Sunnova Energy Earnings 2019-09-30

NOVA 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
NOBH	92	56	8	48	13	8	10	71	28%	6.9	14%
AKOM	92	54	10	3	0	-9	-8	86	3%	-11.2	-16%
NCLC	91	15,962	9,854	6,307	0	994	1,582	6,146	0%	3.9	6%
HGEN	90	2	12	0	0	-10	-9	89		-9.8	-638%
FZMD	90	21	19	24	14	6	6	89	56%	15.2	27%
MATR	89	29	33	50	36	-11	-5	93	72%	-20.5	-39%
NOVA	89	1,953	1,404	35	0	-50	-50	1,218	0%	-24.5	-3%
TRPO	86	1	4	0	0	-1	-1	86		-98.1	-69%
REPR	86	12	2	19	12	0	0	82	63%	165.2	0%
LSYN	85	42	13	24	20	5	8	78	85%	9.6	11%

Q3 2019 Form 10-Q Document

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, 2019



☐	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 475

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 83,980,885 shares of common stock outstanding as of October 29, 2019.

Table of Contents

TABLE OF CONTENTS



		Page
	PART 1 - FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Cash Flows	6
	Unaudited Condensed Consolidated Statements of Redeemable Noncontrolling Interests and Stockholders' Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
	Signatures	60

Table of Contents

PART I - FINANCIAL INFORMATION

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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



	As of September 30, 2019			As of December 31, 2018
Assets
Current assets:
Cash	$	51,026		$	52,706
Accounts receivable—trade, net	10,383			6,312
Accounts receivable—other	5,922			3,721
Other current assets	59,058			26,794
Total current assets	126,389			89,533

Property and equipment, net	1,620,048			1,328,457
Customer notes receivable, net	255,070			172,031
Other assets	148,279			75,064
Total assets (1)	$	2,149,786		$	1,665,085

Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
Current liabilities:
Accounts payable	$	40,342		$	20,075
Accrued expenses	17,904			18,650
Current portion of long-term debt	59,404			26,965
Current portion of long-term debt—affiliates	—			16,500
Other current liabilities	13,501			13,214
Total current liabilities	131,151			95,404

Long-term debt, net	1,116,369			872,249
Long-term debt, net—affiliates	—			44,181
Other long-term liabilities	119,128			66,453
Total liabilities (1)	1,366,648			1,078,287

Commitments and contingencies (Note 15)

Redeemable noncontrolling interests	156,578			85,680

Stockholders' equity:
Series A convertible preferred stock, 0 and 44,942,594 shares issued as of September 30, 2019 and December 31, 2018, respectively, at $0.01 par value	—			449
Series C convertible preferred stock, 0 and 13,006,780 shares issued as of September 30, 2019 and December 31, 2018, respectively, at $0.01 par value	—			130
Series A common stock, 0 and 8,612,728 shares issued as of September 30, 2019 and December 31, 2018, respectively, at $0.01 par value	—			86
Series B common stock, 0 and 21,727 shares issued as of September 30, 2019 and December 31, 2018, respectively, at $0.01 par value	—			—
Common stock, 83,980,885 and 0 shares issued as of September 30, 2019 and December 31, 2018, respectively, at $0.0001 par value	8			—
Additional paid-in capital—convertible preferred stock	—			701,326
Additional paid-in capital—common stock	991,936			85,439
Accumulated deficit	(365,384		)	(286,312		)
Total stockholders' equity	626,560			501,118
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	2,149,786		$	1,665,085

(1) The consolidated assets as of September 30, 2019 and December 31, 2018 include $658,690 and $411,325, respectively, of assets of variable interest entities ("VIEs") that can only be used to settle obligations of the VIEs. These assets include cash of $5,483 and $3,674 as of September 30, 2019 and December 31, 2018, respectively; accounts receivable—trade, net of $1,302 and $884 as of September 30, 2019 and December 31, 2018, respectively; accounts receivable—other of $0 and $109 as of

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September 30, 2019 and December 31, 2018, respectively; other current assets of $16,876 and $4,821 as of September 30, 2019 and December 31, 2018, respectively; property and equipment, net of $628,821 and $398,693 as of September 30, 2019 and December 31, 2018, respectively; and other assets of $6,208 and $3,144 as of September 30, 2019 and December 31, 2018, respectively. The consolidated liabilities as of September 30, 2019 and December 31, 2018 include $9,076 and $9,260, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of $1,458 and $4,278 as of September 30, 2019 and December 31, 2018, respectively; accrued expenses of $25 and $14 as of September 30, 2019 and December 31, 2018, respectively; other current liabilities of $143 and $296 as of September 30, 2019 and December 31, 2018, respectively; and other long-term liabilities of $7,450 and $4,672 as of September 30, 2019 and December 31, 2018, respectively.

See accompanying notes to Sunnova Energy International Inc. 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,
	2019			2018			2019			2018
Revenue	$	36,615		$	30,429		$	97,942		$	79,176

Operating expense:
Cost of revenue—depreciation	10,942			9,349			30,820			25,468
Cost of revenue—other	1,186			614			2,914			1,474
Operations and maintenance	1,925			(96		)	6,468			4,495
General and administrative	28,509			17,170			70,984			49,103
Other operating income	(49		)	(12		)	(129		)	(51		)
Total operating expense, net	42,513			27,025			111,057			80,489

Operating income (loss)	(5,898		)	3,404			(13,115		)	(1,313		)

Interest expense, net	30,884			9,416			99,855			25,123
Interest expense, net—affiliates	701			2,398			4,098			7,245
Interest income	(3,407		)	(1,763		)	(8,868		)	(4,373		)
Loss on extinguishment of long-term debt, net—affiliates	—			—			10,645			—
Other (income) expense	293			—			827			(1		)
Loss before income tax	(34,369		)	(6,647		)	(119,672		)	(29,307		)

Income tax	—			—			—			—
Net loss	(34,369		)	(6,647		)	(119,672		)	(29,307		)
Net income (loss) attributable to redeemable noncontrolling interests	3,221			(13		)	7,170			4,111
Net loss attributable to stockholders	(37,590		)	(6,634		)	(126,842		)	(33,418		)
Dividends earned on Series A convertible preferred stock	—			(9,437		)	(19,271		)	(26,765		)
Dividends earned on Series C convertible preferred stock	—			(1,794		)	(5,454		)	(3,340		)
Deemed dividends on convertible preferred stock exchange	—			—			—			(19,332		)
Net loss attributable to common stockholders—basic and diluted	$	(37,590	)	$	(17,865	)	$	(151,567	)	$	(82,855	)

Net loss per share attributable to common stockholders—basic and diluted	$	(0.62	)	$	(2.07	)	$	(5.77	)	$	(9.60	)
Weighted average common shares outstanding—basic and diluted	60,890,129			8,634,541			26,245,493			8,634,484

See accompanying notes to Sunnova Energy International Inc. 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,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(119,672	)	$	(29,307	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	34,987			29,000
Impairment and loss on disposals, net	1,236			1,235
Amortization of deferred financing costs	8,795			6,488
Amortization of debt discount	2,027			766
Non-cash effect of equity-based compensation plans	6,974			2,182
Non-cash payment-in-kind interest on loan—affiliates	2,716			4,132
Unrealized (gain) loss on derivatives	30,262			(20,647		)
Unrealized loss on fair value option instruments	97			—
Loss on extinguishment of long-term debt, net—affiliates	10,645			—
Other non-cash items	4,637			3,601
Changes in components of operating assets and liabilities:
Accounts receivable	(8,006		)	(7,674		)
Dealer advances	—			(237		)
Other current assets	(11,753		)	(7,394		)
Other assets	(37,787		)	(6,571		)
Accounts payable	5,156			(145		)
Accrued expenses	(2,455		)	2,087
Other current liabilities	75			(1,644		)
Long-term debt—paid-in-kind—affiliates	(719		)	(1,144		)
Other long-term liabilities	(1,753		)	30
Net cash used in operating activities	(74,538		)	(25,242		)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(299,199		)	(184,260		)
Payments for investments and customer notes receivable	(104,391		)	(80,557		)
Proceeds from customer notes receivable	14,072			5,733
State utility rebates	401			691
Other, net	(584		)	(1,439		)
Net cash used in investing activities	(389,701		)	(259,832		)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	588,153			132,674
Payments of long-term debt	(318,855		)	(27,045		)
Proceeds of long-term debt from affiliates	15,000			15,000
Payments of long-term debt to affiliates	(56,236		)	(20,000		)
Payments on notes payable	(2,177		)	—
Payments of deferred financing costs	(10,435		)	(1,753		)
Payments of debt discounts	(1,084		)	(1,883		)
Proceeds from issuance of common stock, net	164,695			—
Proceeds from issuance of convertible preferred stock, net	(2,510		)	157,117
Contributions from redeemable noncontrolling interests	119,372			51,427
Distributions to redeemable noncontrolling interests	(6,289		)	(1,322		)
Payments of costs related to redeemable noncontrolling interests	(3,155		)	(985		)
Other, net	(15		)	(6		)
Net cash provided by financing activities	486,464			303,224
Net increase in cash and restricted cash	22,225			18,150
Cash and restricted cash at beginning of period	87,046			81,778
Cash and restricted cash at end of period	109,271			99,928
Restricted cash included in other current assets	(16,688		)	(368		)
Restricted cash included in other assets	(41,557		)	(28,411		)
Cash at end of period	$	51,026		$	71,149

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	Nine Months Ended September 30,
	2019			2018
Non-cash investing and financing activities:
Change in accounts payable and accrued expenses related to purchases of property and equipment	$	25,576		$	7,754
Change in accounts payable and accrued expenses related to payments for investments and customer notes receivable	$	(6,335	)	$	(8,079	)
Notes payable for financing of insurance premiums	$	7,101		$	—

Supplemental cash flow information:
Cash paid for interest	$	48,866		$	45,781
Cash paid for income taxes	$	—		$	—

See accompanying notes to Sunnova Energy International Inc. unaudited condensed consolidated financial statements.

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SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

(in thousands, except share amounts)



	Redeemable Noncontrolling Interests			Series A Convertible Preferred Stock			Series B Convertible Preferred Stock					Series C Convertible Preferred Stock			Series A Common Stock			Series B Common Stock				Series B Treasury Stock			Additional Paid-in Capital - Convertible Preferred Stock			Additional Paid-in Capital - Common Stock		Accumulated Deficit			Total Stockholders' Equity
				Series A Convertible Preferred Stock			Series B Convertible Preferred Stock					Series C Convertible Preferred Stock			Series A Common Stock			Series B Common Stock
				Shares	Amount		Shares		Amount			Shares	Amount		Shares	Amount		Shares		Amount
December 31, 2017	$	38,590		40,179,508	$	402	4,583,576		$	46		—	$	—	8,612,728	$	86	21,727		$	—	$	—		$	530,951		$	82,455	$	(242,757	)	$	371,183
Net income (loss)	774			—	—		—		—			—	—		—	—		—		—		—			—			—		(14,210		)	(14,210		)
Issuance of common stock, net	—			—	—		—		—			—	—		—	—		149		—		—			—			—		—			—
Issuance of convertible preferred stock, net	—			—	—		13,013		—			7,390,218	74		—	—		—		—		—			97,256			—		—			97,330
Non-cash exchange of Series B convertible preferred stock for Series A convertible preferred stock	—			4,763,086	47		(4,596,588	)	(46		)	—	—		—	—		—		—		—			(1		)	—		—			—
Contributions from redeemable noncontrolling interests	17,139			—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Distributions to redeemable noncontrolling interests	(339		)	—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Distributions payable to redeemable noncontrolling interests	(111		)	—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Costs related to redeemable noncontrolling interests	(701		)	—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Equity in subsidiaries attributable to parent	(5,995		)	—	—		—		—			—	—		—	—		—		—		—			—			—		5,995			5,995
Equity-based compensation expense	—			—	—		—		—			—	—		—	—		—		—		—			—			726		—			726
Acquisition of treasury stock	—			—	—		—		—			—	—		—	—		—		—		(1		)	—			—		—			(1		)
Retirement of treasury stock	—			—	—		—		—			—	—		—	—		(149	)	—		1			—			—		(1		)	—
Other, net	—			—	—		(1	)	—			—	—		—	—		—		—		—			—			—		(1		)	(1		)
March 31, 2018	49,357			44,942,594	449		—		—			7,390,218	74		8,612,728	86		21,727		—		—			628,206			83,181		(250,974		)	461,022
Net income (loss)	3,350			—	—		—		—			—	—		—	—		—		—		—			—			—		(12,574		)	(12,574		)
Contributions from redeemable noncontrolling interests	17,726			—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Contributions receivable from redeemable noncontrolling interests	1,108			—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Distributions to redeemable noncontrolling interests	(450		)	—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Distributions payable to redeemable noncontrolling interests	(178		)	—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Costs related to redeemable noncontrolling interests	(91		)	—	—		—		—			—	—		—	—		—		—		—			—			—		—			—
Equity in subsidiaries attributable to parent	(5,592		)	—	—		—		—			—	—		—	—		—		—		—			—			—		5,592

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	9	$89

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

8-K	2020-02-14	Enter Agreement, Leave Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K	2020-02-11	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2020-02-04	Enter Agreement
8-K	2020-01-23	Regulation FD, Exhibits
8-K	2019-12-05	Enter Agreement
8-K	2019-10-31	Earnings, Regulation FD, Exhibits
8-K	2019-10-03	Enter Agreement
8-K	2019-09-13	Enter Agreement, Exhibits
8-K	2019-09-12	Enter Agreement
8-K	2019-08-30	Regulation FD
8-K	2019-08-19	Earnings, Regulation FD, Exhibits
8-K	2019-07-24	Enter Agreement, Sale of Shares, Shareholder Rights, Officers, Amend Bylaw, Other Events, Exhibits
8-K	2018-01-23	Accountant, Exhibits

EX-10.16	tephagreementex1016.htm
EX-10.18	sladebtamendmentex1018.htm
EX-31.1	q32019ex311.htm
EX-31.2	q32019ex312.htm
EX-32.1	q32019ex321.htm
EX-32.2	q32019ex322.htm