Sunnova Reports Fourth Quarter and Full Year 2020 Results

Source: www.gulfoilandgas.com 2/24/2021, Location: North America

2020 and Recent Highlights
- Added approximately 29,000 customers in 2020, bringing total customer count to 107,500 as of December 31, 2020;
- Reduced adjusted operating expense per weighted average customer by 9.5% in 2020;
- Met all 2020 guidance targets despite unprecedented public health and macro-economic challenges;
- Recently closed a $189 million asset-backed securitization at the strongest terms the industry has seen; and
- Entered into a definitive merger agreement to acquire Lennar's residential solar platform SunStreet, accelerating Sunnova's growth and increasing Sunnova's operating leverage.

Sunnova Energy International Inc., one of the leading U.S. residential solar and storage service providers, announced financial results for the fourth quarter and full year ended December 31, 2020.

"We are incredibly proud of our fourth quarter and full year results as we skillfully navigated the challenges presented by the global pandemic," said William J. (John) Berger, Chief Executive Officer of Sunnova. "Despite an incredibly challenging year, in 2020 we achieved a 57% customer growth rate, saw record levels of demand for our energy storage offerings, expanded our strategic technology partnerships, strengthened our differentiated dealer base, and met our operational and financial targets.”

"As we look ahead to 2021 and beyond, we are excited about the growth and tailwinds our industry is experiencing. Sunnova is well positioned to navigate the current market environment and to lead a decarbonized and decentralized energy transition while providing our customers with a better energy service at a better price."

Recent Business Development
On February 17, 2021, Sunnova and Len X, LLC, a technology focused subsidiary of Lennar Corporation, one of the nation's leading homebuilders, announced they have entered into a definitive agreement under which Sunnova will acquire Lennar's residential solar platform ("SunStreet"). In addition to Sunnova's acquisition of SunStreet, Sunnova will become Lennar's exclusive residential solar and storage service provider for new home communities with solar across the country.

"We are thrilled to have announced our plans to acquire SunStreet and for Sunnova to become Lennar's exclusive residential solar and storage service provider," added Mr. Berger. "Our acquisition of SunStreet will increase customer growth and further scale our business, while our relationship with Lennar will ultimately position Sunnova as a market leader in the development and management of microgrids for communities across the U.S."

"This transformational opportunity is structured to align the strategic and economic interests of both companies with a focus on unlocking Sunnova and SunStreet's full growth potential while enhancing the lives of homeowners."

The acquisition of SunStreet is expected to be completed during the second quarter of 2021, subject to regulatory approvals and other customary closing conditions.

Fourth Quarter and Full Year 2020 Results
Revenue increased to $38.0 million, or by $4.4 million, in the three months ended December 31, 2020 compared to the three months ended December 31, 2019. Revenue increased to $160.8 million, or by $29.3 million, in the year ended December 31, 2020 compared to the year ended December 31, 2019. These increases were primarily the result of an increase in the number of customers served.

Total operating expense, net increased to $56.0 million, or by $13.2 million, in the three months ended December 31, 2020 compared to the three months ended December 31, 2019. This increase was primarily the result of an increase in the number of customers served and greater depreciation expense.

Total operating expense, net increased to $196.6 million, or by $42.8 million, in the year ended December 31, 2020 compared to the year ended December 31, 2019. This increase was primarily the result of an increase in the number of customers served, greater depreciation expense, and higher period-over-period general and administrative expenses due to the hiring of personnel to support growth.

Adjusted Operating Expense increased to $28.0 million, or by $5.2 million, in the three months ended December 31, 2020 compared to the three months ended December 31, 2019. This increase was primarily the result of an increase in the number of customers served.

Adjusted Operating Expense increased to $101.2 million, or by $18.0 million, in the year ended December 31, 2020 compared to the year ended December 31, 2019. This increase was primarily the result of an increase in the number of customers served and higher period-over-period general and administrative expenses due to the hiring of personnel to support growth.

Sunnova incurred a net loss of $128.8 million for the three months ended December 31, 2020 compared to a net loss of $13.8 million for the three months ended December 31, 2019. Sunnova incurred a net loss of $307.8 million for the year ended December 31, 2020 compared to a net loss of $133.4 million for the year ended December 31, 2019. These larger net losses were primarily the result of a loss on the extinguishment of debt from the conversion of convertible notes for common stock and higher net interest expense.

Adjusted EBITDA was $10.0 million for the three months ended December 31, 2020 compared to $10.8 million for the three months ended December 31, 2019, a decrease of $0.8 million. Customer principal (net of amounts recorded in revenue) and interest payments received from solar loans increased to $9.5 million and $6.4 million, respectively, for the three months ended December 31, 2020, or by $2.4 million and $2.9 million, respectively, compared to the three months ended December 31, 2019. Adjusted EBITDA was $59.6 million for the year ended December 31, 2020 compared to $48.3 million for the year ended December 31, 2019, an increase of $11.3 million. Customer principal (net of amounts recorded in revenue) and interest payments received from solar loans increased to $32.6 million and $23.2 million, respectively, for the year ended December 31, 2020, or by $12.5 million and $11.7 million, respectively, compared to the year ended December 31, 2019. These overall increases were primarily driven by customer growth increasing at a faster rate than expenses.

Net cash used in operating activities was $29.7 million for the three months ended December 31, 2020 compared to $95.7 million for the three months ended December 31, 2019. This decrease was primarily the result of a decrease in purchases of inventory and prepaid inventory with net outflows of $19.5 million in 2020 compared to $110.4 million in 2019. This decrease was offset by an increase in realized loss on interest rate swaps of $12.1 million.

Net cash used in operating activities was $131.5 million for the year ended December 31, 2020 compared to $170.3 million for the year ended December 31, 2019. This decrease was primarily the result of a decrease in purchases of inventory and prepaid inventory with net outflows of $41.5 million in 2020 compared to $118.5 million in 2019 and a decrease in payments to dealers for exclusivity and other bonus arrangements with net outflows of $25.8 million in 2020 compared to $31.7 million in 2019. These decreases were offset by an increase in realized loss on interest rate swaps of $38.1 million.

Adjusted Operating Cash Flow was $10.2 million in the three months ended December 31, 2020 compared to $19.3 million for the three months ended December 31, 2019. This decrease was primarily driven by higher working capital requirements in the fourth quarter of 2020.

Adjusted Operating Cash Flow was $10.7 million in the year ended December 31, 2020 compared to $6.4 million for the year ended December 31, 2019. This increase was primarily the result of customer growth increasing at a faster rate than cash expenditures.

Liquidity & Capital Resources
As of December 31, 2020, Sunnova had total cash of $377.9 million, including restricted and unrestricted cash.

2021 Guidance
Management increases full-year 2021 guidance for customer additions, Adjusted EBITDA, and Recurring Operating Cash Flow.

- Customer additions increases from 42,000 - 48,000 to 55,000 - 58,000;
- Adjusted EBITDA increases from $77 million - $83 million to $80 million - $85 million;
- Customer principal payments received from solar loans, net of amounts recorded in revenue of $57 million - $63 million reaffirmed;
- Customer interest payments received from solar loans of $28 million - $34 million reaffirmed;
- Adjusted Operating Cash Flow of $20 million - $30 million reaffirmed; and
- Recurring Operating Cash Flow increases from $(15) million - $5 million to $(5) million - $5 million.


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