Spruce Power Holding Corporation Q4 FY2025 earnings call

2025 was a breakout year for Spruce with strong growth, expanded margins, and improved platform efficiency and scalability. Fourth quarter capped it with exceptional momentum. Full year revenue growth underscored platform strength and NJR acquisition impact. Saw meaningful inflection in cash generation. Continued to delever by repaying debt. Strategy focused on three key growth drivers: acquiring installed residential solar portfolios, expanding programmatic partnerships, and scaling Spruce Pro.

For the fourth quarter, revenue was approximately 24 million, up 19% year over year. Operating EBITDA exceeded 17 million. For the full year, revenue increased 36% versus 2024. Operating EBITDA was $80.1 million for the full year 2025, a 49% increase versus 2024. In the fourth quarter, O&M expense declined 64% year-over-year and SG&A declined 16%. Adjusted cash flow from operations was positive $5.1 million in the quarter compared to negative $4.1 million in the prior year period.

Intend to build on momentum from second half of 2025, continue to reduce costs and improve core expense profile while pursuing modest disciplined growth. Extended SP1 facility to January 30, 2027, with stipulation to have a term sheet by October 30, 2026.

Going concern disclosure driven by accounting requirements related to financing process timing, not reflective of operating performance or lender engagement. Actual results could differ materially due to risks and uncertainties.

Q: Hi, guys. Good afternoon and congrats on the strong cash flow. I just wanted to see if I could get a little more color on the revenue buckets. How much was SRAC during the quarter and the services revenue since those have been larger growth contributors?

A: yeah yeah thanks thanks will you got it tom yeah well appreciate it um thanks for the compliment on the quarter that the uh the k you'll see we break out the revenue by component um the srec revenue for the year was 20 21 million and the system uh either leases or ppa revenue was 78 million um but keep in mind the sb4 revenue It's consistent with every quarter. That revenue is recorded below the line as interest income, and that's just due to the accounting nuance and the requirements to record that revenue as actually interest income. But you can see it in the cash flow statement as cash coming in. So that's the breakdown. Okay. And then with Spruce Pro, How would you characterize the pipeline of adding new business there to grow that?

A: Yeah, I would say overall, we have a robust pipeline that's made up of kind of what we call a few large whales and sort of some smaller opportunities. So we've been super active in the market. Obviously, we didn't announce anything in the quarter, but we are hopeful there will be announcements in the near term. and are very aggressive in that space. Okay. And then last question is more on M&A, which is part of the answer, but you haven't done anything too recent. I was just wondering, what is the pipeline like for that? But is it also now kind of tied to the debt consolidation deal that you're working on?

A: Yeah, so I'll answer them. I'll answer them separately, but talk about any interplay between the two. So we do have a super active pipeline. I mean, you know, we've done 13 acquisitions over a number of years. So having been active in the market, we get phone calls. We're always beating the bushes. We are underwriting a number of deals. Whether we get to closing remains to be seen, but that is certainly the objective. As it relates to the SP1, strategic extension that we chose, no, there is not an interplay with that and either helping or hurting any strategic growth acquisitions that sort of operate independently. Got it. Okay. Thank you. Appreciate it. Well, thanks.