Sunrun (Nasdaq: RUN), the nation’s leading provider of residential
solar, storage and energy services, today announced financial
results for the quarter ended September 30, 2023.
“We have sharpened our focus on cash generation and continue to
execute a customer-first, sustainable growth strategy that does not
require equity funding. We are using challenges from this
macroeconomic environment to accelerate our leadership position and
tighten our operations,” said Mary Powell, Sunrun’s Chief
Executive Officer. “We are fundamentally and rapidly
transitioning to a storage-first company, to offer the most
pro-consumer product, expand our margins, and lay the foundation
for increased value streams from our growing fleet of networked
storage systems.”
“We have taken deliberate go-to-market optimization actions,
including repositioning geographic mix, sales route mix and product
mix as we transition to a storage-first company. These actions,
coupled with a relentless focus on cost discipline and productivity
across the organization, help us maximize long-term value creation
and position us for meaningful cash generation,” said Danny
Abajian, Sunrun’s Chief Financial Officer.
Third Quarter Updates
- Storage attachment rates accelerating: Storage attachment rates
reached over 33% in Q3, nearly double the rate in Q2, with 176
Megawatt hours installed during the quarter. Recent sales
activities are above 40% nationally, with California exceeding 85%
of all new customers including storage with the solar system.
Sunrun has now installed more than 76,000 solar and storage
systems, representing over 1.1 Gigawatt hours of stored energy
capacity.
- Launching premium add-on storage offering in California: Sunrun
announced today it is launching an add-on storage offering, using a
premium battery product that seamlessly integrates with customers’
existing solar systems to provide either partial- or whole-home
backup power during grid outages. In addition, the batteries allow
customers to maximize their use of solar energy by capturing and
storing electricity generated during the day and utilizing it
during peak evening hours when utility rates are highest.
- Strong capital markets execution: On September 28, Sunrun
completed a record-setting $715 million securitization of
residential solar and battery systems, marking the largest
transaction of its kind in the industry. The securitization was
structured with two tranches of A-rated notes, with the A-1 notes
marketed in a public asset-backed securitization, while the A-2
notes were privately placed. Strong investor demand enabled the A-1
notes to be upsized by $100 million, and also resulted in a spread
of 240bps, which was an improvement of 25bps from Sunrun’s previous
public securitization transaction in May of this year. Subsequent
to the securitization, Sunrun raised an additional $253 million of
subordinated subsidiary-level non-recourse financing.
- Expanding our leadership team to focus on customer value
realization and unlocking additional efficiencies: Sunrun recently
announced the appointments of Dr. Marcus Mueller as Vice President
of Generation, and Rachit Srivastava as Head of Artificial
Intelligence (AI). Dr. Mueller, who was previously with Tesla
Energy, will guide Sunrun’s asset performance and grid services,
and will help introduce new storage solutions for customers. Mr.
Srivastava, who previously led machine learning and data science
for Cockroach Labs, will steer Sunrun’s AI strategy, aiming to
enhance customer value, efficiency, and personalization across
products. Both of these appointments emphasize Sunrun’s focus on
innovation, electrification, and enhancing customer relationships
with the goal of enhancing a clean energy lifestyle.
- Fast Company names Sunrun a Brand That Matters: Sunrun was
recently recognized by Fast Company on its third annual Brands That
Matter list, for achieving cultural relevance through compelling
branding, ingenuity and business impact with communities. Fast
Company attributed Sunrun’s success to its focus on innovative
solutions for energy needs and delivering a unique customer
experience.
- PG&E Grid Services: Sunrun just concluded our dispatching
season on the largest residential power plant of its kind in the
United States. The program provided consistent, reliable capacity
to support the grid by dispatching every day during peak times from
August through October, with more than 8,500 customers
participating. The program “Peak Power Rewards” with PG&E
provided nearly 30 Megawatts to the grid and Sunrun and PG&E
are in active discussions to upsize the fleet and program in the
future.
Key Operating Metrics
In the third quarter of 2023, Customer Additions were 33,806,
including 29,303 Subscriber Additions. As of September 30, 2023,
Sunrun had 903,270 Customers, including 754,087 Subscribers.
Customers grew 19% in the third quarter of 2023 compared to the
third quarter of 2022.
Annual Recurring Revenue from Subscribers was over $1.2 billion
as of September 30, 2023. The Average Contract Life Remaining of
Subscribers was 17.8 years as of September 30, 2023.
Subscriber Value was $47,068 in the third quarter of 2023 while
Creation Cost was $36,038. Net Subscriber Value was $11,030 in the
third quarter of 2023. Total Value Generated was $323 million in
the third quarter of 2023. On a pro-forma basis assuming an 8%
discount rate, consistent with current capital costs, Subscriber
Value was $40,753 and Net Subscriber Value was $4,715 in the third
quarter of 2023. Commencing in the third quarter, Subscriber Value
includes benefits obtained from the energy communities ITC adder
for systems deployed during the quarter, but does not include value
we may receive from other ITC adders.
We expect to realize additional value from Subscriber Additions
in Q3 that we anticipate will be eligible for additional adders,
which could add $2,249 per Subscriber, subject to final rules and
government application processes and procedures. These critical ITC
adders will make solar more affordable and accessible to a broader
consumer population. Additionally, hardware costs for key items
such as modules, inverters and batteries are falling significantly
based on current procurement activities, and are expected to
provide additional benefits of $1,514 in future periods. While
these cost tailwinds do not benefit Q3 deployments, we have
provided the impact of the cost benefits we expect to achieve in
future periods as we work through higher-cost inventory. Pro-forma
for these benefits, at a 6% discount rate, Net Subscriber Value was
$14,793 in Q3. Adjusted for an 8% discount rate, but including the
full ITC adder benefits and cost deflation, pro-forma Net
Subscriber Value was $8,478 in Q3.
Gross Earning Assets as of September 30, 2023, were $13.3
billion. Net Earning Assets were $4.6 billion, which included $952
million in total cash, as of September 30, 2023.
Storage Capacity Installed was 175.6 Megawatt hours in the third
quarter of 2023. This represents a 68% sequential increase from the
104.7 Megawatt hours of Storage Capacity Installed in the second
quarter of 2023 and 131% year over year increase from the 76.0
Megawatt hours of Storage Capacity Installed in the third quarter
of 2022
Solar Energy Capacity Installed was 258.2 Megawatts in the third
quarter of 2023. Solar Energy Capacity Installed for Subscribers
was 229.0 Megawatts in the third quarter of 2023.
Networked Solar Energy Capacity was 6,462 Megawatts as of
September 30, 2023. Networked Solar Energy Capacity for Subscribers
was 5,428 Megawatts as of September 30, 2023. Networked Storage
Capacity was 1.1 Gigawatt hours as of September 30, 2023.
The solar systems we deployed in Q3 are expected to offset the
emission of 5.2 million metric tons of CO2 over the next thirty
years. Over the last twelve months, Sunrun’s systems are estimated
to have offset 3.6 million metric tons of CO2.
Outlook
Sunrun is sharpening its focus on cash generation and continues
to execute a customer-first, sustainable growth strategy that does
not require equity funding. As a result, we are dramatically
increasing installations of storage systems, which provides for
increased margins and value creation opportunities over time, but
also presents near-term impacts as we shift operations. Management
believes these adjustments will deliver the strongest value
creation for Sunrun, including delivering meaningful Cash
Generation faster than a strategy that only prioritizes volume
growth.
Given our strategy to be a storage-first company to extend our
differentiation and increase customer value, in addition to
launching battery retrofit offerings, we are introducing guidance
for Storage Capacity Installed.
Storage Capacity Installed is expected to be in a range of 180
to 200 Megawatt hours in Q4. This range represents approximately
108% to 131% growth year over year. For the full-year 2023, this
range represents 71% to 78% growth year over year.
Solar Energy Capacity Installed is expected to be in a range of
220 to 245 megawatts in Q4. This represents full-year 2023 growth
of approximately 2% to 5% compared to our prior guidance range of
10% to 15% growth for the full-year 2023.
Net Subscriber Value is expected to be stable in Q4. Fixed cost
absorption pressures offset many benefits from higher storage mix
in Q4. An increasing mix of storage, meaningful hardware cost
deflation tailwinds and forthcoming ITC adder value is expected to
provide material uplift to our Net Subscriber Values in 2024.
Third Quarter 2023 GAAP Results
Total revenue was $563.2 million in the third quarter of 2023,
down $68.7 million, or 11%, from the third quarter of 2022.
Customer agreements and incentives revenue was $316.5 million, an
increase of $45.3 million, or 17%, compared to the third quarter of
2022. Solar energy systems and product sales revenue was $246.7
million, a decrease of $114.0 million, or 32%, compared to the
third quarter of 2022. The increasing mix of Subscribers results in
less upfront revenue recognition, as revenue is recognized over the
life of the Customer Agreement which is typically 20 or 25
years.
Total cost of revenue was $518.0 million, a decrease of 1%
year-over-year. Total operating expenses, excluding the non-cash
impairment of goodwill, were $752.7 million, a decrease of 2%
year-over-year.
During the third quarter of 2023, Sunrun recorded a non-cash
goodwill impairment charge of approximately $1.2 billion. Due to
the decline in our stock price, we wrote down our goodwill from $
4.3 billion to $3.1 billion. The goodwill primarily arose following
the stock-for-stock acquisition of Vivint Solar in October 2020,
with the majority arising from and determined based on the market
capitalizations at the time of the acquisition. The company
recorded a non-cash goodwill impairment charge of $1.2 billion, or
$5.32 per basic share, in our Consolidated Statement of Operations
for the third quarter of 2023.
Net loss attributable to common stockholders was $1,069.5
million, or $4.92 per basic and diluted share, in the third quarter
of 2023. Pro-forma to exclude the non-cash goodwill impairment
charge, non-GAAP net income would have been $88.5 million or $0.40
per diluted share in the third quarter of 2023.
Financing Activities
As of November 1, 2023, closed transactions and executed term
sheets provide us with expected tax equity to fund approximately
235 Megawatts of Solar Energy Capacity Installed for Subscribers
beyond what was deployed through September 30, 2023. As of
September 30, 2023 Sunrun also had $555 million available in its
$1.8 billion non-recourse senior revolving warehouse facility to
fund over 195 Megawatts of Solar Energy Capacity Installed for
Subscribers.
Conference Call Information
Sunrun is hosting a conference call for analysts and investors
to discuss its third quarter 2023 results and business outlook at
2:00 p.m. Pacific Time today, November 1, 2023. A live audio
webcast of the conference call along with supplemental financial
information will be accessible via the “Investor Relations” section
of Sunrun’s website at https://investors.sunrun.com. The conference
call can also be accessed live over the phone by dialing (877)
407-5989 (toll free) or (201) 689-8434 (toll). An audio replay will
be available following the call on the Sunrun Investor Relations
website for approximately one month.
About Sunrun
Sunrun Inc. (Nasdaq: RUN) revolutionized the solar industry in
2007 by removing financial barriers and democratizing access to
locally-generated, renewable energy. Today, Sunrun is the nation’s
leading provider of clean energy as a subscription service,
offering residential solar and storage with no upfront costs.
Sunrun’s innovative products and solutions can connect homes to the
cleanest energy on earth, providing them with energy security,
predictability, and peace of mind. Sunrun also manages energy
services that benefit communities, utilities, and the electric grid
while enhancing customer value. Discover more at www.sunrun.com
Non-GAAP Information
This press release includes references to certain non-GAAP
financial measures, such as non-GAAP net (loss) income and non-GAAP
net (loss) income per share. We believe that these non-GAAP
financial measures, when reviewed in conjunction with GAAP
financial measures, can provide meaningful supplemental information
for investors regarding the performance of our business and
facilitate a meaningful evaluation of current period performance on
a comparable basis with prior periods. Our management uses these
non-GAAP financial measures in order to have comparable financial
results to analyze changes in our underlying business from quarter
to quarter. These non-GAAP financial measures should be considered
as a supplement to, and not as a substitute for or superior to the
GAAP financial measures presented in this press release and our
financial statements and other publicly filed reports. Non-GAAP
measures as presented herein may not be comparable to similarly
titled measures used by other companies.
Non-GAAP net (loss) income is defined as GAAP net (loss) income
adjusted by the non-cash goodwill impairment charge. Management
believes the exclusion of this non-cash and non-recurring item
provides useful supplemental information to investors and
facilitates the analysis of its operating results and comparison of
operating results across reporting periods.
Forward Looking Statements
This communication contains forward-looking statements related
to Sunrun (the “Company”) within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities Exchange
Act of 1934 and the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include, but are not limited
to, statements related to: the Company’s financial and operating
guidance and expectations; the Company’s business plan, trajectory,
expectations, market leadership, competitive advantages,
operational and financial results and metrics (and the assumptions
related to the calculation of such metrics); the Company’s momentum
in its business strategies including its ESG efforts, expectations
regarding market share, total addressable market, customer value
proposition, market penetration, financing activities, financing
capacity, product mix, and ability to manage cash flow and
liquidity; the growth of the solar industry; trends or potential
trends within the solar industry, our business, customer base, and
market; the Company’s ability to derive value from the anticipated
benefits of partnerships, new technologies, and pilot programs;
anticipated demand, market acceptance, and market adoption of the
Company’s offerings, including new products, services, and
technologies; the Company’s strategy to be a storage-first company;
the ability to increase margins based on a shift in product focus;
expectations regarding the growth of home electrification, electric
vehicles, virtual power plants, and distributed energy resources;
the Company’s ability to manage suppliers, inventory, and
workforce; supply chains and regulatory impacts affecting supply
chains; the Company’s leadership team and talent development; the
legislative and regulatory environment of the solar industry and
the potential impacts of proposed, amended, and newly adopted
legislation and regulation on the solar industry and our business;
the ongoing expectations regarding the Company’s storage and energy
services businesses and anticipated emissions reductions due to
utilization of the Company’s solar systems; and factors outside of
the Company’s control such as macroeconomic trends, bank failures,
public health emergencies, natural disasters, acts of war,
terrorism, geopolitical conflict, or armed conflict / invasion, and
the impacts of climate change. These statements are not guarantees
of future performance; they reflect the Company’s current views
with respect to future events and are based on assumptions and
estimates and are subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements to be materially different from expectations or
results projected or implied by forward-looking statements. The
risks and uncertainties that could cause the Company’s results to
differ materially from those expressed or implied by such
forward-looking statements include: the Company’s continued ability
to manage costs and compete effectively; the availability of
additional financing on acceptable terms; worldwide economic
conditions, including slow or negative growth rates and inflation;
volatile or rising interest rates; changes in policies and
regulations, including net metering, interconnection limits, and
fixed fees, or caps and licensing restrictions and the impact of
these changes on the solar industry and our business; the Company’s
ability to attract and retain the Company’s business partners;
supply chain risks and associated costs; realizing the anticipated
benefits of past or future investments, partnerships, strategic
transactions, or acquisitions, and integrating those acquisitions;
the Company’s leadership team and ability to attract and retain key
employees; changes in the retail prices of traditional utility
generated electricity; the availability of rebates, tax credits and
other incentives; the availability of solar panels, batteries, and
other components and raw materials; the Company’s business plan and
the Company’s ability to effectively manage the Company’s growth
and labor constraints; the Company’s ability to meet the covenants
in the Company’s investment funds and debt facilities; factors
impacting the home electrification and solar industry generally,
and such other risks and uncertainties identified in the reports
that we file with the U.S. Securities and Exchange Commission from
time to time. All forward-looking statements used herein are based
on information available to us as of the date hereof, and we assume
no obligation to update publicly these forward-looking statements
for any reason, except as required by law.
Citations to industry and market statistics used herein may be
found in our Investor Presentation, available via the “Investor
Relations” section of Sunrun’s website at
https://investors.sunrun.com.
Consolidated Balance
Sheets(In Thousands)
|
September 30, 2023 |
|
December 31, 2022 |
|
|
|
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash |
$ |
643,787 |
|
$ |
740,508 |
Restricted cash |
|
308,010 |
|
|
212,367 |
Accounts receivable, net |
|
188,892 |
|
|
214,255 |
Inventories |
|
661,801 |
|
|
783,904 |
Prepaid expenses and other current assets |
|
126,028 |
|
|
146,609 |
Total current assets |
|
1,928,518 |
|
|
2,097,643 |
Restricted cash |
|
148 |
|
|
148 |
Solar energy systems, net |
|
12,528,617 |
|
|
10,988,361 |
Property and equipment, net |
|
128,015 |
|
|
67,439 |
Intangible assets, net |
|
1,273 |
|
|
7,527 |
Goodwill |
|
3,122,168 |
|
|
4,280,169 |
Other assets |
|
2,318,376 |
|
|
1,827,518 |
Total assets |
$ |
20,027,115 |
|
$ |
19,268,805 |
Liabilities and total
equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
296,453 |
|
$ |
339,166 |
Distributions payable to noncontrolling interests and redeemable
noncontrolling interests |
|
32,697 |
|
|
32,050 |
Accrued expenses and other liabilities |
|
381,453 |
|
|
406,466 |
Deferred revenue, current portion |
|
128,894 |
|
|
183,719 |
Deferred grants, current portion |
|
8,211 |
|
|
8,252 |
Finance lease obligations, current portion |
|
18,611 |
|
|
11,444 |
Non-recourse debt, current portion |
|
540,517 |
|
|
157,810 |
Pass-through financing obligation, current portion |
|
16,432 |
|
|
16,544 |
Total current liabilities |
|
1,423,268 |
|
|
1,155,451 |
Deferred revenue, net of current portion |
|
1,025,890 |
|
|
912,254 |
Deferred grants, net of current portion |
|
193,754 |
|
|
201,094 |
Finance lease obligations, net of current portion |
|
56,472 |
|
|
17,302 |
Convertible senior notes |
|
394,583 |
|
|
392,882 |
Line of credit |
|
517,248 |
|
|
505,158 |
Non-recourse debt, net of current portion |
|
8,785,196 |
|
|
7,343,299 |
Pass-through financing obligation, net of current portion |
|
280,974 |
|
|
289,011 |
Other liabilities |
|
138,058 |
|
|
140,290 |
Deferred tax liabilities |
|
137,294 |
|
|
133,047 |
Total liabilities |
|
12,952,737 |
|
|
11,089,788 |
Redeemable noncontrolling
interests |
|
683,449 |
|
|
609,702 |
Total stockholders’
equity |
|
5,611,108 |
|
|
6,708,122 |
Noncontrolling interests |
|
779,821 |
|
|
861,193 |
Total equity |
|
6,390,929 |
|
|
7,569,315 |
Total liabilities, redeemable noncontrolling interests and
total equity |
$ |
20,027,115 |
|
$ |
19,268,805 |
Consolidated Statements of
Operations(In Thousands, Except Per Share
Amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Customer agreements and incentives |
$ |
316,528 |
|
|
$ |
271,211 |
|
|
$ |
865,151 |
|
|
$ |
740,789 |
|
Solar energy systems and product sales |
|
246,653 |
|
|
|
360,695 |
|
|
|
878,072 |
|
|
|
971,481 |
|
Total revenue |
|
563,181 |
|
|
|
631,906 |
|
|
|
1,743,223 |
|
|
|
1,712,270 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of customer agreements and incentives |
|
283,742 |
|
|
|
209,539 |
|
|
|
789,334 |
|
|
|
613,878 |
|
Cost of solar energy systems and product sales |
|
234,274 |
|
|
|
311,782 |
|
|
|
824,830 |
|
|
|
854,105 |
|
Sales and marketing |
|
176,349 |
|
|
|
193,992 |
|
|
|
574,061 |
|
|
|
556,346 |
|
Research and development |
|
5,039 |
|
|
|
4,398 |
|
|
|
14,153 |
|
|
|
16,794 |
|
General and administrative |
|
48,452 |
|
|
|
47,099 |
|
|
|
156,704 |
|
|
|
140,126 |
|
Amortization of intangible assets |
|
4,802 |
|
|
|
1,341 |
|
|
|
7,253 |
|
|
|
4,023 |
|
Goodwill impairment |
|
1,158,000 |
|
|
|
— |
|
|
|
1,158,000 |
|
|
|
— |
|
Total operating expenses |
|
1,910,658 |
|
|
|
768,151 |
|
|
|
3,524,335 |
|
|
|
2,185,272 |
|
Loss from operations |
|
(1,347,477 |
) |
|
|
(136,245 |
) |
|
|
(1,781,112 |
) |
|
|
(473,002 |
) |
Interest expense, net |
|
(171,288 |
) |
|
|
(117,214 |
) |
|
|
(471,163 |
) |
|
|
(312,513 |
) |
Other income, net |
|
77,673 |
|
|
|
97,953 |
|
|
|
93,744 |
|
|
|
263,784 |
|
Loss before income taxes |
|
(1,441,092 |
) |
|
|
(155,506 |
) |
|
|
(2,158,531 |
) |
|
|
(521,731 |
) |
Income tax expense
(benefit) |
|
29,846 |
|
|
|
— |
|
|
|
(11,096 |
) |
|
|
— |
|
Net loss |
|
(1,470,938 |
) |
|
|
(155,506 |
) |
|
|
(2,147,435 |
) |
|
|
(521,731 |
) |
Net loss attributable to noncontrolling interests and redeemable
noncontrolling interests |
|
(401,479 |
) |
|
|
(366,066 |
) |
|
|
(893,062 |
) |
|
|
(632,087 |
) |
Net (loss) income attributable to common stockholders |
$ |
(1,069,459 |
) |
|
$ |
210,560 |
|
|
$ |
(1,254,373 |
) |
|
$ |
110,356 |
|
Net (loss) income per share attributable to common
stockholders |
|
|
|
|
|
|
|
Basic |
$ |
(4.92 |
) |
|
$ |
0.99 |
|
|
$ |
(5.81 |
) |
|
$ |
0.52 |
|
Diluted |
$ |
(4.92 |
) |
|
$ |
0.96 |
|
|
$ |
(5.81 |
) |
|
$ |
0.51 |
|
Weighted average shares used to compute net (loss) income per share
attributable to common stockholders |
|
|
|
|
|
|
|
Basic |
|
217,344 |
|
|
|
212,696 |
|
|
|
216,029 |
|
|
|
210,609 |
|
Diluted |
|
217,344 |
|
|
|
220,850 |
|
|
|
216,029 |
|
|
|
218,662 |
|
Consolidated Statements of Cash
Flows(In Thousands)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating
activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(1,470,938 |
) |
|
$ |
(155,506 |
) |
|
$ |
(2,147,435 |
) |
|
$ |
(521,731 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization, net of amortization of deferred
grants |
|
138,756 |
|
|
|
118,620 |
|
|
|
388,645 |
|
|
|
331,856 |
|
Goodwill impairment |
|
1,158,000 |
|
|
|
— |
|
|
|
1,158,000 |
|
|
|
— |
|
Deferred income taxes |
|
29,844 |
|
|
|
— |
|
|
|
(11,093 |
) |
|
|
— |
|
Stock-based compensation expense |
|
27,723 |
|
|
|
22,830 |
|
|
|
84,226 |
|
|
|
88,702 |
|
Interest on pass-through financing obligations |
|
4,886 |
|
|
|
5,022 |
|
|
|
14,642 |
|
|
|
15,079 |
|
Reduction in pass-through financing obligations |
|
(10,485 |
) |
|
|
(11,407 |
) |
|
|
(30,532 |
) |
|
|
(31,105 |
) |
Unrealized gain on derivatives |
|
(74,390 |
) |
|
|
(68,102 |
) |
|
|
(80,121 |
) |
|
|
(191,818 |
) |
Other noncash items |
|
63,750 |
|
|
|
19,863 |
|
|
|
142,434 |
|
|
|
26,368 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
22,688 |
|
|
|
(7,841 |
) |
|
|
9,986 |
|
|
|
(87,307 |
) |
Inventories |
|
129,939 |
|
|
|
(41,675 |
) |
|
|
122,103 |
|
|
|
(82,275 |
) |
Prepaid and other assets |
|
(83,510 |
) |
|
|
(110,315 |
) |
|
|
(334,190 |
) |
|
|
(283,715 |
) |
Accounts payable |
|
(36,439 |
) |
|
|
19,734 |
|
|
|
(56,271 |
) |
|
|
(14,763 |
) |
Accrued expenses and other liabilities |
|
24,023 |
|
|
|
52,676 |
|
|
|
(24,487 |
) |
|
|
72,801 |
|
Deferred revenue |
|
12,913 |
|
|
|
66,242 |
|
|
|
59,360 |
|
|
|
133,788 |
|
Net cash used in operating activities |
|
(63,240 |
) |
|
|
(89,859 |
) |
|
|
(704,733 |
) |
|
|
(544,120 |
) |
Investing
activities: |
|
|
|
|
|
|
|
Payments for the costs of solar energy systems |
|
(736,781 |
) |
|
|
(540,561 |
) |
|
|
(1,935,721 |
) |
|
|
(1,481,556 |
) |
Purchase of equity method investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(75,000 |
) |
Purchases of property and equipment, net |
|
(4,666 |
) |
|
|
(6,517 |
) |
|
|
(16,298 |
) |
|
|
(10,820 |
) |
Net cash used in investing activities |
|
(741,447 |
) |
|
|
(547,078 |
) |
|
|
(1,952,019 |
) |
|
|
(1,567,376 |
) |
Financing
activities: |
|
|
|
|
|
|
|
Proceeds from state tax credits, net of recapture |
|
— |
|
|
|
— |
|
|
|
4,033 |
|
|
|
— |
|
Proceeds from line of credit |
|
295,014 |
|
|
|
238,000 |
|
|
|
651,398 |
|
|
|
1,018,967 |
|
Repayment of line of credit |
|
(359,572 |
) |
|
|
(283,000 |
) |
|
|
(639,308 |
) |
|
|
(724,066 |
) |
Proceeds from issuance of non-recourse debt |
|
1,724,370 |
|
|
|
995,652 |
|
|
|
3,189,480 |
|
|
|
2,381,630 |
|
Repayment of non-recourse debt |
|
(1,061,809 |
) |
|
|
(542,117 |
) |
|
|
(1,399,799 |
) |
|
|
(1,166,720 |
) |
Payment of debt fees |
|
(29,809 |
) |
|
|
(11,693 |
) |
|
|
(46,930 |
) |
|
|
(42,282 |
) |
Proceeds from pass-through financing and other obligations,
net |
|
2,392 |
|
|
|
(2,811 |
) |
|
|
6,712 |
|
|
|
1,451 |
|
Payment of finance lease obligations |
|
(6,035 |
) |
|
|
(3,713 |
) |
|
|
(16,795 |
) |
|
|
(10,489 |
) |
Contributions received from noncontrolling interests and redeemable
noncontrolling interests |
|
355,002 |
|
|
|
393,799 |
|
|
|
1,112,541 |
|
|
|
925,550 |
|
Distributions paid to noncontrolling interests and redeemable
noncontrolling interests |
|
(52,192 |
) |
|
|
(51,774 |
) |
|
|
(173,536 |
) |
|
|
(152,105 |
) |
Acquisition of noncontrolling interests |
|
(32,090 |
) |
|
|
(7,200 |
) |
|
|
(46,274 |
) |
|
|
(37,373 |
) |
Net proceeds related to stock-based award activities |
|
283 |
|
|
|
4,719 |
|
|
|
14,152 |
|
|
|
22,555 |
|
Net cash provided by financing activities |
|
835,554 |
|
|
|
729,862 |
|
|
|
2,655,674 |
|
|
|
2,217,118 |
|
Net change in cash and
restricted cash |
|
30,867 |
|
|
|
92,925 |
|
|
|
(1,078 |
) |
|
|
105,622 |
|
Cash and restricted cash,
beginning of period |
|
921,078 |
|
|
|
863,128 |
|
|
|
953,023 |
|
|
|
850,431 |
|
Cash and restricted cash, end
of period |
$ |
951,945 |
|
|
$ |
956,053 |
|
|
$ |
951,945 |
|
|
$ |
956,053 |
|
Reconciliation between GAAP and Non-GAAP diluted (loss) income
per share:
|
Three Months Ended September 30, 2023 |
|
Three Months Ended September 30, 2022 |
|
Net (loss) Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
GAAP diluted (loss) income per share |
$ |
(1,069,459 |
) |
|
$ |
(4.92 |
) |
|
$ |
211,131 |
|
$ |
0.96 |
Goodwill impairment (2) |
|
1,158,000 |
|
|
|
|
|
— |
|
|
Non-GAAP diluted income per
share (1) |
$ |
88,541 |
|
|
$ |
0.40 |
|
|
$ |
211,131 |
|
$ |
0.96 |
|
|
|
|
|
|
|
|
GAAP weighted average shares
for diluted EPS |
|
217,344 |
|
|
|
|
|
220,850 |
|
|
Non-GAAP weighted average
shares for diluted EPS |
|
223,103 |
|
|
|
|
|
220,850 |
|
|
(1) |
Non-GAAP diluted income per share excludes the effects of the pro
forma adjustment detailed above. Non-GAAP diluted income per share
is adjusted to exclude this item, as it is not used by management
to evaluate the performance of the business. |
(2) |
Excluding this item of
non-recurring, infrequent or unusual nature and its impact on the
comparability of our results for the period to prior periods and
future expected trends. |
Key Operating and Financial
Metrics
The following operating metrics are used by management to
evaluate the performance of the business. Management believes these
metrics, when taken together with other information contained in
our filings with the SEC and within this press release, provide
investors with helpful information to determine the economic
performance of the business activities in a period that would
otherwise not be observable from historic GAAP measures. Management
believes that it is helpful to investors to evaluate the present
value of cash flows expected from subscribers over the full
expected relationship with such subscribers (“Subscriber Value”,
more fully defined in the definitions appendix below) in comparison
to the costs associated with adding these customers, regardless of
whether or not the costs are expensed or capitalized in the period
(“Creation Cost”, more fully defined in the definitions appendix
below). The Company also believes that Subscriber Value, Creation
Costs, and Total Value Generated are useful metrics for investors
because they present an unlevered view of all of the costs
associated with new customers in a period compared to the expected
future cash flows from these customers over a 30-year period, based
on contracted pricing terms with its customers, which is not
observable in any current or historic GAAP-derived metric.
Management believes it is useful for investors to also evaluate the
future expected cash flows from all customers that have been
deployed through the respective measurement date, less estimated
costs to maintain such systems and estimated distributions to tax
equity partners in consolidated joint venture partnership flip
structures, and distributions to project equity investors (“Gross
Earning Assets”, more fully defined in the definitions appendix
below). The Company also believes Gross Earning Assets is useful
for management and investors because it represents the remaining
future expected cash flows from existing customers, which is not a
current or historic GAAP-derived measure.
Various assumptions are made when calculating these metrics.
Both Subscriber Value and Gross Earning Assets utilize a 6% rate to
discount future cash flows to the present period. Furthermore,
these metrics assume that customers renew after the initial
contract period at a rate equal to 90% of the rate in effect at the
end of the initial contract term. For Customer Agreements with
25-year initial contract terms, a 5-year renewal period is assumed.
For a 20-year initial contract term, a 10-year renewal period is
assumed. In all instances, we assume a 30-year customer
relationship, although the customer may renew for additional years,
or purchase the system. Estimated cost of servicing assets has been
deducted and is estimated based on the service agreements
underlying each fund.
In-period volume
metrics: |
Three Months EndedSeptember 30,
2023 |
|
Customer Additions |
|
33,806 |
|
Subscriber Additions |
|
29,303 |
|
Solar Energy Capacity Installed (in Megawatts) |
|
258.2 |
|
Solar Energy Capacity Installed for Subscribers (in Megawatts) |
|
229.0 |
|
Storage Capacity Installed (in Megawatt hours) |
|
175.6 |
|
|
|
|
In-period value
creation metrics: |
Three Months EndedSeptember 30,
2023 |
|
Subscriber Value Contracted Period |
$43,387 |
|
Subscriber Value Renewal Period |
$3,681 |
|
Subscriber Value |
$47,068 |
|
Creation Cost |
$36,038 |
|
Net Subscriber Value |
$11,030 |
|
Total Value Generated (in millions) |
$323.2 |
|
|
|
|
In-period
environmental impact metrics: |
Three Months EndedSeptember 30,
2023 |
|
Positive Environmental Impact from Customers (over trailing twelve
months, in millions of metric tons of CO2 avoidance) |
|
3.6 |
|
Positive Expected Lifetime Environmental Impact from Customer
Additions (in millions of metric tons of CO2 avoidance) |
|
5.2 |
|
|
|
|
Period-end
metrics: |
September 30, 2023 |
|
Customers |
|
903,270 |
|
Subscribers |
|
754,087 |
|
Households Served in Low-Income Multifamily Properties |
|
11,512 |
|
Networked Solar Energy Capacity (in Megawatts) |
|
6,462 |
|
Networked Solar Energy Capacity for Subscribers (in Megawatts) |
|
5,428 |
|
Networked Storage Capacity (in Megawatt hours) |
|
1,124 |
|
Annual Recurring Revenue (in millions) |
$1,239 |
|
Average Contract Life Remaining (in years) |
|
17.8 |
|
Gross Earning Assets Contracted Period (in millions) |
$10,064 |
|
Gross Earning Assets Renewal Period (in millions) |
$3,235 |
|
Gross Earning Assets (in millions) |
$13,299 |
|
Net Earning Assets (in millions) |
$4,574 |
|
Note that Sunrun updated the discount rate used to calculate
Subscriber Value and Gross Earning Assets to 6% commencing with the
first quarter 2023 reporting. Also note that figures presented
above may not sum due to rounding. For adjustments related to
Subscriber Value and Creation Cost, please see the supplemental
Creation Cost Methodology memo for each applicable period, which is
available on investors.sunrun.com.
Definitions
Deployments represent solar energy systems,
whether sold directly to customers or subject to executed Customer
Agreements (i) for which we have confirmation that the systems are
installed on the roof, subject to final inspection, (ii) in the
case of certain system installations by our partners, for which we
have accrued at least 80% of the expected project cost (inclusive
of acquisitions of installed systems), or (iii) for multi-family
and any other systems that have reached our internal milestone
signaling construction can commence following design completion,
measured on the percentage of the system that has been completed
based on expected system cost.
Customer Agreements refer to, collectively,
solar power purchase agreements and solar leases.
Subscriber Additions represent the number of
Deployments in the period that are subject to executed Customer
Agreements.
Customer Additions represent the number of
Deployments in the period.
Solar Energy Capacity Installed represents the
aggregate megawatt production capacity of our solar energy systems
that were recognized as Deployments in the period.
Solar Energy Capacity Installed for Subscribers
represents the aggregate megawatt production capacity of our solar
energy systems that were recognized as Deployments in the period
that are subject to executed Customer Agreements.
Storage Capacity Installed represents the
aggregate megawatt hour capacity of storage systems that were
recognized as Deployments in the period.
Creation Cost represents the sum of certain
operating expenses and capital expenditures incurred divided by
applicable Customer Additions and Subscriber Additions in the
period. Creation Cost is comprised of (i) installation costs, which
includes the increase in gross solar energy system assets and the
cost of customer agreement revenue, excluding depreciation expense
of fixed solar assets, and operating and maintenance expenses
associated with existing Subscribers, plus (ii) sales and marketing
costs, including increases to the gross capitalized costs to obtain
contracts, net of the amortization expense of the costs to obtain
contracts, plus (iii) general and administrative costs, and less
(iv) the gross profit derived from selling systems to customers
under sale agreements and Sunrun’s product distribution and lead
generation businesses. Creation Cost excludes stock based
compensation, amortization of intangibles, and research and
development expenses, along with other items the company deems to
be non-recurring or extraordinary in nature. The gross margin
derived from solar energy systems and product sales is included as
an offset to Creation Cost since these sales are ancillary to the
overall business model and lowers our overall cost of business. The
sales, marketing, general and administrative costs in Creation
Costs is inclusive of sales, marketing, general and administrative
activities related to the entire business, including solar energy
system and product sales. As such, by including the gross margin on
solar energy system and product sales as a contra cost, the value
of all activities of the Company’s segment are represented in the
Net Subscriber Value.
Subscriber Value represents the per subscriber
value of upfront and future cash flows (discounted at 6%) from
Subscriber Additions in the period, including expected payments
from customers as set forth in Customer Agreements, net proceeds
from tax equity finance partners, payments from utility incentive
and state rebate programs, contracted net grid service program cash
flows, projected future cash flows from solar energy renewable
energy credit sales, less estimated operating and maintenance costs
to service the systems and replace equipment, consistent with
estimates by independent engineers, over the initial term of the
Customer Agreements and estimated renewal period. For Customer
Agreements with 25 year initial contract terms, a 5 year renewal
period is assumed. For a 20 year initial contract term, a 10 year
renewal period is assumed. In all instances, we assume a 30-year
customer relationship, although the customer may renew for
additional years, or purchase the system.
Net Subscriber Value represents Subscriber
Value less Creation Cost.
Total Value Generated represents Net Subscriber
Value multiplied by Subscriber Additions.
Customers represent the cumulative number of
Deployments, from the company’s inception through the measurement
date.
Subscribers represent the cumulative number of
Customer Agreements for systems that have been recognized as
Deployments through the measurement date.
Networked Solar Energy Capacity represents the
aggregate megawatt production capacity of our solar energy systems
that have been recognized as Deployments, from the company’s
inception through the measurement date.
Networked Solar Energy Capacity for Subscribers
represents the aggregate megawatt production capacity of our solar
energy systems that have been recognized as Deployments, from the
company’s inception through the measurement date, that have been
subject to executed Customer Agreements.
Networked Storage Capacity represents the
aggregate megawatt hour capacity of our storage systems that have
been recognized as Deployments, from the company’s inception
through the measurement date.
Gross Earning Assets is calculated as Gross
Earning Assets Contracted Period plus Gross Earning Assets Renewal
Period.
Gross Earning Assets Contracted Period
represents the present value of the remaining net cash flows
(discounted at 6%) during the initial term of our Customer
Agreements as of the measurement date. It is calculated as the
present value of cash flows (discounted at 6%) that we would
receive from Subscribers in future periods as set forth in Customer
Agreements, after deducting expected operating and maintenance
costs, equipment replacements costs, distributions to tax equity
partners in consolidated joint venture partnership flip structures,
and distributions to project equity investors. We include cash
flows we expect to receive in future periods from state incentive
and rebate programs, contracted sales of solar renewable energy
credits, and awarded net cash flows from grid service programs with
utilities or grid operators.
Gross Earning Assets Renewal Period is the
forecasted net present value we would receive upon or following the
expiration of the initial Customer Agreement term but before the
30th anniversary of the system’s activation (either in the form of
cash payments during any applicable renewal period or a system
purchase at the end of the initial term), for Subscribers as of the
measurement date. We calculate the Gross Earning Assets Renewal
Period amount at the expiration of the initial contract term
assuming either a system purchase or a renewal, forecasting only a
30-year customer relationship (although the customer may renew for
additional years, or purchase the system), at a contract rate equal
to 90% of the customer’s contractual rate in effect at the end of
the initial contract term. After the initial contract term, our
Customer Agreements typically automatically renew on an annual
basis and the rate is initially set at up to a 10% discount to
then-prevailing utility power prices.
Net Earning Assets represents Gross Earning
Assets, plus total cash, less adjusted debt and less pass-through
financing obligations, as of the same measurement date. Debt is
adjusted to exclude a pro-rata share of non-recourse debt
associated with funds with project equity structures along with
debt associated with the company’s ITC safe harboring facility.
Because estimated cash distributions to our project equity partners
are deducted from Gross Earning Assets, a proportional share of the
corresponding project level non-recourse debt is deducted from Net
Earning Assets, as such debt would be serviced from cash flows
already excluded from Gross Earning Assets.
Cash Generation is calculated using the change
in our unrestricted cash balance from our consolidated balance
sheet, less net proceeds (or plus net repayments) from all recourse
debt (inclusive of convertible debt), and less any primary equity
issuances or net proceeds derived from employee stock award
activity (or plus any stock buybacks or dividends paid to common
stockholders) as presented on the Company’s consolidated statement
of cash flows. The Company expects to continue to raise tax equity
and asset-level non-recourse debt to fund growth, and as such,
these sources of cash are included in the definition of Cash
Generation. Cash Generation also excludes long-term asset or
business divestitures and equity investments in external
non-consolidated businesses (or less dividends or distributions
received in connection with such equity investments).
Annual Recurring Revenue represents revenue
arising from Customer Agreements over the following twelve months
for Subscribers that have met initial revenue recognition criteria
as of the measurement date.
Average Contract Life Remaining represents the
average number of years remaining in the initial term of Customer
Agreements for Subscribers that have met revenue recognition
criteria as of the measurement date.
Households Served in Low-Income Multifamily
Properties represent the number of individual rental units
served in low-income multi-family properties from shared solar
energy systems deployed by Sunrun. Households are counted when the
solar energy system has interconnected with the grid, which may
differ from Deployment recognition criteria.
Positive Environmental Impact from Customers
represents the estimated reduction in carbon emissions as a result
of energy produced from our Networked Solar Energy Capacity over
the trailing twelve months. The figure is presented in millions of
metric tons of avoided carbon emissions and is calculated using the
Environmental Protection Agency’s AVERT tool. The figure is
calculated using the most recent published tool from the EPA, using
the current-year avoided emission factor for distributed resources
on a state by state basis. The environmental impact is estimated
based on the system, regardless of whether or not Sunrun continues
to own the system or any associated renewable energy credits.
Positive Expected Lifetime Environmental Impact from
Customer Additions represents the estimated reduction in
carbon emissions over thirty years as a result of energy produced
from solar energy systems that were recognized as Deployments in
the period. The figure is presented in millions of metric tons of
avoided carbon emissions and is calculated using the Environmental
Protection Agency’s AVERT tool. The figure is calculated using the
most recent published tool from the EPA, using the current-year
avoided emission factor for distributed resources on a state by
state basis, leveraging our estimated production figures for such
systems, which degrade over time, and is extrapolated for 30 years.
The environmental impact is estimated based on the system,
regardless of whether or not Sunrun continues to own the system or
any associated renewable energy credits.
Total Cash represents the total of the
restricted cash balance and unrestricted cash balance from our
consolidated balance sheet.
Investor & Analyst Contact:
Patrick JobinSenior Vice President, Finance &
IRinvestors@sunrun.com
Media Contact:
Wyatt SemanekDirector, Corporate
Communicationspress@sunrun.com
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