Disclaimer

Our mission as a company is to power energy independence, and we achieve this mission when we conduct ourselves ethically and transparently. To that end, we condemn all human rights abuses and the use of forced labor in the Xinjiang region and anywhere else in the world, and we stand committed to ensuring that all our vendors engage in ethical sourcing. We require transparency in our supply chain, and we work closely with our vendors to ensure they satisfy our vendor code of conduct." - John Berger, CEO of Sunnova

As a matter of ethical business practices and sourcing, Sunnova requires each company on its Approved Vendor List (“AVL”) to:

  • certify that they (and their suppliers) practice ethical sourcing;
  • certify that they do not engage in human rights abuses in the sourcing and manufacture of the products they sell to Sunnova; and
  • certify that they do not use labor or goods from Xinjiang in their supply chain.

Sunnova will also continue to engage its vendors in discussions and to review available data regarding forced labor in the Xinjiang region to ensure that its supply chain is free from human rights abuses.

News Details

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Sunnova Reports Third Quarter 2022 Financial Results

October, 26, 2022

Third Quarter 2022 Highlights

  • Added 21,800 customers in the third quarter of 2022, bringing total customer count to 246,600 as of September 30, 2022;
  • Reinforced liquidity through a convertible debt raise, satisfying our projected corporate capital needs given our current growth plans;
  • Increased single customer economics as expressed through fully burdened unlevered return;
  • Effectively managed our emergency response to support our customers' energy reliability and resilience during recent hurricanes; and
  • Expect growth to escalate further in 2023 due to increasing demand for cheaper, more reliable energy services, complemented by the positive impacts of the Inflation Reduction Act.

HOUSTON--(BUSINESS WIRE)-- Sunnova Energy International Inc. ("Sunnova") (NYSE: NOVA), one of the leading Energy as a Service (EaaS) providers, today announced financial results for the third quarter ended September 30, 2022.

"In the third quarter, we took action to fortify our liquidity and satisfy our planned 2023 corporate capital needs ahead of schedule through a timely capital raise, putting the company in an excellent financial position with a strong balance sheet," said William J. (John) Berger, founder and Chief Executive Officer of Sunnova. "Our record low customer default and delinquency rates and customer feedback clearly show that consumers do not see us as merely providing financing but providing an essential service to them. Sunnova is optimally positioned to benefit from this strong consumer demand for its energy service, catalyzed by a combination of our focus on service, the Inflation Reduction Act, and the global energy crisis, as homeowners look to avoid rising utility bills that they must pay.

"As extreme weather events continue to wreak havoc, especially in areas on the frontline of climate change like Puerto Rico and Florida, the importance of battery storage performance during grid failure has become even more critical. In fact, customers impacted by Hurricane Fiona averaged 5.3 days of solar plus storage battery backup with many residents remaining dependent on their Sunnova system for more than 10 days. For any customers in need of assistance, Sunnova quickly dispatched service technicians to return their systems to full operation. We continue to offer tried-and-true solutions to climate change realities while providing a better energy service at a better price."

Third Quarter 2022 Results

Revenue increased to $149.4 million, or by $80.5 million, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. This increase was primarily the result of an increased number of solar energy systems in service and the sale of inventory to our dealers or other parties, which began in April 2022.

Revenue increased to $362.1 million, or by $185.4 million, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. This increase was primarily the result of an increased number of solar energy systems in service, the April 2021 acquisition of SunStreet, and the sale of inventory to our dealers or other parties.

Total operating expense, net increased to $177.1 million, or by $100.0 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. This increase was primarily the result of an increased number of solar energy systems in service, greater depreciation expense, an increase in cost of revenue - inventory sales due to the sale of inventory to our dealers or other parties, higher general and administrative expense, and a change in other operating expense (income) primarily due to changes in the fair value of certain financial instruments and contingent consideration.

Total operating expense, net increased to $426.8 million, or by $204.2 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. This increase was primarily the result of an increased number of solar energy systems in service, the April 2021 acquisition of SunStreet, greater depreciation expense, an increase in cost of revenue - inventory sales due to the sale of inventory to our dealers or other parties, and higher general and administrative expense.

Adjusted Operating Expense increased to $53.7 million, or by $14.9 million, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. This increase was primarily the result of an increased number of solar energy systems in service and higher general and administrative expense.

Adjusted Operating Expense increased to $150.6 million, or by $50.8 million, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. This increase was primarily the result of an increased number of solar energy systems in service, the April 2021 acquisition of SunStreet, and higher general and administrative expense.

Sunnova incurred a net loss of $29.9 million for the three months ended September 30, 2022 compared to a net loss of $25.9 million for the three months ended September 30, 2021. This higher net loss was primarily the result of higher general and administrative expense and a change in other operating expense (income) primarily due to changes in the fair value of certain financial instruments and contingent consideration. This was partially offset by an increase in interest income of $7.1 million due to our larger customer loan portfolio, and a decrease in interest expense, net of $8.3 million.

Sunnova incurred a net loss of $60.2 million for the nine months ended September 30, 2022 compared to a net loss of $116.3 million for the nine months ended September 30, 2021. This lower net loss was primarily the result of an increase in interest income of $16.2 million primarily due to our larger customer loan portfolio, a decrease in loss on extinguishment of long-term debt, net of $9.8 million primarily due to a make-whole payment related to the early repayment of one of our solar asset-backed notes in June 2021, and a decrease in interest expense, net of $48.5 million. This was partially offset by higher general and administrative expense.

Adjusted EBITDA was $41.3 million for the three months ended September 30, 2022 compared to $25.2 million for the three months ended September 30, 2021. Adjusted EBITDA was $93.5 million for the nine months ended September 30, 2022 compared to $68.1 million for the nine months ended September 30, 2021. These increases were primarily due to customer growth increasing at a rate faster than expenses.

Customer principal (net of amounts recorded in revenue) and interest payments received from solar loans increased to $22.3 million and $15.1 million, respectively, for the three months ended September 30, 2022, or by $8.0 million and $6.2 million, respectively, compared to the three months ended September 30, 2021. Customer principal (net of amounts recorded in revenue) and interest payments received from solar loans increased to $67.5 million and $39.1 million, respectively, for the nine months ended September 30, 2022, or by $25.1 million and $15.2 million, respectively, compared to the nine months ended September 30, 2021. These increases were due to our larger customer loan portfolio.

Liquidity & Capital Resources

As of September 30, 2022, Sunnova had total cash of $540 million, including restricted and unrestricted cash.

2022 Guidance

Sunnova management is reaffirming its guidance for customer additions and Adjusted EBITDA, increasing its guidance for interest payments received from solar loans, and decreasing its guidance for principal payments received from solar loans, net of amounts recorded in revenue.

  • Customer additions of between 85,000 and 89,000 reaffirmed;
  • Adjusted EBITDA of between $117 million and $137 million reaffirmed;
  • Customer interest payments received from solar loans increases from between $45 million and $55 million to between $50 million and $60 million; and
  • Customer principal payments received from solar loans, net of amounts recorded in revenue, decreases from between $134 million and $154 million to between $90 million and $100 million.

Non-GAAP Financial Measures

We present our operating results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). We believe certain financial measures, such as Adjusted EBITDA and Adjusted Operating Expense, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our business. We use Adjusted EBITDA and Adjusted Operating Expense as performance measures and believe investors and securities analysts also use Adjusted EBITDA and Adjusted Operating Expense in evaluating our performance. While Adjusted EBITDA effectively captures the operating performance of our leases and PPAs, it only reflects the service portion of the operating performance under our loan agreements. Therefore, we separately show customer P&I payments. Adjusted EBITDA is also used by our management for internal planning purposes, including our consolidated operating budget, and by our board of directors in setting performance-based compensation targets. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under GAAP, can be used both to better assess our business from period to period and to better assess our business against other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Our calculation of these non-GAAP financial measures may differ from similarly-titled non-GAAP measures, if any, reported by other companies. In addition, other companies may not publish these or similar measures. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with GAAP. Sunnova is unable to reconcile projected Adjusted EBITDA and Adjusted Operating Expense to the most comparable financial measures calculated in accordance with GAAP because of fluctuations in interest rates and their impact on our unrealized and realized interest rate hedge gains or losses. Sunnova provides a range for the forecasts of Adjusted EBITDA and Adjusted Operating Expense to allow for the variability in the timing of cash receipts and disbursements, customer utilization of our assets, and the impact on the related reconciling items, many of which interplay with each other. Therefore, the reconciliation of projected Adjusted EBITDA and Adjusted Operating Expense to projected net income (loss) and total operating expense, as the case may be, is not available without unreasonable effort.

Third Quarter 2022 Conference Call Information

Sunnova is hosting a conference call for analysts and investors to discuss its third quarter 2022 results at 8:00 a.m. Eastern Time, on October 27, 2022. The conference call can be accessed live over the phone by dialing 844-200-6205, or for international callers, 929-526-1599. The access code for the live call is 212518.

A replay will be available two hours after the call and can be accessed by dialing 866-813-9403, or for international callers, +44 204-525-0658. The access code for the replay is 493538. The replay will be available until November 3, 2022.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of Sunnova’s website.

Forward-Looking Statements

This press release contains 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 "may," "will," "should," "expects," "plans," "anticipates," "going to," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern Sunnova’s expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to, statements regarding our level of growth, customer value propositions, technological developments, service levels, the ability to achieve our 2022 operational and financial targets, and references to Adjusted EBITDA and customer P&I payments from solar loans. Sunnova’s expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including risks regarding our ability to forecast our business due to our limited operating history, the effects of the coronavirus pandemic on our business and operations, supply chain uncertainties, results of operations and financial position, our competition, changes in regulations applicable to our business, fluctuations in the solar and home-building markets, availability of capital, our ability to attract and retain dealers and customers and manage our dealer and strategic partner relationships, the ability to successfully integrate the SunStreet acquisition, the ability of Sunnova to implement its plans, forecasts and other expectations with respect to SunStreet's business and realize the expected benefits of the acquisition. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in Sunnova’s filings with the Securities and Exchange Commission, including Sunnova’s annual report on Form 10-K for the year ended December 31, 2021 and subsequent quarterly reports on Form 10-Q. The forward-looking statements in this release are based on information available to Sunnova as of the date hereof, and Sunnova disclaims any obligation to update any forward-looking statements, except as required by law.

About Sunnova

Sunnova Energy International Inc. (NYSE: NOVA) is a leading Energy as a Service (EaaS) provider with customers across the U.S. and its territories. Sunnova's goal is to be the source of clean, affordable and reliable energy with a simple mission: to power energy independence so that home and business owners have the freedom to live life uninterrupted®. For more information, please visit sunnova.com.

 

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts and share par values)

 

 

As of
September 30, 2022

 

As of
December 31, 2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

412,581

 

 

$

243,101

 

Accounts receivable—trade, net

 

35,743

 

 

 

18,584

 

Accounts receivable—other

 

152,942

 

 

 

57,736

 

Other current assets, net of allowance of $5,306 and $1,646 as of September 30, 2022 and December 31, 2021, respectively

 

336,047

 

 

 

296,321

 

Total current assets

 

937,313

 

 

 

615,742

 

 

 

 

 

Property and equipment, net

 

3,537,177

 

 

 

2,909,613

 

Customer notes receivable, net of allowance of $62,682 and $39,492 as of September 30, 2022 and December 31, 2021, respectively

 

2,072,264

 

 

 

1,204,073

 

Intangible assets, net

 

169,187

 

 

 

190,520

 

Goodwill

 

13,150

 

 

 

13,150

 

Other assets

 

920,634

 

 

 

571,136

 

Total assets (1)

$

7,649,725

 

 

$

5,504,234

 

 

 

 

 

Liabilities, Redeemable Noncontrolling Interests and Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

94,647

 

 

$

55,033

 

Accrued expenses

 

121,195

 

 

 

81,721

 

Current portion of long-term debt

 

191,131

 

 

 

129,793

 

Other current liabilities

 

51,093

 

 

 

44,350

 

Total current liabilities

 

458,066

 

 

 

310,897

 

 

 

 

 

Long-term debt, net

 

4,807,107

 

 

 

3,135,681

 

Other long-term liabilities

 

631,137

 

 

 

436,043

 

Total liabilities (1)

 

5,896,310

 

 

 

3,882,621

 

 

 

 

 

Redeemable noncontrolling interests

 

153,469

 

 

 

145,336

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock, 114,895,870 and 113,386,600 shares issued as of September 30, 2022 and December 31, 2021, respectively, at $0.0001 par value

 

11

 

 

 

11

 

Additional paid-in capital—common stock

 

1,633,507

 

 

 

1,649,199

 

Accumulated deficit

 

(387,073

)

 

 

(459,715

)

Total stockholders' equity

 

1,246,445

 

 

 

1,189,495

 

Noncontrolling interests

 

353,501

 

 

 

286,782

 

Total equity

 

1,599,946

 

 

 

1,476,277

 

Total liabilities, redeemable noncontrolling interests and equity

$

7,649,725

 

 

$

5,504,234

 

(1)The consolidated assets as of September 30, 2022 and December 31, 2021 include $2,721,620 and $2,148,398, respectively, of assets of variable interest entities ("VIEs") that can only be used to settle obligations of the VIEs. These assets include cash of $33,695 and $23,538 as of September 30, 2022 and December 31, 2021, respectively; accounts receivable—trade, net of $9,834 and $6,167 as of September 30, 2022 and December 31, 2021, respectively; accounts receivable—other of $739 and $410 as of September 30, 2022 and December 31, 2021, respectively; other current assets of $273,175 and $272,421 as of September 30, 2022 and December 31, 2021, respectively; property and equipment, net of $2,362,041 and $1,817,471 as of September 30, 2022 and December 31, 2021, respectively; and other assets of $42,136 and $28,391 as of September 30, 2022 and December 31, 2021, respectively. The consolidated liabilities as of September 30, 2022 and December 31, 2021 include $59,908 and $47,225, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of $8,965 and $6,014 as of September 30, 2022 and December 31, 2021, respectively; accrued expenses of $178 and $88 as of September 30, 2022 and December 31, 2021, respectively; other current liabilities of $2,894 and $3,845 as of September 30, 2022 and December 31, 2021, respectively; and other long-term liabilities of $47,871 and $37,278 as of September 30, 2022 and December 31, 2021, respectively.

 

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$

149,364

 

 

$

68,901

 

 

$

362,098

 

 

$

176,733

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

Cost of revenue—depreciation

 

24,663

 

 

 

19,665

 

 

 

69,935

 

 

 

55,621

 

Cost of revenue—inventory sales

 

40,917

 

 

 

 

 

 

89,884

 

 

 

 

Cost of revenue—other

 

15,567

 

 

 

7,342

 

 

 

32,974

 

 

 

13,572

 

Operations and maintenance

 

9,774

 

 

 

6,035

 

 

 

23,787

 

 

 

14,640

 

General and administrative

 

75,897

 

 

 

53,372

 

 

 

214,362

 

 

 

144,028

 

Other operating expense (income)

 

10,267

 

 

 

(9,337

)

 

 

(4,186

)

 

 

(5,303

)

Total operating expense, net

 

177,085

 

 

 

77,077

 

 

 

426,756

 

 

 

222,558

 

 

 

 

 

 

 

 

 

Operating loss

 

(27,721

)

 

 

(8,176

)

 

 

(64,658

)

 

 

(45,825

)

 

 

 

 

 

 

 

 

Interest expense, net

 

18,328

 

 

 

26,588

 

 

 

36,275

 

 

 

84,748

 

Interest income

 

(16,185

)

 

 

(9,098

)

 

 

(40,428

)

 

 

(24,266

)

Loss on extinguishment of long-term debt, net

 

 

 

 

 

 

 

 

 

 

9,824

 

Other (income) expense

 

(12

)

 

 

189

 

 

 

(327

)

 

 

60

 

Loss before income tax

 

(29,852

)

 

 

(25,855

)

 

 

(60,178

)

 

 

(116,191

)

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

64

 

 

 

 

 

 

64

 

Net loss

 

(29,852

)

 

 

(25,919

)

 

 

(60,178

)

 

 

(116,255

)

Net income attributable to redeemable noncontrolling interests and noncontrolling interests

 

32,195

 

 

 

1,622

 

 

 

72,455

 

 

 

7,665

 

Net loss attributable to stockholders

$

(62,047

)

 

$

(27,541

)

 

$

(132,633

)

 

$

(123,920

)

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders—basic and diluted

$

(0.54

)

 

$

(0.25

)

 

$

(1.16

)

 

$

(1.12

)

Weighted average common shares outstanding—basic and diluted

 

114,816,879

 

 

 

112,159,698

 

 

 

114,293,251

 

 

 

110,185,333

 

 

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Nine Months Ended

September 30,

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net loss

$

(60,178

)

 

$

(116,255

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation

 

78,401

 

 

 

62,286

 

Impairment and loss on disposals, net

 

2,971

 

 

 

3,522

 

Amortization of intangible assets

 

21,333

 

 

 

14,111

 

Amortization of deferred financing costs

 

9,690

 

 

 

11,556

 

Amortization of debt discount

 

6,273

 

 

 

8,231

 

Non-cash effect of equity-based compensation plans

 

20,059

 

 

 

13,937

 

Unrealized gain on derivatives

 

(35,685

)

 

 

(5,574

)

Unrealized gain on fair value instruments

 

(4,136

)

 

 

(4,665

)

Loss on extinguishment of long-term debt, net

 

 

 

 

9,824

 

Other non-cash items

 

(14,087

)

 

 

12,622

 

Changes in components of operating assets and liabilities:

 

 

 

Accounts receivable

 

(100,537

)

 

 

(27,194

)

Other current assets

 

(139,946

)

 

 

(99,731

)

Other assets

 

(84,142

)

 

 

(41,404

)

Accounts payable

 

1,403

 

 

 

(5,226

)

Accrued expenses

 

41,571

 

 

 

19,923

 

Other current liabilities

 

(4,243

)

 

 

(1,617

)

Other long-term liabilities

 

(4,542

)

 

 

(1,193

)

Net cash used in operating activities

 

(265,795

)

 

 

(146,847

)

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Purchases of property and equipment

 

(637,556

)

 

 

(344,044

)

Payments for investments and customer notes receivable

 

(902,773

)

 

 

(553,475

)

Proceeds from customer notes receivable

 

79,870

 

 

 

47,300

 

Proceeds from investments in solar receivables

 

9,388

 

 

 

 

Other, net

 

(282

)

 

 

3,038

 

Net cash used in investing activities

 

(1,451,353

)

 

 

(847,181

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Proceeds from long-term debt

 

2,308,033

 

 

 

1,890,185

 

Payments of long-term debt

 

(571,261

)

 

 

(815,710

)

Payments on notes payable

 

 

 

 

(34,555

)

Payments of deferred financing costs

 

(24,748

)

 

 

(27,031

)

Payments of debt discounts

 

 

 

 

(2,324

)

Purchase of capped call transactions

 

(48,420

)

 

 

(91,655

)

Proceeds from issuance of common stock, net

 

(3,345

)

 

 

9,911

 

Contributions from redeemable noncontrolling interests and noncontrolling interests

 

236,661

 

 

 

226,432

 

Distributions to redeemable noncontrolling interests and noncontrolling interests

 

(20,847

)

 

 

(10,407

)

Payments of costs related to redeemable noncontrolling interests and noncontrolling interests

 

(10,380

)

 

 

(8,159

)

Other, net

 

(601

)

 

 

(283

)

Net cash provided by financing activities

 

1,865,092

 

 

 

1,136,404

 

Net increase in cash, cash equivalents and restricted cash

 

147,944

 

 

 

142,376

 

Cash, cash equivalents and restricted cash at beginning of period

 

391,897

 

 

 

377,893

 

Cash, cash equivalents and restricted cash at end of period

 

539,841

 

 

 

520,269

 

Restricted cash included in other current assets

 

(14,584

)

 

 

(52,042

)

Restricted cash included in other assets

 

(112,676

)

 

 

(60,071

)

Cash and cash equivalents at end of period

$

412,581

 

 

$

408,156

 

Key Financial and Operational Metrics

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

 

(in thousands)

Reconciliation of Net Loss to Adjusted EBITDA:

 

 

 

 

 

 

 

Net loss

$

(29,852

)

 

$

(25,919

)

 

$

(60,178

)

 

$

(116,255

)

Interest expense, net

 

18,328

 

 

 

26,588

 

 

 

36,275

 

 

 

84,748

 

Interest income

 

(16,185

)

 

 

(9,098

)

 

 

(40,428

)

 

 

(24,266

)

Income tax expense

 

 

 

 

64

 

 

 

 

 

 

64

 

Depreciation expense

 

27,594

 

 

 

21,961

 

 

 

78,401

 

 

 

62,286

 

Amortization expense

 

7,309

 

 

 

7,204

 

 

 

21,894

 

 

 

14,362

 

EBITDA

 

7,194

 

 

 

20,800

 

 

 

35,964

 

 

 

20,939

 

Non-cash compensation expense

 

4,463

 

 

 

3,093

 

 

 

20,059

 

 

 

13,937

 

ARO accretion expense

 

952

 

 

 

745

 

 

 

2,687

 

 

 

2,094

 

Financing deal costs

 

162

 

 

 

480

 

 

 

582

 

 

 

837

 

Natural disaster losses and related charges, net

 

1,161

 

 

 

 

 

 

1,161

 

 

 

 

Acquisition costs

 

3,005

 

 

 

1,565

 

 

 

5,622

 

 

 

7,053

 

Loss on extinguishment of long-term debt, net

 

 

 

 

 

 

 

 

 

 

9,824

 

Unrealized (gain) loss on fair value instruments

 

10,625

 

 

 

(8,834

)

 

 

(4,136

)

 

 

(4,665

)

Amortization of payments to dealers for exclusivity and other bonus arrangements

 

1,185

 

 

 

832

 

 

 

3,110

 

 

 

2,089

 

Legal settlements

 

(1,001

)

 

 

 

 

 

(1,001

)

 

 

 

Provision for current expected credit losses

 

10,967

 

 

 

6,567

 

 

 

26,881

 

 

 

15,032

 

Non-cash inventory impairments

 

864

 

 

 

 

 

 

864

 

 

 

982

 

Indemnification payments to tax equity investors

 

1,727

 

 

 

 

 

 

1,727

 

 

 

 

Adjusted EBITDA

$

41,304

 

 

$

25,248

 

 

$

93,520

 

 

$

68,122

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

 

(in thousands)

Interest income from customer notes receivable

$

15,119

 

$

8,904

 

$

39,051

 

$

23,863

Principal proceeds from customer notes receivable, net of related revenue

$

22,284

 

$

14,333

 

$

67,478

 

$

42,408

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

 

(in thousands, except per system data)

Reconciliation of Total Operating Expense, Net to Adjusted Operating Expense:

 

 

 

 

 

 

 

Total operating expense, net

$

177,085

 

 

$

77,077

 

 

$

426,756

 

 

$

222,558

 

Depreciation expense

 

(27,594

)

 

 

(21,961

)

 

 

(78,401

)

 

 

(62,286

)

Amortization expense

 

(7,309

)

 

 

(7,204

)

 

 

(21,894

)

 

 

(14,362

)

Non-cash compensation expense

 

(4,463

)

 

 

(3,093

)

 

 

(20,059

)

 

 

(13,937

)

ARO accretion expense

 

(952

)

 

 

(745

)

 

 

(2,687

)

 

 

(2,094

)

Financing deal costs

 

(162

)

 

 

(480

)

 

 

(582

)

 

 

(837

)

Natural disaster losses and related charges, net

 

(1,161

)

 

 

 

 

 

(1,161

)

 

 

 

Acquisition costs

 

(3,005

)

 

 

(1,565

)

 

 

(5,622

)

 

 

(7,053

)

Amortization of payments to dealers for exclusivity and other bonus arrangements

 

(1,185

)

 

 

(832

)

 

 

(3,110

)

 

 

(2,089

)

Legal settlements

 

1,001

 

 

 

 

 

 

1,001

 

 

 

 

Provision for current expected credit losses

 

(10,967

)

 

 

(6,567

)

 

 

(26,881

)

 

 

(15,032

)

Non-cash inventory impairments

 

(864

)

 

 

 

 

 

(864

)

 

 

(982

)

Direct sales costs

 

(3,237

)

 

 

(310

)

 

 

(4,110

)

 

 

(358

)

Cost of revenue related to cash sales

 

(10,225

)

 

 

(4,591

)

 

 

(23,946

)

 

 

(8,413

)

Cost of revenue related to inventory sales

 

(40,917

)

 

 

 

 

 

(89,884

)

 

 

 

Unrealized gain (loss) on fair value instruments

 

(10,637

)

 

 

9,023

 

 

 

3,809

 

 

 

4,725

 

Indemnification payments to tax equity investors

 

(1,727

)

 

 

 

 

 

(1,727

)

 

 

 

Adjusted Operating Expense

$

53,681

 

 

$

38,752

 

 

$

150,638

 

 

$

99,840

 

Adjusted Operating Expense per weighted average system

$

227

 

 

$

230

 

 

$

691

 

 

$

700

 

 

As of
September 30, 2022

 

As of
December 31, 2021

Number of customers

246,600

 

192,600

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

Weighted average number of systems (excluding loan agreements and cash sales)

171,600

 

138,500

 

163,800

 

117,800

Weighted average number of systems with loan agreements

60,800

 

29,000

 

50,900

 

24,600

Weighted average number of systems with cash sales

4,300

 

700

 

3,300

 

300

Weighted average number of systems

236,700

 

168,200

 

218,000

 

142,700

 

As of
September 30, 2022

 

As of
December 31, 2021

 

(in millions)

Estimated gross contracted customer value

$

5,706

 

$

4,337

Key Terms for Our Key Metrics and Non-GAAP Financial Measures

Estimated Gross Contracted Customer Value. Estimated gross contracted customer value as of a specific measurement date represents the sum of the present value of the remaining estimated future net cash flows we expect to receive from existing customers during the initial contract term of our leases and power purchase agreements ("PPAs"), which are typically 25 years in length, plus the present value of future net cash flows we expect to receive from the sale of related solar renewable energy certificates ("SRECs"), either under existing contracts or in future sales, plus the cash flows we expect to receive from energy services programs such as grid services, plus the carrying value of outstanding customer loans on our balance sheet. From these aggregate estimated initial cash flows, we subtract the present value of estimated net cash distributions to redeemable noncontrolling interests and noncontrolling interests and estimated operating, maintenance and administrative expenses associated with the solar service agreements. These estimated future cash flows reflect the projected monthly customer payments over the life of our solar service agreements and depend on various factors including but not limited to solar service agreement type, contracted rates, expected sun hours and the projected production capacity of the solar equipment installed. For the purpose of calculating this metric, we discount all future cash flows at 4%.

Number of Customers. We define number of customers to include every unique premises on which a Sunnova product is installed or on which Sunnova is obligated to perform services for a counterparty. We track the total number of customers as an indicator of our historical growth and our rate of growth from period to period.

Weighted Average Number of Systems. We calculate the weighted average number of systems based on the number of months a customer and any additional service obligation related to a solar energy system is in-service during a given measurement period. The weighted average number of systems reflects the number of systems at the beginning of a period, plus the total number of new systems added in the period adjusted by a factor that accounts for the partial period nature of those new systems. For purposes of this calculation, we assume all new systems added during a month were added in the middle of that month. The number of systems for any end of period will exceed the number of customers, as defined above, for that same end of period as we are also including any additional services and/or contracts a customer or third party executed for the additional work for the same residence. We track the weighted average system count in order to accurately reflect the contribution of the appropriate number of systems to key financial metrics over the measurement period.

Definitions of Non-GAAP Measures

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus net interest expense, depreciation and amortization expense, income tax expense, financing deal costs, natural disaster losses and related charges, net, losses on extinguishment of long-term debt, realized and unrealized gains and losses on fair value instruments, amortization of payments to dealers for exclusivity and other bonus arrangements, legal settlements and excluding the effect of certain non-recurring items we do not consider to be indicative of our ongoing operating performance such as, but not limited to, costs of our initial public offering ("IPO"), acquisition costs, losses on unenforceable contracts, indemnification payments to tax equity investors and other non-cash items such as non-cash compensation expense, asset retirement obligation ("ARO") accretion expense, provision for current expected credit losses and non-cash inventory impairments.

Adjusted Operating Expense. We define Adjusted Operating Expense as total operating expense less depreciation and amortization expense, financing deal costs, natural disaster losses and related charges, net, amortization of payments to dealers for exclusivity and other bonus arrangements, legal settlements, direct sales costs, cost of revenue related to cash sales, cost of revenue related to inventory sales, unrealized gains and losses on fair value instruments and excluding the effect of certain non-recurring items we do not consider to be indicative of our ongoing operating performance such as, but not limited to, costs of our IPO, acquisition costs, losses on unenforceable contracts, indemnification payments to tax equity investors and other non-cash items such as non-cash compensation expense, ARO accretion expense, provision for current expected credit losses and non-cash inventory impairments.

Investor Relations:
Rodney McMahan, Vice President Investor Relations
IR@sunnova.com
877-770-5211

Media:
Matt Dallas
Matt.Dallas@icrinc.com
917-363-1333

Source: Sunnova Energy International Inc.

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