Sunnova(NOVA) - 2022 Q1 - Quarterly Report

Part I Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2022, including Balance Sheets, Statements of Operations, Cash Flows, and Equity, with accompanying notes Unaudited Condensed Consolidated Balance Sheets Total assets increased to $5.93 billion as of March 31, 2022, driven by property and equipment and customer notes receivable growth Condensed Consolidated Balance Sheet Data (in thousands) | | As of March 31, 2022 | As of December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $562,551 | $615,742 | | Property and equipment, net | $3,056,898 | $2,909,613 | | Customer notes receivable, net | $1,449,991 | $1,204,073 | | Total assets | $5,928,453 | $5,504,234 | | Total current liabilities | $345,616 | $310,897 | | Long-term debt, net | $3,461,614 | $3,135,681 | | Total liabilities | $4,275,844 | $3,882,621 | | Total equity | $1,507,423 | $1,476,277 | Unaudited Condensed Consolidated Statements of Operations Q1 2022 revenue grew 59% to $65.7 million, but increased operating expenses resulted in an operating loss of $34.2 million and a net loss of $33.6 million Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue | $65,722 | $41,276 | | Total operating expense, net | $99,928 | $64,582 | | Operating loss | $(34,206) | $(23,306) | | Net loss | $(20,629) | $(24,064) | | Net loss attributable to stockholders | $(33,583) | $(32,983) | | Net loss per share | $(0.30) | $(0.31) | Unaudited Condensed Consolidated Statements of Cash Flows Q1 2022 cash flow included $92.1 million used in operations and $357.7 million in investing, largely funded by $382.8 million from financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(92,129) | $(49,908) | | Net cash used in investing activities | $(357,650) | $(226,213) | | Net cash provided by financing activities | $382,813 | $161,691 | | Net decrease in cash and restricted cash | $(66,966) | $(114,430) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail business operations, accounting policies, and financial components, including revenue sources, inventory, debt, derivatives, and various commitments - Sunnova is a residential energy service provider serving over 207,000 customers in more than 25 U.S. states and territories, utilizing a dealer model for origination and installation[21][22] Revenue Breakdown (in thousands) | Revenue Type | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | PPA revenue | $21,185 | $16,834 | | Lease revenue | $21,780 | $16,397 | | SREC revenue | $6,244 | $5,957 | | Cash sales revenue | $11,348 | $— | | Loan revenue | $3,376 | $1,195 | | Other revenue | $1,789 | $893 | | Total | $65,722 | $41,276 | - As of March 31, 2022, the company had future minimum purchase commitments for solar energy systems and accessories estimated to range from $580.0 million to $640.0 million through December 2023[88] - In April 2022, subsequent to the quarter end, the company issued 694,446 shares of common stock to Lennar, LLC as part of an earnout agreement from the SunStreet acquisition[90] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2022 performance, financial condition, and key trends, highlighting customer growth, revenue increase, financing strategies, and key metrics like Adjusted EBITDA and Estimated Gross Contracted Customer Value Recent Developments Recent developments include ongoing COVID-19 related supply chain disruptions and significant February 2022 financing transactions, such as a $150.0 million tax equity fund and $298 million in solar loan-backed notes - The industry is currently facing shortages and shipping delays for energy storage systems, modules, and component parts, partly attributed to the COVID-19 pandemic and supply chain issues[102] - In February 2022, the company secured a new tax equity investor with a total capital commitment of approximately $150.0 million[104] - In February 2022, a subsidiary issued the HELVIII Notes, a securitization of solar loans, totaling $297.9 million across three classes with interest rates ranging from 2.79% to 3.53%[105] Key Financial and Operational Metrics Key metrics include customer base growth to 207,800, Adjusted EBITDA of $12.5 million, and Estimated Gross Contracted Customer Value increasing to $4.74 billion Customer Growth | | As of March 31, 2022 | As of December 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Number of customers | 207,800 | 192,600 | 15,200 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net loss | $(20,629) | $(24,064) | | EBITDA | $(2,023) | $(3,618) | | Adjusted EBITDA | $12,547 | $12,783 | - Estimated Gross Contracted Customer Value was $4.735 billion as of March 31, 2022, calculated using a 4% discount rate[128] Results of Operations Comparison Q1 2022 revenue increased $24.4 million (59%) YoY, driven by customer base growth and SunStreet acquisition, but rising operating expenses widened the operating loss to $34.2 million - Revenue increased by $24.4 million YoY, primarily due to a higher number of solar energy systems in service and the April 2021 acquisition of SunStreet[161] - Cost of revenue—other increased by $6.3 million, with $5.8 million of that increase related to costs from cash sales revenue, which began with the SunStreet acquisition[164] - General and administrative expense increased by $27.9 million YoY, driven by higher payroll ($10.4 million), amortization of intangibles ($7.3 million), provision for credit losses ($3.3 million), and consultant fees ($2.6 million)[166] - Interest expense, net, decreased by $10.5 million YoY, primarily due to a $16.6 million increase in unrealized gains on derivative instruments[168] Liquidity and Capital Resources As of March 31, 2022, Sunnova had $208.5 million unrestricted cash and $311.8 million available borrowing capacity, with Q1 2022 financing activities providing $382.8 million in cash - As of March 31, 2022, the company had total cash of $324.9 million, of which $208.5 million was unrestricted, and $311.8 million of available borrowing capacity[173] Historical Cash Flow Summary (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(92,129) | $(49,908) | | Net cash used in investing activities | $(357,650) | $(226,213) | | Net cash provided by financing activities | $382,813 | $161,691 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on variable-rate debt, mitigated by derivatives, with a hypothetical 10% rate increase impacting Q1 2022 interest expense by $0.4 million - The company's primary market risk exposure is to changes in interest rates on its floating-rate debt[187] - A hypothetical 10% increase in interest rates on variable-rate debt facilities would have increased interest expense by $0.4 million for the three months ended March 31, 2022[187] Controls and Procedures Management, including CEO and CFO, concluded disclosure controls and procedures were effective as of March 31, 2022, while integrating SunStreet's internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[188] - The company is integrating SunStreet's internal controls, which has resulted in changes to its internal control over financial reporting[190] Part II Legal Proceedings The company is involved in ordinary course legal matters but does not anticipate any material adverse effect on its financial position or operations - The company is not a party to any litigation or proceeding that it believes will have a material adverse impact on its financial position or operations[193] Risk Factors No material changes to the company's risk factors have occurred since its Annual Report on Form 10-K filed on February 24, 2022 - There have been no material changes in the company's risk factors since its last Annual Report on Form 10-K[194] Other Part II Items Items 2, 3, and 4 are marked as "Not applicable," and Item 5 is marked as "None" - Items 2, 3, and 4 are marked as "Not applicable," and Item 5 is marked as "None"[195][196][197][198] Exhibits This section lists all exhibits filed with the Form 10-Q, including debt indentures for Series 2022-A Notes, a note purchase agreement, and CEO/CFO certifications - Key exhibits filed with this report include debt indentures for the HELVIII Notes (Series 2022-A), a note purchase agreement, and CEO/CFO certifications[199]