Spruce Power Announces First Spruce Pro Servicing Customer

Rhea-AI Summary

Spruce Power (NYSE: SPRU) has secured ADT as its first customer for the Spruce Pro servicing business. Under a multi-year Service Agreement, Spruce Pro will manage workmanship and equipment warranty claims for customers of ADT's former solar business, which was discontinued in early 2024. The partnership leverages Spruce's decade-plus experience in managing residential solar assets.

Spruce Pro offers customizable services for third-party owners of distributed generation assets, including financial and asset management operations, customer service support, and environmental commodities trading. CEO Chris Hayes emphasized the company's commitment to growing Spruce Pro and unlocking value from their servicing platform investments.

Positive

• Secured first customer (ADT) for Spruce Pro servicing business
• Multi-year service agreement provides recurring revenue stream
• Expansion into third-party servicing creates new revenue opportunities

Negative

• None.

Insights

Financial Analyst

The service agreement with ADT marks a strategic pivot for Spruce Power's servicing business, but comes with notable limitations. ADT's solar business wind-down means this represents a legacy portfolio without growth potential.

For a micro-cap company ($52M market cap), diversifying revenue streams through servicing contracts could improve cash flow stability. However, the agreement's financial terms and volume are not disclosed, making it impossible to quantify the impact. The servicing model typically generates lower margins than direct solar ownership but requires less capital investment.

The most significant aspect is proof-of-concept for Spruce Pro's third-party servicing platform. Success with ADT could lead to additional contracts in a fragmented residential solar market where smaller operators often lack sophisticated servicing capabilities. Still, investors should note that servicing revenue alone is unlikely to dramatically alter Spruce's financial trajectory in the near term.

Market Research Analyst

This deal reflects broader industry dynamics in residential solar. As the sector matures, we're seeing increased specialization and outsourcing of operational functions.

The timing is strategic - multiple solar companies have recently scaled back operations or exited markets, creating opportunities for specialized servicers to manage legacy portfolios. The residential solar O&M market remains highly fragmented with no dominant players, presenting an opportunity for companies with established infrastructure.

However, Spruce faces competition from larger solar players who also offer third-party services. The company's relatively small size could limit its ability to win major contracts. While this first customer validates the business model, Spruce Pro needs to demonstrate it can scale efficiently and win additional meaningful contracts to materially impact the company's valuation.

--Multi-year Agreement with ADT for Several Servicing Needs--

DENVER--(BUSINESS WIRE)-- Spruce Power Holding Corporation (NYSE: SPRU) (“Spruce” or the “Company”) today announced the first customer for its Spruce Pro servicing business. Spruce signed a multi-year Service Agreement with ADT, under which Spruce Pro will facilitate the management and resolution of workmanship and equipment warranty claims for customers of ADT’s former solar business, which it wound down earlier in 2024.

“We are proud to partner with ADT to provide a solution set to meet the specific servicing needs of the customers of their former solar business,” said CEO Chris Hayes. “This announcement underscores our strong commitment to grow Spruce Pro. Our goal is to unlock value from the significant investment in our servicing platform. This deal demonstrates our ability to provide tailored servicing solutions to the residential solar industry.”

Spruce Pro leverages the Company’s decade-plus experience in management of its wholly owned residential solar assets. Spruce Pro offers a suite of services that can be tailored for third-party owners of distributed generation assets, including financial and asset management operations, customer service support, and environmental commodities trading. For more information on Spruce Pro, please visit https://sprucepower.com/pro/.

About Spruce Power

Spruce Power Holding Corporation (NYSE: SPRU) is a leading owner and operator of distributed solar energy assets across the United States. We provide subscription-based services that make it easy for homeowners to benefit from rooftop solar power and battery storage. Our power as-a-service model allows consumers to access new technology without making a significant upfront investment or incurring maintenance costs. Our company owns the cash flows from approximately 85,000 home solar assets and contracts across the United States. For additional information, please visit www.sprucepower.com.

Forward Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and rules promulgated thereunder. Forward-looking statements generally are characterized by the use of qualified words (and their derivatives) 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 indicate future events or trends or that are not statements of historical matters. Forward-looking statements in this release include statements regarding the Company’s financial outlook including the Company's prospects for long-term growth in revenues, cash flows and earnings. These statements are based on various assumptions, whether or not identified in this press release and on the current expectations of management, all of which management believes are reasonable within the bounds of management’s existing knowledge about the Company’s business and operations. These statements are not predictions of actual performance. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by forward-looking statements, including but not limited to: expectations regarding the growth of the solar industry and home electrification; the ability to identify and complete future acquisitions; our ability to successfully integrate acquisitions; the ability to develop and market new products and services; the effects of pending and future legislation; the highly competitive nature of the Company’s business and markets; the ability to execute on and consummate business plans in anticipated time frames; litigation, complaints, product liability claims, government investigations and/or adverse publicity; cost increases or shortages in the materials necessary to support the Company’s products and services; the introduction of new technologies; the impact of natural disasters and other events beyond our control, such as hurricanes, wildfires or pandemics, on the Company’s business, results of operations, financial condition, regulatory compliance and customer experience; privacy and data protection laws, privacy or data breaches, or the loss of data; general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; risks related to the rollout of the Company’s business and the timing of expected business milestones; the effects of competition on the Company’s future business; the availability of capital, including the availability and cost of borrowings; and the other risks discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 9, 2024, subsequent Quarterly Reports on Form 10-Q and other documents that the Company files with the SEC in the future. These factors are not necessarily all of the factors that could cause the Company’s actual results to materially differ from those expressed in or implied by any of the forward-looking statements. Other factors, including unknown or unpredictable factors, could also harm the Company’s results. If any of these risks, or other unknown or unpredictable risks, materialize or our assumptions prove incorrect, actual results or the timing thereof could differ materially from the results expressed in or implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company undertakes no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Investors are cautioned not to rely too heavily on any forward-looking statements, and investors are urged to consider all risks, uncertainties and other factors in evaluating any forward-looking statement made by the Company.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241223043072/en/

Investor Contact: investors@sprucepower.com

Media Contact: publicrelations@sprucepower.com

Source: Spruce Power Holding Corporation

FAQ

What services will Spruce Power provide to ADT under the new agreement?

Spruce Power will manage workmanship and equipment warranty claims for customers of ADT's former solar business through its Spruce Pro servicing platform.

When did ADT wind down its solar business that SPRU will now service?

ADT wound down its solar business earlier in 2024, prior to signing the service agreement with Spruce Power.

What services does Spruce Pro offer to third-party asset owners?

Spruce Pro offers financial and asset management operations, customer service support, and environmental commodities trading services for distributed generation assets.

How will the ADT service agreement impact SPRU's revenue stream?

The multi-year service agreement will provide Spruce Power with a new recurring revenue stream through its Spruce Pro servicing business.