RUN - Earnings call transcript Q1 2024

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Operator

Good afternoon, and welcome to Sunrun's First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded and that 1 hour has been allocated for the call, including the question-and-answer session. [Operator Instructions]

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

Patrick Jobin

operator. you, Thank

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

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

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

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

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

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

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

call over And now Mary. to me turn let the

Mary Powell

Thank for and us you all thank today. joining you, Patrick,

our the guidance, strong solar momentum the records both solid net subscriber set with end high for storage year strong storage In of results. and and storage-first installation delivered is as the our values. the of in quarter, starting quarter are we attachment rates first margin-focused strategy business delivering We beat new another

success delivering installation is strategy and results. productivity Our driving storage-first of strong

sales our grow slightly coming in QX At slower direct the growth in in than expected, business. XX% at sequential same time, initially did activities

than this our with less historical still initially norm. is level While anticipated, consistent seasonal

We and approach continue over to result margins our long-term believe the volumes, this value prioritize highest will we shareholders. in for

down year our we are We guidance our storage solar are installation flat prior from X%. X% year full up of full and range to reiterating reducing to XX% guidance capacity installation capacity our to outlook down

year a million. $XXX value of reiterating will expect generation annualized grow in strong total cash guidance a important, will terms QX generated, XX%. Most We of XXXX million $XXX level are be which over of by our we to

enhanced value QX, while installed in year We the attachment of prior increased robust. providing the higher are of customer QX, fundamental on beginning as the from to continues triple resiliency our value resilient drivers continue equipment value and remain oriented be operating proposition be the a confident for better costs solar also in we quarter. Storage are us systems from grid In up new the This customer regulatory in of through provide strategy growth which storage-first rates to and in the year in improve. demand year. allowed We services. industry. efficiency business storage installation to our to rise, creation XXXX, power and others the installed foundation to eager future lays Utility continue XXX-megawatt affordable we margins through achieving activities control, to for the and strong their XX% lives. In business storage has capitalize than Sunrun. our clean, XX% rate increases customers, and storage declining, the Customers ago for hours of almost changes on energy while

fleet half we installed. about In installations systems across And we we new Based Our capacity XX% storage share industry in represent storage on networked were X.X storage U.S. under residential data, XXX,XXX gaining. and reached XX%. of XXXX, are with deployments of were has hours by the the gigawatt of QX, United States approximately

Our fleet a significance already in is replace could and scale at multiple power plants. is polluting peaker growing that

For for batteries the instance, and San a daily city Francisco from hours so as these resources sun. recharged like could power are multiple do

record-setting early of the commercializing stages announced grid in resources, new still programs. just these we While X service

in Last in year, for a largest grid plant. program a we Sunrun row, will year the program residential XX,XXX support about launching did national battery XX-megawatt a that than number a the size is with with more a enrolled set second the Sunrun are twice year, statewide customers. record power we For virtual This plus systems demand-side of solar PG&E.

We virtual nearly plant. also have customers now X,XXX enrolled our Puerto in Rico power

plants not nearly times, to VPPs keeping programs these X Our all month, Ricans, that running successful dozen consumers can study a that blackouts virtual scale all resources California save have helping million are concluded the just the that $XXX we The across a could customers. for power our dispatched been Group fact Puerto rapidly Brattle year. prevent power country. Last on shows rolling per and

Sunrun's generation. batteries team to on continue focus even We in as EV renewal early to and is we our systems, experiences, The busy of opportunities. with extend also market cash innovating the products, dial AI, innovate differentiation existing enhanced to up and efficiency course, new customer charging our adding

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

time our this our continued points Promoter of installation exceeding customer increase, approach, XX a to to Scores testament at Net As quarter. the

while dramatically We investing are and driving efficiencies. experience great this customer in innovation operating increasing also

prior has complex by our improved more battery as productivity of even labor mix compared X% tripled the crew we than Our to year more jobs.

more year-over-year. is Overall count head than our change improving Our impressive, the organization installation in XX% volumes. points efficiency installing X with systems particularly percentage batteries gains in are down

addition, as pace the have costs we and barriers slightly of continue our the and of to this innovation, declined entry highlighting be administrative advantages accelerate fraction year-over-year and space. we derive a In tremendous peers, to sizable scale that of general in even

also artificial are efficiency increased quality the leveraging and improved intelligence. from throughout driving organization We

improve using already the and of accuracy started have AI pipeline handling. We to speed material system and design, management

We AI by customer can and how even are our increasingly encouraged further. operating efficiency improve experience

for will to by for energy account Agency the increase XX and centers comes AI their one U.S. demand. this in to of this total International Electric of of and meet drive in forecasts it to use the of need, from solar electricity with will to are X% that Growth solutions. is need Much at battery fleet and data greater systems. voracious flexible Energy coming power the be nearly U.S. will eager even peak energy more grids procure also from who clean The need demand will to distributed Sunrun's environmental especially growth power renewable resources XXXX terawatt hours companies objectives. meet consumption times

quarter. our power the of call over to leading energy Danny, want our our the world. you Houston, to a handing to celebrate Thank moment make in truly Before I embrace real teams in difference some based who a Jonathan were and solar to sales people Texas of the experiences. take Sunrun. to installation Thank in quality, Texas, They and contributions our team led customer leadership by for in quarter crew, direct-to-home you this all your safety, rates battery on top-ranked all at and attachment

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

Danny Abajian

Thank you, Mary.

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

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

storage systems reaching XXXX. We rates have XX% during and now quarter the with solar first storage XXX,XXX installations installed nationally of over attachment of

year. mix our of storage subscriber carry driven of attachment storage the to higher improvements net expect level rates throughout as This around value We higher storage margins. this to remain backup has offerings remainder the

storage of guidance capacity, XXX-megawatt During last and above the year. almost the well we quarter, high the installed quarter end our hours same triple of

XXX Our megawatts. quarter, also was total were energy XXX the XX,XXX In network including capacity XXX XX,XXX, additions capacity guidance subscriber solar range of over hours. of approximately to X.X storage installed end first now Customer the high approximately additions. megawatts, our above is approximately gigawatt

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

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

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

and efficiency value Turning beat XX. from delivering creation and was This a strong was increased result value Slide In $XX,XXX, QX, cost volumes. $XX,XXX, on approximately was subscriber subscriber approximately $XX,XXX. of net to a

Energy deployed a credit Our benefiting expanded million $XXX the by the of QX in first adder. Total the systems value ITC subscriber is now of over subscriber our subscriber was number which for eligible multiplied portion net the value net period tax value value reflect the the adder investment Community's XX% and and for from subscriber in blended quarter. generated additions the low-income of eligibility

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

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

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

tailwinds of of reductions, from to weighted XX%, of business and lower In of equivalent XX, future realization a sequential volume tailwinds in qualifying additional favorable from factors: for recognized systems subscriber adders from price expect or the costs from average following adder. ITC strong We leverage increased communities the efficiency and growth. On the and of hardware adders more ITC our the net QX, approximately value half hardware we operating Slide variety energy low-income mix, labor periods detailed we ITC costs. approximately

energy During qualified Approximately the compared to XX% is XX% criteria quarter, installation now our for the the of qualification government expansion. expanded the before adder. the current communities

was design energy in the the forward community expansion adder has program lowered favorable, the and XX% qualify low-income XX% to the systems adder going for While the given that expectation for of inefficiencies current implementation. portion our from been our

from adder has million or $XXX been domestic more these processes proceeds. rule-making cash further we qualify adders run additional year. still process. this additional up issued adders but in While be sometime to to the low-income adders content the Proceeds the given the are are in what communities the slow coming awarded Guidance from proceeds adders, on delayed energy realized proceeds continue will receive to from we rate from Combined, for awaiting domestic expected clarity represent content government are could quarters. annual

XX% decline in will to peak increase see carries nearly which their backup like-for-like a continue expected higher year, an hardware reported X.X from for We obscured key XXXX. On net kilowatt solar or may hardware and for of gradually with creation finish of as are which quarter flowing second battery mix to our higher are beneficial $X,XXX increase install our cost therefore, consuming through by costs per be costs but this storage, trends hardware costs system components, a decreasing prices over end by the of These increasing we costs. by and system, inventory. the basis, margins

the our are total new demonstrated been is manageable impact global tariffs. however, represent developments certain with of creation has manufacturers U.S. dynamic petitioning for disputes time. and of than Additionally, less recent Modules, over various as costs trade chain supply has the we XX% history monitoring

time, opportunities quarter. of operating cash to tax balance $X.X at structures, the net measure at our vast all the were The interest plus flip capital and we flows our less approximately related cash gross and derivative now and distributions receive fixed to securities, including represent Turning near-term insulate assets include loans and costs, value. The on first earning is all quarter, additional maintenance partners earning to or not upside assets earning our all were services coupon that equity earning $XX net Net floating retrofit our we value end to equity are sheet to assets metrics. which products XX. billion other swaps, and costs of expect services creation reflected Net project been of interest quarter. fluctuations. subscribers is and have end over from from the future hedges rate rate earning to progress expect enter rate Gross or swaps. to these billion $XXX first storage Gross of the million our Slide electrification earning and assets a inventory prior doesn't and cost. Net debt. base, is hedged We offering, partners with either majority discounted additional gross assets assets of the assets of in earning the assets interest rate customer adverse or at construction selling assets partnership from from up X% long-dated debt programmatically financing distributions into capital unlevered our net grid

in as discussed activities from costs delayed was items of As timing for quarter. such, quarter negative typically we outlined not last the rate timing-related onetime we used QX, QX, match assets costs incentive on was we of which installations. We a on new monetization. to as completed we $XXX cash, in compared due with ended well which approximately discount do cash of decrease generation million as total the current earning in further in included volume $XXX weakest the $XXX adjust Cash Slide onetime capital million quarter, prior the as by million million and net XX. to quarter generation $XXX costs for impacted call, the to quarter's seasonality, is financing have

paid reduction mitigate cap our XXXX the the items, for activities and These issuance provided to the million $XXX nonrecourse on reduction purchase warehouse installations significant QX where facility's or transition just before debt to fees fees call a advance typically proceeds convertible the of adjusted working our in extension in was of at of generation tax in we paid million. This funds made was a onetime impact. million credits capital tax included cash equity transfer opted of and from in $XXX facility traditional responsible tax and for cash the an pursue financing for primarily these to QX in quarter. The rate. In positive where equity $X associated Excluding often tax fees the to quarterly paid arrears. recourse resulted facility cash approximately QX, credit transition come of extension dilution, we on all is

We resolve close to we all which will of new close to the quarter. end before capital are that headwind, expect the of working working the funding

generation recover $XX With these to investment from the deployed low-income million QX. in closings, in fully adder. working we the QX, capital In we that will we ITC contribute that expected systems made are cash

all of and quarter, ITC combination we given have timing this government of to additional met expecting processes. conditions, proceeds. While delayed many the funding Later equity systems monetization of monetize are remains the receipt debt a delayed adders tax through

capital Turning to activity. our markets

very upsized In conditions we As is to support maturities. balance facilities market. by successfully prudent maturity growth to years We capital we extending sheet $XXX million extended scale. last XXXX navigate by XXXX. early optimize arranging our discussed February to and volatility. and securitization asset-backed It further billion nonrecourse potential from principally facility our revolving billion extend by extended financing, our call, QX macroeconomic the and This raise February, the were $X.XX active we and to unexpected April in facility to increased $X.X and support X temporarily up warehouse assets the to long-term approximately senior before in we from funds size our

have effective movements increase term advance rates. in facility a with The XX the of X continues transactions credit to for set out recent market The points securitization lenders. spreads was basis relationship similar with of commensurate diversified

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

a large ITC to transfers deepening also tax buyers. pool team equity facilitate structures Our execute including that of transactions continues to

been equity market have resolving investors we now this environment. tighter calls, to discussed tax approaches new adapted we in believe which structuring deals recently tax As last few on that traditional their has is the equity the

systems we addition, pipeline service. to continue buyers ITCs tax when that are are active build In an placed for sell to corporate into to credits generated

beyond As through first projects or of capacity deployed term tax provide of to and sheets was us executed today, megawatts expected quarter. XXX closed subscribers transactions with over fund equity what the

this QX. expand during to expect runway We

This XXX would revolving amount Sunrun in on unused available at projects commitments end subscribers. its approximately had $XXX million fund the nonrecourse for of warehouse quarter. also the unused of megawatts loans senior

to was The senior closed provide timing and and year, an with we well. The nonrecourse since from sector our execution securitization XXX in at of debt was continues solar approximately XX capital. residential subscriber as million we Our financing assets a priced with be nonrecourse our stack as The allows over senior portfolio. than advance with basis ABS measured $XXX in in and subordinated rated X.X% refinance lowest debt of in use private securitization of from point by industry-leading was declining this investor originator the transactions February, assets. set capital an XXXX. costs, capital investors. strong that rate XX.X similarly cost achieved on average closed arranged as spread the of on portfolio basis the our a a and deep debt million a portfolio us investors X was lower The access strong performance spread. resulted growing spread. with subordinated closed of points, In million points runway to This points seasoned start credit a transactions. Since Kroll private in to A demonstrated on private XX%. have our debt placed transactions. and ABS basis contracted The selective servicer from all-in existing improvement April, credit credit for metric we shows debt assets latest value capital and portfolio February a basis interest point Sunrun's the a the to broad against spreads September securitization the accumulative on priced of in September loan attractively of across XXXX. securitization represents A-by and rated In a spread another of was was $XXX $XXX yet basis in We a XXX.X priced XXX weighted last full the improvement Kroll priced transaction our rated

the National jointly XXXX, Grid by majority equity owned flows cash With portfolio proceeds and refinancing. The their Grid of is this net the National following Sunrun including XXXX. cash through receiving project in from investment significant

This have highlights Importantly, assets coming sized improving will our capital for deep transaction we and significantly terms assets seasoned and originated however, serviced. access of the demonstrates we for in favorable refinancing well at that this the refinance market portfolios to seasoned continued years. bodes the

the side. to Moving parent capital

million took to During current QX, and $XXX.X January our working $XXX.X upsize the to to actions extend capital we XX, the size extension sheet. February, we extend closed of facility option reduced million, September with facility. our XXXX to balance maturities maturity an the amended optimize million to In recourse to $XXX to We prior from from We November the facility XXXX. an XXXX.

We XXXX over convertible date, have XXXX. $XX in these Since of feature we notes Less half February of that million issued the remain notes. XXXX million the outstanding. maturity XXXX issuance the $XXX repurchase which we To maturity of also notes. convertible $XXX repurchased now spent February, the convertible XXXX we $XXX due have the the now of March notes notes Also should include million another million provision, than convertible of in to XXXX. notes, for included further a the addressing meet in to in will we this extend requirements due our

repurchases, selective capital disciplined be and We high-yielding given will uses. alternative continue with to

our increased retirement recourse including Our maturity, sheet. far in as fees, recourse convertible intent maintain With XXXX The bond changed. increased QX, expect and continued net debt is and to the strong $XXX by repurchase of we related activity repurchases notes a million. as little or and healthy cash our million to all be debt by a $XXX balance financing

cash have prudently debt When and strong and to while costs interest maturities prioritize credit and lowest maturity capital nonrecourse capped This consumers and think We cash with balance position appropriately asset-level use financing. parent dates, by the use cost we to backed also that sheet, balances is cash extended finance about strategy we mitigating dilution call. of debt flow-producing the flexibility. our provides assets recourse high a sized

our continuing this to outlook In we of growth nature XX. this throughout now backdrop, can Slide Turning robust priority The by services on increase is underpenetrated business. decade. the our costs driving and to values sustain cash further reducing us demand efficiencies storage market across confidence strong our long-term gives other adoption by to growing by customer high-value and through and generate products

previously QX growth strong anticipated, the pickup to to While point leading sales This expected seeing XXX-megawatt hours installations activities demand we QX, material half. second and to an signals were of capacity XXX% in to higher in meaningfully inflection Storage installed QX. be slightly occur than in to we with are in a the expect in XXX% represents range is XXX year-over-year. less

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

Because installed expected in and California the Solar QX. relevant demand be capacity represents QX. growth megawatts less the in in in comparisons of between energy a of year-over-year from early this in are XXXX, XXX XXX is QX. pulling midpoint, range XX% to At

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

underpinned growth updated range the outlook. of flat down year, high We range of and we end by solar disciplined this still share installed gains sales market our strength go-to-market offerings the reflects activities capacity energy low and This end. to subscription year-over-year represents to our XX% believe approach. For expect recent in the at be full the the at guidance

the in larger. this we value create with be volume growth will Our much

cost input resulting subscriber We generated than total by will values XXXX. value in XX% than growth in greater increase declines, our to XX% greater of as in value XXXX offerings increase of forecast we mix higher in continue and

generation margin we to Turning disciplined meaningful focus our committed growth as execute strategy. driving to and Slide XX. We cash remain

reiterating are outlook. generation our cash We

into of to be $XXX This rate the million. expanded an rate the generation annual cash upon year, will million basis guiding are in to annualized QX positive of $XXX at for on with run generation We on an remainder run basis XXXX. be a cash quarterly

these We Slide have XX. The notable The realization set outlined of domestic the on our bottom this the range the for content content high most obtained. assumes content qualify expect With no of assumptions the systems of let guidance domestic to assumes end turn the storage is currently the are current it low adders adders back underpinning Mary. adder. large outlook domestic end of of while a that, variable adder. portion me We our to

Mary Powell

Thanks, Danny.

Sunrun appreciation I want express again to to team. the my entire

Your communities create continued providing their lives, our is with and to customers commitment our clean, stakeholders affordable energy and drives all to forward. for what of us power value

a differentiation, rapid delivering customers. is extending margins our Our transition to storage-first company enhanced value best to driving the and

open that, for questions. the with Operator, let's

Operator

the Our Instructions] question comes Goldman Sachs. with Lee of from [Operator first line Brian

Brian Lee

First a parse those your I nonstrategic follow-up. the had is sort And back to sales it market-related or It areas the And I slower. for bit strategic, reduction some kind but appears, one also of to here. then said just solar focusing storage, earlier you were little kind Can year weakness guess, X in How much of of outlook guess, pieces out? of the on is wanted related? then of in that market weakness, maybe focus you was strategic profitable that slides, volume then being you activity own on you just part? pinpointed alluded growth there had I you the it the in specific from? a How pull on much

Mary Powell

and from our feel bottom, And really Brian. uptick we the confident hear we marking the you're year. clear, Thanks, to see to QX be you. right. in so Great in for Yes, outlook absolutely Sure. the

it, generation And give very that, volume. I we As on on continue response detailed little a why goals being focus some questions? really to you to don't we around have and Brian's said, with and our turn strategic would more cash of profitability bit Paul,

Paul Dickson

question. Yes, great

and So of did that evaluation cut of final we meet we a generating volume volume threshold. that and market routes kind economics our not final have target a did return our the various of underwent

component adjustment. we that which a of so volume is the exercise, underwent And

take, comes that partners distracting thing channel been we're kind it's seeing that this other aggressive to we is various of approach business the they while past like see market in provider the we've and finance they're work to distraction unable business The ankle the affiliate affiliate in their in our model, business. some a sustainable when new for of don't there any purchasing we uneconomical or and somewhat has been made practice pricing of approach kind of that with biter because this their partners operate with. And in portfolios them that entrants

Brian Lee

that's just... Yes, Understood. then super helpful. And

Mary Powell

point Brian, on just one last that.

again, sure line was with thrilled attachment our Just you really we very storage and positive which and it, are notice to from retained, but storage volume, rates volume I'm is that did with bottom the ability retain perspective. a

Brian Lee

know XX, and or some this It the pass you lot on. just us get any then awesome. resources context of it capital to you seems you, XXX. giving Danny, derisk there's storage end. of should Slide of questions between to like to kind a helpful, absolutely. get the is Yes, further reallocation That's number. XXX versus for do high low how super been I I'll how Maybe one

helping a Each presume XXX, XXX, and up seems the the each is but of it I of of you capital frame kind to of understand to provided is it worth end, of worth? Can cash those if at worth storage tracking, or costs much at of those you of lot on XX%. of the If to $XXX that of the X% simple kind quarter on is one XXX, where buckets going XXX, XX XX during you're capital flow X slide help I you're to ahead where tracking already the us wouldn't get million buckets attached this bullets. just is how each X.X%. X.X%, low to these Like down maybe quantify cost data you generation. annualized look it's based like those what the from you get

Danny Abajian

questions Yes. been as Great question. that. around lot are the out opposite to with break to And what of ends assumptions did want as getting we've of this range we associated absolutely a

So to we wanted to that. responsive be

a more of not as to the cost in volume of year QX of rate. grow middle capital would million. And then I ITC range relevant adders point. I drivers a on exact plus I rate between probably point per is those given it's $XX would $XX the attachment so X the translation, the then probably point capital quarter rate, first exit are costs, we we the as somewhere most minus that this each million on started. don't storage range smaller XX, And point, $XX the million, far but always more to say million depending in million of primary Slide say attachment where maybe And closer the As cost but is $XX in order, to this is of south to storage the capital meaningful magnitude or at will have volume. period, in we're range relative the and through are in $XX

Operator

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

Moses Sutton

from So the essentially credit banks? could $XXX million still through is you tax And typical what TE outside replaced a million, of XQ? gotten fall credit sold delay those equity the receivable it proceeds than this is that a further partially maybe flow the fund? of going would some cash have Or of transferability $XXX to tax

Danny Abajian

Yes.

the the you sell for of delay. buyer. timing the So general let basket primarily, to to There's here of of fund be But -- of I it's think by credit a yes, the the up like when out is reasons me expectation the the QX. caught end

equity arrears, the around both structures, for the equity of the traditional ahead equity And install. tax as structures, the is today, to that the you happening that monetization credit. bank of time migrating install traditional So involve tax buying rather of that the willing to will, and the used can credit is a we're tax credit bank, in Whereas trail in would an tax and not install take give credit the tax equity the -- buyer structures or to. fronting, that for it degree tax advance don't the of time be if

it proceeds monthly. do on for They timing of They the purchase. vary might is some of might They individual it annually. do do also based quarterly. transferring it Now the the might it when buyer over

quarterly seeing on as of the funds is we've move recently. market I where of done annually, which the to started think we to kind opposed and monthly we're one

that's dynamics traditional of tax as the equity say base that process moving XX% as adders. would a driver. So credit big both predominantly working structures, It's the into Obviously, the tax timing in remarks, in the payment the for I figuring we banks the really out and being resolved, of the it of is plus are capital frequency are it's prepared and is payment these improving. said driven,

Moses Sutton

resi tax the banks helpful. very to exposure its guess, timing, participation to seeing any aggregate that's are their in Nova those capacity that a to normally market, And specific reduction I in equity because possibility. maybe is increasing through thinking you solar? the That's limit Just use you unrelated your want if

Danny Abajian

of I radically. think we're seeing process generally, in we're the capacity seeing expanding

put up buyers to I basically think who biggest we they discount. that are the provide single-digit getting can of we type now thing to XX%, Immediately, high see just the is in corporate value I that comfortable. we're of figure get once see taxes. think their to and large out buyers repeat coupon come on storm going how And do they a this to

think expansion. now be a that's traditional I We've for couple equity noted quarters driving tight. And of to tax the

as structures, expansion still net-net, I big in some moving think seeing a I capacity. dynamic we're presents degree. to to that But think we're hybrid

Operator

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

Kashy Harrison

for So is maybe first one Danny.

point adder. that I'm once is would fully be ITC crust for guidance, said so the say, is I wrong, looking What think but for should what and specifically think correct this domestic $XX okay, of the Treasury we you releases derisked? -- Department I please question for my content the me just if million of --

Danny Abajian

referencing or? the content domestic And you're

Kashy Harrison

Yes, the yes. content, domestic for

Danny Abajian

Yes.

it's I of the think eligibility, it's basis calculation.

I before, domestically. the think batteries think we supply, made works. that that's I noted have, case buy as we we've -- in Module batteries, of already we in the are

full you So specifically we the in things don't technically yet eligible, the based clarity as have I kind attribute is we And get we supply calculation the matter. around of how that past guidance think will domestic rulemaking think there. on

range of a too but additional soon as long, hope. be narrow And see And that been range. to we're guidance, hope, a in hopeful we're So able is soon. unfortunately, bit a that's is as we'll our that we very some

Kashy Harrison

you to -- way. and Or a bit do different in little alone that a just would I guess be a maybe batteries qualify, enough? qualify? asking need modules of batteries If

Danny Abajian

Yes. taken We on the most installs, guidance, battery that us. qualify we've the of -- view again, short preliminary a batteries should

could again, we need balance other view. also like inverter. test we'll racking cases, that might have only the module. involving the combinations threshold. There need some to firm -- the meet we only, components to system in However, of punch on minimum solar through meet the up all solar to be details And And on and

Kashy Harrison

the the call. And just then cash color volumes, appreciate with offerings. I back on focus Fully to my the in the that's definitely appreciate discussion second the on right again [indiscernible] newer entrants there. just uneconomic the question,

that cut make in But of we're I'm XQ? in not XQ that wondering guidance potentially -- another another call either or just sure there's the August, trying these continue risk handicap or on how Just some accelerate to headwinds you and solar the side. just having

Paul Dickson

Yes, great question.

feel providing the think we're side taking that adjustment. with the confident guidance we view really the range volume guidance and we're conservative I that on a about

segments in behavior business, seen areas in throughout we've I have different attraction. as of the of irrational think kind time gained the different history

low We've in So sales commissions, seeing seen and we're install we've really seen now providers. attractive prices. it really capital

to we And in of ability confidence have a it's lot so something navigate. our

that's see risk. this few captive to from insulated sales partner is component force and the relationships robust affiliate business competitive with and strong key our think key have for a largely opportunities us we The with I them. rest the is partners business deep of continue

Operator

comes with question the line Andrew Stanley. Our next Percoco Morgan of from

Andrew Percoco

conversations apologies out, if just to some as I it's if of at here. curious find those asked So deals I'm all some to level changed space impacts and Have capital. peers under changed result you've the a just your start that the all? project of this in already, across your pressure terms any non-recourse at has ability clear I but of seeing in been guess some Have think space? to are the coming the seen the And you're disruptions

Danny Abajian

question. We get Yes. Good underwritten.

And great. been has we quality has think level been I servicing underwritten great, asset and quality. on asset First, get our

get tests. those and sponsor on quality, and passing underwritten also we've meeting we So been

and So extension it's of all obviously, also and to of whom frame. lenders, assets. many underscore data and market now kind time warehouse that we for of lenders almost the news turnout And several lenders of the have seasoned of time, well, whom which that came -- that, we been our of a one with talk recently, is about of that the some X nonrecourse pool involving of good do. loan, points course, all whom XX who size -- about, extended is did $X and of in February in public we up course, the And group on the visibility seeing are a that regard, billion in

February. about So in those been X that running spread and the market the the been have closed private maintained performing duration. well. in They're ,X for from in we transaction years got did we They've lower prior we

market. good We're in credit broadening track also market. So getting the in participation of in a ABS a done continuation we're of seeing deals and public private the performance record seeing

any that seeing issues of not we're in regard. sort So

Edward Fenster

has history, company's like quality Over to a generally benefited us. flight the mindset

Andrew Percoco

definitely. Yes,

a maybe makes just all But opportunities. in of kind as follow-up you question, And second That question. Okay. terms maybe of see strategy what retrofit sense. curious a of more battery

Obviously, readily a slowed is back cash in to to generation? like just down little Is come batteries? positive bit. be lot. Now of more from in that available, have negative Would growth your supply a some customers Would that impact? what an go solar that And to would there that that or has perspective? costs look cash battery opportunity a near-term

Mary Powell

-- have year, already well. program that's of storage retrofit a we beginning doing the Yes, question. very totally great Yes, the launched agree at we launched and, fact, in

We also, We've launched a combined phase retrofit. renewal launched pilot. program renewal and of storage as repowering you a first program also our know, our with

And So also described, opportunity that the is yes, really from value solar longer services on every becomes participate storage to side that provides really in we the tertiary tremendous see grid we benefit can customer grow of term a and perspective that the business. also that in of to much customer other I incredible with potentially focus us program. a grid more then attach services storage as because

are we So numbers storage impact. very about seeing rolled and about one it. We've We're really yes, out good that, we're programs. excited bullish And feel of good reasons again, the and uptakes on we our the guide.

Operator

the line Evercore James with West from next of Our ISI. comes question

James West

could and that in here seeing and provide you you and on bottomed aren't we you most color -- states Mary hear the the faster rates your recovery fast? the recovered most a you're the XQ I recovery, is for low the growth, where confidence where But the point maybe where maybe year. on guys little things operate,

Paul Dickson

Yes.

California we is share to but really future perspective, from strategic inside obviously, from in robust which continue as think perspective. us, a see gaining well believe grid return I we're for market to volume solar service a that volume market, and that really

having well. been market quite us Another that about market and really inside and Texas, geographic is exciting as we've are excited for expansion state the

markets are growth for big those promising So us. really X

is as list would well. I third Illinois The

James West

Got it.

maybe think being costs higher cost And said of a some By peak. inventory Okay. cost year, -- That you equipment higher gave XX% still and in that field the through declines in they're I all the down and just Danny, around the sense. quick end then numbers the inventory? from you working follow-up. out equipment inventory. makes your the Does incorporate the of some

Danny Abajian

last Yes. there been as way cost purchase we've guided terms the to bit. QX year. lower continue our activity of quite in this for realization that the seen timing we've fall most being of to a and The seeing you inventory it year late you've of track balance, And

that cost residual lower of we've that terms in the will gets QX been of -- equipment there nearly QX. the there in buying. fully, we're fully of recognition a But Some be in expense recognized

Operator

Our with Wells next Fargo. line question comes Praneeth of Satish from the

Praneeth Satish

treasury and generation of from think out for it getting those many end rates that the clarity we forecast many interest your out maybe seems like about laid coming XXXX like if domestic, seems of So the assumptions XXXX, you between cash down supply a bit. shifting will more battery high play between in low and assumptions

could mean, generation. to out takes I guidance maybe another you you're talk right to the consider we So I look giving and not puts year But cash now. just as recognize XXXX about if

Danny Abajian

Yes.

to time we the last we at that some energy one assumption is we for now And And a quarter. whatever that -- put planning of domestic rates, have for around of we in top seen carry been we've have buckets. a matter net-net, we've as community climb obviously cautious And extent the be expect just driver upside movement expressing been X.X% to that we of the in it's right? the content, -- that will range low-income but our adders, X%. of domestic the do matter we and since see running. to get time a here those a arise. The period, think There's adders percentage the what and over between I here, we're is XXXX. Interest you content into

base this credit seen a rates for quarters recently major rates. the declines few we've of last in of seen within assuming range. spreads We've up. set not improved We most are interest held go We've generally and

and will range storage. of is attachment carry even into time. planning XXXX us this of slightly generation so over magnitude in penetration more the rates third lower cost to also we're working capital to of with on. And it far the that one cash allow And markets keeping further rate penetrate So again, there, is growing then story is that where carrying storage

range I grow that we'll as we well move the think for XXXX. hopefully into continue to push as to

Edward Fenster

course to will qualify expect clarify those that the year batteries we thing, content that just And have of been we domestic installing Great. the the over are the adder. for make one sure we

until for that is possible confirms and expectations adders sufficient would XXXX retroactive installations. guidance then obviously monetize those cannot the make you while our So the

content wait batteries and we to and to are are for be but installing puts delays domestic getting qualify up, show retroactive there that and the that need Now expect takes to already we not those credit, guidance. for could we likely do in

Praneeth Satish

that now, you to that's mean, you're balance you're like the on the assuming helpful. staying maybe but for XX% be it, And just attach kind addressed of No, rate it. I it ratio year. batteries. of Got looks flat

to it's close higher? And California. does to rate to it XX% that like not So you you're then or -- get range? scenarios in it is why, how what the to continuing just need to look attach happen out because see mean first come question second, I maxing would creep the higher

So for the what see do rest country? higher get of you to the need to the rates

Mary Powell

well more time, Well, is that been more as customers. absolutely, we all attachment like more make towards my the we about program like of parts to about, I and grid again, landing the to rate think continue But we country attach customers But entire talked view will what attractive storage above as as when for you schemes storage look for future, them as as we looking like make in, from to a see tariff the issues also a storage grid perspective look country moving tremendous attractive reliability see different Yes, start we over at see you'll that the other a well. storage I is that think might we're go we've absolutely at markets increasing. that rate could of landing see percentage. But XX%. at

back excited to opportunity we're So also go really about existing attach our the and to storage. base customer

Operator

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

Joseph Osha

Patrick Jobin	executive
Mary Powell	executive
Danny Abajian	executive
Brian Lee	analyst
Paul Dickson	executive
Moses Sutton	analyst
Kashy Harrison	analyst
Andrew Percoco	analyst
Edward Fenster	executive
James West	analyst
Praneeth Satish	analyst
Joseph Osha	analyst
Philip Shen	analyst
Colin Rusch	analyst
Maheep Mandloi	analyst
Dylan Nassano	analyst

Sunrun (RUN) 8 May 242024 Q1 Earnings call transcript