Sunrun(RUN) - 2024 Q3 - Quarterly Results

Q3 2024 Financial and Operational Highlights Sunrun achieved strong Q3 2024 results, marked by significant storage growth, positive cash generation, and surpassing 1 million residential solar customers Q3 2024 Performance Highlights Sunrun reported strong Q3 2024 results, exceeding guidance for Storage Capacity Installed with 92% year-over-year growth, achieving its second consecutive quarter of positive Cash Generation, increasing Net Earning Assets to $6.2 billion, and becoming the first clean energy company to surpass 1 million residential solar customers Q3 2024 Key Performance Indicators (in MWh, MW, or millions) | Metric | Q3 2024 Value | YoY Growth | | :--- | :--- | :--- | | Storage Capacity Installed | 336 Megawatt hours | 92% | | Solar Energy Capacity Installed | 230 Megawatts | - | | Cash Generation | $2.5 million | - | - Became the first clean energy company to surpass 1 million residential solar customers[1] - Net Earning Assets increased to $6.2 billion, which includes over $1 billion in Total Cash[1] Management Commentary The CEO emphasized that the focus on customer experience and differentiated offerings drove record storage attachment rates, solid solar installation growth, and higher Net Subscriber Values, while the CFO highlighted the company's strong balance sheet, debt reduction, and a capital allocation strategy focused on de-leveraging and driving shareholder value - CEO Mary Powell stated the company delivered its second consecutive quarter of positive Cash Generation and will remain a disciplined, margin-focused leader[2] - CFO Danny Abajian noted that Net Subscriber Value was the highest level ever reported, reflecting a margin-focused and disciplined growth strategy[2] - The company has no near-term corporate debt maturities after extending its recourse working capital facility to March 2027 and is allocating excess cash to reduce parent recourse debt[2] Business and Operational Updates Sunrun advanced strategic initiatives in Q3, achieving high storage attachment rates, expanding its new homes division, and launching new virtual power plant programs Strategic Initiatives and Partnerships In Q3, Sunrun's storage attachment rate on new installations reached 60%, a significant increase from 33% in the prior year, while the company expanded its new homes division, partnering with 9 of the top 10 builders in California and expecting over 50% growth next year, and launched several new virtual power plant (VPP) programs to enhance grid stability and create new revenue streams - Storage attachment rates on installations reached 60% in Q3, up from 33% in Q3 2023, with 336 Megawatt hours installed[3] - The new homes division is gaining strong traction, working with top builders like Toll Brothers, and is expected to grow at least 50% next year[3] - Launched several new virtual power plant (VPP) programs, including the first vehicle-to-home VPP in Maryland with BGE and partnerships with Tesla Electric and Vistra in Texas[3] Capital Markets and Financing Sunrun demonstrated strong capital markets execution by closing a $365 million securitization, its fourth in 2024, and expanding its non-recourse warehouse lending facility by $280 million, while also improving its debt profile by extending the maturity of its recourse working capital facility to March 2027 and repurchasing $317 million of its 2026 Convertible Notes to date, reducing parent leverage - Closed a $365 million securitization of residential solar and battery systems with a cumulative advance rate above 80% of Contracted Subscriber Value[4] - Expanded its non-recourse warehouse lending facility by $280 million to $2.63 billion in commitments[4] - Extended the maturity of its recourse Working Capital Facility to March 2027 and continued to de-lever by repurchasing convertible notes, with $83 million of the 2026 notes remaining outstanding[4] Key Operating Metrics Key Q3 2024 operating metrics highlight Sunrun's customer base exceeding 1 million, significant storage capacity growth, and record net subscriber value Customer and Installation Metrics In Q3 2024, Sunrun added 31,910 customers, growing its total customer base by 12% YoY to 1,015,910, and while Solar Energy Capacity Installed decreased by 11% YoY to 229.7 MW, Storage Capacity Installed surged by 92% YoY to 336.3 MWh, reflecting the strategic shift towards storage Q3 2024 Installation & Customer Metrics (in MW or MWh) | Metric | Q3 2024 | YoY Change | | :--- | :--- | :--- | | Customer Additions | 31,910 | - | | Total Customers | 1,015,910 | +12% | | Solar Energy Capacity Installed | 229.7 MW | -11% | | Storage Capacity Installed | 336.3 MWh | +92% | - Total Networked Solar Energy Capacity reached 7,288 Megawatts and Networked Storage Capacity reached 2.1 Gigawatt hours as of September 30, 2024[9][10] Subscriber Value and Earning Assets Net Subscriber Value reached a record high of $14,632 in Q3 2024, a significant increase from the prior year, generating $444 million in Total Value, while Gross Earning Assets stood at $16.8 billion, with Net Earning Assets at $6.2 billion, and Annual Recurring Revenue from subscribers was approximately $1.5 billion Q3 2024 Subscriber Value Metrics (in dollars or millions) | Metric | Q3 2024 | YoY Change | | :--- | :--- | :--- | | Subscriber Value | $51,223 | +9% | | Creation Cost | $36,591 | +2% | | Net Subscriber Value | $14,632 | - | | Total Value Generated | $444 million | - | Earning Assets and Revenue (as of Sep 30, 2024, in billions) | Metric | Value | | :--- | :--- | | Gross Earning Assets | $16.8 billion | | Net Earning Assets | $6.2 billion | | Annual Recurring Revenue | ~$1.5 billion | Financial Results (GAAP) Sunrun's Q3 2024 GAAP financial results show decreased total revenue but a significant improvement in net loss, with growth in assets and liabilities Consolidated Statements of Operations For Q3 2024, Sunrun reported total revenue of $537.2 million, a 5% decrease year-over-year, driven by a 47% decline in solar system sales as the business mix shifts towards subscriber agreements, while revenue from customer agreements and incentives grew 28% YoY, and the company recorded a net loss attributable to common stockholders of $83.8 million, or ($0.37) per share, a substantial improvement from a loss of $1.07 billion in Q3 2023, which was impacted by a significant non-cash goodwill impairment Q3 2024 Statement of Operations Summary (in millions, except EPS) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenue | $537.2 | $563.2 | | - Customer Agreements & Incentives | $405.9 | $316.5 | | - Solar Systems & Product Sales | $131.3 | $246.7 | | Loss from Operations | ($127.8) | ($1,347.5) | | Net Loss Attributable to Common Stockholders | ($83.8) | ($1,069.5) | | Net Loss Per Share (Diluted) | ($0.37) | ($4.92) | Consolidated Balance Sheets As of September 30, 2024, Sunrun's balance sheet showed total assets of $22.1 billion, up from $20.5 billion at year-end 2023, with total liabilities increasing to $15.1 billion from $13.5 billion over the same period, and total cash, including restricted cash, standing at $1.01 billion, with total equity at $6.4 billion Balance Sheet Summary (in billions) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $22.1 | $20.5 | | Total Liabilities | $15.1 | $13.5 | | Total Equity | $6.4 | $6.2 | | Total Cash (Cash + Restricted Cash) | $1.01 | $0.99 | Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash used in operating activities was $507.8 million, and net cash used in investing activities, primarily for solar energy systems, was $1.91 billion, with these uses funded by $2.44 billion in net cash provided by financing activities, which included proceeds from non-recourse debt and contributions from noncontrolling interests Cash Flow Summary - Nine Months Ended Sep 30, 2024 (in millions) | Activity | Net Cash Flow | | :--- | :--- | | Operating Activities | ($507.8) | | Investing Activities | ($1,908.6) | | Financing Activities | $2,439.2 | Outlook and Guidance Sunrun reiterates full-year 2025 cash generation guidance and anticipates continued Q4 growth in storage and solar installations with increased Net Subscriber Value Q4 2024 and Full-Year 2025 Guidance Sunrun reiterated its full-year 2025 guidance for Cash Generation of $350 million to $600 million, and for Q4 2024, the company anticipates continued growth in storage installations and a sequential increase in solar installations, with Net Subscriber Value also expected to increase compared to Q3 - Reiterating full-year 2025 Cash Generation guidance of $350 million to $600 million[11] Q4 2024 Guidance (in millions, MWh, or MW) | Metric | Q4 2024 Guidance Range | | :--- | :--- | | Cash Generation | $50M to $125M | | Storage Capacity Installed | 320 to 350 MWh | | Solar Energy Capacity Installed | 240 to 250 MW | - Net Subscriber Value is expected to increase in Q4 compared to Q3[12] Financing and Other Information Sunrun secured sufficient financing capacity for future installations and provides detailed definitions for key non-GAAP metrics to aid investor understanding Financing Capacity As of November 7, 2024, Sunrun has secured sufficient financing capacity for its near-term pipeline, with expected tax equity to fund approximately 272 Megawatts of future subscriber installations and an additional $907 million available in its non-recourse warehouse facility to fund over 318 Megawatts - As of November 7, 2024, the company has secured expected tax equity to fund approximately 272 MW of future Solar Energy Capacity Installed for Subscribers[15] - At the end of Q3, Sunrun had $907 million available in its non-recourse senior revolving warehouse facility, sufficient to fund over 318 MW of installations[15] Definitions of Key Metrics The report provides detailed definitions for its non-GAAP operating metrics, including Subscriber Value, Creation Cost, Gross Earning Assets, and Cash Generation, designed to provide investors with insight into the economic performance and present value of future cash flows from subscribers, which are not fully observable from standard GAAP measures, with key calculation assumptions including a 6% discount rate and a 30-year customer relationship - The report defines key non-GAAP metrics like Subscriber Value, Creation Cost, and Gross Earning Assets to help investors evaluate the economic performance and future cash flows of the business[23] - Core assumptions for calculating these metrics include a 6% discount rate for future cash flows and a 30-year assumed customer relationship (initial term plus renewal)[24]