NOVA - Earnings call transcript Q2 2024 | Sunnova Energy International Inc.

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Operator

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

Rodney McMahan

Before we begin, please note that during today's call, we will make forward-looking statements that are subject to various risks and uncertainties as described in our slide presentation, earnings press release, and our 2023 Form 10-K. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. certain during reference call. will we non-GAAP today's measures Also, reconciliation presentation appendix as the Please non-GAAP the our appropriate cautionary as to for refer to release of well disclosures. press the GAAP and earnings

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

William Berger

everyone. Good morning,

on us Officer, from today securitization us to relevant to First, his management Eric is warm particularly Williams, entire capital who his to is market, when significant our team Chief of new for in where and markets, want call asset-backed and with I our earnings long-term the accumulated him welcome say with Financial which strategic for forward joined of I first looking behalf insights in we with Diversified extend are wealth Board the and our the utilizing Eric leveraging expertise specifically speak and he a I working Sunnova. Energy, June Sunnova financing strategy. experience.

more jump and which detailed cash be forecast, I slide provide a want into quick cash update generation I Before can on found balance to on X. our remarks,

in in of both increased in core our priorities million increase sheet a our our make balance consolidated this of adaptive on on to and resulting XX, of increasing restricted $XXX.X energy June $XXX.X million $XX.X efficiencies, cash inclusive continuing asset-level Progress are cash balance million, XXXX. as a by We capital, cost Total unrestricted for quarter. unrestricted on last the and customers. cash, we balance these X progress quarter key outlined driving maximizing utilization, resulted initiatives of ITC refocusing against adder

cash to progress on generation. our our As focused we strategy we shift remain approach, and continue

of generation estimated our result neutral that in our $XXX million XXXX. are from to share guidance pleased an efforts, cash we a I'm cash As increasing to

XXXX our million and XX% we expect call. and million, for an our $XXX generation of period, $XXX guided we increasing guidance cash are to we respectively. our over $XXX In X-year guidance where XXXX on of last earnings Additionally, now generation from increase total, million cash

are As priorities which I on results, last summarized are quarter mentioned, X X. our slide we driving introduced strategic the

corporate the current asset-level we we inflated said given First, cost capital. of to capital, maximize wanted

We have made first as were the compared X in half to strides we only of XXXX. in XXXX to the in this able area X half securitizations of first issue

through market commitments also focus sales. here tax the securitization asset our increasing Our goes include generating opportunistically to beyond cash equity and

to technology efficiencies said to we scale. we utilizing cost going continue by drive our were Second, platform and

in this a there us adjusted operating for more steps confidence cost taking the row, While sequential our the expense QX structure average experienced in second customer, fruit. is work decline in quarter a were that are to in weighted we ahead rightsize giving our area, per we bearing

guidance year. is as in more Our increase thanks priority to to IRS of adder months short issued domestic the ITC we for adder ITC than utilization. continue expected a by to ago, part May generation, even a few the in large third just tailwind content this cash adders serve

final out laid focus the energy adaptive customers. to Our priority on our back that last quarter we was core put

expect accessory loan to the mostly reducing again customers reductions While we are XXXX, number total guidance of those once on we in were customers. add

heavy solar PPAs. lease in solar and weighting with and storage to continue We expect a to plus customers strong additions

XXXX. period of through number million, securitizations last X XX% cash growth $XXX I to corporate and flows. underlying you deals On increase asset of from of size continued strong a as twice period highlight of the The recent capital-light in and our of the these a expect securitizations in the XXXX performance, year Kroll's closed since see prior of securitizations in the year. XX, increase X, service-only can would compared also the evidence and last number first our We to TPO XXXX, issued like the of issued particularly we in the high-margin half same June significant cash size customers. XXXX portion underpin our upgrade slide in same totaled flows

half of million strong improve half We expect cash and up billion these $XXX period first of the to year. color We second $X that equity, issue additional a equity asset-level same position more in an last ABS strong commitments beyond. in of us we to for will bit the market, tax tax estimate half during flows a the $XXX our in over setting we up million securitizations. XXXX the the to year, versus second Giving added XXXX, of

during not our home which loan Adaptive improvement to be in million security second in home of and cash to $XX.X proceeds from entire Sunnova combination portfolio cash the $X.X will sell After also expected The future fees X the quarter, and the these sale completed the separate role of bring Additionally, loans our portfolio. generate to sales of and but sales of non-solar in cash demonstrate elected as These play loan only included chargers, ahead X loans periods. of million debt loan surge door another well items creating the improvement repayments, such sales. included the the done, these portion Home. generators, could in ITC loans EV in we adders. quarter for a as market, of home as a to a loan roofing, the portion sold second generated We it

of variety it sense. sales believe of asset potential makes a other we evaluate to areas different where continue our business We in

decline is of customer of is an headcount where progress we additional QX, between QX increased total in reporting efficiency. see XX% driving Also in decline operating the this in structure XXXX metric a and slide end XX%. sequential are XXXX you making our X, to trajectory reduction QX expense bringing this adjusted key since to contributing can improving and efficiency solid On XXXX. priority per continued in our our have our Another we cost decreasing

our Moving forward, platform technology profitable efforts continue areas to the position cost expenses our us business customer operating will most lower. to our per through and of even scaling drive reducing

the slide the term, we in covers expect ITC that of greatest Next, adders. impact will our near increasing the X priority have utilization

noted capture, now guidance, Given I cash expect cash as earlier, generation and XXXX generation $XXX content this the is we in retroactive estimate latest to community Included energy from be the million. adders. domestic

only of year, originate content X will dealers adder. September who this and of for lease mandate the As qualify our customers PPA to we domestic

second proceeds rising in rate a increase that As million result, see while quarter, to the now in half this year, to moving we believed X% we And we approximately our average would translate that weighted ITC year, last to average in rate XX% $XX be per in every estimate of weighted number $XX cash XXXX. our million. up over ITC

this refocused core adaptive Lastly, customers. energy we our on have year,

expect on we continue to solar growth slide see can our you X, customers. As strong in

compared PPA. contracts by more we look business year their include lease is to and to of system. be will will ITC leases cash over more customer XX% customer adders, can our solar XX% Additionally, us again, it type to more will notice capitalize a This for deployments megawatt of incredibly also homeowners in our battery you our as is expect origination to add as in or storage on valuable. with last hours which generate energy as dominated XXXX, is are XXXX PPAs. only of these solar beneficial Currently, allow What

and slide of you details Now a all This energy, I've storage, XX. of platform our minute in is that with home. management against enhance Adaptive resilience our designed through remind and Adaptive seamlessly in as on take utilities. complex the of Home like nature minimizes solutions to battery priorities, approach usage and energy to the first strategy, to progress Sunnova and business energy integrates short-term our all gone Sunnova customers mind our the I illustrated innovative across applications would increasingly Home it the solar optimize foremost core energy

As of business home cost, maintenance, and complexities the powering dependable, sustainable technical affordable, can energy manage and upfront partner, a trusted solutions. customers' energy or with Sunnova

hurricane, would power. remiss in all affected Eric, call by to Hurricane if the million did thoughts your without reaffirms over X Houston nearly families. left To I provides Home, by Before when people grid the the I and to Sunnova the go resiliency The you those which Beryl value mention not Adaptive I tremendous out turn fails. disruption caused the of area the Beryl, specifically it our in be the

they our Eric. XXX.X utilities pride and the can storage During the reliability get events and leads will service, customers level Sunnova hours for matters the I quality, sort to XX% Ultimately, people demonstrating These hurricane energy brings of With needed energy take service the it solutions. their no be its drive systems at when and of Sunnova comfort difficult our most some customers. the associated in our that, considerable We of that solar times. repair of this provide Sunnova reliability. price to of even that it persistently and and a to the and there increasing control, most to deteriorating from our customers outages, in through fact customers adoption reevaluate their of its types pass to produced the megawatt

Eric Williams

John. Thank you introduction, for the

experience with and emphasis commitments John, this advance I profitability is with welcome, you here, our have on excited the of have great my and to look first team, our warmest cash today time mid-June, entire join team some spent am stakeholders Sunnova joining you for and and that of I I to generation. be considerable further refine Board, It Sunnova's combining team listening to call. strategic forward the our You with to and an my to extended and earnings the talented call. in to to focus Since

XXXX, have in I securing communications. out equity for to first focus find transactions, For To and terms on articulate and with pleased way current a the progress capital quarter, closing our results we've walk to financial tax through focus not with our we'll the by begin ahead, reach business those business more quarters momentum and slide fund to am near-term simplifying please of our spoken, listening our My which to attractive provides during made XX. including we not connect. ABS stakeholders. I potential is the on simple: investor refining the half yet to I'll the do hesitate time at and whom asset-level do

adjusted adjusted our earlier, growing interest and cash of per-customer from $XX.X EBITDA, we meaningfully notes delivered receivable. discussed which million $XXX.X to million addition $XX.X during proceeds the level reducing expense, quarter, balances income, our principal and operating In million of John customer of

million reported of included types adjusted loans, in the Our from channel noncash excludes sale since at following the our home term. volume loans from this noncash our Conversely, eliminate security the decision the loss EBITDA near we sale loans sales we $XX.X a loss to improvement million $XX business. lower adjusted expect of albeit home the these EBITDA, certain continue to in on of originating our

for ITC If you also the EBITDA be $XXX.X X% or exclude the similarly XXXX. second-quarter million sales, the in adjusted would of $XX.X million the period higher $XX.X quarter million than second adjusted

contracted see net NCCV. We our year-over-year also customer in continue value steady or to growth

Assuming June a share NCCV was or per $XX.XX X% XX. billion discount $X at rate,

into I to I've working return nuanced that quarter is we Before our for a and is that mentioned slide discuss clearly priorities burdened that earlier provide to XX, financial commitment, mentioning on more this one accurate updated unit key our drivers investors our develop our business, economics that provide including performance. of unlevered fully materials communicate measure. worth insight of Reflective this it my calculation refined

condition. service now cost an sites equipment asset estimate estimate an and customer we restore value to of higher obligations, and allocation, remove retirement and purchases a our the renewal to of original all including Specifically, their include cost

a and make non-GAAP to insight a of measures to I as financial While additional to minor performance of our newcomer measures the am we to the each into provide other coming refinements this is the in in the use revision, process industry, evaluating quarters. additional expect

as rate as our backlog XX, needs, maintenance infrastructure, serve Turning even debt, grid we continue energy variables power implied competition, current difference for to to generation, interest higher weighted unlevered traditional a in sources. lack their the continuously less back of other to a average interest of demand, the and environments. slide of cost consumers growing burdened catalyst utility increasing Shortages drive of rates rates, reconsider returns durability between ageing of spread return and the present our illustrates fully high our higher

on unlevered enable we Importantly, costs us burdened a ability factors pricing improving basis. these maintain our power, factors to its debt to a fully which Ultimately, offset return. and Sunnova to implement these with implied continue underpin evaluate higher spreads strong allowing higher market-by-market

and points. XX-month basis, our You long-term a on basis spread that we quarter-to-date see that generated both trailing can of implied exceeds target an XXX

the would realized ITC guidance. rate a weighted With cuts discuss slide driving interest of I XX, discussed spreads average expect by compounded debt, move our potential higher we cost that to adders, Flipping higher. will we CV ITC percentage, the reduce would even our

overgrowth, on appropriate. we As our generation execute revising we to commitment where cash are profitability these and values prioritize

we EBITDA and specifically of reflects to to our our First, second XX% of guidance lower and XXXX increasing total are of of revenues, PPA This our EBITDA. million higher the $XXX increase sales, adjusted operating and expenses, million. half range a ITC XX% adjusted lease expected expectations in per-customer which higher represent between $XXX

additions range $XXX,XXX. and customers, and adding solar and less storage solar plus loans, loans, expect to more accessory customer As PPAs prioritize into including $XXX,XXX we between prospectively leases high-margin to into deploy capital we

to notes to and related now between to $XXX $XXX and we million $XXX income guidance which million, expect our respectively. $XXX interest from adjusting also receivable, proceeds are million to million customer principal range We

the target the Our as the to in have of loans to strong. driven weeks, quicker-than-anticipated X upside see It's worth we past leases PPAs. is continue principal update been move by accessory prepayments loan proceeds monetization recent mentioning that our to and and

to placed but to of pleased XX, higher emphasis will the for I associated of is once I'm we've half additional we XXXX say the this slide reiterate years only second driving call, the cash for for this more throughout forecast generation Turning not significantly the guidance which metric. on

be to this expected year. we quarter, last Just cash-neutral

this million structure, add and the cash for John end the progress end unrestricted of on made X we to I include increase and you we key price ITC approximately to unrestricted generate cost unrestricted next now back high-margin increases, now to if expected expect cash $XXX unrestricted coupled began and cash adders, with our to our this cash to XXXX. years, with realize have $XXX efficient focus, result, over call the of the $X The expect through in remarks. which over the turn unrestricted by customer million our the over of we we $XXX thanks $XXX million to cash more that to like XXXX. of year approximately a the However, year would billion add period. Thus, up XX% of million rises highlight, Wrapping balance closing the the

William Berger

the we to the identified results priorities in first environment. properly have position have our Clearly, half demonstrated current Sunnova that on and executed correct

our For of experienced prices the we cash quickly. simply the that so now weeks we and cannot near future, been margins. great in few prioritize protect these origination will to generation raise has network growth flow, our absorb this growth past The dealer has and

recently new we adding our As a network optimizes generation. as result, to cash paused our growth planned dealers

generation. alignment warehouse to our better our a funding growth opportunity terms with clearly by increased This addition, even facilities. In public in of the the The are working there, equity the align for recent we lead large to turn needed which better of dealers is schedules cash our better payment competitor. to exit to our capital will growth, will tax turbocharge and working lower

generation and However, increasing on we will our disciplined corporate to pay debt. remain focused down cash

landscape of have in still we value Sunnova, With proposition short go, further please made needs. I the in believer significant operator, open for in encouraged the a remain society's energy a questions. line to the place be by incredibly and to progress in role ever-increasing the I strong continue that, such long-term meeting we transforming time, While and have energy it's its

Operator

Shen so you is The Partners. first with much, Capital Mr. Instructions] Philip Roth [Operator question Thank Berger. from

Philip Shen

this with liquidity and you do for plan forecast meaningfully What doing XXXX. cash? all 'XX, on increased your incremental XXXX You've

William Berger

levels the Pay debt. at pay and the the the the dictated be I, and team right And working management debt. stack cash, debt, will the time by Board, with pay but

Philip Shen

Any et of terms next color year, year can you timing versus in share cetera? this

William Berger

pretty the pay customers. clear, No, reasons, service share our job to and but our cash, down that, is dealers debt, would I prefer I obvious think, for support earn the not

Philip Shen

dealers. note slow you In of be guys, paying your how wrote about for some may our we preview you

equity growth due that the about does solar another more prepared to leases. may of you. of give a the company situation? a a on delayed this be tied might to dealers Can outlook? You mentioned publicly Some you little And pushing this color your your remarks in us this how tax of be lot I'm guessing exit to likely traded tranche. is

on how so 'XX and You're a then dealers? do growth that? all consumption you â€˜XX? And outlook not And standpoint new cash how impact and that taking growth, does for from ultimately any your balance

William Berger

there. Certainly, a lot

are lining we're get and So to up some legal there. hoops but that forth adders, the than the accounting let me saying and I by others so all easier through start think

million more of we partners, cash from of obviously, the course, cash. money. few us half to X, back all Now all our XXXX, July we about of weeks. days we've XXXX, but the do on next And of of to is as communities, domestic yet, the January far of yesterday other and half got expect operations on That January but really execute is and of energy collected appreciate roughly This in we content, to to no collect roughly going side, that expect collect $XXX LMI with can, then about which, working going as that. side the both We've that. the as financial

say tremendous and few close over then these days, including amount pieces. rather cash to In priced capital out fact, closings, next a XX from would the of increasing a we securitization wave it's we we of have the as I tidal there yesterday. X days,

and and the -- at look even CapEx talk about started to May. accomplished the see this measured we clearly, all So I've it and we've to execution we'll anything a and noise very these seeing remarks, lot be quarter, days, like or of kept terms in took, industry, There historically. point. had is preponderance this. near-term higher just last busy seen -- it about never growth either our market, we weeks our June The in continue first in of to at in the [ a actions best my amount being but actual -- We not I I we but year and of ]. our easy year in cash, never would of history our business the going month trucking had our mentioned in in of, a say, we August transactions, in it second negative very this When weren't still we second-best we prepared like terms close was in growth how of with then going

base a in higher, steps So that XX heading we plan. did compared days the continue. that's as big last dealer were to the But were terms With we've take just unprecedented, X trucking night. our and increasing We was now, we nothing ago, Right XX% ago, towards heading still of we in but is only off XX% to June increase that, additions, and higher which some that that ahead of been well CapEx finished that. as able a surpassed about that's year-over-year. month that weeks to expect pausing new a percentage, far we

that. payment terms, We a then reflect terms are our and moving current to contractual in and payment than change rights the changing further move we're

the and few content last prices further domestic We regions. by raising we're days then are some raised in prices X, mandating have September over and

elongating than core very even simply on hard dealers who pay working dealers we I us, to welcome not growth, fair but sacrifice our more much cash. to patience we appreciate possibly this is handle our to this generating cash and I we with debt reflected working current on bringing benefit and the more So earning dealers to therefore, is and changes. not therefore, our working the capital level our to their service of in forecast of is focus know our are But us all our cash more and these not will using this of dealers, as support and necessarily guidance customers, wisely in with make cannot the

Operator

Andrew The Morgan from next Percoco question with is Stanley.

Andrew Percoco

the EBITDA I'm guide. First domestic EBITDA is any ITC seems if the XXXX, of and curious, higher much? is strong on content looking should what in is XXXX guidance? a one you the contribution driven percentage there XXXX. how expect then update And included ITC by Obviously, be there, XXXX XXXX, from just to of quantify in representative can you And in so, to sales. mostly EBITDA sales recapture maybe of out

William Berger

time sales, adjusted with sales, produce to why the greater And math. I'd That ITC going amount not a requirements the it. guided I just and ITC the don't say forward so mid-XXs without think we've don't I amount is to up the maybe ITC and ITC an from have XXs EBITDA into regards it's sales. vast with do majority even of as But -- going move you of the show high in to we the that's it's to. equity and know therefore, the mid-XXs small tax to you of

move actually we in not it and it. moving of as did economics are I the pickup, There's the should on any higher materially this and level, have slides, And add. that's increase do time. in materially generation amount you the The â€“ shown clearly would as don't moving So math, unit cash one-time in is moving clearly past returns month, to higher. are forward this

of see go greater So, along to a contribution greater generation. we a cash expectation with

Andrew Percoco

that competitor the would to benefit on be? how to opportunity this There's competition I'm going second, adder. and curious get leases some from you out to for ultimately to flowed any benefit of benefit be a ] that pass-through? to this does And sticking [ there expect that is customer there just has if then this maybe domestic through expect the just another you content that sticky obviously to

William Berger

would result of conservative 'XX -- I of We've few be some there very noted in as Andrew, a very that 'XX been peers think and by a yourself, as think assuming your and I markets think, I higher right demanding markets, as capital. balance I And return very with and capital directly, but returns right now. the capital clearly out for origination overrun now, we're the are, laid to

to materially not we've think being worried appropriately back about returns in been X term out in laid and the I'm we've I the So generation capture the conservative cash in short able then that years. us

Operator

from with [indiscernible] Jefferies. The Julian is next question

Unknown Analyst

up of of little changing the warehouse bit about on following funding? about there? think of little timing earlier played just a from rapid a think the more your the tax partnering about and and seems terms talk bit. talked tax more Can the talk, the health How the the partners here enable handling a growth, align you can adding that? you you It equity further, How You of some tax here about equity little to terms of into equity market do to -- plays So or tax here? into outlook you Q What the about partners the the that changing funding with perhaps bit about funding. equity with like sort right? dealers additional as payment your just the health that market, effectively

William Berger

Yes.

I the tax expanded this due back closing probably maybe of of number really ITC quite has certainly credit quite to it transformed of certainly the where or you hundreds more dollars and so transfer pay structure. financing market capital that the and a that would And an practical the of that goes likely first almost, done the to market say, September. ITC, point, right? of that's sale right? transferability -- saying marketplace. And Because on transaction we're companies better entire have is speak if tax without And bit point recall, the look, We the the think I are millions and that -- it, at in we limits, as engaged to a equity tax. market under a way billions in is there we in did greatly is overall, more sources

at somewhat it so And the really to, up think And of complexity came out the right things time certainly helping IRA and take I it's the ITC. would terms in in think I of that of of capital. the some change the and exact meter that but say, transferability opened meter, the just that behind top in numbers enlarge of well. I the the as financing funnel And not for can front the the available industry, of the entire see and the you

So flows, a like balance sheet. are cash you We've terms much on in and as negotiable forth. a know. our always And service, terms, focus retaining very We you in the very a our nobody know. got position, as those so strong customers of like we're payment better. of We serves

where partners the sit, we getting that the So and we're we like feel capital we in best market.

Unknown Analyst

looking to in I X. want but swiftly I you equipment pivot verbalize can Then that this Seemingly September to packages are mean, related network direction. here, of what impact you're muted I that little all moving -- in dealer content at? total your say suspect by equipment? everything of practically will to of piece? I of fairly volumes â€“ domestic a you that September you talk effectively the a What bit just on the about terms be requires know, has permutations is What anticipating X. saying or by briefly impacting

William Berger

few. week names of a and say May. OEM manufacturing the would that, States. growing a into, as more almost up certain of at valued don't want their by quite get more they've United since number permutations lines running and guidance that necessarily the in and there is OEMs Julian, in I get naming There's been late partners, I dropped to us working and with

panels, to seems inverters chargers, right, seems fashion. United States, or to administration So production EV et what of it's bipartisan working and and the quick or bringing cetera, in ESS focus, Congress the very a intended or very in the to the batteries gear, whether be

quickly anything all about see we We partners to with don't get sales, They're being else. of of their manufacturing hourly major us. working kicked maximize and the OEM off communicating and AVL almost course, of our number or through diligently to So any permutations. us see a how to

number going a the very it's comfortable, permutations companies smoothly, over hard together, dealers. months So And pretty I so. think, but is have to of we're up this the or of that put it's the set racking including get moved feel -- get have next pieces to moving to quickly, all and to we for our going going couple

Operator

The Evercore West ISI. James from next question is with

James West

how us about have to you Eric, guide clearly, you're forward the economics costs how tax on you moving and we unit going a touch unit wanted equipment to are as got it? else, high-grading, obviously that for think customer additions, side, everything how economics about the down thinking but the and you're lot about John of thinking would forward? on the coming you've going Or credits, parts, business I

William Berger

in seeing the of the casting the and that lead increases in did point a burdened we're month the all time that apples last our this uptake basis burdened are the working period of what's down, as unlevered it movement what would brought last That back the on things was fully of apples. return, on do points forward a at and we and unlevered forecasted. On those for been a the generation we somewhere match as what to fully going that the with back able know guidance month best conservative, teams Eric Board And cash be his the trailing price unlevered more given return. at in that see adders fully a marketplace. we and finished higher do One up our materially little basis, with everybody, burdened the time up on members we far between and so would short XXX and return is to has in here expect relook here to XXX night just

James West

the the dealers, adding a a than quarter, year? additions year? When months, forecasted what you about base standpoint? of are think Is on of couple you this of further the then you you stopping customers dealers to a thinking -- And your rest this adding this the for timing how be of from do would new and

William Berger

think keep we're just optimize into then to got next a sloping cash, to That's from I do to I we're And that. and think need we've and going going there. going with gradually Well, to keep the year CapEx that. what we increase flatlining

we're want of core those mitigate above care foremost. us goes with for anything our first have down. of to take So to in especially years, growth steps been that going take that, terms that to dealers, and We that

think And just so fair. I that's

to going these potentially would in get possibly. them over just they them wish very to out pay can dealers lose of we is we are and The Now line on. some and And long. move some -- well

working well at our be those take us want care we're not to point aggressive long we the take We that's so And to being just grow. been on exactly other the sure try and we side get need I really shareholders. with for a doing time, going to. believed where of on and to for be with that, And us and time in in in the who've not make stick down paying what to is debt, and aggressive to of need growth cash, to earning this

Operator

Sachs. Goldman is The Lee from next Brian question with

Brian Lee

have the it's XX%. you I look slide at up X, megawatts per John, added if year,

EPS last just other gain? of raising question, you're 'XX. you're because XXX you prior than you're of growth Is for to that at curious, just actually Is driving sense the what XX% that It kind things? and growth, of year, couple looks it us trying higher on 'XX 'XX talk Is Can lot of investment is no share improved to what's be forecasting same So momentum looking in growth quarter in new outlook get Just it -- cetera, forecast here your XX%? but you're megawatt to more megawatts getting driving alluded you slide. and it Just about showed what's the faster like here what a for years? it seems your you That's growth actually 'XX. on 'XX new of talk XXXX. cost the implying I'd growth what's and the next there's growth, Is there. as it your And implying constraining you're well? dealers, for et view outlook? better for it a like last

William Berger

say, of island also large it's the our the of been as increasing. been have But we the average kilowatts to, has growth pretty are customer markets low. kilowatt where the Yes, Pacific southern markets you a per and seen some this high in is pretty growth continuously seeing relative pretty large Caribbean pretty multiyear per where know, is Part some certainly. the of in amount That's and system Brian. trend,

that it's of 'XX. now, run for a So Right here, big running of 'XX taking steps. kind that's we're think this. we at, we're piece I and we'd just a of I dealers other at state rate the these pace looking out basically be would by managing to say limiting and some

bit I So, we're a basically If doubtful. but maybe there. think higher, little not

'XX. how think we you XXX out, that's however it, ahead, looking the how if given days to want long go quarters, phrase -- origination of works kind to to And where from a X to that's or 'XX I will, in-service, takes from basically it want half year, to moving you about math we're be.

Brian Lee

a And just earlier Phil's of then question to I'm follow-up kind one. curious.

new you've billion most in the by these have of forecast You've 'XX leverage like be is that on to even of what got some much could mean, robust adders unrestricted upside based the there it had you. you're plus seeing probably $X liquidity target. how a to sounds and I cash while,

singular you can't answer us of So planning first the the the to per as down about se, debt, you of how I think like give as kind sounds priority. permutations a know it pay it different you're to address but

to been restructuring speak are to still table? generate focus like different the simply bit? options multiple there cash? doing We'll there's things, strategic lots that if a you can Or and up priority around I on of now, until down as you shifted has or be that and curious think refinancing debt different the discussions just paying

William Berger

don't did upgrading I facilities. unless take asset-level lease on can days a come believe on the it ABS Those older our have on flows pay taking all. on asset-level certainly. we few stronger, flows. our debt cash And witnessed in agency debt Yes, you ago cash the of rating underlevered and personally this upon

thing other The in we made mention surge prepayments. of, a we're seeing

tremendous So or pretty going the produce think I We're negative those we'll going the a are that to loan pickup. about see rallying, those sort of turbocharge bond that's cutting about and that prepayments. rates be value falling to yesterday soon not any And think cash, seeing the clearly that. pretty the was ABS in Fed forth that talking as and just to rates going market so is

the of So the billion. those now can appendix is I'd put in measured out see there. way, by that the discount portfolios $X loan as on you And

cash more what's to view, as that the options When to crossing of that $X you in can't of continue to number at options for produce ahead, flow as the generating of back just have we've far never shareholders. moving a company would focus, to my a pay focus, personal off us focus and we to those having you team's as look up the And best there's the intended. cash would management us billion the more pay take piling the cash we this is is to So a off in do we'll got cash. that customers here and as the should available originally things so cash evaluate expect as can point lot Eric's we flow. and to But direction management debt do. clearly us generate right Board go to And on my and team

would I to going plan. that execute the We're and our with plan, original -- was So we're going end plan. to this to stick

Eric Williams

I'd just add behind that.

maximizing opportunity a at asset-level my cash better I'm comments hand. tremendous you flow, nothing in in create to than options that to puts position that. in least heard to we cash You do really And that committed have having

got said So nice before the at we'll that's comes thoughtful look as maturity what think absolutely and most be we will opportunistic be runway that John value at the we've just a as we case. create closer but

Operator

is with from next Dylan Research. Wolfe question The Nassano

Dylan Nassano

it TPO on updated the $XX increase? you to kind to what color [ to looks that some any can more proceeds. Presumably, million the netted this relates offsets are tax like But cash equity the sales. Just gets generation, higher against of on X% per shift just there ] offer

William Berger

not generation ITC. X% per more less, is basically offsetting. of thumb that's a thumb. but mean of a be or rule you I can It of cash when at That look rule

Dylan Nassano

or Right. just But number ITC the to proceeds? gross net from

William Berger

OpEx I mean it's into waterfall and going so forth. to the down

that P&I, the you so to And could generation. of it's end going bottom the into adjusted up cash look gets but largely EBITDA where line plus towards at

impact there in well. as You've got working capital

Eric Williams

That's right.

in that as structure, lower we If the ITC beginning mentioned well down that growth coming the cash waterfall you in at present with net unrestricted at and the look largely graph, cost at a cash we things the start way year, other the this end. restricted of result as we through

Dylan Nassano

market. just John, the a competitors public follow-up, exit the from then as And you referenced

past. of seems you flagged specifically is Just of time wondering do is get this bigger California? a at you in have this been tailwind kind It Like in your NEM how more much point. of It's like to more X.X relative right share in the grab to appetite stabilizing exposure try California, since there? the kind to

William Berger

that think We have trend and market California, I increasing share going our in been is to continue.

Operator

Wells question Blum next with Fargo. The from is Michael

Michael Blum

credit versus ask shared content you to with the of kept tax domestic how customers guidance, cash Sunnova? wanted generation gets in I are and suppliers the much assuming by

William Berger

domestic dealers a all we our from clearest that answer the content I'd think method or cost harbor it's the the is way to X. under whether I method safe of choose expect by that compliant, September

Michael Blum

just down I strategy to to the on on then the refocus drill customer. adaptive wanted energy And core

of say mentioned, point? exclusively lease you businesses. completely loans some tied to As these non-solar sold some just the to non-solar this on you exit you're focus ancillary at planning businesses Would you PPAs the and

William Berger

predominantly about you and power a little Well, residential really customers, customers as business know. is bit of to the business markets, serving

not type shareholders. cash to returns business. the to The we do focusing our therefore, that's the is is optimize financing on serve generation or business and so customers the another. we're What one And to after

can supply again, even some to roofing, our to need those going of customers. that, generators, management, to items turn services our is those be in and them and PPA that, because cash needs customers our clearly, generation. a so our adders, lease ITC superior that some And chargers, to still continue the EV customers supply Outside of could dealers additional It we're the have. load there's that though,

Now even to look can. sell off on this doing agreements those that. and That's were we past that loan side? make likely. obviously enter ] money very assets We solar to highly executed the comfortable flow loan those accessory as the We we feel and forward [ would loans We quarter. on side

off past securitize the sell So them done to valued partners option leaning that go in either we'll this sell up the we've terms quarter purchasers. we've past towards already with in loan picked strongly ahead or those and them we're in historically to loans pretty and have as of off,

X the do On right days And so. one or a likely behind in closing have securitization the of this have we another X. then most couple or we front, private next that's securitization

ahead frame would securitization. first be another lease sell behind we in won't If have it be then The fall one we would that go loans, time PPA and and the a potentially loan. then

So gives what we're bit hopefully, color of little it thinking. of a you

Operator

The next question is from with Ben Baird. Kallo

Unknown Analyst

for on Davis Ben. It's

just previously follow-up remainder you a the quick. selling accessory just actually see maybe this the to benefit I could in that super quarter, and the the year. of the on question, guys portfolio to that Just was ask about non-solar, going a the the was one loans asked,

what we about sales timing, can visibility versus this year see you far? year into assumed for next think so what for closing Just as is

William Berger

loan solar I the into us more loans Sure. do that side. expect to some sell and broaden

very, So loans with up quarter past batch our one flow forward pick some of basis this include important. financial on or and we've become work else our very product. up some with love again, partners That's a expect solar I partners picked probably We no to service the either does. loans, or sell additional that

capital sure Finally, making promised. everybody get and services important the woke they what up were how markets, in customers

fantastic products, us. to confident a loan I'm that. forward these fee-based type in working into you for turning will, I'm out And we've a think if and business got I looking of So product.

Operator

Raymond James. The next Molchanov from question is Pavel with

Pavel Molchanov

demand that? one. macro a in of what you've since observed that This surge kind First, May, caused

William Berger

the exiting view truck I higher $X they at natural XX-year guess continue very even. year, the collective has market have ahead over that to at at $X is next to look I the utility at actually personally staying while look gas, NM you my natural be gas the probability view, I we all I rates, think you if gas NM. be it's low see bear a of and could the here the in probability. company, When

facilities, higher and of so probability extreme given rollover goes forth. that power general the LNG basins, the demand, gas of the growth, and of the some just demand, the economic so And Haynesville,

obviously get assistance in better. the extreme about instance, and lot have interesting else an here up constructive of tag. people offered I is to on much All [ utility price more. to problems, for at push terms in long Houston, sit ] is backdrop nothing are be ideas a of think rates I The issues as CenterPoint, -- which further hand. But it's natural if those the with going to how to wait, gas, reliability done. That come there's multibillion-dollar

utilities, and Somebody's That's ratepayers. the all be to on got the going that. going to for to pass they're pay to it

monopoly, retail so a have higher see competition, a to consumer to you I got So not think everybody now choice inflation. having that is else can you rates We've for Not than well see be sees having topic. that, higher when have expect And trucking going to higher, too. And technology, services consumers. have should rates. better real better we competition continuously I

more. more are So I that and people getting think

dominant batteries especially battery, The are other more more our of inverter whether that, solar in and panel becoming or equipment, side a the in batteries are plummeting; portfolio. an it's or a the

for we went hour and we at Just Houston. better, in like through storm money serve just the our the growth, and look good here customers make instance, megawatt

laid well as Our we the out XX. on slide served customers were

at you interest you proposition rates that a trucking see fundamentals, utility looked produces exactly, higher, when we moving So rates. lower, flat if XX-year, and value at I might year-over-year, add, everything, see look equipment the you we almost have

So flatlining potentially your to cost capital is basically declining. of

overall this macro all So a backdrop in for is growth our very industry. constructive

Pavel Molchanov

And you how on your in structure efforts? the current financials, What XX months? Zooming last importance tracked maybe of has that service. cost the of service referenced the over in-house is your

William Berger

in down. we've we'll able customer Paul our will, I to to customer Chief don't that more cost think look declining take strong see we've has been core the ability don't On curve little is down Operating as a is, cost at you to job can industry. public cost continue the if that, if the been our we customers. a per see driving what a about the see that our fantastic But call. talk to we bit on if drive I while so moat, be we service and that QX a basis, the per-customer that at but a level per-customer Matthew, service cost about improving drive it matched And and doing the Officer, know can done service that in down,

Operator

The question with Sophie next KeyBanc. is from Karp

Sophie Karp

your corporate-level goal still on So more that's the would long-term moving there down with more different debt be appreciated. of strategy? your and the and would paying capital is supposedly, immediate asset-level debt, color So may what accomplished, once a of rely improved liquidity forecast financing is Is be that kind? one to forward? any Or you consider

William Berger

corporate corporate and cheaper. I always the -- absently or debt is more corporate those not doing years -- Our relative was Clearly, is either That have strategy level anymore. has as lower The option pieces. of the the been, I the whatever say, capital capital, capital capital, we put expensive. spoken flexible to would those you is is -- level capital the fairly we asset inexpensive asset level over feel that when to raise back let's clearly have and case

we're do. and size out going laid market. asset a changing, capital don't cost be voting again. lot and not to we've more will do we've I level converts market I'm higher that that see opinion on the My the executed than dictate but ever what focus will so the And on. not we to is are converts The of capital I probably personal

Sophie Karp

And the a thoughts maybe then are to potential on maybe November that? terms change ITC on in administration, adders like of in safe you'd how extent your comment are what to in the

William Berger

win bit But this probably I who's the to think I knows joke. heat a is Who of a clearly, election? now. think a supportive when of going at them, President look dead very you and Harris -- be will that's

the I looking tirade So be at the just think cautious so just old ] forth, and [ personally Trump I'd very that situation. on

we'll some been it's think of behind supportive very as IRA -- doing. to are both X political continue what you surprises. see regardless I I And the that. of think party, a be think weeks look, And politicians is active of exactly in I think that I should scenes, stripes the I the don't -- landscape.

is listen So batteries, manufacturing I working the mentioned solar, don't And not what's working. than earlier, worth jobs to stay listen frankly, personally that generation driving a very noise to I'd it new in as space power noise and quite What's domestic on that, is time the ever. using domestic my is the management, focused et like I content growth the unhelpful be and technologies find to in more load political I cetera. EVs, space important to

I find both I time, very in move be So forward think think years. I the the I plan to intact same this will with that And and Health is idea the after think, that, on you'll doing we're think what you care all history, up supportive parties and much being Obama end of basically that like as still these the dustbin repeal of execute.

Operator

is Levy with The next from Steris Jordan question Securities.

Jordan Levy

a you're with or of come space. like the seem deposit into entries dynamics any certain the but lease I out new PPA see with you new growth there's with perspective evolving seeing are doesn't guys from it how just more wanted the dealers to overall? of problems If talk having competition Certainly, are regions any all that competition

William Berger

firmly to pushes me capitalism Yes, be believe utilities all the and certainly makes certainly. us think Look, better. It And some. the and I competition better. I that ought get competition, in to believe I

than everything the period. any embrace cost-competitive. This greatly area scale how the other game, much complex capital that is under big-scale under management, competition. needing probably assets of a to energy operations, and I how and more up said, have, management big So, With people that the financing, need the become I business, lining very think underestimate

I new to with be a of think going that so lot there's the And entrants. struggles

You their build everybody and and lot be I'm painful XX to got size that go share lessons more. a last And And I've of painful lessons over learned the as to Sunnova through that And a would kind company has prime well. up of and performance years done my them. say that lot certainly to competitor the I can there's has.

the So I competition. embrace

have. I'm position. And time, in important think I and it's so the competitive at same moat our to confident increasingly our in very

Jordan Levy

update the you're Any Puerto thinking Rico on there? market the about things status how and of

William Berger

Great market. Great.

of some there have our the for best firmly top down of the there, everything decade. able market We to over that do the the we dealer the terms there forward committed completely and obviously are fantastic over taken still And market was share focused few a we've at dealers Puerto still now to have years. a customers and like sure in down of. making our large We're after potential as on Rico We're a we we over very next market care move decade. been

were and our Rico. fantastic So like of wish all markets Puerto it's

Operator

Thakkar with Ameet from is question BMO. next The

Ameet Thakkar

of it kind the like paydown kind placeholder any I a now think just cash a this expense perhaps cash at corporate balance to for on in guidance slide. And John, is flatlined but bit you're questions looks had the a XXXX, that you of generation talk horizon for of then plan couple is is can interest just mentioned that? little corporate like it I showing the assuming for now? over delever about presumably, you year. the cash just forecast of Is quick the kind the level

William Berger

fair. that's I think

Ameet Thakkar

of older your ABS. you upgraded some then ] rating agencies think, highlight, the And did your I [ vintages one of of

your little an bit looked that look of points yesterday. have ABSs wider just a A was the a wondering in the other one of were of kind the spreads basis You of the the I little now? kind some notes just causing with right than public like wider ABS price ABS recently. to competitors, is some if issued that of bit would It issues of us market leaseback been of set of Series a kind XXX

William Berger

that shall numbers situation. [indiscernible] what's it. by pass focus I but just doing market investors noise And what through executed most we a is versus really think But we're important company when the unfortunate, on helpful. and in a nailed the You bunch too created this as it. I think of

Eric Williams

investors to a grow broader base been it's that add investors. to We're some see nice Just new class, working coming of in. [indiscernible] the have to

X. the to tightly look we've The us Xth that allow asset you possibly in helpful expanding done, to another we more like talked year universe. or X while John last yield, the X X behind is the fifth, about outperformance in from is at don't will moving what So just behind announced that We future deals price right said And we deals. just that.

important of asset And expect cash it's under you'd flows make then broader that a quality why base an underpinning quality corporate done backstopping support amount, pressure of single-name that will to there so to pull in. really flows a all well sure Kroll to chance the give that that's that's we've broader we corporate get in. what us cash the highlight our and it the together. but So significant having investors And the works ambitions having issued that

I see continue those So environment and we'll to you'll rate think as continue in. to as looks to spreads execute, come interest well. Certainly, the change

Operator

from is Grippin William with question UBS. next The

William Grippin

to that to that hold your just a domestic of the that to a relative And X customers and growth I'm you're taking September you're time pricing mandate qualify thinking comfortable content? bit pricing how some to It seems in wanted with. evident could price growth moderation drive how maybe that and are growth originate further for to just increases? dealers only level continued curious Just moderate about maybe your initiatives come here. that back topic of the little down take

William Berger

lot It could. a about so it if don't There's names, and naming I not won't get a date. make with I won't. And that September the reasonable suspect about I we're mistake. there's think I trouble think things. to options pretty names, of -- But I later naming partners. and are and I is that start a But reasonable that, available, OEMs number our I X work that going of high-quality dealers be in do

as dealers far now, just [ as So it. strategy take allowing look, about if to we but always of change on And good doesn't is again, we're ]. can us right And sense need the to, dance. what solidly those new feel we pretty that saying we makes care who brought

going over And focus maximizing we're so that's cash to on exactly to growth. on, generation focus going the what we're and

William Grippin

update extent any Hestia on just initiative you've that And what recent lastly, Project and on to leveraging been securitizations? the

William Berger

to to finding ways that it success, and it and with program. We and did forward happy one program, a last quarter use more was great look we're of great

Operator

The next Mizuho. question is from with Mandloi Maheep

Maheep Mandloi

Brian's Just customers the on a follow-up here. on question

in call, of time. So the said last -- for growth 'XX versus seems you down versus growth the XX% versus customers last what XX% the number

wondering driving that? mix why else is that's are just [indiscernible]? Just Is what's leases increasing, your that something the of megawatts increasing or

William Berger

more day, At I'll the more care the customer you generation. grid we count, whether core you on even the could It direct I which a it's megawatt I be focusing customers about end hours, or on focus right? really with just, I Yes, always, services about really easily is the as cash or megawatts and you as guess lot of call just even gives don't know, certainly know, energy column. think we argue think now don't I optionality important, I our again, the care services,

Maheep Mandloi

there's to But the any that, megawatts? I'm [ upside if there on customers are the either ] seeing just just understand strong trying you to demand out or or

William Berger

it's with got to cash gen. additional but Potentially, come

Maheep Mandloi

for for And or in the with September well? waiting content, domestic just talks the that timing on further of clarification just terms checks as that is them, your based any with EPC IRS or from X,

William Berger

partners OEM by them. the and That's driven mainly with conversations our

Operator

We no currently have questions. further

So remarks. I hand back to closing Mr. Berger for

William Berger

tremendous you. even sharing QX Execution of was in will dealers, and forward to look I busy, you. of down Thank Thank earning QX better results and expect supporting with serving our focus. be sole made and October. progress. you late debt, we plan our on paying is cash, our execution customers the

Operator

Thank This you Thank joining. all Mr. you Berger. today's call. for very concludes much,

disconnect now may your lines. You

Sunnova Energy International (NOVA) 1 Aug 242024 Q2 Earnings call transcript