NOVA - Earnings call transcript Q1 2024 | Sunnova Energy International Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Sunnova's First Quarter 2024 Earnings Conference Call. Today's call is being recorded. And we have allocated an hour for prepared remarks and the question-and-answer portion of the call.At this time, I would like to turn the conference over to Rodney McMahan, Vice President, Investor Relations at Sunnova. Please go ahead.

Rodney McMahan

Thank you, operator.

presentation, note are call and subject described our please forward-looking will uncertainties begin, and in that release statements to slide we during Form we today's make as our Before XXXX press XX-K. earnings various risks documents call. those regarding information these additional may certain non-GAAP those will statements.Also, we for reference that measures affect see Please factors forward-looking during today's cautionary press to of Officer; to presentation Vice as and and earnings the non-GAAP call Officer.I the Financial GAAP appropriate appendix Chairman our and now the President are release refer and today the over turn Please as for Sunnova's Executive call John the disclosures.On reconciliations John. well to will Chief Rob Berger, Lane, Executive Chief

William Berger

Lane, Before we our Officer. get started, Financial I Rob acknowledge Chief wanted to

already be we an to in other success. X-K opportunity we ahead. together, arrived from supporting Sunnova have later well team Thank Financial and we down Rob. Rob our position details underway, of the the decision will expect pursue recognizing search tenure.Rob and Officer key during is you, new a role corporate and share logical successor to Sunnova we the want is As for a have focused for serve yesterday, the search Directors, further gratitude for will all activities until his offering, the the on Rob remain run June firm and success we our thank he initial is CFO helping many outside Sunnova's with of Rob presents This to stepping successor execute contributions, XXXX, time to to as in process, we including acquisition Working which for change his express Chief a weeks in his transition.On full will his at will has to discuss behalf this SunStreet the This recognize an our our opportunities. call. as and named, done support of I the for first on public perspectives We continued Board, want industry's financing or company a XX, Board green to his retained as bond. its is through launching sincere that stated

miss will our We and Sunnova first performance, that our to we at commercial everyone take you.Now want a reliable quarter as both remains clean to making review focused and residential remind I customers. for more affordable on accessible, team energy moment

maintain the opportunity cryptocurrency front centers.But allows XXXX, As competitive offering. X, as maintain Sunnova the infrastructure. due onshoring rates. stakeholders continued as decades to on current This economy, means from cost an the grid demand steady adoption rate for tremendous aging increases AI, increased we manufacturing, we the aging power electric driven continues services and to we seeing will utility will grid growth support also market By And the a and electricity to becomes in At discuss on energy replace and has energy and direct public to all and more continue highly and regulators environment.Inflation a is on utility opportunity load approve a expensive see to impact the grow.On of to power Sunnova that energy will vehicle electrification tailwind we're of demand the needed power growth and U.S. infrastructure and in to demand this expected with time, is in long-term Sunnova outstanding needed positioned higher the us, to the that it can utility aging increase by infrastructure much shortly, this our data on capital an same capitalize and less horizon, scenario dramatically damaged multiyear be reliability. of interest provides that of upgrade we to the frequently have deliver had for value in so compelling a rates Slide come. so higher

on and the direct solar rates create Slide see correlation we consistent Slide and evidenced energy a exists As utility Adaptive offerings. these X, our for energy.On of between dynamics demand strong X, adoption Sunnova

homes, be trends customers, we As by customers of families.To financing, management up a almost over hours we the and company, proud energy helping servicing date, Through services XXX,XXX and energy macroeconomic Sunnova to businesses opportunities many gigawatt of storage our has are solutions. view provided these X.X as of X.X innovative indicators their to backed offerings, ahead. protect managing power energy gigawatts our

over We and in XX dealers territories. U.S. new have X,XXX partnered states and with installers homes over

to with doing service see we remain continue customer by and we've the this years dedicated value core day support our are the which technology, in demand backed business. both We recognize as committed our around software, is offerings hardware out.We We centered industry-leading entire team and day who improvements business the customers entire and employees our to to our make in, proposition of XX it ago.

trusted they of upfront as about sustainable and Instead, not energy services a do are maintenance comprehensive, approach their rely that have As Sunnova accessing platform, partner, and the sustainable streamlined our to we businesses. energy to a our are or powering cost, the leading affordable, customers complexities landscape nuanced their and energy energy we increasingly delivering on technical simplifying adaptive so services.With of reliable company, solutions. energy homes worry

support and last $XX.X of million results fourth financial We see the experience and hard compared future in an million year, customer income over the expense to country.Moving are energy steps fruit.This we steady the with continue costs compared $XX.X to per quarter, XX, $XX.X were in total on the the generated XXXX.Additionally, delivered we million are initial unrestricted QX we line as balance relatively our the $XXX.X notes $XX.X customer bear March prior continue decrease quarter, taken more interest our we provided have experienced call.We to during we year-over-year few we that also see adjusted or in on to our proceeds and cash, of to notably, work of from principal growth needs the in customer earnings proof what flat adjusted EBITDA, starting quarter, to quarterly to million guidance sitting at XX.X% last customer receivable, cash in which remained ever on million growing net will reduce to NCCV. Most Slide to operating XX. our all excited in prior value brings, in the than months our the and quarter innovate contracted

their various NCCV our integration and rate.Over months, $X partnership, with cutting-edge center visiting with an after in of resilient XX% Houston. teams cost-effective Sentient seamlessly. troubleshoot platform, over our in late customers few and early now announce X,XXX innovate Powered technicians made in States Home our assuming Sunnova Depot heavily billion, strategic and compared creating April, and will XXXX, need and discount the and In systems in and the growth the virtual territories. to Home its of we service return was On energy of most empowers dependable solutions stores and contribution, our to have United Home provides X% with customer our offerings battery peak plant Sunnova also environment, network. battery thrilled response polluting integrate power our several win-win of Depot share agreement same help allows utilities their customers the engineering during It times provider announced a whereby discount XX, XXXX. by technologies per empower to In increase March to our offset to Adaptive testing plants Center the our the Equipped in the be the produced across service fossil demand sole power we are access the a enhancing consumers power periods. compensated working energy $XX.XX issues response Assuming batteries NCCV continues ensuring last the Home and was power, energy and the the this for solar opening our years programs, customers' demand, stores.Lastly, strategic XX, storage Technology exciting for a we power rate, were supplied March, we to for to we announcements. community. by services Depot the fuel to Adaptive use with January, clean of customer homes.In in This controlled also field technologies, for announced technology our March

leveraging driving on discuss our focus see which core continues end ITC margins. up to base the forward earnings expand, at cost the focus industry, compared and details our we adders last of sharpened pivotal enrolling customers in current cash customer to a remains only level sharing will our As asset all on we look further increasing and these detail to programs, moment you balance maximizing calls.Recognizing energy Slide our the in in unrestricted capital, refocusing total slides.Turning the generation greater maintaining future was subsequent immediate our cash and XX, customers, more efficiencies, will are into Adaptive of year. on we This of to has state our in

active market, ABS remained solar. confidence are $XXX a securitizations totaling strong the which market well secondary February us in and issuances in gives in for have million, securitization the We asset-backed our X trading in with environment

year access be as market new with to to this appetite closure to February We previously expect the a of in the investor million $XX of continue the commitments the remains strong.We tax to increased million fund in active and established quarter continue throughout funds. funded throughout quarter the and equity market also securitization $XXX

X-D our funded year, March with the it this significant quarter. until while us was first December, in liquidity Additionally, closed large not fund of providing TEP in

total to equity loans generating larger and financing at years. in are adders, We there component driven make shift asset-level leases that we believe than proceeds the support will this. we macroeconomic PPAs conditions are ITC of expect recent play financings.We that tax dynamics will main As and our from have continues up more X from by a

securitizations beyond and points. monetizing those The first investment-grade more is per year the attachment credit securitizations asset-backed

from by tax And shift The second, leasing accelerating financing.First, asset third, equity increased more the on level overall utilization to the of PPAs. of financing loan pace securitizations. driven

detailed XX. approach things, notes. an than in Class loans back, and allows our We multiple This spanning the energy. different our reliable recently customer is environments leases due PPAs. equity breakage towards faster mix advantage A rates assets securitization is beyond to and solar done to the quickly. a we and benefit net securitize.Moving in and the of higher from enhanced us by X X financings tax Closing Taking We and dealers the that and for But practice asset-backed to to attachment biggest Also, of one securitizations have at last our service at pace of in we a expect securitizations the in internal advantage monetizing many X our by to securitizations savings. resumed issuing we point value net least hedge year with in C safer our the rate advantages years, the pace since credit only customers Class proposition of accelerating in XXXX, notes focused investment-grade our QX are the Slide complete X on our when working higher adders.Lastly, securitizations step per of advance trend more to B our our XXXX. rates addition to economics of utilize including bring asset-level us interest cleaner, Class years. increase for their as leases to change PPAs more on advance shift ITC proceeds.Second, unit take we across total This to ability by us allows resources comprised into is

we've increase customers us rising rate delivering environment.This able Given allowed to a dynamic illustrated rates, a time spread pricing. trend the X years. implied our healthy to spread increasing the the has of been at over to by the while last utility our in is savings This achieve in same interest continue

rate XXXX, term. implied We delivered X.X%. have a always of environment, lower an said In that spread long point XXX in we spread we basis target a

a than generate and points able year so of of while model.Additionally, in of savings more below above to Though spread by XXXX, of debt, return return, last to and spread of years this we as and XX back implied this our it of pricing We increased, increase rate believe X.X%, interest the X% our that in fully in doubling the burdened an offset spread cost did our quarter rose than first from host target.Over of for a allowed dipped X.X% rates X increase As debt implied was our mark. been our even changes XXXX customers. the is in XXXX. XXXX in basis XXXX, we've XXXX to environments, us increase different up saw average our the delivering unlevered still burdened spread our we fully unlevered our sustainability cost too indicative into in business our target higher an our an

or unit cost the first since driven costs efforts XXXX $X.X of efficiencies However, decrease drive expense are million. of our and This business.In operating and efficiencies strong operating we to story. decrease that X% further quarter-over-quarter Therefore, part by further economics roughly be adjusted total can quarter the recognize we adjusted was in in metric in to this business. initial declined drive first was our reduce expenses continuing XXXX, to the the our in only

evidenced to continue dynamic we cost the investment credit the monetization reduction XX.X% is adders the are of per as in monitoring utilize introduced we the Reduction scale Inflation down forward, driving Moving our customer first and platform the quarter.Another in by Act. technology tax will

XXXX, weighted to due was credit, for addition the saw guidance the little service individuals In push Treasury U.S. a content the seeing to adders the limited the from This domestic year's to communities, more year. are to on access we uplift the base and the last ability allocated implementation only energy low-income ITC adders XX% and providing was these adders with equipment.For increasingly, building we to from and as adders XX.X%. average tax

expect a are we'll in this come year. market refocusing be and we XXXX.As weighted to by to would can the received customers XX% XXXX more Slide in fair somewhere between weighted lease here $XX to PPA customers.The ITC on and shortly, on have per average place generate estimate year. of our with Slide And the Adaptive XX, our the increase expect core this additional the based that you we into we ITC guidance X% of our in cash able XX% side left and at average least end the we to rate service proceeds With of on increase shows million an see year energy value systems XX deployed lastly, we

still in growth more our adequate our refocus overall as scale enough expect of also additions for energy expect number market This challenges more financing. has as core the cash to our to additions this deploy in our previously I than as the in our help While due shift that and is expected to we flat recognize for in we energy expected to me fund to we as renewed Adaptive benefit the make weighted customer a PPA now capital This turn year margins. megawatts Rob. customers, expenditure customer progress increase. there investment clear, in call on heavily XXXX, customers.Also, also asset mix XXXX lease demand XXXX towards our is to I the to are through we our much be on core well will solar which, that, priorities business discussed, continue business.With advantageous is over to providing Adaptive to the customer economic us while want the be necessary mentioned, focus us despite level let scale against I generation

Robert Lane

Thanks, John.

will mentioned and XXX,XXX. is range in business to kinds prior growth.As are customers is offerings demand while on business, down cost approach and from do Turning some additions reduction that position will move our customer earlier, to additions is we We of any a our adding. reduction but customers we This limiting not customer growth lapse XXX,XXX no see more intentional of to our customer goals. value to outlook to to offerings, tempering in rightsize being highest are much about our that in this cash we focused of the are taking our scale returns believe provide for indicative important way instead of areas the highest achieve are us on proactive the our better but our generation XX, for John XXX,XXX to we XXXX you Slide XXX,XXX to

million customer flows all comprised of cash in customer make The and fees impacts unpledged beyond. generated and is quarter, MSA approach all asset-level quarter.Now interest $XX our principal $XXX for and from $XX and our cash we full XX. levered focused $XXX levered last the in million in are securitized guidance SRECs systems our the interest and also our investment unrestricted forecast moving flows, we residual In of grid to figures, to proceeds.Turning financings us additions Slide EPC net of our a leading and EBITDA, $XX flows, million more from asset-level quarter, generated in investment of services. which costs that from in cash customer proceeds additions, contracts, year expense, to XXXX income first of including corporate on adjusted amount but guidance million our proceeds reaffirming increase systems set totaled Aside the to of used The roughly from reducing XXXX the our up cash million.We we cash financing.

said last expect turn we for X and the generation beside we to an to just say anticipate call before the what want XXXX the entire you neutral to XXXX team work and strong As years. back continue quarter, for still has I I honor John, cash over, past it cash in beyond.And being and been Sunnova

remain call close the the out dedicated closing pass for turn John excited to customer tenure in will torch the back Sunnova over and remarks. and to I CFO a my While shareholder, as I'm months.I'll coming

William Berger

line also while forward. for cash closing, enough the are Thanks, our demand to offer moving us setting we've energy short-term we for overall, to balance better by progress generation open first economic the the adding well challenge the than meet increased Though in Rob. quarter shareholder a rates operator, our encouraged all price service challenging rapid at customers energy quo XXXX elevated there equipped of and is and base the energy in value.With sustainable landscape, a the questions. interest remainder to Sunnova customer continue look through take manage XXXX, help remainder a to picture, demands, and better of transform is steps In to manner.As while sheet the we made maximizing please that, made will an continue more to ever-increasing already the society's to status for macro up had

Operator

first have ROTH We Shen the from question Instructions] with [Operator Co. Philip &

Philip Shen

it's your with in Best Rob, been pleasure working wishes a you. endeavor. next

The first question is on...

Robert Lane

[indiscernible].

Philip Shen

best and luck Rob. best Yes, wishes, of

talk The about first article down is explore you Ahead on balance engagement Moelis with that that on yesterday, Moelis. about is your was potentially about? might the engaging XX% there deny options. question you of potential or results you of that And What have share able you guys confirm you Bloomberg can timing to them? any be this stock engaged them? to any outcomes sheet Can

William Berger

What is deeply would I that some interesting you as to us is do. going as This presents, John. to opportunities. think And us it's and is, feel, very how corporate those I everybody always discounted we to evaluate and accordingly, obvious trading. we is debt that would our say to opportunities And we're expect

Philip Shen

Great.

over ITC Shifting that. to appreciate I adders. Okay. the

proceeds. equates in increase $XX X% a cash about talked to You million about

ITC able from Can could adders? assumptions ITC So next from there might $XXX the as year million this well and you you about -- the of be cash you magnitude these suggests as some value from of you that a that cash year. timing your the and and year start to the possibly XX% to generate 'XX the nearly the as how generate to this in year of when in talk maybe moving of level -- of level, XX.X%

William Berger

expanded of most collecting since And on of this don't understood. that very March energy been adder for guidance I collected ITC I There treasury we on was have it. this gave an energy adder last is adders We've well tail add. communities with the few those at the end would the months. the communities monies, additional greatly adder think the that actually quite

ITC the would on surprised generation has adders cash I us, greatly. the So say,

content, 'XX well domestic change mix of few pick in the quite our adders slide weeks what to ITC as like on that see up forecast on including forecast, else, and way.So is of this in startling both more to been seeing to the to our on together able how we're come out our possibly in and we for increase.So going here substantially. quite origination in ITC to cash the everything lease positive the liquidity will comments origination and a how adders everybody We adder. next beyond, coming call very the or But as conservative expect our those terms is with against to quite want come to and the we've share goes And in is generation while we point loans so, further and that cash grow our about continue PPA further how we're together.

So there's it. be to a lot of had cash generation after going we're and here

Philip Shen

Great. the to any way 'XX quantify there potential Is and 'XX? for impact

William Berger

I'd stick we now. right like what to have with

conservative. Let's be

and there out go Let's execute.

Operator

next Brian is Sachs. The Goldman Lee question with from

Brian Lee

to sentiments well, best our of Great I'll of echo a mind, Phil's slides, in again. just working as one luck going cross Slide favorite with hope follow-up slide, maybe With your question. straight that guess XX, I paths you, to your and Phil's Rob.

liquidity fair So XXXX based John, every none made, is equals is your walk? assume million none of $XX of reflected incremental cash, Slide to cash on in it those walk X% actually of you or for that Rob, comments the just XX

William Berger

there. on out can and average increase and a adders go quite reflected and this we to more have expect of again, an forward those fair. what content be from ITC that full extent to up pretty adder wouldn't increase what adders to and bit but see years position cash origination is domestic energy communities that No, adder, we beyond, little the good capture and we think and do in, possibly I those maybe We execute basis. even of can do how the change XX%, be a not But profile in is let's the towards

Brian Lee

Okay.

trying then focused capital a Sounds of maximize discussion -- XX kind Slide the on asset-level of of flow, assets. sticking the good. with enough. cash concept here, kind of maximizing And existing to lot you Fair had around

this walk bullet those those. of around around us a I a think little each in you potential of through terms additional Can of potential maybe have kind options, into you detail You lot don't point options. got of bit amount you timing? monetize around kind could those a entail potentially those what to one being execute of just transactions? then bit And of of go-to-market those of color terms in each Maybe little able and would options opportunities.

William Berger

What flow what given it. is we'll to especially the multiple is and efforts do that we step I that them we underlevered and parent. say asset continue would generates And need most the up maximize there's have cash And to levers historically years cash our the XXXX. have whatever from corporate to to assets the at to the level, the do up 'XX

is just corporate or parent. out a think if the through of So -- securitizing a I cash terms the generating that's that's purpose asset, capability we'll have securitization generate don't multiple I selling of way we'll well.So optionality that people fully generating a thought the an to through that resid all in think that. securitization, the and to of different If sale to of as of the do options do the cash the here lay

Brian Lee

on. it pass I'll and me, for one Last

You for did reduce here forecast the customer year. the additions

no time there about forecast sort kind of up or would the You're think cash or solar you Any balance your have as kind just down forecasted customer core we the of in the sheet the P&L base, growth? or tightened is sort maybe O&M the flow impact what focusing would to assumed some guess, might thoughts of and of flow KPI around some I where savings generation. that taking have in OpEx customers. or incremental as growth I targets? on show around Adaptive resulted in frame belt cash Why,

William Berger

certainly. Yes,

from back, cash at and greater point and interest having in. locked the base an as than revenues from XX%, those of greater our this say, in as is principal than Going large year, would I inflows asset XX% ours loans probably

cuts, in So basis a have cash and of model show on we They up quarter-over-quarter, going as even end XX.X% per a forward. quite as move actually, some drop there quarter to again, Cost much happen first been far very durable bit. more customer have a have is happened the more the operating to to as started adjusted degree, we since generation. expense.But

and very OpEx, for the these much place software focused further in operating So need people, to cetera. automation getting on expenditures, et cut

So we're focused on OpEx quarter. And basis. in already doing up show a we've forward this the indeed, in some will on that had more

Operator

next The Mark is Morgan. Strouse with JP from question

Mark W. Strouse

dating all much Slide you the couple for at very the as of both have just to thank I Rob, help well. I'll same on your back throw questions. IPO. XX a of time

III that side, then seeing just you about any from On is just transferability impact you're the can portion, traditional the you're equity -- actually, with start And yet? that. latest Basel tax the talk that yes, seeing on the let's within on the there market? And

William Berger

of your lot Mark, more around are to that. easier the a of of lot transferability this willing traction. a a It's lot market A major -- company. is -- is into companies to head a get the John. and it's the gaining do of The or the sale CFO more ITC lot as coming

several those, market from have equity we've significantly.We that So Basel you already and impact on executed out, tax any rather we not traditional expanding III. yet on seen of as pointed see

So the would see. only we tax from alive well, growing significantly and it's I not equity but can is certainly what say, market,

Robert Lane

strong. market that. It's execution one the we've thing of remains ITC add been the something can The I transferability If that led transfers has to on.

of Tens out that's the But life We ITCs, get success, that So about only solve start, work. systems were folks one be something which the It's speak and able have to the has which done. successfully we to how and we've that lot well. as IRS of make amazing already done a think much what to a is do to is office IRS back investors ahead we've been of I to and significant just and those number as portal. required the transfers cycle well not with price, process thousands well, associated we've of the entire really of been first able their to a huge but processed. our ability of

Mark W. Strouse

then follow-up And on number securitizations. quick a just the of increased

increased So door that, kind kind in fees Are there sooner. out? more that I as far understand frequently downside benefit getting as that to cash else would of of like or of call the potential you anything maybe would any you that see the transaction

William Berger

No.

the more a of timely corporate and In in deliberate that warehouses a that's on. more now trapped capital fact, released need on are securitization our we be lot there's schedule that to

expect we So as of executed. have a cash are quite bit released securitizations the to

Operator

The is next Percoco Stanley. from with Andrew Morgan question

Andrew Percoco

everyone of echo luck great with Rob, been comments. endeavor. Again, you in working best your next It's else's and

from component I a your it bit want of more asset expected that If start of trends to that just in rates at higher in invested numbers the we that performance. higher. delinquency going of historically. just I guess and on in has a continue a to kind look of big delinquency the terms now driving service business? the update Can grind level customer looks XX-Q, with I part So rate you've you been question us here know service like loan there a give an just what's forward little maybe

William Berger

seeing some by customers quite there as are response on more Yes, and service we good paying performance the that's therefore, timely. far as

part do is the One, customers. and of of things. FICO that out take loan Two outlier. an government, the the program with low Hestia pointed is rightly You we

a accordingly higher were and delinquency those so rate default And priced to rate.

a majority from to of aspect our of in time loans. majority one so And all itself decidedly PPA. at a reminder, Hestia to point And again, one that's origination lease loan has loans.Secondly, TPO or significant mix continued a the transform

at you've well. therefore, a small that's there so of as And got numbers play lot

are rate aspects X those So causing be little a delinquency bit the to higher.

Andrew Percoco

And are with can you're sounds terms some engaged there, of I timing, asset in table. kind maybe any -- just more we hear to you then can Any It you of sales front? solutions? that might on back for question potential liability on a anything provide advisers coming sense when give us management. timing on know of kind on for sense the like but

additional there. helpful So color would any be

William Berger

-- our debt itself. we business discounts. would It's the wouldn't would again, No, who and I to corporate deep as in is place I say presents had And What we say, wouldn't is it. not you very way. opportunities treating engage with that color, if any that, are, expect, say clearly evaluating doing more our I at I

Operator

The next Fargo. with question is from Wells Praneeth Satish

Praneeth Satish

in with ITC liquidity you the Let of review me also rate Rob. can few our think for on done raises you at cash just touched back the to last echo generation all table you're dealing best guidance? my the just to Maybe wishes adders. XXs the forecast, questions. you've this I assuming what advance going But Thanks year. high

figure to incremental? cash, cash this $XXX of correctly. So into equals million that take on into I ABS that guidance if incremental Or trying same forecast? the that guidance. be X% think issuance, Just would if the in result XXs, of versus said this would what's already you then you does thing assume out remember I baked every the And X? frequency

William Berger

that market, pricing, no improvement improvement is, answer no improvement currently the ITC so what what adders. is the significant we table is The have in in advance done assuming see no rates, we and in this in

your advance that And example, generation. therefore, the the increase is in cash would rates so increase

And would additional the so generation. cash increase operating cuts with expense

ample a generate and think cash. and view So and fairly of go again, generation pull I levers other even conservative to this more is cash

Praneeth Satish

And I quarter. any ATM of prepared in issuance last didn't remarks see mention the versus

generation off ATM plans Or a some these of you'd is some that table? So backstop increase financing plan? to go don't kind just as you've that that here is if wondering, a now levers cash of the still lever to got the consider

William Berger

there We've it. filed no We because ATM. is have not ATM used the not

Operator

Molchanov is Pavel question from James. with Raymond next The

Pavel Molchanov

looks we one geographic customer are another? the at the of both like mix customers versus you up same? maybe additions, slide look pivoting solar will it nonsolar country When showing categories Is the be to those the be XX%. part sort down of Or XX%, will of of

William Berger

has crash increasing the share even increasing. more seeing historically. the within little again, in that's the everywhere. picking That it been cost -- the States up than Pavel, edge, growth our prices United still lower, have really the mix has been move the as And California, is, where -- We're market then but higher, out the as rates it opportunity south rest the capital broadening about value equipment small is with in we We have of of footprint customer a very utility is a bit. same.

see opportunity So a of to, upside the market and lot we and expect the in to the marketplace I think, growth. surprise

Pavel Molchanov

the this not I slides. did in see

battery the metric? in on commentary You attachment And kind mentioned may of any was rate? trend that have the just what it,

William Berger

the want quite to generate for some really of We as important, do from area. the have whatever part business, aspects customers a the energy a our natural services, is to going cases, of rate the the local stabilizing to system and strong a of the some broadening We're in of and been there We've seen storage seeing geographies focus some of pricing increase be expect we've we've instance.So the especially had response And the revenues of we opportunity lot into get to continued significantly, And seen and Yes. is wanted ourselves other dropping storage marketplace additional is centralized what wanting you services, that. you storage, overall to purchases. as to attachment but be to about historically. of batteries for grid in both call on them.

Operator

is The from next question with Tristan Scotiabank. Richardson

Tristan Richardson

expectations down a customer on just that investment refocus systems side. seem up takes little. for I equity Maybe came proceeds totally follow-up quite a your the tax the but one your liquidity did it bit, understand

customer from weighted And curious core so that you growing more Adaptive seeing if just a thought average little of than I'm actually if or adders that that purely bit maybe slides? previous tick might up that a in function is see

William Berger

and origination adders the the It's mix. it's

lease We at the more we PPA doing expected are the far than more beginning of year.

Tristan Richardson

maybe this anything And going bit in to that Or we saw function housekeeping that about Is a follow-up. about the you largely might was But a we there on talk there? specifically terminations more quarter. initiative? refocus little one of saw something think or that could maybe be seasonal

William Berger

terminations Yes, there payoffs. and are

seeing an especially increase we prepayment So type loans. rate, some constant of accessory on the are our in

if that's so And news, you will, unexpected. and welcome

make as that to we did and the we with more off as sure owe it reflect at their soon customer the property subtract customer not paid customer wanted us, our service from account. want So was them the to and loan we any

And bit. accelerating so reflect seeing payoff that rate here. a you're It's basically -- is our

Operator

The Capital Ameet next from with question Markets. is BMO Thakkar

Ameet Thakkar

with I just few last echo up of to thank putting the us years. and sentiments for want Rob again over all everyone's

up, within the beginning dealers? on of dealer anticipated the less you're think, quick of are the kind kind went fairly look XX another bit you in of attrition you what from I real going of looks it like I or like a I like -- than be the guys going count dealer dealers. like Just was steady just XXX we wondering count terms year. the Is little on? kind to at grow here maybe mean of to seeing

William Berger

positive, obviously out their lives probably they're think in managing the in in our dealers' And life, that's there great that negative. the I we there way that things happen best. have sure happen to right, to constantly the pretty make because accurate. things network and We're dealer sometimes sometimes world make are trying are entrepreneurs

is dependent new solar entrepreneurs is in other wherever whether business, and upon have So true, a influx this and business heavily you call of power that to the or great constant it it's dealers. you want security to want home business, any dealers, the or

are maintain knows. new the be spot all to I we're size of little we'll going network, our exited. trends that pretty to maybe But need time, in have lower, who So others a to our you bring blood, we're think we some bit if good in where because with and a will, try

Ameet Thakkar

of and -- repay through facilities. just of there? added auditors some on is I EZOP was risk then the require your you've wondering kind language debt of TEPH kind around something the was looking do that And additions quarter? really this additional [ language that kind resources there that XX-Q, to Agent your to of always just it credit you ], that looks Or like, APX, like or like in your triggered something

William Berger

just And lawyers difference. feel We No, refinancing it's their good our job. I think there's lenders. doing about no that pretty with

Operator

The next question with Mizuho. from Maheep is Mandloi

Maheep Mandloi

[ of seems mid-single be needs here likewise, how Just in the to you in flow like reason reduction the ], to Can investment nonsolar focus forward? low, right? one that the what's just shift, business? customer confirm customers reduction trying the on because And going the And cash the I'm yield more on on is think about yield right? understand causing just mainly overhead of capital that to question digit flow rest the delivered to liquidity the yields cash on forecast that is -- levered that and

William Berger

It could and to SREC as expect as or in such is drive the this of decreases, small sales country we of we loans in the as had much be It's the be this of loans case, down. also past it, areas don't some asset be to that the Yes. we and majority could in revenue originate fluctuate will of could high the accessory great wasn't It that quarter-to-quarter. some which these for weather instance. have that

idea. So you've right think I got the

Operator

Capital Chris is The with Dendrinos from RBC Markets. next question

Christopher Dendrinos

operating you progress adjusted And wanted and some more cost structure I to the that contracted in expense. little and into compares guess the back a taking against calculation on the value structure looking baked underlying cutting just bit I step focus implied made a how that notably, net here. at customer assumptions your But spreads. cost

XX-K, I the and assumption think per battery. that like all the in year for the not indicate is escalating kilowatt $XX, then you $XX per escalating

second are right think in how service we think than customer of I guess just what the under get under now, your assumptions that operating is comfortable now just are we contract which that higher current value value context would the different? to I net to if is the at contracted recast were that.The structure? with forecast right I be operating that cost your costs you're question the you're then those cost that if do multiple net about first times So operating customer And vastly underwriting customer

William Berger

our as as And far the low will, all-time tickets, and so backlog on decidedly fact, on an if Yes. We've of customer service. done job service we're improving a customer base. at you great in

do a business. customers our have to service We and over the to service decidedly fantastic only technicians started or job who for the so us redirect technicians

structure. the that cost and so And drive revenue will drop additional

a So that's pretty you significant. see it. cost structure already drop to started will experience We've

very consistent. Sunnova was over quarters point You by to the we've And founded. that standards that's start I be I acknowledged visible.So even something on just become to want that the industry was the GCCV, long that set to see coming used before that, will out that

were contain levered higher able we to cash significantly, in especially about. our out had talking to very of that do And necessarily cost much the that we fees spend feel figure Our to what securitizations spend do the were increased situation comfortable some you wouldn't being trying the cost drop just out.So kind into absolutely flows. I would if want to I or too point time MSA go do.

we'll cost very, of believe I to down focused and and that XX the XX think materially what you last to very on months. we can envelope the some we're done that math than do service back something But over out. have figure lower get do reducing that's

Christopher Dendrinos

kind just that guess marked of against sort at confirm that or same unlevered the assuming follow-up operating is of that sort structure the is now? in I of the of as calculation rate right what all cost as you return a to that provide, you're And NCCV then

William Berger

we're cost, the all it's service It's in it's all be costs, clear, operating at To all what right current spend now. it's year.

marginal we estimate what burden our unit So base try spend the some and economics now, is and the taking or look alternative the when initial unit one of upfront coming customer take all what we cost service you're cost that's in view we'll have the at entire upfront, quarters fully pretty money burdened and do an -- think that burdening But forward right current is the and of service have money it a cost structure.I every burdensome in levered that on return. returns. to the on out we marginal then with on customer at existing

So many should actually in more than it's be. it punitive ways,

Operator

Ben Kallo question next is with The from Baird.

Ben Kallo

Maybe ones. quick X

that, direct focusing but on a really reducing little expenses guys and John? changed any have And a on do I sales, any direct have you follow-up. sales. Just thoughts I around then know you

William Berger

unhorrible, have decidedly, in Look, use they're I pointed No. And on business sales, phrase haven't we areas not the I know just if entrepreneurs out, you of been think since the Ben. gone have that's on founded focused I can with terms model that company a great are still of will, that bit dealers we we the word if where But we the -- of will but back in things. really that's and dealer I and others as finding side model, wavered a you, got dealer and not you any have forth, have a coverage. direct but dealer wavered. not. and had We've little about we've

good part continue a I deal cash. generate And to relatively expect of a business, of be to it small so but our will that

Ben Kallo

with just balance we something And on like SunPower see that? you could and the possibly JV is structure options, that with the SunStrong Hannon, guys a different that and sheet

William Berger

a team run the We're good done our very possible. things lot And definitely and and good and of they've Hannon at there. looking business. It's a strong, at options looking is

run of always that we And want talk to folks so course, businesses. to good

So that's certainly possible.

Operator

Thank William Grippin you. The next question is with from UBS.

William Grippin

expect we of just forward cash future a question the how impact activity some we of on level generation? these pulling First of should in about was think should ABS securitization XXXX? transactions And lower

William Berger

it be significant. pull the we look XXXX we pace. Well, The think cash we steady that that a at is is securitizations, way -- is forward forward that right and pull the to now should we on as about would see cash way you as

backlog. markets securitization the can we year in the we take need lot risk that And as ahead we us to just do into keeps disciplined schedule frankly. so we have We put that, should probability I our what's and than well more rate interest in a as this haven't 'XX, of as and of a thought the do securitizations that's

this do likely cash, many don't of on do space And think I long that securitizations speak haven't as disciplined accordingly, changing we're steady But right years matters. we we're in the now, on state. be is past we'll not of of We so. a the as it how or we done a I generating seeing that or that course, to schedule but you're is couple year.And more as a think where do, just it of steady securitizations of out try that really more a kind so state

William Grippin

expected your what here. impact you otherwise financing of some and on implied Have you advance been just stock And last concerns would the relative maybe there? and given or one maybe any rates the has terms have where to then the just trading debt your seen

William Berger

No.

Operator

Donovan Markets. next question from is with The Schafer Capital Northland

Donovan Schafer

of terminations I feel So a of dig it's jump. pretty deeply I payoffs some guess, and in kind the on is lot it of presumably I some more moving parts And the same of service know expirations. want lot And oriented, to that there on a of to a XX, it's nuance. compelled not. I there's At and collectively, bit Slide time, a ask, -- big

X,XXX approximately X,XXX last and to sort deduct, this quarter was customer almost will, jumped quarter. in it it of think additions I to a if -- you X,XXX

to expect that. unpack economics down there imagine opt back with could mean you or like trend? can people that Like about it see maybe out sometimes day-to-day there or that just more actually know with what what's to can basic So things -- buy and could the a bit whoever want might just cases are you cause?I the alone. come I economics. I maybe dealer get lease or I you savings some improve in be mean, expenses like something like equal? this and fees all else just do to But cause the how people that some Do more the retirees behind the do loans is specifically worried they

the kind that you can one the other of be to but this trend line? Do unpack you do of maybe lines, So want would to not, do not up? you see Anything that, great.

William Berger

majority Vast Sure. payoffs. are

loans? time do faster Absolutely, the as back our money negative get XXX%. become in we to in you more So move to want that forward

Donovan Schafer

gets and economics at dealer that because and forth. looked something historically, the could people financing interest then duration, the way partners, better prepayment maybe sensitivity guess you have impacts you rate fee mortgages so your I risk And the or

such is them be something that with just way fee would will be if these dealer in a -- door, shared and be be all prepayments just the So all happy fiving and where high in fantastic? it gets they if it'd the with it'd it everyone came to

William Berger

Correct.

have pay You that. don't debt, refinance you off

Operator

with is question Cho next from Barclays. The Christine

Christine Cho

number? for Maybe the the if loan think here. I this could just APR, and over return, fees if know move around And loan fee, X fully for the would has consistency your assumptions in fee But CPR have the dealer all the the the changed. it drivers: book, to return CPR. this ask assumptions flat relatively APR just dealer that are at purposes to calculate dealer on frame? burdened and main Or I the curious there APRs as have moved I lot unlevered I go are think time of in stayed that there a assumptions And

William Berger

moved to reflect the down We have significantly market. current CPR the

depress would the that So unlevered return.

Christine Cho

drove previously then much beyond residuals? non-IG more ABS market, And how in your out portion the through -- slide your has just change about ways. it the to you and the flows liquidity being this decision Can in funding the or a other from is capital IG in lower originations last securitize then talked funded talk levered cost versus in base approach your expensive file being in less there points points?And liquidity and so approach previously been from and about the coming attachment driven your of flows just -- and new cash that the why and of for what versus in how attachment this you the that's securitizing little for more quarter, year down, -- by stack the change approach existing cash you

William Berger

I'll answer one second first. the

terms at some vast the levered that asset-level how debt not flow on not sell do origination, I due corporate discount. we And the the existing the obvious the deep is I about trading of and more of flow but between looking the it's cash deep, underperforming.In off, it's cost pretty the cash so loans margin, the many lower loans think of to capital much -- as majority some of accessory slightly at mean, it's think is capital, that really I -- corporate base

at obvious that I discount. the equity think is it's pretty also trading deep a very

a that side. And a anything asset-level don't I even higher the of model. side, than capital run bit on to so don't need can we on think do It's you cost think I the corporate quite the

seems it back things. the straightforward we've about asset-level flip So the side to had why pretty of

Operator

of The last today Deutsche Blanchard with question the Corinne Bank. call is

Corinne Blanchard

maybe less go answered, Most so have a talk I'm been maybe going we it's as a rebound about a to been it has terms bit a the Can of what since and maybe different. something seeing of year little in But you bit California? XQ? are try I into demand little you know focus. [indiscernible]

William Berger

California. Again, big in presence have a we don't

the would competitors very have who, in think, So I a California. I large leave portion my to of it origination

the pretty has the more to regards it's a better clear job think and that I power done the California of states with year have consumers past over are other state that than industry. consumer-friendly,

that embrace we power, particularly leave of it that.I it's quite unfortunate states huge consumers opposite the I'll it in know, we're demand, think going exact cost. at the giving in to see other take direction the heartened the going. all And and up and value, So keeps path as as California most is is state

Corinne Blanchard

you maybe next for like XX then seeing the the maybe most months? of And state the over which are potential quickly, so just that

William Berger

in does I that. by do list anybody appendix the We state. that you know, as think don't out, else

United point States, direction. the general. growth in and we're again, just a mentioned of I out in growth seeing would some But you So we're in that I seeing spread earlier, southern as lot

crashing increase, of So weighted for as expect pricing, see they're really nice should inverters, or from equipment monopolies alternatives with value edge in look really or electricity I the cost the a for modules and it's we to continues utilities, transacting. average the overall, batteries whether and think to cost consumers presents consumers that

Operator

the is for will all time remarks. have Thank to I Berger This John today. back we you, closing now questions for over hand everyone.

William Berger

value QX seeing you all on and generation all I from for I look our on focused more we the than We Thank QX already expenses, increase capital Thank thank our contracts call. our Rob closing and joining asset operating you cash level his remain service, to forward increasing service call. to cutting you. quicker, have. want for even to

Operator

you call. today's concludes Thank This joining. for

your may disconnect You now lines.

Sunnova Energy International (NOVA) 2 May 242024 Q1 Earnings call transcript