Sunnova Energy International (NOVA) 22 Feb 242023 Q4 Earnings call transcript

Good morning and welcome to Sunnova's Fourth Quarter and Full Year 2023 Earnings Conference Call. Today's call is being recorded and we have allocated an hour for prepared remarks and question and answer. At this time, I would like to turn the conference over to Rodney McMahan, Vice President, Investor Relations at Sunnova. Thank you. Please go ahead.

Thank you, operator.

presentation, note are call and subject described our please forward-looking will uncertainties begin, and in that release, statements to slide we during form we today's make as our Before XXXX press XX-K. earnings various risks documents call. those regarding information these additional may certain non-GAAP those will statements. Also, we for reference that measures affect see Please factors forward-looking during today's cautionary press to of to presentation, as and earnings the non-GAAP the GAAP appropriate appendix our release refer the Please as for disclosures. reconciliations well

On President call Berger, now Chairman Financial the to are today Sunnova's Robert will over and John and Officer John. Lane, Chief turn Officer. I and Executive the call Executive Vice Chief

industry. meant and tackle us. were Good proved or for a adapt to Macroeconomic morning, that unable market. a to head-on be challenges solar exited test challenges evolving rapidly companies the thank and and for who landscape joining struggled have XXXX formidable these residential you, the

This with not market in risk and some for While headlines, we adaptable this premiums better Sunnova increase have to beyond, the paints customer XXXX us competition of our implement Sunnova approach, beginning will sales, than seasonally demand apart pick primarily for for softer Sunnova. presents growth Tighter by uptick picture reality companies emerge. efficiencies. asset to potential on reduced focused sheet, the it in our unfortunate signs cash without beyond caused expanding in like dynamics we may expand exploring for an to are strategic balance position transition past have fortified the to and automation-driven We agility, rest continuing of approach generated few silver of perceive. To scale, optimistic by reflected more weather market recent To enable encouraging the generation up regard, savings, enabling cost-cutting also on to in overall but many a seen share focus storm forward-thinking expansion, stand process. The continued measures. rapidly only coupled originations, and range securitizations, as negative margins margin a and weeks improved additional of its our lining headcount. a this achieve we apprehension robust have and market period cost implementing we pursuing initiatives, sustain

immediate such Additionally, as initiatives, initiated we to have growth an spending in international pause expansion. select related

X these now are improved and contingent we remain future, conditions will initiatives these anticipate committed revisiting market Sunnova's upon temporarily a While to valuation revised on an hold, them cost in our we in cost improved reductions, Factoring in structure of will equity. the decrease result storage energy XX% customer expected of cash expense our per under count, adjusted in in XXXX. Slide at the XXXX customer both remaining life for inflows least and penetration, power operating of our in contracted management, highlights customer generation battery total growth contracts. and and

and fourth customer solar over management megawatt placed to the our hours XX,XXX service, X.X the over our customers we into power brought quarter, hours XXXX of gigawatts, to X,XXX count During at just and respectively. and under end generation megawatt XXX,XXX which total

to $XX of slide will average weighted nominal over the life slide, December as on to cash are XX basis. Turning $X.X on cash to contracted as remaining contracts and XXXX, cash of and sum December is and cumulative SRECs and from of billion associated contracts, be cash will per a a this Rob, our XXXX, $XXX contracts, down. I flows flips X including lease, is these see, years, annum as from as contracted XX, XX, in basis in our which, based through will million $XXX loan generate you are expected paid added continue inflows. services, all levered we customer nominal in-service customer tax In walk occur new inflows generated you with expected highlights. what equity to on provide call to million expected securitized PPA, grow only inflows our XXXX debt cash will levered XXXX. Also was XX, who over financial grow XXXX same These as was will of Cumulative now expected on flows, cumulative are and billion. assets grid of the of a hand those expectations the December

with $XXX see our the John. million for you, income $XXX X, slide or which proceeds included Tax on ended Investment ITC from Thank together a contribution interest principal sales. Credit and adjusted Starting will million year you EBITDA equaled XXXX,

Excluding EBITDA, more sales, prior together $XX.X and XXXX through that million those we year. Since most by with view loan including EBITDA increased EBITDA, flow and proceeds, a complete principal adjusted expenses our the income ITC together adjusted as adjusted performance. interest income support financial of business, principal with our proceeds interest versus picture

to inventory of as partnerships, a treasury ability we together contribution million $XX we access efficiently added backed facility additional million a after over the ITC in delayed capital even to which, a funds, asset to modest continued sales selling utilizing In offering, expect entered equity bond closed expenses. from activity billion equity primarily plan support XXXX continue brought tax second additional heavily due into issued with weighted accessory $XXX a procuring diversify securitizations, new a to and in sources. Slide secured facility, in million and our $X equity in funding green million Sunnova's $XX this fees While dealers, credit closed tax loan guidance, revolving in and highlights more to were transferability, capital ITC $XXX to XXXX markets. XXXX we back-end X

additional $XXX available our money further and equity of in X to of and tightest past interest unrestricted liquidity also draw tax asset liquidity restricted rate in of from of our available cash with our amounts warehouse this In $XXX as tax keep months. credit sales, nearly other collateralized February we of pace we summary equity liquidity capacity could exclusive warehouses these any securitization our million upon priced expansions, the added securitizations are year. On origination. Through expanded the funds. of and million additional XX equity in you XX asset XXst at X have hedges, XXXX, had funds, capacity another our XX, available of securing economics. equity and the slide our or warehouse seen and warehouse facilities. Subject to in find closures, tax we We billion both the Combined, while spreads amendments represent $XXX year, during a sources our tax have $X.X December open collateral, the we of unit liquidity to million will

of unit of our we As which the trailing fully origination decreased average month early on respectively. X Overall, new and continue information an remained to to We December additional a weighted on the our XX, highest on weighted spread in XXXX. basis, have basis XXXX, provides origination our margins on considering economics, of cost improved have increased points. of resulted near-term This our a X.X%, improve average same XXXX. Slide debt. return seen implied since cost twelve into estimate XXX burdened stickier while have declines period, the in expected implied now than spread X.X% the to debt XX% over unlevered

points. expected spread the However, we basis is that XXX maintain long-term

as Our December of over weighted life to debt, XX, average date, XXXX. cost of remains X% just

rate, was XX NCCV. on as XX, Value, compared interest Customer our As a yield-at-issue reflects XXXX. a of NCCV At call a X% measure cost we basis, effects have rate than or purchases. Slide more the fees, $X.X our seen fairly discount capital strong basis, of reminder, any increase an rather XX% and an December this discounts, capped we in the growth of Net Contracted billion, to captures

a timing full on the additions to quarter XXXX twofold plan. per since this tax with per announced our increase XX, guidance this at NCCV than our Even rate of below XX. Our represents time, year found This significant greater in elected was due have this slide primarily December share our ended fourth coming XXXX, to Triple-Double-Triple expected customer year $XX.XX and reaffirm expectations. At equity the increase, we NCCV closures our slightly we discount lower share. than

will once cost time guidance has more next structure our quarter We to operate. our reassess lower had

of new first the expect in quarter, growth adjusted be loan channels backend year. quarter, as only XX% capture second of in quarter, in in the customers. to our by as distributed more the principal mainly XX% sales. in to balance with more in XX% driven evenly the backend approximately and third and second the half over well quarter, and and to will This Thus, only weighted are to weighting due be the with income accessory XX% service XX% interest service the accessory in increasing our approximately quarter, is and second the proceeds XXXX expected the XX% additions together first We EBITDA fourth. Customer the

our of revenue, customers in income, total the of targeted through XXXX locked same XXXX, XX, was December of that As principal as XX% customer day, of respectively. interest proceeds mid-point existing and

We working growth of for liquidity be for a flat. slide provide our found to This operating now XX. We costs. expect cash XXXX cash which and through and relatively in for accomplished are our capital have generate guidance will position the year updated to target needed securitizations sales, on XXXX introducing XXXX combination forecast our to can and hit the of net be XXXX, keeping enough while

increase $XXX be treasury an cash expect risk final improvements generation cash premiums, further in guidance. in the annual between beyond pricing $XXX is reflection we of range of end tightening significant achieve As towards and exit the million a XXXX, to of enhanced we ever can This and content and changes, run our domestic rates, top million. through rate XXXX generation

of electing Flows costs from value MSA cash sum loan model. to from of residuals the and desire our not customer favor and contracts, cash Cash all but from the a plus in and flow operating our plus securitized assets expected securitized We flows superior unpledged see inflows services. just PPA, to around cash in investor SRECs cash are flows expected lease, response sunset to in-service the of fees, inquiries metric service is recurring grid Levered and Levered all

to cost reductions. noted earlier, we As continued John have on focus

our that low basis retain maintaining approximately will annum unchanged its investment per rate, is area is which at we department XX collections to points. one capital our are continue However, ensure to loss

ATM putting no will the housekeeping weeks a we modest $XXX for anticipated capital usage. corporate update of quarter purposes Finally, coming need million and for while every XXXX, the through be in place forecast we any will in market good

now a before, and call be necessity. I back utilize do fact, we they tools will over luxury We a between like clear, ATM place time earnings the ATM to put an not call. in have in to discussed intend the this are, not John. ATM turn to to and best our next and now is when The

for management our Thanks, Rob. Sunnova streamlined and comprehensive, is committed to to customers. a and sustainable, financing, delivering energy approach servicing,

that to selectively integrated where an company are choosing people focus center, energy on on customer center picture and paint strong quality truth, with In and investments our know solutions, we our from experience. crafting to command we manipulated, adaptive adaptive facts. customers a control We is optimize on are innovative world in technology energy both by narratives integrity, perceptions services designed far technologies, commitment an the that a our and has the but our stand global provide in and to there our focus evidenced are operations firm focus our that transparency unwavering as a

of at response XX slide Moreover, average X.X% days customers the by our had improvement we to an XX, XXXX. as of investments of improvement saw of XX% XXXX example, XX age as marked escalated XXXX XXXX concern, our an see days went of This improvement a of only our in closed December was on of end in from For an work levels time XX, in X.X% from enhanced cash order December emphasis a continued To XX, December you driven the XX as service as as XXXX. will and for our and infrastructure source with we the on will mentioned, growth which expanding reductions cash accomplish as transformation look generation strengthened will more increasing be our to Sunnova, and with sales this, and we leverage year margins in aggressive a flows. more of cost cash to generation service a customer customer levered asset our long-term coupled continued service a meaningful priority. capabilities. XXXX top addition

to opportunities industry. continue will rapidly will allocation deploy of to capital. Our prudent optimal not and time, our Over in to both of we resources and evaluate unchanged. exploring hesitate management returns returns maximizing to capital capital, and dedicated value in capital advantage remains on take on our ways changing shareholder markets of remain capital the the and an commitment capital our with to creation make opportunities emphasis We evaluating attractive to

of As seeing. excited remainder what we are look we the to we are XXXX, about

we what the that, help denying greater challenging there offering demands. With no the and energy is While status we day choice the end are transforming customers of the society's difficult; the open landscape, are is at quo, energy operator, questions. doing line please to ever-increasing meet for that

question Our Thank first Shen from Philip Instructions] comes from you. line [Operator ROTH the MKM. of

that outlook? contemplated touch for and would taking any color the of through Are John, current highlighted not sale? Can questions. balance what what you is of asset on lot available more what sales know now my assets you talk your XXXX this sheet. times. your would just is magnitude sales Thanks that? you some give ahead? guess XXXX My Hey there number any Can a assets means? of securitized guidance additionally, loan you is of in you of asset on view and for you a have in I And do

some No, probably and really loans, Phil, it's plus securitizations in plan, the sell if of TPO those. be we are possibly more But looked exploring we've thanks. things we accessory guess. -- to in Pratt's loans could could loans that side see my the Yes, think don't at I solar look the But would the and we assets. -- would be our that those of primarily I both

the our pretty laid to of we of that is of see given that we've That close through and spread primarily play, second primarily I well quarter. asset timing. course out. quarter TPO year, generation cautious have back securitizing I the as the we this clear the that's think cash to year. It's the asset and would of in sales possible that our towards not to last latter realizing that even those to some into this But expect part have through given been the the so we're quarters, few assets, can't. and realizing in for to these third to the the move able speak, to starting being come in just half it's securitize of majority

why as Those assumed on is And conservative ITC -- a of tax So, are each part proceeds Obviously, content compared generation could once equity it those we up go get do to for that's is there's side, guidance, meaningfully. the primarily assumed. securitization that. IDC or percentage this. very a domestic there. securitization cash adders cash We generation have range peers in

loan end could the it meaningfully of range. a could than So bit higher then add? quite that Rob, that the supplemented And bottom be be sales. to with loan and accessory anything

that mean pretty it, covers you I like Well, much said.

you some got good in at that it locked with rates long we've and that hit pricing with So can't today you rates term securitizations can't advanced today. phenomenal some really

securitizations to make really have touch most what already. So sense of our in it we wouldn't

OpEx, of in it Thanks, quality adjusted Great. benefit to over up Shifting looks meaningfully the guys. went metrics. your seeing the service customer Clearly, that like OpEx you're in QX.

share, high specifically which for line customer the you you per these Can each lowering QX. absolute items, on in customer. outlook ahead? what basis about marketing dollar and were sales the and Can service may about scale XX% items line talk how trend quite by talked and You an this is

still does feels, a so breaking direct It of more sales small a stand some of but -- as And the sales attempted and marketing good this increase. our of we've far to growth. as visibility the is that origination, of some It's sales. portion by is give and the minority it out out

catching service some. and service up over our we On that last promised have done side, I've We've the quarters the levels about talked then the now few customers. that on

be pretty to, be which on backlog a -- once that seeing reduction done we're we've basis will cost so And customer per we'll meaningful. a that's we've cleared able

I bonus QX. And you'll some said in paid payments, see so we bonuses in that as peak QX employees outside, to

'XX, We budgets high. laid I slowing bringing but out and cost continue it's reductions few are months. the to and already some too question beyond, in seeing it can we're you we've that see this it meaningfully Clearly, last QX capital meaningful about for growth. pretty that no down expect and quarter in efficiencies in 'XX of accelerate start of spending then and There's to been as as to a spending, of and those the in helps and costs something meaningfully 'XX. are That's well part a realizing to part big as cut bring invested the the automation. those us That and soon quarter. expect this of some as lot we've efficiencies

John. Thanks, last One here. one Great.

ATM. for potential million the $XXX about talked You a modest

you on don't capital, you address in maturity? convert and hand, terms On how timing and plan you're upcoming 'XX saying have more the of announcement. share corporate but the thinking also, this you the then Can need your one to rationale you

Yes.

the like of housekeeping least been Phil. really prepared Street this quarter now, we putting we done We've because on about don't intend use it we'd the comments, talking long We it this said update ago. have our So, second a we're it time we plan is frankly, in to intended year. wish And at use, last now. to the just since publicly good but in place

be wouldn't is making we're to sure it done. so it get an So but issue, just

few The the the generation high still excess to converts then use paying thing is years and pay to the over down. to second cash planning able that on on yield converts the bond refinance on getting the had we're both and converts are the to be next

the down. of So, part first second is, use second it. And cash to is to refinance pay

debt forma the between our we refinance and expect able pro X, that. on balance of overall lower we amount that to for So those have to be sheet

the look for The and along that's do timeframe to right preparing the is not right burden, to XXXX. of that's was it to really peers is way until and with well. date. with we trying capital the generation that things looking other closer be doing still start to have of XXXX. addressing refinancing as we is we cost in time now some to the due And it up that think time paper this it what But as get brought have, we'll with The I the we're at low. our really, maturity and that cash that decrease to is

to its a few just things. Phil, wanted I John. So highlight

cash ability assets. lever existing flows the not generate levered way to the have the We all We off through the asset. did

securitizations that generating that's so and my in flow first then we're question sales cash. cash your providing has. meaningful additional no else through asset And one And frankly answer to also

generate have what cash and on pay to focused debt we X to doing down ways it so the that. the is And that's we're just

John for and much color. it on. all Rob the pass thanks I'll very

Our next question from comes from Wells Praneeth Satish Fargo.

Thanks.

you offer Just if that at way? could impacting aggressive companies maybe competition on financing you you're level comment financing any in the are pricing irrational seeing only in your strategy space any a high or seeing wondering

Yes. John. This is

We doesn't are some last seeing of that. long. very It

doing I forth surprised, But player and positive think I to one particular that. been able X the on to long is market, maybe there's peers market surprised stickiness increases our around been that for too price a as that a while got way. the the put in the have in or a And we I'm say time. me

X But share. that then very market certainly there's margin, why clearly here. ends would have different that no any We think see taking in of share. into that on now clearly the is that, one So trail reason market we're or tears. always the that healthy. always to want be and market folks come I buy to the decide we And the And

to We out, cash. growth continue really the although that to we're slowing projecting generate

to power. all, our see much so don't amount pricing a really it continue of I at impacting see And we surprising operations

implied then some a how continue of get enjoy cost but Got of course equipment X% tax from over view XXXX probably to had now, trend to general spreads spread I could declining roughly tailwinds you'll you it. And wanted and your the credit.

we holding next are just consider? interest Or puts would rates should guess spread I you the and expect months? widen over the there constant, So takes other to XX

quite I will. it likely think it's No,

in that really has in you in to some been I for high though, continue. if couple sticky. hold pricing reduction me premium, X% or has power north does the in of rate risk that word has But so XXXX. the what again, even a been without this you're bit And And materialized or to that, And that think hanging constant what been think spread from so a the pretty we're and XXXX come little the I that and plus a year. historically I seeing made minus quarters and continue expect

America. next from Julien Our comes question Dumoulin-Smith Bank of from

Tanner provide sale the on assumption guide. I in quick is about gain just XXXX wanted an ask through stated This loan upside Julien. is for question portfolio for EBITDA this target Is Or expect the of a guide, time? monetization? on this that there for to terms pure predictable you year the to a over progress opportunity monetization in Thanks. asset sales sense and be begin the in period certain through we you or do a for XXXX as of could to

Yes really that's upside.

I more think be the give into that to as we market get able more we'll appetite market information. and visibility

do You lumpy And you think it type a flow forward programs. of into could in programs can that that can season programmatic do we those guide now or that as will little ways, I it help enter really disclosure bit. to do you X it

question Our Lee Brian Goldman. from from next comes

If cash XX, then in embedded just you've those follow-up got asset $XXX and on are the in questions, generation no Thanks slide and of a I sales. XXXX, the then the Correct? million at XXXX for being million asset sales look and taking maybe $XXX forecasts?

some on could margin, if of on at there, Correct. the as -- the little loans securitized primarily Very the flows. that not little, as wholly very leveraged you if something but well look margin be that's the there

Okay. Great.

sales, like So you be opportunistic. know and base sounds John, if are casing, I you'd asset it

$XXX What sell million more sales how of up? talking those like your we a kind of be? year? $XXX started figures kind first could millions monetize cash to about in talking down asset and on If show them. Are programmatically be slide could million And hundreds dollars you of additive then upside if the of to we to this the included it you guess do I X, metric? Would assets start to generation

Yes.

for So out at on and about pretty the if time the off equity. earnings flows that in debt you we've right service been shows tax think cash you generation talking that paying we've last the Slide move cash look for several forward time, X, calls the as first I the all laid meaningful after time as first

So there's amount. there's the flows, nominal that a meaningful cumulative mean, billion. $X almost I cash levered

quite there's that essentially the could pay bit So whether a another makes bonds or say do the there that's to the of wanted if the we road. And sense to it that or do. it, we avenue down down the corporate debt, converts

-- us cash gives having an it enormous optionality. flows again amount contracted So these and gives us of

think Rob, you there me. can correct meaningful. I anything was

you I show for think all break out would but.. we to that, it

And amount, to and there. material be did go a want -- that we something that out that if we see ahead would was call

XX% kind All we right. in of question XX% XXXX the you forecast now. on It's like enough. I based in like these growing stay What the Fair systems. of deflation to growth about got there's Again, are lot And second sort slide, for happening We'll investment numbers. you've that seems a tuned. on cost had of in embedding right that was. this just know It investment?

are a or implying. guys. in that? next Thanks any investments see seem growth baked growth element meaningful year in just there would mix there you're no to what helpful be there color into Is the XXXX assumptions So maybe there's on significant unless fairly into to

Yes.

of deliver, spend anything which If service, our our on includes we spending you our the that in our sales it IT all on at G&A costs. our costs, service software That's overhead and look to all CapEx those numbers. CapEx,

when at, $X.XX you And roughly about X.X. X.X, it's look billion so

XX% little to very growth you're your looking And XXXX. so XXXX XX% to to at from point

are So XXXX flat then and from we XXXX.

debt's We said are $X the is where $X equity to sit cash here have trading to I billion our last I debt CapEx growth. range. and at we were earnings that corporate CapEx And where billion I like in where just want generate the intentionally being given trading. is point some the call, this particularly slowing trading, and before in

on going So expand and how I are cash. the like where and we're margins cut we just costs we generate focus and to do

customer guess I talking side. Yes, the John. on like on growth I more was

you're $X.X lot investment customer next So billion, that cost doing to some your you're of own presumably the would on base hardware $X.X deflation side. year as further seeing as adds well of billion billion given reductions cost XXX,XXX on $X.X year go you're XXX,XXX this making new the a

sense new XX% to XX% what you're get for kind your modest a trying or quantifying? of on growth So of in translate to to assumptions does however you're in customers investment that growth

Yes.

Okay.

So out far year. haven't guidance that just obviously this growth out given customer we for

XXX So just last about came roughly about at for in north of year. roughly that one XXX a little

can about about so the simple roughly And obviously customer growth. you The is growth. there, roughly XX% CapEx customer math XX%

our that is CapEx declining equipment count other faster declining or to charger EPC. out et channels the side and only do load manager than will and EV our you're that I that pointing continue And so is cetera I different have customer sales, feel of our different costs, now And these growth. like a because the for little uptake battery, grow in that have, reason sales of think channels, we the upsells what strong

That's get little buck going basically You per to also more CapEx and your bit having for to contribute a growth. higher growth customer. customer

enough. it pass Okay. sense. guys. on. Thanks, Fair Makes I'll

Thanks.

today Our from Kallo Baird. Ben from next comes question

guys. you, Thank

asset sales. real on quickly the Just

little John seeing a about the if Rob you that how you impact private Just bit could are does and talk that? what and -- in on your valuation, decision sales? Just market,

Yes.

have the of can you market -- have private what at next loans different at look certain it more securitization they look buyers, look out pricing third-party securitization one the sale. they And we attractive more other. the make we the for see market. we and and for So is others at them pricing, to attractive We expectations that that put

if for then can for impact were is be elect we if us to game them it's we that loans other cash, that and Hestia the really to the us. And to might an channel securitize is that sell bring flat, an instead. us So optimization securitize them hoping able thing some to certain allows be

my The together -- make an lot it right ultimately of of been lot of to to for And really outcome. team. time team tranching pricing is So that a trying game. has we're the and spend a we the finance team the sure optimization then and marketing for optimally, right pricing time we're

the John, industry impact the you in mentioned of right. health could carnage and or that does the you you? your to that's But positively but All negative negatively of about prepared you. word. the marketplace, interest imagine, and the affect how so in just remarks talk Thank but you impacts right just

think debt I gets I sometimes Sunnova at great Yes. Ben. lot the markets, our more equity and again seen we've just don't across now a a -- year. a is year focus credit yes, of think efficient, whether that. year corporate where and that, the deliver to CapEx goes in out and I negative that kudos billion everybody last obviously been from over and industry, an debt do it's numbers. and about equity markets, where cash, stay it's chain in term, dealers our Yes, $X value this trading. And securities really generate to range executed we we just that billion $X given media want to the clearly, the you the use Look, or overall, markets, there's or into cloud over And of all even Yes. for the more the how challenging folks get that But the

will which think the that's just you away, and because at just over looking look cloud California when California. made even overall a point reality that and blow were but and I So California, point some that in that at not big at over, unfortunate

when jacked -- you crazy like strength the utilities run is of know, think months, continuing the I in last there across there. numbers make lot XX the up sense, Because the why? rates they're see a and I country. numbers we're that surprising to

you're is lows that increasing gas So into rates XX%, of historic orders to XX%. prices selling a and despite industry natural plummeting

announced major increases and Just last in XX% week rate the X alone, utilities greater.

of clearly things, have this, in you've got do. through content the where of kind in case or the oil, yet pricing are to maybe got you've other stabilization the employed, of IRA will prices So improvement fuel selling worst ITCR. pretty you you of capital, and interesting incentives that be to into and equipment it domestic sideways that least at then got of cost side kind dropping, of if side the declining going And you've market, is the despite additional specifically, a that's of

So if others. innovator. of as that California this And causes it's sell and is, pain than some battery. when the what a on, brought a you you that of is name do look to people move that you all have going light, change need look doesn't -- adapt yes, at now faster do have did, a people, switch to like to you numbers just How in significant what's lot you at that change because people a happen as difficult

to is in not gain which for And to doing you This X are so the It's this time. X a I challenging. What there's that think do like lot overall ability is long negative the kind peer of that execute really the ago, years cash couldn't years Sunnova, business those continue really or a is frankly, fundamentals good can market well seems -- through as that Obviously, it time that and another so and across see means the time a the industry up everybody was when where us. happy, but of ago. generate just like ago pick the good X the heyday share. a and very great headlines headlines

fundamentally So, technologies, end out much, and new this cheap this service. come cheaper much and of storage time the a with better customer great but other we'll stronger, shall pass, too

Bob, I just for in you that. if thank one sneak And could

I risk into that know year. you coming are and still we're you [indiscernible]. how your saw policy talk but an election judging assessing before or if risk early, just you and election about could You had what year,

in the politics. just at need Look first plants, customer in been think I'm this to seen is, we the don't to and that for the being I I've of what going gas, that going as anything companies the of his seen from our and is the growth think there's of and largely I you stay say, say investment and very multiples know, IRA is just industry, and look go manufacturing so-called in some Houston, of We parts power conventional think when the oil stay in of and don't And just will you activity in anything. I've trying really so-called some don't. the large IRA. We and will I'm ever states, I've as phenomenal. sequestration If at away what's to message pretty listen even hydrogen that to don't prefer this carbon long not we on to and engaged time terms would in provisions. the you need intact been who end in away you now amount red if energy, than fully area, I interesting so are can from IRA it's provided I points, forth. political spectrum. But by the that this day, the more located just conventional ever

-- I So place. I election that a think think the we are in have And I energy -- that's we're don't of change. in certainly think going It's to policy. regardless outcome it's

you. Thank

Our from Guggenheim Osha next Partners. Joseph comes from question

Yes, thanks and good questions. Two folks. morning

cash them as bit the the out take then First, more could X free at? I the prices wondering sense, instruments trading are majority I'm of trading maybe the plan if get that and down your just that for at converts the other I really of a of a question. you at if sort drill away them what to pick I'm are or just could advantage little they X better are those And levels with we wondering have taking might now, with plan to refi is when on at one be they're trading

Yes, John. Thanks, I Joe. lot This mean a we optionality. of have

with We more et expect cash, securitize through and generate cost flows. we cetera. cash of have ITCs lumber the as the delivered And the asset to we

pointed do of options But very the look years. market do a place are trading then sell do number where doing next you are to this what place because at -- of we and over and our those questions look to few answered What already, and the we securitizations have want I in that see execute of the entirely paid is couple some some buying at been flow to converts weeks they've want go been look possible see those. we is, we out obviously, about and including, So how levered in attractive options level. is ability the that for then of to cash to accordingly. of on assets have down do as decisions in those a make we've debt, a this the call It

to primary we weapons, on but number left lost of the Rob add a sense want my us not a attractive debt's you then got very is -- that and to level earlier, that? pay cash whatever's the generate trading as at it's we've anything it Rob that focus refinance So, it and said debt as can makes to make down to

Sure. later ahead up does continue the and which in prudent -- would for we've We repurchasing will, XXXX time market some at open responsible of and we going going And go capital. another we the mean to just build just got note. making in refinance cash want optionality that stewards now between be parts and to but be to sure to point, is that's to

making there my Okay. their on curious your it in working bank. or the of wondered your of dealers as how the the dealers exists onto me emphasis on point working one coming other And breaks we this cash? your capital the at just and look down of that Thank to customer pressure talking new terms platform a preserving at context year he and adds the said about that in you. you of financial available I to pressure existing question, are dealers one I'm some in then folks not expanding that capital footprint dealers out dealers said

systems There's some of of because in we dealers. Quite coming a Joe. couple candidly Yes. saw have been processing what stumbles we terms on those experience.

that For years years. something is an years industry couple instance, It's holdbacks Sunnova ago. standard duration now become of the given and last implemented

going manage And a better where it's we that to we're lot clear growth do on things. we our know dealers closely that think coming full stop. to than on side I yes, continue anybody They the when of board. period, that. financial at scrubbed to are else, a lot look very a how new you is, have of And risk

year? up Yes a quite them. failure few So rate we it of has has. And failed that gone the last over

and see coming or you marketplace And with we any to dealers we're to for very to do competitors the and demand the do But entire continue very mean, replaced lost, those that have, will, I so So we high-graded industry, versus we large if onboard forth easily that. of we from us. dealer come replaced. easily going

managing we're like spot it. as we're We feel we partners expect. growth, a good financially. the and So in And understand the We're seeing our we're you risks. would high-grading

you. Thank

Thank you.

Strouse comes JPMorgan. question from from next Mark Our

questions. Thanks my for taking Yes, good morning.

Just I ones, Rob. quick a for couple think, of

OpEx. in talk guide. kind I In the appreciate pro ITC. then higher just than what think bit XQ, implied the than targeting I that forma a XX% you're your of XXXX was the And So Can forma in drove fully you about what question in reduction though the sales is just second was greater the OpEx pro EBITDA. that?

call just was said I XX% but wrong, the I'm to update looking XX%, an last me think going for you about be that there. on to correct if

Yes, no, absolutely.

the So OpEx, you we of in did deck. could of the see adjusted our breakout and that back our

and of to drivers, with as One half as There do really drivers some that other help into were but put year. it that adjusted to in of of have of some part do we get that internally the doing technological year-end systems stuff some were push the Part the OpEx with increases of that and second some up EPC ourselves well was helps in that the WIP more that's along what just with actually well, direct driver it don't had a had. into we of the increase and to expense built had sales, do improvements. And to part service. some of we had to move to the

what bringing the a our the deploy is think think, or has along. The of of find sales pennies at going at I to quarter we're lot attractive combination able of P&I. that to the be still things. later folks, ITC few go And could especially guide, universe those exceed forward on year, you as that as but that. transferability. XX we tend at really getting into if on we're somewhere And we're And EBITDA tax we're to that transfer, of lot economics becomes opened to much the like tax of look transferability economics about a the type plus equity leases of that look PPAs. this talking quickly looking a do we're them for on We we XX a up around of adjusted of and and partners to of more is case And partially calls per million have the XX%, They make dollar then that take, ITC that equity them. a I they combination to the the a the how So but a function base million give basis. certainly to and ITC

buyers to to on continue tax convert go-forward basis. to equity partners ITC is a into goal our trade so And

Got you, Rob. it. Thank

comes Kashy from next Sandler. Piper Harrison from Our question

and good thank Yes, you taking my for questions. morning

cost sensitivity framework So my can debt the of on forecast? cash slide. in of first net cost in give to one forecast us assume X% a is a Does And guys for you changes the liquidity then the charter change debt? this

Yes.

debt cost So pricing the current assuming -- cuts improvement. we or We're cost this into It is highlighted not what our risk well. improvement take premium, it as assuming in the of although, does I'd risk-free John say premium risk seeing current and into not account improvement account take any in is risk are that that we're the environment. does any

at for about somewhere advanced at if additional capital advantage would would budget each liquidity. you're better that of on rates to numbers. Generally probably give advance take pricing. look certainly every about to that if $XX would we're look to accretive this point we you say $XX of say then advance So talking of expense. get around And of debt additional speaking us would of that X those I points you million able point million our I That's interest

each at point degradation. So rate or point interest -- improvement each of

right belief So there's the X.X. up down the it back that to year. further in a still then came the goes about It's come of book down risk-free back since now

If $XX you one into of risk and million about that the would were with translate points in about improvement point another $XX to or that anything else to X would X see rate in a we equate free that million. changing, improvement at advance to

You million could held generation extrapolate another steady. pricing out that to cash whole assuming XXX of

John across. relative I that And all low-XXs to it's very Kashy, is conservative I say this assumption would thing, One add others adders. the would ITC of the way the

of sort domestic any upside going numbers So potential up there with that meaningfully. these content quite is move to

can brought well on since a well? you it as Yes, sensitivity ITC that. give us the up you Appreciate

be our XX I we given other it would say north haven't would mean anything I be commentary XX conservative of that to maximum. kind too some It somewhere of was XX? considered may

mean this running XX. most about at I Yes. is

my a proceeds call So on little if pretty maybe proceeds go you debt you XX% in increase that. a the debt that and much got your XX else everything down bit equity would tax would to up

change So the a any that call net the less we'd the on expect equity that XX% in recourse to increase total tax get debt.

plan. capital this in So it's call be not XXX XXX it a to lot going to this in

very to done And the the nature get just appetite people for to fully the use final need utilize want rules of that, allow domestic be content. end other content. been up push there could thing we is and it Now there does But depends additional strong really to building to where be domestic that's it. to an tends rules We that on gratifying appear us there for a that actually be one to us and deploying. guidance to

we're reflection We're where So at even what in than anything energy is this based this targeting. is are. we point a plan. really This more else on building really not communities domestic of content

to from you above in are my X as to think just you that I'm question. is for follow you experienced think Appreciate and which points all beginning upper to players one benefiting are the wider I guys to hike the think spreads. limit other then quarters, up and back prior XXX was market that wondering Fed quick basis the color the presumably at do where they're it maybe Spreads about well what were pretty do and is which X XXX specifically? or above. XXX spreads How quarter close point

like that XXX peak. XXX probably we the that long-term see in be XXX And out the to would that I the for wouldn't so any case. And we've to why is think reason be again, And felt I laid don't that average. somewhere range years it

consider strong have a are especially, competition it at a and is markets wanted recession the big But versus the our maybe seen flock it market only of on seen. out would pretty least it towards given investors premiums more importantly for why would get by out reason And and I brought further or further drops more now risk you and be ever peak. than some risk-free a that we could Now if time, could of of wouldn't case XXX bit the where be the quite suddenly little expand decline the to widen nature. paper the we paper it a it I've of period probably performance, more right what is what maybe something think I to that other

from comes Sophie question from Karp Our next KeyBanc.

rundown for what consider for trends demand foreseeable geographically, do where and grow in now and the markets you if current I the question. you in look in my of like which terms you give on Hi, was US can highest good right the could and future? us different a thank guys morning, environment and taking see the unsalable ones wondering quick you

a of so is John. in share that that We our have increase that and plans be new retrofit seem, with small been homes pretty and growth islands of Mid-Atlantic businesses to out ago. to are markets easy be we're market vast mature pretty strong the about market to region That's we're Puerto doing pretty region do of channel. more building pretty continued seeing Northeast of improve say, of that across it's to the have that general there. The what the we've we've anything. growth, the growth trend a in markets exception in rest and would is I on would the like of those South certain growth of And started The but well. that over had Most never California. board seems other the Rico for and those these this much some growth. strong instance Sophie, majority seeing probably decade – states and us. lot then We're California I'm pretty solid our historically

is to and on. relationship our the by be to Depot been that Some some of bring able of we've that Home going dealers other enabled

TPO, So I that about. quickly surprised – to certainly traction. that And something decidedly it's loan to it's went have been from gains we a market gain a think continued bit fairly and

you And with a the there so there's PPA. just lease know not – out or many that folks with as

customer with Home on lines channels the maybe other of So along solar the eat that. addressing is the to structural that and your costs, thought sales the partnership you economics acquisition and Can going spin, costs acquisition guess markets the is on have. higher then you to Depot give helpful. And knock US into customer costs I guys any in are

some wondering point So strategically this have any future? the in thoughts can guys I that if given you and address at how was you

actually Yes, retail. with we are

that me different we've then the driven. Home that We focus going to to model. And on on do addressed the its that continue Again, have channels is this you dealers and retail and company dealer Depot on it. is what into a we're model. We very have fundamentally built focused is company asked about and specifically, business have that going

channel. partner, our others very we and in model financially have are for a than done and our different So, than retail perspective been financially, for financially. doing the us retail have partners It's what successful for very dealers

changed we and have up that it So, working. is model

Yes. of Thank take I'll the time. rest you. you. Thank

you. Thank

Molchanov comes from James. question next from Raymond Pavel Our

to taking speak. politics, the at question the a of so risk bit into Thanks delving for

months You Committee situation? that the just had from update an whole was on Congressional about that several get Can the ago. letter we Healthia obviously

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I calling the and like federal service service that ourselves. think years. States mandate government for the companies audit creditworthy a with We've companies, been Fed for

focus to improve shall to we the And something going our can that. others and we're doing noise, leave on And there's X deal to to we're going for customer. say better a we job again, going we're doing on So, with. better, to always focus on

in particularly Okay. if a I'm opportunities conditions, it are corporate industry the current up been as entering new Sunnova selling company sort when Fair follow lot of enough. Can You've for to a M&A? comes there asked any curious assets. about I geographies? just on M&A

and at. some attractive look see we're do taking good It's a asset that question purchases we a

have to interesting see side be yet, that we business we on executed it do. that may of but anything things pretty and market We of in haven't more particularly seen the

need make comment in cash On highest have I think We that all terms the at specifically, we growth but it's the right the sure M&A the possible to growth possible. we obviously, really Act, need. anything now, the corporate of can't comes generation we

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else the generating other stay just the really and focused opportunities to of to right some they'll either. these exploit down to we we is be And cash able So, nobody road, expand now because need and those on need things. then doing there

I possibility. see on horizon So, a anything there's the always but don't

UBS. question next William from Our Grippin comes from

discussed could levels in How you O&M those here. one in to relative me squeezing embedded first seeing for here? time light your in costs. wondering and was you're that enhancements in what's just Thanks of value Great. if your touch My service assumptions, you response particularly on trends customer

per quickly. Yes. cost is We coming customer This the down John. rather see

We improvement. We that's lot new been have place have been we in brought putting a a in a over of IT clearly and new ago year tremendous processes. a leadership

effective, So, can we have service. best I'd improve to the is, wanted we mean the way the done we We to at think it doesn't get that put in now, industry that opportunity that to just question I improve our But cost we see of things we're from realizing the side into gentleman. structure lot answered on the and go a of service that.

here forward I'm those. per on large moving cost quite bit achieve and the as we'll than a expect the we're from out we decreases on really customer even XX% quite So, service quite confident in greater

And for Perfect. just here. one last the me

wide pretty higher be of the of cash on more you us a driven puts growth? would of cost generation more And a and end some get of that gave versus to guidance then function takes is the that the lower that Could you You through walk going exiting end range to XXXX. or capital range?

One could that a If a get we guidance. would us domestic of significant get uplift there's is there. There's assume we will content, get ITC the we things better couple a there.

being blow enjoying some And it the much seen risk well. And a still asset keeping down, range. mean could on come it's benefit. would we cash finally, premium. And see nothing sales. that's years we're it I still back we we if sorry risk If that frankly, But the and then contraction industry really risk-free. irrationally was the wider the through on the X, a that there's with pretty trying artificially was We've even can this risk-free in, of with continue to then be number is obviously, of target I'm -- risk than second X is premium premium. ago The a much, it but up third, would the can as margins nascent accretive very -- that the too. was that's to If tight when we at accelerate could sales, that I number. end asset that magnitude say then depends the that to not aspirational comes

from Schafer Our Capital Markets. next question from Donovan comes Northland

you things more address customer overall talk can want else like was Depot But right forget someone I and way have kind about proactive curious and there Home that to -- if the actions it asked it. sounds you who and generally costs about follow-up and take the approach measures with industry you to with trends you the the now. I'm I acquisition that, of

parallel the intermediate wave more just adopters market And it just one to it of to but an contemplate, somehow -- and So, you a -- are maybe of third I'm if so of it growth some a at and for and getting maybe a had ones best has guys that has you there? the kind -- been impacts And anything the people consumer difficult adopters. I early kind just commercial would think in any raises somehow? the this -- EVs, idea you of customer and and is guys kind around comes commentary you initially on have slower or mind kind costs sort wondering there's that have fourth sorry of wave for EV there then then you It if or be seen that than had makes bit question the have that all probably well that's are acquisition of thinking helpful. answer. In

Certainly.

to that terms being we you services overall we're company expect our adaptive and services in continue. energy look to us an -- a think profitable strategy energy when selling customers. at and I serve of multiple services to huge That's been benefit growth

a EV additional coming then got pretty generators years And you in pricing of existing and bear, is done that better And that offer we storage we specifically plummet as so over see a we've really pricing base interesting. continues the to to well as downwards. management all items that have go items as that enabling strong than charging, uptake. And like battery that and and the And us it's frankly. And quite our that's that upsell anybody can bit. to pretty load back is customer really roofing other

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dealers And and market market board so current we're really and customers we products is better on from costs, our that as dealers set better adding our services widest the that overall feel dealer. hear our but delivering be and drop that people share. And come lot on of big more product better customer is to we the our cheaper where just I in think customer growth of that lot We and that taking best industry. continues be see more are portion organic and that outside some frankly them the and a acquisition are the base the on minding opportunity come to to want a new our

the the service plus will do quite become nobody install flow do first that first I we the and and years have expanding how not now great just only, power of how being best talking nicely. really to about sell you the do you service weeks it the having offer to the not life the you that few you how and to the that able is get after even X so think months marketplace for then contract XX do if that talked something products us about everybody's for it's service but service about And that services

focus on We on service. focus we products. So these delivering new

in some hardware middle go the the of some Our in than country the partners down. And cost states. in the of to will products, and of of OEM think better continue market will we're that acquisition seeing the states, continue the expand I cheaper delivering focus southern on part to

to regards there's again, happening marketplace with that capital most lot a up to today things good obviously think so, the the in I markets. speak And more then

kind guys so you stood as the on if more maybe compared And you helpful. always southern less and have presence peers. and out, other other islands markets Puerto a That's Okay. follow-up, have in Rico, some California then even of we, just say, to some

terms LMI, hindsight like you're I'm -- of you of and kind the tax are the energy IRR the finding credits of like gee-whiz. in you and you finding the communities the for draw, So like out luck wondering adder in

you quite to low or not going like owners. in so many look California probably at Home middle have If I you're California income

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insightful is question. yes. answer That's Yes. an The

right. You're

Okay.

appreciate I'll it. Okay. I address Thank Well, my offline. questions you.

You you. bet. Thank

Mandloi comes question Mizuho. from from next Our Maheep

Thanks squeezing for me in.

on asset in look your none but Just thinking mid-teens XX-XX. the or for here? But sale tranches hitting pricing? some and keep sales of asset today And high-yield it which versus of to you're for low asset seeing question you're the should into a from those guidance more curious just talks manages, ATM they about attractive think what we We how pricing? how about are said planned

an Is residual what's at are versus we sales really of a pricing does or looking the it's about securitization? thinking is sale, more think assets either to think holistically, the ATM and sense an meant return. cash function securitization a said or with not looking make That's is it saying that at the asset using. about It than do go has and and ATM? have a put we the time something good a to be not to Board best into been need we it we're something housekeeping. it. said in be do not been for that, monetizing while. it yield to and That's a unlevered And where it we're we the Or through entire stack stack burdened better an again So, going what's liquidity? it us, asset attractive pricing to Like you just that's to the there. request whole return fully when sell to and sales, ATM, when for is much full-stack we asset of that the a and place don't longer housekeeping the ahead better the and This

a about it. changing And the maybe remarks quarter next question talked at you not stage the we'll in and the revisit prepared guidance the here then end this at just on

at cuts, mostly credit EBITDA how what's like, on the the should guidance stage? there, upside So transferability anything we for? else tax And much look OpEx it's of is in the this

said there. to per got $XX I the guidance, EBITDA million sales we've of Like on about million Sure. $XX ITC in quarter

as the to we we than We better a guidance. through to part not as it's we much and well that, a additional out this is had we've through and sure what big budget versus and impact the that part growth, cost produced year. PPA doing could starts modest there. want but grind this we how cuts get can than how can see gone So of then that lot some And see of making see growth certainly loan and what uplift less do fairly but we have make process, what and been to of market do with lease sure develop the to roll we

it's pretty but necessarily there. out admittedly change, range don't So guidance expect wide to we

there. tighten a we're up to that more granular So able to maybe hoping and bit be get a bit little

Thank appreciate you. that. I

Nassano Research. Wolfe Our next question from from comes Dylan

running your me. I question know just we're for a quick time. for long Thanks here, bit so one

the guidance on prepared once update said you remarks that out. you So XXXX cutting is may how cost see you playing

would wondering, bit scenario be You've gross cases appreciated? elaboration also initiatives. Any a there upside the laid Thank unit I'm may you. as growth a be where comment customer reduced on additions we for out that is EBITDA. some But lower

This this had for is think QX our our cut cotton where good is about we customer year, the we I additions down range plan. as John. call feel had range this of say I in we Possibly. pretty CapEx -- that north But this we would clearly from

just coming plan. And so I back think we're into

are. sell with earlier more feel I we Again growth. services we we CapEx than the channels good be pretty So as and our where about ability accessory able grow mentioned the other have customers to the to or faster

right the So, more here, about pickup growth quarter we now, trend, on. feel our pretty seeing we good on and are as more goes

but a obviously well. nice see the quite also as that's So for to us, industry

I than overall another. going is year It's we're And better like a industry have think track feel yet for as we year going think. record on what think certainly, be a us. And an I to so we're we're to at to people

question BMO from Ameet Capital for one time more just have We Thakkar, Markets.

me on. Thanks in for squeezing

to kind ratio debt been we've north and wondering, kind bring I towards couple to of just last that going ratio guys years. XX% means to a targeted of the what designed it leverage more the in more kind to to sale entity size add that cap towards? past that think be of drive you've kind or given the got of I a asset that's of decreasing is was overall you of we trying are the bit you the size little kind of XX% and ability and of back

right. You're

we're So the is we've to there and XX% been target so that, pegging XX% in we've been targeting to down XX% quarters. term and that last targeting on bring that long XX%. about We're XX%, for the few a

So debt. again, primarily focused on generating paying cash down and

with net would necessarily a and So I assets that to of reduction monetizing, see wouldn't make that sense selling even to or do. expect it, of debt much be

we're to down. that So going bring

out and that something good top clearly I focus? my think call that's it's it's a

make about you to weather kind you TPO? of more sense Okay. value of something monetizing. potentially like look assets loans would more just portfolio of the for or kind what's And that then -- of kind guess for the sense like at and notional you within Mike us a kind the Can what what's I loan of of how talked give be sorts guys

been the marginal which securitized origination has not that On yet?

Yes.

the will months. service billion and loans, probably billion it quite over the probably got So now generate of X we've origination X not our in it next call course XX right within of within another on warehouses net

So that's could go that origination. a assets after of pool action pickup that absent in we existing your loan

time. Great. Thanks for

you. Thank

concludes That Q&A portion today's remarks. the Berger now call. to will over John of back I for final any hand

continue energy excellent forward to Thank and a continue to aggressively to our you leverage. We to Thank cash work customers you number you. going we execution joining to generation. on going our to operating We're us. improve our country prioritizing expand to of cost shareholders. returns growing around reaching pursue to cuts, importantly, delivery we're for to look updating most we services margins, the We're as and are our scale, deliver

today's concludes earnings call. full That fourth XXXX Sunnova's year quarter conference

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