NOVA - Earnings call transcript Q2 2021 | Sunnova Energy International Inc.

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Operator

Good morning and welcome to Sunnova’s Second Quarter 2021 Earnings Conference Call. Today's call is being recorded and we have allocated an hour for prepared remarks and question-and-answer.

During the question-and-answer session please limit yourselves to one question and one follow-up. At this time, I would like to turn the conference over to Rodney McMahan, Vice President, Investor Relations at Sunnova. Thank you. ahead. go Please

Rodney McMahan

operator. Thank you,

our earnings begin, information make please risks call we those slide during uncertainties Form as our XX-K. Please factors note may statements that will affect refer see presentation, our will forward-looking earnings measures in non-GAAP certain call. various for that for GAAP these Please are we we release are and the that well XXXX those to additional and during Before the to presentation documents press release of non-GAAP described appendix today's press reference regarding subject the cautionary forward-looking and to statements. as today's appropriate Also, disclosures. reconciliations

Officer; Officer. Lane, Chief and President and On John. will over I Vice Robert Sunnova’s call the are Executive John Executive Financial today turn Berger, to the now call Chief Chairman and

John Berger

you Good morning us. and thank for joining

we customer in We strong the are our growth second the quarter customer margins in to single quarter. network, report proud the through into and experienced dealer carried first that count,

last several months, new has residential a customers enter and proposition the of value seen have maturation the industry and phase solar growth, changed. the for with we it, Over

it was as on focused savings industry is customer as on Our acute driven savings. reliability and solely an well now by resiliency once focus and

on stronger collect we quarter, we growth expected than in implied specifically, loans, our continued and spread adjusted single metrics; interest customer This to the margin. financial see of improvements and many key or EBITDA, principal our in solar

the a XX% a operating on customer per basis past in over adjusted year. experienced we decline Additionally, of expense

history. base, continue some adjusted Slide attachment service during quarters. We results rate, more details declining these of the of finished X, we the and strong closing into our this to network. by solar and other in the you the company's any placing trend We operating quarter coming expense on customer see increased with a note month June timely of On further than per the where high of SunStreet systems battery operational began quarter the the dealer will the expect over of acquisition customer month in

Sunnova from homeowners increasing regional strong push grids continued scale advantage reliable more increasingly to and As resilient are energy network, quarter in With and The launch continues of us, growth XXXX. with organic three of customers second XX%. the out setting our SunStreet and services. customer is of growth XXXX. the in This We new the XXXX expected seek expected in went several result, New power up to for later increasing for the Homes just operational continued over we of instability a XX% resulted year-over-year added increase origination, battery we integration year, services of attachment QX this in rate our in QX our months a continued which XX% of when rate XX,XXX customers growth even for acquired. improvements XXXX a from our dealer accounting customer from to to rapid XXXX, XX% behind on our accelerate the Sunnova combination saw

in On battery amongst constraints increased expected. subject continued seen chain of the suppliers. Much batteries, supply availability by competition being improvement availability of have driven we is and this as

this their batteries next comes will the demand in power in relief eliminated the early or given reliability not constraints be all consumer for year certain However, increase in year. late we dramatic if if service, are by

expanding across our thanks continues new rapidly homes the to be service of sub-dealers, Our XXX dedication success made and installers territory. to dealers our and possible,

XXXX. the count to end near be we installers, by Over nearly anticipate the last and year, or X,XXX XXX dealers and we of and homes added sub-dealers new at this

giving to us costs lead increased on year. dealers Our greatly time, growth, contribute generation estimates. our acquisition both in customer to have point future confidence will and customer over grow, which our further decreasing last base, our we our brand latter value to and over visibility Per by compared increasing continues growth to the our XXX%

updated expected information our cash on contract we on Lastly, and life customer inflows. slide this have

As average previous equaled contract while customer over XX, expect life we weighted cash contracts June $XXX $XXX the remaining of our to million. from million to XXXX, months twelve the years, in on receive next the inflows XX.X the increased quarter

solar strengthen growth XXXX meter even Turning results. We services ends in to summary our are service, adjusted loans expected spend of growth, loans grid upselling investment of customer in focus of aggregation microgrids, provide the as per an hardware trend adjusted results increase the well higher on EBITDA believe growth together our a the and such P&I services, and we XXXX. quarters receive the customer and XX% EBITDA strong as we in will on as growth coming our subsides. as and the by once especially result replacement by interest financial solar the than further as QX Slide X, in principal the from These measured value with to and

improved midpoint full-year growth for expected, cash cash later recurring call, expect to but the detail quarter. noting cash from As to flow we in continue this is on and year. that it results prior very large operating break-even XXXX in greater a flow materially the our in flow we cash our adjusted anticipate worth year-over-year achieve discuss Rob operating will

tools X, customers, long-term fast are as Turning building software offering clear which dealers, aggregation. for and customers analytics and a meet now it our predictive need, we energy out grid this for is that services capabilities end-to-end platform, expecting to Slide such is service quoting that for service To software intelligent. contains are

years, date both the $XXX We place seven opportunities It with least customer that we our programs have the estimated XX of noted service of a all the service Therefore, are the to for come. next ownership the million an and in contractual be pipeline relationship with in contracts. million at to for in the grid services. significant seeing years with grid potential To an additional over the grid value Sunnova value. right $XX retains of any for and to should the the customer and Sunnova customer services in has obligation

care industry turn focused service service dedicated Our at call quality service to growing electric crucial over position continues vehicle technicians The new Sunnova-employed load the on secondary leader market. managers, itself pace Sunnova to residential is the predicatively now I to our as Rob. technologies team and Service for becoming and the batteries, the customer chargers, in delivering generation enter unparalleled a and quicker differentiator increasingly energy will the accurately, industry is service. team are base. service as such providing field as customer and higher energy quickly,

Robert Lane

Thank you, John.

are by Turning X, the interest over quarter the increased up received while continued will principal loans second same QX XXXX to QX adjusted you from over results over and years. solar XX% slide see XXX%, EBITDA period on the respectively. our improvement XXX% few the XXXX past and and revenues in

from As although quarter declined John this QX adjusted they year-over-year. noted year, improved and earlier, the recurring first flows cash of materially operating

higher be in As into in our XX-Q, stronger half expense this for to lower the because the the loans, balance, forecasted made we because AOCF to than have principal record year detailed strong second interest of cash results expect low-cost of than of the and On that further the on of half budgeted due was were year originally in XXXX. SunStreet. expenses year, from executed we quarter acceleration second of financings payments the second the an certain the this

increased an ROCF on for Furthermore, end at discount the that industry a to our conservative expect Contracted Contracted NCCV share breakeven in will X%, excluding milestone expect the on cash to positive Power-Co. XXXX, Using Customer a absolute NCCV or acquired of increasing Customer for Gross experiencing June our also customers. a On increases the yet Overall, over both same year GCCV, significant the per $X.X balance and $X.X We X, year we frame, our Slide an to be a balance see June and over year. NCCV, SunStreet significant increase year-over-year. customer on or XX, increased the Value, time the basis, the see basis of from positive per addition NCCV and to of has billion to you to are Value, billion rate also on XX, Net XXXX.

both NCCV upsells only reminder, base. for any growth, they renewals, our exclude GCCV a as or value metrics cash flow As our contracted and represent existing

transactions not items in and position. meaningful average cash over customer contracted excluded per they significant these Slide our value financing securitizations XXXX three number reflected to are of sold values, have become The our a recent weighted will that grows. date While X.X%. completed just of over the achieved services do blended time customer more and as include financing yield summarizes activity X

we be that to transactions financing Our cash to a This represent our take issue of elected to amortization yield us to debt cash assets our subject recent punitive and in tranches high pivot securitizations. that flows equity. strategy to they not from corporate company in would the otherwise allows two better the the highly allowing service to align of the In non-recourse the those level. more the cash flows our with SPVs thereby generate, flows move short, underlying cash most

was was the PPAs securitization of pre-existing it first a in re-financing particularly collateral leases from securitization that solar June Our sector's unique and securitization. ever

AA- rated average able securitization record rated first into industry represented tranche which spread to treasuries an loan our XXX July were our A- split weighted as we an first our to us, for securitization Our ever points. drove another tranche, both and basis to

credit delinquency our debt our improving included which XXXX, the We have flows. high $XXX $XXX of and million closed restructuring whom investors, in securitization and quality, are our tax and programs terms. cash to rates, especially saw participated of loan funds, grateful Other activity decreasing the of default of for both equity several reliability in recognizing million inaugural our warehouse the in financing a since

million XX level while $XXX least bridge that our debt a at of to corporate the for a us maturity fund bond. next us issued also giving growth bullet We to enabled convertible months

a As conversion transactions call $XX and of investors Sunnova's strengthening These its portion to aware, corporate cash believe used milestones makes improved will of we we the debt effectively balance recurring to the flow. greatly proceeds of structure per accelerate they as convertible operating our the a lead capped important transformation in are share. the sheet capital that price are purchase of

from the $XXX.X as advantage to in cash by working the driven at recent capitalization balance $XXX.X XX, of opportunity sheet needs needed XXXX, balance complete million, raises million company full it capital to XX, flexibility the company at sizable to growth up and XXXX. XX, XXXX up and total Our was to take the strategy. $XXX.X with increase front undertaken us the of from ensure has our long-term million provide March debt June This June was of

of million as assets or $XXX borrow debt we June XX, equity. cash unencumbered otherwise our to XXXX, warehouse available from draw tax ability Given of an down and the had additional

million recent billion since have Those enough growth, working sheet securitizations fund and we have convertible our recurring of company prefund our the additional that, rate subject for to a high focus. run investments. in we working giving collateral, enough have our Beyond future debt in of ensure believe to annualized avoid issuance runway of and our capital our who balance tranches an for $XXX that $X.X can We known us we primary Sunnova flow so we growth. capacity been available we warehouses offering to as to yield currently the new have capital of that tax always as know days cash has a private operating used tremendous equity,

sources past forecasted sources Turning to through as XX uses the as XXXX. our well of uses Slide our shared years and have cash we three and for

no that, from cash our of Recall statement past on every verified, in ROCF, a have flows basis. that GAAP, operations investors calls attempted we flows this in or into that accounts dollar for already to cash more nature. we As our financing doubt consider of discussion reclassify GAAP have conference presentation or are more ROCF, investing while investing cash consider but we financing excluding in flows other operational, per from historical

of are the before, existing investing in Here, the GAAP in operations. flows burdened classification consider regardless from flows cash we returns. cash new complete our is we systems our we Investments mentioned all and have ROCF, cash the includes unlevered as picture. same fully flows,

level Finally, corporate from flows other sales. cash and debt, our asset we warehouses, the securitizations, from our break asset and into net out net our debt, proceeds which and from net non-recourse tax capital any includes financing proceeds potential equity, proceeds

out separate and costs, nature. integration We also in that are one-time truly primarily items, acquisition

note. of what So is takeaway? items Three the

a First, execution ROCF is expected to most of as grow pivot have analysts and result than our of predicted long-term higher capitalization capital market our strategy. the previously

for we convertible the XXXX in least options as third, XXXX. we And not launched another given service-retained have have need the our issuing corporate asset Second, will we These capital we believe projected include investment do bullet-maturity end at unit Slide our stated investment of our flows capital we through of debt any when offering, additional we corporate economics. cash that expectations, of the and assets tranches numerous. color critical issuing on sales are additional bond, now grade XX securitizations. or On mass additional appreciated, additional provide

expected you return a XX, margins of On single trailing as spread at twelve our XX, leverage cost June other on burdened XXXX, flows. for was while of unlevered guidance As XXXX. XX, months based see, the we to operating trailing of a will seeing In X.X% stronger of fully improvement above resulted origination as customer than ranges. are in in you spread on will XX, debt trailing our Slide March twelve June weighted cash X.X% words, a similarly of X.X% as calculated implied the average was months XXXX, leading X.X%. and twelve This an months, new see

Given the from our convert the payments allowed million of million. million. AOCF expected to with in especially the to both $XX together as utilization of interest decrease our strong principal to of has expected strong XXXX-X are cash origination loan guidance us to increase debt, from loans expense performance of $XX refinancing SunStreet, to the in as and solar $XX received and the increasing well prepayments, of proceeds million This, performance warehouse $XX lieu we

enhance software and we of customer planned some of the pull adjusted accelerate holding will our that further and replacements beyond. our lower and and forward as operating per-unit experience EBITDA make XXXX further in meter the ROCF in we the XXXX unchanged and to platform are ability believe investments second dealer We costs half

the anticipate through and forecasted, homes on XXXX SunStreet customers continue added our to X,XXX we X new April business. closed As acquisition in we

in as costs Additionally, the of anticipated XXXX, XX, SunStreet. transaction million with of $X.X over million have spend years two to $XX expect next we we June spent the approximately and integration associated

XX, customers June through that are over day. solar the targeted P&I the and XXXX, our revenue already as of of As of contracted XXXX XX% same mid-point of loans existing

the organic I XX%. estimated turn our XX% John. increase principal we year-over-year interest as XXXX loans solar back growth our maintaining noted are from are increasing We call XXXX XX%. and and estimated to we of receive in And adjusted EBITDA the year-over-year customer John now on over to earlier, will

John Berger

Rob. been Sunnova's founding have doing right the Thanks, focused on Since is for we what long-term.

early as accumulating in in firm high Our that by a a for do In bet conservative able customers capitalization cash enough has build dollars billions flows our strategy to made and to more locked is pursue a of capital This paid building formidable future cost with lower flow of amount predicated balance off which drive capital been foundation now we be lowest optionality, that we cost the sheet many having our on clearly of have company years. market far cash they crucial days, a to flows than the we cash a would to assets, even underlying time. our and the at and appreciated the prove of in the industry. has generate, valuable would have

together AOCF, see with addition, we One be and already the our and the a solar at now are years. rate next can than over the adjusted interest leverage customer where increasing In our at dramatically growth. by are fact on happening EBITDA point can this operating increased faster a principal loans, several ROCF

is amounts of long-term, firm customer a On this fact, build strategy larger our cash built thanks generation are that this generating better successfully competitors equates a long-term foundation our will strong service to greater capitalization business have flows a out already contracted some to model. service we bases incredibly better and new than What and In energy in we cash cash price. energy a to delivering machine. company continue on at we focused with

speed able and at customer are the field. their increasing concerns, on to and the they questions, issues respond in Our concentrated employees serving the to are which

improvement intelligent, customers which drive same In also enable deliver end will and service the platform the key predictive. tremendous only financial us aggregate value but even provide and reliable, enabler. technology a This will ourselves Service to will our improved to further are QX, to financing technology XX% real more platform by for we XX% not both customers. year. fast, enable creation, expect we of from and service that our a us by fact, our value a building is duration our and is QX is business, The

to end that energy to service the continue consumers we long-term service that, will With for We own the the our please and their in best enables energy an and the is thinking service. are independence. energy reliable, power industry providing again day, questions. differentiator the quick, crucial is open building operator, lead of in and At line

Operator

[Operator Instructions].

of Your line first Sachs Lee the Brian Company. question with comes from Goldman and

Brian Lee

start there's XXXX. targets just I Maybe growth here been the questions to around off, a lot for of know

and the You've the a year better XXXX got then even on XX an for XX. QX then strong view And from to to raising you're metric. obviously that QX start

maybe just back that. should here related happening in And maybe I growth know SunStreet in you Why in year. what's for raise that was you the then But a for So to still Anything the second What getting for for the organic customer see be QX? guidance actual did additions lost said aware in SunStreet not quarter we the for you? what the target of? X,XXX half translation? 'XX?

John Berger

Hey, Brian. This is John. Thanks.

some moving of replacements the First, Rob the his of 'XX. looking 'XX year, then and on moved from up cost in prepared into the the [AT&C] stated, obsolescence, remarks at then as half side, the are back we meter

So the thing. that's first

We're the the And And from the just side charging as up, a year lot the shifting as we're new of et spending. of to on next this cetera. the pull things, opportunities well obviously geographies EV So load then some shifting, software. whether it's it's services seeing year. generators, managers, really of those trying into

next And on sort little of plus top of relative conservative bit. course, next at for so growth a next But just a on guidance of a we that EBITDA of year. for to that. like for that little QX Is we'll, and of what guidance call spending shift. forward it do time a the anybody year guidance, in issue Probably little historically, P&I we've adjusted so. And as should it's this far formal shifting so out in And the conservative? the gave year Is of some enough Group? felt Probably point any industry. our in just else in done But October. really ahead reminder, we do explain we

So that question in you part that? you enough, And of the Rob, -- will. was felt other why terms of question, don’t if like the take

Robert Lane

SunStreet X,XXX mean, and I quarter. did pretty about Yes. customers business. customers ratable homebuilder the we That's in a

as went So Brian. that about expected, we

Brian Lee

to answer. the unchanged year, this helpful. side. an for you range you're are and impact targets keeping original are or I that's my did unchanged your right But misinterpreting better relative rephrase having Okay, things for saying Maybe, 'XX now maybe target why cost I growth But that's you for your miss on John, just question, to the just customer wondering keeping growth growth shifts XXXX. was I'm something? see

John Berger

to thought EBITDA sorry. P&I. adjusted you were referring Yes, plus I

material it things, been again, regards chain, been in of year we've the on see as to the continue last improvement coming actually modules really inverters. almost customer supply past quarter, a issues competition space, this phases battery more strong. to -- has and the in of And see we on do remarks, including for a or things more we or XX It's past side no with really talking with on side on the days a in lot this to over Now over specifically, this been and very more year.

Tesla doing in many coming there. [solarize] We've well, As as very listed Generac, course, up got are Aaron in ramp continues out his listed a as good as others then, call; job. well up. as his [Bobby] of And to calls,

back a in including on I at from -- lot of huge you've this because the the lot lot a is on our fires, a from events and storage States, coming. going consumers heard reliability But companies last mentioned there's that rate, there's that’s that, other the wild two of just of and that a supply on, focus attachment resiliency. you So then are look hurricane of season,

the on materially So, see on we we we're storage And but improvement, thought so seeing see demand the up side things. then the pick demand as higher. of continue materially is storage, we to would

So entirely into it if But everything of think, we higher get a sure if that we want, even including we're next by doesn't, the spill we year. bit year. demand not the may it can end the the

with little year. customer So that's a increase this growth why we paused to bit guidance

Next just that the question? year, October. lift growth of But we'll we're seeing, it’s seems give the strong. fairly us rate Again, your next to growth in very answer for given easy that trend for formal easy us year. for guidance Does that raise a fairly

Brian Lee

additional the -- amount the were at have while per in gross I and gross customer quite both you they remarks. color. I One is question. in But threw here? per value capital I Absolutely of deck here, QX quick it total We sense. that how appreciate seen a follow-ups customer customer for sharing the with we housekeeping at few It I That's helpful. appreciate look us. just number your chart. down and that bit could misprints a didn't value When value you of squeeze with the prepared liquidity think And in about contracted maybe for from XXXX. for down walking like the here. customer more that and raises sound Does you What's should a issue, makes haven't on the that happening for of the be were quarters imply you a of it to $XX,XXX through in $XX,XXX, And a pieces potential QX the considering of that you'd option then SunStreet? million in Is list when fairly secondly, out numbers. that reported XXX mix customer low down sort capital equity if 'XX? some it's here? future

Robert Lane

on so basis. SunStreet there customer is Yes, One, have about up think a effects. some really per I into [indiscernible]. really that seeing XX,XXX we mix, we two picked it customers What don't you're

pretty then the servicing and fee out We zero customers. service and because have much we there right a now, in cash paid that’s we’re

the So service but fully revenue we obligation, it’s have not them. covered, there's additional with attached

So the it's that's the true the be the that the is quarters. there sales. if and we on gap ducks certainly to feed creating on And we're mean, past been to going screaming there's that's tranche several go at see the again, there certainly But relationship. market your corporate in that issue. as has been first an valuations you that down other equity that, have on capital, is, equity, We dividends it always especially on where back to so the service option this things it now is the really in but what that our assets in option, do certainly. And securitizations, corporate right is in last want contract, with of that a we denominator question key And we them. to debt. given the seeing believe not customer, the can continue growth to prices, look at wouldn't stock a to the asset an -- call market. over today's many in service them it is happy before we for have again grade on to went little paying deeper bit We the reiterate go investment key are and We the actually to know, and to would that more below our out go I and opportunities value course, we opportunity retained. in quacking, asset you

John Berger

we this reinforce said And asset values. equity Brian, disconnect you'll corporate get is just this in while, the completely again. where here the what to a oftentimes in And values sector, every is, Rob from are John, once

and just ABS which of one at our lease witnessed equity valuations. by as As this obviously, we it's but and really in a And their did just it's one extreme peers pretty And you then at divorce not PPA from two offerings well. point loan them, and corporate looking recently, know, time. those price, as and there is us,

out So, this share point something looks us in to $XX to asset to very, certainly relative a time. values at the compelling that’s very

these issuing we frankly, so the the options, We it. including do at don't number of time, and need of a it had soon intention some in point the some because prices. and liquidity. things. capital ahead we go and side option, We're if avenue no And us something that may you be another that exploring gives assets equity. of putting place another it start of on this it's of of We wouldn't And corporate will, offered anytime selling in we

doing financing the amount side side. Rob's is on us the optionality debt what most of of is the doing on gives us giving anybody equity corporate in right has corporate our with what from than it the side, this and we're I lot think, a doing So space, flexibility anything

Operator

of question next from Mark JPMorgan. the of comes Strouse Your line

Mark Strouse

question. follow-up a Brian's to Just

year, that next unchanged? going for growth up else targets loans that’s you or but you there left that targets, Is up it's a the metric is EBITDA obviously not growth not of there? the why something mix On and took included just that's in

John Berger

mean and in we of but is closer continues XX% be. a this point is Yes, I actually seeing XX% to it best to ours, market the so loans in estimate this probably Mark, at John. time, that push think direction. move level could we're Yes, towards

said, you as some wanted before well. formally like And it will, our we give so to term, conservatism And of all have we I a degree gain few months weeks, of you XXXX guidance. was more also if

of creating a interest thought we obviously, And basis. plus it's from on on that's value a the XXXX growth and growth per why through adjusted feel rate. we EBITDA basis comfortable principal per the customer given about customer customer XX% So, above rate, our significantly that of now

want earnings we on least make it call up, on move that next to will EBITDA the So adjusted that, year. for likely at for next but certain P&I, call the formal is that plus

Mark Strouse

the then outside… And

Operator

Mr. has Strouse's disconnected. line

line comes of Partner. question Capital the with next Philip ROTH Your Shen from

Philip Shen

With talk terms green behind about refinancing assets the recent next of securitizations, of including the in bond? what's you, first can securitized you

Robert Lane

Yes, Phil, is….. the alerts, thanks for suggest We keep folks sure that that mean page checking IR loaded. want. on signed asking. would locked Whatever blocks. our is the on I Bottom it in line up Twitter. you make here you're and investor and We're analogy us follow take refresh, we're

John Berger

you… for Just

Robert Lane

we two come earnings, equity. securitization with out flow complete cash other needed Clearly few of before our out care move come look, yes, yield, on the which, we both the probably said us order was want point, high convertible giving you today green which on get We the had So To your as delivered. closed refinancing launch these to us the make clean. we and tranches be We the financing able a steps of. But XXXX-X. the we is, allow forewent to get sure that taken the in advance, it to the that in to up debt do you framework, to We've remember, move, you up to us into that right? things. up runway setting securitizations, green of to bond, to open all we can

ahead no the filing no think announcement us I see this in over to an I to the soon. that you expect emphasize went of terms the me very in offering. had I this look, need formal of time, this with Q, market lawyers is Now, of But should that told uncertain

Philip Shen

ahead Rob. Great. Thanks for And…go the detail.

Robert Lane

all I said, will me that's they to say. allow

Philip Shen

Got it.

given spreads about recent And your Okay. talked down ABS coming your spreads. Well, are the nicely. you in transactions, two

could get you base points. investors these points rate. How for with loan shared recent low spread recent in ABS much to XX as And basis checked your basis was think time rates as over I us spreads XXX loan over next What XXXX to XX the months? X go we over can lower heading do and in some that with base they the -- ABS assets? see spreads into most

Robert Lane

in. in. believe can continue I come mean, we've We seen certainly to they them come

were not X.X -- asset so value X.X that ago, I was say I to X.X had. was most ABS that One of or be about was when it's conference, years told still we it class there I great the is that at the would disconnected much an -- things

lot your is. could getting to far to go. more. course are back we're incredibly given we've don't there getting would true where room come the as see had. a I those closer them love to what think especially performance come that value I want as in, of point to we prognosticate think that point, We I for do in is back them to to where strong spreads

rates give planning squeeze doing little more. to on too. are you when them going continue the base us those that's rise, our more be We continue see coming to -- and or a room in margins to not actually interest to flat But based bit rates

follow So that. we're going to continue to

rates you'll be I think there. it's down, see the compression, a and the then more we very virtuous get base go have us we will the opportunity spread rate see cycle. interest not but go base to there's flatter or Either, for spread rates absolute compression compression, get up, we'll may and

John Berger

first that on -- the June. securitizations first got that obviously, roughly that four refinance of did today, which as that about And XXX on spread in points, back those And bring I industry’s rate, got we've could one, on we Rob, the securitization. XXX is the we industry’s basis probably could in somewhere refinancing we between that's basis think a build On securitizations. points the that

quite from things great But next so significant And coming in Now, think is market may pick happen call, the previous versus, sense quite you et over we or side a securitizations cash payments, take up those flow and value makes years cetera. will those in it it's do. on to rough it Rob of three in I while the position as is a assets pretty lot. and we're our -- really a as and

Philip Shen

one last here. One

a and seeing you unit and you're loan maybe economics that In you, the prepayment you at XX% levels? through at XX%. talked and little XX% unit terms the loans how for could of for be Are Can the you on improve John economics, talk seeing bit economics you then you're a versus think we're about specifically lease market where to you trend company. yes, does basis lease see much you were is we if you from unit are that or that you the But down? whole perspective, spread from that at do and levels come that change? lower versus so look at example, extending prepayment a think have seeing the how coming it -- loan for For

John Berger

Yes, loans customer it's well services the were, do great plus seeing on We're remind finance-agnostic. to good a really and to service great question. returns we that the our again, everybody, on put as loans our just

for grid customers on lease think effectively whatever same through I of putting very done good loans, so PPAs, way consistent service And keep and do. services. with best truly all a we the our what we've job we the the parity

it. cash as is that spoke to seeing So than to us prepared even we're planned made and go the to and had of cash flow. why increasing are about more up his That remarks, than we about continue and move was in thought giving part we flow agnostic we some and further Rob further we of That rates we a increasing planned. see prepayment But to, that's continue time. forward that far in us guided

if We we're place, you in to that putting also further augment down programs a few place pay putting will. things that in have we're

a So we side this as [debt of forward on far rapid downs year. been move time do so the degree] expect loan saying that we in pay have quite we on the and bit

Operator

line Kallo a of question Baird. from Ben comes next Your with

Ben Kallo

three. have I

offering, you just can both First, update know But progressed? John. on us how on give the Generac? it's the partnership an growth I mentioned you’re and you

John Berger

what we’re find be obviously of going look to growth, strong. at well Ben. fairly dealer was -- if Yes, I ahead continues we're expected. you we -- to mean, it our It

look X,XXX in we at you next last end clearly dealers when at gave of think, I ahead our a forecast out the year pace. that far of quarter, pretty we're

part and those Generac working like and And moving. folks right Aaron with his the team to is of get really products that dealers over find so

back products I there, through quarters. the of next coming, the call call number so success I more the in -- a let yesterday went his in Aaron it, really and and through as out success launching And lot over go expect that to particularly some will and it, had we've half as of the they're this year, several year

to I And do more we they've well. and They well they're So coming think fantastic job those with great always we more great business run done company, them. clearly. can a products, pretty want have do, and are a things

Ben Kallo

along My [Aggie] statement, an I'm them? like competitors? championship how growth. big dealers you this next as lines versus dealer a laying you you're question national get greetings. this How but down do recruit sorry to the about your go about those But the

John Berger

Yes, that hurt.

football. happens Just see wait till this year, in right? We'll what

applications really pieces on services the differentiator get and focusing quote dramatic service is service really -- more, a and getting think we and do last when what constantly particularly tool, crucial intent service just And the continued that is matters I pushing strategy and dealers et that another right and making we're side we're as to as to field, services really my ago. -- we the improvement the we're And the over And the being dealers, to to remarks customers, always we're is also because can can clearly -- the on anybody the really we're of on the of and I our outpace And to well, sure referrals, that moving others the said seeing and improvement, something we several customer. and cetera. what that in the in the just We software offering. really see we're a working. that then want you focused see the app months a this pretty that adopting instance, and company to couple for trend months we can year. that you commissioning launched come strategy, improving can

all want totally any and through we've deals our focused so on into your products platform, -- they originators so them. trying We the and And own we're got with have plug not don't the starters. we're financing, take once to forth

And service our leads increase tools again, increase well. my we're no mentioned, to there's in channel and in a So top want more to remarks, push then I that. referrals. we And on conflict. dealers to as to year-over-year to of have as more improve XXX% that, continue adding We prepared customer

to long-term. So We continue not But going the do businesses efforts and value best and don't on out dealers. strongly marketplace the basket, push And that. a providing capabilities do to really long-term have, the all the we our dealers. to Overall, clearly that for we're the you but focused will but really of that. this pay lot will, up. others in then outside others there not we're branding. the going growing is gaining believe traction if of really We're over that for We're

Ben Kallo

have questions. the turning just four then questions there, And to side. liquidity two so more actually I or

to you recurring and The cash guys talk get any the cash to first emphasized about of about have way capital, one and that I back doesn’t systems going the one, both that you flow. have ending solar that always flow? way the we just things can And this, recurring the that access you sale talks versus it. But asset

Robert Lane

what's I return think investor. equity at to mean, is going I best we look have the total for would what Yes, the that

or more there sale, could so probably if process, that that And when asset is if through down proceeds the We asset an at we assume there considered bottom. an from this get sale. we've opportunities, gone -- we'll be obviously that we consider

So is it's right? not cash. benefit It it's you cash It for a not recurring that an specific If yes, asset, onetime is cash, recurring sell transaction. cash.

that's why So at a this bottom considering part throwing it we're out are as ROCF. of and the

Ben Kallo

say system, I'm so this think or plus batteries that's if I a for 'XX? 'XX, baked wrong, I system XXX,XXX me systems [$XX,XXX] finally, then get do implying in for I sticking that’s just some in $X.X people of new billion that’s investment the can guidance, if in, math, tell And

Robert Lane

over pivot the are to of obviously a lot to two more making like want around factors and that I and ticket. there more customer to adding bigger grids likely into then add even is, think more going do you're see I But same we course, the in than We're directionally storage number to investors the think skis that one a of correct. at I as of micro in try have interest time, expect and don't on more my a battery as starting timeframe. get lot demand guidance. from to specific Obviously, tickets adds where a smaller we well things batteries, be in homebuilder going you're

that of to especially of in -- front that a you For to well certainly when to conservative. the little having think ends 'XX. your you on think the a wanting dealers could in it as mean by looks target there's sub-dealers X,XXX of end growth be I and way wanting point opportunities yes, we're up us, think I there I that our Yes, is, about know, increase. But conservative,

Operator

comes Credit the question from next line You're Suisse. of with [indiscernible]

Unidentified Analyst

those just you John, guidance. question, of coming any levels and on impacting the impact high One on seeing the either unlevered XXXX in and/or labor IRRs demand some the Are for from on projects? shortages those XXXX

John Berger

dropped continue? has very time, faster far mean, our strong. it's the it is Is the And returns, stronger. clearly of seeing move strength. and trend it cost and but at And customers than I lot a stayed our stayed going than we're on has we cash of economics much No, thought unit maintained capital would. So that from our to cash same unlevered further our

labor our little We expenses, bit, That is basis. a with case their the come because the temporary on are also are may of at therefore margins -- and of manage the that in least dealers ones our a model, true some equipment. the

they So that, they a will. which go have, up with modules if little you bit, manage

and we of labor don't true impact it So, all-in-all, cost have any a materially, issue seen really us expect not to. sort

Unidentified Analyst

maybe just housekeeping. small then like one And

contribution referring cash X.X sale? want related, on some sales or item, SunStreet from be ROCF cash is and asset that that million, cash that marginal the that just to to side which sales might you're the EBITDA what because on the is sale, SunStreet that So the understand

John Berger

there's are -- is nuances actually few have we here. the homebuilders. sitting, there that different So items And a accounting some line

purchase customers account point sale. If So into weeds. or want homebuilders to section, if until what the do, up But to the the the want we're their vast on for I mortgage. just don't slightly is majority into a we the because these they enter customer building which the it is system PPA, of majority homes. going deep roll too of to we don't outright, -- the And into differently, get know home

is seeing them, the there providing So the the a and outright service of purchasing selling It's to but still them actually standpoint. customer portion you're done system into is asset, it being significant what it's but rolling an just not it purchasing the are mortgage. We're from the accounting asset.

loan runs of we're like it viewing through and the for the a the think is Just off internally. asset. it they're sale how immediately Paying it But as purchasing it's P&L. accounted

for, majority As a was vast that And exact beat it on way of far the a beat operating yes, higher we general. I relative we of a to before, as have is had accounted also the our those to revenue. in cash had the those sales. who that would And then attributable being noticed, bit that, little say -- this analysts expenses where were lot

Unidentified Analyst

me. final maybe And from just one take last question

your about more quoting services So John spoke general offering. your and service tool expanding

dealers, like experia look Sunnova connects an branded dealers, of maybe could towards lack can expand it that as for you for you offerings move these of So and kind solar? a and expand solution customers better if the a which kind doe what marketplace, of of word,

John Berger

course, there I origination it providers would the then it characterize and the I'd and work valued are think, there equipment don't of as, characterize dealers are installation. I No, you. thank there highly field, Yes, and that service manufacturers that are in do way.

sure events whether out batteries there's problems, we we've trucks make notice taking as roll do sure even have sure there and months, into had a worked customers’ calls things that where make to few events last willing very, were goes fixed, to home drop laid anything over be, by taken in are but to the of. problems alive, way, that's making care and the whatever all do gets very well, have need where or ones solving moment's we been -- on the to the and may had wrong is employees, in particularly, it that service, the we Our some those this

wireless provider, a that a of of service in all is all the So equipment. been the really exponential an this, that that that with to integrates is number is the which service a company, saying means we're the is is, truly power with founded a And provider. equipment manufacturer, pieces pieces somebody this we're have the company industry what we rise point we're the since seeing and

if you've bring you charging, only getting power managers But things ESS, involved stay Now that specifically together, can there's an of that in with fuel will. a EV those of of you we're well. focused maybe hardware generators, integration and you're solar out cells load instead of just as there, now out that inverter, number going of as apps, pieces on and the all through side got

that definitely ever customer a sort owning frankly, that single company that But or competitors there's think And experia. will. portal and a this has customer. lot us is provider of to versus this one never lot the and service, customer, the down. value don't to everybody to to is it track service of in and choke, And I a don't customer to is for space. trying -- And you service, sure our are the I someone go scale years care us large for we model provide think there making as different one works come. necessary. So any a to than person with for of service has, taken it in That's excellent throat to if materially that's purpose will service

Operator

next question with from line Karp KeyBanc. Sophie of comes Your

Sophie Karp

not just companies within I little something some it wanted like I to space their not answering more maybe ask prior in that them the will, that have competency. are in well. getting guys sell question, that's another your high more a lane, been you and seems and level more their staying products am to core speaking, if the But of you as and to, -- broadly just historically it’s trying presuming in question bit. suppliers alluded

relationship competitive, becomes point competitive then it kind the in and your given you evolve see of do economics position how moving dynamic? this sets landscape So this kind collaborative of forward and what and at

John Berger

Yes, to exciting do, we've that There's so that Sophie, good much that on before. reflection this a is more things can a true historically. than focusing of And question. industry Instead business, seen certainly happen. it's been That right? now And of ever.

And there into of year out to have that's so, involved lot amount looking other things an immense that half there's of capital with, for are a get the so. moved or over and we plus the folks been a space last

going we're would out We've, the options with be far that is, see service some a And on the company side of the so that our of out. to like, some future. of that, founded an what that, but provider. of to work the are that, maybe those to that some be on piece equipment There we're in able there are piece lot there pieces or with like equipment stick business something it. and I model, the app or and a providers is a knitting, stick software we've going may been of equipment overlaps say again, so things, to able And whatever we're -- to we of

the little have to bit but know so far all manufacturing our we to be the And -- very done. going that to do not taking that continue upsell an expect customer contract there's would customer, in be knitting. strong and something comes and overlap, equipment customer anything the employees stick with I service it’s to oftentimes We're own needs the manager our to remarks. stick continue. Nobody the taken there's so, it's load not of to to suppliers, that going except and customer, the our to getting We into black a of very in been us. care to else or is the going we've to that of trucks customer prepared we're And to when fortunate rolling a we're being that up customer a it’s the battery, white. to are definitely care that going my And of business. clear, yes, I and we But I get equipment fear, that. remind also We're provider care relationships again, or and looking something else, and of. take said this with has the are

to… at no So the want the there's of question if day, end we

Sophie Karp

does customer A any right, follow-up this kind your way kind customer loan I Owning it those pay your you that this loan ability if offerings? customers -- -- see if may. of to share include versus customers of or lease potentially customer, bond customers loan the or as in diminish lessons increasing, into in you [DER] of

John Berger

would done a PPA. I lease, parts level put again. that great What a say we think -- get we is the It’s playing to is that question is previous what we have back going loan, field, on I

does diminish customer So don't with does the diminish goods obligations, our in we service to not care. not the services. or relationship our either It customer,

that's out that the seeing, towards hearing fairly going to We're there. industry So trend something I is think entire quickly.

I agnostic. in option it customer there under and services, on From task, or day, we're monetize think a relationship the to think to of the the direction the because at they the it what terms grid choice half end the the they the our customer industry they cannot that start loan I lease true want do. a themselves service contract and of want giving PPA, giving of is under of truly the with right take of whether

far a are PPA. wants whether customer a truly to a agnostic a loan choose or we as lease So as or

Operator

Your from the Molchanov James. with Pavel next Raymond of comes line question

Pavel Molchanov

of in noticing power demand kind of any markets, In about high are you coastal expansion part the the Puerto think Rico and kind I’d is the we story the Lennar the your coastal in of outside the U.S., mainstream markets. model, traditional adoption include long-term If beyond markets that? of post solar rooftop of curve in price

John Berger

Pavel, we yes, are.

States, this in comment the we're to coastal you interest seeing power anticipate which pickup at interior opposed the others. some are I unfortunately we we next we see -- not and from But, last if traditionally a something probably that's we do states. and exposed seeing consumers go Fires, relatively know, and this United at as in there broadening looking close pretty XX as seeing other expansion we're towards probably that will in such strong the Arizona, have that as we've new to we of a pretty and surprised in, hurricanes rates necessarily like consumers year. balance I the by are We're states be made weather-induced You least to events. low was are and launching more I seeing And have strong seen that are solar. about on all international party states, well. from particularly And least certainly interest as Western not of Colorado, definitely can calls. But as in year. earnings with

The too. that is in other thing surprised storage me

So we're seeing that across in the interior United States as well.

industry. as a growth prospects far So for the it's the as basis a compelling forward very on

Pavel Molchanov

the Bill any was What's tax there ITC preliminarily, another the ITC the washing Infrastructure expectation end question. yesterday, between the other that package, extension In maybe of prospect type and in of Senate, some for of classic I'll in of follow-up your included. extension Bipartisan the through now went with kind no year? credits

John Berger

think be I that it's didn't in though. close to pretty expect XXX%. to We that

see true very We that the going to pleased in the That right? and or nature be of it don’t just suspect get years, has American of budget least extenders timeframe, something can in rather we set in I current board or December, our in December resolution, to find continuing over expectation the been that we to do because up to way be several know, our a the looks of on you that's timeframe last, Mainly going bipartisan, going been like that's included country, that's that's of we And the the citizen at later that. a which expected the which is, -- trend so some in be than but that's get the because as to I'm if some can that and it's folks to a were year, climate September to people's -- them tax included no whether priority that this change, not come top or do, the change. the the climate administration extension the has the expectation, highest IPC. out of on is current them priority on there's no also Climate higher priority laid our there's but change remains obviously the will for work.

with this think the month right? December. obviously, And, And it it done or So love year. we it'll move by feel matter I get done just it done extremely we But get the of on, us, to and as that. whether industry, for gets an end comfortable doesn't would that

Operator

for question. time more have We one

comes question with from final Your the Sean Evercore. Morgan of line

Sean Morgan

Earlier is terms the increase I whether knowing or to of the talked of about cash mix, other you -- PPA. business a in other in categories SunStreet. a a attributed can loan cash always the not elect customer assume So most for or the purchase

shift held of all and not and forward? loan, versus that getting customers, that it is sold going XX,XXX plus some So just does just you're unsold, PPA, that that fully is of in how versus out inventory, work some new

John Berger

take clearly, but the we look not Yes, so customers. to XX,XXX consider acquired I none of are -- give that a to be those customer or would

in of then buckets. the we've the don't other into fit others experience doing significant can cash sell that some the fairly are and The contrasts a neatly to, see, which as customers serve-only there are there we you that [indiscernible] three

Operator

questions additional time. at John turn no over Mr. this I'll the to call closing are back for remarks. There Berger

John Berger

you XXXX to the all Thank you, call. continuing operator. company QX that joining is for for Thank pleased We're our us execute.

service, look endeavored we cash to We continue very in see forward flows our of having QX Thank margin, call. a a layout on basis you We've more in offering model the expectation. the have detail of our Look a continue to that look all And to to equity. cash strength we enviable in growth strengthening spot our a and strong business you. see The cash on to forward the strong and flow in seeing customers forward and flow, strong in equity. better to in our to flow cash forward services company and basis. lot of to industry continue experienced great is terms the

Operator

and gentlemen, Ladies this conclude does conference. today's

disconnect. great day. may have now Everyone You a

Sunnova Energy International (NOVA) 29 Jul 212021 Q2 Earnings call transcript