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Sunnova(NOVA) - 2020 Q4 - Earnings Call Transcript
2021-03-01 07:21
Financial Data and Key Metrics Changes - Sunnova reported a year-over-year revenue increase of 22% and adjusted EBITDA growth of 23% for 2020 [22] - The net contracted customer value (NCCV) rose from $1.2 billion at the end of 2019 to $1.7 billion at the end of 2020, translating to approximately $17 per share, a 20% increase year-over-year [17][18] - The company raised over $2 billion in new financing in 2020, including $800 million in securitizations and $415 million in tax equity funds [23] Business Line Data and Key Metrics Changes - Sunnova added approximately 29,000 customers in 2020, a 57% increase from 2019, driven by a significant expansion of its dealer network [10] - The storage penetration rate nearly tripled in 2020 to 9.2%, with expectations to reach mid to upper teens by the end of 2021 [14] - The company performed over 1,100 battery retrofits, an increase of 226 from the previous quarter [12] Market Data and Key Metrics Changes - The company experienced record customer growth in Q4 2020, adding more customers than any other quarter in its history [8] - There was a notable increase in demand for storage solutions, particularly in markets affected by recent natural disasters, such as Texas [71][87] Company Strategy and Development Direction - Sunnova's acquisition of SunStreet aims to significantly increase customer growth and reduce costs per customer while positioning the company as a leader in the development of microgrids [50][51] - The company plans to scale its operations to deliver grid services and develop community microgrids, enhancing energy savings and resilience [54][56] - Sunnova is focused on optimizing recurring operational cash flow through exceptional customer growth and declining costs [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2021 targets, citing strong visibility with approximately 82% of targeted revenue already contracted [45] - The company anticipates a 75% increase in adjusted EBITDA for 2022 compared to 2021, driven by the SunStreet acquisition and upselling opportunities [44][40] - Management noted that the transition to distributed solar and energy storage technologies is a significant trend, with Sunnova positioned at the forefront [58][62] Other Important Information - Sunnova's adjusted operating expense per customer declined by nearly 10% in 2020, with expectations for a further 25% reduction by 2022 [47][48] - The company plans to spend approximately $30 million on integration and transaction costs related to the SunStreet acquisition over 2021 and 2022 [42] Q&A Session Summary Question: What is driving the increased customer growth guidance for 2021? - Management attributed the growth to a significant increase in dealer and subdealer additions, as well as the introduction of new technologies [66] Question: Can you provide insights on the recent dealer additions? - The dealer additions were a mix of large, mid-sized, and smaller dealers, with significant growth observed primarily in the West [70] Question: What impact do you expect from the 2017 ABS refinancing? - Management expects to see improved cash flow and a reduction in interest rates from the refinancing, potentially enhancing shareholder value [75] Question: How do you see storage trends evolving in the next quarters? - Management anticipates a significant increase in storage attachment rates, driven by heightened consumer demand following recent events in Texas [78] Question: What are the expectations for NCCV growth post-SunStreet acquisition? - Management expects to see an increase in NCCV driven by upsell opportunities from the new customer base acquired through SunStreet [88]
Sunnova(NOVA) - 2020 Q4 - Earnings Call Presentation
2021-02-25 15:37
Fourth Quarter and 2020 Full Year Earnings February 24, 2021 SUNNOVA Legal Disclaimer • This presentation and the accompanying oral presentations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or Sunnova's future financial or operating performance. In some cases, you can identify forward-looking statements because th ...
Sunnova(NOVA) - 2020 Q4 - Annual Report
2021-02-24 16:00
PART I [Business](index=8&type=section&id=Item%201.%20Business) Sunnova Energy International Inc. is a leading residential solar and energy storage service provider in the U.S. and its territories, serving over 107,000 customers through a differentiated dealer network model - As of December 31, 2020, Sunnova served over **107,000 customers** across more than **20 U.S. states and territories**, operating over **790 megawatts** of generation capacity[27](index=27&type=chunk)[32](index=32&type=chunk) - In February 2021, Sunnova agreed to acquire **SunStreet**, Lennar Corporation's residential solar platform, including a four-year exclusivity agreement for Lennar's new home communities[22](index=22&type=chunk)[24](index=24&type=chunk) Customer Agreement Mix (as of Dec 31, 2020) | Agreement Type | Percentage of Customers | | :--- | :--- | | Power Purchase Agreements (PPAs) | ~51% | | Lease Agreements | ~31% | | Loan Agreements | ~17% | | Other (Service/Roof) | <1% | - The company operates through a dealer network model, with its top two dealers, Trinity Solar, Inc. and Infinity Energy, Inc., accounting for approximately **28%** and **12%** of net originations for the year ended December 31, 2020[40](index=40&type=chunk)[42](index=42&type=chunk) - Sunnova's business model is capital-intensive, having raised over **$6.7 billion** in capital commitments from equity, debt, and tax equity investors since its inception through December 31, 2020[30](index=30&type=chunk)[137](index=137&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The company identifies significant risks across its business, operations, regulatory environment, and financial structure, including the COVID-19 pandemic, reliance on its dealer network, and potential changes to government incentives - The COVID-19 pandemic has caused disruptions, including an initial decline in new contract originations, and poses ongoing risks to operations, capital access, and customer payment ability[106](index=106&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - The business is highly dependent on its dealer network, with Trinity Solar accounting for **28%** of net originations in 2020, creating a concentration risk[135](index=135&type=chunk) - Changes to net metering policies, which allow customers to receive credits for excess energy sent to the grid, could significantly reduce demand for residential solar systems, with several key markets reviewing or changing their rules[263](index=263&type=chunk)[266](index=266&type=chunk)[272](index=272&type=chunk) - The business depends on government incentives, especially the federal ITC, which is scheduled to decrease from **26%** for projects starting in 2020-2022 to **22%** in 2023 and **10%** thereafter, potentially impacting financing and growth[278](index=278&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - The company has a history of operating and net losses, reporting a net loss of **$307.8 million** for the year ended December 31, 2020, and may not achieve or sustain profitability in the future[111](index=111&type=chunk) - Business operations are geographically concentrated, with approximately **22%** of systems in New Jersey, **24%** in California, and **15%** in Puerto Rico as of December 31, 2020, increasing exposure to region-specific risks[211](index=211&type=chunk) [Unresolved Staff Comments](index=71&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable[328](index=328&type=chunk) [Properties](index=71&type=section&id=Item%202.%20Properties) Sunnova's corporate headquarters is leased in Houston, Texas, with additional smaller leased offices in Guam, New York, and Puerto Rico, and no owned real property - The company's principal executive offices are leased in Houston, Texas, under a lease that expires in July 2029[329](index=329&type=chunk) [Legal Proceedings](index=72&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any litigation or governmental proceeding expected to have a material adverse impact on its financial position or results of operations - Sunnova is involved in ordinary course litigation and claims but does not believe any will have a material adverse impact[331](index=331&type=chunk) [Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[332](index=332&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=73&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Sunnova's common stock trades on the NYSE under "NOVA" since its IPO on July 25, 2019, with no cash dividends declared or expected due to the need to retain funds and credit agreement restrictions - The company's common stock began trading on the NYSE under the symbol "**NOVA**" on July 25, 2019[335](index=335&type=chunk) - Sunnova has never paid cash dividends and does not expect to in the foreseeable future, with future earnings intended to be retained for business operations[337](index=337&type=chunk) [Selected Financial Data](index=74&type=section&id=Item%206.%20Selected%20Financial%20Data) The company presents selected consolidated financial data for 2017-2020, showing consistent revenue growth from **$76.9 million** to **$160.8 million**, but also widening net losses from **$90.2 million** to **$307.8 million**, reflecting the capital-intensive nature of the business Selected Consolidated Financial Data (in thousands) | | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $160,820 | $131,556 | $104,382 | $76,856 | | **Net loss** | $(307,818) | $(133,434) | $(68,409) | $(90,182) | | **Total assets** | $3,587,582 | $2,487,067 | $1,665,085 | $1,328,788 | | **Long-term debt, net** | $1,924,653 | $1,346,419 | $916,430 | $723,697 | | **Total equity** | $1,144,557 | $691,111 | $501,118 | $371,183 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=75&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results, highlighting customer growth to **107,500**, a **22%** revenue increase, and a significant widening of net loss to **$307.8 million** primarily due to a **$142.8 million** non-cash loss on convertible debt extinguishment, while confirming sufficient liquidity for the next 12 months - The number of customers grew by **28,900**, from **78,600** at the end of 2019 to **107,500** at the end of 2020[375](index=375&type=chunk) Key Performance Metrics (2020 vs 2019) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | $160.8M | $131.6M | | Net Loss | $(307.8)M | $(133.4)M | | Adjusted EBITDA | $59.6M | $48.3M | - The increase in net loss in 2020 was primarily driven by a **$142.8 million** loss on the extinguishment of long-term debt related to the conversion of convertible senior notes[424](index=424&type=chunk)[435](index=435&type=chunk) - As of December 31, 2020, the company had **$377.9 million** in total cash (**$209.9 million** unrestricted) and **$402.4 million** of available borrowing capacity under its financing arrangements[440](index=440&type=chunk) - Estimated Gross Contracted Customer Value, a forward-looking metric, increased to **$2.61 billion** at a **6% discount rate** as of year-end 2020, up from **$1.88 billion** at year-end 2019[395](index=395&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=104&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure from variable-rate debt, which it manages using derivative instruments like interest rate swaps, with a hypothetical **10%** rate increase resulting in an additional **$2.6 million** in interest expense for 2020 - The company's main market risk is interest rate risk from variable-rate debt, which it hedges using interest rate swaps[493](index=493&type=chunk) - A hypothetical **10%** increase in interest rates would have increased interest expense by **$2.6 million** for the year ended December 31, 2020[493](index=493&type=chunk) [Financial Statements and Supplementary Data](index=105&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the company's audited consolidated financial statements for 2018-2020, with an unqualified opinion from PricewaterhouseCoopers LLP, and identifies a critical audit matter related to the initial accounting assessment of new Tax Equity Partnerships (TEPs) - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020[499](index=499&type=chunk) - A Critical Audit Matter was identified related to the initial accounting assessment of new Tax Equity Partnerships (TEPs), involving significant judgment in determining if Sunnova is the primary beneficiary and in applying the hypothetical liquidation at book value (HLBV) method[506](index=506&type=chunk)[507](index=507&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31, 2020) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $3,587,582 | | *Property and equipment, net* | *$2,323,169* | | *Customer notes receivable, net* | *$513,386* | | Total Liabilities | $2,306,901 | | *Long-term debt, net* | *$1,924,653* | | Total Equity | $1,144,557 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2020) | Account | Amount (in thousands) | | :--- | :--- | | Revenue | $160,820 | | Total operating expense, net | $196,598 | | Operating loss | $(35,778) | | Net loss | $(307,818) | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=161&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[749](index=749&type=chunk) [Controls and Procedures](index=161&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2020, with no material changes to internal control over financial reporting during the fourth quarter of 2020 - Management concluded that disclosure controls and procedures were effective as of December 31, 2020[750](index=750&type=chunk) - Management assessed internal control over financial reporting as effective as of December 31, 2020, and this assessment was audited by PricewaterhouseCoopers LLP[753](index=753&type=chunk) [Other Information](index=161&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[754](index=754&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=162&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding the company's directors, executive officers, and corporate governance practices is incorporated by reference from its definitive Proxy Statement - Information is incorporated by reference from the company's Proxy Statement to be filed within 120 days after the fiscal year-end[756](index=756&type=chunk) [Executive Compensation](index=162&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the company's Proxy Statement[757](index=757&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=162&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership by certain beneficial owners and management, as well as related stockholder matters, is incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the company's Proxy Statement[758](index=758&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=162&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Details regarding certain relationships, related-party transactions, and director independence are incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the company's Proxy Statement[759](index=759&type=chunk) [Principal Accounting Fees and Services](index=162&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information about the fees paid to the principal independent registered public accounting firm and the services provided is incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the company's Proxy Statement[760](index=760&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=162&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report on Form 10-K, including consolidated financial statements, schedules, and a comprehensive list of exhibits such as key corporate documents, material contracts, debt indentures, and certifications - This section contains the index to the consolidated financial statements and a list of all exhibits filed with the report[762](index=762&type=chunk) - Key exhibits filed include the Merger Agreement for the SunStreet acquisition, various debt indentures and credit agreements, and executive certifications[764](index=764&type=chunk)[766](index=766&type=chunk)[771](index=771&type=chunk)
Sunnova(NOVA) - 2020 Q3 - Earnings Call Transcript
2020-11-01 05:17
Financial Data and Key Metrics Changes - The company reported a significant increase in customer growth, adding over 7,000 new customers in Q3 2020, a 40% increase from Q3 2019 [8][12] - The net contracted customer value (NCCV) increased from $1.1 billion on September 30, 2019, to $1.4 billion on September 30, 2020, representing a nearly 17% year-over-year increase [12][13] - Adjusted EBITDA and principal and interest received from solar loans were at or above expectations, with adjusted operating cash flow trending toward the lower end of guidance [11][19] Business Line Data and Key Metrics Changes - The storage attachment rate on origination increased from 15% in Q3 2019 to 34% in Q3 2020, driven by strong consumer demand for solar plus storage [9][10] - The company has retrofitted 883 battery storage systems for both existing and new customers, with expectations to double this amount over the next two quarters [10] Market Data and Key Metrics Changes - The company has expanded its dealer network to 270 dealers and subdealers, nearly doubling its number over the past 12 months [8] - The company has seen strong traction in non-island markets, with storage attachment rates in Florida and California at 16% and 12%, respectively [9] Company Strategy and Development Direction - The company aims to optimize recurring operating cash flow and growth by either investing to grow profitable cash flows quicker or preserving cash flows for shareholders [7] - Sunnova is transitioning from a product sale model to a service sale model, focusing on creating nano grids for energy independence [30][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2021 targets, with approximately 80% of the midpoint revenue and principal interest from solar loans already locked in through existing customers [23][52] - The company anticipates a customer growth target exceeding 50% for 2021, up from a previously estimated 40% [24] Other Important Information - The company introduced full-year 2021 guidance, including customer additions of 42,000 to 48,000 and adjusted EBITDA of $77 million to $83 million [23] - The company has completed over $570 million in new securitizations and $235 million in new tax equity funds to support its growth [18] Q&A Session Summary Question: Can you discuss the net value per customer and its trends? - Management indicated that the net contracted customer value (NCCV) is expected to continue increasing, with a significant jump from Q2 to Q3 2020 [41][44] Question: What financing transactions should investors be aware of? - Management confirmed plans to focus on tax equity and securitizations, aiming for a cadence of 4 to 5 securitizations per year [45][46] Question: How confident is the company in its customer growth target for 2021? - Management expressed high confidence in the 2021 guidance due to strong growth trends and existing contracts [50][53] Question: What is driving the increase in loans versus leases? - Management noted a significant increase in loan origination, now making up about 46% of total originations, driven by customer demand for long-term service [56][72] Question: How does the company view the potential impact of tax credit extensions? - Management acknowledged that tax credit extensions could influence customer behavior but emphasized that the business would remain strong regardless of the outcome [73][84] Question: What are the company's thoughts on geographic expansion? - Management prioritized growth within existing markets but indicated plans for geographic expansion in the coming year [66][68]
Sunnova(NOVA) - 2020 Q3 - Earnings Call Presentation
2020-10-30 17:55
Third Quarter 2020 Earnings October 28, 2020 Legal Disclaimer • This presentation and the accompanying oral presentations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or Sunnova's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as ...
Sunnova(NOVA) - 2020 Q3 - Quarterly Report
2020-10-29 11:02
[Special Note Regarding Forward-Looking Statements](index=2&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements concerning future events or Sunnova's future financial or operating performance, which may differ materially from actual outcomes due to various factors - This report contains forward-looking statements concerning future events or Sunnova's future financial or operating performance, which may differ materially from actual outcomes due to various factors[6](index=6&type=chunk)[7](index=7&type=chunk) - Key areas of forward-looking statements include the effects of the coronavirus pandemic, federal/state/local regulations, electricity prices, capital raising ability, dealer relationships, supply chain management, customer retention/expansion, platform/product investments, system operation, brand protection, cost management, warranty obligations, litigation, and solar service agreement renewals[8](index=8&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents Sunnova Energy International Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and equity, along with detailed notes explaining accounting policies, significant changes, and specific financial instrument details for the periods ended September 30, 2020 and December 31, 2019 [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets present total assets, liabilities, and equity for September 30, 2020, and December 31, 2019 Unaudited Condensed Consolidated Balance Sheets | Metric | Sep 30, 2020 (in thousands) | Dec 31, 2019 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total assets | $3,154,286 | $2,487,067 | | Total liabilities | $2,142,967 | $1,668,827 | | Total stockholders' equity | $722,594 | $645,935 | | Total equity | $875,472 | $691,111 | - Consolidated assets of Variable Interest Entities (VIEs) increased significantly from **$790.2 million** as of December 31, 2019, to **$1,254.7 million** as of September 30, 2020, representing assets that can only be used to settle VIE obligations[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the unaudited condensed consolidated statements of operations, including revenue, operating income/loss, and net loss for the three and nine months ended September 30, 2020 and 2019 Unaudited Condensed Consolidated Statements of Operations | Metric | 3 Months Ended Sep 30, 2020 (in thousands) | 3 Months Ended Sep 30, 2019 (in thousands) | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue | $50,177 | $36,615 | $122,796 | $97,942 | | Operating income (loss) | $1,649 | $(5,898) | $(17,800) | $(13,115) | | Net loss | $(73,294) | $(34,369) | $(179,027) | $(119,672) | | Net loss attributable to stockholders | $(64,181) | $(37,590) | $(160,514) | $(126,842) | | Net loss per share (basic and diluted) | $(0.73) | $(0.62) | $(1.88) | $(5.77) | - **Revenue increased by 37%** for the three months ended September 30, 2020, and by **25%** for the nine months ended September 30, 2020, compared to the respective prior-year periods[16](index=16&type=chunk) - The company reported a **significant loss** on extinguishment of long-term debt of **$50.7 million** for both the three and nine months ended September 30, 2020, which was not present in the prior year[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows present net cash used in operating and investing activities, and net cash provided by financing activities for the nine months ended September 30, 2020 and 2019 Cash Flow Activity | Cash Flow Activity | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash used in operating activities | $(101,796) | $(74,538) | | Net cash used in investing activities | $(594,275) | $(389,701) | | Net cash provided by financing activities | $757,469 | $486,464 | | Net increase in cash and restricted cash | $61,398 | $22,225 | | Cash at end of period | $84,635 | $51,026 | - **Net cash used in operating activities increased by $27.3 million** YoY, primarily due to increased inventory purchases[19](index=19&type=chunk)[245](index=245&type=chunk) - **Net cash provided by financing activities increased by $271.0 million** YoY, driven by higher net borrowings and contributions from noncontrolling interests[19](index=19&type=chunk)[247](index=247&type=chunk) [Unaudited Condensed Consolidated Statements of Redeemable Noncontrolling Interests and Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Redeemable%20Noncontrolling%20Interests%20and%20Equity) This section outlines the unaudited condensed consolidated statements of redeemable noncontrolling interests and equity, detailing changes in these components for the periods presented Redeemable Noncontrolling Interests and Equity | Metric | As of Sep 30, 2020 (in thousands) | As of Dec 31, 2019 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Redeemable noncontrolling interests | $135,847 | $127,129 | | Total stockholders' equity | $722,594 | $645,935 | | Noncontrolling interests | $152,878 | $45,176 | | Total equity | $875,472 | $691,111 | - **Noncontrolling interests significantly increased** from **$45.2 million** at December 31, 2019, to **$152.9 million** at September 30, 2020, reflecting new tax equity funds[27](index=27&type=chunk)[109](index=109&type=chunk) - The company corrected immaterial classification errors in prior periods, reclassifying Class A members' interests in certain tax equity funds from redeemable noncontrolling interests to noncontrolling interests[36](index=36&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the accounting policies, significant changes, and specific financial instrument details supporting the unaudited condensed consolidated financial statements [(1) Description of Business and Basis of Presentation](index=11&type=section&id=(1)%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Sunnova is a residential solar and energy storage service provider operating through a dealer model. Services are provided via long-term solar service agreements (leases, PPAs, loans), typically 10-25 years, including monitoring, maintenance, and warranty. The company consolidates Variable Interest Entities (VIEs) where it is the primary beneficiary - Sunnova serves **over 98,000 customers** in more than 20 U.S. states and territories, utilizing a differentiated residential solar dealer model[29](index=29&type=chunk)[30](index=30&type=chunk) - Solar service agreements are structured as leases, Power Purchase Agreements (PPAs), or loans, typically with initial terms of 10, 15, or 25 years, and include ongoing services[31](index=31&type=chunk) - The company consolidates Variable Interest Entities (VIEs) where it is the primary beneficiary, formed to facilitate funding and monetization of solar energy system attributes[33](index=33&type=chunk) [(2) Significant Accounting Policies](index=12&type=section&id=(2)%20Significant%20Accounting%20Policies) This section details significant accounting policies, including the adoption of ASU No. 2016-13 (CECL methodology) with a $9.9 million cumulative-effect adjustment to equity, revisions for noncontrolling interests classification, and the impact of the COVID-19 pandemic on operations, supply chain, and financial estimates. It also covers fair value measurements, derivative instruments, and revenue recognition for various service types - Sunnova adopted ASU No. 2016-13 (CECL methodology) in January 2020, resulting in a cumulative-effect adjustment of approximately **$9.9 million** to stockholders' equity[35](index=35&type=chunk) Impact of ASC 326 Adoption on Balance Sheet (as of January 1, 2020) | Account | Impact of ASC 326 Adoption (in thousands) | | :-------------------------- | :-------------------------------------- | | Accounts receivable—trade, net | $240 | | Other current assets | $(451) | | Customer notes receivable | $(8,784) | | Other assets | $(913) | | Accumulated deficit | $(9,908) | - The COVID-19 pandemic has caused some business disruptions, but residential solar services are designated as essential, allowing installations and services to continue with contact-free processes. The company has seen minimal supply chain impact to date[40](index=40&type=chunk)[41](index=41&type=chunk) Revenue Breakdown (in thousands) | Revenue Type | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | PPA revenue | $19,713 | $14,329 | $52,268 | $37,895 | | Lease revenue | $13,115 | $10,238 | $36,995 | $29,496 | | Solar renewable energy certificate revenue | $14,147 | $10,603 | $27,245 | $26,911 | | Loan revenue | $788 | $418 | $2,021 | $1,152 | | Other revenue | $2,414 | $1,027 | $4,267 | $2,488 | | **Total Revenue** | **$50,177** | **$36,615** | **$122,796** | **$97,942** | [(3) Property and Equipment](index=19&type=section&id=(3)%20Property%20and%20Equipment) Property and equipment, net, primarily consists of solar energy systems and construction in progress. The net value increased significantly from $1,745.1 million at December 31, 2019, to $2,172.7 million at September 30, 2020 Property and Equipment, Net (in thousands) | Asset Category | As of Sep 30, 2020 | As of Dec 31, 2019 | | :------------------------- | :----------------- | :----------------- | | Solar energy systems | $2,131,054 | $1,689,457 | | Construction in progress | $167,246 | $143,449 | | Property and equipment, gross | $2,368,238 | $1,893,219 | | Less: accumulated depreciation | $(195,511) | $(148,159) | | **Property and equipment, net** | **$2,172,727** | **$1,745,060** | [(4) Detail of Certain Balance Sheet Captions](index=20&type=section&id=(4)%20Detail%20of%20Certain%20Balance%20Sheet%20Captions) This note provides a detailed breakdown of 'Other current assets,' 'Other assets,' and 'Other current liabilities' on the consolidated balance sheets, highlighting significant changes in components like inventory, restricted cash, and deferred revenue Other Current Assets (in thousands) | Category | As of Sep 30, 2020 | As of Dec 31, 2019 | | :------------------------------------ | :----------------- | :----------------- | | Prepaid inventory | $0 | $96,167 | | Inventory | $111,011 | $43,749 | | Current portion of customer notes receivable | $20,083 | $13,758 | | Restricted cash | $54,096 | $10,474 | | **Total Other Current Assets** | **$199,637** | **$174,016** | Other Assets (in thousands) | Category | As of Sep 30, 2020 | As of Dec 31, 2019 | | :------------------------------------------ | :----------------- | :----------------- | | Restricted cash | $72,958 | $56,332 | | Construction in progress - customer notes receivable | $65,288 | $37,137 | | Exclusivity and other bonus arrangements with dealers, net | $54,543 | $32,791 | | **Total Other Assets** | **$243,548** | **$169,712** | Other Current Liabilities (in thousands) | Category | As of Sep 30, 2020 | As of Dec 31, 2019 | | :------------------------------------ | :----------------- | :----------------- | | Interest payable | $11,669 | $14,680 | | Current portion of performance guarantee obligations | $2,921 | $4,067 | | Deferred revenue | $2,882 | $2,086 | | **Total Other Current Liabilities** | **$18,572** | **$21,804** | [(5) Asset Retirement Obligations ("ARO")](index=20&type=section&id=(5)%20Asset%20Retirement%20Obligations%20(%22ARO%22)) Asset Retirement Obligations (AROs) represent estimated costs to remove solar energy systems and restore sites. The balance increased from $31.1 million at the beginning of the nine-month period to $38.8 million at September 30, 2020, due to additional obligations incurred and accretion expense Changes in AROs (in thousands) | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | | Balance at beginning of period | $31,053 | $20,033 | | Additional obligations incurred | $6,179 | $2,980 | | Accretion expense | $1,577 | $989 | | **Balance at end of period** | **$38,751** | **$23,970** | [(6) Customer Notes Receivable](index=21&type=section&id=(6)%20Customer%20Notes%20Receivable) Customer notes receivable, net, increased to $448.7 million as of September 30, 2020, from $311.7 million at December 31, 2019. The allowance for credit losses also significantly increased, primarily due to the adoption of ASC 326. Interest income from these notes grew substantially Customer Notes Receivable (in thousands) | Metric | As of Sep 30, 2020 | As of Dec 31, 2019 | | :-------------------------- | :----------------- | :----------------- | | Customer notes receivable | $463,436 | $312,823 | | Allowance for credit losses | $(14,767) | $(1,091) | | **Customer notes receivable, net** | **$448,669** | **$311,732** | | Estimated fair value, net | $453,321 | $314,222 | Changes in Allowance for Credit Losses (Customer Notes Receivable, in thousands) | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Balance at beginning of period | $1,091 | $710 | | Impact of ASC 326 adoption | $9,235 | $0 | | Provision for current expected credit losses | $4,701 | $0 | | **Balance at end of period** | **$14,767** | **$949** | - **Interest income from customer notes receivable increased** from **$8.2 million** in the nine months ended September 30, 2019, to **$16.9 million** in the same period of 2020[79](index=79&type=chunk) [(7) Long-Term Debt](index=22&type=section&id=(7)%20Long-Term%20Debt) Long-term debt, net, increased to $1,795.0 million as of September 30, 2020, from $1,346.4 million at December 31, 2019, reflecting new financing arrangements including 9.75% convertible senior notes, SOLI Notes, and HELIV Notes. The company maintained compliance with all debt covenants and had $224.1 million in available borrowing capacity Long-Term Debt, Net (in thousands) | Metric | As of Sep 30, 2020 | As of Dec 31, 2019 | | :---------------- | :----------------- | :----------------- | | Long-term debt, net | $1,795,039 | $1,346,419 | | Current portion | $109,729 | $97,464 | | **Total** | **$1,904,768** | **$1,443,883** | - Sunnova issued **$130.0 million** of 9.75% convertible senior notes in May 2020, with an additional **$60.0 million** purchased in June 2020. Approximately **$84.8 million** of these notes were converted into common stock in Q3 2020[87](index=87&type=chunk)[110](index=110&type=chunk) - New securitization vehicles were established: SOLI Notes (**$412.5 million** aggregate principal) in February 2020 and HELIV Notes (**$158.5 million** aggregate principal) in June 2020[96](index=96&type=chunk)[97](index=97&type=chunk) - As of September 30, 2020, the company had **$224.1 million** of **available borrowing capacity** and was in compliance with all debt covenants[85](index=85&type=chunk) [(8) Derivative Instruments](index=27&type=section&id=(8)%20Derivative%20Instruments) Sunnova uses interest rate swaps to manage interest rate exposure, which are not designated as hedges. Several swaps were unwound in 2020 due to debt facility terminations, resulting in a realized loss of $38.7 million for the nine months ended September 30, 2020 Impact of Interest Rate Swaps on Statements of Operations (in thousands) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Realized loss | $665 | $265 | $38,668 | $12,637 | | Unrealized (gain) loss | $(1,788) | $12,813 | $2,755 | $30,262 | | **Total** | **$(1,123)** | **$13,078** | **$41,423** | **$42,899** | - The aggregate notional amount of outstanding derivative instruments decreased from **$524.1 million** at December 31, 2019, to **$356.9 million** at September 30, 2020[104](index=104&type=chunk) [(9) Income Taxes](index=27&type=section&id=(9)%20Income%20Taxes) Sunnova's effective income tax rate was 0% for the periods presented due to a full valuation allowance against deferred tax assets. The CARES Act did not significantly impact the company's tax position due to existing net operating losses and the valuation allowance - The **effective income tax rate was 0%** for the three and nine months ended September 30, 2020 and 2019, primarily due to a full valuation allowance against deferred tax assets[105](index=105&type=chunk)[108](index=108&type=chunk) - The CARES Act's provisions, such as the five-year carryback of net operating losses and temporary suspension of the 80% limitation, did not benefit the company due to its aggregate net operating losses and existing valuation allowance[108](index=108&type=chunk) [(10) Redeemable Noncontrolling Interests and Noncontrolling Interests](index=28&type=section&id=(10)%20Redeemable%20Noncontrolling%20Interests%20and%20Noncontrolling%20Interests) Sunnova admitted several new tax equity investors in 2020, with total capital commitments of $235.0 million, increasing redeemable noncontrolling interests and noncontrolling interests - In 2020, Sunnova admitted tax equity investors for TEPIVC, TEPIVD, TEPIVF, and TEPIVE, with **total capital commitments** of **$75.0 million**, **$75.0 million**, **$10.0 million**, and **$75.0 million**, respectively[109](index=109&type=chunk) [(11) Stockholders' Equity](index=28&type=section&id=(11)%20Stockholders%27%20Equity) In the third quarter of 2020, approximately $84.8 million of 9.75% convertible senior notes were converted into 6,277,982 shares of common stock, resulting in a $50.7 million loss on extinguishment of debt - Conversion of **$84.8 million** of 9.75% convertible senior notes into **6,277,982 shares** of common stock resulted in a **$50.7 million loss on extinguishment of debt** for the three and nine months ended September 30, 2020[110](index=110&type=chunk) [(12) Equity-Based Compensation](index=29&type=section&id=(12)%20Equity-Based%20Compensation) This note details stock option and restricted stock unit activity. As of September 30, 2020, there were 3,619,606 stock options outstanding and 2,069,128 restricted stock units outstanding, with $20.0 million in unrecognized compensation expense for RSUs Stock Option Activity | Metric | As of Sep 30, 2020 | As of Dec 31, 2019 | | :-------------------------------- | :----------------- | :----------------- | | Outstanding Stock Options | 3,619,606 | 4,304,309 | | Weighted Average Exercise Price | $16.21 | $15.86 | | Aggregate Intrinsic Value (thousands) | $51,383 | $242 | Restricted Stock Unit Activity | Metric | As of Sep 30, 2020 | As of Dec 31, 2019 | | :-------------------------------- | :----------------- | :----------------- | | Outstanding Restricted Stock Units | 2,069,128 | 1,426,139 | | Weighted Average Grant Date Fair Value | $11.83 | $11.93 | | Unrecognized Compensation Expense (thousands) | $20,000 | N/A | [(13) Basic and Diluted Net Loss Per Share](index=30&type=section&id=(13)%20Basic%20and%20Diluted%20Net%20Loss%20Per%20Share) The basic and diluted net loss per share attributable to common stockholders was $(0.73) for the three months ended September 30, 2020, and $(1.88) for the nine months ended September 30, 2020. Various common stock equivalents were excluded from diluted EPS calculation as they were anti-dilutive Net Loss Per Share Attributable to Common Stockholders | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to common stockholders | $(64,181) | $(37,590) | $(160,514) | $(151,567) | | Net loss per share (basic and diluted) | $(0.73) | $(0.62) | $(1.88) | $(5.77) | | Weighted average common shares outstanding | 87,768,712 | 60,890,129 | 85,276,841 | 26,245,493 | - Common stock equivalents, including equity-based compensation awards and convertible senior notes, were excluded from diluted EPS calculations due to their anti-dilutive effect[115](index=115&type=chunk) [(14) Commitments and Contingencies](index=30&type=section&id=(14)%20Commitments%20and%20Contingencies) Sunnova is involved in routine legal matters with no expected material adverse impact. The company has performance guarantee obligations of $4.9 million, operating lease liabilities of $9.9 million, and significant dealer and purchase commitments totaling $89.1 million and $103.2 million, respectively - **Performance guarantee obligations** for solar energy production output totaled **$4.9 million** as of September 30, 2020, down from **$6.5 million** at December 31, 2019[117](index=117&type=chunk) Future Minimum Lease Payments (Operating Leases, in thousands) | Year | Amount | | :---------------- | :----- | | Remaining 2020 | $381 | | 2021 | $1,536 | | 2022 | $1,559 | | 2023 | $1,594 | | 2024 | $1,616 | | 2025 and thereafter | $7,617 | | **Total** | **$14,303** | Dealer Commitments (in thousands) | Year | Amount | | :---------------- | :----- | | Remaining 2020 | $484 | | 2021 | $33,312 | | 2022 | $33,477 | | 2023 | $10,505 | | 2024 | $9,766 | | 2025 and thereafter | $1,509 | | **Total** | **$89,053** | Purchase Commitments (in thousands) | Year | Amount | | :---------------- | :----- | | Remaining 2020 | $3,327 | | 2021 | $26,629 | | 2022 | $26,810 | | 2023 | $26,605 | | 2024 | $19,807 | | **Total** | **$103,178** | [(15) Subsequent Events](index=33&type=section&id=(15)%20Subsequent%20Events) Subsequent events in October 2020 include the repayment of $28.0 million of EZOP debt, an increase in the TEPH revolving credit facility to $600.0 million, and the conversion of $32.5 million of 9.75% convertible senior notes into 2,406,523 shares of common stock - In October 2020, **$28.0 million** of EZOP debt was repaid using proceeds from the AP8 revolving credit facility[123](index=123&type=chunk) - The TEPH revolving credit facility was amended in October 2020, **increasing the aggregate commitment amount from $437.5 million to $600.0 million**[123](index=123&type=chunk) - In October 2020, approximately **$32.5 million** of 9.75% convertible senior notes were converted into **2,406,523 shares** of common stock[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Sunnova's financial condition and results of operations, highlighting the company's business model, recent developments including the impact of COVID-19, key financial and operational metrics, and significant factors affecting the business. It also offers a detailed comparison of financial performance for the three and nine months ended September 30, 2020, versus 2019, and discusses liquidity and capital resources [Company Overview](index=34&type=section&id=Company%20Overview) Sunnova is a leading residential solar and energy storage service provider, serving over 98,000 customers. The company operates through a differentiated dealer model, offering solar service agreements (lease, PPA, loan) with integrated services and leveraging tax benefits and incentives to fund growth - Sunnova is a leading residential solar and energy storage service provider with **over 98,000 customers** and **more than 720 megawatts** of generation capacity[126](index=126&type=chunk)[132](index=132&type=chunk) - The company utilizes a dealer model for customer origination, design, and installation, providing operational flexibility and lower fixed costs[127](index=127&type=chunk) - Sunnova offers long-term solar service agreements (leases, PPAs, loans) typically 10, 15, or 25 years, including comprehensive operations, maintenance, monitoring, and repair services[128](index=128&type=chunk) [Recent Developments](index=35&type=section&id=Recent%20Developments) Recent developments include the ongoing impact of the COVID-19 pandemic, which initially caused a decline in new contract origination but later saw recovery through digital tools. The company has also engaged in significant financing transactions, including new tax equity funds and securitizations, and has successfully raised over $6.1 billion in total capital commitments since inception - COVID-19 initially caused a decline in new contract origination in March and April 2020, but recovery was seen from May to September 2020 due to expanded use of digital tools and virtual sales methods[134](index=134&type=chunk) - Residential solar services were designated as essential, allowing installations and services to continue with contact-free processes, and the supply chain experienced minimal impact[135](index=135&type=chunk)[136](index=136&type=chunk) - Sunnova has raised **over $6.1 billion** in **total capital commitments** from equity, debt, and tax equity investors since inception through September 30, 2020[129](index=129&type=chunk)[175](index=175&type=chunk) - The company closed two additional tax equity funds, expanded an existing credit facility, and closed one additional credit facility, demonstrating continued access to capital markets despite pandemic volatility[140](index=140&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk) [Key Financial and Operational Metrics](index=38&type=section&id=Key%20Financial%20and%20Operational%20Metrics) Sunnova tracks key metrics such as the number of customers, weighted average number of customers, Adjusted EBITDA, interest income and principal payments from customer notes receivable, Adjusted Operating Cash Flow, Adjusted Operating Expense, and Estimated Gross Contracted Customer Value to evaluate performance and liquidity Number of Customers | Metric | As of Sep 30, 2020 | As of Dec 31, 2019 | Change | | :---------------- | :----------------- | :----------------- | :----- | | Number of customers | 98,600 | 78,600 | 20,000 | Weighted Average Number of Customers | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Weighted average number of customers | 95,000 | 70,400 | 88,500 | 66,100 | Adjusted EBITDA (in thousands) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Adjusted EBITDA | $25,414 | $15,867 | $49,607 | $37,533 | Adjusted Operating Cash Flow (in thousands) | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------------ | :-------------------------- | :-------------------------- | | Adjusted Operating Cash Flow | $501 | $(12,876) | Estimated Gross Contracted Customer Value (in millions) | Metric | As of Sep 30, 2020 | As of Dec 31, 2019 | | :-------------------------------- | :----------------- | :----------------- | | Estimated gross contracted customer value | $2,424 | $1,879 | [Significant Factors and Trends Affecting Our Business](index=42&type=section&id=Significant%20Factors%20and%20Trends%20Affecting%20Our%20Business) Key factors influencing Sunnova's business include the availability of competitive financing, the cost of solar energy systems, the increasing adoption and technological advancements of energy storage systems, and government regulations, policies, and incentives, particularly the Section 48(a) Investment Tax Credit (ITC) - Future growth is significantly dependent on the ability to raise capital from third-party investors on competitive terms, with **over $6.1 billion** raised since inception[175](index=175&type=chunk) - The **Section 48(a) ITC is scheduled to decrease from 30%** (for construction before 2020) to **26%** for 2020, **22%** for 2021, and **10%** after 2021, which may reduce the use of tax equity financing[176](index=176&type=chunk) - Energy storage systems are a growing area, increasing customer independence and providing on-site backup power, with technological advancements making them more economic and adaptable to utility rate shifts[178](index=178&type=chunk) - Government policies and incentives, such as net metering, accelerated depreciation, SRECs, and tax credits, are crucial for promoting solar energy and enhancing economic viability[179](index=179&type=chunk) [Components of Results of Operations](index=43&type=section&id=Components%20of%20Results%20of%20Operations) This section defines how Sunnova recognizes various revenue streams (PPAs, leases, loans, SRECs, other) and categorizes operating expenses, including cost of revenue (depreciation and other), operations and maintenance, general and administrative, interest expenses, and non-recurring items like loss on extinguishment of debt - Revenue is recognized from PPAs based on electricity delivered, from leases on a straight-line basis, and from loans as interest income, principal reduction, and operations/maintenance revenue[181](index=181&type=chunk)[182](index=182&type=chunk)[185](index=185&type=chunk) - SREC revenue is generated from selling certificates representing solar energy production, accounted for as governmental incentives with no acquisition costs[186](index=186&type=chunk) - Operating expenses include depreciation on solar energy systems, costs related to SRECs and loan agreements, operations and maintenance (third-party services, insurance, taxes, impairments), and general and administrative costs (employee-related, professional fees, IT, marketing, rent)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - Interest expense, net, includes interest on borrowings and amortization of debt discounts/deferred financing costs. **Loss on extinguishment of long-term debt** arises from GAAP treatment of convertible senior note conversions[192](index=192&type=chunk)[194](index=194&type=chunk) [Results of Operations—Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019](index=47&type=section&id=Results%20of%20Operations%E2%80%94Three%20Months%20Ended%20September%2030%2C%202020%20Compared%20to%20Three%20Months%20Ended%20September%2030%2C%202019) For the three months ended September 30, 2020, revenue increased by $13.6 million (37%) YoY, driven by more solar energy systems in service and higher SREC pricing/volumes. Operating income improved significantly, but a $50.7 million loss on extinguishment of debt led to a higher net loss attributable to stockholders Key Financial Results (3 Months Ended Sep 30, in thousands) | Metric | 2020 | 2019 | Change | | :--------------------------------------- | :----- | :----- | :----- | | Revenue | $50,177 | $36,615 | $13,562 | | Operating income (loss) | $1,649 | $(5,898) | $7,547 | | Net loss attributable to stockholders | $(64,181) | $(37,590) | $(26,591) | | Loss on extinguishment of long-term debt, net | $50,721 | $0 | $50,721 | - **Revenue increased by $13.6 million (37%)** YoY, primarily due to an increased number of solar energy systems in service and higher SREC pricing and volumes in New Jersey and Massachusetts[202](index=202&type=chunk)[203](index=203&type=chunk) - Operating income improved by **$7.5 million**, turning from a loss to a gain, despite increases in cost of revenue—depreciation and operations and maintenance expenses[201](index=201&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk) - Interest expense, net, decreased by **$0.9 million**, primarily due to an increase in unrealized gain on interest rate swaps, partially offset by higher principal debt balances[209](index=209&type=chunk) [Results of Operations—Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019](index=51&type=section&id=Results%20of%20Operations%E2%80%94Nine%20Months%20Ended%20September%2030%2C%202020%20Compared%20to%20Nine%20Months%20Ended%20September%2030%2C%202019) For the nine months ended September 30, 2020, revenue increased by $24.9 million (25%) YoY, driven by growth in solar energy systems. Operating loss widened by $4.7 million, and net loss attributable to stockholders increased by $33.7 million, largely due to a $50.7 million loss on extinguishment of debt and higher interest expenses Key Financial Results (9 Months Ended Sep 30, in thousands) | Metric | 2020 | 2019 | Change | | :--------------------------------------- | :----- | :----- | :----- | | Revenue | $122,796 | $97,942 | $24,854 | | Operating loss | $(17,800) | $(13,115) | $(4,685) | | Net loss attributable to stockholders | $(160,514) | $(126,842) | $(33,672) | | Loss on extinguishment of long-term debt, net | $50,721 | $0 | $50,721 | - **Revenue increased by $24.9 million (25%)** YoY, primarily due to an increased number of solar energy systems in service, with PPA and lease revenues showing significant growth[217](index=217&type=chunk) - Operating loss increased by **$4.7 million**, driven by higher cost of revenue—depreciation (**$11.3 million** increase) and general and administrative expenses (**$13.6 million** increase)[216](index=216&type=chunk)[219](index=219&type=chunk)[223](index=223&type=chunk) - Interest expense, net, increased by **$27.9 million**, mainly due to a **$26.0 million** increase in **realized loss** on interest rate swaps from debt facility terminations and higher principal debt balances[224](index=224&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2020, Sunnova had $211.7 million in total cash ($84.6 million unrestricted) and $224.1 million in available borrowing capacity. The company relies on diversified funding sources, including debt, securitizations, and tax equity, to finance growth and operations, and expects sufficient liquidity for the next 12 months - As of September 30, 2020, **total cash was $211.7 million** (**$84.6 million unrestricted**), with **$224.1 million** in **available borrowing capacity**[231](index=231&type=chunk) - The business model requires substantial outside financing, with historical sources including non-recourse/recourse debt, securitizations, tax equity, and preferred equity[231](index=231&type=chunk) - The company expects sufficient cash, investment fund commitments, and securitization commitments to meet working capital, debt service, and capital expenditure needs for at least the next 12 months[233](index=233&type=chunk) Historical Cash Flows (9 Months Ended Sep 30, in thousands) | Cash Flow Activity | 2020 | 2019 | Change | | :----------------------------------- | :--------- | :--------- | :--------- | | Net cash used in operating activities | $(101,796) | $(74,538) | $(27,258) | | Net cash used in investing activities | $(594,275) | $(389,701) | $(204,574) | | Net cash provided by financing activities | $757,469 | $486,464 | $271,005 | | Net increase in cash and restricted cash | $61,398 | $22,225 | $39,173 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Sunnova is primarily exposed to market risk from changes in interest rates on its variable-rate debt. A hypothetical 10% increase in interest rates would have increased interest expense by $567,000 and $1.9 million for the three and nine months ended September 30, 2020, respectively - The primary market risk exposure is to changes in interest rates on variable-rate debt, which is sometimes managed with derivative instruments[256](index=256&type=chunk) Impact of Hypothetical 10% Interest Rate Increase (in thousands) | Period | Increase in Interest Expense | | :-------------------------- | :--------------------------- | | 3 Months Ended Sep 30, 2020 | $567 | | 9 Months Ended Sep 30, 2020 | $1,900 | [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that Sunnova's disclosure controls and procedures were effective as of September 30, 2020, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely. No material changes in internal control over financial reporting occurred during the third quarter of 2020 - Disclosure controls and procedures were evaluated and **deemed effective** as of September 30, 2020, designed to provide reasonable assurance of timely and accurate financial reporting[257](index=257&type=chunk) - **No material changes** in internal control over financial reporting occurred during the third quarter of 2020[258](index=258&type=chunk) - Management acknowledges that any control system provides only reasonable, not absolute, assurance of achieving its objectives[259](index=259&type=chunk) [PART II - OTHER INFORMATION](index=59&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) Sunnova is involved in routine lawsuits, claims, and governmental proceedings incidental to its business, including disputes with dealers and customers. The company does not expect these matters to have a material adverse impact on its financial position, results of operations, or liquidity - Sunnova is a party to routine lawsuits, claims, and governmental proceedings, but does **not expect them to have a material adverse impact** on financial position or results[262](index=262&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) This section updates the material risks facing Sunnova, primarily focusing on the adverse impacts of the ongoing COVID-19 pandemic. Key risks include potential declines in new contract origination, disruptions to installations and services, reduced access to capital markets, increased delinquency rates, and supply chain disruptions - The COVID-19 pandemic could **adversely affect business, financial condition, and results of operations**, with initial declines in new contract origination and potential future disruptions[264](index=264&type=chunk)[265](index=265&type=chunk) - Future success depends on the ability to raise capital; **reduced access to capital markets** due to COVID-19 could adversely impact financing for solar energy system deployment[266](index=266&type=chunk) - Worsening economic conditions from the pandemic may increase unemployment, reduce consumer credit ratings, and lead to **higher delinquency and default rates** on solar service agreements[267](index=267&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the current report [Item 3. Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the current report [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the current report [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including supplemental indentures, credit agreements, guaranties, certifications, and XBRL documents - Exhibits include various financial agreements such as the First Supplemental Indenture, Amendment No. 6 to Amended and Restated Credit Agreement, and a new Credit Agreement for Sunnova Asset Portfolio 8, LLC[275](index=275&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer, pursuant to the Sarbanes-Oxley Act of 2002, are included[275](index=275&type=chunk) - XBRL (eXtensible Business Reporting Language) documents are provided for interactive data filing[275](index=275&type=chunk)
Sunnova(NOVA) - 2020 Q2 - Earnings Call Transcript
2020-08-02 09:53
Sunnova Energy International Inc. (NYSE:NOVA) Q2 2020 Earnings Conference Call July 30, 2020 8:30 AM ET Company Participants Rodney McMahan - Vice President, Investor Relations John Berger - Chairman and Chief Executive Officer Robert Lane - Executive Vice President and Chief Financial Officer Conference Call Participants Ben Kallo - Baird Philip Shen - ROTH Capital Brian Lee - Goldman Sachs Julien Smith - Bank of America Michael Weinstein - Credit Suisse Paul Coster - JPMorgan Joseph Osha - JMP Securities ...
Sunnova(NOVA) - 2020 Q2 - Earnings Call Presentation
2020-07-30 19:10
CONFIDENTIAL Second Quarter 2020 Earnings sunnova.com July 29, 2020 sunnova" Legal Disclaimer • This presentation and the accompanying oral presentations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or Sunnova's future financial or operating performance. In some cases, you can identify forward-looking statements be ...
Sunnova(NOVA) - 2020 Q2 - Quarterly Report
2020-07-30 11:15
FORM 10-Q _______________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...
Sunnova(NOVA) - 2020 Q1 - Quarterly Report
2020-05-15 11:07
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________________________________________ FORM 10-Q _______________________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period fro ...