RUN - Earnings call 3 2023

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Operator

Good afternoon, and welcome to Sunrun's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. [Operator Instructions]

I will now turn the call over to Patrick Jobin, Sunrun's Senior Vice President, Investor Relations. Please go ahead.

Patrick Jobin

Sherry. you, Thank

please on begin, certain we remarks Before call note constitute make this forward-looking will we that statements.

differ are of statements. us, Although we and projections on results refer to based made from more company's for and filings discussion results best our adversely. to Please with note, any may update to actual the the other believe these factors also of statements differ currently risks obligation reflect factors materially as that or Please may cause and a SEC being judgment inclusive these disclaim we revise statements any today, our forward-looking made actual to in them. known

basis to, comparable be be business today's not periods. a superior meaningful for, considered investors on isolation a information financial certain current non-GAAP for non-GAAP we should and as evaluation the supplement as of meaningful performance During with also to measures, and of performance from facilitate supplemental GAAP or we financial substitute regarding measures call, results. a our prior discussing believe will period in which can a provide These

release You filings this our disclosures will non-GAAP press the measures afternoon on is find website. today's each our in and regarding discussed our of SEC, with call on the financial which additional issued posted

The including be to website Chairman the session. today Co-Founder, of of prepared Q&A with call. is copy Relations along with Powell, today's will the Sunrun's the is shortly today's audio supplemental posted Sunrun's transcript, Co-Executive for Mary call, and website materials. along Fenster, Sunrun's are Investor Investor after the replay Sunrun's and Relations An Sunrun's remarks a On CFO. also call CEO; available Danny Ed Abajian, call on on presentation Q&A,

We have the today's session. XX including allocated call, Q&A for minutes

turn the Mary. me let to over call now And

Mary Powell

you, Patrick. Thank

sector. industry leading know, has in difficult conditions a and solar with rates, the interest As in volatile to time the you all rising been changes policies across this important

action outlook year. taking responding at which to environment, growth of are the We results expected we start and than this to the

our a customer-first sustainable cash We and equity also does on funding. continue sharpening generation are focus growth that require not strategy to execute

what position. to doing these improve are is respond tough conditions our and Here we to

reshaping to we First, business storage be the first. are

quarter, a adoption. result, are to yet not that proposition and growing undertaken. storage and And one clean we multiple delivers our value rapidly America's the superior significant lead creates management company, change During as accelerated a have one national exercise for This we value as is our competitors energy shareholders. streams a that most customers

made on have decisions volume. thoughtful solar-only we Second,

chasing hurdles. economics. QX opportunities not are growth subpar meet that We has Therefore, our not in did return rejected for we that growth

intensified Third, efficiency and reductions cost we both team. best-in-class artificial process a through intelligence

the customers across than We improved the and prior deliver XXX-megawatt We capacity quarter. of have time. the more customer gigawatt QX, storage in X.X prior a storage foundation the hours experience over of value year strong XX% to now and We to hours XXX% country. increased built have growing capacity installed installed compared to from

margins for higher while for years provide the monitoring the Sunrun future significantly in value offerings come. and a storage Our providing enhance generate customers foundation to

and storage a will Our quarter, XX% significant third increase of over in country percentage our the the starting to climb. rate installations continue across attachment the was year, from expect XX% we this

energy clean plant a across America. distributed at presents rate attachment capabilities storage powerful to scale generation providing business accelerating power by opportunity Our grow our

energy have future interest to trusted who Being this have with of the storage deliver existing retrofit valuable customers We our in provider we offering in the launched base volumes chosen value we are customer strong thousands forging In ahead, of driving clean as product. already with In meaningful and enhanced relationships the customers. quarters installing results. early to our our be we customer expressed QX, is storage expect long-term critical.

As a X in to of nearly points Scores Promoter install testament the the compared time Net our approach, increased points customer approximately percentage QX. XX at our prior customer-first to year to

program with subscriptions early and quarter the an to the launch renew in our the their customers to provide renewal opportunity coming lock of benefits will We relationship. in

customers earliest scheduled take upside effectively about auto we to renew program This in Our in opportunities agreements of also period. so can generation with essential scale significant cash X.X provides Sunrun for have and years. learning advantage

guidance installation third capacity as deploying the in the volume, customers. megawatts slightly range sales increased quarter, During to our solar XXX storage we our below of midpoint we solar solar plus on higher-value came of on focus

third to solar approach installed you when our largest the recent and representing We the are with market only are residential of not States, growth and solar in the grew base X.X generation. our as cash quarter, meaningful the our show solar. aim strength against in storage, fact, customer are even to we drive capacity. include strategy. Overall, According customer-first to our model of XXX,XXX we United utility-scale company in differentiation reiterating over we but largest second In we gigawatts research, disciplined and executing margin-focused commitment leader the our to

in million a cash we at total end, quarter durable and funding equity model no have $XXX had needs. with We

plus rate our structure Slide Turning offering. California as Sunrun pro-consumer to lead for in leadership extend with present we double-click solar to our California. on to storage transition our X, opportunities in market continues The

been we While outages. given to grid demand frequent expecting, than significant, were remains we believe the rates utility recover slower and has increasing opportunity

expertise and be on data California will expect in periods in suggest market in trends industry or anecdotal offerings. is lagging, have this storage given to subscription accelerate While we and gaining share information ahead our

over XXX% at the Sunrun we to territories. substantially is are investor-owned the of This storage closer in and rest direct higher attached California utility revenues. business sales attachment industry, the XX% than service less in which in than XX% of rates our observed

Importantly, provides best offering. we believe the with this energy clean customers

solar-only backup product. As Shift installations storage similar enjoy utility and savings with compared customers savings bill more California, our to significantly in with

to margins plants, power reliability future clean energy enhancing the state. stronger to and storage we provide also revenue form opportunities products systems distributed as Sunrun grid the Storage Backup transition and and Shift across for Our accelerating resources together network

X. Turning to Slide

growth strategy. continue execute our margin-focused We to

rates action, in to responding and in full are with go-to-market affiliate higher in our adjusting towards these actions interest remaining disciplined took Because for we shareholders. we actions, outlook year. for focusing storage. optimization, market These the the quarter, geared on the fundamentally are This of maximizing of we partner leadership participate our segment how creation continued valuation our

generation installations guiding We to of to in XX% of XXX to X%, XX% solar year which less customers, for of guidance and XX% prior accelerates installed storage also existing are storage on XX% year. introducing new trajectory. now capacity for customers for the we both of QX, are approximately guidance focus strategic our capacity growth our of to Because growth full approximately implies to than which in products, our XXXX, cash XXX megawatts growth X% full

the our for highlight are solar as on key outlook of installations There X slide. revised capacity we presentation drivers

First, we providing the offering pro-consumer most California. on in remain focused

taking approximately the to While the rate following increased expected. opportunity They're prior remains the strong from the from quarter. have we down in prior structure and longer XX% California, transition recovered than the year. QX X/X by QX is in Sales compared to still almost rebound initially the new

our and prices are that customers ramping through offer simple compelling sophisticated great customer our rapidly. most Backup products grid We deliver programs, are value increasing have communities our Storage Shift product, the more and are where are options grid offering offers Sunrun in Backup believe to best and our We both services and Shift, long-term we operate. product. for the for market utility the Storage We and outages where a non-backup

the on new Based the confusion and customers that policy recent the California, conversations new for environment products consumer now, storage apparent regulatory It has for caused proposition to taking understand in with about many true by best systems. to is adapt offerings change to consumers is for following product that the solar-only midyear it California. consumers far, time in are the policy value

product of far outpace solar-only to offerings our sales. storage All continue

As owner our in customer products long continue benefit are of interests our and to the short to value the that in the term. to customers invest aligned best long-term deliver assets, and

typical increase. offering proposition of X Savings only is is strong, utility our with XX%. news good value to that will The as increase savings the rates Shift year of XX%

January. instance, to rapidly, customers events to to energy increase committed sources. XX% seek get drive For to rates reliable more affordable is continue may increase in shutoff will PG&E Rates likely approval are by power clean and electrification. to California and

lot in over prior QX double gets operates compared a continued of have running of to the While attention, many states. to it's which in of robust, at note been benefits the to California outside prior year. sales growing from the grow digits XX% diversified also while year, business important California Installations a

for opportunities installation the higher-value thousands personnel. net undergoing to become a rapid service subscriber for transition in company offerings attachment programs. increase and rates business sales increased are deliver the of will requires good time, values In and better Second, we storage retraining storage-first

of has storage higher battery Backup pleased sophisticated with and with carry to are product, development product. margins. cycle Shift and and back-up We and installation. consumers' permit uptake sales times install rates our these outsold therefore, systems But which elongated is are have more as This favorable systems our interest between

optimize management are our refine operations change value to and sophisticated sales processes We how communicate customers. working teams teams through and they nuanced learn more accelerated the proposition as to this our

pricing brand, the on are value platform, affiliate are customer product embracing are how companies solar channel focused and transition storage-plus disciplined a through partners and sustainable we in We a share model. to We that that long-term value value participate partners. we Third, that suite storage-first our experience orientation future.

that unattractive, with short-term which of affiliate pockets volume allocations. several market the dealers of seeing the can in behavior are pricing consider scaling partner we irrational influence financing-only participants We sales with segment

affiliate in As [ We've these which we seen strategic won't from company's expectations term. do history a as provides behavior the our capacity and sales not the reduced this integrated and volume includes we fulfillment believe We ] firms several chase market our channel and insulation benefit volumes a partner economics at an to is from times approach, that near view have financing-only behaviors in XX-year diversified result, force Sunrun. sustainable. the through

solar long-term will generation, price actions, cash value take focus discipline mindset customer-centric storage-first creation as for megawatt with not with us growth a as we leading value take to company. These our Fourth, to repositioning near meaningful year recent interest to our such and This installations term, our these and geographic and the storage actions our we than business the In in includes solar sales product Reducing earlier growth as direct mix are to new subscriber position environment. Texas. actions continued we prudent generation. our Arizona something cost reductions, channels the long-term adjusting a values lightly, company maximize but the rate are will offerings geographic and exiting in on our mix. maximize megawatt maximize annual coupled in target is and having cash position adapt volumes. rather

the higher Taking all a interest near-term and intact and sector, and the difficult rates value are position market improved. step back the headwinds amidst the from market equity in Sunrun's market drivers has long-term in volatility conditions

We to deteriorate. adjustments able to environment rate to higher have have reliability inflation been service while continues interest pricing the utility utility coincided with our adapt as rate

of We are clean lower and energy at can the an of source the at use households. electricity transition reliable for home beginning towards a massive affordable, a offer of millions

this shifts remaining believe I the position to actually capitalize that gives am by oriented. confident market the macroeconomic industry. in firmly position accelerate opportunities long-term and us our we challenging our to will long-term I strengthen leadership customer-focused environment on

our in again, this the customer of it our culture our I revolution want practicing energy who and field celebrate are safely offices to across helping country this accelerate in customer-led and quarter, and strong efficiently. teams doing of Speaking focus in the and discipline,

teams not top-performing X are quarter, This the we in but recognizing country. X

based storage sales performance, Tampa, First, and your know thank we you Fresno, California. you our experience our are and on contributions from at second, attachment top-ranked Fresno crew rates customer customer listening, based experience and Tampa, Thank and Go install growth on leadership appreciate you. and safety Florida; Sunrun. for to top-ranked you from I team

financial With that, let me updates. Danny our for over turn to the call

Danny Abajian

I financial performance Today, markets will our Mary. cover and on outlook. capital operating and you, activities and our Thank

on Slide quarter Turning the results first XX. to the for

energy increase installed XXX XX,XXX from year XXX same the capacity to the subscriber quarter were our XX,XXX megawatts. within approximately quarter, third was approximately XXX of including In additions. X% Customer and guidance megawatts, last a solar additions approximately

last represented from X deployments mix meaningful years. a XX% highest subscription in the period, of and Our increase XX% in the level quarter our

now have and storage solar over systems. We installed XX,XXX

We substantially expect grow quarters installations the storage in will ahead.

have grown systems installed meaningfully had of storage which attached to periods. Sales nationally, in over drive higher rates XX% attachment to future continued

storage per offerings thousand Our carry typically backup by higher margins several customer. dollars

and last year, energy increase gigawatts of X.X gigawatt customers of an approximately QX installed with from the same subscribers, storage increase to capacity, total representing network network During the X.X We quarter, capacity bringing XX% XX,XXX we megawatts over of of XXX quarter capacity, an XXX,XXX XXX% ended year-over-year. hours. storage solar

recurring XX- life at significant under had XX% At contract same over end energy with nearly clean ARR, stood for year. most of Our average remaining contracts the the XX annual subscribers provide. period our we QX, last $X.X or of an years. over generate revenue or up billion, XX-year recurring We the revenue,

Slide In to XX. subscriber was delivering approximately creation Turning $XX,XXX was QX, a of net $XX,XXX, value cost value approximately subscriber and $XX,XXX.

subscriber value reflect the that the subscriber in tax million and XX% the $XXX qualified is by for Total quarter. credit, additions subscriber in was the added approximately value third communities QX of quarter. of investment now blended benefiting Our generated, value net the period, XX% number subscriber subscriber mix net value ITC which multiplied in the energy our from

using value-based which metrics rate, cost slightly current our underwriting presented a present X%. accounts but already below X% for is discount of are Our our financial capital,

to reminder, calculate across ease our reflect rates, a generally to net current investors cash not obtainable do on unit we ranges the As discount unit enable rate Instead, rate net update cash interest frequently. of advanced that periods, provide a we enabling deployments. margins comparison

In At of was subscriber the cost an net addition, observed pro quarter. the capital value generated and rate, value total million. for a subscriber $X,XXX discount value we $XXX was X% provide using forma

Turning to Slide XX.

prices realization we periods meaningful our adders of seeing value to from are procurement hardware current expect from subscriber activities. and on tailwinds lower in We ITC additional net the future

additional in Communities coming qualify realized adders ITC quarters. for the operationalized be Energy proceeds domestic for and expected cash the ITC While QX, adder systems in was that the to income low content are

will application cash adder but processes XXXX. annual expected Combined, or proceeds. content issued, or quota low-income up XXXX. rate what and the domestic QX these adder qualify adders expected X been Guidance in window additional on additional million late to $XXX for First, has early into allocation are opened not in has awards represent until rule-making more run are

mix higher like-for-like seeing We few through of start are over X.X-kilowatt reported hardware through creation as trends from for with rapidly peaks. costs will XX% quarter $X,XXX work or our battery are per backup will by the a to our also decline cost therefore, the we may system, increasing higher quarters components costs net decreasing but expected and solar flow for obscured of by be costs carries hardware next inventory. prices year, over second a nearly storage, key system their These basis which next impact install margins by to end On costs. which beneficial an increase hardware and

Slide Turning to XX.

$X,XXX discount net discount on pro value rate. Based quarters. the rate fully unit at forma approximately subscriber tailings X% to show coming with We $XX,XXX value and pro ITC forma a a have subscriber along realized, margins to QX, business potential the from net these the presented our impact an at adders, if in with the in benefits expect was hardware of forthcoming X% we cost mix

partners gross balance end assets to and and flows the maintenance assets and assets by assets Net debt. billion expect costs, partners sheet all is unlevered net to Slide Net to is third project Net cash all now X% XX. we at earning plus were earning over of gross assets the assets equity distributions of equity at from a quarter. progress financing and $XX.X measure of Gross value. this at quarter. cash our third assets inventory Turning were increased of or on the tax net cost. structures to to of flip assets earning capital distributions our earning assets Gross earning receive end include million the $X.X earning net and related construction or operating billion additional other swaps, and assets represent less does partnership time, the earning subscribers discounted not rate interest Net which derivative all earning quarter. $XXX

addition, electrification metrics. selling customer offering and in to expect grid additional reflected storage In from upside grid we our services base creation our not these are opportunities including future services value retrofit

capital interest enter rate We customers. to swaps on into newly our regularly hedge costs installed

customer are when installation our rate this fluctuations insulated interest interest or project-level exposed debt loans between nonrecourse been of We with shortly are rate that have is from either financing is fixed fluctuations with through financed to origination rate principally rate systems debt. Nearly after swaps. our near-term as coupon securities long-dated all floating interest hedged

to total in million the the We working recourse by earning $XX not for capital do with adjust net capital prior such, costs our down facility assets increase $XX paid well. million $XXX used current in new million the to of cash, As We we rate installations. compared ended an match quarter. quarter discount as

to realize below of cost interest senior slightly markets and briefly a average Turning project-level XX. rates. weighted currently We activities debt on nonrecourse capital which our is X%, capital outlook subordinated Slide our and

Our both as longer-term cost across transactions completed our market of for are well capital realized sector. such proxy indications terms and data on our yields rate as observable credit comparable a as base our treasury in by numerous as spreads transactions informed

million year. the of transactions, XX% range slightly quarter, we Similar to we at basis executed $XXX cumulative point last spread the subordinated ] of also securitization prior $XXX in largest-ever improvement a exceeding nonrecourse May public XXX securitization, an provided quarter. [ basis a During on from of million we prior raised subscriber above to advance successfully rate raising the XX -- this portfolio, the public contracted solar the debt our additional credit of points, value, residential bringing

fund subscribers. with us its deployed expected capital revolving strong quarter. continue available also what at robust end approximately executed of timing be the of subscribers us allows unused beyond in Sunrun capital to tax projects fund of the commitments had sheets finance closed activity. -- equity today, quarter maintain XXX XXX megawatts our of million runway a billion $XXX project nonrecourse $X.X markets for as warehouse runway in was provide to the third capacity megawatts We to over through for term senior and projects loan to in selective This transactions

fund, We with Act, buyers. Inflation easily credit tax recently tax corporate transferability enabling the closed to our us provisions first Reduction the leverages credits monetize which large more tax equity from new

strategy. diversify As and This new this part we structure, become transferability more expect investor our familiar corporations large become universe. funds deepen to a will funding with of our

complete Given of the warehouse few our of done as we extension business, the our upsize nonrecourse loan in scale and plan an increased have coming we times months before. to several

planning extend our January working We done facility XXXX well. maturity, several are also recourse capital XXXX, to have as asset-based of ahead as we times before in its

Our diversified limitations. working includes are by capital facility is relationship a loans Both XX borrowing current syndicate and of constrained rate lenders. base neither group floating

now Turning outlook our on Slide to XX.

this decade. the adoption demand We and believe driving can growth robust and this the backdrop, and other continuing very customer through storage continue costs values In to products further reducing underpenetrated is our higher-value by efficiencies business. throughout and strong generate cash across to increase is priority market sustain by services growing long-term to

Given XXX% year-over-year. our to storage-first a company strategy, represents XXX- capacity range capacity in expected be to Storage installed QX. XXX% we are growth This in introducing XXX-megawatt guidance hours for to installed. storage is of

represents XX% growth. For the XX% this full XXXX, year to range

range approximately represents Solar XXX approximately QX. product X%, lean our growth be for generation other as offering of of have factors to expected noted. growth to XXXX. full megawatts and to XXXX have we energy to guidance installed prioritize of cash year decisions full the the in This our capacity due X% as to prior storage is This made XX% reduction strategic into well range in we compared XXX further a XX% is to year to

we stable -- QX We subscriber compared value net expect to in QX. to be have

to complex our met definition costs realized transition storage more installations for we that installed. As systems higher-value and more these of in time-consuming mix yet systems result not have being the

realized pace the we them adder include although XXXX, does processes. to occur be expect as additional in outlook on Our sooner based not of ITC this benefits could government

call. As fourth provide our will quarter earnings on we guidance our practice, is XXXX

of XXXX in of phaseout have we that NIMX installed will benefited attachment expect from higher energy XXXX year-over-year anticipated rate, will period. significantly a year-over-year storage capacity the QX and As solar decline QX California, in

ramp in season, and make rooftop to weather typically a we up progress retrofit While is winter opportunities. offering installations also believe significant as we solar the we our explore can headwind storage renewal

Slide to Turning XX.

capitalize disciplined to strategy our cash and us our XXXX. our opportunity focus expect long-term focused current on generation allow will with We in on

project annual million We we are quarter of cash quarter-to-quarter our which reiterating the in business. be to generation expect positive cumulative expect to generation cash fourth and XXXX. seasonality achieve of to recurring based range can in third cash XXXX. in $XXX timing of through lumpy we generated generation, in inherent the and financing We $XXX the Keep quarter, by mind, on be end cash million our

on cash generation have XX. assumptions the based of is we Slide bottom on Our outlined range

have with to We the responded go-to-market environment actions. optimization our higher rate interest

We rate mix have capital on higher quarter of than to attachment ITC noted average of the X%. storage and changes in XX% the our assumptions a backup a include slightly X.X% range cost weighted from higher which a XX%, of of slide, last greater

let Mary. me back it that, turn With to

Julien Dumoulin-Smith

helping best Danny. am value our our so expand differentiation, teams and to of transition to margins company with our Thanks, passion is the customers. deliver hardworking Sunrun and a I to storage-first ingenuity appreciative extend

to long for the we value steadfast commitment disciplined the our our believe will I Importantly, can growth maximize strategy run. create

for questions. ready we're Operator,

Operator

[Operator Instructions]

question first with Andrew is Our from Morgan Stanley. Percoco

Andrew Percoco

guess, dig there's little a you're I bill savings product. I with bit into I'm want in the any by little uptake appear a just demand that seeing more doesn't since there, that it California. like storage to surprised especially associated the backup

sticking with hearing just to maybe to product they're versus product? Sunrun on elaborate what you the Shift as can the you're from going why customers, that just specifically So

Mary Powell

Andrew. Backup the surprised Shift. was to I were to the you. outpaced in Yes, uptake of we hear things Thanks. mean, storage pleasantly to the see really one accomplish Great, Nice home Yes. really

with whole value to pleased that transition, So home also innovative Shift, again, backup. significant into customers there as we but was had for had know we consider talked that an the offering we we product about went when

very one And that the we you to hit like provide is what particularly clearly -- home storage, what terms outages the that, pricing the is could customers presentation, of of that and But because priceless value we similar whole look if as power. you slide, it's customers, really of of California, number say state a of the the at value events actually in in look see that to we happen. paying at to show if the stable they're even backup, that sort current you'll with equivalent, the price for home on

So and they they it and California. similar the get of over energy escalate to store mind, it to switch use have to themselves the pricing capability as protect in have have rates need states as peace like and from when continuing well

PG&E request again, poised next XX%. is So a year at for has that

I looks XX%, XX%, going like the or go it original through. and is request XX% think was XX% to for

of with So backup kind also should of one more that reliability reasons much to makes in the storage talked whole-home environment going the the ] environment, think, environment best-in-class past, And that pleased add I market. I really about for offering we've customers. really in our price that driving is and a robust Lunar which another investment the we're is be [

Andrew Percoco

just hardware here. makes sense. procurement of your lot And follow-up, as it. interested in a just a Got maybe just That strategy

seem coming as battery inverter as too. to prices think have I down, prices be well well, panel that as down it's prices coming been clear there,

How are hardware? managing vendor vendors? list? of from approved existing you prices How -- So at you kind are to current just you your the are more landscape buying lower is for additional vendors adding

Danny Abajian

Yes.

think on as I the to big list. the the of the movement more latter number opposed nature list it's vendors in of or that

a really in our think we're time driven by activity also times as now. burning in keep we and over here the are mind, position of we've is still inventory. of mentioned I'd procurement elevated right also I seeing it's few midst down

getting that, over pricing won't deliver as firm So our see course the metrics external But and right indications purchases pricing our will few based into we on we on necessarily a definitely of that away. quarters, today. we're the through cycle we

Operator

from is with question Goldman Sachs. Next Brian Lee

Brian Lee

megawatt the if in I'd new this your it's I apologize maybe customers installed guidance types, kind if states, versus from since through of bit is in already pulling around be of back. give the available coming much but being prior, kind you return you're less or of requirements maybe where function of advance a you being curious went to detail a us customer how whether is delta could more just meet this, biggest

provide little If more seeing in between volume outlook maybe you a a could bit the breakdown where here. the you're pullback

Mary Powell

mean megawatt the I Yes. at as solar we outlook. installed volume look

I out it, things mean, there's the in I deck very presentation in clearly, lay think as X we the driving basically Brian.

the So a one is like slower in bit anticipated. than California was recovery trajectory little of just pure sales up we

impacts definitely that So the outlook.

a showing in said certain the really that in of -- in uptick we're because call, that, also change seeing losing growth the in down, again, we the But we trajectory. of good are As amount it numbers, numbers other states. again, again, break we

in hard backup. leaned whole-home also to really We

storage. drove So we by that makes generation could outlook was something leveraging that our really saw customers' in also when that really we interest

in And -- the that's we why subpar third the of so was other storage And the as channel market. retrofit quarter economics the seeing this thing program were the well. also then we launched segment

storage, really strategic made we so certain over decisions prioritize to And growth solar value to areas. megawatt in

Brian Lee

here Okay. presumably, already Fair delta? And to driving you're factor? on then is swing end it's year-end a before a the the that wide November, mean, swing options couple One, that the And target then mean, before it's uncertainty here given table second around by what's know is given makes correct? are through there factor. financing And $XXX more months here, presumably what cash year. such this suppose, end then on. generation a is I enough. pass two, drive it I timing, year? of kind of reiterating the question just sense. million sort of I That $XXX Why the of all of I I million that the

Danny Abajian

Danny. it's Brian,

this over through think end to And and range I fourth I to made the year, next the out the total XXXX. the then the think end next looking and noted remarks, more we've timing just assumptions, through again, us year. through for sure the the through not within year, make few because annualized think and the the is page, the of guidance of just But think it's the end of I the top, generally, the at not coming guidance I year. through the the end cumulative of on we've the generation quarters specific and question as hitting also on next quarter the set, the is X specificity next potentially from and the thinking -- that this cash changes clarify total where quarters called cumulative that's cash that's there's generation. the is I cash in to just taking assumption clarify of generation But at year, X I in of that

Brian Lee

pretty over Okay. the delta. I clarification. that, X of wide having Understood. guess it's What Appreciate where a though, still said hit you quarters? swing factors versus kind X are the

Danny Abajian

delta within and XXX the range? mean XXX between the You

Brian Lee

yes. Correct,

Danny Abajian

Yes. Yes.

the content range. but And a think upside planning as is quarter clarity X we've content. up really -- And this there that about for of there. factor nudged version wider are about of more the adjusted that's in discussed. XX within noted we've bullish costs, and And XX. remain but at slightly every on But the advance minus. call in which plus we which we've not seen backup think in as that time. adders, out The the of back-ended strength annualizes point last point somewhere outcomes in few, shape that's is a the the just past this range our period the actually I'll over course single storage of back-ended. less And that Capital I amount there's one. is is the domestic a of noted we range $XX moment, mix, to range still in we've of we or the of took rate, I domestic up ITC So swing that -- over comes when is version from the we like million, to we've change generally hit there The percentage attainment

on time, which is to are the big So again, falling, that advance play, equipment you another that at -- over an would we factor I costs, X minus increase. on mentioned costs the those give is say or rates. delivering another plus take nearest gives the

Operator

is next with Partners. Joe Our from Osha Guggenheim question

Joseph Osha

questioning, then level To to and end follow on like annualized the I you a that, to that be XXXX, that words couple generation language? signaling continue what grow future I'm once we years? of with flow of of Brian's implication cash the up questions. recurring. Is expect and/or other seeing And line have we that in Is something use can get you're of that

Danny Abajian

range Yes. Absolutely, getting once of the that within on nature with recurrence reasons it that's time landing the growing objective stick over and mentioned. in is for the -- recurring all both the we the I

Joseph Osha

Okay.

guys. Obviously, have some some Second inventory your by extent which -- But I how question, dealer then outlooks today, what nothing own Enphase sheet to quarter, one that's shocking if with I there on as out And here what to to more driven, question I am look just you Europe, and of feel then SolarEdge inventory. the to the about you has level world. of think, also and in in do after at pretty had in that. you're balance say you curious for especially fourth seeing

Danny Abajian

Great.

of activity. But also north been our simply, -- our objectives. we've in our we've in We balance. measure targets. above inventory been on of we've the very that's reducing based days made And well been run rate progress supply So installation trending

last quarter, $XXX balance So for drove the down by the inventory million. we in instance,

to we I to million get targets. another go million our have levelized $XXX to $XXX to think

be our purchase going activity is of of rate -- to now to rate X the purchasing think we're X rightsized beneath our until and right will our as we another size, the us flow that's and take So installation we quarters.

Edward Fenster

Ed. is this Joe, And

sidestep to think make are the United is to transition out. third, inverter with mostly storage higher to really rates. markets is cost have International the effective are the X we then us reducing I interest is within that Companies And impacted unable that haven't there obviously another. we're markets sales stop one. States being which calling

a that's helped us factor so has relatively. differentiating And that

Joseph Osha

you you monetization -- I'll and away. had the direct And economics from a Ed. maybe nice to last do go Got to particular, a for number one, curious how about guys? And equity hear then you, you one ITC the monetization? And in you. Probably for And some tax is there when are I'm that. for for basis relative traditional me. mechanism step-up direct then that's of it

Danny Abajian

I'd per So structural price credit, there's say. and then economics there's

more a side we pleasing the is of ultimately, we across do side why time. deal And see, period but the transactions. noted it both we be and done getting been to and more market, also increase first has for deals these price that's our of to As that per the everybody their mix in think is going teen driving of participation part first and expect to as we're the we the And credit has in doing are that. investor noted been

are As transactions things not us. for have not far of there's of a the -- which cases, look like where some might sale be structure being as it tax subsequent monetization more might In like credit, structurally, directly depreciation, there of a market, different by I modes think the it some equity done some in traditional do do.

are And so well. there as structures emerging

if equity, putting think, will, we'd to tax relative preserve aside. I ultimately, the credit value, per expect price you to

Operator

from is question next ISI. Our with James Evercore West

James West

be to company stuff to the as you're of long perfect should we reskilling, in expect going you in a a move have some this how lot for. storage-first, general, think to you've makes to on period going got sense, So transitional Mary, which but about with do of

Mary Powell

mean invested way. know, we're XXXX. our as been has I well good Sunrun storage you in on Great question. a I thing the like future since mean, is,

in experience. in thing our already And policy one experience the very amidst large So scaling significant had of shift in and the company. have cool have We a we did a really taking -- we that scaling and is, particularly the expertise it's rapid like it way, that challenge of really California. it's markets in

on way. that see made our well really been the we're over the been incredible It's just strides quarter. to So have

As installing storage, them of percent moving star we're having being customer a we're experts of of them our instead having training, in communications, sales of are all all -- storage. in experts to installation again, teams that like improving our that our

way, on uptake were working I'm towards So I kind good that this well about that would we we're saw. feeling question, and our uptake. say really I no of we mean

backup just reaction particularly -- particularly we in whole-home storage pleased So on were country, and across the with focus to really our the and California. customer

James West

Okay.

we as are the then flow. at whatever about starting And things here some point, normalize looks environment it. to, Got think Okay. prioritizing new you cash normal in like,

on So should be how should annual we volume basis? think about what normal growth an the

Mary Powell

call. as you we grow strategic to it storage to mean, year so earnings guide megawatt hours next because how I about Again, this is next talking we our expect at we know, think so quarter and important. see we're

about relationships. that you you value next how as can why opportunity for we're talk and like in upsell add creation historically, which it's program, their Ed, the you even also renewal that again, have really to we instance. and our helping we renew to creation is as than broader be shareholders. -- And something And But year, value to value context powerful for think on. creation I initial lock to a our like about So again, of contracts. that going practices a retrofit think cross-sell, like to that, from customers perspective, really we've important pleased also really around to part to for our a growth been reaction gives it customers it want longer-term And about anticipate sounded our getting in we're really launching us we're going with we're talking the

Edward Fenster

probably grid business. historically, required barrier several our market capital. you design, of go. sell where Hawaii in obvious if requires market working Storage share economies storage obvious is was grew to Yes, storage. just look happened price, scale after The going harder most I what is the significantly fantastic higher There in times effectively that's permit, to are entry services.

why pivot. that's part making in so the And we're strong

And holistically very so us. to is important volume obviously, still

now nameplate total on a we're Solar focusing products bit, and broader megawatts, and suite proposition, deemphasizing flow. cash value we're a of little

Mary Powell

to it's clean go and services this far, on of we're top now powerful amount going PG&E a about haven't a as what about grid but energy of storage this rates ability talked very, on with with retrofit the Yes. with back this generation to powerful. the storage. think attachment so former kind Ed just said, and of be call incredibly summer build lot did to executive, utility we customers on And with very to sitting that program And we was the

Operator

with is Our Wells Sithi ] from next question Praneeth [ Fargo.

Unknown Analyst

You increase. mentioned on like track they're looks PG&E rate XX% for a

benefiting trying how strategy that PG&E in in you envision pricing in California. pace that your January. prices how you wondering from installs? of benefit or Just a kind higher think raising and leaving capturing impacts of maybe pricing Just lockstep with to Do understand unchanged maybe about

Mary Powell

are it customers. selling a first more what lot and Well, makes attractive say, I currently foremost, to we would

think, I and first that's really So important. foremost,

a always have as from are different described evaluating Secondly, but whole opportunistic, we're calls, of I pricing host a mean other very on think also we we it very I've flexible I factors. strategy.

we're made. that I decisions decisions have at we're right make within market flexible been geography going nimble, single we'll And profitable sustainable, in. our market again, focused approach would to time the So and every say, keep on no that every growth. to And

Unknown Analyst

just the in then maybe are terms market. accessing proposals end and -- from you that then tax some the equity I if there equity And any switching out guess, market, the constraints uncertainty tax given and any it. your of next to here of ITC of longer Got looks seeing are at like going in sense there's I And shift terms guess, then, mix so, I over obviously, term, is to all? what few years? growth that assume plans a your transfers, to be that the impacting mix

Edward Fenster

couple to speak of a I'll ways. Ed. this in is This Sure.

growing about market So and is on equity, don't we the first, rapidly, growth. constraining it's both but definitely for the not supply The clearing tax concerns market. any our have side demand

Basel rules I think future. only referencing those you also the would XXXX indirectly were and the potential affect

it Basel, treatment obviously with that, regarding the occur. it's who pretty will feel a not people conversations fix will direct the for funds seems clear as the moment. the pretty equity my happen, proposed investors showing regulators with there's and the equity papering are their guarantee So at viewed certainly tax no to up that, that. that having file but tax residential comfortable that starting was In the that for miss are to And conversations

Operator

is question of Bank Julien Our next Dumoulin-Smith from America. with

Unknown Analyst

It's Alex Julien. on for

right, lot you to mean, addition of does -- come sort more of measured color about guys as I profile. company sort this storage of talking I'm growth in gave curious, cash the you into a that Just the think whole reassessment sort also be with again sort carrying pivot a we sort when on of sort that overhead that heading of year? of current to run with like of the rate targets into sort of eye need generation backdrop about any guys the of XQ next when

Danny Abajian

Yes.

I think near affecting to transition getting like the element a the term. key is storage

relative the subscriber So proceeds we dealing install. value which recognize we creation look with at obviously, -- expenses if the at to that at but book value in we storage in our point the period, you of that affects on period metric, also also, the like speed projects, capture we book

cycle the an element efficiency. there being that's order-to-cash getting and design cycle -- along we configuration here, getting just it operation dimension in talking there's time And Ed like the how earlier their that. the electrical for call how cycle those the realization design work, accelerated backup all streamline through to home simplify would I like do about think times point I So an upgrades, storage, thinking systems to was that we

picture. doing down on operating accelerated more cutting units fashion, getting say, we those the quite aggressive we've overhead well. the But really is leverage forever. by been are -- dollars in So we've also It's over bringing we've been part mentioned we've the would the last of Overhead, that pretty install where several all containing at the and can which overhead the overhead, then gross overhead. than lever -- you through to an several been I business. been And on bigger of throughout cost managing quarters,

Unknown Analyst

Got it. Yes. Super clear.

to, cash you adders true-up a point. One, I as And guys forma be a those finalized. are expect of then, include you of about value you the pro for to sort housekeeping pro or subscriber mean, will would we the sort is when forma sort think of period. on do I guys indicating that Just to it this what you expect are realized guess expecting it rules are net or what metric in guide this be the shift that

Danny Abajian

Great.

definitionally, subscriber into So have in the the net in catch-up value unit put not metric. the past, we

been through as have we've the equity to have dollar amounts We generally we've funds. our floated that indicated what just them people cash of and catch-up claimed tax through

So community did that the case energy report in be adders we again period. the for metric which will in the

a there actively claiming equity, that will we are retroactive on stub and tax for get is will portion We claim tax treatment systems that through equity.

and So of we be the haven't the that yet given done probably that on over past. in will of information lot we've That course QX, activity. a

to it. energy application opened. element communities catch-up retroactive we have the why a low That's noted, window income, does So as

net our be then the are and applications award and lump rate be catch-up just clear it to we underway submitting is a element We a for batch comes not going And an There in should in. of initial should windows sum up. future on value, initial as when open well I'm any will subscriber true-ups make run applications sure forward the that. that

final margin have unit awaiting content, We'll the restate will but and metric of as that. on prior and guidance has the element we're to Domestic not not the potential prospective any as -- yet the metrics We rulemaking go still live. will be them to retroactive, we also in now these. put catch-up for far

Operator

question with Rusch Colin Oppenheimer is Company. next & from Our

Colin Rusch

little talk going into to and I I'm the the PPP monetization some guess sense maturity you about this Can forward? point? model start revenue of trying of of when get to bit model a at that layering that a the

Mary Powell

storage fast growing and that's fast Yes. years number how uneven with put as load When lumpy, you exponentially times, and I about of we're a really that the on already grid grid challenges scaling electrifies, of we're this creates the see mean which strained. to in backdrop come. against think how now you I articulated scaling a we as value as society

with through we the times going X,XXX per And with to services XX to a And more whereby peak as grid assets. or to a can programs types good to nearly what from upsize NPV August of see what these all every that the providing from from conviction the increases So country. did start like we them customer we our experience active you're We're October. were in our of the in to program realize during just in day postcard discussions growing we megawatts over was see future with PG&E fleet that future. the

keeping we're events. it. to and And of how are that incredible, flexible all in back up way the to need you And other really what just unlike any utilities climatic more since, going where at with I certainly country different with the with struggling resources, many the up is the the see that's load, and we utilities see proved some and utility a provide So XXXX more are parts again, support headlines keeping over country at have so looking proven which grid. these the

Edward Fenster

lifetime $X,XXX even could again reminder, a per per it's there's maybe services a that customer be that have grid like about per data customer, $X,XXX value vehicle year over previously Just and per said year. we

Mary Powell

Yes.

Colin Rusch

about the system inventory on it the some you of curious I'm hand. offline. you'll on elements. the of thanks of follow-ups, other some need around that in and have some modules in days I'll through just terms -- clarity in just rack work have guys take inverters. that balance to may I And of but for inventory the

Danny Abajian

modules, control we those a that On we other equipment own dollar have Rack, and do bringing do would everything as just as is inventory once I on over we distribute we managing that inverters, smaller becomes much Yes. else. in But called them because say company batteries, and we Snap value. balance racking, far installations. have get more in inventory racking been beyond line both down manufacturing direct and and concerned, our it racking and -- system of with levels use racking

Operator

Strouse JPMorgan. with Mark is question next from Our

Unknown Analyst

on Mark. This is for Joe

on inventory back just topic. one, the First

the I level to to to that of start that XX- in get some declines next through. expect can year, and first early we that expect see you think to be you've back XX-day pricing of part to would the mentioned when come

be here, growth half tapering any headwinds too into the or reading value I that? much first relatively that? the -- could Or of With of because outlook to there creation the am

Danny Abajian

would of we inventory. I yes, so it's -- the pace expensing -- -- say the

new just installing So the us accruing on that we're held. to actual we're price expensive inventory purchasing It's as are reductions as purchases. already not that we've expensing much and more we're

cost of also time at nature in creation you're increase next more is probably all of an it as remember, of and But relation line quarters, and equipment that you'd the more because high what each it -- unit solar-only we've in couple lower with see concurrently I'd equipment, significantly over get batteries you unit cautioned gradually are So getting installation that's say to is system equipment, of more the then price. the units we that. after a probably what And the coming at coming you're and look getting in our cost, the battery is. to although due cost the the also

attach But as up. mind observe to and leverage we subscriber over keep as a get value net few pickup volume you something value put Just in back in operating contributing next all quarters. that storage the cost as it's higher in paces to

Unknown Analyst

Okay. one sense. one California. on That's then just That makes helpful. quick And

of to some interconnection to California morning that this of Is I headwind for into slowering a said utilities they're same installs And that times that having California? the a peers in systems getting some Your elongated, guys? does the in have anything maybe been some guess, with you with do and that's operation.

Mary Powell

help degree. again, accelerate some routinely company. storage-obsessed should times, to very at But installation would really encouraged, collars, encouraged by we've with a instance, challenge what the like I over same I a time, yes, We're mean, adoption seen say storage devices, again, actually of a that's time. But which meter for with we're us. the for also as

in focus solar. is, backup the seeing So our some where context is which we're of with moves good whole-home

Unknown Analyst

Philip Our final with question will from ROTH Shen MKM. be

Philip Shen

And tax when quick discussion. Can tax XXXX credit sense of first had of the your you your how give much follow-up sales? deal could monetization be supported ITC Just a then be? credit a on volumes could the us of timing by

Danny Abajian

Yes.

the closed transaction. we've So first

the fund stages fund We heavy of the the balance and of that a final completing are in of will element of user be that the transfer year. for

the that's of So status the transaction generally.

Philip Shen

it relates Great. be your expect to to financing of XXXX? financing you And do as majority credit a it for the

Danny Abajian

I the far the I line a of of in traditional would thing, the a interest like portion. be lot through the piece, delivers very we're if equity other very just substantial traditional I income definitely, think similar funds so At I of some it At be trend, -- point more have, our as think, the what large points don't these time, I on think utilizing equity it transferability. keep depending time. could over the might in year, majority But ITC over P&L. gap more to are be as guess, know one to it's in it be the mind equipment tax other as other tax thing noncontrolling might year, size. treatment,

ITC look to the ITCs contra-depreciation. of more will transition we like likely As transfer, the treatment

have will impact it over EPS the trending of time. So on our

to that statements. you activity all GAAP Just through mind as something attract our again in keep

Philip Shen

of and -- And going proceeds $X.XX going line or about up going costs in why are why storage that? if the up increased Great are -- installation watt penetration? it talk your why growth can proceeds aren't also with they're to proceeds per sequentially? so, Is due -- why you up

Danny Abajian

Yes.

the I we're making think the transition. general point about

-- the percentage We the expenditure XX quarter. been our expect come battery battery and against against over points up started install or last proceeding. has picked mix pickup points been that, as sorry, attach percentage to we on we've and more we spending transitioning the XX So

little So et little drag. on audits, volume a down and bit bit is nonvariable negative as elements to of permits getting install that's such leverage a site cetera. costs operating like a doing the being The

negative recognition those the the quickly largest would in equipment, leverage, would I not other battery say a So few value factors. operating There as be subscriber coming enough. elements, of the but are

Philip Shen

then Okay. question the the subscriber that is reports uses. questioning Great. and some customer here around count And count final EIA

a I disconnect difference X. if the difference. be wondering seems break you could there to or So down the the between was

Danny Abajian

to here. bit run little through Yes. Happy that a

are we would website just from numbers foremost, and more It's metric. sources Obviously, have count. the here detail And any I responded And in define give do EIA. clear, to time we them to EIA different perfectly reporting looking have like this them comparable. guideline cover has exactly generic wouldn't like aspects would off X think all I this for you to first from express publicly. what for, business as not company through where same say team into We we there we and conversations make changed directly it's do adequate. done address. over in pull that think with with subscriber sure that we asking and that's response what call. on our us our go diligent far and the been multiple what was of the as conversations our Happy do our their not as case, hasn't our information, And between atypical that team and of nuances they're are

to as there So from requested -- has customers, we places EIA that solar a are diverge of couple GAAP.

that report number, we other over with the In in bill in monthly because from million trying place GAAP to mind and XX $X.XX whether term, contract That actually should well X. they're go those areas to billing change current happily GAAP cash you balance billing that, said customers their And sheet. The obtain the more do to so. would prepayments is customers. $X.XX customers, $XXX our and have years, over we if payments year $X.XX than would they $X.XX records, report we and we contract which gives like escalates amount not have the of be of XX,XXX billing them to which levelized report our we they've us don't data. asked actively And we our prepaid first on rise and

them it. a systems system that -- kind into, and with in analysis when other was that's sheet, report to do differences And is finally, GAAP sell I hit And we recognition between there's nuance have report how is storage we of report the element you in unusual side, examples I currently in that the would another get on commencing visible placement also the difference. done. the up I then hit, And to in $XXX the And checked, the into then delay and on leave We cost longer to and is large last would we that's include that's in And picked -- directly. subscriber. to which and branches, on much just with wasn't how And from CIP, the say wasn't to vehicles, we've of was period as been well, say expense So lease up understood. satisfaction time, lag and balance that -- getting we to analysis that's which asset we're that of from discussions operate we in the piece also on don't which it one area that a a you revenue versus when of here. how their capitalization over in picked have awaiting get and estimates million our expense asset, service. is that assets I warehouses, of done. of before capitalize to basis in the do that much permission recognition the -- that, there's to permission doesn't is didn't install operate. the another is and an portion to going it And that then from billing And operates also permission costs that

that scrutinized welcome to what tax As very numerous do and we parties, and relates and does we equity been by third that's through of diligence well, well as far elements as go how on ITC that due funds claims third-party it.

Operator

is That Q&A. allocated that time all have the for the we

a lines You your time, may day. wonderful all have at and disconnect this

Sunrun (RUN) 1 Nov 232023 Q3 Earnings call transcript