RUN - Earnings call 4 2023

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Operator

Good afternoon, and welcome to Sunrun's Fourth Quarter and Full Year 2023 Earnings Conference Call. 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

Thank you, operator.

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

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

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

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

today the call CFO; Dickson, call Sunrun's the Revenue Mary Ed the Chief Co-Executive on are and along session. Sunrun's CEO; for Paul with On are Fenster, Powell, and Danny Abajian, Sunrun's Chair; Sunrun's Co-Founder Q&A Officer, also

Q&A, to Relations prepared after remarks call. audio is copy today's with of transcript along website shortly with including today's a presentation along supplemental materials A on replay website will and Sunrun's an Sunrun's available the Relations posted Investor of Investor be and call,

now for the today's over allocated let Mary. call, to have And including We turn the me call session. XX question-and-answer minutes

Mary Powell

for all you thank our and call. us joining Patrick, you, on Thank

a of things today. to about have talk We exciting lot

guidance and our strong installed cash the guidance. $XX far assets to . We higher-value range and the guidance and storage our landed quarter We generated of And In operate million more our to customers. installation to discipline, on driving transition delivered increases in net hours QX X up near in fourth capacity in in storage-first strategy XXX,XXX values, our in significant margin-focused the We solar than net the cash in generation continued gigawatt subscriber a year-over-year. solar year. team exceeded exceeded our $X subscriber This storage cash on quarter, our combination with we for cost meaningful with X% gigawatts subscription on of from our focused earning X.X capacity First, grew offerings fleet now business generation also and capacity over billion. outlook and values reiterating are over of remain and resulted capacity. in XXXX. XX%

be The fundamental demand continue business drivers to of robust. our

continue rates due the utility expenditures. the the to capital on First, stress strain grid and to massive and rise events of climatic utility

and Second, productivity costs labor to declining, installed our improve. while solar equipment are storage continues

decline. Third, have and could capital stabilized costs

lives. and remain for resilient customers to energy power Finally, their eager affordable clean,

energy accessible energy chosen reliable families and the the trusted service We industry. offerings pro are most to deliver customer in consumer and the this best and provider is making the clean, America by extending to across differentiation experience affordable clean critical. Being our with delivering future

to the coming California, in in to pleased quarter, growing continued Promoter testament our points by installations time sales where Scores XX% sharp to QX. are believe to to flow over am uptick through sequentially. I QX, led strong. is XX% report a at sales at QX. growth trend compared We Net leading this customer installation are customer-first XX growing will to over increase, QX approach, sales our volume that reaching a As the our of

be will typically we Most and quarter important, in as exit prior the last in QX installation slower-than-expected markets in year and unprofitable increase of low and recovery a compared last seasonally to to strategic Growing the is certain installed prior our the from to Results on we decision influenced the QX by declines California QX. discussed from continue year XXX-megawatt call. XXX% quarter. XX% of hours the mix storage. storage capacity We QX.

offerings value plant monetization provide same Our by the storage distributed power at margins and customers they generate for capabilities. At higher significantly summer. future providing are time, scale the enhanced for foundation

sales. in Our new storage of XX% to attachment beginning installations at continues over quarter last and this with from the fourth rate up country of across number rise quarter, the the was XX% the XX% and year.

We our only the focused and on participants that We remain suite platform, with consider we of several value product sustainable storage-first of pricing customer scaling and experience unattractive. market are that are with through There in how affiliate brand, we disciplined affiliate value channel. pockets financing model. behavior participate the irrational segment the partner in partners that pricing our

can several not as We've business behavior channel short-term this do volumes to history volumes. in view influence X-decade Our nearly won't not the times decision economics and affiliate seen for we that such company's sustainable. chase compete at

diversified which fulfillment benefit behaviors from Sunrun. insulation a integrated financing We is these approach, an provides market from to includes believe firms strategic only capacity, our and sales and force

a prior experience Depot opportunities Lowe's selected focused -- presents I great excited partner. that on One many partnership. retail that thoughtfully evaluate years home of transitioning in retail and our as day. with and XX, am Friday on Lowe's Lowe's February markets staff we homeowner geographies. about reaching our of partner. activities, announce our sales through are launched our Home We the customers overlaps Lowe's excited have that to new With today target a exciting and model has we improvement out

We by are the so encouraged incredibly results far.

provide early for subscription advanced believe to have decades and renewal products we opportunities will underappreciated strategic valuable priorities, including most we commencing services retrofit months, pilot I an beyond agreement. Sunrun's the few and launching last several initial of of the one numerous assets customers customers. Over base serve installations is and storage that the we existing for our

has position to products able sales with the service, relationships cycle. trusted offer from initial points life and ongoing and strong customers services the realize to be company customer in built consultation many from at installation value additional to the As the an touch throughout and are we who enviable

Our their early well most subscription customers agreement the interested highlights length are pilot they in even extending of expire. before renewal

have evaluating in the are current subscription of While hundred and or the pilot far, renew to an by mind before years of the approximately all X/X Nearly their only savings did provided the targets service. of several years their of those that contracts to X contract agreement process pricing lock customers. peace eager average renewed and their so are for initial current Thus terms X their of proposals. in end energy at

of of Only presenting early offer. customers to our first the at renew about X/X attempt opted not

However, have interest equipment they or buy express moving. about be new expressed that outright half these customers system upsizing explore to with Sunrun the might their with of systems

these of incremental for provide All scenarios Sunrun. opportunities margin

eager Customers offering. our retrofit are also for battery

markets, provide. the it's do While and available better is value the rapidly still not customers early providers we days only uniquely ongoing high. do customer been strong customer who sales total lifetime orders financing only positioned is have with through interest relationships installation and realization service Sunrun select and and we to develop than in growing see significantly

the to value hundred only scale want years tackle growth to and targeting we these it we ahead. processes more detail. our investors in in Shifting the several pursuing While Danny and optimize thoughtful to opportunities before and pilot to gears, approach highlight are sales at funding systems I generating disciplined customers, Sunrun's are our covers strategies, for

than recourse total QX more cash ended cash debt, with We XXXX, both in we generated QX. and and

that transactions capital are disciplined executed strategy During aligned capital QX, with approach. we and numerous our

our years the date from First, we $X.XX XXXX $X.X approximately X senior billion $XXX warehouse to facility to expanded XXXX. million and billion by nonrecourse extended maturity by

consistent our to Second, capital XXXX we value. of all From objective reduce to optimize our are a at maturities generate The the leverage November at subject capital. are competitors terms XXXX, cost the extend with certain recourse maturity meeting time of facility to risk, conditions. of facility. to drive our recourse our with to extended to January and increased shareholder the of further maturity extended some a provision extend XXXX, cash, working

execute approximately Recently transaction. tax terms. we equity and funds strong out an with to million out financing Third, term closing $XXX continue term

and and affordable our Sunrun profile shareholder to am funding and growth who I and We team support partners finance and managing are value. drive a debt at prudently clean our financial to our vision energy parent all. so proactively make share appreciative of to accessible

our over I handing to people, the to moment Before the Energy. revolution this soul celebrate in to and customer-led heart of call take a want Danny,

attachment all quarter. contributions team were safety, First, California, Bakersfield, Thank your thank and on crew you in for install at rates our based and leadership Sunrun. top-ranked our of storage experience this customer to you who

our Solar, Panel Bright at in friends our Rico. sales to shout-out Puerto big a Second, top dealer

the forward thankful to years We update. partnership for over come. that, over your me our the look many to financial more for turn to call With Danny are so and let

Danny Abajian

Thank you, our with an in will performance update the Mary. quarter, financial capital I outlook. along operating Today, activities on and markets and our cover

volumes delivering and way. financing leading in and storage with strong appropriate Our growth team efficient is our an

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

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

storage the attached periods. in installed sales XX% attachment to Recent We future been continue [indiscernible], grow of which rates should will storage installations systems ahead. higher quarters have in expect substantially drive approximately

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

gigawatt reflecting topping end installed to additions quarter, XX,XXX During solar of Customer increase an megawatts of of our XXX% hours. over total and additions. XXX approximately the storage the capacity range the approximately guidance In XX,XXX, fourth the year, was significantly quarter XXX quarter, X.X same we including guidance capacity of installed approximately last to our XXX-megawatt megawatts. XXX storage network subscriber were energy and within hours bringing capacity high from

the XX% period. highest and deployments increase subscription of years. level XX% our Our quarter in represented the many last in from mix an

solar customers representing network XXXX capacity, of XXX,XXX with XXX,XXX an ended of X.X year-over-year. We energy XX% approximately and gigawatts subscribers increase

provide. under generate subscribers or for XX-year revenue energy clean XX- most with we the contracts recurring significant Our

billion, over At average of ARR, $X.X our nearly the We years. the remaining XX% revenue, up an last at year. end had or stood period of XX life same over annual QX, contract recurring

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

Total systems the value investment generated, the by the from Energy number adder. the adder Communities QX and subscriber benefiting was is value in the net for which in subscriber fourth tax million period portion the of XX.X% value $XXX of blended reflect subscriber ITC credit, a and Our the low-income multiplied value additions a subscriber quarter. net eligible now

for Our are present capital a accounts but X.X% rate, financial costs, our presented already area. current in underwriting our which the is using value-based metrics discount X%

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

provide cost addition, net pro value quarter. In forma the subscriber using we a capital the for observed

$XXX total X.X% rate, At was was X,XXX subscriber a net value and million. discount value generated

We future costs from price tailwinds increased variety leverage and sequential to volume, value from growth labor subscriber and in realization orders of lower periods the of expect from higher ITC net factors: additional attachment rates volume efficiency operating storage in hardware reductions, following growth.

Slide XX, detail [ the ] hardware ITC from On and tailwinds adders we costs.

cash adder adders in content on final continued for has recognize or are what government proceeds energy communities be realized would the pending the adders domestic approval content issued. from During still to Proceeds we the will QX. each expect in fourth on Guidance from quarter, to expected while quarters. application, been adder, which qualify late the for awarded coming QX we domestic are low-income the proceeds

awaiting However, we year. sometime processes additional are still this rule-making

Combined, million more cash adders rate run annual three or in $XXX to these proceeds. represent up additional

our continue through which as see are We consuming key gradually higher decreasing flowing components, we hardware reported inventory. to our finish prices cost for costs

costs. but beneficial carries install in of therefore, hardware decline for the On are a quarter of by peak increasing $X,XXX and costs per basis or will system mix over this which and end with net higher These nearly solar second storage, margins impact battery may be to XX% an year, backup and their by trends costs increase a XXXX. like-for-like of the creation from hardware obscured by system, X.X-kilowatt expected

to Turning Slide XX.

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

of Gross and discounted fourth gross net the and cash quarter. expect Gross a partners to partnership maintenance Slide at structures, to to and now flows cost. time balance partners all X% earning earning and sheet the of assets earning distributions receive from net equity of and Turning were assets the equity we financing end to capital $XX.X is XX. flip our project measure subscribers distributions assets operating over billion tax unlevered costs, at on

assets our derivative services in these reflected base, rate net of were we additional Net retrofit opportunities does and additional to debt. billion and electrification of Net value. metrics. earning grid assets not by quarter. or is $X are $XXX quarter. other end including represent plus related value fourth creation selling Net our earning assets at customer expect swaps, or Net gross construction assets which less inventory the million increased assets all progress this earning include and services the our not earning The interest products all assets assets offering to earning from upside storage cash future

interest to long-dated capital that of is either interest enter insulate our hedged have debt fluctuations. rate from been The loans programmatically or floating swaps. majority costs fixed coupon into hedges vast with near-term our We rate adverse securities rate

new As such, not do assets adjust the cost current for in installations. net rate to earning used discount match capital we

of $XXX quarter million an the cash, quarter. prior compared the with to ended million total $XX We in increase

to activities. our capital Turning markets

last We we in considerable over been shareholder few optimize further arranging ways have believe long-term drive growth the value. incredibly and can to balance our capital support sheet our active months

securitization and before in warehouse support market. revolving scale. term have We asset-backed to facility financing This upsized raise extended successfully nonrecourse principally our finances senior assets the out facility temporarily we our

the was April the the of We from to $XXX facility by and by X $X.X years spread million effective The February extended billion $X.XX from billion to maturity size approximately increased XXXX commensurate XXXX. credit for lenders. set recent the basis relationship increase advance diversified facility a to out continues The transactions with securitization with market in nine of points rates. movement of XX have similar term

fund terms improved afford more other certain that flexibility achieved mix. anticipated also product We geographic future to our and

has exploring transactions, also facilitate is calendar our pool undertake, including planning now a to deepening execute as to the relationships a That market decade to The the put are of options partners equity tax tighter which utilizing tax track ITC recently, rethinking the equity timing been tax spanned of continues increase ITC fund traditional exercises along structures commitments. can impact have the a fact owing of our size transfers. believe by continue team us said, to tax a partners and of which that Our year available over our long-term to record structures good This large structural arrange well that we with buyers. transfers sponsor the equity in position to that many funding.

amendment. subsequent warehouse in loan us of what $XXX senior upside to closed commitments revolving of over XXX quarter. executed or the nonrecourse expected forma and would reflect fund fund to XXX transactions approximately tax subscribers. capacity for the its with in megawatts at through term projects pro As unused deployed sheets beyond of quarter, subscribers provide This of the today, and end was projects unused had also available megawatts the equity Sunrun fourth million amount

strong transactions. Our in allows runway us selective capital timing be to

with rate portfolio and was of closed In rated costs a last million private priced February, stack we subordinated X.X% demonstrated approximately The in ] We senior with [ was full XXX.X resulted a XXX placed of capital well. financing. an on with in priced spread. $XXX average ABS was a The cumulative A- the weighted investor points This September with as loan capital point advance $XXX cost that ranging spreads credit all-in another improvement contracted transaction also assets yet broad along private investors metric in our CRO as use value of credit in interest securitization of the of was subordinated XX%. a and against The over shows measured million a our from basis debt basis nonrecourse spread. and declining investors. with strong set by subscriber our from a growing a

parent to capital updates side, share. of a On have couple the we

high sure leverage lowest parent lines. and is unexpected managing maturity early across conditions capital strategy financing of flexibility the is generate debt terms and while make drive appropriately of It to facilities extend time overarching to to in cash the to asset enterprise, navigate macroeconomic our Our have cost volatility. to we potential level prudent supporting

working chain strategy, as refinance upsize the XXXX. been inventory as to especially substantially Consistent XX, the recourse in capital that to option into the facility, prior and $XXX.X we million working line closed September with with reduction have of this facility have is million needs our the capital an to $XXX.X size the supply pandemic-related reduced we million planning we The to recently from challenges with reduced facility We business, the past. reduced in $XXX extension. fade to

We November XXXX. facility amended January the extend from maturity the XXXX to to

extend meet points. a this that included spreads tied grid-based can time. typical provision. without March any now also This to XXXX, XXX facility the pricing maturity We from will ranging to for to utilization the with feature at we refinanced be further basis should The XXX has requirements penalty facility

Shifting million coupon we in XXXX, of to that zero issued is In February convertible $XXX debt. XXXX. our debt due

believe deploying area these and have final in the During of taken shareholders. to into at principal we QX, value These low QX opportunistically par repurchases pricing teens reflect levels market nearly million accretive to healthy are a discount by $XX maturity, approximately significant and dislocation of a bonds we yield $XX the the of open repurchasing million. market, to advantage

and proceeds convertible are for to use offering. on that refer press to release issued the information also transaction launching million the cap proposed a we call I we mitigate is will transaction the dilution. you of release intended more that indicating afternoon, read This a debt $XXX

million outstanding. $XXX have convertible we of XXXX today, of bonds As

to in previous bonds buying reduction debt. a Our net resulted XXXX transactions the

facility and balance about million our capital recourse by opportunity of debt. strategy with is of that prudent reduced recently working contemplating $XXX sheet also quantum We being with optimization consistent duration this the our

the financing. maturity execution decline issuance schedule will the a XXXX asset-level appropriately capital notes, provides that by cost recourse consumers increase, prioritize in and the convert is the and cash recourse indebtedness the parent and cash about be finance total position while costs flow-producing backed dates, balances either repurchase our assets use to of This high material sheet, interest When credit unlikely to of debt cash flexibility. on new nonrecourse either we of or of think lowest extended and balance could Depending sized use and the significantly. strong debt we direction strategy maturity

adoption is growing by products the and storage Turning on now services. we to outlook XXX high-value other very a backdrop, to The And this can long-term further underpenetrated, decade. to installed sustain generate across Slide values to XX. XXX-megawatt hours to represents expected be remains Storage we throughout our by and XXX% market by is year-over-year. customer robust reducing business. growth costs continue XXX% to capacity QX. our cash strong to growth through In in increase range this of and in believe priority efficiencies continuing driving demand This

the of hour year, expect reflecting we in gigawatt growth XX% to full range For to to storage a X capacity year-over-year. installed hours XXX-megawatt XX% be

XXX a is represents megawatts to energy decline range approximately capacity be XXX at Solar QX. midpoint. installed in the expected of QX a This from in XX% to of

QX. year along sales QX, weather-related to in on QX installations period activities based in to the typically is the and with QX constraints seasonal lowest of obstacles

QX, from declined no this every QX year reported volume, our has and we've exception. to year, volume Our is and

with California the continued fact the effect are the of we comparisons Because early has the Arizona. exited addition, of year-over-year are in in affiliate XXXX, segment in less a relevant QX. we slight demand partner that along pull-in In in exercising discipline

will QX the that growth We rest and QX year. expect very confident sequential into robust we point, volumes low and of the the are mark

our installed our go-to-market X%. share For in market approach the capacity the disciplined offering of the strong full results. delivers year, we to strength range represents X% subscription expect and to gains up solar of be as down This

mix create XX% in total we this increase we by input costs than the larger. Resulting in greater XXXX. higher much value with as subscriber XX% than generated in and will of value growth XXXX greater forecast will offerings volume declined. values of We in Our our increase of growth be value

Slide to XX. Turning

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

to consecutive of We expect generation. achieve million we $XXX are generation cash of of XXXX. the second which fourth quarter cash in cash reiterating positive our annual quarter recurring by range quarter, fourth $XXX the to in We million generated the

latter cumulative generation QX project expect positive to the point, XXXX. mind, to which inherent lumpy in to financing fixed of a this we To and QX, based of cost quarter-to-quarter owing of can in cash on from end lower be business. result have volumes, generation Keep generation continue financing absorption. XXXX expect We timing in to cash our activity cash the be lower timing in worse the and seasonality through

refinancing on In we warehouse reduction the rate facility new advance our addition, as will the a result to onetime in facility. assets reflect cash in

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

to With back let me turn it that, Mary.

Mary Powell

am Danny. customers. executing Sunrun value expand our extend the of to work team our and the I still storage-first company transition on best margins differentiation deliver of to our the a Thanks, to appreciative

will the the create in line maximize steadfast open commitment our we growth let's strategy Importantly, the for disciplined long can believe questions. value to I our Operator, run.

Operator

you. Thank

conducting We Andrew Instructions] [Operator line a will from session. Morgan Our of first Percoco question be now with the comes question-and-answer Stanley.

Andrew Percoco

to out growth your guess break want the guidance, just year. your down with start I for I just guidance to solar

within slides. You're pretty sequential impressive showing your some growth

some of So what that you're can and California year? provide growth throughout the terms non-California on you just context in maybe guidance baking into just

Mary Powell

around growing the sequentially. the constant is that sales with across leaders seeing. is seeing our seen nice XX%, volume very comfortable And QX, Yes, of hear all Yes, we're growing right? hit, So sales some Andrew. seen our for we've we're growth I as we've to sales XX% demand growth monitoring in sure, -- company, mean sales from what you. that really feel yes, I California we Nice

where the of focused also volume, rate seen, seeing context that solar from selling. attachment storage the rate the we're field the we're not well in really, in that single very, they're uptick on attachment just what the the but also again, attachment very you of week as what really know, as percentage healthy every we've As rate

about, So expecting, that we're the subscriber to work really about a the we other and really of we're we're also the feeling again, and growth. net the talked we rate, doing value good hit. retrofit attachment volumes tied some lot storage initiatives

Andrew Percoco

Understood. maybe That's just gears switching a context. then This bit. helpful And renewal pilot interesting. is really

demonstrate kind on of just debt like through to of guess, of within a seems is I conversations working the getting process? value second. with small pretty and So sample want start still having on it. double-click need based that the providers, underwriting of you I kind that size, renewal a for do It you're your to to you're credit this some what some

So you to how in credit additional and done securitizations? far order are you future as with start in what come to those market to conversations getting be needs

Danny Abajian

Yes. question. Great

to that I think it's more the numbers record, track getting continue build.

customers the there's effectiveness also the pilot a and customers have relationships have obviously what different go think I where back with test can things can test to in and subsets of of period them. works. long-term We we we variety this that of

So the it at really track and I continuing think it's record. building

results. initial encouraged we're think with I the

it's perspective, underwriting the a building. I think lengthening from debt track and numbers record the really

Operator

comes Our America. with the next of from Julien line question of Dumoulin-Smith Bank

Julien Dumoulin-Smith

to you team. Nice chat afternoon, Good guys. Thank with you, operator.

a ramp the bit talk here. your things needs meet you about kicking little Can context present and obviously, to cash guidance. on off just beyond So external of cash sort the financing

ongoing you the terms that you of As the In by about think presumably against the developments cash. number, up juxtapose achieve that ongoing into here? of sustainable of how sort more end ramping does cash year needs today's

Danny Abajian

backdrop Yes, level, we've maturities, I about the asset about level, parent to on and into And more the and is in X Yes. taking amount the at looking picture of with exercise is And this financing the kind really the care leverage. that that for warehouse the track. the later activity the is which of that then level. cash at we strategy maximize say importantly, of runway would recourse the out of nonrecourse obviously, warehouse talked within line about the delivering generation pushing the of taken with the as all together year, years, of, been talking

Julien Dumoulin-Smith

second can geographically from about field. it what seeing specifically you against talked there? about Got little it. stands you installs, here, mean data your quarter you're points that to sales the You start elaborate volumetric bit more the want you that does Excellent. of the on little seems out use enthusiasm of on commentary breakdown a the on -- uptick. the other some the a is I seeing the out How And expectations if here, And juxtapose too. to elaborate. your you word even maybe talk me informing bit like want Do California to we're then do to obviously, seems here? that's some really at more year about as what reflect sharp

Mary Powell

California, Yes, of California the we as we're talked the are we positive. trends, And trends are were Julien. for What and seeing is but in in some particularly in policy recent managing through positive growing. yes, changes sure, context the before, about

the California of In the now than fact, country is us. for growing rest faster

traditionally a I of its So we're in volumes. that quarter through QX lower important has feeling in made seeing country. view good again, on result way is back you of really good see other we California. what decisions is about is a just seeing the the volume build again, results that, always prudent largely in as us with And we're What parts really

our what And So our it's our we -- really it's a reflection of our up talked about net is drove that's, subscriber disciplined profitable of growth. that. value again, focus on sustainable that execution

Operator

Harrison question Piper Sandler. next from comes the of with Kashy Our line

Kashy Harrison

cash, balance cash So just unrestricted is by exited strategy the like the be gen the indicated, commentary. you going it with of a million you first end financing you question. higher Mary, year and in as to one, $XXX quick given sounds cash XXXX, the

pursue have the you down? since cash excess rather after So than had just pay convert convert down would a why pay

Danny Abajian

Yes.

The the of driving here facilities that. a across been liability take the maturity financings. extension, is stack, I'll the timing management I of exercise of that's near-term obviously think some few with involved layering

to the I did think apparently again, dislocated of bonds very and we trading we purchase looked us. saw, where that. convertible a they're go bit ahead

moved the cash pricing and balance value. shifting that management. year maturities of with it generation repurchasing. that out But then near-term were think process think that to use that the generally, cash week extending for maximize extra liability then during shareholder was behind think that's I focus as We the of on and optimizing the few we prudent, the the to it us arrives I

Kashy Harrison

parcel guidance enough. is And the to us you my securitizations all I costs the generation cash with rates, X% be follow-up benchmark and target reiterated. thought closer the just And time of sensitivities given would project what maybe XQ recent rate versus that, the would remind the are part then to drop and maybe have I guess Can call. you the then last equal? that else the in question on Fair interest

your guess down only to relative I'm the project update. So finance moved curious bps costs I just XX why last

Danny Abajian

questions. Great

move. -- is one basis about or advance point about X in rate XX X.XX about is first The point points in

million of I rate gotten $XX change annualized On think generation. a million cash stabilized interest basis, we've kind change rates. an of has of rates sensitive bit $XX in per between higher. less as that's XX-point the little baseline and of

relative a I to little that's fair a we've in what X.X% the conservative one, the been does skew second observation. the market. say would seeing on And

transaction. a lower end subsequent a up a tad on we'd possibility think I there's

Operator

Moses Our BNP Sutton comes from next question line of Paribas. of the

Moses Sutton

I just convert. follow-up on have the to Kashy a

understand trying XXXX And majority just is discounted convert? a arbitrage using majority there do convert to a to of if I would expect million of you the to trying this considering a a Just clarify, to [indiscernible]. understand will be the $XXX I'm get do expect if that you buy convert? to repurchase a repurchased. an be I'm mostly premium to the pricing XXXX. relative

Danny Abajian

Yes.

to I press kind I to do want the you of think release. refer just more

press I think a release, of of repurchase think and was use noted kind I the proceeds. that's in

as script a slightly material. that that result intending be will in see time. in could out that's of note not much, think go either the could We on transaction. But fall the direction, generally, to range. the As It in I come we positioning . how leverage But up. due did the to

Moses Sutton

the guess know Got to is country, faster NEM X.X. there's for lot it. you to now quite underlying pull lot the you a NIM it X.X a I of CA than attach friction, We shifting that do storage I And the X.X, a relates helpful. of you How Mary, is rates. rest of get to growing That's return astonishing. much which There relates to I lot the noted X.X very forward. believe profile? was think it

there get a there out how of it's real-time time misconception sense use So with NIM to really I'm a is rates, on curious if return hard the economics eye-popping of books. X.X

Mary Powell

is had because Yes. I storage differentiation we expertise our the Sunrun, in mean, storage.

backup California and innovated, we as customers was whole And again, expertise shift in we so And that home have soon found really product. were a you product possible, then grab customers that. we across with to what wanting that great know, as as

launched, -- storage and leading California. our know, and were a we to strategy, we storage, as particularly the effective was and we XXXX, -- in called with numbers show year So were that that, we of going you very

still challenging So who probably have differentiation. selling California for are this a for kind solar companies that some, or only don't of market is

and stopping rates. rates, there's nothing utility the You pressure also it's note, correct on utility that

storage also that with the time, helpful context over in of proposition the certainly value So offering. our solar Sunrun is plus

Operator

the Our Michael of comes Blum question Fargo. next from line Wells with

Michael Blum

here back through out you actual broadly this plans more program walk indications the go to customer to you those the contracts Can what turning renew your to for have into customers. of to the roll to wanted of kind base? signed And contracts? process program I are just the

Mary Powell

about the Yes. We're pleased excited question. going. Great results. pilot really renewal know, you early really get this to And were as we

this Dickson Paul have who's We here effort. led

So some of don't Paul, you those address why questions.

Patrick Jobin

the for Yes. Thanks questions.

And us that obviously, and we're interests. doing think and these understanding with the these as for the products adding we've customers. take into really in a as find, really assets pilots, escalator. what mentioned creating is are needs product, steady there's additional initial an our hope consumers' question in of dug with focus But we earlier avenues finding customers renew. actually pulling these customer that the selling renewals, with or and to love full whole And which value customer for and I and they us, we extend securitizing can increasing eager keeping to is now they're their host exactly on around was the rate focus where desires we're better financing and that

But we looking us customers a the and really, sitting value taking we're about there's and of they're extend understanding giving full it's for assets on it. as So and the what open on them for. the that store lot table

Michael Blum

then you Home to Great. noted, as from Depot recently, switched you you And Lowe's.

from... just if you broadly, more how difference you're And viewing wondering different the address channels maybe the Just arrangements there? in sales can the

Kashy Harrison

Yes.

one So two, reality growth, in host found opportunity And far cash ]. in it's as homeowner general presence area only [ a it's home that we side, in just a high encouraging. although interesting been and as really site, And really strong improvement been been a evaluated the those few a things if lows we've that the generation driving sites. for of in focused having profitable solar about retail. there's you will, retail that like And some being less on demographic. We selling and presence advantageous and really days been a

the excited we're nature about really demographic and relatively So unpenetrated it. the consumer of

Operator

Thank you.

from question with Tristan . Richardson the line next of Our comes Scotiabank.

Tristan Richardson

highs. the seeing couple throughout this completed what terms of about the not hearing of you equipment over the or pricing on of side. the your we're value XX% off Is next the in on just product also, yet. And seeing categories? you're greater question chain, pressure talked XX% you're that is than quarters. you reductions sort a realizing the then cost Just today mentioned

next possibility is couple that end XX%. So a than over XX% the there that, of quarters up higher could .

Danny Abajian

question. Great Yes.

being a has of reason the we've been by again, inventory is above are sticky lag little we talking actual on of in procurement been in terms it the in amount are about target. bit we So more pricing is definitely, The conducting manner, market. activity hand a being the driven XX% carrying on

two do have greater the quarters. line certainly think last than over of good through, quarter that as it's over sight target could the towards And moves I into as be we more. XX%. of guided next to It couple moving we've that or

which softened a being it's there bit by At the and and most be significant module the heavily part a that stack. pricing driven battery are more. and could up has of prices, way, point, remain bit -- this opportunity prices definitely, But for obviously the most

Tristan Richardson

the early I then the what seeing you you days quarter approximately last accelerate said think Appreciate XXX that we're guys sales about XQ? in activity XXX follow-up, given downward around just talking it. that in vein here should today, Or seeing the same days. And funnel? going a on to maybe than greater and reflect the of top are uptick the expect we you're in just in Does

Danny Abajian

Yes.

to part yet our are it get kind be line lower, to not will that apart So of increase significant much target X-quarter activity days. And in reflected. in will as our dollars guidance from down daily what down balance the inventory be X- of naturally of bringing that also install just installs sales. will follow that's should and we And of our with higher rate brings is the gross balance, our we expecting

Operator

Our the Joseph Guggenheim Partners. comes next from question line Osha with of

Joseph Osha

Two questions. interlinked kind of

about generation Can or talk that to cash limits million issuance? trajectory when that use can about for this to the think the debt that benefit of QX of this in the to $XXX Can by without occurs that, equity year. equity or us we $XXX million generation you that or is cash look annualized you commit recourse ratio us linked was understanding the largely of First, in company might you give convert that debt refi. like. some vein, recourse of set And what

Danny Abajian

here maximum nonrecourse. cash towards that use geared part, Yes, really to second of generation Yes. is the

implied really the of generate to it's is exceeding So nonrecourse is the growing originations. cost amount a here that

that a different. more generation. plan to So cash That's raise is parent obviously the That's not capital.

Joseph Osha

How that recourse about that think how And on we [indiscernible] in about . first think can what debt? we Okay. should question,

Danny Abajian

Yes.

of have I reiterate with the I the part -- remarks of think to XXXA that. transaction reiterate in of the amount in leverage. the parent in kind the the like with Obviously, I'll material like Yes. no to direction transaction net will either But movement prepared of market, kind pointing

Joseph Osha

That is net recourse.

Danny Abajian

correct. Recourse,

Operator

from next ROTH of comes line Our question Philip MKM. with Shen the

Philip Shen

was a year, might per missed standpoint, from to scale it, if thereafter? and megawatt share the that this wondering it can could As that renewal up year, relates -- sorry renewals, if I but next dollar I you you how be share or volume year could

Danny Abajian

Yes.

So customers this no up for proactive of are pilots. year, have renewal that we

in that start customers renewing. to begin X to from to years out reaching we're So now X

And are. talking them so to to we're proactively opportunities those understand what

Mary Powell

renewing early. fact, in And them

is it like again, about scaling. So and learning

customers programs meet about as we're renew. We're to to at period. needs again, going wait their like sit going renewal So we're all here with not of the thinking this their to end something come for and of and ways to up ahead

Philip Shen

as don't renewals a for you wondering totally might but to you time, understand said, some everything and guys had not the are I be. view I get if I what was the volume

flat to with XX% is one growing question suggest as our to your year-over-year. I largest, a second believe Forever, of XXX% here. largest -- I'll backdrop, the XX-megawatt Freedom work move your may dealers with That's be they not guide which if

might as to that megawatts they -- and and Everbright have in In business estimates they're their this be megawatts your contributed 'XX, splitting ]. suggest between XXX closer could volume So our [ XXX 'XX. may to you

to numbers be suggest might rough 'XX in your roughly our what, So they X megawatts that gig. your XXX of megawatts roughly adding,

I business in that the that partner? is And there Sunrun. direct from X, it there, of on is -- you wondering the if well. situation in business dealer your business business? growing growing XXX, Are correct assumptions is they where freedom So direct have happening blue going with Or the know Slide rest mark, categorized. the some X share guided really is us I us given categorized a the rest maybe that was how or us are if with XX that direct a year-over-year. the shows standpoint, can but on program maybe with affiliate year-over-year, off wrong. what business the of you is they're what's our you your flat freedom But on on Slide we're perhaps going give have color

can be would share that more fantastic. you some on So if situation, that color

Mary Powell

Yes.

time. gives up a clear We're right. been what long partner how growing currently. partner nicely. yes, has we forever, the you is our of to valued affiliate a And affiliate going our seeing you picture yes, XX%. 'XX you're direct partner, in partner over shows no very And who that's Currently, a X, freedom really which to volume. . So a I point quite was for of is installations Slide category. see business And

Operator

you. Thank

Our Goldman the Lee with next from Brian comes Sachs. of question line

Brian Lee

the on the XX, been I on one me but lot's just talking covered know cash on where this different you're the about flow Slide for maybe levers here call, a and assumptions generation.

year. it You assumption. can just the throughout seems cetera, maybe maybe you for, you whether of the if mid, this, low, are the some a in I storage raises, tracking in hit mentioned to mean, give that's visibility more capital us above here end. well it's through embedded what as But mix high already milestones, the and I what I to like you're time be give frame, lumpy guess, et going you events that sense would

mentioned I a conservative be prior already starting X.X% think to a the question, year. here might the bit you

as through the just and kind lumpy a be of So to takes, quarter-to-quarter to it's as on to trying we the line time understand, move one that crystallizes year. of Granted the puts view going also basis. when but

Danny Abajian

question. Great

and the -- highlight year-over-year On page. year. mark hitting I the of the factors we start I'll back there the the sequentially, picking of So in is implied I'll directionally throughout up think XX% about maybe a considerably volume, year few that half on talked year, the throughout

that won't Of highlighted in the look as course, first half year-over-year good. the comps we also

as that, believe that really And will a decline QX orders, on decent The of be sequential ITC in a we're very get do XX%. the we have mix, operating bit cost shy the us pacing on will the that. about the out well. back business. we of gives remarks. we storage We based trending backup little return exceed leverage

getting of we kind again, think time pathways have that to in QX frame it. of building more I QX,

that on content, I where onset it then obviously, communities think energy and million in a moment the And the low range to and two relates the at saying million. factors the there and of would capital course, $XX X.XX and range, $XX as costs, is domestic crystallized. the are giving get regulations geo-targeting, more point be of we between income

low there's capital end north XXX cushion So as from to of end basis respect to points range of high of costs.

Operator

Our from next Rusch question with comes Oppenheimer. of the Colin line

Colin Rusch

with obviously, the guys about talk the incremental monetization, the maturity you Could VPP deployments energy of of storage.

you get potentially sense the increasing portfolio Just want that to a NPV how level, a value see on of of the portfolio.

Mary Powell

would virtual really over press structures the it Yes. I'm time, where release a that participated that good in in you of we $X,XXX. for program, plant pleased about net the do, sets with we that subscriber saw a We're framework with sure really really it like PGD. that view that future We a think value months. over a up be X,XXX did number results customers power program a of

Colin Rusch

over then to course Fantastic. I labor throughout of as both front, the that see cadence you and efficiency and sense a want just the of and of year just magnitude to And you're year. expecting on mentioned order sales of the the go get the installation efficiency we

Mary Powell

productivity that in seen of area, I the has the mix across installation a great we've by and of where coming distortion I Yes. with is resulted created percent despite down. business. the change. gains is that we're mean, subscriber efficiency benefits. really happening some the pleased the Obviously, say in value would as CAC some particularly really

again, really particularly plus yes, as, to we've storage solar company. moved a pleased, we're So

So and think gains gains installing having had, we that are, we've you selling two about products, you where products. folks productivity about in as also, two our think essence, the

our around by cost we've results kind yes, pleased the So . in really focus been we've business. seen the on maniacal of

Operator

the line Mandola from Maheep Our comes with Mizuho. next of question

Unknown Analyst

bit but due from refinance, current doesn't of David or is please little understand Can on on until it's for This that have the timing? talk color XXXX go around in XXXX. question you the I a a heap. convert. I give the Benjamin the converts

could around you provide So any helpful. color be would just that

Danny Abajian

Yes.

ahead liability early really was exercise, early think warehouse getting same out thing. the The I the the management was same thing. in and revolver

the like market we think I conditions.

obviously good addressing capital have not spectrum. convert but We across directly, the depth especially I'm the

pools wanting deep just available just to us be to handling and think timely in exceptionally I of of that. all capital

Operator

concludes has time That allocated that you. been Thank the for Q&A.

disconnect. may You now

Sunrun (RUN) 21 Feb 242023 Q4 Earnings call transcript