NOVA - Earnings call transcript Q4 2019 | Sunnova Energy International Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Sunnova Energy International, Inc. Fourth Quarter 2019 Earnings Call. [Operator Instructions] Please be advised that today’s conference is being recorded.

[Operator Instructions] I would now like to turn the conference over to the Vice President of Investor Relations, Rodney McMahan, please go ahead.

Rodney McMahan

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

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

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

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

call over turn John. I the will now to

John Berger

operational increased year, boosted dealer expanded our our of results. network, customer XXXX was earnings attachment in growth X. closed and with the We year Sunnova Good of base, the another year became morning, rate. our for storage Slide capital and on Throughout cost XXXX and call. rates. out Starting lowered the for financial thank us strong year-end you our joining the leader our we quarter industry

able to in we meet, guidance targets. most result, our exceed As XXXX and a were cases,

in increase XX% is over last XXXX. added X,XXX from we XX% just new alone, quarter a XXXX customers, quarter added QX and fourth what In increase which an was the

XXXX, we a all XX%. at For our grew base customer of of rate

excited increasing We at acquire call, will year later ranges this is a quicken. to growth as call. guidance continue update to are the earnings we the quarter only rate third discussed about continuing pace Due we we in in XXXX customers the to that XXXX ahead our

rates. our A plus growth surge solar the XXXX, a ability that has provide our In attachment experienced offerings. supported storage to driving has dealers portfolio been force we of solar service broadest with storage in and

in rate XXXX grew XX% origination continue attachment In growth we rate QX. quarter-over-quarter QX fact, we to in and from are storage a into our XX% QX seeing XXXX, similar

our unit are operational our down customers. and which our such profitability the acceleration to and growth in previously allowing fuel to Storage price new witnessing continue improving energy in come It to faster than technologies, is now clear as storage us an cash continue that is Batteries, rapid operations. as capabilities helping we expected. Sunnova’s included to from add industry faster for is are recurring and energy power flow independence economics in stated to

mandatory infrastructure, power storms becoming traditional the power intolerable grids the With instability and fragility regional the and is as disasters, consumers. power on of to for such toll continuing their centralized wildfires of take outages increasingly

options continue the reliability. and Rico As earthquakes in increase Most look that and our higher the to as offerings recently, product a resiliency consumers demand energy energy result, provide for for storage of the solar were once plus resulting customers. proved as and keep loss on lights again nearly economic of societal power X,XXX across the able value to island, we for the Puerto

history, the majority are power outages outdated power storage technology evolve technology more and it. we and consumer the XXth become Yet energy and homes. such will relying upon must with Throughout their century evolve, to continuing choice solar is world the Americans to an of and sources, The to inevitable. plagues have towns energy as across believe plus reliable America, cities as switch won always industry

would mentioning valued without our our Finally, we remiss growth dealers. discussing be in

backbone high-quality with dealer a to are expertise, Sunnova looking We and end XXX, have growing who network total an dealer XXXX. from attract At backlog to exclusivity. subdealers a them reached of us new the September and number we who the industry increasing of and become and the the Sunnova are to is skills, of our dealers leverage managerial customers markets above of XX% increase allows rate contractors a of partnered Our year-end, of local number at knowledge dealers desire average. currently who

we Slide expanded XXXX a of on Slide X, which Turning summary further X. results, our to provide are

the adjusted customer on years, On using value previous flow Slide of and the X, solar our customers, a we over contracted our and cash adjusted loans within collect year. or we three for and EBITDA, total above on ranges X%. Our principal net all were interests the discount guidance estimated gross both rate our operating full reflect

of As customer per potential any net is existing our upside from value, ability customers renewal This only or flow $X.X upsell billion represents excludes share. XXXX, of contracted $XX.XX existing value to any XX, our prospects. cash or December contracted growth approximately base and

level debt value. value all net our corporate To present flows be both clear, calculate our liabilities, cash asset we from and to customer contracted subtract and

slide, A the shareholder a contracted paying on technology-enabled that is focus a increased believe growth, year-over-year, industry lead capital customer will this to average. to additional increases continue is company. a and is service value customer. and We on Sunnova dedication customer customer creation. significant opportunities that upsell of happy reflected service below cost value our as our steadfast experiencing directly We As translates operate which net into

momentum, and the has of Service a Recently, engaged cost industry of our the on the an our and demanding million a up a experienced service, noting energy we $XXX.X and of investors core markets opened model our to the everyone to organization differentiators We customer from achieved our capital the experience. as unique evidenced that our for demand significant solar like recognize by of over years as would all-time heart has saw consumers. last result, saw options the securitization. increasingly capital focus at world industry. for I is the new few remind low

continue today, to energy we’re that and at evidence We coming, power already reality. sustainable it it’s our Sunnova, cleaner see more here customers helping changes a and

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

Robert Lane

months recorded or operations Adjusted which XX, customer X. operating to the increase Starting in and served John. customers ended number $XX.X recurring revenue response service December in XX, growth. XX%, also million the increased operate full our ended the to We the a Thanks, the for $XX.X year-over-year represents cash XXXX. strong for to XXXX, XX expenses increase Slide expense, million months grow December of $XXX.X to of thanks on XX our of million

we that Our quarter-over-quarter, decline this to adjusted operating see relatively was year. expense but expect flat per customer

picture, year. all completes than as the respectively, our the for same Principal which for was solar increase million, up of double XXXX, we public a and EBITDA ended inflow in during million cost was loans, Adjusted XX, XXXX interest from the year even months experienced $XX.X customer payments from million, $XX.X company. the $XX.X more $XX with million period and last XX last amounts were which from December the cash

significantly guidance was from flow, to operations Adjusted our relatively operate the operating but business was year-over-year, cash cash reflect in how our above unchanged where flow we we range. adjust

look flow we our changes to making forward cash are As XXXX, including few to AOCF metric. adjusted a we guidance, operating or

of per operating nature more are As not out the but or that more aware, classified items resulted GAAP the we a operating cash move want These use to as but move nature that well in financing operating are goalpost investing we set would investors higher financing investing changes cash during did into are AOCF in in for as AOCF adjust cash we flow as XXXX, to or IPO. flows back flow. have

rate For and are breakage income realized of securitization. XXXX, backing we interest incur out out we expense swap

cash As investing this securitization. moving financing cost from consider from we would or financing. not projections term for net a assets in warehouse proceeds that into consider costs facility except and occur, these a our We a for

also AOCF as current both received investors gives subtracting the inventory picture investor sales. earlier the well deck of which clear released for our are to believe updated reconciliation, We our a In today, operating cash the shown of have we out reconciliation as cash appendix we flows.

to XXXX the our XXXX. pace lower slightly to value we of was level first QX net $XXX our growth. But up grew Estimated XXXX, net customer XX, X% deployment approximately some using contracted XX, the million of the as to Due million discount of the of at industry from make standard $XXX December customer customer from contracted XXXX. capital that December into as QX value of up timing XX% of asset rate, a compared in half expect XXXX,

We producing and customer storage Our interest flows. the focus operating investors and loans, long-term metrics that net believe from cash predictable complete and give adjusted additions, of principal a our industry. residential value, view company and growing solar and a of flow as stable, adjusted service solar customer on contracted is EBITDA, straightforward cash

purchase lone front new XXXX million including $XXX equipment the and IPO, the early ended We inverters the convertible have energy of $XX our and million by XXXX-XX. facility we batteries and equipment two with of and safe of our and satisfying of solar end PPA, IRS which been in Slide equity as a the at outlined us on credit XX% over illustrated the transactions, in number a year for tax fund active refinancing lease facilities, XXXX, TPO and allow X. very to the the to our next Notice a financing completed year, years funds credit XXXX, the debt tax facility. a securitization, In a facility harbor X% qualify in should investment federal the most of The allowed systems

provide needed The fund growth. of exceptional was fund also a capital facility to our inventory convertible portion well as safe working purchases used debt as harbor to

purchases the facility we interest convertible expense incurred the While our equipment safe than the offset increased expense, prices both additional this more were attractive facility equipment to debt the year. able on harbor secure the will and

senior In equity. in and to of advance so, have a addition, we do well time refinance to ample are options reviewing common the possible facility multiple to conversion debt

and rate order efforts closing a XX% this We advance $XXX.X a interest achieved average four X.XX% of times blended TPO On securitization, of was spread weighted financing on continued year, average into our book we the securitization. on subscribed. an million X.XX% that new weighted a rate, a

to debt and being a flows investors. As debt We believe retaining retaining well our as necessary reflecting that our John as this of cash our investors alignment we value provider ourselves between service flows. our as our commitment to a strongly see mentioned, provides cash testament solar the by

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

John Berger

Thanks, Rob.

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

announce principal received increased to customer from guidance to in able increase be to to loans pleased to These adjusted XXXX. $XX are $XX of $XX to adjusted for we amounts increased recorded XX,XXX $XX changes revenue solar $XX call, our $XX solar customer an additions flow million operating include: to to the in EBITDA earlier increased to increased million, cash million. from received XX,XXX, $XX to loans noted million, increased interest net As ranges $XX million million, million payments million to to to

guidance, provides flows. through solar the in with loans business future XXXX XXXX. targeted that excellent principal and in XX% of of customers increases level cash the was midpoint targets of visibility model as from a our January we in continue high interest our Even the and achieving revenue is in as into to the of have of nature XXXX locked comfort visibility XX, fact received This existing recent our reflected

cash result Further, solar will our customers stability starting AOCF and of visibility point much in to in principal this in flows, of our in adjusted interest this from growth EBITDA, XXXX. year increased increased of and growth loans and

expect our to as targets, we did to in results business, we confident just highly of hit quarter-over-quarter quarterly due are to While in our XXXX we our our seasonality ability fluctuate the XXXX.

XX% in our XX% interest of Based QX in loans from EBITDA QX, to and in XXXX, on XX% in expect we our the principal QX. solar forecast, quarter XX% to of adjusted capture first approximately internal and increasing

the expect over growth, last occur of to during for XX% the customer happening we our half will year, our months. while six first customer customer with approximately remaining evenly occur year, XX% As more throughout the additions the of the forecasted additions

to updating level In projected found the also XXXX cash we’re Slide guidance, our formal on addition more to our XX. proceeds high update

find will from adjusted flow operations you our existing the is On cash corporate flow our less cash left, operating projected CapEx. which

This range as estimate and up increase previously our increase XXXX, $X disclosed adjusted previously discussed. $XX is these improved to For we cash to cash operating be outlook, now flows our to between flow $XX driven the guidance, XXXX million. includes $X of from million, million an which by

the from are the our financing activities, On investments. from outflows right, cash cash growth less proceeds

includes costs, as As and well EPC of network previously progress as our inventory work-in dealer financing. all this asset-level payments, all estimate calculated, including bonus our

securitization Asset-level shown financing includes and drawdowns warehouse debt or capital here asset are proceeds proceeds corporate Not from and repayments, amortization tax sales. payments. changes equity,

continue will of and transactions shareholders they these kinds fully our clearly occur. we if disclose However, when to and to

breakage For XXXX, higher these to be million and higher-than-expected we are proceeds interest offset continue estimate fees. to as million between rate proceeds the by hedge $XX $XX securitization

customer. payments we continue future. cost achieve in proceeds or federal Simply the any solar of includes put this and renewable the cash customer put, unlevered expect incentives, as certificates. all an dealers asset energy the as This to continue to the such return cash to service the XX% state made achieving and also IRR We well approximate a to including is into payments from unlevered received as as equity painted tax other against flows level

for focused As discount We QX mentioned debt corporate very equivalent stability equity in cash view cash We is contracted earnings that is investors. call, are selling that flows highly creates with these investors. flow selling stated on. valuable from recurring valuations misalignment flows, a a are operations cash at PVX equity positive believe milestone we provide long-term and and especially to to our

expenses debt our of minus and from operations and portion costs portion financial covered all of The achieving. generate expected that of corresponding to dealers fully are customer be to on allocated our from expenses we all operations. all allocated definition these are remaining cash to long-term At total the recurring the Our of existing revenues, to currently plus total are expenses interest our are origination. new cash harbor current flow our plus minus capital cash payments and pace, working interest is flow our origination by to flows principal our safe

current for achievement that billion and expectations. spend achieved financing operations XXXX. of our for We for be costs level proper to positive previous indicated from previously recurring $X economics, allocated growth. all is This of have achieve company to cover significant asset result Our asset $X.X will the in and operational our overhead to scale exceeds a by billion flow cost the cash range us growth enabled incurred obviously fully

improved older and the debt, our Given increased ability to XXXX. sometime that see achieved range now or in cost capital billion growth, our economics, stable of $X.X we goal refinance XXXX unit in billion to $X.X

summary, as XXXX, any flows sufficient financing. from growth. by recurring measured are not supply contracted now more our if All additional than metric. from generate In time, visibility faster cash generating cash our of we the required now financing same contracted we customer base, long-term we cash operations the have cash value capital the required rather operations increasing XXXX net of are all, the moving to with from larger total cash or of At exception while, flows our the significant in and for either majority, working to to

one, cash; Therefore, two, We the shareholder main produce ways to see are value number two contracted focused we on for create flows. produce both cash number shareholders. long-term are:

we our have As Most generation and including much focused provided. our disclosures handful information have and expenditures endeavored commonly metric that cash get metrics and in we’ve as on all shareholders cash importantly, used our as major can disclose structure cash guidance we hopefully thoughtful usage. see, possible on and financial in to of

asset residential corporate market in growth, strides superior a entered was larger best entire transformative level by while financial solar XXXX. our is make and to to storage Sunnova marked remain to The drive phase. results. In ability most expect its I and exciting global closing, in continue confident S-curve. year, long-term has in XXXX We transformation achieving industry Every industry and and an technology even

resulting the and curve We the lower be part change of entered global have profound. the in the energy in industry the middle clearly will balance

please that, questions. for open the operator, With line

Operator

Go [Operator your Bank please, question is first Merrill from comes of ahead open. Lynch. of line the line Instruction] America Lee our from And Eric

Eric Lee

Congrats on the results.

if First your at maybe higher looking discuss you ability about to and discuss of the XX% could And the year-over-year drivers at how off, could your I’m rate, that it, it’s ability full year or sustain for you your growth substantially midpoint, XXXX? we XXXX growth into perceive beyond?

John Berger

Certainly.

think, conservative I of just everybody taken all, to first we’ve classifying a that customer. remind more of way a

PPA. paying lease and in-service is customer or that or loan either so And monthly, their

And lag way so way. a is more conservative. a wrong others reminder about a installation. Nothing ours It’s that to the in industry classify relative as of that create without that four customer approximately will a an the just months, the

the of Second, organically, growth been just amount has and exceptional. dealer pretty

of two don’t flip dealers just the also one get all we lot then lease as lastly single And the or like I product service we’ve a cost on about business having indicated the dealers platform. have when platform, how PPA that between for of loan platform. platform cuts a looking smart say single products they the that and industry would I a more added to lot are into really But getting to our a dealers, And more do see comments provider in widest a lot that made. previous number a a in and portfolio

model. business And then mean focus. really just focus, I a focused focus,

in not multiple to We’re so forth. operations trying do and different channels

dealers. our We’re focused on

what customers. a that making we obviously We’re growth. focused sure can need, we��re to dealers that’s customers. provide in the we’re come leading And they both exceptional the and sure And pretty that on our – making and

Eric Lee

that. there’s like an you for discuss, It increase more increase in on bit a actually the Could for sounds demand Certainly. dealers? exclusivity in

So to what’s… on your it be thoughts hear great would

John Berger

and something a come that as pretty strong this summit, Yes. feedback. was That was had that recently surprise did our a we dealers – what

lot look, the to again, there a operational the think, cut that we’re to I is product desire customer really company. and costs to a in adding And proven one isn’t need. focused service financial And our at and relationships, portfolio, then, service. by widest dealer on certainly, again a capabilities we’re the dealers looking of A platform. to position, just we’ve strong plug the there

to relationship. dealers able home. sides to together to on if up They be that do pick to phone, talk the both So find looking management things senior comes of need that the want be are all happen is because a

And so more Sunnova other amongst you’re not know term. you to and long over to lot This folks, seeing talks your that of each a is is the are come and can be. the giving dealers a here. build is where This to place you you over home. This lot that you comfort need saying, dealers want yet what, business is

Eric Lee

advance Got it. to question here. – rate, pass X%? ABS, And along to weighted average do it gears standard, little Shifting related bit. maybe think unlevered before clearly, I discuss you. XX% Could one Thank discount industry and to you you relative a the rate last about How with since $X.XX million. go appropriate

John Berger

Yes.

a the believe, record was north with of ACE. think just November ago XX about PPA, the hard lows points. this risk which I that since about the the X.X%. way, the little that free both any on leasing Clearly, the looking expenses, in interest far premium, to was XXXX, over here, the days you that all securitization, – about the of out to included is even as securitization, X.X I dropped of put roughly in. belong which Clearly, XXX Sunnova of in over X.X%, XXX – as and basis earlier, couple cost rate has stack, a by at of market by risk- a rate, overhead mentioned guys in piece our as all the through The

PPAs. X% guys clearly it I So service, lot me conservative. over are conservative absolutely of being couple you investors But but the last us, looks you X.X really and of lot very that this, loans is thing both to that not and the would leases from starting when a very on the data, with, looks to spoken which it also I’ve right even do. of provide the is to particularly that see weeks, add a to – only the increasingly are

– speak. the And the industry, to out conservative embedded the in then are leaving there the industry that the degradation value table, default as as on securitization the to such cash the flows proving value uses, be and that the a very to such the point assumptions really X%, very, given percentage and they’re lot that’s the of very so

so And idea. not assets long the cash term, of good off at look these has been flows if a selling you

assets, You’ve default lot continue lower. will holding – flow them, I lower in. cost to cash think, capital achieving overall, the the that the lower a refinancing of rate the to by more was on baked trend achieved And actually

the there. right So trend I guys think you are on

Eric Lee

Thank you.

Operator

Our Paul comes ahead the Go question with next from please. JPMorgan. Coster of line

Your line open. is

Paul Coster

of expansion John, sort of dealer of be XXXX existing much There’s the will growth stuff versus – growth, network the growth and dealers of lot us but the and would much Can of thoughts growth unpack I of organic quantify network? the imagine, expansion demand? fueled, And – dealers. for it in of further welcome. there, expansion be of by you through is a by the how your themselves to the

John Berger

our guidance dealers. current I would about our XX% of Yes, XX%, existing Thanks, is say certainly. Paul.

into seeing be current addition and that as I’ve to. previously is we a our also that again, would much in forecast, number growth, at are, all, large homebuilder We again, that if commented, dealer stated baked stands. any, not of activity very in so

And being deliberate sure growth. fairly far forecasting as that so as we’re really making conservative we’re and

so And certainly growth, the a to there to it’s is the upside. if bias

Paul Coster

how territory? existing the happening? it that expanding program? on network from territory, And with on improving dealer Where following comment of supporting dealer particular can penetration versus that, how acquisition you battery is attach of your the the to And rate? respect And much is an territory is

John Berger

Yes.

in our So our most is growth existing of territories.

and moved to been But speak, and have the wouldn’t We say needle, early expanded baked winners. XXXX certainly are states, not our they have to into had forecast. new those some so I

most has rip now, footprint. of our start continues really existing So very a growth battery especially is the in of to, been The pleasant surprise higher. our and at right this year,

consumers I are at are seeing Guam, attachment it either or XXX% rapidly. Rico, and of Island markets, our battery. think more Clearly, benefits the nearing Saipan, rates clearly Hawaii in more the Puerto

QX California, in the wildfires. from obviously, had a big boost

that this see wouldn’t and quarter. And up to and more few move We’ve in out, surprised more frequency Texas. issues continue A that really increasing intensity. and some the in that coastline. with actually would think lot particularly Texas. We people, of the you sold along me, pencil but storage economics We’ve had a storms

And York see going storage some And in that, so anywhere up. Jersey you’re also little Massachusetts, pick you New another seeing see to New some is we’re bit. Florida a then and one.

So prices fall. storage to of as to see pickup, continue storage we a broadening the expect especially

Paul Coster

you Thank Okay. much. very

Operator

comes Our with ahead Shen please. question next Capital line Partners. Philip Roth from of Go the

Your line is open.

Philip Shen

Congrats guide. as well on the QX and

say, balance of about you that And the that to growth understand be balance compare helpful. quality a-vis vis- that very – So and and speak that In quality does would talk between provide to then is if leverage, can on how and growth growth that you us you terms good, you versus some picture. to help it’s and us also, can of the your wanted Some strong. if not might the of whole To I degree what thoughts looking see growth, it’s could hey, growth to between leverage? quality? really can but maximizing the us Thanks. that growth?

John Berger

a Thank That’s right. lot, you. Phil. All Okay.

through try me to go Let that.

of this, our say the unit me let all, stable. economics that been of fairly capital First cost level despite

going any virus seen and of of see the stable really continues it that. to fact, the forth, we you change so – but over last that’s yet. In year. of maybe capital pressure the that might that, We plummet, in the bit given don’t The very on with little cost some maybe see haven’t issues on then as a

And We at we sure making quality our unit a – the in high. point roughly want economics out, of to want our are approximate. included costs that are about has so been money. XX% I And all at make to

higher are Some bit a little than than bit that, some a less that. are little

portfolio. And product points is only a the only that. about what roughly cost, about at XX across cost call we million it return about not that’s few was that basis roughly indirect that’s and in – dollars, Unlevered an to the

it’s XXX with want all that So maybe you the in. costs fully couch to to it

roughly XX% as The other out and costs allocated XX% of of of have towards to overhead about and those operations. costs costs been been those growth, the apportioned the

accounted every we’ve for so cost. And single

have cash including of And is of contract our generated I not in about to of of over a to rule We I or of PVX into from the growth. included million to out $X.XX And value generated approximately the terms million working of of our XX the $XXX of they’re pulled it, the including way years at related calculations. of capital our look that, every in that year generate, most Phil, the we roughly cost way at not $X.X the least if thumb, And the at look in-service million were and contracts. our at at flow. you net $XX look very cash in and again, for before simple costs cost, operating expenses all customer Of XXX and equity, customers our cost one, number. our of harbor costs contracted safe course of interest side million

generation. hopefully, rule helps that that’s, the cash give you visibility of rough a into thumb So

– for XXXX. can profitable you it’s higher said of we the the all there’s move high-quality further so it about working looking forward the that growth. forth mentioned our upside increase capital to day, at in before, laid capital we’re the that when bias So We if time, end earlier, to a then we the And as look I is growth bias, certainly growth. to at due tell growth, out requirements then and And as for upside. to we growth, is I’ve further

or This Generac of bias does our any or not the to exploring homebuilders further partnerships we’re include growth.

know We’re that like in a capital overall know saw We want yesterday. that’s we at time, company. the don’t make cognizant experienced something maybe point some we mentioned, of and in the sure leverage, markets the problem We the that, overlever as we been to past. that you

earlier, mentioned we that growth to and and need needs, a that sure than look that. on and that overlever that even focused we working we our make like further we’d remain not I Generac ahead conservative And shareholders, homebuilders capital as recurring are other want And increasing and what to operations to bring means particularly on we cash proper guiding value the to from leverage we flow as to company. stability long-term achieve look and partnerships due now, were we at we to

On as this I have XX capital, debt the $XX options. next Again, corporate this would have we including a debt of only at at we the working corporate the over many of that that convertible I’ve million a mind so, corporate we considering or discussed look we’re and about options months multitude level. past, in

lightly So levered. pretty it’s

few all. this and debt we decision would in in did these been options it over small small One corporate if has number decreased no and increased but made, could last equity, anything in be weeks. Our of at the be costs part options

as what we to so and capitalize the way now, company properly looking move best contemplating the forward. we’re right And to see

Phil, would to out. didn’t to and well, company but the it’s add of would to – think the of As value long-term the add this, think, as liquidity. increase ask everybody to also we looking I’ll at for look I this But out, shareholders, question finish interested when value at But it shareholder any is sort the bring the I this that in you you I company. looking this

I’m stock personally of price. a at this buyer the

and I CEO, no the company do. one than As founder better knows

near- but times. We’re or clearly can indicated as that do I’ve on we growth, term I path humming and the a company, even we’re more much larger believe a as several

will share I And any single a not be these here levels. will clear, buy price so to at sell and I near only

I a think excited generating proper we’ve position the I’m asking for, answer. more It’s and leverage. quality probably know got in you’re to I on what got you right I want And we’re sitting the give we’ve but focus complete about now. balance – profitable where growth. than really on

Philip Shen

That’s color. great

of to As the it the to house. side relates gears shifting financing

month. this your did ABS guys early You – back

you year, what asset I of thoughts? doing ahead? on last about you can or forth? guys latest us and love call, four type think on ABSs, maybe talked three you your update this to many sense timing How the maybe would some ahead, so see Looking get more

Robert Lane

And still We is to we We’ve on have one. to year. X% X% this Yes, trajectory. Rob. going really this Phil, that done were we’re said clearly

we’ve So got down. one

Our plan up regular in our pull as equity is a tax our loan to funds get into warehouses. we cadence

a expect to So this out more at see you few in least. year, the there back should market times us

Philip Shen

any like some And to be electricians a that? great. especially California. To installations, your one, in appear storage checks, of Okay, seems for of last it one bottleneck our Are through experiencing dealers operations, there’s what might impact delay Thanks. of degree that how the perhaps if some getting or attach And lag terms might but order, you a rates the be in all? at in installations?

John Berger

it’s Phil, part one. I’ll Look, differs that country. the Yes, John. of different take it on

Jersey. like is New Other it’s in Massachusetts, well tightness has tightness California York, think the labor particular anywhere geographies places, in There’s New places known not that I tight market. that near category. relatively some or a labor

is real work that dealers, have our off with layup, the and this lot for has hiring knows that, model though, so want that issues come or they certainly him field have in women it entrepreneur to a no pays local we dealer or people need. We that people man the found people, and – while again, been the of of a found,

lot hiring do, I far side that of we picked And our and of then this for technology Houston pick those to at on the fairly up lot needed a And or people able that included we service needed that, a the we up that, on would and we is decent year. needed. say pace. to we that in plan so heads that what technicians, were we’re information a And

And And we see the ahead, going as so in as far the with but to service don’t field. overhead more the all be labor. any in necessarily, Houston look at folks less hiring here we’re as we issues

this address think to we’re Our I – it’s quite this model for And doing we’re clear very issue. geared this is effectively.

Operator

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

open. is line Your

Brian Lee

Maybe you’ve response question. bit cash It all might misconstrued flows a like upped I not equity. you mentioned of corporate just seems the Can more? retaining a capital But quantify, you follow-up John, to to equity in think, that selling comment akin and I on here. have notion Phil’s this. being

here raising comment and the how square to XXXX? into trying just equity strategy fits So in your

John Berger

can Yes. we flows been as have we if NCCB cash that continue really about our calculation. Brian, retain it’s to and grow

here equity seeing in more more start the We’re our amortization and corporate the next status will schedules equity, more beneficial fairly flip we rate. where also our to that including into going as years. renewable delever, tax debt get off hedges the couple and And of energy solar getting equity. more to flow paid is a at will rapid the then That naturally against certificate cash our

can keep should flows, do we time any those we So cash that.

we’ll we’re an that that, it’s of it’s clearly we think at could asset – if that or do, what fully disclose sale a is be and opportunistic that. four a something about out in there’s discount that substantial and rate pointing I nature,

table. cash when But – not anytime we they’re when a should that. we elevated necessarily in rate, those at probably they’re discount the terms trading it’s flows So off can do of levels retain not

flow are piece Now the is very the terms company answering, the and that on the operational and management other Phil, positive, get proper are cash team overlevered that’s the don’t and of making achieving of the the I what sure the focused Board sheet that was we positive. leverage, flow on we cash balance in recurring

given and this top that is, is rate be rate properly capitalized. growth on we’re that see the high coming, at growth high And looking of so to we even the needs additional what of of guidance that,

the get an And we overlevered company don’t into situation. so

number of debt those the those a some a equity. portion one of of of or small options – corporate on a side things, options have options portion of We be with

I don’t know.

raises. as that next opportunity more I that something than see growth that’s for that as very considerably saying year And be and higher anything, a contemplating and out merely small. the do working it continue will over look be growth, we’re buyer look to to I is we the Just thought equity. capital the be, more would of if continue further we But we as to at I indicated strongly, very

to So it see I continue undervalued.

Brian Lee

maybe on Fair of follow-ups a just That’s regulatory couple issues. then helpful. And Okay. enough.

On been seeing on comment the there’s update/changes could there some Jersey, that develop? the in you’re recent abstract program maybe process, how if in New kind you of

also you think the visibility in California any terms the And on commission there? California by you planning New they the or it’s the key the then of Commission? recent decision are then relation because what that? obviously? from the other community might views Maybe if opportunity Mandate, impact solar secondly, in better the seeing Energy to a you there’s And SMUD a guys, what SREC in And there guys. for utilities state, on on Homes market for Thank you in be

John Berger

Sure.

think shareholders that to bit Jersey. like favorable. our be come It’s First, to New pretty on generated a quite out going importantly. value most of We customers, program. our We the it’s and for current

we that least the I So that And to New there wouldn’t stages close expect think leadership. the decision up relationships you’re fairly understand national Jersey final change. aware ends excellent shown is it. of of. Jersey We’ve got whatever program in think state they’re that at I has as entering I And that being, New

in even to be it will of a program. think transition not such type be I new rough – it a will fairly

up so rate the actually state. SRECs, on fixed guaranteed you the will, if being May by a looks end a – like

presence our growth more New We to choices. should to be be you’re some on is of in very want clear about On California, look, a think the in So ways, favorable actually dealers given there. right, our it and to margin, bit I Jersey. beneficial little may been I’ve we that. what the And there. our that customers to have would consumers even to that large state ourselves, say

the to choices would that choice and I they’re and there have consumer and in it’s consumers And aligned it to more giving U.S. consumer when find monopolies be it’s power of every them. time market, industry against say, what I not overall a consumers utility, when and having terms choice the for think for I not interesting ought for we are them, such.

the to this has consumers And that don’t so choice done necessarily. way any I what problem with and given have been SMUDs

the state maybe utilities probable in that it’s follow it. other think I

for to and therefore, point out the But than out as did given residential, solar is in I attachment what storage, solution and our SMUD cheaper has offer thing is far reliable a our solution is, service. increase want that to better and and earlier, especially California have such I one, that a rate, our another contribute far pointed impacts headline-grabbing storage been in a industry and and wildfire more solution

at better a it’s a service, service price. energy So better better

I’ve founded that’s And why company. this

California, that they I choose value offering and that would that consumers in can there’s that the there what and to choices that pitch a to there which government competitor, offering. make we SMUDs I’m would we’re understand also, versus And from. can dealers sure the go I of confident out consumers that hope balance hope a have So our in state this proper the proper make what case, and

think, balance. even an giving consumers and think by choices so And I as large, I that, it’s more as is long fine

Brian Lee

thanks Okay, guys.

Operator

with ahead comes the from Go Baird. next of Ben please. Kallo question Our line

line is Your now open.

Ben Kallo

year’s what we want might say this types how thinking Thank continue you or we detail, Depot of the you impacts Home kind into that that the so about dig think We’ve could to Generac. Generac, just And I for we than you like of I whether forward? guess, was, things should other if feedback about be do going you’re that. that John. guys as guidance, to expand is, question of how you. things of in then channels. it’s seen to not Thanks this out else, how I forward? included, going maybe channels And look? that’s just the work past, what But What type think, different looking should didn’t should rolling the outside think I year outline

John Berger

terms are I well, company’s from Ben. in up Yes, technology this in control point more expensive one that and to develop getting very with advice, there. that’s an but – there’s others I developing technologies. somebody race generators think of direction question, that we’re and interesting quiet that bring fact the other powerful, I that the business – a arms the have Thanks, and – case, Generac I partners industry is in cheaper to day it’s more very – a to is, be trying out ESSs generate well this so technologies electronics, clear also that’s providers. think think In And what’s to and basically

and opportunity long-term crazy would speak, people to vision, idea next a are I real seems the even well potentially aligned by energy say very of more a I few cord, with is point Generac. powering near-term as think And and so that over more independence the years. our And the way, what to clipping the of seeing like

And to that going at the technology contract focus. developing technologies think that’s to don’t were best. not so partner or the We out those manufacturer – we we’re want certainly pour when manufacturing not just I landscape, ourselves, into looking capital technologies our with used ourselves,

and there on going We be that, one product our best then proud dealers and partnering especially them partnered model, to continue to partner therefore, as SolarEdge and We do to cultures and well. the top growth. reasons They Tesla. customers, with there. then we partnerships there’s which customer partners of go more was a develop their also sales. and see a lines. the marketing Enphase for our other now with, with work And our more machine. so they how that dealers to generate with Generac, leads is we’re of company lead additional will customer very technology out and out go And and out the dealer a getting work Generac and, have to up It’s fit we’re for

other from our us which they’re to current kind on, guidance. growth or baked well, again, so that yes, Generac into again, both as technology dealers we’re this not their give stress otherwise expected that And growth. of some working further and of to that, And partnerships, is to access going is,

we’re that. enough be before conservative to don’t QX look by these But proud I be to on on say raise to to partnerships. for want more expectations have very that we yet QX, able do new And would many But and hope information to certainly, just to so able very I do call. be I I come. that the the of

Ben Kallo

thanks your Great, for help.

Operator

from from next Michael Go of Credit comes our the And line ahead [Operator Instructions] Please. Weinstein Suisse. question

Your line is open. now

Michael Weinstein

for Hi, you there the category you of – And a that Maybe, bit customers growing. seems – after wondering question. more that’s in if and going taking have? just do have guys. types especially the I’m forward, talk little my other split to XXXX? different Like between guidance about there’s could an it Thanks what be any you

John Berger

are originated typically business category and other are termed. last installation, typically different service answering seen origination anymore because types I’ve very as or call is not I businesses. different. Yes, and phone I by two Very over dealers customers. either would orphaned say These we those have. that, they’re few the Well, types that operation a months. customers the they’re guess, sure. are loan-only the different These companies whatever in our the reason, contracts service-only There of new maybe other not some for of some that, term they’re being that are

those to And so we’re what orphaned address customers. large pretty seeing opportunity a is

be our passed markets, was us and of that cattle service Those will service industry. be not taken is I more care capital. is sale. product a to dealers. recognize Those the consumers by provide get will a is in This the And That’s securitization of a this of. more what will the think to need start This to that industry recognized lower and sale. our that cost customers costs a on

looking it through so to at year. off, to interesting speak, interesting we’ve you on how the I – to maybe other so when I take got expect this category, sales facilitate know of that a think, number would further But certainly, a I we that of of not XXXX, plans dealers. number to And ahead do look growth those our

our there’s are fit may That then I come starting that technologies category as Demand really of technologies coming. out. that other up products later side will are partners launch And know down well. and gearing lot that come technology the there’s to will a in path this year.

to that a of that’s proliferate. to products of to services further near-term are starting lot customers our and to those that batteries. going And growth. just sales So different course, we the is example And provide can our provide of that there’s go consumers, that

starting those unique rather count battery. to industry, other just but a upsell don’t are is in us that point further to the count. we don’t number. One be be not count we a customer that, customer decent want is a may it’s that when customer. transaction the a think I that I out count in that because And thing that in to unique We And

may forward existing more, upsells, break move to to a you out going in customers. all battery we’re you would those bit we will, little if as So time, but start to for – those be

Michael Weinstein

Interesting.

new unique XX the batteries. not XXXX customers. So upsells – just is It’s growth to additional the into your all really

John Berger

Correct. That’s correct.

Michael Weinstein

are we’re be forecasting moderating you mean, We’re going that going Okay. be, million – it for next when above XXXX, were year? XX% or is I when to going know that Or there’s to to is that further look but going And see still no you you to XXXX? yet, year I originally it this to well we lower the the at $XX XXXX? into than look out still initial level guidance above be

John Berger

pertaining having and not, those the business – or just visibility goes given it believe and and into to different flow. the model term cash Well, this long cash a flows

working are a or on it believe and XXXX forecast. I and already So team budget my not,

a would still say what it is And in on certainly that around is think, see, is And that may XX%. I point but some be the call, of give we’ll year – next to over something to and we’re something out, time more could amount. at year XXXX, and we’re point visibility this as it help which more share that the XXXX. looking guidance did minimum I What comes more we of for then wrong of I last few be so to that that you for large this you And in all with able information is getting growth, to this that. into level going not at time, months QX we’ll we’re when later be year’s

that into additional partnerships, other And any homebuilding, haven’t thought the again, the partnerships on. I this of process, we’re baked working

move year So that, of all as first two is certainly we months that would year. signs to see rate growth down this is next any the at of this I we in all plausible kind of rate no see continue into this that slowing growth at all.

a So of cash and didn’t much high lot sure rate and possible. on intelligent sure it’s want that more growth, we that of – fashion. we’re wisely But us. growing focused and fairly growth sure in is to conservative and running more to but high growth But get away we’re we just And generating making and rate equity. going that, definitely we’re make to a opportunities too too the choose and from that there, and that company the there’s making

Michael Weinstein

and XXXX or a idea more and of I question. One do an of kind that’s growing Great. XXXX beyond? When about mean, retrofitting think batteries, in you you have of guidance kind where

John Berger

Are you in or terms territories? where same of the question? It’s asking geography another

Michael Weinstein

How we’re in growing? – guess, revenues those our to be are sales about I to Where are that customers, be to growing, of going going how revenues thinking right? terms

John Berger

Yes.

or that some in starting also, California those and would the that will here to We earlier, of Southwest we’ll two. the our and see, mentioned do the haven’t island we’re in like I and particular, be batteries. What quarter in existing try say that next I customers that broken the for Northeast, out, locals is but you markets, would anywhere as – to want

the product I very out. of lot a product Enphase I a There’s battery. well-capitalized is think, of as mentioned has companies. launches of from the before, well-run, year this going a coming be got to lot

our Tesla as got new We’ve products be innovating we’ve others going more. partnership, know there talked out SolarEdge – more I and out does. is well. and there, about always putting there’s Generac to but

below more in will same still bit pay more rates of the a cases. And either I to without grid to little you and all need customer and some here or solution think, the at be power that, just that don’t lead and awareness

to prices, for a choose rather when to to batteries and in I are different get continue you – solutions from think fashion, these products precipitous all the consumers and drop available going So Sunnova. our particularly

increased So think rate. attachment that certainly an yes, I amount we see of will

and them work more We’re upsell encourage looking our figure those how and about with opportunities, out we more do business. more so to gives dealers of that

our And fashion. in customers much of a care takes better

there in going any had is our occurred the of lot this make that Rico say we’re dealers of You’re customers. phrase. doing out payment everybody when, sure that battery that get is of extremely batteries, wanted that unfortunate talking those use did in to there can. year. all and neighbors a the with And power least for their a turn earnest but time, been example happy one. Puerto earnest batteries family customers these those when making new and many not. and we’ve upselling earthquakes friends at One in to events the around of happy They everything unfortunately, been were – of We and very customer can’t a looking, we We’ve the can that

opportunity better battery the everybody services do, to that in make to So procure that that wants to better we’re the sure going that to from and has continue sees us. with price energy the try value

Michael Weinstein

very Okay. much. Great, you thank

Operator

Our Please. next question Karp Sophie Go Capital comes with from ahead the KeyBanc line Markets. of

line open. Your is now

Sophie Karp

of Couple questions.

one, First [indiscernible] clarification just a

John Berger

Yes.

cash building of – No, debt. for is talking the the about talk is question was when about securitizations, – that recurring can cash that, retaining recurring So business? flows a we we flows sort cash are hear long-term I in

say, talking sales and of, selling about and then such. are off do on many asset We do a equity loans

like what the And be closer company. to get then do We’re to as deliver we be is flow as recurring achieve look time, and can. of much cash we’d retain from flows a to able operations able as to looking we over cash to those period

of level And about are both the for that including our a build long and of facilities, company, that what the Board corporate management we very proper long talking term is our the and term. the on care we level have focused the overall can for shareholders was customers so again, for take that’s I long sure making the asset debt something long-term the term and the and team leveraging

So the – simply debt way, securitization capital to capital cost the markets. lowest no, access economical most the the is

Sophie Karp

Yes. Perfect.

to the may bit getting further and are a now? for that spreads the work assets consider you’re to down the to so And sense I as we could that through of road that maybe make going the portfolio? be being think advance you rate you that does about mean securitized little you your speak vintage the us when

John Berger

Sure. older fairly little This newer a last vintage. – of and it, securitization in some had some then are assets in are about that assets vintage. bit Roughly half

in vintage of forward more those move we’ll we time, and by be see, assets. just more definition, newer As the

done rate declines the the Sophie, we as as quality of a good class We the demonstrating advance continue to competitors see as demonstrate the the mentioned this asset as job and area in of I premium, increase risk well. and have quality earlier, our asset class

older our even older it, course, to made overall some falling. enters rates of have of interest maybe our vintages refinancing of I – and some And the reference been That securitizations. that,

significant. has We’re cost XX of look The taking that. at drop past the over months. quite a capital Particularly been

And company. looking cash we so building for that to from we the that cash And more providing refinance up operations we’re likely and to at. cash up pull that’s stability the to able that balance more or sure can flows, long-term that either like and be again, feel something sheet recurring make flow more

Sophie Karp

last I may. one And Terrific. one, if

plan asset points lower talking this guess, I you and flow at level. not free for achieve cash when forward, bringing in you’re time that about You’re to the positive the

kind to point able driving flow think to you and you’re maybe color what’s Could point us the I of asset achieve level or utilization. this cash give on like some where heard lower something that. repeat positive those I say X.X% X.X% you

John Berger

Yes.

follow-up to a call or to is question the this on the call. the So last

I think securitization about term as that at saying than expected. point. origination to that to us was the we the going side, it, our that faster and is able it over Julien is into what Eric and And asked financing clear the we’re that growth, be about that we’re so larger are growth, costs had enabling cover market that we’re allocated to basically larger-than-expected

the of this towards they cash that can getting, filling neutral. of that securitization cash sort that we any So the achieved instance, is be we’re need that need – going financing cash we flows from like, for any so of sort

that assets is of if do the to like assets, side those to to not we the we’d fully fully to that we to covering securitization. from costs able fully – in the other as did lever without cash, Or assets the using chose lever What that in get the securitization. so needing of all are be on that in terms side operations the of be

So durability. a financial it more lot operational, gives us

and so profitable expected year And cash foreseeable this that future more what continues. this generation, and the is is trend our describing this driving I than growth as merely was growth in both

so recognizing to And the on and question updating earnings answer my comment simply in – to previous the my call.

Sophie Karp

quarter. Thank you. you for the clarifying, on Congrats thank

Operator

of Pavel Please. Raymond Molchanov from ahead Our the from James. next Go question comes line

is line now open. Your

Pavel Molchanov

taking for question. the Thanks

since out a for you take less that This given ask years rates industry, since it’s to capital the shift of about would a kind kind the the cost do year you’ve cost remained capital. one of and target, been presumably ever general, than to in in X%, the or first I it the of as space. XX different SolarCity Sunnova talking X% of for point believe, put achieving? What slightly the something everybody marks, the abstract benchmark, me Let think

John Berger

the Yes. had discount the Eric Thanks, they again, the X.X% put Pavel. Q&A start And Well, a asked guess, I off question on piece out session, earlier, to right? rate.

point, environment pretty It’s this think keeps at it rate clear or whether anybody’s reverse. now this particularly some with I guess X%, sub we’re getting move. does low just recent it’s lower

bad you to it and prepared conservative that’s the fairly the it’s be into don’t market, need think of both. for you know want think in instance, for necessarily. I I the it’s very dig the you equation But value side to to way. as securitization any not change that, and that’s create also discounts if clear assumptions the I used used in

going your I – that. little XX if But years, flows. been last, in you’ve simply, a these cash I and nothing the dropping. think, your It’s risk your retaining flows you the look maybe it’s trend cash retaining value than there’s you continue, them bit through been actually the point, is off clearly at – it’s see longer better I to certainly look asset think more It’s premium class retaining selling that if And this. off. than assets, to that, but

this we a if again, customer. goes a service to service paying again, properly And is provider, you’re the customers, customer happy the

rate up the And to risk-free overall if so industry unforeseen change the X% the event. don’t continue When that’s maybe to from in to drop further and go barring the me say, a I X%, X%, really discount and a answer. I more some macroeconomic will off jumping standard, further that should for think know

think I do all comfortable feel you answer in to more and when that. that’s for doing about you to the investor answer the lenders that

So I’m answer not to going that.

of I you good it. in indicated, a XX you, what to the I basis looking XX next see time. X% us terms see I look being at fairly the And very at in about conservative. significantly. – and market way value. I looking when think at months, the can that I think at $XX.XX, per tell the more this feel to ahead And look that’s for the tell share that’s growing I right quite just I to is I’m can $XX.XX, need I as why

indicate being few last at we I look that respond as undervalued stock I the kind that ever- weeks. we’ve so value think see – being And create. lot and think I which of an my over the conservative a got done a price they’ve base increasing in about the And we’ll to hopefully, of value, market shares to goes And here. point

Pavel Molchanov

year? the the or appreciate that geographic to in I mix do end how in? are footprint, And of secondly, geographic many currently Yes. expect by what the you And you perspective on then be states number of that. terms

John Berger

over states and indicating think XX we’re we territories. I are in roughly about U.S.

customers looking be to We drive other of amount costs my say a geography basis. are per to I overall want at expansion. customer down there’s my operating a clearly that and service I geographies. going on huge of densification wouldn’t Again,

this conservative markets, in storage as but we United a of the lot just really And business. time, transformation fairly want At is same the be on global, States, in so of energy the is different up not that. opening a comments, my to indicated I

out that new of make both want enter we’re to we and there’s but lot very in I geographies. we’re these again, what growth, forward very to So take a conservative, of there. in kind our cautious, on But expenditures estimating opportunity also sure

And to I We’ve of think see what continued open need up couple that. pace also I is to continued think the we very new that over methodical be But to we’ll geographies. next judicious do that. with continue years. we’ve

Pavel Molchanov

Thank you very much.

Operator

questions queue closing I’d at this And back there turn over John no call remarks. like to to the for are in further time. some

John Berger

I and job. had fantastic support. dealers year Sunnova make to breakout increase. did very We’ve of amount and everybody year, really, continues our thank men up us want women a that XXXX and appreciate of and the it was of I really call. We momentum all all one of this your into for heck conference everybody, the coming a got Sunnova for joining I’m it company. proud year to for our at a fantastic

right catalyst. Got significant The at is time. industry the The right the really it’s right a the is battery and strategy, people, transforming.

looking We behind XXXX. forward maybe And have us. have the right looking a bigger to XXXX. I indicated the amount having we of fantastic even strategy. to already earlier, a as right And Again, folks ahead

of Thank call. your all you. our appreciate to support next I and look forward So conference

Operator

you. Ladies and Thank joining you available thank at for the gentlemen, we replay would us like for to be today. XX:XX. call A will

disconnect. now may You

Sunnova Energy International (NOVA) 25 Feb 202019 Q4 Earnings call transcript