Sunnova(US:NOVA)2020-11-01 05:17Financial 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]