XL Fleet Corp.

Total company revenue was $8.4 million in Q3 2022, up from $3.0 million in Q2 2022 and $3.2 million in Q3 2021. Revenue included $5.1 million from 21 days of Spruce Power contribution. SG&A was $31.3 million versus $12.8 million last quarter and $12.7 million a year ago, including about $2.6 million of legal fees and approximately $50 million of transaction costs tied to the Spruce acquisition. Adjusted EBITDA was negative $9 million compared with negative $11.1 million in Q2 and negative $14.2 million in Q3 2021. Spruce’s gross customer value was $828 million on a PV5 basis at quarter-end, and unrestricted cash and cash equivalents were approximately $240 million, down from $322 million at the end of Q2 after about $62 million of cash used for the acquisition. Long-term debt was $542 million, with a weighted average interest cost of approximately 5.5% and first maturity in April 2026. No explicit next-quarter or full-year revenue/EPS guidance was given; management instead emphasized ongoing execution on integration, 4G upgrades, and strategic alternatives for Drivetrain.

Eric Tech framed the acquisition of Spruce Power as the result of a deliberate search for a business that supports decarbonization, operates in a mature and growing market, and generates positive EBITDA. He emphasized that the company used its cash position to make a transformational M&A move, is rebranding to Spruce Power, and expects to shift CEO responsibilities to Christian Fong by Q1 2023. His tone was confident and execution-focused, with repeated emphasis on simplifying the business, unlocking value, and addressing the gap between the company’s cash/assets and its market valuation.

Don Klein focused on the reported numbers and balance-sheet impact of the deal. He noted Q3 revenue of $8.4 million, SG&A of $31.3 million, adjusted EBITDA of negative $9 million, and cash of about $240 million at quarter-end versus $322 million at the end of Q2. He also highlighted that the acquisition used roughly $62 million of cash, with net purchase price of $32.6 million after acquired cash, and said the company’s debt load was $542 million with roughly 97% of the variable-rate senior debt fixed through swaps and a first maturity in April 2026.

Analysts focused on how to value Spruce’s PV5, whether the company was targeting only post-flip assets, and what capital structure and return profile management could support in a higher-rate environment. Christian Fong said the $821 million figure is both contracted and renewal value using the same PV5 metrics peers use, that most of the more than 34,000 systems in bilateral negotiations are post-flip but some are pre-flip, and that senior debt capital remains available. He also said Spruce believes it can still earn double-digit, even mid-teens, levered returns, while the 14% unlevered IRR cited on recent small buyouts was a proof point rather than a template for all future deals. On the market question, he said a shift toward TPO/leases is a tailwind because about 89% of the service portfolio is TPO, expanding the addressable market for Spruce as upstream peers add more systems.