Sunnova(NOVA) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are subject to risks and uncertainties, and actual outcomes may differ materially from forecasts[11] - Key factors influencing actual results include federal, state, and local regulations, tax rebates and incentives, ability to raise capital, relationships with dealers, supply chain management, customer retention, and the performance of solar energy systems[12] Item 1. Financial Statements. The company presents its unaudited condensed consolidated financial statements, including balance sheets, operations, and cash flows UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------------------- | :------------- | :---------------- | :----- | :------- | | Total assets | $8,902,208 | $8,336,892 | $565,316 | 6.78% | | Total liabilities | $6,955,444 | $6,449,442 | $506,002 | 7.85% | | Total equity | $1,767,262 | $1,721,713 | $45,549 | 2.64% | | Cash and cash equivalents | $210,884 | $360,257 | $(149,373) | -41.46% | | Property and equipment, net | $4,054,373 | $3,784,801 | $269,572 | 7.12% | | Customer notes receivable, net | $2,864,545 | $2,466,149 | $398,396 | 16.15% | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | % Change | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Revenue | $161,696 | $65,722 | $95,974 | 146.03% | | Total operating expense, net | $210,477 | $99,928 | $110,549 | 110.63% | | Operating loss | $(48,781) | $(34,206) | $(14,575) | 42.60% | | Interest expense, net | $85,607 | $(1,015) | $86,622 | -8534.29%| | Net loss | $(110,346) | $(22,104) | $(88,242) | 399.21% | | Net loss attributable to stockholders | $(81,083) | $(35,058) | $(46,025) | 131.29% | | Net loss per share attributable to stockholders—basic and diluted | $(0.70) | $(0.31) | $(0.39) | 125.81% | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | % Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net cash used in operating activities | $(169,327) | $(92,129) | $(77,198) | 83.79% | | Net cash used in investing activities | $(524,295) | $(357,650) | $(166,645) | 46.59% | | Net cash provided by financing activities | $568,871 | $382,813 | $186,058 | 48.60% | | Net decrease in cash, cash equivalents and restricted cash | $(124,751) | $(66,966) | $(57,785) | 86.29% | | Cash, cash equivalents and restricted cash at end of period | $420,823 | $324,931 | $95,892 | 29.51% | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Redeemable Noncontrolling Interests and Equity Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------------------- | :------------- | :---------------- | :----- | :------- | | Redeemable Noncontrolling Interests | $179,502 | $165,737 | $13,765 | 8.31% | | Total Stockholders' Equity | $1,278,777 | $1,273,076 | $5,701 | 0.45% | | Noncontrolling Interests | $488,485 | $448,637 | $39,848 | 8.88% | | Total Equity | $1,767,262 | $1,721,713 | $45,549 | 2.64% | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Description of Business and Basis of Presentation Sunnova operates as a leading Energy as a Service provider utilizing a differentiated dealer model for its solar and energy storage systems - Sunnova serves over 309,000 customers in more than 45 U.S. states and territories as a leading Energy as a Service provider[24] - The company utilizes a dealer model for customer origination, design, and installation, which provides operational flexibility and reduces fixed costs[25] - Services are offered through long-term agreements (leases, PPAs, loans, sales) typically lasting 10 to 25 years, with ongoing monitoring, maintenance, and warranty services[26] Impact of Revisions on Consolidated Statement of Operations (Three Months Ended March 31, 2022, in thousands) | Metric | As Previously Reported | Revisions | As Revised | | :------------------------------------------ | :--------------------- | :-------- | :--------- | | Interest expense, net | $(2,490) | $1,475 | $(1,015) | | Loss before income tax | $(20,629) | $(1,475) | $(22,104) | | Net loss | $(20,629) | $(1,475) | $(22,104) | | Net loss attributable to stockholders | $(33,583) | $(1,475) | $(35,058) | | Net loss per share attributable to stockholders—basic and diluted | $(0.30) | $(0.01) | $(0.31) | Significant Accounting Policies The company details its significant accounting policies, including revenue recognition methods, fair value measurements, and inventory valuation - The company uses estimates and assumptions in financial reporting, which are based on historical experience and reasonable assumptions, but actual results may differ[36] - Revenue recognition varies by contract type: PPAs are based on electricity delivered, leases on a straight-line basis, inventory sales upon shipment, SRECs upon transfer, cash sales upon home closing, and loan payments are split into interest income, principal reduction, and O&M revenue[47][48][51][52][53][56] - Contracted but unrecognized revenue was approximately $3.7 billion as of March 31, 2023, with about 3% expected to be recognized over the next 12 months[45] Revenue Breakdown (in thousands) | Revenue Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | PPA revenue | $21,746 | $21,185 | | Lease revenue | $31,343 | $21,780 | | Inventory sales revenue | $59,914 | — | | Solar renewable energy certificate revenue | $7,791 | $6,244 | | Cash sales revenue | $16,819 | $11,348 | | Loan revenue | $7,143 | $3,376 | | Other revenue | $16,940 | $1,789 | | Total Revenue | $161,696 | $65,722 | Property and Equipment This section provides a detailed breakdown of the company's property and equipment, reflecting ongoing investments in customer contracts - The increase in property and equipment, net, is primarily driven by investments in solar energy systems and energy storage systems related to customer contracts[63] Property and Equipment, Net (in thousands) | Asset Category | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Solar energy systems and energy storage systems | $3,972,515 | $3,719,727 | | Construction in progress | $367,174 | $329,893 | | Property and equipment, gross | $4,495,113 | $4,192,983 | | Less: accumulated depreciation | $(440,740) | $(408,182) | | Property and equipment, net | $4,054,373 | $3,784,801 | Detail of Certain Balance Sheet Captions This section details components of other current assets, other assets, and other current liabilities on the balance sheet Other Current Assets (in thousands) | Asset Category | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Inventory | $182,949 | $152,113 | | Current portion of customer notes receivable | $133,150 | $114,910 | | Restricted cash | $52,699 | $51,733 | | Total Other Current Assets | $402,975 | $351,300 | Other Assets (in thousands) | Asset Category | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Construction in progress - customer notes receivable | $326,907 | $382,611 | | Restricted cash | $157,240 | $133,584 | | Exclusivity and other bonus arrangements with dealers, net | $144,568 | $121,313 | | Investments in solar receivables | $62,749 | $65,064 | | Total Other Assets | $986,625 | $961,891 | Other Current Liabilities (in thousands) | Liability Category | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Interest payable | $26,220 | $35,258 | | Deferred revenue | $38,938 | $30,172 | | Total Other Current Liabilities | $72,884 | $71,506 | Asset Retirement Obligations ("ARO") The company accounts for asset retirement obligations related to the removal and restoration costs of solar energy systems - AROs are estimated costs for solar energy system removal and site restoration, capitalized and depreciated over 30 years[66] Changes in Asset Retirement Obligations (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $69,869 | $54,396 | | Additional obligations incurred | $3,355 | $2,573 | | Accretion expense | $1,081 | $840 | | Balance at end of period | $74,292 | $57,779 | Customer Notes Receivable This section details the growing customer notes receivable from the loan program and the associated allowance for credit losses Customer Notes Receivable (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Customer notes receivable | $3,089,154 | $2,662,307 | | Allowance for credit losses | $(91,459) | $(81,248) | | Customer notes receivable, net | $2,997,695 | $2,581,059 | | Estimated fair value, net | $2,940,803 | $2,554,948 | Changes in Allowance for Credit Losses (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $81,248 | $41,138 | | Provision for current expected credit losses | $10,211 | $6,644 | | Balance at end of period | $91,459 | $47,818 | Aging of Amortized Cost of Customer Notes Receivable (in thousands) | Aging Status | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | 1-90 days past due | $89,799 | $91,668 | | 91-180 days past due | $27,743 | $16,859 | | Greater than 180 days past due | $35,638 | $14,504 | | Total past due | $153,180 | $123,031 | | Not past due | $2,935,974 | $2,539,276 | | Total | $3,089,154 | $2,662,307 | Long-Term Debt The company's long-term debt increased to $5.6 billion, supported by various debt instruments and expanded credit facilities - Available borrowing capacity as of March 31, 2023, was $220.7 million, including $69.0 million under EZOP, $146.7 million under TEPH, and $5.0 million under IS revolving credit facilities[72] - EZOP revolving credit facility commitment increased from $450.0 million to $775.0 million, and TEPH revolving credit facility commitment increased from $600.0 million to $700.0 million, with agent changes due to Credit Suisse's securitized products sale[74][76] - A new $50.0 million secured revolving credit facility was established for Sunnova Inventory Supply, LLC (IS) with Texas Capital Bank[78] Long-Term Debt, Net (in thousands) | Debt Type | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | SEI 0.25% convertible senior notes | $575,000 | $575,000 | | SEI 2.625% convertible senior notes | $600,000 | $600,000 | | Sunnova Energy Corporation 5.875% senior notes | $400,000 | $400,000 | | EZOP revolving credit facility | $706,000 | $500,000 | | TEPH revolving credit facility | $553,274 | $425,700 | | AP8 revolving credit facility | $148,774 | $74,535 | | IS revolving credit facility | $45,000 | — | | Total Long-Term Debt, net | $5,621,437 | $5,194,755 | Derivative Instruments The company utilizes interest rate swaps and caps to hedge exposure to variable interest rates, recognizing a total unrealized gain of $23.6 million - EZOP, TEPH, and AP8 entered into interest rate swaps and caps for aggregate notional amounts of $153.0 million, $119.6 million, and $75.0 million, respectively, to hedge variable interest rate exposure[82][83][85] Fair Value of Interest Rate Swaps and Caps (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :---------------- | :------------- | :---------------- | | Derivative assets | $133,873 | $112,712 | Impact of Interest Rate Swaps and Caps on Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Realized (gain) loss | $(6,707) | $591 | | Unrealized (gain) loss | $23,616 | $(33,874) | | Total | $16,909 | $(33,283) | Income Taxes The company's effective income tax rate was 0% due to a full valuation allowance on its deferred tax assets - Effective income tax rate was 0% for Q1 2023 and Q1 2022 due to a full valuation allowance on deferred tax assets[87] - No reserve for uncertain tax positions was recorded, and no significant change in unrecognized tax benefits is expected in the next twelve months[87] Redeemable Noncontrolling Interests and Noncontrolling Interests Capital commitments from Class A members of certain tax equity funds were increased during the first quarter of 2023 - Class A member of Sunnova TEP 7-B, LLC increased capital commitment from $30.0 million to $125.0 million in February 2023[88] - Class A member of Sunnova TEP 7-C, LLC increased capital commitment from $41.0 million to $51.3 million in March 2023[88] Equity-Based Compensation The company details its equity-based compensation plans and reports significant unrecognized compensation expense for outstanding awards - The aggregate number of shares for awards under the 2019 Long-Term Incentive Plan (LTIP) was increased by 1,525,652 shares in February 2023[89] Stock Option Activity Summary | Metric | March 31, 2023 | | :------------------------------------ | :------------- | | Outstanding Stock Options | 4,085,535 | | Weighted Average Exercise Price | $17.70 | | Total Unrecognized Compensation Expense | $12.3 million | | Weighted Average Period for Recognition | 2.46 years | Restricted Stock Unit Activity Summary | Metric | March 31, 2023 | | :------------------------------------ | :------------- | | Outstanding Restricted Stock Units | 2,449,142 | | Weighted Average Grant Date Fair Value | $17.14 | | Total Unrecognized Compensation Expense | $36.7 million | | Weighted Average Period for Recognition | 1.86 years | Basic and Diluted Net Loss Per Share The company reports a basic and diluted net loss per share of $(0.70) for the three months ended March 31, 2023 - Equity-based compensation awards (5,037,823 shares) and convertible senior notes (34,150,407 shares) were excluded from diluted EPS computation for Q1 2023 as their inclusion would have been anti-dilutive[94] Basic and Diluted Net Loss Per Share (in thousands, except share and per share amounts) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to stockholders—basic and diluted | $(81,083) | $(35,058) | | Net loss per share attributable to stockholders—basic and diluted | $(0.70) | $(0.31) | | Weighted average common shares outstanding—basic and diluted | 115,073,975 | 113,499,426 | Commitments and Contingencies The company outlines its various commitments, including legal proceedings, dealer agreements, and substantial purchase obligations - The company is involved in routine legal proceedings but does not expect a material adverse impact on its financial position[95] - Estimated remaining purchase commitments under a supplier agreement are approximately $457.1 million through December 2023[100] Performance Guarantee Obligations (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $4,845 | $5,293 | | Accruals | $1,015 | $329 | | Settlements | $(2,731) | $(3,148) | | Balance at end of period | $3,129 | $2,474 | Dealer Commitments (in thousands) | Year | Amount | | :---------------- | :----- | | Remaining 2023 | $43,187 | | 2024 | $74,399 | | 2025 | $58,986 | | 2026 | $36,904 | | 2027 | $30,000 | | Total | $243,476 | Subsequent Events The company reports significant financing developments after the reporting period, including a major DOE loan guarantee commitment - U.S. Department of Energy announced a conditional commitment to guarantee 90% of up to approximately $3.3 billion of future financing arrangements in April 2023[102] - In April 2023, $300.0 million in Series 2023-1 Class A solar asset-backed notes and $23.5 million in Series 2023-1 Class B solar asset-backed notes (SOLV Notes) were issued[103] - Tax equity investors increased capital commitments for Sunnova TEP V-C, LLC and Sunnova TEP 6-A, LLC in April 2023[104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management discusses the company's financial condition, operational results, key metrics, and significant business trends Company Overview Sunnova is a leading Energy as a Service provider that leverages a dealer model to deliver clean, affordable, and reliable energy - Sunnova is a leading Energy as a Service provider with a mission to power energy independence for home and business owners[106] - The company uses a differentiated dealer model to originate, design, and install solar and energy storage systems, providing operational flexibility and lower fixed costs[107] - Solar service agreements typically range from 10 to 25 years and include comprehensive services like operations, maintenance, monitoring, and repairs[108] - As of March 31, 2023, Sunnova serves over 309,000 customers with more than 1,763 megawatts of generation capacity[113] Recent Developments The company details significant financing activities, including increased tax equity, expanded credit facilities, and a major DOE loan guarantee - Tax equity investors increased capital commitments by $95.0 million in February and March 2023, and by an additional $7.8 million in April 2023[114][197] - EZOP revolving credit facility commitment increased from $450.0 million to $775.0 million, and TEPH revolving credit facility commitment increased from $600.0 million to $700.0 million[115][117][198][199] - AP8 revolving credit facility commitment increased from $75.0 million to $150.0 million[118][200] - Sunnova Inventory Supply, LLC (IS) entered into a new $50.0 million secured revolving credit facility[119][201] - The U.S. Department of Energy conditionally committed to guarantee 90% of up to approximately $3.3 billion of future financing arrangements in April 2023[120][202] - In April 2023, $323.5 million in SOLV Notes (solar asset-backed notes) were issued[121][203] Key Financial and Operational Metrics The company presents key metrics to evaluate performance, showing growth in customer numbers and an increase in Adjusted EBITDA Customer and System Metrics | Metric | As of March 31, 2023 | As of December 31, 2022 | Change | | :---------------------------------------------------- | :------------------- | :---------------------- | :----- | | Number of customers | 309,300 | 279,400 | 29,900 | | Weighted average number of systems (Q1 2023) | 293,500 | 199,900 (Q1 2022) | 93,600 | Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(110,346) | $(22,104) | | Interest expense, net | $85,607 | $(1,015) | | Depreciation expense | $32,671 | $24,740 | | Amortization expense | $7,338 | $7,288 | | Non-cash compensation expense | $9,515 | $10,864 | | Provision for current expected credit losses | $10,259 | $6,657 | | Adjusted EBITDA | $14,553 | $12,547 | Interest Income, Principal Proceeds, and Solar Receivables (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Interest income from customer notes receivable | $20,088 | $10,832 | | Principal proceeds from customer notes receivable, net of related revenue | $29,098 | $20,413 | | Proceeds from investments in solar receivables | $2,132 | $1,798 | Adjusted Operating Expense (in thousands, except per system data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total operating expense, net | $210,477 | $99,928 | | Depreciation expense | $(32,671) | $(24,740) | | Non-cash compensation expense | $(9,515) | $(10,864) | | Cost of revenue related to inventory sales | $(51,779) | — | | Adjusted Operating Expense | $78,422 | $46,980 | | Adjusted Operating Expense per weighted average system | $267 | $235 | Estimated Gross Contracted Customer Value (in millions) | Metric | As of March 31, 2023 | As of December 31, 2022 | | :------------------------------------ | :------------------- | :---------------------- | | Estimated gross contracted customer value (6% discount rate) | $6,751 | $5,875 | Significant Factors and Trends Affecting Our Business Key business drivers include financing availability, the impact of the Inflation Reduction Act, rising interest rates, and energy storage adoption - Future growth is highly dependent on the ability to raise capital from third-party investors on competitive terms, including debt and tax equity[150] - The Inflation Reduction Act (IRA) expanded and extended tax credits (Section 48(a) ITC, Section 25D Credit) for solar and energy storage projects, potentially increasing demand for services[150][156] - Rising interest rates and inflationary pressures could affect capital raising ability and increase costs[152] - Increased demand for energy storage systems is expected due to technological advancements, enhanced energy resilience, and independence from the grid[154] - Government regulations, policies, and incentives (e.g., net metering, SRECs, tax credits) are crucial for promoting distributed solar energy, and adverse changes could harm the business[156][157] Components of Results of Operations This section details the various components of revenue and operating expenses, defining recognition methods and cost categories - Revenue recognition methods vary by contract type: PPA (electricity delivered), Lease (straight-line access), Inventory Sales (shipment), SREC (transfer), Cash Sales (home closing), Loan (interest, principal, O&M services), and Other Revenue (earned, placed in service, straight-line)[158][159][160][163][164][166][167][168] - Cost of revenue includes depreciation on solar energy systems, costs related to inventory sales, and other direct costs like SREC broker fees and credit checks[169][170] - Operations and maintenance expense covers third-party services, property insurance, taxes, and warranties, while general and administrative expense includes employee costs, professional fees, IT, marketing, and depreciation on non-solar assets[171][172] - Other operating income primarily reflects changes in fair values of financial instruments related to solar receivables and contingent consideration[174] Results of Operations—Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022 Revenue grew 146% year-over-year, but net loss widened due to higher operating expenses and a substantial increase in net interest expense - Revenue increased by $96.0 million, primarily due to $59.9 million from inventory sales (which began in April 2022) and an increase in the weighted average number of solar energy systems in service[182][183] - Cost of revenue—inventory sales increased by $51.8 million, directly correlating with the new inventory sales revenue[185] - General and administrative expense increased by $31.0 million, driven by higher payroll, credit loss provisions, consultant fees, legal expenses, depreciation, and IT costs[188] - Net interest expense increased by $86.6 million, mainly due to $57.5 million in unrealized losses on derivatives and $32.6 million in higher interest expense from increased debt levels[190] - Interest income increased by $13.9 million, primarily due to a significant increase in the weighted average number of systems with loan agreements (from 41,700 to 88,700)[191] Key Financial Results (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | % Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Revenue | $161,696 | $65,722 | $95,974 | 146.03% | | Operating loss | $(48,781) | $(34,206) | $(14,575) | 42.60% | | Interest expense, net | $85,607 | $(1,015) | $86,622 | -8534.29%| | Net loss attributable to stockholders | $(81,083) | $(35,058) | $(46,025) | 131.29% | Liquidity and Capital Resources The company maintains liquidity through diversified funding sources, with $420.8 million in total cash and $220.7 million in available borrowing capacity - As of March 31, 2023, total cash was $420.8 million ($210.9 million unrestricted), with $220.7 million in available borrowing capacity[194] - The company's liquidity and financial condition were not materially affected by recent adverse developments in the financial services industry (e.g., Silicon Valley Bank, Credit Suisse)[195] - Net cash used in operating activities increased by $77.2 million, and net cash used in investing activities increased by $166.6 million, primarily due to increased payments to dealers and purchases of property and equipment[205][206] - Net cash provided by financing activities increased by $186.1 million, driven by higher contributions from redeemable noncontrolling interests and net borrowings under debt facilities[208] - Seasonal variability in solar energy production is mitigated by geographic diversity, and certain service agreements are designed to insulate customers from monthly fluctuations[209][210] Item 3. Quantitative and Qualitative Disclosures About Market Risk. The company's primary market risk exposure is to interest rate changes on its variable-rate debt, which is partially hedged - Primary market risk exposure is to changes in interest rates on variable-rate debt[215] - A hypothetical 10% increase in interest rates would have increased interest expense by $2.2 million for the three months ended March 31, 2023[215] Item 4. Controls and Procedures. Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal controls - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023, providing reasonable assurance for timely and accurate financial reporting[216] - No material changes in internal control over financial reporting occurred during the first quarter of 2023[217] PART II - OTHER INFORMATION Item 1. Legal Proceedings. The company is involved in routine legal proceedings not expected to have a material adverse impact on its financial position - The company is a party to routine legal proceedings but does not expect a material adverse impact on its financial position, results of operations, or liquidity[220] Item 1A. Risk Factors. No material changes to risk factors were reported, except for new risks related to adverse developments in the financial services industry - No material changes to risk factors, except for new risks concerning adverse developments in the financial services industry[221] - Adverse developments affecting financial institutions (e.g., SVB, Credit Suisse) could impact access to capital, ability to meet obligations, and overall business, despite current performance of counterparties[222] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. This item is marked as 'Not applicable,' indicating no unregistered sales of equity securities or use of proceeds to report Item 3. Defaults Upon Senior Securities. This item is marked as 'Not applicable,' indicating no defaults upon senior securities to report for the period Item 4. Mine Safety Disclosures. This item is marked as 'Not applicable,' indicating no mine safety disclosures are required for the company Item 5. Other Information. This item states 'None,' indicating no other information required to be disclosed under this section PART IV Item 6. Exhibits. This section lists all exhibits filed with the report, including agreements, amendments, and required certifications - Includes amendments to credit agreements for Sunnova EZ-Own Portfolio, LLC (EZOP), Sunnova TEP Holdings, LLC (TEPH), and Sunnova Asset Portfolio 8, LLC (AP8)[229] - Details the Credit Agreement for Sunnova Inventory Supply, LLC (IS)[229] - Contains certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act[229][230] SIGNATURES SIGNATURES The report is certified by the signatures of the company's authorized officers on April 27, 2023 - The report was signed by William J. Berger, Chief Executive Officer and Director, and Robert L. Lane, Chief Financial Officer, on April 27, 2023[235]