2019 Highlights
- Added over 18,000 customers in 2019, increasing total customer
count 30% year-over-year to 78,600;
- Exceeded midpoint of guidance for each 2019 financial
metric;
- Increased storage attachment rate on origination to 24% in the
fourth quarter of 2019; and
- Sustained 2019's accelerated growth into 2020.
Sunnova Energy International Inc. ("Sunnova") (NYSE: NOVA), one
of the leading U.S. residential solar and storage service
providers, today announced financial results for the fourth quarter
and full-year ended December 31, 2019.
"The past twelve months were an exciting period of disruption
for Sunnova as we became the industry leader in growth rate. In
2019, we increased our customer base 30 percent, saw escalating
growth in our contracted customer value, launched new product
offerings and entered new markets, saw a surge in storage
attachment rates, continued to build out our differentiated dealer
base, and met or exceeded our 2019 operational and financial
targets," said William J. (John) Berger, Chief Executive Officer of
Sunnova. "In addition, we closed on a number of important financial
transactions, including our IPO, new tax equity facilities, a new
credit facility for our leases and PPAs, a comprehensive amendment
to the credit facility for our loan products, and a safe harbor
credit facility to fund the purchase of inventory to qualify for a
30 percent federal investment tax credit. In addition, we opened
2020 with the closing of a $412.5 million asset-backed
securitization at some of the strongest terms the industry has
seen, which is a testament to our business model and focus on
customer service."
Berger added, "With higher than expected growth in late 2019,
which has continued into the new year, our outlook continues to
improve, supporting an increase in our 2020 guidance. We now
foresee our asset base growing at a higher rate than projected in
the third quarter of 2019 while we maintain our focus on maximizing
recurring cash flows from operations. In addition to overall
customer growth, we have also seen our Sunnova SunSafe™ solar +
storage sales and attachment rates increase at a faster pace than
expected as consumers seek out more resilient sources of energy to
combat severe weather events and unreliable electricity grids.
Solar + storage has become an integral component of our business
strategy and Sunnova SunSafe™ is now available in 16 markets. The
increased pace of solar + storage sales is contributing to our
growth and our customers' ability to power energy independence.
"We are proud of what we accomplished in 2019; these
accomplishments have given us additional momentum to continue to
produce strong growth, deliver superior energy service to our
customers, and achieve our 2020 operational and financial
targets."
Year-over-Year Results
Sunnova's total number of customers was 78,600 as of December
31, 2019, an increase of 18,300 compared to December 31, 2018.
Revenue increased to $131.6 million, or by $27.2 million, for
the year ended December 31, 2019 compared to the year ended
December 31, 2018. This increase in revenues is primarily the
result of an increase in the number of customers served.
Total operating expense, net increased to $153.8 million, or by
$35.7 million, in the year ended December 31, 2019 compared to the
year ended December 31, 2018. This increase is the result of an
increase in the number of customers served, greater depreciation
expense, and higher period-over-period general and administrative
expenses due to costs related to our initial public offering and
the hiring of personnel to support growth.
Adjusted Operating Expense increased to $83.3 million, or by
$20.0 million, in the year ended December 31, 2019 compared to the
year ended December 31, 2018. This increase is the result of an
increase in the number of customers served.
Sunnova incurred a net loss of $133.4 million for the year ended
December 31, 2019 compared to a net loss of $68.4 million for the
year ended December 31, 2018. This larger net loss was primarily
driven by the factors described above as well as higher net
interest expense, including higher realized and unrealized net
losses on interest rate swaps.
Adjusted EBITDA was $48.3 million for the year ended December
31, 2019 compared to $41.1 million for the year ended December 31,
2018. This increase was due to customer growth increasing at a
faster rate than expenses.
Customer principal (net of amounts recorded in revenue) and
interest payments received from solar loans increased to $20.0
million and $11.6 million, respectively, for the year ended
December 31, 2019, or by $13.2 million and $5.4 million,
respectively, compared to the year ended December 31, 2018 due to a
larger customer loan portfolio.
Net cash used in operating activities was $170.3 million in the
year ended December 31, 2019 compared to $11.6 million in the year
ended December 31, 2018. This increase was due primarily to higher
inventory and prepaid inventory purchases under our safe harbor
credit facility, additional higher inventory purchases to meet
growing demand, an increased use of working capital and an increase
in the amount of exclusivity and other bonus arrangement payments
made to certain dealers that are inclusive in our asset level
economics during the year ended December 31, 2019 compared to year
ended December 31, 2018.
Adjusted Operating Cash Flow was relatively unchanged at $8.3
million in the year ended December 31, 2019 compared to $8.4
million for the year ended December 31, 2018.
Fourth Quarter 2019 Results
Revenue increased to $33.6 million, or by $8.4 million, in the
three months ended December 31, 2019 compared to the three months
ended December 31, 2018. Total operating expense, net increased to
$42.8 million, or by $5.1 million, in the three months ended
December 31, 2019 compared to the three months ended December 31,
2018. Adjusted Operating Expense increased to $22.9 million, or by
$5.6 million, in the three months ended December 31, 2019 compared
to the three months ended December 31, 2018. These increases are
the result of an increase in the number of customers served.
Sunnova incurred a net loss of $13.8 million for the three
months ended December 31, 2019 compared to a net loss of $39.1
million for the three months ended December 31, 2018. This smaller
net loss was driven by an unrealized gain on interest rate swaps in
the three months ended December 31, 2019 versus an unrealized loss
on swaps in the three months ended December 31, 2018.
Adjusted EBITDA was $10.8 million for the three months ended
December 31, 2019 compared to $8.0 million for the three months
ended December 31, 2018. This increase was due to customer growth
increasing at a faster rate than expenses.
Customer principal (net of amounts recorded in revenue) and
interest payments received from solar loans increased to $7.1
million and $3.4 million, respectively, for the three months ended
December 31, 2019, or by $5.3 million and $1.4 million,
respectively, compared to the three months ended December 31, 2018
due to a larger customer loan portfolio.
Net cash used in operating activities was $95.7 million in the
three months ended December 31, 2019 compared to $13.7 million of
net cash provided by operating activities in the three months ended
December 31, 2018. This change was primarily due to higher
inventory and prepaid inventory purchases necessary to meet growing
demand and safe harbor requirements.
Adjusted Operating Cash Flow was $26.7 million in the three
months ended December 31, 2019 compared to $22.0 million for the
three months ended December 31, 2018. This increase in Adjusted
Operating Cash Flow was primarily due to the increase in the number
of customers served.
Liquidity & Capital Resources
As of December 31, 2019, Sunnova had total cash of $150.3
million, including restricted and unrestricted cash.
2020 Guidance
Management announces updates to 2020 full-year guidance as
follows:
- Increase guidance on customer additions from 23,000 - 27,500 to
28,000 - 30,000;
- Increase guidance on Adjusted EBITDA from $55 million - $60
million to $58 million - $62 million;
- Increase guidance on customer principal payments received from
solar loans, net of amounts recorded in revenue from $30 million -
$35 million to $32 million - $36 million;
- Increase guidance on customer interest payments received from
solar loans from $15 million - $20 million to $17 million - $21
million; and
- Increase guidance on Adjusted Operating Cash Flow from $5
million - $15 million to $10 million - $20 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, Adjusted
Operating Expense and Adjusted Operating Cash Flow, 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 use Adjusted Operating Cash Flow as a
liquidity measure and believe Adjusted Operating Cash Flow is a
supplemental financial measure useful to management, analysts,
investors, lenders and rating agencies as an indicator of our
ability to internally fund origination activities, service or incur
additional debt and service our contractual obligations. We believe
investors and analysts will use Adjusted Operating Cash Flow to
evaluate our liquidity and ability to service our contractual
obligations. However, Adjusted Operating Cash Flow has limitations
as an analytical tool because it does not account for all future
expenditures and financial obligations of the business or reflect
unforeseen circumstances that may impact our future cash flows, all
of which could have a material effect on our financial condition
and results of operations. 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,
Adjusted Operating Expense and Adjusted Operating Cash Flow 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,
Adjusted Operating Expense and Adjusted Operating Cash Flow 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,
Adjusted Operating Expense and Adjusted Operating Cash Flow to
projected net income (loss), total operating expense, or net cash
provided by (used in) operating activities, as the case may be, is
not available without unreasonable effort.
Fourth Quarter and Full-Year 2019 Financial and Operational
Results Conference Call Information
Sunnova is hosting a conference call for analysts and investors
to discuss its fourth quarter and full-year 2019 results at 8:30
a.m. Eastern Time, on February 25, 2020. The conference call can be
accessed live over the phone by dialing 1-866-211-4135, or for
international callers, 1-647-689-6729. A replay will be available
two hours after the call and can be accessed by dialing
1-800-585-8367, or for international callers, 1-416-621-4642. The
conference ID for the live call and the replay is 1496478. The
replay will be available until March 3, 2020.
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 at
www.sunnova.com.
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 improved outlook, expectations about net
contracted customer value asset base growth rate, the momentum to
continue to drive strong growth and maximize recurring cash flows,
deliver superior energy service to our customers, add more net
contracted value and achieve our 2020 operational and financial
targets, and references to future rate of customer additions,
Adjusted EBITDA, customer P&I payments from solar loans and
adjusted operating cash flows. 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, our competition, fluctuations in
the solar and home-building markets, our ability to attract and
retain dealers and customers and our dealer and strategic partner
relationships. 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, 2019. 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
residential solar and energy storage service 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 homeowners
have the freedom to live life uninterruptedTM.
SUNNOVA ENERGY INTERNATIONAL
INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
amounts and share par values)
As of December 31,
2019
2018
Assets
Current assets:
Cash
$
83,485
$
52,706
Accounts receivable—trade, net
10,672
6,312
Accounts receivable—other
6,147
3,721
Other current assets
174,016
26,794
Total current assets
274,320
89,533
Property and equipment, net
1,745,060
1,328,457
Customer notes receivable, net
297,975
172,031
Other assets
169,712
75,064
Total assets (1)
$
2,487,067
$
1,665,085
Liabilities, Redeemable
Noncontrolling Interests and Stockholders' Equity
Current liabilities:
Accounts payable
$
36,190
$
20,075
Accrued expenses
39,544
18,650
Current portion of long-term debt
97,464
26,965
Current portion of long-term
debt—affiliates
—
16,500
Other current liabilities
21,804
13,214
Total current liabilities
195,002
95,404
Long-term debt, net
1,346,419
872,249
Long-term debt, net—affiliates
—
44,181
Other long-term liabilities
127,406
66,453
Total liabilities (1)
1,668,827
1,078,287
Redeemable noncontrolling interests
172,305
85,680
Stockholders' equity:
Series A convertible preferred stock, 0
and 44,942,594 shares issued as of December 31, 2019 and 2018,
respectively, at $0.01 par value
—
449
Series C convertible preferred stock, 0
and 13,006,780 shares issued as of December 31, 2019 and 2018,
respectively, at $0.01 par value
—
130
Series A common stock, 0 and 8,612,728
shares issued as of December 31, 2019 and 2018, respectively, at
$0.01 par value
—
86
Series B common stock, 0 and 21,727 shares
issued as of December 31, 2019 and 2018, respectively, at $0.01 par
value
—
—
Common stock, 83,980,885 and 0 shares
issued as of December 31, 2019 and 2018, respectively, at $0.0001
par value
8
—
Additional paid-in capital—convertible
preferred stock
—
701,326
Additional paid-in capital—common
stock
1,007,751
85,439
Accumulated deficit
(361,824
)
(286,312
)
Total stockholders' equity
645,935
501,118
Total liabilities, redeemable
noncontrolling interests and stockholders' equity
$
2,487,067
$
1,665,085
(1) The consolidated assets as of December
31, 2019 and 2018 include $790,211 and $411,325, respectively, of
assets of variable interest entities ("VIEs") that can only be used
to settle obligations of the VIEs. These assets include cash of
$7,347 and $3,674 as of December 31, 2019 and 2018, respectively;
accounts receivable—trade, net of $1,460 and $884 as of December
31, 2019 and 2018, respectively; accounts receivable—other of $4
and $109 as of December 31, 2019 and 2018, respectively; other
current assets of $47,606 and $4,821 as of December 31, 2019 and
2018, respectively; property and equipment, net of $726,415 and
$398,693 as of December 31, 2019 and 2018, respectively; and other
assets of $7,379 and $3,144 as of December 31, 2019 and 2018,
respectively. The consolidated liabilities as of December 31, 2019
and 2018 include $13,440 and $9,260, respectively, of liabilities
of VIEs whose creditors have no recourse to Sunnova Energy
International Inc. These liabilities include accounts payable of
$1,926 and $4,278 as of December 31, 2019 and 2018, respectively;
accrued expenses of $35 and $14 as of December 31, 2019 and 2018,
respectively; other current liabilities of $612 and $296 as of
December 31, 2019 and 2018, respectively; and other long-term
liabilities of $10,867 and $4,672 as of December 31, 2019 and 2018,
respectively.
SUNNOVA ENERGY INTERNATIONAL
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
and per share amounts)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Revenue
$
33,614
$
25,206
$
131,556
$
104,382
Operating expense:
Cost of revenue—depreciation
12,716
9,242
43,536
34,710
Cost of revenue—other
963
533
3,877
2,007
Operations and maintenance
2,120
9,540
8,588
14,035
General and administrative
27,002
18,327
97,986
67,430
Other operating income
(32
)
(19
)
(161
)
(70
)
Total operating expense, net
42,769
37,623
153,826
118,112
Operating loss
(9,155
)
(12,417
)
(22,270
)
(13,730
)
Interest expense, net
8,169
26,459
108,024
51,582
Interest expense, net—affiliates
—
2,303
4,098
9,548
Interest income
(3,615
)
(2,077
)
(12,483
)
(6,450
)
Loss on extinguishment of long-term debt,
net—affiliates
—
—
10,645
—
Other (income) expense
53
—
880
(1
)
Loss before income tax
(13,762
)
(39,102
)
(133,434
)
(68,409
)
Income tax
—
—
—
—
Net loss
(13,762
)
(39,102
)
(133,434
)
(68,409
)
Net income attributable to redeemable
noncontrolling interests
3,747
1,726
10,917
5,837
Net loss attributable to stockholders
(17,509
)
(40,828
)
(144,351
)
(74,246
)
Dividends earned on Series A convertible
preferred stock
—
(9,581
)
(19,271
)
(36,346
)
Dividends earned on Series C convertible
preferred stock
—
(2,608
)
(5,454
)
(5,948
)
Deemed dividends on convertible preferred
stock exchange
—
—
—
(19,332
)
Net loss attributable to common
stockholders—basic and diluted
$
(17,509
)
$
(53,017
)
$
(169,076
)
$
(135,872
)
Net loss per share attributable to common
stockholders—basic and diluted
$
(0.21
)
$
(6.14
)
$
(4.14
)
$
(15.74
)
Weighted average common shares
outstanding—basic and diluted
83,980,885
8,634,455
40,797,976
8,634,477
SUNNOVA ENERGY INTERNATIONAL
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Year Ended December
31,
2019
2018
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(133,434
)
$
(68,409
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
49,340
39,290
Impairment and loss on disposals, net
1,772
7,565
Amortization of deferred financing
costs
9,822
9,074
Amortization of debt discount
3,018
1,083
Non-cash effect of equity-based
compensation plans
9,235
2,984
Non-cash payment-in-kind interest on
loan—affiliates
2,716
5,524
Unrealized loss on derivatives
19,237
6,100
Unrealized loss on fair value option
instruments
150
—
Loss on extinguishment of long-term debt,
net—affiliates
10,645
—
Other non-cash items
8,442
4,818
Changes in components of operating assets
and liabilities:
Accounts receivable
(9,349
)
(4,983
)
Dealer advances
—
(237
)
Other current assets
(131,741
)
(11,331
)
Other assets
(40,118
)
(8,529
)
Accounts payable
5,292
(996
)
Accrued expenses
15,099
4,234
Other current liabilities
8,452
4,938
Long-term debt—paid-in-kind—affiliates
(719
)
(3,184
)
Other long-term liabilities
1,879
489
Net cash used in operating activities
(170,262
)
(11,570
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of property and equipment
(430,822
)
(252,618
)
Payments for investments and customer
notes receivable
(159,303
)
(108,354
)
Proceeds from customer notes
receivable
21,604
7,715
State utility rebates and tax credits
668
853
Other, net
(463
)
3,555
Net cash used in investing activities
(568,316
)
(348,849
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from long-term debt
883,360
445,586
Payments of long-term debt
(342,540
)
(292,091
)
Proceeds of long-term debt from
affiliates
15,000
15,000
Payments of long-term debt to
affiliates
(56,236
)
(40,000
)
Payments on notes payable
(4,672
)
—
Payments of deferred financing costs
(12,110
)
(8,598
)
Payments of debt discounts
(1,084
)
(2,465
)
Proceeds from issuance of common stock,
net
164,452
—
Proceeds from equity component of debt
instrument, net
13,984
—
Proceeds from issuance of convertible
preferred stock, net
(2,510
)
172,771
Contributions from redeemable
noncontrolling interests
157,149
79,017
Distributions to redeemable noncontrolling
interests
(7,559
)
(2,017
)
Payments of costs related to redeemable
noncontrolling interests
(5,395
)
(1,510
)
Other, net
(16
)
(6
)
Net cash provided by financing
activities
801,823
365,687
Net increase in cash and restricted
cash
63,245
5,268
Cash and restricted cash at beginning of
period
87,046
81,778
Cash and restricted cash at end of
period
150,291
87,046
Restricted cash included in other current
assets
(10,474
)
(5,190
)
Restricted cash included in other
assets
(56,332
)
(29,150
)
Cash at end of period
$
83,485
$
52,706
Key Financial and Operational
Metrics
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(in thousands)
Reconciliation of Net Loss to Adjusted
EBITDA:
Net loss
$
(13,762
)
$
(39,102
)
$
(133,434
)
$
(68,409
)
Interest expense, net
8,169
26,459
108,024
51,582
Interest expense, net—affiliates
—
2,303
4,098
9,548
Interest income
(3,615
)
(2,077
)
(12,483
)
(6,450
)
Depreciation expense
14,353
10,290
49,340
39,290
Amortization expense
9
33
29
133
EBITDA
5,154
(2,094
)
15,574
25,694
Non-cash compensation expense (1)
2,261
944
10,512
3,410
ARO accretion expense
454
292
1,443
1,183
Financing deal costs
133
564
1,161
1,902
Natural disaster losses and related
charges, net
—
7,787
54
8,217
IPO costs
—
482
3,804
563
Loss on unenforceable contracts
2,381
—
2,381
—
Loss on extinguishment of long-term debt,
net—affiliates
—
—
10,645
—
Unrealized loss on fair value option
instruments
53
—
150
—
Realized loss on fair value option
instruments
—
—
730
—
Amortization of payments to dealers for
exclusivity and other bonus arrangements
328
—
583
—
Legal settlements
—
—
1,260
150
Adjusted EBITDA
$
10,764
$
7,975
$
48,297
$
41,119
(1)
Amount includes non-cash effect of
equity-based compensation plans of $2.3 million and $0.8 million
for the three months ended December 31, 2019 and 2018,
respectively, and $9.2 million and $3.0 million for the years ended
December 31, 2019 and 2018, respectively, and partial forgiveness
of a loan to an executive officer used to purchase our capital
stock of $0.1 million for the three months ended December 31, 2018
and $1.3 million and $0.4 million for the years ended December 31,
2019 and 2018, respectively.
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(in thousands)
Interest income from customer notes
receivable
$
3,432
$
1,987
$
11,588
$
6,147
Principal proceeds from customer notes
receivable, net of related revenue
$
7,058
$
1,714
$
20,044
$
6,812
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(in thousands)
Reconciliation of Net Cash Provided by
(Used in) Operating Activities to Adjusted Operating Cash
Flow:
Net cash provided by (used in) operating
activities
$
(95,724
)
$
13,672
$
(170,262
)
$
(11,570
)
Principal proceeds from customer notes
receivable
7,532
1,982
21,604
7,715
Distributions to redeemable noncontrolling
interests
(1,270
)
(695
)
(7,559
)
(2,017
)
Payments to dealers for exclusivity and
other bonus arrangements
—
—
31,733
—
Inventory and prepaid inventory
purchases
115,250
7,001
127,818
14,288
Payments of non-capitalized costs related
to IPO
884
—
4,944
—
Adjusted Operating Cash Flow
$
26,672
$
21,960
$
8,278
$
8,416
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(in thousands, except per
customer data)
Reconciliation of Total Operating
Expense, Net to Adjusted Operating Expense:
Total operating expense, net
$
42,769
$
37,623
$
153,826
$
118,112
Depreciation expense
(14,353
)
(10,290
)
(49,340
)
(39,290
)
Amortization expense
(9
)
(33
)
(29
)
(133
)
Non-cash compensation expense
(2,261
)
(944
)
(10,512
)
(3,410
)
ARO accretion expense
(454
)
(292
)
(1,443
)
(1,183
)
Financing deal costs
(133
)
(564
)
(1,161
)
(1,902
)
Natural disaster losses and related
charges, net
—
(7,787
)
(54
)
(8,217
)
IPO costs
—
(482
)
(3,804
)
(563
)
Loss on unenforceable contracts
(2,381
)
—
(2,381
)
—
Amortization of payments to dealers for
exclusivity and other bonus arrangements
(328
)
—
(583
)
—
Legal settlements
—
—
(1,260
)
(150
)
Adjusted Operating Expense
$
22,850
$
17,231
$
83,259
$
63,264
Adjusted Operating Expense per weighted
average customer
$
301
$
293
$
1,215
$
1,185
As of December 31,
2019
2018
Number of customers
78,600
60,300
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Weighted average number of customers
(excluding loan agreements)
65,600
53,200
60,100
49,200
Weighted average number of customers with
loan agreements
10,300
5,600
8,400
4,200
Weighted average number of customers
75,900
58,800
68,500
53,400
As of December 31,
2019
2018
(in millions, except per
customer data)
Estimated gross contracted customer
value
$
1,879
$
1,476
Estimated gross contracted customer value
per customer
$
23,906
$
24,478
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 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 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 6%.
Number of Customers. We define number of customers to
include each customer that is party to an in-service solar service
agreement. For our leases, PPAs and loan agreements, in-service
means the related solar energy system and, if applicable, energy
storage system, must have met all the requirements to begin
operation and be interconnected to the electrical grid. For our
Sunnova Protect services, in-service means the customer’s system
must have met the requirements to have the service activated. We do
not include in our number of customers any customer under a lease,
PPA or loan agreement for whom we have terminated the contract and
removed the solar energy system. We also do not include in our
number of customers any customer of our Sunnova Protect services
that has been in default under his or her solar service agreement
in excess of six months. 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 Customers. We calculate the
weighted average number of customers based on the number of months
a given customer is in-service during a given measurement period.
The weighted average customer count reflects the number of
customers at the beginning of a period, plus the total number of
new customers added in the period adjusted by a factor that
accounts for the partial period nature of those new customers. For
purposes of this calculation, we assume all new customers added
during a month were added in the middle of that month. We track the
weighted average customer count in order to accurately reflect the
contribution of the appropriate number of customers 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, 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 IPO, losses
on unenforceable contracts, losses on extinguishment of long-term
debt, realized and unrealized gains and losses on fair value option
instruments and other non-cash items such as non-cash compensation
expense and asset retirement obligation ("ARO") accretion
expense.
Adjusted Operating Cash Flow. We define Adjusted
Operating Cash Flow as net cash used in operating activities plus
principal proceeds from customer notes receivable and distributions
to redeemable noncontrolling interests less payments to dealers for
exclusivity and other bonus arrangements, inventory and prepaid
inventory purchases and payments of non-capitalized costs related
to our IPO.
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 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, losses on unenforceable
contracts, and other non-cash items such as non-cash compensation
expense and ARO accretion expense.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200224005934/en/
Rodney McMahan - Investors Kelsey Hultberg - Media
IR@sunnova.com 877-770-5211
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