WIXOM–Officials at XL Fleet Corp. (NYSE: XL) announced what they called a transformational acquisiton of Spruce Power, the nation’s largest privately held solar-energy-as-a-service provider.
The price was $58 million in cash and the assumption of $542 million in debt as of Sept. 9.
The acquisition, officials said, marks XL’s new corporate strategy to become a provider of subscription-based rooftop solar power, battery storage, and electric vehicle charging.
Spruce Power has more than 52,000 subscribers, generating $15 million of net income and $51 million of adjusted earnings before interest, taxes, depreciation and amortization in the 12 months ended June 30
In conjunction with the acquisition, the CEO of Spruce Power, Christian Fong, has been appointed president and a member of the board of directors of XL Fleet, and is expected to become CEO of XL Fleet on or prior to Feb. 15, 2023.
XL also announced it is “initiating a comprehensive review of strategic alternatives for XL Fleet’s Drivetrain segment to maximize shareholder value.” This business provided electrification technologies to vehicle fleets.
Spruce Power was acquired from funds managed by HPS Investment Partners LLC. XL’s board unanimously approved the transaction.
Spruce Power owns and operates more than 52,000 residential rooftop solar systems. The company sells the power generated by its systems to homeowners pursuant to long-term agreements that obligate the company’s subscribers to make recurring monthly payments. Spruce Power’s operational headquarters are in Houston, Texas and the company had approximately 110 full time employees as of Sept. 1.
Spruce Power’s revenues have more than doubled since 2019, driven primarily by the acquisition of 10 rooftop solar portfolios. The company does not have a salesforce or installation technicians. Spruce Power has grown by acquiring portfolios of residential solar systems from other companies and investors rather than selling individual systems to homeowners through a direct-to-consumer salesforce like many of its competitors. This approach has allowed the company to keep its customer acquisition costs low and enabled it to generate consistent earnings.
Said XL Fleet CEO Eric Tech in a statement: “Earlier this year, we communicated our intent to transform the company and create shareholder value through strategic M&A. The acquisition of Spruce Power is a critical first step in that transformation and will be the cornerstone of our new strategy to provide subscription-based solutions for rooftop solar, battery storage and EV charging to homeowners and small businesses.”
Added Fong: “The Spruce team is incredibly excited about joining the XL Fleet platform and motivated by the potential value created by combining our two companies. With XL Fleet’s resources, we now have the tools to significantly accelerate the growth in our business, while continuing to execute on our mission to lower the cost of energy for our customers and create a more sustainable future.”
In connection with the acquisition of Spruce Power and implementation of the company’s new corporate strategy, XL Fleet intends to change its corporate name and introduce a new brand identity. The company’s new name will reflect its focus on providing subscription-based solutions for rooftop solar, energy storage, EV charging and other energy-related products to homeowners and small businesses.
To listen to a conference call discussing the transaction, call (844) 512-2921 in the United States or (412) 317-6671 elsewhere. The passcode for the replay is 13732695. The replay will be available until September 26, 2022.