Sunrun (Nasdaq: RUN), the nation’s leading provider of residential
solar, storage and energy services, today announced financial
results for the quarter ended March 31, 2022.
“Sunrun is in an enviable, market-leading position
to become the chosen provider of clean energy across America,” said
Mary Powell, Sunrun’s Chief Executive Officer. “We are seeing
tremendous growth across our business, with customer orders
increasing 39% compared to the prior year as more families demand
clean, affordable and reliable energy.”
“Over the last month we successfully implemented
meaningful pricing changes to offset higher material and capital
costs, and continue to see very strong demand as utility rate
inflation exceeds 11% across the country,” said Tom vonReichbauer,
Sunrun’s Chief Financial Officer. “Despite continuing to grow our
backlog of customers, and the effects of Omicron early in the
quarter, we generated sequentially higher Net Subscriber Values and
expect margins to increase meaningfully throughout the year.”
Growth & Market Leadership
The growth opportunity for the solar industry is
massive. Today, only 4% of the 77 million addressable homes in the
U.S. have solar. The U.S. residential electricity market is over
$194 billion per year and ongoing utility spending has resulted in
escalating retail rates, increasing our value proposition and
expanding our addressable market. Households that adopt electric
vehicles consume approximately double the amount of electricity,
increasing our market opportunity and value proposition even
further. In addition to delivering a superior electricity service,
we are increasingly working to network our dispatchable solar and
battery systems to provide resources to the grid, such as virtual
power plants, to also serve the $125 billion annual market for
utility capex. These virtual power plants offer greater potential
for resiliency and precision than bulky centralized
infrastructure.
Owing to network effects and density advantages,
increasing operating scale efficiencies, growing brand strength,
capital raising capabilities, and advanced product and service
offerings, we believe Sunrun will continue to expand our leadership
position. Here are a few highlights from the last quarter:
- Sunrun has now installed over 37,000
solar and battery systems nationwide, which offer homeowners the
ability to power through multi-day outages with clean and reliable
home energy. Solar and battery systems also optimize when power is
purchased or supplied to the grid, helping manage constraints on
the grid during peak times. Sunrun’s battery installations
increased by more than 100% in 2021 compared to the prior year
despite battery supply and logistical constraints which lowered our
battery volumes relative to our initial outlook. Sunrun expects
battery installations to increase by more than twice the growth
rate of overall installations in 2022.
- Channel partners are selecting Sunrun
and deriving significant value from our platform. In Q1, we
continued partner onboarding in tandem with exclusivity agreements
which resulted in a record install quarter for many of our key
channel partners. We continue to expect 2022 to be another record
year for our channel partner business.
- Sunrun’s new homes business continues
to gain momentum and scale. Sunrun added multiple top-20 new home
builders under exclusive partnerships during the first quarter.
Installations grew at a record pace, growing at over 50% year over
year in Q1, delivering all-time record installations. Sunrun
currently works with over 80 top home builders throughout multiple
regions, providing us with a high level of confidence that our
positive growth trend will continue throughout 2022.
- Sunrun is in a strong position to
navigate a dynamic supply chain environment, most recently
compounded by the uncertainty of the potential retroactive tariffs
arising from the anti-dumping and countervailing duty (AD/CVD)
anti-circumvention matter being evaluated by the Department of
Commerce against solar imports from Malaysia, Thailand, Vietnam and
Cambodia using Chinese inputs. Sunrun has increased its inventory
position by $49 million in Q1 to $556 million (an increase of $273
million since the start of 2021) to maintain high levels of
component supply, particularly solar modules. Sunrun had over 100
days of supply on hand of modules as of the end of Q1 and continues
to procure modules from a diversified base of manufacturers. While
Sunrun believes that the Department of Commerce’s investigation is
misplaced and contrary to the Administration's objectives to
encourage the transition to clean energy and reduce imports from
China, the company is taking steps to further diversify its supply
chain and arrange procurement from unaffected countries. To that
end, Sunrun has entered into several supply agreements for hundreds
of megawatts of solar modules from manufacturers unaffected from
the investigation. We also expect to enter into additional
agreements in the coming months.
- Sunrun announced in January that the
company retired its $250 million recourse lending facility and
arranged a larger $425 million facility at enhanced terms and
longer tenor than the company’s prior term extensions. During Q1,
Sunrun upsized the facility to $600 million on the same terms. The
new recourse lending facility reflects improved terms, including a
higher valuation for operating assets, in conjunction with an
increased advance rate against Sunrun’s project backlog. In
addition, the new facility expands the borrowing base to support
more efficient inventory financing, also at a higher advance rate,
while maintaining the same borrowing costs.
Innovation &
Differentiation
The world has the technologies to move to a
decentralized energy architecture today. Home solar and batteries
can operate economically at small scale and can therefore be
located where energy is consumed, leveraging the built environment
instead of relying on expensive, centralized infrastructure whose
design specifications do not meet today’s weather reality. Sunrun
is effectuating this transition through continued business model
innovation and a superior customer experience. We provide
fixed-rate solar-as-a-service subscriptions, whole-home backup
power capabilities, and participation in virtual power plants. We
are investing in efforts to further electrify the home, including
electric vehicle charging infrastructure and converting gas
appliances to electric. We expect these efforts will increase
Sunrun’s share of the home energy wallet and enhance our value to
customers. The following recent developments highlight our
innovation and increasing differentiation:
- Sunrun’s partnership with Ford to
serve as the preferred installer of Ford Intelligent Backup Power
continues to accelerate. Ford launched production of the F-150
Lightning last week, and Sunrun is now in the process of connecting
with initial customers to facilitate the installation of the Charge
Station Pro and the Home Integration System, along with providing
options for solar and battery systems. Sunrun expects to install
thousands of bidirectional chargers over the next few months for
these initial Ford F-150 Lightning customers and will provide an
update on the initial results and realized benefits of the
partnership later this summer. Earlier this year, Ford announced
that they have exceeded 200,000 reservations and also announced
plans to nearly double production of the all-electric F-150
Lightning to 150,000 units annually by 2023 due to high customer
demand. Sunrun stands ready to assist Ford in meeting its ambitious
new goals and is currently ramping its efforts to train qualified
installers for installation of specific charging hardware that will
enable the truck to provide backup power to homes during grid
outages. Customers will need to equip their home with the 80-amp
Ford Charge Station Pro and Home Integration System to unlock
bidirectional power flow and future energy management solutions.
The Home Integration System—designed and developed together with
Ford—can be purchased exclusively through Sunrun. Customers
interested in combining Ford Charge Station Pro and/or Home
Integration System installation with clean solar power may be
eligible to do so for as little as zero dollars down and reduced
installation pricing.
- To demonstrate what is possible,
Sunrun, Ford and PulteGroup, one of the nation’s largest
homebuilders, have teamed up to build two model homes near Fort
Myers, Florida to showcase what an electrified future can look like
that embraces electric vehicles with bidirectional charging
capabilities. The homes were also built specifically to harness the
capabilities of the F-150 Lightning and its Ford Intelligent Backup
Power feature to create energy management solutions and serve as a
critical lifeline to homeowners during power outages and to provide
valuable resources to the grid.
- In the first quarter, Sunrun invested
an incremental $75 million in equity into a venture co-established
with SK E&S (and other companies affiliated with SK E&S),
bringing the company’s total investment in the venture to $150
million (inclusive of contributed advisory services valued at $10
million). The venture is making significant progress and expects to
unveil a disruptive suite of products and services by the end of
2022 with commercialization expected this year or early 2023.
Sunrun currently owns approximately 37% of the venture and has
preferential access to the technology being developed. Sunrun
expects the innovative and differentiated products and services
will accelerate Sunrun’s business and expand the customer value
proposition considerably. The venture was initially established in
July 2020 to conduct research and development activities to
accelerate the adoption of renewables, the electrification of
homes, and the transition to a connected and distributed energy
system.
- Streamlining permitting and
interconnection processes present an opportunity to accelerate the
adoption of solar and storage by reducing 'soft costs' and
improving a homeowner's experience. Sunrun was a founding member of
a coalition to develop an industry-wide web-based solar permitting
tool called SolarAPP+, which seeks to reduce these costs and
deliver a better customer experience. Jurisdictions now have the
opportunity to adopt SolarAPP+ to streamline the permitting
process, save local residents thousands in costs per solar
installation, and promote the growth of solar jobs. As of today,
5,600 PV permits and 395 PV and Battery permits have been processed
through SolarAPP+ across the residential solar industry, which has
saved an estimated 56,000 working days of permitting time.
- Our business development and policy
teams are actively educating more utilities and grid operators on
the valuable services that networked distributed energy resources
can provide. Sunrun has already forged 12 virtual power plant
opportunities and has continued growing our pipeline. We have over
$75 million in expected revenue from grid service opportunities
that have been awarded or are in late-stage discussions. These
opportunities provide incremental recurring revenue and offer an
enhanced customer value proposition while also further
differentiating Sunrun’s offering from companies that lack the
scale, network density, and technical capabilities to serve this
market. We estimate that over 10% of geographies we serve today
have beachhead virtual power plant opportunities in place, which is
expected to expand to over 50% of our geographies in the coming
years. Increasingly, utilities and their regulators are seeing the
value in fast-to-market solar and battery systems to solve peak
energy needs and to replace the void from retiring fossil fuel
power plants. For instance, earlier this year Hawaiian Electric
asked the state regulator to approve a program to compensate
households upfront and on an ongoing basis for adding a battery to
their rooftop solar systems if the systems export energy to the
grid during peak times.
ESG Efforts: Embracing Sustainability &
Investing in Communities
Sunrun’s mission is to create a planet run by the
sun and build an affordable energy system that combats climate
change and provides energy access for all. We proactively serve all
stakeholders: our customers, our employees, the communities in
which we operate, and our business and financial partners.
Investing in our people and providing meaningful career
opportunities is critical to our success. As the country embarks on
upgrading infrastructure and rewiring our buildings, the demand for
skilled workers will increase substantially. We are focused on
developing a differentiated talent brand and providing
opportunities to train workers to be part of the clean energy
economy. The following recent developments highlight our commitment
to sustainability, investing in people, and investing in our
communities:
- In April, Sunrun released its fifth
annual Impact Report. As part of its commitment to annual
reporting, the 2021 Impact Report highlights Sunrun’s progress
towards its 2020 ESG goals to mitigate the impacts of anthropogenic
climate change; building a diverse, fair and equitable workforce;
and improving environmental equity and justice. Sunrun also
announced three ambitious ESG updates: Decreasing transportation
emissions by transitioning half of the company’s vehicle fleet to
either electric or hybrid by the end of 2025; achieving 100%
equipment recycling at each operating facility by the end of 2023;
and fostering a diverse workforce that represents the customers and
communities in which the company’s employees live and work by (i)
increasing the representation of employees who identify as women in
Director and above roles by 50% and the representation of Black,
Indigenous, and People of Color (BIPOC) leaders in manager roles by
25% by the end of 2025, and (ii) reaching gender parity in Director
and above roles by the end of 2030 and BIPOC representation parity
in Manager roles by the end of 2030. Sunrun also recently signed on
to the United Nations Global Compact and committed to adopting
science-based emissions reduction targets with the Science Based
Targets Initiative. This year’s impact report includes reporting
under the Task Force on Climate Financial Disclosures (TCFD) based
on investor feedback.
- Lawrence Berkeley National Laboratory
released the latest edition of its annual report, Residential
Solar-Adopter Income and Demographic Trends, in March which
describes income, demographic, and other socio-economic trends
among U.S. residential rooftop solar adopters. The report is based
on data for roughly 2.3 million residential rooftop solar systems
installed through 2020, representing 82% of all U.S. systems. The
report shows that rooftop solar is becoming increasingly equitable
and that the residential solar market is deepening by reaching more
middle and lower-income households. According to the report, median
incomes of solar adopters have fallen from $138,000 in 2010 to
$115,000 in 2020 as adoption becomes more proportionately
distributed across the population while approximately one-third of
household incomes of 2020 solar adopters were in the $50,000 to
$100,000 range. The report also provided data showing that
underrepresented communities are becoming a larger proportion of
solar adopters with 42% identifying as Asian, Black or
Hispanic.
- We remain committed to creating long
term tenure value for our employees and building a differentiated
talent brand. During Q1, we accelerated our efforts by partnering
with a leading web-based provider of career development tools that
focuses on helping women elevate in the workplace by providing
intel via anonymous job reviews, sharing industry news and advice,
posting jobs at companies that women love and providing a sounding
board for women to share in conversation and support. Additionally,
we expanded the educational resources available to our employees at
no cost by partnering with a global non-profit to offer community
led learning. We remain focused on building our electrician talent
pipeline and overall 37% of eligible employees have initiated their
upskilling learning pathways with our educational provider.
- The solar systems
we deployed in Q1 are expected to prevent the emission of 4.6
million metric tons of CO2 over the next thirty years. Over the
last twelve months, Sunrun’s systems are estimated to have offset
more than 2.7 million metric tons of CO2.
Key Operating Metrics
In the first quarter of 2022, Customer Additions
were 29,463, including 21,197 Subscriber Additions. As of March 31,
2022, Sunrun had 689,774 Customers, including 588,941 Subscribers.
Customers grew 20% in the first quarter of 2022 compared to the
first quarter of 2021.
Annual Recurring Revenue from Subscribers was $883
million as of March 31, 2022. The Average Contract Life Remaining
of Subscribers was 17.4 years as of March 31, 2022.
Subscriber Value was $37,004 in the first quarter
of 2022 while Creation Cost was $29,863. Net Subscriber Value was
$7,141 in the first quarter of 2022. Total Value Generated was
$151.4 million in the first quarter of 2022.
Gross Earning Assets as of March 31, 2022 were
$10.2 billion. Net Earning Assets were $4.5 billion, which includes
$863 million in total cash, as of March 31, 2022.
Solar Energy Capacity Installed was 213 Megawatts
in the first quarter of 2022. Solar Energy Capacity Installed for
Subscribers was 154 Megawatts in the first quarter of 2022.
Networked Solar Energy Capacity was 4,890 Megawatts
as of March 31, 2022. Networked Solar Energy Capacity for
Subscribers was 4,204 Megawatts as of March 31, 2022.
Outlook
Management now expects Solar Energy Capacity
Installed growth to be 25% or greater for the full-year 2022, an
increase from the prior guidance of 20% or greater.
Total Value Generated is expected to grow
meaningfully faster than Solar Energy Capacity Installed for the
full-year 2022, with Net Subscriber Values of above $10,000 in
Q3.
For the second quarter, management expects Solar
Energy Capacity Installed to be in a range between 235 and 245
megawatts.
First Quarter 2022 GAAP
Results
Total revenue was $495.8 million in the first
quarter of 2022, up $161.0 million, or 48%, from the first quarter
of 2021. Customer agreements and incentives revenue was $209.7
million, an increase of $35.1 million, or 20%, compared to the
first quarter of 2021. Solar energy systems and product sales
revenue was $286.1 million, an increase of $125.9 million, or 79%,
compared to the first quarter of 2021.
Total cost of revenue was $451.6 million, an
increase of 53% year-over-year. Total operating expenses were
$677.2 million, an increase of 32% year-over-year.
Included in operating costs for the first quarter
of 2022 were $7.3 million of non-recurring restructuring expenses
related to the acquisition of Vivint Solar. Operating costs include
stock-based compensation expenses of $39.2 million in the first
quarter of 2022.
Consistent with purchase accounting standards under
GAAP, the fair value of outstanding equity awards for Vivint Solar
employees was reevaluated upon the closing of the acquisition,
which resulted in a step-up of the value of such awards, which will
result in an increase to non-cash stock-based compensation expense
until such awards have fully vested. Additionally, the value of
Solar Energy Systems was recorded based on a fair value assessment,
which was approximately $1.1 billion higher than the book value at
the date of the acquisition, and will result in additional non-cash
depreciation expense over the estimated useful life of the assets,
partially offset by a write-off of Vivint Solar’s Cost to Obtain
Customer Agreements.
Net loss attributable to common stockholders was
$87.8 million, or $0.42 per share, in the first quarter of
2022.
Financing Activities
As of May 4, 2022, closed transactions and executed
term sheets provide us expected tax equity and project debt
capacity to fund over 400 megawatts of Solar Energy Capacity
Installed for Subscribers beyond what was deployed through the end
of the first quarter of 2022.
Appointment of New Chief Financial
Officer
Today, Sunrun also announced that Tom vonReichbauer
will be stepping down from his current position as Chief Financial
Officer at the end of May to pursue an external opportunity.
Following a search, and consistent with Sunrun’s succession
planning activities, Sunrun’s Board of Directors has appointed Mr.
Danny Abajian to act as the new Chief Financial Officer, effective
May 30. Mr. Abajian, who is currently the Senior Vice President at
Sunrun overseeing the Project Finance group, has been with the
company for nearly 12 years and has helped facilitate the raising
of more than $10 billion in capital to support our rapid customer
growth. Prior to joining Sunrun in 2010, Mr. Abajian worked at
Barclays Capital and BNP Paribas, executing structured debt and
commodities transactions for infrastructure, power generation and
energy assets across North America. Mr. Abajian holds a Bachelor of
Science degree in Finance and International Business from the New
York University Stern School of Business. Mr. vonReichbauer has
agreed to remain a consultant for four months to ensure a smooth
transition of responsibilities.
Conference Call Information
Sunrun is hosting a conference call for analysts
and investors to discuss its first quarter 2022 results and
business outlook at 1:30 p.m. Pacific Time today, May 4, 2022. 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) is the nation’s leading
home solar, battery storage, and energy services company. Founded
in 2007, Sunrun pioneered home solar service plans to make local
clean energy more accessible to everyone for little to no upfront
cost. Sunrun’s innovative home battery solution brings families
affordable, resilient, and reliable energy. The company can also
manage and share stored solar energy from the batteries to provide
benefits to households, utilities, and the electric grid while
reducing our reliance on polluting energy sources. For more
information, please visit www.sunrun.com.
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 leadership team and talent development; the Company’s
financial and operating guidance and expectations; the Company’s
business plan, trajectory and expectations in 2022 and beyond,
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 the
company’s business strategies, 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; the Company’s ability to manage suppliers,
inventory, and workforce; supply chains and regulatory impacts
affecting supply chains; factors outside of the Company’s control
such as macroeconomic trends, public health emergencies, natural
disasters, act of war, terrorism, or armed conflict / invasion, and
the impacts of climate change; 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, anticipated, or
potential impacts of the COVID-19 pandemic and its variants;
expectations regarding the Company’s storage and energy services
businesses, the Company’s acquisition of Vivint Solar (including
cost synergies), anticipated emissions reductions due to
utilization of the Company’s solar systems; the Company’s ability
to derive value from the anticipated benefits of partnerships, new
technologies, and pilot programs; expectations regarding the growth
of home electrification, electric vehicles, virtual power plants,
and distributed energy resources. 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; volatile or rising interest rates; changes in
policies and regulations, including net metering and
interconnection limits or caps and licensing restrictions; the
Company’s ability to attract and retain the Company’s solar
partners; supply chain risks and associated costs; the impact of
COVID-19 and its variants on the Company’s operations; the
successful integration of Vivint Solar; realizing the anticipated
benefits of past or future investments, strategic transactions, or
acquisitions, and integrating those acquisitions; the Company’s
leadership team and ability to retract 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 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)
|
|
March 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash |
|
$ |
629,161 |
|
|
$ |
617,634 |
|
Restricted cash |
|
|
233,306 |
|
|
|
232,649 |
|
Accounts receivable, net |
|
|
200,549 |
|
|
|
146,037 |
|
Inventories |
|
|
555,946 |
|
|
|
506,819 |
|
Prepaid expenses and other current assets |
|
|
90,388 |
|
|
|
44,580 |
|
Total current assets |
|
|
1,709,350 |
|
|
|
1,547,719 |
|
Restricted cash |
|
|
148 |
|
|
|
148 |
|
Solar energy systems, net |
|
|
9,772,062 |
|
|
|
9,459,696 |
|
Property and equipment, net |
|
|
59,963 |
|
|
|
56,886 |
|
Intangible assets, net |
|
|
11,550 |
|
|
|
12,891 |
|
Goodwill |
|
|
4,280,169 |
|
|
|
4,280,169 |
|
Other assets |
|
|
1,421,880 |
|
|
|
1,125,743 |
|
Total assets |
|
$ |
17,255,122 |
|
|
$ |
16,483,252 |
|
Liabilities and total
equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
385,265 |
|
|
$ |
288,108 |
|
Distributions payable to noncontrolling interests and redeemable
noncontrolling interests |
|
|
30,661 |
|
|
|
31,582 |
|
Accrued expenses and other liabilities |
|
|
320,318 |
|
|
|
364,136 |
|
Deferred revenue, current portion |
|
|
113,653 |
|
|
|
111,739 |
|
Deferred grants, current portion |
|
|
8,294 |
|
|
|
8,302 |
|
Finance lease obligations, current portion |
|
|
11,135 |
|
|
|
10,901 |
|
Non-recourse debt, current portion |
|
|
193,131 |
|
|
|
190,186 |
|
Pass-through financing obligation, current portion |
|
|
7,454 |
|
|
|
7,166 |
|
Total current liabilities |
|
|
1,069,911 |
|
|
|
1,012,120 |
|
Deferred revenue, net of current portion |
|
|
780,305 |
|
|
|
761,872 |
|
Deferred grants, net of current portion |
|
|
204,299 |
|
|
|
206,615 |
|
Finance lease obligations, net of current portion |
|
|
11,849 |
|
|
|
11,314 |
|
Convertible senior notes |
|
|
391,175 |
|
|
|
390,618 |
|
Line of credit |
|
|
470,000 |
|
|
|
211,066 |
|
Non-recourse debt, net of current portion |
|
|
6,084,854 |
|
|
|
5,711,020 |
|
Pass-through financing obligation, net of current portion |
|
|
311,679 |
|
|
|
314,231 |
|
Other liabilities |
|
|
150,806 |
|
|
|
190,056 |
|
Deferred tax liabilities |
|
|
98,982 |
|
|
|
101,753 |
|
Total liabilities |
|
|
9,573,860 |
|
|
|
8,910,665 |
|
Redeemable noncontrolling
interests |
|
|
630,511 |
|
|
|
594,973 |
|
Total stockholders’
equity |
|
|
6,264,342 |
|
|
|
6,254,736 |
|
Noncontrolling interests |
|
|
786,409 |
|
|
|
722,878 |
|
Total equity |
|
|
7,050,751 |
|
|
|
6,977,614 |
|
Total liabilities, redeemable noncontrolling interests and
total equity |
|
$ |
17,255,122 |
|
|
$ |
16,483,252 |
|
Consolidated Statements of
Operations(In Thousands, Except Per Share
Amounts)
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue: |
|
|
|
|
Customer agreements and incentives |
|
$ |
209,692 |
|
|
$ |
174,596 |
|
Solar energy systems and product sales |
|
|
286,092 |
|
|
|
160,198 |
|
Total revenue |
|
|
495,784 |
|
|
|
334,794 |
|
Operating expenses: |
|
|
|
|
Cost of customer agreements and incentives |
|
|
201,785 |
|
|
|
160,277 |
|
Cost of solar energy systems and product sales |
|
|
249,844 |
|
|
|
134,082 |
|
Sales and marketing |
|
|
174,926 |
|
|
|
126,113 |
|
Research and development |
|
|
6,257 |
|
|
|
5,872 |
|
General and administrative |
|
|
43,081 |
|
|
|
85,630 |
|
Amortization of intangible assets |
|
|
1,341 |
|
|
|
1,345 |
|
Total operating expenses |
|
|
677,234 |
|
|
|
513,319 |
|
Loss from operations |
|
|
(181,450 |
) |
|
|
(178,525 |
) |
Interest expense, net |
|
|
(92,254 |
) |
|
|
(74,270 |
) |
Other income, net |
|
|
113,958 |
|
|
|
34,347 |
|
Loss before income taxes |
|
|
(159,746 |
) |
|
|
(218,448 |
) |
Income tax benefit |
|
|
(3,277 |
) |
|
|
(14,126 |
) |
Net loss |
|
|
(156,469 |
) |
|
|
(204,322 |
) |
Net loss attributable to noncontrolling interests and redeemable
noncontrolling interests |
|
|
(68,691 |
) |
|
|
(180,533 |
) |
Net loss attributable to common stockholders |
|
$ |
(87,778 |
) |
|
$ |
(23,789 |
) |
Net loss per share attributable to common stockholders |
|
|
|
|
Basic |
|
$ |
(0.42 |
) |
|
$ |
(0.12 |
) |
Diluted |
|
$ |
(0.42 |
) |
|
$ |
(0.12 |
) |
Weighted average shares used to compute net loss per share
attributable to common stockholders |
|
|
|
|
Basic |
|
|
208,676 |
|
|
|
202,562 |
|
Diluted |
|
|
208,676 |
|
|
|
202,562 |
|
Consolidated Statements of Cash
Flows(In Thousands)
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Operating
activities: |
|
|
|
|
Net loss |
|
$ |
(156,469 |
) |
|
$ |
(204,322 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization, net of amortization of deferred
grants |
|
|
106,110 |
|
|
|
91,955 |
|
Deferred income taxes |
|
|
(3,277 |
) |
|
|
(14,126 |
) |
Stock-based compensation expense |
|
|
39,219 |
|
|
|
78,029 |
|
Interest on pass-through financing obligations |
|
|
5,010 |
|
|
|
5,394 |
|
Reduction in pass-through financing obligations |
|
|
(9,826 |
) |
|
|
(10,219 |
) |
Unrealized gain on derivatives |
|
|
(66,182 |
) |
|
|
(46,490 |
) |
Other noncash items |
|
|
(28,173 |
) |
|
|
18,039 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(57,232 |
) |
|
|
(32,311 |
) |
Inventories |
|
|
(49,127 |
) |
|
|
(6,727 |
) |
Prepaid and other assets |
|
|
(136,843 |
) |
|
|
(88,469 |
) |
Accounts payable |
|
|
100,425 |
|
|
|
1,479 |
|
Accrued expenses and other liabilities |
|
|
(27,780 |
) |
|
|
14,113 |
|
Deferred revenue |
|
|
27,736 |
|
|
|
8,008 |
|
Net cash used in operating activities |
|
|
(256,409 |
) |
|
|
(185,647 |
) |
Investing
activities: |
|
|
|
|
Payments for the costs of solar energy systems |
|
|
(420,630 |
) |
|
|
(357,012 |
) |
Purchase of equity method investment |
|
|
(75,000 |
) |
|
|
— |
|
Purchases of property and equipment, net |
|
|
(6,471 |
) |
|
|
(39 |
) |
Net cash used in investing activities |
|
|
(502,101 |
) |
|
|
(357,051 |
) |
Financing
activities: |
|
|
|
|
Proceeds from line of credit |
|
|
490,000 |
|
|
|
207,694 |
|
Repayment of line of credit |
|
|
(231,066 |
) |
|
|
(258,160 |
) |
Proceeds from issuance of convertible senior notes, net of capped
call transaction |
|
|
— |
|
|
|
372,000 |
|
Proceeds from issuance of non-recourse debt |
|
|
453,700 |
|
|
|
431,633 |
|
Repayment of non-recourse debt |
|
|
(83,585 |
) |
|
|
(293,409 |
) |
Payment of debt fees |
|
|
(8,571 |
) |
|
|
(15,360 |
) |
Proceeds from pass-through financing and other obligations |
|
|
1,911 |
|
|
|
2,486 |
|
Payment of finance lease obligations |
|
|
(3,299 |
) |
|
|
(3,087 |
) |
Contributions received from noncontrolling interests and redeemable
noncontrolling interests |
|
|
230,493 |
|
|
|
247,693 |
|
Distributions paid to noncontrolling interests and redeemable
noncontrolling interests |
|
|
(51,245 |
) |
|
|
(47,913 |
) |
Acquisition of noncontrolling interests |
|
|
(30,173 |
) |
|
|
(4,195 |
) |
Net proceeds related to stock-based award activities |
|
|
2,529 |
|
|
|
8,541 |
|
Net cash provided by financing activities |
|
|
770,694 |
|
|
|
647,923 |
|
Net change in cash and
restricted cash |
|
|
12,184 |
|
|
|
105,225 |
|
Cash and restricted cash,
beginning of period |
|
|
850,431 |
|
|
|
708,208 |
|
Cash and restricted cash, end
of period |
|
$ |
862,615 |
|
|
$ |
813,433 |
|
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 fillings 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 5%
unlevered discount rate (weighted average cost of capital or
“WACC”) 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 EndedMarch 31,
2022 |
Customer Additions |
|
29,463 |
Subscriber Additions |
|
21,197 |
Solar Energy Capacity Installed (in Megawatts) |
|
213.2 |
Solar Energy Capacity Installed for Subscribers (in Megawatts) |
|
153.9 |
|
|
In-period value
creation metrics:(1) |
Three Months Ended March 31,
2022 |
Subscriber Value Contracted Period |
$ |
33,838 |
Subscriber Value Renewal Period |
$ |
3,166 |
Subscriber Value |
$ |
37,004 |
Creation Cost |
$ |
29,863 |
Net Subscriber Value |
$ |
7,141 |
Total Value Generated (in millions) |
$ |
151.4 |
|
|
|
|
In-period
environmental impact metrics:(1) |
Three Months EndedMarch 31,
2022 |
Positive Environmental Impact from Customers (over trailing twelve
months, in millions of metric tons of CO2 avoidance) |
|
2.7 |
Positive Expected Lifetime Environmental Impact from Customer
Additions (in millions of metric tons of CO2 avoidance) |
|
4.6 |
|
|
|
|
Period-end
metrics: |
March 31, 2022 |
Customers |
|
689,774 |
Subscribers |
|
588,941 |
Networked Solar Energy Capacity (in megawatts) |
|
4,890 |
Networked Solar Energy Capacity for Subscribers (in megawatts) |
|
4,204 |
Annual Recurring Revenue (in millions) |
$ |
883 |
Average Contract Life Remaining (in years) |
|
17.4 |
Gross Earning Assets Contracted Period (in millions) |
$ |
7,040 |
Gross Earning Assets Renewal Period (in millions) |
$ |
3,116 |
Gross Earning Assets (in millions) |
$ |
10,155 |
Net Earning Assets (in millions) |
$ |
4,454 |
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.
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 5%) 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.
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 5%) 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 5%) 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.
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.
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.
Investor & Analyst Contact:
Patrick JobinSenior Vice President, Finance &
IRinvestors@sunrun.com
Media Contact:
Wyatt SemanekPublic Relations Managerpress@sunrun.com
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