Sunnova Energy Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

a12344345-20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________________________

FORM 10-Q

_______________________________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38995

_______________________________________________________________________________

Sunnova Energy International Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________________________________

Delaware

30-1192746

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

20 East Greenway Plaza, Suite 540

Houston, Texas 77046

(Address, including zip code, of principal executive offices)

(281) 985-9904

(Registrant's telephone number, including area code)

_______________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	NOVA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 93,587,398 shares of common stock outstanding as of October 26, 2020.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements generally relate to future events or Sunnova's future financial or operating performance. Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. In some cases, you can identify these statements because they contain words such as "may," "will," "likely," "should," "expect," "anticipate," "could," "contemplate," "target," "future," "plan," "believe," "intend," "goal," "seek," "estimate," "project," "target," "predict," "potential," "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this report include, but are not limited to, statements about:

•the effects of the coronavirus pandemic on our business and operations, results of operations and financial position;

•federal, state and local statutes, regulations and policies;

•the price of centralized utility-generated electricity and electricity from other sources and technologies;

•technical and capacity limitations imposed by operators of the power grid;

•the availability of tax rebates, credits and incentives, including changes to the rates of, or expiration of, federal tax credits and the availability of related safe harbors;

•our need and ability to raise capital to finance the installation and acquisition of distributed residential solar energy systems, refinance existing debt or otherwise meet our liquidity needs;

•our expectations concerning relationships with third parties, including the attraction, retention, performance and continued existence of our dealers;

•our ability to manage our supply chains and distribution channels and the impact of natural disasters and other events beyond our control, such as the coronavirus pandemic;

•our ability to retain or upgrade current customers, further penetrate existing markets or expand into new markets;

•our investment in our platform and new product offerings and the demand for and expected benefits of our platform and product offerings;

•the ability of our solar energy systems, energy storage systems or other product offerings to operate or deliver energy for any reason, including if interconnection or transmission facilities on which we rely become unavailable;

•our ability to maintain our brand and protect our intellectual property and customer data;

•our ability to manage the cost of solar energy systems, energy storage systems and our service offerings;

•the willingness of and ability of our dealers and suppliers to fulfill their respective warranty and other contractual obligations;

•our expectations regarding litigation and administrative proceedings; and

•our ability to renew or replace expiring, canceled or terminated solar service agreements at favorable rates or on a long-term basis.

Our actual results and timing of these events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

Table of Contents

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Cash Flows	6
	Unaudited Condensed Consolidated Statements of Redeemable Noncontrolling Interests and Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	57

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
	Signatures	61

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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


	As of September 30, 2020		As of December 31, 2019


Assets
Current assets:
Cash	$	84,635	$	83,485
Accounts receivable—trade, net	11,799		10,672
Accounts receivable—other	13,354		6,147

Other current assets, net of allowance of $591 and $112 as of September 30, 2020 and December 31, 2019, respectively	199,637		174,016
Total current assets	309,425		274,320

Property and equipment, net	2,172,727		1,745,060
Customer notes receivable, net of allowance of $14,177 and $979 as of September 30, 2020 and December 31, 2019, respectively	428,586		297,975
Other assets	243,548		169,712
Total assets (1)	$	3,154,286	$	2,487,067

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable	$	29,288	$	36,190
Accrued expenses	27,944		39,544
Current portion of long-term debt	109,729		97,464
Other current liabilities	18,572		21,804
Total current liabilities	185,533		195,002

Long-term debt, net	1,795,039		1,346,419
Other long-term liabilities	162,395		127,406
Total liabilities (1)	2,142,967		1,668,827

Commitments and contingencies (Note 14)

Redeemable noncontrolling interests	135,847		127,129

Stockholders' equity:
Common stock, 91,125,076 and 83,980,885 shares issued as of September 30, 2020 and December 31, 2019, respectively, at $0.0001 par value	9		8
Additional paid-in capital—common stock	1,198,680		1,007,751
Accumulated deficit	(476,095)		(361,824)
Total stockholders' equity	722,594		645,935
Noncontrolling interests	152,878		45,176
Total equity	875,472		691,111
Total liabilities, redeemable noncontrolling interests and equity	$	3,154,286	$	2,487,067

(1) The consolidated assets as of September 30, 2020 and December 31, 2019 include $1,254,660 and $790,211, respectively, of assets of variable interest entities ("VIEs") that can only be used to settle obligations of the VIEs. These assets include cash of $12,396 and $7,347 as of September 30, 2020 and December 31, 2019, respectively; accounts receivable—trade, net of $2,719 and $1,460 as of September 30, 2020 and December 31, 2019, respectively; accounts receivable—other of $903 and $4 as of September 30, 2020 and December 31, 2019, respectively; other current assets of $131,242 and $47,606 as of September 30, 2020 and December 31, 2019, respectively; property and equipment, net of $1,094,801 and $726,415 as of September 30, 2020 and December 31, 2019, respectively; and other assets of $12,599 and $7,379 as of September 30, 2020 and December 31, 2019, respectively. The consolidated liabilities as of September 30, 2020 and December 31, 2019 include $20,227 and $13,440, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of $2,133 and $1,926 as of September 30, 2020 and December 31, 2019, respectively; accrued expenses of $603 and $35 as of September 30, 2020 and December 31, 2019, respectively; other current liabilities of $277 and $612 as of September 30, 2020 and December 31, 2019, respectively; and other long-term liabilities of $17,214 and $10,867 as of September 30, 2020 and December 31, 2019, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue	$	50,177	$	36,615	$	122,796	$	97,942

Operating expense:
Cost of revenue—depreciation	15,113		10,942		42,120		30,820
Cost of revenue—other	1,403		1,186		5,315		2,914
Operations and maintenance	3,469		1,925		8,614		6,468
General and administrative	28,549		28,509		84,575		70,984
Other operating income	(6)		(49)		(28)		(129)
Total operating expense, net	48,528		42,513		140,596		111,057

Operating income (loss)	1,649		(5,898)		(17,800)		(13,115)

Interest expense, net	29,954		30,884		127,804		99,855
Interest expense, net—affiliates	—		701		—		4,098
Interest income	(5,999)		(3,407)		(17,299)		(8,868)
Loss on extinguishment of long-term debt, net	50,721		—		50,721		—
Loss on extinguishment of long-term debt, net—affiliates	—		—		—		10,645
Other (income) expense	91		293		(175)		827
Loss before income tax	(73,118)		(34,369)		(178,851)		(119,672)

Income tax expense	176		—		176		—
Net loss	(73,294)		(34,369)		(179,027)		(119,672)
Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests	(9,113)		3,221		(18,513)		7,170
Net loss attributable to stockholders	(64,181)		(37,590)		(160,514)		(126,842)
Dividends earned on Series A convertible preferred stock	—		—		—		(19,271)

Dividends earned on Series C convertible preferred stock	—		—		—		(5,454)

Net loss attributable to common stockholders—basic and diluted	$	(64,181)	$	(37,590)	$	(160,514)	$	(151,567)

Net loss per share attributable to common stockholders—basic and diluted	$	(0.73)	$	(0.62)	$	(1.88)	$	(5.77)
Weighted average common shares outstanding—basic and diluted	87,768,712		60,890,129		85,276,841		26,245,493

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(179,027)	$	(119,672)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	47,811		34,987
Impairment and loss on disposals, net	1,768		1,236
Amortization of deferred financing costs	6,781		8,795
Amortization of debt discount	12,205		2,027

Non-cash effect of equity-based compensation plans	8,389		6,974
Non-cash payment-in-kind interest on loan	780		—
Non-cash payment-in-kind interest on loan—affiliates	—		2,716
Unrealized loss on derivatives	2,755		30,262
Unrealized (gain) loss on fair value option instruments	(165)		97
Loss on extinguishment of long-term debt, net	50,721		—
Loss on extinguishment of long-term debt, net—affiliates	—		10,645
Other non-cash items	10,566		4,637
Changes in components of operating assets and liabilities:
Accounts receivable	(2,785)		(8,006)

Other current assets	(10,688)		(11,753)
Other assets	(32,541)		(37,787)
Accounts payable	(3,274)		5,156
Accrued expenses	(8,566)		(2,455)
Other current liabilities	(2,781)		75

Long-term debt—paid-in-kind—affiliates	—		(719)
Other long-term liabilities	(3,745)		(1,753)
Net cash used in operating activities	(101,796)		(74,538)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(439,855)		(299,199)
Payments for investments and customer notes receivable	(180,725)		(104,391)
Proceeds from customer notes receivable	25,028		14,072
State utility rebates and tax credits	327		401
Other, net	950		(584)
Net cash used in investing activities	(594,275)		(389,701)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	1,182,912		588,153
Payments of long-term debt	(667,670)		(318,855)
Proceeds of long-term debt from affiliates	—		15,000
Payments of long-term debt to affiliates	—		(56,236)
Payments on notes payable	(3,017)		(2,177)
Payments of deferred financing costs	(18,317)		(10,435)
Payments of debt discounts	(3,132)		(1,084)
Proceeds from issuance of common stock, net	4,269		164,695
Proceeds from equity component of debt instrument, net	73,657		—
Proceeds from issuance of convertible preferred stock, net	—		(2,510)
Contributions from redeemable noncontrolling interests and noncontrolling interests	197,360		119,372
Distributions to redeemable noncontrolling interests and noncontrolling interests	(4,484)		(6,289)
Payments of costs related to redeemable noncontrolling interests and noncontrolling interests	(4,108)		(3,155)
Other, net	(1)		(15)
Net cash provided by financing activities	757,469		486,464
Net increase in cash and restricted cash	61,398		22,225
Cash and restricted cash at beginning of period	150,291		87,046
Cash and restricted cash at end of period	211,689		109,271
Restricted cash included in other current assets	(54,096)		(16,688)
Restricted cash included in other assets	(72,958)		(41,557)
Cash at end of period	$	84,635	$	51,026

Table of Contents


	Nine Months Ended September 30,
	2020		2019
Non-cash investing and financing activities:

Change in accounts payable and accrued expenses related to purchases of property and equipment	$	7,603	$	25,576
Change in accounts payable and accrued expenses related to payments for investments and customer notes receivable	$	(12,429)	$	(6,335)
Change in accounts payable and accrued expenses related to financing costs	$	(972)	$	(485)
Transfers of inventory to property and equipment, net and customer notes receivable	$	38,089	$	1,628



Non-cash conversion of convertible senior notes for common stock	$	84,196	$	—

Supplemental cash flow information:
Cash paid for interest	$	69,058	$	48,866
Cash paid for income taxes	$	58	$	—

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

(in thousands, except share amounts)


	Redeemable Noncontrolling Interests		Series A and Series C Convertible Preferred Stock			Series A and Series B Common Stock				Common Stock	Additional Paid-in Capital - Convertible Preferred Stock		Additional Paid-in Capital - Common Stock		Accumulated Deficit			Total Stockholders' Equity		Noncontrolling Interests		Total Equity


			Shares	Amount			Shares	Amount				Shares					Amount
December 31, 2018	$	85,680	57,949,374	$	579		8,634,455	$	86		—		$	—	$	701,326		$	85,439	$	(286,312)	$	501,118	$	—	$	501,118
Net income (loss)	3,018		—	—			—	—			—		—		—			—		(38,514)		(38,514)		—		(38,514)
Issuance of common stock	—		—	—			2,143	—			—		—		—			4		—		4		—		4
Repurchase of convertible preferred stock	—		(13,484)	—			—	—			—		—		(183)			—		(8)		(191)		—		(191)
Contributions from redeemable noncontrolling interests	18,030		—	—			—	—			—		—		—			—		—		—		—		—
Distributions to redeemable noncontrolling interests	(3,652)		—	—			—	—			—		—		—			—		—		—		—		—
Costs related to redeemable noncontrolling interests	(1,562)		—	—			—	—			—		—		—			—		—		—		—		—
Equity in subsidiaries attributable to parent	(10,125)		—	—			—	—			—		—		—			—		10,125		10,125		—		10,125
Equity-based compensation expense	—		—	—			—	—			—		—		—			281		—		281		—		281
Other, net	2,627		—	—			—	—			—		—		493			—		(2)		491		—		491
March 31, 2019	94,016		57,935,890	579			8,636,598	86			—		—		701,636			85,724		(314,711)		473,314		—		473,314
Net income (loss)	931		—	—			—	—			—		—		—			—		(50,738)		(50,738)		—		(50,738)
Contributions from redeemable noncontrolling interests	32,207		—	—			—	—			—		—		—			—		—		—		—		—
Distributions to redeemable noncontrolling interests	(1,491)		—	—			—	—			—		—		—			—		—		—		—		—
Costs related to redeemable noncontrolling interests	(419)		—	—			—	—			—		—		—			—		—		—		—		—
Equity in subsidiaries attributable to parent	(18,297)		—	—			—	—			—		—		—			—		18,297		18,297		—		18,297
Equity-based compensation expense	—		—	—			—	—			—		—		—			713		—		713		—		713
Other, net	600		—	—			—	—			—		—		(1)			—		—		(1)		—		(1)
June 30, 2019	107,547		57,935,890	579			8,636,598	86			—		—		701,635			86,437		(347,152)		441,585		—		441,585
Net income (loss)	3,028		—	—			—	—			—		—		—			—		(37,590)		(37,590)		193		(37,397)
Issuance of common stock, net	—		—	—			—	—			14,865,267		1		—			164,391		—		164,392		—		164,392
Non-cash conversion of convertible notes for Series A and Series C convertible preferred stock	—		2,543,127	25			—	—			—		—		32,809			—		—		32,834		—		32,834
Non-cash exchange of Series A and Series C convertible preferred stock and Series A and Series B common stock for common stock	—		(60,479,017)	(605)			(8,636,601)	(86)			69,115,618		7		(734,444)			735,128		—

Price	11.65	EPS	-1
Shares	61	P/E	-8
MCap	709	P/FCF	-38
Net Debt	1,067	EBIT	-84
TEV	1,776	TEV/EBIT	-21
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-10-29
10-Q	2020-06-30	Filed 2020-07-30
S-1	2020-06-29	Public Filing
10-Q	2020-03-31	Filed 2020-05-15
10-K	2019-12-31	Filed 2020-02-25
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-19
S-1	2019-06-27	Public Filing
10-K	2018-12-31	Filed 2019-03-19
10-Q	2018-09-30	Filed 2018-11-07
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-03-23
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-08
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-31	Filed 2017-03-20
10-Q	2016-09-30	Filed 2016-11-03
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-12
10-K	2015-12-31	Filed 2016-03-22
10-Q	2015-09-30	Filed 2015-10-30
10-Q	2015-06-30	Filed 2015-08-11
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-02-23
10-Q	2014-09-30	Filed 2014-11-12
10-Q	2014-06-30	Filed 2014-07-29
10-Q	2014-03-31	Filed 2014-05-08
10-K	2013-12-31	Filed 2014-03-28
10-Q	2013-09-30	Filed 2013-11-12
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-03
10-K	2012-12-31	Filed 2013-03-27
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-08-13	Filed 2012-08-13
10-Q	2012-03-31	Filed 2012-05-11
10-K	2011-12-31	Filed 2012-03-29
10-Q	2011-09-30	Filed 2011-11-14
10-Q	2011-06-30	Filed 2011-08-03
10-Q	2011-03-31	Filed 2011-05-02
10-K	2010-12-31	Filed 2011-03-22
10-Q	2010-09-30	Filed 2010-11-10
10-Q	2010-06-30	Filed 2010-08-13
10-Q	2010-03-31	Filed 2010-05-17
10-K	2009-12-31	Filed 2010-03-24

8-K	2020-11-30	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2020-11-30	Enter Agreement, Exhibits
8-K	2020-11-20	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2020-10-30	Enter Agreement
8-K	2020-10-28	Earnings, Regulation FD, Exhibits
8-K	2020-10-27	Officers, Exhibits
8-K	2020-10-01	Enter Agreement, Off-BS Arrangement
8-K	2020-09-24	Enter Agreement
8-K	2020-09-01	Officers
8-K	2020-08-13	Enter Agreement, Other Events, Exhibits
8-K	2020-07-29	Earnings, Regulation FD, Exhibits
8-K	2020-07-01	Enter Agreement, Other Events, Exhibits
8-K	2020-06-29	Enter Agreement
8-K	2020-06-22
8-K	2020-06-17
8-K	2020-06-12
8-K	2020-05-20
8-K	2020-05-14
8-K	2020-04-02
8-K	2020-03-03
8-K	2020-02-24
8-K	2020-02-14
8-K	2020-02-11
8-K	2020-02-04
8-K	2020-01-23
8-K	2019-12-05
8-K	2019-10-31
8-K	2019-10-16
8-K	2019-10-03
8-K	2019-09-13
8-K	2019-09-12
8-K	2019-08-30
8-K	2019-08-19
8-K	2019-07-24
8-K	2018-01-23

EX-10.1	exhibit101-amendmentno.htm
EX-10.2	exhibit102-amendmentno.htm
EX-10.3	exhibit103-arguarantyt.htm
EX-10.4	exhibit104-prcreditagr.htm
EX-10.5	exhibit105-limitedperf.htm
EX-31.1	exhibit311-q32020.htm
EX-31.2	exhibit312-q32020.htm
EX-32.1	exhibit321-q32020.htm
EX-32.2	exhibit322-q32020.htm

NOVA 10Q Quarterly Report

Sunnova Energy Earnings 2020-09-30