Sunnova Energy International Inc. [NOVA] Filings

10-Q 1 nova-20240930.htm 10-Q nova-20240930

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, 2024


☐			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) 892-1588

(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 124,952,654 shares of common stock outstanding as of October 28, 2024.

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	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 4.	Controls and Procedures	68

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	69
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 3.	Defaults Upon Senior Securities	78
Item 4.	Mine Safety Disclosures	78
Item 5.	Other Information	78
Item 6.	Exhibits	80
	Signatures	81

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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"). Unless the context otherwise requires, the terms "Sunnova," "the Company," "we," "us" and "our" refer to Sunnova Energy International Inc. ("SEI") and its consolidated subsidiaries. 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 "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "will" 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:

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

•determinations of the Internal Revenue Service ("IRS") of the fair market value of our solar energy systems;

•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 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;

•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 customer 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.

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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)


	Notes	As of September 30, 2024		As of December 31, 2023


Assets
Current assets:
Cash and cash equivalents		$	208,913	$	212,832
Accounts receivable—trade, net	2	46,416		40,767
Accounts receivable—other	2, 6	257,733		253,350

Other current assets, net of allowance of $5,193 and $4,659 as of September 30, 2024 and December 31, 2023, respectively	2, 4, 6	401,530		429,299
Total current assets		914,592		936,248

Property and equipment, net	2, 3	6,980,352		5,638,794
Customer notes receivable, net of allowance of $124,634 and $111,818 as of September 30, 2024 and December 31, 2023, respectively	2, 4, 6	3,930,847		3,735,986
Intangible assets, net		112,322		134,058

Other assets	2, 4, 6, 8, 14	944,199		895,885
Total assets (1)		$	12,882,312	$	11,340,971

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable	2	$	484,252	$	355,791
Accrued expenses	2	96,990		122,355

Current portion of long-term debt	3	324,748		483,497



Other current liabilities	2, 4, 14	153,036		133,649




Total current liabilities		1,059,026		1,095,292

Long-term debt, net	7	7,908,860		7,030,756


Other long-term liabilities	2, 5, 14	1,230,979		1,086,011
Total liabilities (1)		10,198,865		9,212,059

Commitments and contingencies	14

Redeemable noncontrolling interests	2, 10	256,440		165,872

Stockholders' equity:
Common stock, 124,923,776 and 122,466,515 shares issued as of September 30, 2024 and December 31, 2023, respectively, at $0.0001 par value	11, 12	12		12

Additional paid-in capital—common stock	2, 11, 12	1,780,464		1,755,461
Accumulated deficit		(1,573)		(228,583)
Total stockholders' equity		1,778,903		1,526,890
Noncontrolling interests	2, 10	648,104		436,150
Total equity		2,427,007		1,963,040
Total liabilities, redeemable noncontrolling interests and equity		$	12,882,312	$	11,340,971

(1) The consolidated assets as of September 30, 2024 and December 31, 2023 include $6,741,429 and $5,297,816, respectively, of assets of variable interest entities ("VIEs") that can only be used to settle obligations of the VIEs. These assets include cash of $91,642 and $54,674 as of September 30, 2024 and December 31, 2023, respectively; accounts receivable—trade, net of $22,242 and $13,860 as of September 30, 2024 and December 31, 2023, respectively; accounts receivable—other of $213,340 and $187,607 as of September 30, 2024 and December 31, 2023, respectively; other current assets of $745,644 and $693,772 as of September 30, 2024 and December 31, 2023, respectively; property and equipment, net of $5,527,005 and $4,273,478 as of September 30, 2024 and December 31, 2023, respectively; and other assets of $141,556 and $74,425 as of September 30, 2024 and December 31, 2023, respectively. The consolidated liabilities as of September 30, 2024 and December 31, 2023 include $312,125 and $278,016, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of $199,638 and $197,072 as of September 30, 2024 and December 31, 2023, respectively; accrued expenses of $967 and $157 as of September 30, 2024 and December 31, 2023, respectively; other current liabilities of $5,726 and $7,269 as of September 30, 2024 and December 31, 2023, respectively; and other long-term liabilities of $105,794 and $73,518 as of September 30, 2024 and December 31, 2023, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

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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,
	Notes	2024		2023		2024		2023
Revenue:
Customer agreements and incentives	2	$	157,538	$	108,192	$	404,348	$	282,848
Solar energy system and product sales	2	77,756		90,206		211,447		243,623
Total revenue		235,294		198,398		615,795		526,471

Operating expense:
Cost of revenue—customer agreements and incentives	2, 3	54,722		39,130		155,064		105,956
Cost of revenue—solar energy system and product sales	2	66,679		76,288		183,111		196,921
Operations and maintenance	2	35,868		18,702		89,811		59,306
General and administrative	2, 14	110,678		100,342		339,692		279,105
Provision for current expected credit losses and other bad debt expense	2, 6	22,646		11,203		21,738		35,085

Other operating (income) expense	2, 6	(2,812)		(9,051)		22,016		(3,134)
Total operating expense, net		287,781		236,614		811,432		673,239

Operating loss		(52,487)		(38,216)		(195,637)		(146,768)

Interest expense, net	7, 8	182,528		57,601		388,642		200,155

Interest income	2, 6	(38,565)		(30,590)		(109,656)		(81,670)


Other expense		—		561		4,882		3,969
Loss before income tax		(196,450)		(65,788)		(479,505)		(269,222)

Income tax benefit	2, 9	(46,126)		(9,325)		(159,413)		(1,632)
Net loss		(150,324)		(56,463)		(320,092)		(267,590)
Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests	10	(27,735)		6,684		(94,490)		(37,269)
Net loss attributable to stockholders		$	(122,589)	$	(63,147)	$	(225,602)	$	(230,321)






Net loss per share attributable to stockholders—basic and diluted	13	$	(0.98)	$	(0.53)	$	(1.82)	$	(1.97)
Weighted average common shares outstanding—basic and diluted	13	124,852,073		119,554,008		123,998,539		116,971,318

See accompanying notes to unaudited condensed consolidated financial statements.

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SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


		Nine Months Ended September 30,
	Notes	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(320,092)	$	(267,590)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	3	166,088		107,957
Impairment and loss on disposals, net		53,101		24,930
Amortization of intangible assets	2	21,324		21,324

Amortization of deferred financing costs	7	27,764		17,007
Amortization of debt discount	7	21,365		12,971

Non-cash effect of equity-based compensation plans	2, 12	25,113		19,812


Non-cash direct sales revenue	2	(36,012)		(43,034)
Provision for current expected credit losses and other bad debt expense	2, 6	21,738		35,085
Unrealized (gain) loss on derivatives	8	61,820		(10,208)
Unrealized (gain) loss on fair value instruments and equity securities	2	(15,363)		846
Loss on sales of customer notes receivable	6	43,426		—


Other non-cash items		(24,051)		2,633
Changes in components of operating assets and liabilities:
Accounts receivable	2, 6	29,485		99,753

Other current assets	2, 4, 6	(114,339)		(77,976)

Other assets	2, 4, 6, 8, 14	(100,706)		(95,321)
Accounts payable	2	12,829		(6,711)
Accrued expenses	2	(22,790)		(35,193)

Other current liabilities	2, 4, 14	(87,800)		9,604


Other long-term liabilities	2, 5, 14	(2,881)		(10,680)
Net cash used in operating activities		(239,981)		(194,791)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	2, 3	(1,329,197)		(1,315,192)


Payments for investments and customer notes receivable	2, 4, 6	(269,903)		(716,972)
Proceeds from customer notes receivable	2, 4, 6	166,598		126,980
Proceeds from sales of customer notes receivable	6	65,867		—

Proceeds from investments in solar receivables	2, 4	9,273		8,708


Other, net		4,642		4,707
Net cash used in investing activities		(1,352,720)		(1,891,769)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	7	2,007,524		2,859,489
Payments of long-term debt	7	(1,291,587)		(1,090,338)


Payments on notes payable	7	(6,402)		(4,356)
Payments of deferred financing costs	7	(38,954)		(60,336)


Proceeds from issuance of common stock, net	11	(1,882)		81,329


Contributions from redeemable noncontrolling interests and noncontrolling interests	2, 10	976,379		520,611
Distributions to redeemable noncontrolling interests and noncontrolling interests	2, 10	(366,402)		(30,159)
Payments of costs related to redeemable noncontrolling interests and noncontrolling interests	2, 10	(21,572)		(8,475)
Proceeds from sales of investment tax credits for redeemable noncontrolling interests and noncontrolling interests	2	316,392		4,950
Other, net		(1,272)		(6,662)
Net cash provided by financing activities		1,572,224		2,266,053
Net increase (decrease) in cash, cash equivalents and restricted cash		(20,477)		179,493
Cash, cash equivalents and restricted cash at beginning of period		494,402		545,574
Cash, cash equivalents and restricted cash at end of period		473,925		725,067
Restricted cash included in other current assets	4	(10,186)		(30,307)
Restricted cash included in other assets	4	(254,826)		(226,858)
Cash and cash equivalents at end of period		$	208,913	$	467,902

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	Nine Months Ended September 30,
	2024		2023
Non-cash investing and financing activities:

Change in accounts payable and accrued expenses related to purchases of property and equipment	$	101,763	$	66,022









Non-cash settlement of receivables and payables with primarily dealers	$	35,774	$	17,443

Supplemental cash flow information:
Cash paid for interest	$	324,741	$	213,016
Cash paid for income taxes	$	10,733	$	11,693

See accompanying notes to unaudited condensed consolidated financial statements.

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SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

(in thousands, except share amounts)


	Redeemable Noncontrolling Interests		Common Stock			Additional Paid-in Capital - Common Stock		Accumulated Deficit		Total Stockholders' Equity		Noncontrolling Interests		Total Equity


			Shares	Amount
December 31, 2022	$	165,737	114,939,079	$	11	$	1,637,847	$	(364,782)	$	1,273,076	$	448,637	$	1,721,713

Net loss	(20,404)		—	—		—		(81,083)		(81,083)		(8,859)		(89,942)
Issuance of common stock, net	—		645,580	1		(1,625)		—		(1,624)		—		(1,624)

Contributions from redeemable noncontrolling interests and noncontrolling interests	60,203		—	—		—		—		—		114,748		114,748
Distributions to redeemable noncontrolling interests and noncontrolling interests	(1,448)		—	—		—		—		—		(7,106)		(7,106)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(2,605)		—	—		—		—		—		(1,460)		(1,460)
Equity in subsidiaries attributable to parent	(21,528)		—	—		—		78,893		78,893		(57,365)		21,528
Equity-based compensation expense	—		—	—		9,515		—		9,515		—		9,515
Other, net	(453)		—	—		—		—		—		(110)		(110)
March 31, 2023	179,502		115,584,659	12		1,645,737		(366,972)		1,278,777		488,485		1,767,262
Net income (loss)	860		—	—		—		(86,091)		(86,091)		(15,550)		(101,641)
Issuance of common stock, net	—		809,283	—		11,409		—		11,409		—		11,409

Contributions from redeemable noncontrolling interests and noncontrolling interests	40,201		—	—		—		—		—		104,204		104,204
Distributions to redeemable noncontrolling interests and noncontrolling interests	(2,498)		—	—		—		—		—		(7,320)		(7,320)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(719)		—	—		—		—		—		(721)		(721)
Equity in subsidiaries attributable to parent	(111,121)		—	—		—		180,877		180,877		(69,756)		111,121
Equity-based compensation expense	—		—	—		4,803		—		4,803		—		4,803
Other, net	(6,144)		—	—		—		—		—		(1,073)		(1,073)
June 30, 2023	100,081		116,393,942	12		1,661,949		(272,186)		1,389,775		498,269		1,888,044
Net income (loss)	(8,715)		—	—		—		(63,147)		(63,147)		15,399		(47,748)
Issuance of common stock, net	—		6,011,846	—		81,976		—		81,976		—		81,976

Contributions from redeemable noncontrolling interests and noncontrolling interests	137,580		—	—		—		—		—		63,675		63,675
Distributions to redeemable noncontrolling interests and noncontrolling interests	(3,347)		—	—		—		—		—		(8,440)		(8,440)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(2,575)		—	—		—		—		—		(155)		(155)
Equity in subsidiaries attributable to parent	(96,524)		—	—		—		143,820		143,820		(47,296)		96,524
Equity-based compensation expense	—		—	—		5,494		—		5,494		—		5,494
Other, net	(2,418)		—	—		—		—		—		(1,576)		(1,576)
September 30, 2023	$	124,082	122,405,788	$	12	$	1,749,419	$	(191,513)	$	1,557,918	$	519,876	$	2,077,794

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	Redeemable Noncontrolling Interests		Common Stock			Additional Paid-in Capital - Common Stock		Accumulated Deficit		Total Stockholders' Equity		Noncontrolling Interests		Total Equity


			Shares	Amount
December 31, 2023	$	165,872	122,466,515	$	12	$	1,755,461	$	(228,583)	$	1,526,890	$	436,150	$	1,963,040

Net loss	(13,893)		—	—		—		(69,960)		(69,960)		(6,222)		(76,182)
Issuance of common stock, net	—		1,505,040	—		(1,878)		—		(1,878)		—		(1,878)
Contributions from redeemable noncontrolling interests and noncontrolling interests	160,153		—	—		—		—		—		141,575		141,575
Distributions to redeemable noncontrolling interests and noncontrolling interests	(92,115)		—	—		—		—		—		(13,125)		(13,125)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(3,097)		—	—		—		—		—		(7,599)		(7,599)
Distributions payable to redeemable noncontrolling interests and noncontrolling interests	42,463		—	—		—		—		—		(1,860)		(1,860)
Investment tax credit sales related to redeemable noncontrolling interests and noncontrolling interests	43,661		—	—		—		—		—		1,390		1,390
Equity in subsidiaries attributable to parent	(115,732)		—	—		—		135,569		135,569		(19,837)		115,732
Equity-based compensation expense	—		—	—		13,383		—		13,383		—		13,383
Other, net	—		—	—		—		1		1		—		1
March 31, 2024	187,312		123,971,555	12		1,766,966		(162,973)		1,604,005		530,472		2,134,477
Net loss	(38,840)		—	—		—		(33,053)		(33,053)		(7,800)		(40,853)
Issuance of common stock, net	—		763,697	—		4,290		—		4,290		—		4,290
Contributions from redeemable noncontrolling interests and noncontrolling interests	152,053		—	—		—		—		—		315,040		315,040
Distributions to redeemable noncontrolling interests and noncontrolling interests	(8,667)		—	—		—		—		—		(49,512)		(49,512)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(2,671)		—	—		—		—		—		(2,422)		(2,422)
Distributions payable to redeemable noncontrolling interests and noncontrolling interests	(124,970)		—	—		—		—		—		(1,411)		(1,411)
Investment tax credit sales related to redeemable noncontrolling interests and noncontrolling interests	126,123		—	—		—		—		—		20,550		20,550
Equity in subsidiaries attributable to parent	(73,029)		—	—		—		163,635		163,635		(90,606)		73,029
Equity-based compensation expense	—		—	—		4,236		—		4,236		—		4,236
Other, net	(1)		—	—		—		(2)		(2)		2		—
June 30, 2024	217,310		124,735,252	12		1,775,492		(32,393)		1,743,111		714,313		2,457,424

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	Redeemable Noncontrolling Interests		Common Stock			Additional Paid-in Capital - Common Stock		Accumulated Deficit		Total Stockholders' Equity		Noncontrolling Interests		Total Equity


			Shares	Amount
Net loss	(10,886)		—	—		—		(122,589)		(122,589)		(16,849)		(139,438)
Issuance of common stock, net	—		188,524	—		(166)		—		(166)		—		(166)
Contributions from redeemable noncontrolling interests and noncontrolling interests	127,600		—	—		—		—		—		79,958		79,958
Distributions to redeemable noncontrolling interests and noncontrolling interests	(134,599)		—	—		—		—		—		(68,384)		(68,384)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(3,757)		—	—		—		—		—		1,241		1,241
Distributions payable to redeemable noncontrolling interests and noncontrolling interests	83,100		—	—		—		—		—		142		142
Investment tax credit sales related to redeemable noncontrolling interests and noncontrolling interests	45,043		—	—		—		—		—		23,721		23,721
Equity in subsidiaries attributable to parent	(67,372)		—	—		—		153,408		153,408		(86,036)		67,372
Equity-based compensation expense	—		—	—		5,138		—		5,138		—		5,138
Other, net	1		—	—		—		1		1		(2)		(1)
September 30, 2024	$	256,440	124,923,776	$	12	$	1,780,464	$	(1,573)	$	1,778,903	$	648,104	$	2,427,007

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Index to the Notes to Unaudited Condensed Consolidated Financial Statements


			Page
Note 1 - Description of Business and Basis of Presentation			11
Note 2 - Significant Accounting Policies			13
Note 3 - Property and Equipment			24

Note 4 - Detail of Certain Balance Sheet Captions			24
Note 5 - Asset Retirement Obligations ("ARO")			25
Note 6 - Customer Notes Receivable			26

Note 7 - Long-Term Debt			28
Note 8 - Derivative Instruments			35
Note 9 - Income Taxes			36


Note 10 - Redeemable Noncontrolling Interests and Noncontrolling Interests			36
Note 11 - Stockholders' Equity			37
Note 12 - Equity-Based Compensation			37
Note 13 - Basic and Diluted Net Loss Per Share			38
Note 14 - Commitments and Contingencies			39
Note 15 - Subsequent Events			42

(1) Description of Business and Basis of Presentation

We are an industry-leading energy services company focused on making clean energy more accessible, reliable and affordable for homeowners and businesses, serving over 422,000 customers in more than 50 United States ("U.S.") states and territories. Sunnova Energy Corporation was incorporated in Delaware on October 22, 2012 and formed Sunnova Energy International Inc. ("SEI") as a Delaware corporation on April 1, 2019. We completed our initial public offering on July 29, 2019 (our "IPO"); and in connection with our IPO, all of Sunnova Energy Corporation's ownership interests were contributed to SEI. Unless the context otherwise requires, references in this report to "Sunnova," the "Company," "we," "our," "us," or like terms, refer to SEI and its consolidated subsidiaries.

We partner with local dealers and contractors who originate, design and install our customers' solar energy systems, energy storage systems and related products and services on our behalf, as well as other sustainable home solutions, such as smart home devices, modern heating, ventilation and air conditioning, generators, upgraded roofing, water systems, water heaters, main panel upgrades and electric vehicle chargers. Our focus on our dealer and contractor model enables us to leverage our dealers' and contractors' specialized knowledge, connections and experience in local markets to drive customer origination while providing our dealers and contractors with access to high quality products at competitive prices, as well as technical oversight and expertise. We believe this structure provides operational flexibility, reduces exposure to labor shortages and lowers fixed costs relative to true vertically integrated models.

We offer customers products to power and improve the energy efficiency and sustainability of their homes and businesses with affordable solar energy and related products and services. We are able to offer energy generation savings compared to utility-based retail rates with little to no up-front expense to the customer in conjunction with solar and solar plus energy storage products, and are able to also provide energy resiliency. Our customer agreements typically take the form of a legal-form lease (a "lease") of a solar energy system and/or energy storage system to the customer, the sale of the solar energy system's output to the customer under a power purchase agreement ("PPA") or the purchase of a solar energy system, energy storage system and/or accessory either with financing provided by us (a "loan") or paid in full by the customer (a "sale"). We also offer service plans and repair services for systems we did not originate. Complementary to our business, in some states we make it possible for a customer to obtain a new roof and/or other ancillary products. We also allow customers originated through our homebuilder channel the option of purchasing the system when the customer closes on the purchase of a new home. The initial term of our customer agreements is typically between 10 and 25 years, during which time we provide or arrange for ongoing services to customers, including monitoring, maintenance and warranty services. Our lease and PPA agreements typically include an opportunity for customers to renew for up to an additional 10 years, via two five-year or one 10-year renewal options. Our ancillary products include both cash sales and loans with an initial term between one year and 20 years. Customer payments and rates can be fixed for the duration of the customer agreement or escalated at a pre-determined

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

percentage annually. We also receive tax benefits and other incentives from leases and PPAs, a portion of which we finance through tax equity, non-recourse debt structures and hedging arrangements in order to fund our upfront costs, overhead and growth investments.

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements ("interim financial statements") include our Consolidated Balance Sheets, Statements of Operations, Statements of Cash Flows and Statements of Redeemable Noncontrolling Interests and Equity and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") from records maintained by us. We have condensed or omitted certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP pursuant to the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. As such, these interim financial statements should be read in conjunction with our 2023 annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K filed with the SEC on February 22, 2024. Our interim financial statements reflect all normal recurring adjustments necessary, in our opinion, to state fairly our financial position and results of operations for the reported periods. Amounts reported for interim periods may not be indicative of a full year period because of our continual growth, seasonal fluctuations in demand for power, timing of maintenance and other expenditures, changes in interest expense and other factors.

Our interim financial statements include our accounts and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, Consolidation, we consolidate any VIE of which we are the primary beneficiary. We form VIEs with our investors in the ordinary course of business to facilitate the funding and monetization of certain attributes associated with our solar energy systems. The typical condition for a controlling financial interest is holding a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve holding a majority of the voting interests. A primary beneficiary is defined as the party that has (a) the power to direct the activities of a VIE that most

Sunnova Energy International Inc. [NOVA] Filings
10-Q	[2024-10-31]
10-Q	[2024-08-01]
10-Q	[2024-05-02]
10-K	[2024-02-22]
10-Q	[2023-10-26]
10-Q	[2023-07-27]
10-Q	[2023-04-27]
10-K	[2023-02-23]
10-Q	[2022-10-27]
10-Q	[2022-07-28]
10-Q	[2022-04-28]
10-K	[2022-02-24]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-04-29]
10-K	[2021-02-25]
10-Q	[2020-10-29]
10-Q	[2020-07-30]
S-1	[2020-06-29]
10-Q	[2020-05-15]
10-K	[2020-02-25]
10-Q	[2019-10-31]
10-Q	[2019-08-19]
S-1	[2019-06-27]