Investment Thesis
Spruce Power is in financial distress with critically unsustainable leverage and a severe debt servicing crisis. An interest coverage ratio of 0.4x means the company cannot cover interest expenses from operating income, forcing reliance on asset sales or capital raises. Negative operating cash flow combined with poor liquidity ratios signals imminent refinancing risk.
Strengths
- Positive operating income of $3.8M with reasonable 16.4% operating margin shows some operational viability
- Meaningful asset base of $824.4M provides collateral and regulatory stability as regulated utility
- Adequate cash position of $50M offers near-term liquidity buffer
Risks
- Critical interest coverage of 0.4x means company cannot service debt from operations—unsustainable and distress signal
- Negative operating cash flow of -$2.7M indicates the business is burning cash operationally despite positive EBIT
- Extreme leverage with 5.88x debt-to-equity ratio and $687.3M debt vs $116.9M equity creates refinancing risk
- Weak liquidity with 0.48x current ratio and 0.42x quick ratio—insufficient to meet near-term obligations
- Severe gross margin of 0.6% indicates structural cost or pricing problems that threaten long-term viability
- Net loss of $2.9M despite positive operations confirms high financing costs are unsustainable
Key Metrics to Watch
- Interest coverage ratio—must improve above 1.5x minimum for stability
- Operating cash flow—critical to return to positive territory
- Current ratio—monitor for liquidity crisis as current ratio below 0.5x is distress level
- Debt restructuring progress—refinancing or debt reduction urgently needed
- Gross margin—investigate and resolve underlying cost structure issues
Financial Metrics
Revenue
23.4M
Net Income
-2.9M
EPS (Diluted)
$-0.16
Free Cash Flow
-2.7M
Total Assets
824.4M
Cash
50.0M
Profitability Ratios
Gross Margin
0.6%
Operating Margin
16.4%
Net Margin
-12.5%
ROE
-2.5%
ROA
-0.4%
FCF Margin
-11.5%
Balance Sheet & Liquidity
Current Ratio
0.48x
Quick Ratio
0.42x
Debt/Equity
5.88x
Debt/Assets
85.5%
Interest Coverage
0.35x
Long-term Debt
687.3M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-15T10:10:31.489478 |
Data as of: 2026-03-31 |
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