HOUSTON–()–Sunnova Energy International Inc. (“Sunnova”) (NYSE: NOVA), one of the leading Energy as a Service (EaaS) providers, today announced financial results for the fourth quarter and full year ended December 31, 2022.

“We delivered strong growth in the fourth quarter as we placed a record number of customers into service, which brought our total customer additions in 2022 to 87,000, the midpoint of our guidance,” said William J. (John) Berger, founder and Chief Executive Officer of Sunnova. “This strong growth trend has carried into 2023, increasing our confidence in our ability to meet or exceed our 2023 guidance targets. Our EaaS business model with an open platform strategy has enabled Sunnova to navigate various macroeconomic challenges. We continue to increase our total addressable market and market share.

“The Sunnova Adaptive HomeTM and Sunnova Adaptive BusinessTM offerings and our extensive build out of our software platforms have created increased value by enabling aggregation capabilities and superior customer service. Our industry-leading technology solutions and curated hardware capabilities within our software platforms continue to provide superior EaaS for our customers. Furthermore, as the monopoly utilities continue to increase their rates, we are able to provide our customers with even greater savings through an energy service that is more resilient, reliable, and sustainable.”

Fourth Quarter and Full Year 2022 Results

Revenue increased to $195.6 million, or by $130.6 million, for the three months ended December 31, 2022 compared to the three months ended December 31, 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.

Revenue increased to $557.7 million, or by $315.9 million, for the year ended December 31, 2022 compared to the year ended December 31, 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 $212.4 million, or by $138.4 million for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. This increase was primarily the result of an increased number of solar energy systems in service, 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.

Total operating expense, net increased to $639.2 million, or by $342.6 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. This increase was primarily the result of an increased number of solar energy systems in service, the April 2021 acquisition of SunStreet, 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 $64.6 million, or by $23.8 million, for the three months ended December 31, 2022 compared to the three months ended December 31, 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 $215.2 million, or by $74.6 million, for the year ended December 31, 2022 compared to the year ended December 31, 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 $62.0 million for the three months ended December 31, 2022 compared to a net loss of $31.3 million for the three months ended December 31, 2021. This higher net loss was primarily the result of higher general and administrative expense and an increase in interest expense, net of $31.9 million. This was partially offset by an increase in interest income of $9.4 million due to our larger customer loan portfolio.

Sunnova incurred a net loss of $130.3 million for the year ended December 31, 2022 compared to a net loss of $147.5 million for the year ended December 31, 2021. This lower net loss was primarily the result of an increase in interest income of $25.6 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 $8.5 million. This was partially offset by higher general and administrative expense.

Adjusted EBITDA was $25.6 million for the three months ended December 31, 2022 compared to $17.7 million for the three months ended December 31, 2021. Adjusted EBITDA was $119.1 million for the year ended December 31, 2022 compared to $85.9 million for the year ended December 31, 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 $24.0 million and $17.4 million, respectively, for the three months ended December 31, 2022, or by $7.1 million and $7.5 million, respectively, compared to the three months ended December 31, 2021. Customer principal (net of amounts recorded in revenue) and interest payments received from solar loans increased to $91.5 million and $56.4 million, respectively, for the year ended December 31, 2022, or by $32.2 million and $22.7 million, respectively, compared to the year ended December 31, 2021. These increases were due to our larger customer loan portfolio.

Liquidity & Capital Resources

As of December 31, 2022, Sunnova had total cash of $546 million, including restricted and unrestricted cash.

2023 Full Year Guidance

Sunnova management reaffirms its 2023 guidance of:

  • Customer additions between 115,000 and 125,000;
  • Adjusted EBITDA between $235 million and $255 million;
  • Customer interest payments received from solar loans between $110 million and $120 million; and
  • Customer principal payments received from solar loans, net of amounts recorded in revenue, between $150 million and $190 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.

Fourth Quarter and Full Year 2022 Conference Call Information

Sunnova is hosting a conference call for analysts and investors to discuss its fourth quarter and full year 2022 results at 8:00 a.m. Eastern Time, on February 23, 2023. 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 598836.

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 992749. The replay will be available until March 2, 2023.

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 2023 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, supply chain uncertainty, and our ability to attract and retain dealers and customers and manage 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, 2022. 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.

CONSOLIDATED BALANCE SHEETS

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

 

 

As of December 31,

 

2022

 

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

360,257

 

 

$

243,101

 

Accounts receivable—trade, net

 

24,435

 

 

 

18,584

 

Accounts receivable—other

 

212,397

 

 

 

57,736

 

Other current assets, net of allowance of $3,250 and $1,646 as of December 31, 2022 and 2021, respectively

 

351,300

 

 

 

296,321

 

Total current assets

 

948,389

 

 

 

615,742

 

 

 

 

 

Property and equipment, net

 

3,784,801

 

 

 

2,909,613

 

Customer notes receivable, net of allowance of $77,998 and $39,492 as of December 31, 2022 and 2021, respectively

 

2,466,149

 

 

 

1,204,073

 

Intangible assets, net

 

162,512

 

 

 

190,520

 

Goodwill

 

13,150

 

 

 

13,150

 

Other assets

 

961,891

 

 

 

571,136

 

Total assets (1)

$

8,336,892

 

 

$

5,504,234

 

 

 

 

 

Liabilities, Redeemable Noncontrolling Interests and Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

116,136

 

 

$

55,033

 

Accrued expenses

 

139,873

 

 

 

81,721

 

Current portion of long-term debt

 

214,431

 

 

 

129,793

 

Other current liabilities

 

71,506

 

 

 

44,350

 

Total current liabilities

 

541,946

 

 

 

310,897

 

 

 

 

 

Long-term debt, net

 

5,194,755

 

 

 

3,135,681

 

Other long-term liabilities

 

712,741

 

 

 

436,043

 

Total liabilities (1)

 

6,449,442

 

 

 

3,882,621

 

 

 

 

 

Redeemable noncontrolling interests

 

165,737

 

 

 

145,336

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock, 114,939,079 and 113,386,600 shares issued as of December 31, 2022 and 2021, respectively, at $0.0001 par value

 

11

 

 

 

11

 

Additional paid-in capital—common stock

 

1,637,847

 

 

 

1,649,199

 

Accumulated deficit

 

(364,782

)

 

 

(459,715

)

Total stockholders’ equity

 

1,273,076

 

 

 

1,189,495

 

Noncontrolling interests

 

448,637

 

 

 

286,782

 

Total equity

 

1,721,713

 

 

 

1,476,277

 

Total liabilities, redeemable noncontrolling interests and equity

$

8,336,892

 

 

$

5,504,234

 

(1) The consolidated assets as of December 31, 2022 and 2021 include $3,201,271 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 $40,382 and $23,538 as of December 31, 2022 and 2021, respectively; accounts receivable—trade, net of $8,542 and $6,167 as of December 31, 2022 and 2021, respectively; accounts receivable—other of $810 and $410 as of December 31, 2022 and 2021, respectively; other current assets of $422,364 and $272,421 as of December 31, 2022 and 2021, respectively; property and equipment, net of $2,680,587 and $1,817,471 as of December 31, 2022 and 2021, respectively; and other assets of $48,586 and $28,391 as of December 31, 2022 and 2021, respectively. The consolidated liabilities as of December 31, 2022 and 2021 include $66,441 and $47,225, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of $9,015 and $6,014 as of December 31, 2022 and 2021, respectively; accrued expenses of $287 and $88 as of December 31, 2022 and 2021, respectively; other current liabilities of $4,420 and $3,845 as of December 31, 2022 and 2021, respectively; and other long-term liabilities of $52,719 and $37,278 as of December 31, 2022 and 2021, 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,

 

2022

 

2021

 

2022

 

2021

Revenue

$

195,592

 

 

$

65,019

 

 

$

557,690

 

 

$

241,752

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

Cost of revenue—depreciation

 

26,345

 

 

 

20,853

 

 

 

96,280

 

 

 

76,474

 

Cost of revenue—inventory sales

 

88,426

 

 

 

 

 

 

178,310

 

 

 

 

Cost of revenue—other

 

19,513

 

 

 

8,262

 

 

 

52,487

 

 

 

21,834

 

Operations and maintenance

 

12,892

 

 

 

4,943

 

 

 

36,679

 

 

 

19,583

 

General and administrative

 

87,642

 

 

 

60,208

 

 

 

302,004

 

 

 

204,236

 

Other operating income

 

(22,380

)

 

 

(20,182

)

 

 

(26,566

)

 

 

(25,485

)

Total operating expense, net

 

212,438

 

 

 

74,084

 

 

 

639,194

 

 

 

296,642

 

 

 

 

 

 

 

 

 

Operating loss

 

(16,846

)

 

 

(9,065

)

 

 

(81,504

)

 

 

(54,890

)

 

 

 

 

 

 

 

 

Interest expense, net

 

63,395

 

 

 

31,500

 

 

 

107,775

 

 

 

116,248

 

Interest income

 

(19,371

)

 

 

(9,962

)

 

 

(59,799

)

 

 

(34,228

)

Loss on extinguishment of long-term debt, net

 

 

 

 

 

 

 

 

 

 

9,824

 

Other (income) expense

 

(2,763

)

 

 

456

 

 

 

(3,090

)

 

 

516

 

Loss before income tax

 

(58,107

)

 

 

(31,059

)

 

 

(126,390

)

 

 

(147,250

)

 

 

 

 

 

 

 

 

Income tax expense

 

3,886

 

 

 

196

 

 

 

3,886

 

 

 

260

 

Net loss

 

(61,993

)

 

 

(31,255

)

 

 

(130,276

)

 

 

(147,510

)

Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests

 

(41,089

)

 

 

(17,047

)

 

 

31,366

 

 

 

(9,382

)

Net loss attributable to stockholders

$

(20,904

)

 

$

(14,208

)

 

$

(161,642

)

 

$

(138,128

)

 

 

 

 

 

 

 

 

Net loss per share attributable to stockholders—basic and diluted

$

(0.18

)

 

$

(0.13

)

 

$

(1.41

)

 

$

(1.25

)

Weighted average common shares outstanding—basic and diluted

 

114,919,237

 

 

 

112,947,816

 

 

 

114,451,034

 

 

 

110,881,630

 

 

 

SUNNOVA ENERGY INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Year Ended

December 31,

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net loss

$

(130,276

)

 

$

(147,510

)

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

 

 

 

Depreciation

 

108,167

 

 

 

85,600

 

Impairment and loss on disposals, net

 

8,459

 

 

 

3,655

 

Amortization of intangible assets

 

28,441

 

 

 

21,354

 

Amortization of deferred financing costs

 

13,640

 

 

 

14,050

 

Amortization of debt discount

 

9,342

 

 

 

9,949

 

Non-cash effect of equity-based compensation plans

 

24,218

 

 

 

17,236

 

Unrealized gain on derivatives

 

(19,451

)

 

 

(4,874

)

Unrealized gain on fair value instruments and equity securities

 

(29,279

)

 

 

(21,988

)

Loss on extinguishment of long-term debt, net

 

 

 

 

9,824

 

Other non-cash items

 

(428

)

 

 

30,117

 

Changes in components of operating assets and liabilities:

 

 

 

Accounts receivable

 

(159,295

)

 

 

(53,261

)

Other current assets

 

(119,794

)

 

 

(129,810

)

Other assets

 

(124,981

)

 

 

(70,758

)

Accounts payable

 

4,486

 

 

 

(6,392

)

Accrued expenses

 

48,385

 

 

 

27,908

 

Other current liabilities

 

11,772

 

 

 

5,963

 

Other long-term liabilities

 

(6,832

)

 

 

(293

)

Net cash used in operating activities

 

(333,426

)

 

 

(209,230

)

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Purchases of property and equipment

 

(868,208

)

 

 

(554,541

)

Payments for investments and customer notes receivable

 

(1,236,228

)

 

 

(728,926

)

Proceeds from customer notes receivable

 

109,760

 

 

 

66,879

 

Payments for investments in solar receivables

 

 

 

 

(32,212

)

Proceeds from investments in solar receivables

 

12,394

 

 

 

3,231

 

Other, net

 

680

 

 

 

4,353

 

Net cash used in investing activities

 

(1,981,602

)

 

 

(1,241,216

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Proceeds from long-term debt

 

2,903,727

 

 

 

2,235,939

 

Payments of long-term debt

 

(758,355

)

 

 

(947,130

)

Payments on notes payable

 

 

 

 

(34,555

)

Payments of deferred financing costs

 

(30,791

)

 

 

(31,324

)

Payments of debt discounts

 

 

 

 

(2,324

)

Purchase of capped call transactions

 

(48,420

)

 

 

(91,655

)

Proceeds from issuance of common stock, net

 

(3,190

)

 

 

10,513

 

Contributions from redeemable noncontrolling interests and noncontrolling interests

 

449,398

 

 

 

350,121

 

Distributions to redeemable noncontrolling interests and noncontrolling interests

 

(29,771

)

 

 

(15,854

)

Payments of costs related to redeemable noncontrolling interests and noncontrolling interests

 

(13,091

)

 

 

(8,805

)

Other, net

 

(802

)

 

 

(476

)

Net cash provided by financing activities

 

2,468,705

 

 

 

1,464,450

 

Net increase in cash, cash equivalents and restricted cash

 

153,677

 

 

 

14,004

 

Cash, cash equivalents and restricted cash at beginning of period

 

391,897

 

 

 

377,893

 

Cash, cash equivalents and restricted cash at end of period

 

545,574

 

 

 

391,897

 

Restricted cash included in other current assets

 

(51,733

)

 

 

(80,213

)

Restricted cash included in other assets

 

(133,584

)

 

 

(68,583

)

Cash and cash equivalents at end of period

$

360,257

 

 

$

243,101

 

 

Key Financial and Operational Metrics

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

 

(in thousands)

Reconciliation of Net Loss to Adjusted EBITDA:

 

 

 

 

 

 

 

Net loss

$

(61,993

)

 

$

(31,255

)

 

$

(130,276

)

 

$

(147,510

)

Interest expense, net

 

63,395

 

 

 

31,500

 

 

 

107,775

 

 

 

116,248

 

Interest income

 

(19,371

)

 

 

(9,962

)

 

 

(59,799

)

 

 

(34,228

)

Income tax expense

 

3,886

 

 

 

196

 

 

 

3,886

 

 

 

260

 

Depreciation expense

 

29,766

 

 

 

23,314

 

 

 

108,167

 

 

 

85,600

 

Amortization expense

 

7,330

 

 

 

7,409

 

 

 

29,224

 

 

 

21,771

 

EBITDA

 

23,013

 

 

 

21,202

 

 

 

58,977

 

 

 

42,141

 

Non-cash compensation expense

 

4,159

 

 

 

3,299

 

 

 

24,218

 

 

 

17,236

 

ARO accretion expense

 

1,014

 

 

 

803

 

 

 

3,701

 

 

 

2,897

 

Financing deal costs

 

348

 

 

 

574

 

 

 

930

 

 

 

1,411

 

Natural disaster losses and related charges, net

 

3

 

 

 

 

 

 

1,164

 

 

 

 

Acquisition costs

 

2,179

 

 

 

(344

)

 

 

7,801

 

 

 

6,709

 

Loss on extinguishment of long-term debt, net

 

 

 

 

 

 

 

 

 

 

9,824

 

Unrealized gain on fair value instruments and equity securities

 

(25,143

)

 

 

(17,323

)

 

 

(29,279

)

 

 

(21,988

)

Amortization of payments to dealers for exclusivity and other bonus arrangements

 

1,217

 

 

 

879

 

 

 

4,327

 

 

 

2,968

 

Legal settlements

 

 

 

 

 

 

 

(1,001

)

 

 

 

Provision for current expected credit losses

 

13,279

 

 

 

8,647

 

 

 

40,160

 

 

 

23,679

 

Non-cash inventory impairments

 

4,511

 

 

 

 

 

 

5,375

 

 

 

982

 

Indemnification payments to tax equity investors

 

1,010

 

 

 

 

 

 

2,737

 

 

 

 

Adjusted EBITDA

$

25,590

 

 

$

17,737

 

 

$

119,110

 

 

$

85,859

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

 

(in thousands)

Interest income from customer notes receivable

$

17,380

 

$

9,833

 

$

56,431

 

$

33,696

Principal proceeds from customer notes receivable, net of related revenue

$

23,977

 

$

16,866

 

$

91,455

 

$

59,274

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

 

(in thousands, except per system data)

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

 

 

 

 

 

 

 

Total operating expense, net

$

212,438

 

 

$

74,084

 

 

$

639,194

 

 

$

296,642

 

Depreciation expense

 

(29,766

)

 

 

(23,314

)

 

 

(108,167

)

 

 

(85,600

)

Amortization expense

 

(7,330

)

 

 

(7,409

)

 

 

(29,224

)

 

 

(21,771

)

Non-cash compensation expense

 

(4,159

)

 

 

(3,299

)

 

 

(24,218

)

 

 

(17,236

)

ARO accretion expense

 

(1,014

)

 

 

(803

)

 

 

(3,701

)

 

 

(2,897

)

Financing deal costs

 

(348

)

 

 

(574

)

 

 

(930

)

 

 

(1,411

)

Natural disaster losses and related charges, net

 

(3

)

 

 

 

 

 

(1,164

)

 

 

 

Acquisition costs

 

(2,179

)

 

 

344

 

 

 

(7,801

)

 

 

(6,709

)

Amortization of payments to dealers for exclusivity and other bonus arrangements

 

(1,217

)

 

 

(879

)

 

 

(4,327

)

 

 

(2,968

)

Legal settlements

 

 

 

 

 

 

 

1,001

 

 

 

 

Provision for current expected credit losses

 

(13,279

)

 

 

(8,647

)

 

 

(40,160

)

 

 

(23,679

)

Non-cash inventory impairments

 

(4,511

)

 

 

 

 

 

(5,375

)

 

 

(982

)

Direct sales costs

 

(2,152

)

 

 

(375

)

 

 

(6,262

)

 

 

(733

)

Cost of revenue related to cash sales

 

(14,820

)

 

 

(6,112

)

 

 

(38,766

)

 

 

(14,525

)

Cost of revenue related to inventory sales

 

(88,426

)

 

 

 

 

 

(178,310

)

 

 

 

Unrealized gain on fair value instruments

 

22,380

 

 

 

17,779

 

 

 

26,189

 

 

 

22,504

 

Indemnification payments to tax equity investors

 

(1,010

)

 

 

 

 

 

(2,737

)

 

 

 

Adjusted Operating Expense

$

64,604

 

 

$

40,795

 

 

$

215,242

 

 

$

140,635

 

Adjusted Operating Expense per weighted average system

$

247

 

 

$

222

 

 

$

940

 

 

$

920

 

 

As of

December 31, 2022

 

As of

December 31, 2021

Number of customers

279,400

 

192,600

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

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

182,700

 

147,300

 

168,400

 

125,100

Weighted average number of systems with loan agreements

73,200

 

34,900

 

56,500

 

27,200

Weighted average number of systems with cash sales

5,800

 

1,500

 

4,000

 

600

Weighted average number of systems

261,700

 

183,700

 

228,900

 

152,900

 

As of December 31,

 

2022

 

2021

 

(in millions)

Estimated gross contracted customer value – PV6

$

5,875

 

$

3,853

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 6%.

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 or business. 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 and equity securities, 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.

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