell assets [17][41] Question: Can the company disclose net subscriber value? - The company has not disclosed a net number but acknowledges the importance of transparency in financial metrics [34] Question: What is the expected run rate for SG&A expenses? - The company estimates a sustainable SG&A run rate of around $16 million, excluding one-time restructuring costs [83] Question: How does the company plan to improve customer service? - The company is investing in technology to enhance customer interactions and streamline service processes [100]