NOVA - Earnings call transcript Q3 2019 | Sunnova Energy International Inc.

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Operator

Good morning and welcome to Sunnova Energy International’s Third Quarter 2019 Earnings Conference Call. Today’s call is being recorded and we have allotted 1 hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Rodney McMahan, Vice President, Investor Relations at Sunnova. Thank you.

You may begin.

Rodney McMahan

good and operator you, morning everyone. Thank during our a slide released our at be earnings Relations press posted and website referenced will which today earlier investors.sunnova.com call. presentation of release portion We this to Investor the

Chairman Joining Officer Chief President Chief and Berger, Vice Executive Financial Executive and Officer. me Lane, John today and are Sunnova Robert

risks Securities of we let actual materially uncertainties our me the may set These to duty differ are that and to statements update certain cause prospectus statements about or forth not begin, from beliefs, in remind within could forward-looking We our call implied with future any July filings Act are of factors results Before estimates, prospects. Exchange constitute in of to other statements. meaning Litigation and include and remarks Commission. Private XX, plans risks, XXXX the contain do statements. variety final factors other indicated a that XXXX. Such Securities everyone that Reform Such the subject forward-looking dated expectations, subsequent and this those statements by and such such undertake

non-GAAP in our call, our with this considered be non-GAAP can believe be discuss we useful to or accordance reconciliation in today’s as most presentation measures isolation these additional found in the results earnings release. The measures, we for in GAAP. for which during Additionally, information prepared will should be comparable evaluating performance. GAAP of can not substitute of measure a A

the call over I John. to turn will now

John Berger

X, operating earnings quarter us joining strong quarter Good call. of you for results. morning for another thank Starting Slide on experienced third XXXX we our and

growth grow base, loans received as principal customer flow. our breadth remains operating in and EBITDA, and adjusted we network drive interest count, offerings. This continue intact and strategy has customer growth adjusted contracted our cash helped customer values, to of product from dealer Our customer

provides faster rate we of and into XX% X,XXX year-over-year. customers a new clear over XX% at which a going visibility to to backlog continue and than with alone, a strong XXXX QX have This a market quarter-over-quarter line the We increase increase is XXXX added acquire us year. a overall In next growth. customers, sight into

grew the continue base third years During quarter, in multiple geographic our dealer areas. lock exclusivity in wholesale and we with our various to of dealers

Our grow and network have in develop dealer months. XX to and the over number doubled continues past

attract dealers’ knowledge, in at Our and managerial to markets an local our model pace. leverages customers experience skills accelerating

in growth. labor and Our environment force of skilled this to attracting dealers retaining success a have in expansive continue

Our supporting while wholesale on costs success. and dealers efforts are entrepreneurial and our our the attracting increase quality demand, support the increased and Sunnova, growth and address our standards stringent our we and per our customer managing lower of encourage dealers sub-dealers spirit At to to to count overhead scalability. maintaining in overall

by behind with geographic Products force accelerating your driving encompasses provide various financed offering service one and technologies our defined range has growth are been to as sales-ready of our for that options. product offerings. a contracted our financing region Another a wide are of ability customers

new products products. related healthy plus solar experiencing and are SunSafe We storage rates of Sunnova our adoption to attachment

our battery X.X% rates growth With rate clear to grew penetration opportunity is battery it attachment large origination we fact, surrounding XX%. a in is In our a base, there customer storage.

deliberate California it critical energy resulting moment state, across blackouts by and shutdowns is caused witnessing and in power With wildfires landscape. across clear a are we the the the devastation the

stability national their the take toll, less grids become energy disasters As of natural predictable. increasingly the

in energy for the climate and As a change. effects reliability resiliency alternatives the that are products result, of storage as our look we face for of demand seeing provide stronger customers

see get We an as continuing the on with have specifics and we and strong that beyond, more In forward to give and developed several homebuilders focused space. incremental remain growth opportunity we’ll into as we develop this Year. XXXX into New for looking relationships addition, within

Slide Turning are to loans count, collect Slide on which the Customer and all guidance. EBITDA adjusted were our X, we and we principal provide line a X. our interest financial snapshot expanded previous with on of further solar in results,

from positive metrics our X% customer customer value rate. adjusted value to discount net XX, up-sell or third a conservative ability renewal On cash of in of gross and estimated our deeper net gross a existing as our $X.X excludes the and dig discount our existing contracted X, rate amount year-over-year. over even and only customer an past experienced of Our growth share. both X%, a $X.X customers estimated contracted value, Slide discount per increase represents is operating at flow net we value years. Regardless our or Using any into quarter of any contracted September of base contracted XXXX, increased potential This upside in September reflect was X rate, and billion from the XXXX, the asset as year. prospects. prior customer exceeded impressive $XX.XX billion significant XX, contracted We value

potential to our We even are ability the confident to in plan if execute moves and our and a future economy growth recession. into slows

At results electric strong proposition. becomes on compelling we financial day, When more their end savings our consumers belts, our value customers, building to is dealers the and average their with an tighten growth. an relationships XX% the achieve enabling of us and focused which bill long-term are on even

and long-term our Over dealer and strong, an on confident growth, the built emphasis deliver success to We financial top formula and are cash providing rates to the this of the more in strong line leverage. turn, drive highest increased future. up-sell contract, we for length for enable service the will now entire With lower growth operating and level of place their to to time, build opportunities, in Sunnova we our flows. default lead a able we, customers recurring, network are

providing to chain on the level a Together with focus customer-focused value process. level generating participant economics. do dealers, our localized asset strong on installation Our selling and includes in what dealer model best, we and are which side they allows each corporate the

the this but using in the not leader adoption strategy a only help the energy, driving be to to solve world industry, empower challenges, solar proud for are environmental our business better. of world’s the We

build broadest customers a and our is continuing driven the network attachment the world-class dealer choose battery rates success best by technology out suite to from. the new increasing product with Our entrepreneurs innovative and in having for and to most business,

help our power We independence. are energy to here customers

will the I to over walk Rob financial detail. through our to turn you greater results in call now

Robert Lane

thanks X% ended the quarter. expense, and strong are for XXXX, $XX.X performance record recurring Adjusted financial an We we million million to on XX, experienced Starting increase a we with onetime for X our expenses operating the customer We increase recorded $XX.X as in to now of represents which a expense to September for XXXX. cash operate the year-over-year incur public G&A full was a X, with operating months costs pleased growth. per quarter-over-quarter, third ongoing current third adjusted or Thanks, John. business, million our revenue Slide of $X.X customer drop the related book even company. both X of XX%, quarter

expenses operating to expect customer realize success the adjusted continued We several next over per reducing in quarters.

period million million, the company $XX.X the even was costs. in during $XX.X from public quarter same up EBITDA year, increase with last Adjusted in the

XXXX. adjusted will EBITDA last that our significantly expect of stated year-end we quarter, we that As exceed fully

has quarter, adjusted the the the As leases costs cash noted our operating impact PPAs, last and and of full inflows but our from loans. EBITDA from none only customer solar

and revenue recorded to we loans, double amounts customer in and amounts interest million, net $X.X is For those the principle, $X.X which must year. payments from million more solar from were last of respectively, that, or P&I look than which

adjusted reminder, look a picture to more of our the As P&I together a complete and get management and at board EBITDA performance.

keep a positive us our long-term we loans the we are sheet, over balance our cash addition, to in paid as those recurring especially believe which securitizations clear place In we flow, time. and had runway a down loans advantage free have on finance provides to

continues improve, sales. market of evaluate we the loan the to securitizations for As securitization benefit versus loan will

financing then us. with the add perspective. tax partners. We XX debt payments on assets received operating cash with from flows from that distributions start then To another our we puts to ongoing our Adjusted operating months. investing represent the costs, cash GAAP the flow and Doing those flow, metric to such we principal next our out that, our it over existing cash significant as remove equity a inventory expenses expect convert par from subtract cash is back other customer from basically and costs key loans, that onetime IPO as flows non-capitalized to cash and for purchases

$XXX period XXXX, negative value September in was up The values. XX% an area flow contracted and value gross months compared Adjusted contracted net growth X was discounted $X.X net for customer Sunnova million, many of both a the has Estimated million and XXXX, same $X.X million investors, XX, to as a approximately for from X% customer XXXX. operating ended of million year-over-year positive XX, demonstrated as at in for cash $XXX has XXXX. of September XX, our focus customer the been September

cash P&I, adjusted metrics evolve look an customer a believe predictable complete EBITDA to that into give and that of is contracted flows. value and continues Our focus and and sustainable, We grow. operating investors flow company growth, on our growing a producing customer as and adjusted net cash fair industry

$XXX in securitization; and $XXX give front equity as illustrated back-leverage with used million which which commitments closed $XXX a approximately We Slide of on up over million a equity have program date; million $XXX early senior the million of next expanded we commitments $XXX to anticipate commitments. active warehouses of million million; additional $XXX closed asset-backed and financing tax tax of We a for down equity recently closing on month, notes; We an our would loan $XX of on additional XXXX, refinanced just $XX closed completed placement private notes, paid $XXX been $XXX of equity million on and tax facility. to X. million have tax million IPO; us of million

additional position. $XX equity have of the corporate cash debt to very capital. combining By corporate with Through adjusted these flows our financings, little our cash level, outside year-to-date realized our we we working use million more to equity cash generated expect bolstering refinancing flows, further than operating of

debt harbor securitizations facilities months. focused the additional equity We financing in coming including facility, tax safe on and are new the upcoming opportunities,

to a update to tax the In additional detail in of origination. on To estimated ability some $X order for billion including use cash an harbor securitization the year. will fund John schedule $XXX our introduce to will XX% investment preserve A Safe of safe first starting purchase the an for we XXXX, in decreases it of quarter. to intend that million guidance Harbor, have of a on Much we provide $XXX on just credit billion is moment, million next process $X the inventory year. planned that after at of this that our predicated end our flow to

large asset maintain free have refinancing have a building equity expect At proceeds. base We secure to over with up of equity several common will corporate strong point, been the will believe do a amount in a this that our any balance significant we XXXX quarters we in that cash to past and sheet. not and issue we order

over will the to to John go back provide now our closing I remarks. over outlook turn and call to

John Berger

Thanks, Rob.

will on our XXXX. XXXX find for and for you year our XX, Slide to expectations guidance full XX Slide Turning

or in million, targets of solar end, $XX Interest For guidance $XX received from loans, million which million. Customer between $XX the XXXX, of EBITDA received quarter, to and recorded $XX XX,XXX at of we $XX customers negative $XX adjusted between million $X approximately last rate growth at a revenue payments net year to from operating positive a of amounts adjusted million. we flow million cash million. were solar and payments loans established million principal $X reaffirming XX% customer least are

solar introducing operating EBITDA in loans, Today, flow between $X recorded $XX adjusted we of revenue from million. million million. additions XXXX between XX,XXX, $XX million Customer solar amounts to received and of cash to net are of $XX million, payments million Interest $XX XX,XXX and received $XX of loans million. from million adjusted $XX guidance customer to $XX principal of

fact nature of a have the high provides reflected in as business the level comfort We in future excellent visibility visibility our is into of hitting flows. our This cash XXXX targets as approximately midpoint that interest and solar of XXXX XX, will existing XXXX. revenue and principal of customers in from been loans received our targeted have the locked December XX% through of

formal our to high addition XX. more we cash also out projected have guidance, on broken provided level In at XXXX Slide proceeds

cash get from of flow capitalized we $XX our to flow is flows expenses. to of the the less adjusted cash our $X capture dollars On how our the less our the left CapEx of metric, spend. cash our existing cost existing regardless business, is or million, operations want from business, Essentially, operating which operating corporate

growth are network On to process bonus all of the financings any dealer and our right of the $XX cash million. million as financing. $XX This investments payments, all inventory including proceeds EPC well in as work from includes and asset-level cost,

Asset-level and or here, Not debt asset shown repayments, warehouse financing draw-downs corporate includes amortization from equity, proceeds payments. financings proceeds tax sales. and our securitization

As Rob mentioned issue we to year. equity do expect common earlier, any not next

proceeds focus we schedule from such To from capital to to supplement cash for other our and asset and goal securitization be for growth flow will to with from Our is We existing generate and our cash return given growth positive maximize assets financings, anticipated also our needs flow if operations, from XXXX. cash cash and net cash positive our clear, our proceeds, necessary, sales. financings, is existing cash investors. anticipate utilize as be and investments operations generate cash

reach possible to our to and level to capital point spend; achieve dealer financing our using ability depends market and We opportunistic term asset and financing financial us through refinancings, in best-in-industry on asset rate controlling complete outsized Our and results increase growth continue sales. this our growth market base, continuing to remain finally, customer confident of asset SG&A to our and ability network platform. and to investors the service superior corporate drive returning

provider the at also returns level. into includes against payments to asset cost cash put, IRR Simply near put flows service expect to and is the payments asset this future, un-levered tax the target to from un-levered in proceeds XX% the equity customer. receive see the certificates. is any residential We as we of United an the continue is energy greatly and This the The as currently, cash significantly not or incredibly space such other And In industry state that solar solar in incentives, closing, the and solar but federal and States Sunnova, the see we renewable is undervalued. well service as market only exciting. as storage under-penetrated. entire storage

and implied below intrinsic our Sunnova we our well trading is peers. alone are amongst earlier, not we As value,

on have future a different evaluating may in to business we performance, company public a reliable each energy While for all focus metrics the and are their different striving model or world. create respective clean

the open please questions. operator, for that With line

Operator

from Coster. Your Thank Paul first [Operator you. Instructions] response is ahead. Please go

Paul Coster

for actually. much I have questions very thanks of my Yes, a question. taking couple

are your website can still at is of margins And arrangement anyway? it’s in dealers. North sub-dealer the does you obvious economics weigh like a to lot on are Looking space adding in there you them? the adding white Where America. that It your of explain us looks you new

John Berger

John. Thanks is Paul. morning, question. Good This for the

small look couple First we yet. relatively in size. all, of we that couple be of when on different states a a new of haven’t see opportunities released we they Actually, will at,

But we think in So provide just yet. we some a incremental growth. in year for following expectations the they’ll of states built those of growth amount haven’t next lot years,

we’re Southeast sub-dealer of we’re adding the most, across. I all the very where heavy in and adding areas dealers, the already where that West Southwest, really are Mid-Atlantic. we’re concentration our the and the the given the say and terms Northeast them would adding the In

up. word, they cable are security, grow that leverage economics So, simply in do model there in way extension country. television, don’t. our common needing a anyway? Sub-dealers our is part us etcetera. dealers business very in and out that of part to not help are as the This of satellite in folks we an wholesale impact many home the No, they They

it wholesale And is growing comments and given we’ve have that mentioned really at we model have a as growth that about, experienced year. talking up and of this the been looking signed we’ve this dealers lot our quarter. this that So another expanded in we

in So the our expect further all quarters, to we our impact economics. have see augment to in at growth any not that coming but

Paul Coster

do year? PPA What may. that I to least at provisions lease the if of X expect follow-up does mix change in Safe XXXX the and for be that quick a mix And and you loan, Harbor

John Berger

the with expect lease been materially loans. we that lease it of but could a you change running Right roughly, year, can PPA being it’s you move for XX% on next preference, about have the to and and from as PPA will, bit appendix, into tax XX% the now, and XX% about if do the there to don’t XX%. we economics investment calculations a but in given credits We dropping

laid Rob harboring, safe are as We out.

extension there no for towards there there think PPA be be so XX% be lease, into that’s could the change away a And given if XXXX, from lease but drop next to to I is loan, will moving XX%. to PPA sure, definitely be material tilt and seen, would the from remain a year

Paul Coster

Thank you, John. Great.

John Berger

Thank you.

Operator

Shen. is Philip Your from next response

Philip Shen

guys. Hey, the for questions. Thanks

on Just you year and of next John, as do XXXX program, wholesale wholesale come a dealer add the could how dealers? from follow-up your how many the growth customer much expect to

John Berger

and at that’s next overall that quite we’ll it combining of sub-dealer, be it, possible particularly year, higher at think that. most than growth, are looking than we our in look number, could way when The dealer XX% I we see is definitely the that sub-dealers, fair significantly more the

north all, is X the dealers, combined makes growth XX% of partners up. to we out our Our what like But of to don’t that that as of see if see too country. at covered continued for in well most that X There growth want a growth pockets sub-dealers and are wholesale there. we taking with some expect or but to we to are more wholesale much into sense we all it dealers, to them. expect I we’ve sign get the that exactly be in expect don’t would out of we where, look

slightly of can a at we of moving than dealers themselves, in number dealer and on because our lower the product to over are and serve most be quite that importantly, breadth of In most and a how serve bit depend become still we our offerings, Sunnova, mainly seeing our we to folks XX%, important colleagues dealers. a but with wide interest of customers, our and customers, our work service to our that terms

that say really driving many further focus about relationship it’s partner come the just to my pointed – becoming lease bit importance in are talk further to and dealers a drive Paul out, be that said, disadvantaged and and I becoming in Sunnova being a answer increased the and is PPA dealer. as industry With would to that driving interest Sunnova. we would that even interest with become a So to and Paul loans in see further economically relative dealer so unique and

Philip Shen

John. you are what issues do are today your your To you Thanks, among dealer see volumes partners? Can foresee ahead? dealer major any tightness through talk installation limited what or labor with by degree being Great. labor, any you seeing

John Berger

we the the you And the big partners people city. Yes, a competitive has mean in having and entrepreneurs communities of given as best sitting the benefit us particular could, the a that huge in part don’t. have field field your a better one know they and anybody I of where the is edge. model else people from than that

that one of larger and of others. particular there. somebody in of labor been doesn’t from not have seen have sort we mean not our by the heard been We constraints little mentioned But availability it take have dealers. our spot particularly bit overall, dealers, we the versus labor to a the hire It longer not out doesn’t anything that kind limited have

execution growth and our remain pretty capability So confident continued our confident again in pretty are rate. we in

Philip Shen

if more One Great. may. I

expect the maybe storage the then guys also, just you increased base, a about can that services services leases, storage maybe how And time and able and on give storage, ahead? what’s company? you to asset If In view could see when to grid for your more loans? your substantially having and you rates meaningfully, for the that trend value state to of timing example on beyond do more terms attach by in you some us or color of you generate do that think in that, suite sense as over to more develop you perhaps as as any versus your

John Berger

Sure.

of would country. spreading to lot rest the say accelerated seeing growth. think I say Interestingly it’s California of headlines would created I are fair a customers. We enough, of the it that unfortunate out coming that also be the have the interest across headlines, storage certainly amongst

specific it’s So not California. to

at wildfires a storms situation I that the other think causing any that to those we Florida have would that understandably front continue point and amount hitting not islands do both that wildfire the become country, had but of that those as also Coast, Texas, in utilities disasters. in the to and/or only response that face, of would mind kind Pacific company would I and previously concerns a the part news look of response and as say and is as out and faced monopoly the East wildfires so is and of I to forth increasing Caribbean. the people the

country. So having really price. all better we are the is events over in minds demand there of your of a service people’s way from these about getting all on a coming power, an climate at seeing lot better better a change impact indeed that And a are maybe

seeing increased are California. uptake We in

that in of service lot reliability. economic of see of I sense because more expect makes to We and think a it terms good

quarter. we’re even so investors. answer growing anything services, last and equity delivering lot to focused we And else. a focusing we very flow am month going storage grid see your amount cash question our And good To this a rate versus I that that and storage prioritize on to growth are on about over earnings Phil, of

a that we in make decentralized the more flow absolutely I that are where the grid cash that think next up right that’s wholesale revenue integrating I whole year going on is position the or that in to importantly, with you are we the versus profitability lot right industry and, and market activity decentralized or of market. the go from now, with some out in two. see of doing sure and there the have But We terms don’t market, work will and services. if

to And any and are and our way. drive sure not so to we making and left we making are have focus sure efforts option will cash we but shareholder, are that our that in the were that we behind prioritizing

to foremost that, when base something that a sure and cash becomes attachment first up The particular continues that drive have make make storage rate in again, to and sure and we that customers a and services so size have move is we our to when it’s storage make investors assets to that locale that grid appropriate. that have meaningful difference

Philip Shen

will John. Thanks, Great. I pass on. it

Operator

Thank you.

next response Brian ahead. Your from is Please go Lee.

Brian Lee

customer growth Hey like questions. the I the guys. back guess going here, growth we half. as the most guidance about linearity year in your it the you the for But and good And John. of have looks mentioned. think when year, I of appreciate visibility, is And to second the reason do Thanks the we for XXXX. year-on-year cadence ask through coming you outlook sort I how be about that? is in should this thinking taking

wondering next cadence should like we look the this if might So some expect just we year? lumpiness saw how year,

John Berger

Yes. Brian. Thanks,

know it. this We’ve know not talked there last may everybody industry. about else all, it, you that of is know it First just but quarter. seasonality for in I

seasonality Northeast be time, will Your quarter. lowest, for QX second and QX and Mid-Atlantic. have And because again, in-service is amount going impacting revenue lowest is the purposes, your of weather. be going of your to particularly lowest then biggest our obviously pace your This QX year, to weather, just

X year is strong we So next to from growth not origination that I a say the given we’d the the up that roughly QX period QX. of QX, it of. growing. that frame, me are fast to in service. bit overall surprise months just note takes XX-plus back get how months the growth have about a for would again to percent more share, quarter we would tilted But as The X see lion’s time stronger trend structure you least pretty the in may a coming anywhere

start QX and QX, as we start in and would in QX. of And it so up that, and QX by through end more back definition, go show the originating to

think in to of we do weighting particularly and the I more some side things. QX in-service But a year. grow So degree I the to QX, in will QX, expect and QX of QX this see against QX

Brian Lee

sequentially to and just up helpful. XXXX. can you of Okay. QX QX and clarify, so be versus That’s think QX QX Maybe

was your I actual year-on-year comment also volumes the second the parsing half? half new to the you absolute customers, definitely sure half. versus implying that I the then than rates understand stronger think that first I better there. your last first of correctly. want the And be make and will comments in Are terms half can be growth I’m in second just

John Berger

true. you’re probably and – the where And I think looks achievable, Yes. if we’re on that. it it doing look now, No, I guidance the it’s something range, trajectory a at math, that appreciate very It is Right possible. this this that that you I’d well like is is keep to when is. that

XX% the matters growth for figure trajectory. ‘XX so in ‘XX – and really how QX year-over-year we’re And very of on to the looking And it working continue operations at was where QX we relative do you’re to growth. increase out and growth hard terms to what that’s

to think of ‘XX ahead I look is going year-over-year much QX the be to than of see higher growth. and that ‘XX can XX% you QX

on year-over-year in basis. do some we are that up growth see and seeing but a point strong all that to you, So numbers continued expect with at catches time,

Brian Lee

to, what grow we a of to? more can is believe in metric the metric. years in Maybe you sense relative metric And some about for of XXXX, that’s a target cash can how here? helpful. that The new couple let’s Can should think number say, $XX million that it that a we growth few I’ll me, it cash you an of Okay, proceeds, terms that on. you and pass how if then growth, customer compare flow XX% sustain from I million in number there us was give to apples-to-apples if $XX

Robert Lane

is Rob. This Hey,

so doing we’re going to is guidance for XXXX and you a in quarterly and was really only give negative is a reasons. not it doing what on quarter We’re tell you guidance, you XXXX give guidance. But not because full lower would can couple of I

not The terms year first equity tax a robust as as that second with we that year weren’t we was the is have the started of that we the back that off tax right half did now. the securitization. And equity do

number newer So schedule securitization. begins very some of have both into of a some a it well service assets quarters seasoned more securitization couple robust And as assets we’re past our year. into we securitizing that of putting to planning as we’ve been yet on with assets put that the next have a had in we

year. So spreads be in all, next for the of how as the that this and will tighten taken you’ve for been securitization the we continue is taking But quarter. we’re securitization waiting it. at in But this room certainly And deliberate year, first be next have of strength a year securitization negative we market. to that’s seen, haven’t the look market just year numbers And that the were market. the to the we full there’s advantage within that grow depending more positive range will on

is interest expect the sort incredibly to strong the even loans been of And in tighten that thing that on even we at our would have that rates helping we that’s midyear, received securitization further. declining. So see other

assets. we advance all expect interest we’d lock lock even effect to to those to going on that’s long-term lower would decline rate the in what of we And to – would receive on same interest expect the rates, rates be able in a with have with would that in an spread, be the So there.

Brian Lee

Okay, enough. fair

John Berger

this our cash existing cash Brian, and delivering in would What our is from plus bottom operating from flow John. the from say also line. that adjusted proceeds cash operations terms is is I flow, corporate our that of our coming effectively CapEx. our to It’s customers

the of commensurate business. that but given customer with I rate I at here. – a commensurate numbers wise, So percentage and law it’s would rapid expect be expect the of grow to Rob the the faster, but a basically not – base, see And to with little of fairly continue see spinning only expand actually just would to the growth to

generating that very include does So equity. we working corporate the The are capital. proceeds focused cash flow to on cash

fairly to escalate large up amount to have as rate. out into will the the we continue come of going recycle capital quickly a so And we’re gate securitize to very large the to our as expectations be we’re able Rob a have proceeds And show to year, build in that back do. up said, very to our those continue going firm to backlog, of we working that, growth first and very and

Brian Lee

Yes, last Okay. me, And it makes it from pass I’ll one sense. on.

in issues, Rico, I regulatory update the program also Jersey, process on think I headed of charge process your Puerto think transition SREC any in exposure is guys then there? potential Can exposure restructuring, where there? And guys. and that for PREPA’s debt sense as part two Thanks you the Just of give on the you have New an us that views hearing and some to. you’re latest

John Berger

Sure, sure.

Let’s take New first. Jersey

old it’s think I think the I’ve Jersey, voters old given Jersey, say amount you will will way program known those in and be homeowners, nothing New in that that sometime old also different the best off safe just the say place It next have it to SRECs, heard program and burn be and of to of will be the as set aside, touched. are I anything it. that the saying is probably New that’s not that will, year to current if allow

that a comfort degree – program high feel to negative very there nothing way. we any that impact done So of be in actually will

think of there’s like. program, new very smart look what New about a lot Jersey. that of I that’s still debate would The leadership

in for the that Jersey anything risk is done their an that program lower entire substantially becoming has amount economy state. They jobs current of actually that’s creating of of built of be the lot than energy the pretty for the They are at least. way doing huge a leadership think have a jobs. country. say state excellent carbon-free would And job I a the are New to of However, leading significant, the

would they at that risk do see don’t to at take put really families I so and and And anything risk. that those

but economics. of XXX% will passed recently different the what Rico, rules, in and a Puerto will also next Puerto New makes there too in in some XXXX. I’m are that not we that forward target we’ll today by terms that here put And look months, Rico. the something especially probably look, get they of program something everybody, to dissimilar will have have people that sense compromised Jersey, at weeks we forgot renewable they’ll some few I in confident and sorry, So for structurally Puerto just quite and most energy On the move Rico,

for huge stretch made to branch way on the country Rico there’s probably and is imagination renewable is of of support legislature only The that. is there if residential Puerto Rico And it’s specifically rest in There just get a been Puerto you very about of Puerto on a solar. it, progress the do lot a like amount of energy, to solar. think is resiliency And the that in within focused reliability. the executive not and the Rico

a we’ve that for with attachment so rate been had XXX% there public And storage. long time we’ve

So reliability it’s change climate it’s real about targets for stable Puerto not just and people providing life a also about in Rico. targets, in emission

so in way. don’t that the we really they’ve growth to practical any movement limit that any see and had success within And legislature

solar we always the is bankruptcy Puerto done the In terms firm in right a very storage basis maintained has of given very on Rico of a adoption Rico. on things growing forward what and leadership proposals the there’s and focus by again, and the that some large, but is issues see consistently territory just Puerto experiencing,

Operator

you. Thank

go next Julien Please is ahead. from Your response Dumoulin-Smith.

Julien Dumoulin-Smith

Hey, John. good morning

John Berger

Hey, Julien.

Julien Dumoulin-Smith

cash of bit if little little I little the you emphasize how return you on guys bit on a questions follow-up flow, a Can some more possible. a last that’s cash about to fixate wanted wanted on flow. talk just bit of I to think about what from like eventual equity, corporate need cash that a look return now and around but – flow as and any perspective? this does let’s about that what we inflection flip conversation talk that form rather are of in point clearly reaching they don’t

John Berger

Yes.

very As on focused that. you know, we are

a I base. had these think that And that’s almost the in increase $XXX out increase is flows. to up contracted we a want value, first million. continue that to PV very we X. And thing on to asset are And large the cash that pointed we that

it, if we you well back some a more think way that then at in or and to our entire X% did I of of recent has capital the the securitization June way fair been stack even look securitizations looking cost of at lower. in the cost marketplace,

would PV as more a discount you like a billion. comments, X, feel think see, and our would that be, over rate reasonable we I stated that can be we So as in $X.X

balance And you the basically As that you and the have but to about when seeing. just that you something as amount that cash proceeds of the billion been of terms asset ABS at will, continue to our in the accommodative the – assets of transactions, marketplace of or laid generate capital, stated years, the a north you’re assets. quarterly of has billion do market now, asset talk up, that balance whatever year. point, this when the risk-free the we looking big could as market and on can we cost and probably on likely given cost point how continue tracking that may we’re between grow dividend, around in $X.X build we’re whether than and sheet see through we to importantly, to we will the just do somewhere balance start premium base flow class $X to you from some between There or out we’ll can big given I is in start time Julien, in at be put that risk in billion you’re turn, couple corporate towards that of generate leverage $X then I certainly if to feel flow do time next going year not mostly there I market, effectively in out are out, particularly out, addressing we it conditions, limit what in we what last I that. our range, XXXX basis even move you that additional XXXX. back exact time. I like to faster give return the it of been that something be. that most about looking the to The of That’s and our assets the an a the more expenses my be I calls able have most do we’ve Right comments, would general it’s range, frame going buyback continue to to and also where can in end share $X and more these a be SG&A our and updates on you we date. billion. would the backlog take increasing something dropped some has drop. mark terms can to down it’ll it’s the that that. expect November the to of equity about some give and as rate in updates over that’s cash particularly performing, well where I ABS executed happen interest do don’t in when over

marketplace to some, shareholders capital the continue to possible. big on soon in a that see focused are but tailwinds I very of So return up at pull we looking ways as as lot may that to

Julien Dumoulin-Smith

there? across what dig other think here footprint if Got for to bit the a $XX it. the can harbor? bit a even about So little harbor, Alright, Just of talk given customer further further, you growth the in the And ITC could little you more a million, cash the for the some safe instance, are you this about of then excellent. perspective And how do can I $X itself? bit in elaborate it considerations little some XXXX flow million that about safe the from nuances a the to nuances continued too?

Robert Lane

This is Rob.

and So ahead will that. tackle try to I go

that XX% using doing maintain to with So be next the the inventory Harbor to What Safe is to ITC. the we the there. up built Harbor more or X be years in definitely that is for this able Safe build year will we’ll are be

when X, market. are as a to able in proceeds have of make ITC out includes will at to actions the the least well we think that what be as we includes securitizations have a we what then, be. payment take next now, huge going And It on look we securitizations the expect help our years. the $XX possibly as warehouse to equity to to right be safe we amort bet mentioned, When we and have, using scheduled facilities. from that tax it million. that $XX government to Harbor, course, going that want Safe X So refinancing our XX% proceeds don’t the in the we million in schedule given is for to are at the We harbor also

advantage take that, if to but able So be to to materialize mostly best able that and XX% flexible market is be the if take near in we enough back that the are to ITC be it be our future. where a our to safe of to harbor compromise the harbor force advantage designing utilize does comes able we’re that safe there not maintain able to in of

Julien Dumoulin-Smith

you. guys. Thank Alright, lot. a Thanks

John Berger

Thank you, Julien.

Operator

response Please ahead. Weinstein. go from next Michael is Your

Michael Weinstein

sense Hi, guys. A one us the questions. creation a are my battery how costs. Thanks batteries How quick – attachment of changes? storage can how the give affect costs, taking and about that for creation you

John Berger

Michael, John. it’s Yes,

of obviously In you that doesn’t on will, basis. a follow that per any battery something methodology, watt is cost, terms of if sort

big continue clear that we this megawatts need to I addressing sort think is would We in off And A you get battery I but been customer a to get very to appendix as exhibit its that, we not the to rate certainly out not per detail. But on watt we’ve the we’ve laid that in customers, basis. is costs on focus attachment industry. expect a why to industry-leading to any information that – like serve in – the And metric. customers, think, we’ve would per megawatts. increase watt per see you those of can

the when we as it a are true was that on However, on made capital, clear, well. And we basis. clear I an unlevered to deploy XX making batteries average very be that

future. customers profitability even to in I So question the serve overall, rate it and generation And improve to that coming like basis. companies grow big storage on and the demand-side knows a mentioned having our services. asked earlier strategic technologies, able we enables That’s certainly per expect who grid are deal, services us what to of enhance grow enhance in revenue that and business that electronics other we can that generators be control from better inverter technologies, kind by as the some other customer unlike faster, to and on a enable because options, as the our out our other the profitability attachment Phil our a

see faster gives candidly, of both term. attachment rate the equity, and flow down quite the certainly and drive I near something us long in So cash the to in being to earnings increasing the that, a lot ability term increase

Michael Weinstein

just will sure you also What that the and in then And be harbor with if will one dynamics to works. dealers too does how using it actually inventory be will forward use are safe how that get last you going Great. the how used Harbor dealers, that? on you dealers? and to not one order Safe will? I’m down new – dynamic passed attract inventory How

John Berger

especially using very them. Again, Sure. close their dealers, have, in and relationships we sites our obviously, with wholesale working with being

exclusive from still the that about form either quarter, last coming to and lion’s are of or our shares of origination reference fully XX% same, are that’s multiple So to the for I us. years made it’s dealers is in our exclusivity some roughly

– of and a component at versus different the batteries. nature dealer chain That’s short a equipment just been already year setup last others, this at being, bit used of moving are a have for because also supply least into We to of been time we’ve network. that supply

and more the the we’re and filings documentation putting bit a to be supply that that sure manage intensity our to and the puts to make hired appropriate certainly chain. right this government the systems track making able We’ve and banks. the ability accordingly in for So inventory that on

question, is, for And As new will that Michael. are others dealers? yes. earlier there that you in the using to I in the dealers ready that we in think dealer don’t the we’re everybody, is go. So know, all will marketplace, be mentioned attracts answer that as I alone basically it answering something be which simple

products I batteries many total as offerings, our them particular. and think in well that, other well. as folks very Obviously, a we offer chosen have partners growth also terms we technology have the more to with regards that like feel dealers focus we the prospects product regions good to technologies and on and to and in would lot in attract of our

or XXXX, confident So as safe will. would we harbor if strategy move you forward competitive the that will we are capabilities quite our into actually that, moat, enhance

Michael Weinstein

Jersey. sense. for New Yes, especially one, one XXXX the I that slightly in guidance in volumes What’s actually we program Actually, New last Jersey? discussed given in that makes the are know declining SREC SRECs,

John Berger

me question, Yes. I the let in would answer say that breaking Michael, terms out, last of first.

variability. We would marketplace Again, have say that, top there I on will broken by it’s out out I XX think state, that the a unique kind in-service. you on our see states in of state the quarter-to-quarter,

in or that to grow was You California jumped quarter-over-quarter wouldn’t for anything going see York of there think in and New can in XXX% or and I may a of up. quarter-over-quarter not to may continue degree at bit then trend. I New a Puerto – a New flattening instance, that nature. you be I consistent expect, it high tell Rico is that certainly, York, a Jersey of That increase is

variability So region. the quarter some see there in you to should is expect within the

that terms we’re state. But I’m is conservative across had appropriately even Obviously, it bit continue in rate with a growth the weighted that’s year. the little to of this any to there, overall, further Jersey, more board, what from trying here in not we rate. specific New growth our guidance very So Jersey listed pleased of New increase we’ve than terms so

pretty our energy in solar guidance and with Jersey And certificates the New for comfortable so we renewable feel next regards to year.

Michael Weinstein

very Alright. Thank much. you

John Berger

Thank you, Mike.

Operator

is Your Please from go response ahead. next Sophie Karp.

Sophie Karp

good Hi, morning guys.

John Berger

Good morning Sophie.

Sophie Karp

Thanks quarter. question. my Real for the taking quick on Congrats here.

your from you much that a understand at also growing me principal Could discussed higher for and will, guidance be loans you like if your are rate help seems in year, core what’s sort loans here? happening interest you than your disadvantaged would of So this and EBITDA, it in next environment.

John Berger

then anything Sophie, this I first this out. and is to question high I leave goes finish can is predictability business. and the will the But Yes the Rob bottom John. line of answer

our are XX so next And XX% today, over in basically revenue, already of so have into in – I lot our within a where backlog. our those days here, that in interest moving at or does And principal either which year that include our in-service we about base talking is the year. of as customer mentioned, end the the that means what of from – and we’re loans

ITC so be impacted, would don’t by And we obviously, an see how that change.

to we as a a lot do market, pricing as in and activity we refinancing our interest particularly expect, We loans, lot prepayment faster that dropped very to more has the given, are we’ve that as here knows we stated, with that Rob have seeing on mortgage conservative rate, were that our that, and rates conservative. continue fairly and see a continue everybody P&I there is is to target slightly

forecast base backlog. customer that either is line in of is already bottom answer that in our much So or P&I our

confident. And anything bit be want turn So is Rob, you we feel pretty it conservative. to indeed, may a to add? there out

Robert Lane

there, of add so from the the EBITDA keep in have doesn’t costs mind if That’s cash our broken just only It inflows that other the loans. really adjusted I’d Yes. you thing out. has loans. The all of

in outsized servicing again, captured become them then expect you’d in loans loans, see our And part our growth of all we’re see And more a P&I. the the ITC, to drop management with the will that of adjusted the there’s associated costs that expect EBITDA. would portfolio bigger that’s lot But still a of very a why be do have or as to loans. So we in in piece SEC, mean those the with and and even growth seeing Board service to wish cash the to We’ll up analyze add But you internally, from that that. to them. versus our allowed to them I business is look those the reasons business customers receiving we you together. at we flows customers. and how of is show cash not we that leave to if together are are run because to that for the flows the it

Sophie Karp

you. it. And more Got Thank color. one helpful I Very may. if

rates early active that that, mentioned are you little a give securitization some to can advance pretty So compared and rates could what pre-flip may you previous you are at be year, do you it assets that preview the share about on done? kind it’s of schedule looking early or looking talk you at your you’ve next to deals Any color maybe looking maybe, to on us and you but that?

Robert Lane

going into that So is What to can narrow. our don’t I of to want will the the predicting interest that business spreads I I in to be get market. tell rates you continue are expect where

You have that seen happen.

right you securitizations, our it’s Note there statements. of financial at in the If X of look our history

securitization the been one. than has see better can successive prior a that each at rate You done

to continue. So expect trend I that would generally

in And would some – track together together. have our putting in much put those before well-seasoned equity put not we’d pretty a very they we leverage that and we flushed far there, pre-flip could we assets think record have next We And believe our And we back the strong are expect and years, had and first in using had the defaults, you to believe, to were early do but been to whatever I are about our plan there, assets see the older year. very really I as facilities. we of assets, flip, be those that include as that X out. tax securitizations both post securitization do, in assets current is include

we be within So and five quarter. strong. to do are we expect that, first hoping year again, to first will about next the we pretty the darn expect But do one that securitizations

Sophie Karp

Excellent. Thank you.

Operator

you. Thank

Please Your ahead. next go from is Kallo. response Ben

Ben Kallo

for thanks my taking Hey, question.

pretty the dealers just into you with maybe, if then a much on visibility, have versus bit number maybe help year, contrasting direct heading could set dealer you little you model? your talk force for again just Just John, about of a visibility And could the next guide? sales us

John Berger

Sure. it’s Ben, John.

I built base. would that is what our and First, our existing base on sub-dealer plan is say dealer

more out a have and I’ve lot be additions, we much additions interest more why any be plan the laid do to to So have laid the it. the candid with that all out, expect I for, something dealer, and And seeing did a become to growth we not we would reasons us. that as are in about

do And see so opportunities. some we more potential

a For next made instance, mentioned the on – we’ll as the as get more give homebuilder is into I call plan, markets last in as on well. stated color have quarter year, earlier very I’ve comments, not my we that and the in

sort growth history company’s and in-service and origination. our So our yesterday, had into day profile year on sales also of we significant is that I ever growth. going the next net on there in an confidence point is dealer of bit amount not both and of period very a fair sub-dealer antidote in any will in predicated out best as

certainly, dealers and the more growth. and months And trend that growth few a help us over XXXX expect join we continues. the lot see So augment sub-dealers next to us

Operator

today’s Thank you. concludes This teleconference.

now disconnect. may You

Sunnova Energy International (NOVA) 3 Nov 192019 Q3 Earnings call transcript