Sunnova Energy Earnings 2020-06-30

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

a12344345-20200630

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 June 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)

20 East Greenway Plaza, Suite 475

Houston, Texas 77046

(Former address)

_______________________________________________________________________________

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 85,028,799 shares of common stock outstanding as of July 27, 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 disease 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 disease 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

Unaudited Condensed Consolidated Statements of Operations

Unaudited Condensed Consolidated Statements of Cash Flows

Unaudited Condensed Consolidated Statements of Redeemable Noncontrolling Interests and Stockholders' Equity

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

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 June 30, 2020		As of December 31, 2019


Assets
Current assets:
Cash	$	102,279	$	83,485
Accounts receivable—trade, net	12,504		10,672
Accounts receivable—other	6,094		6,147
Other current assets, net of allowance of $542 and $112 as of June 30, 2020 and December 31, 2019, respectively	165,928		174,016
Total current assets	286,805		274,320

Property and equipment, net	2,006,115		1,745,060
Customer notes receivable, net of allowance of $13,001 and $979 as of June 30, 2020 and December 31, 2019, respectively	378,976		297,975
Other assets	195,699		169,712
Total assets (1)	$	2,867,595	$	2,487,067

Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
Current liabilities:
Accounts payable	$	27,590	$	36,190
Accrued expenses	21,496		39,544
Current portion of long-term debt	114,141		97,464
Other current liabilities	26,534		21,804
Total current liabilities	189,761		195,002

Long-term debt, net	1,628,672		1,346,419
Other long-term liabilities	149,169		127,406
Total liabilities (1)	1,967,602		1,668,827

Commitments and contingencies (Note 14)

Redeemable noncontrolling interests	238,305		172,305

Stockholders' equity:
Common stock, 84,056,032 and 83,980,885 shares issued as of June 30, 2020 and December 31, 2019, respectively, at $0.0001 par value	8		8
Additional paid-in capital—common stock	1,088,223		1,007,751
Accumulated deficit	(426,543)		(361,824)
Total stockholders' equity	661,688		645,935
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	2,867,595	$	2,487,067

(1) The consolidated assets as of June 30, 2020 and December 31, 2019 include $1,113,760 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 $10,415 and $7,347 as of June 30, 2020 and December 31, 2019, respectively; accounts receivable—trade, net of $2,601 and $1,460 as of June 30, 2020 and December 31, 2019, respectively; accounts receivable—other of $214 and $4 as of June 30, 2020 and December 31, 2019, respectively; other current assets of $96,675 and $47,606 as of June 30, 2020 and December 31, 2019, respectively; property and equipment, net of $994,155 and $726,415 as of June 30, 2020 and December 31, 2019, respectively; and other assets of $9,700 and $7,379 as of June 30, 2020 and December 31, 2019, respectively. The consolidated liabilities as of June 30, 2020 and December 31, 2019 include $17,963 and $13,440, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of $2,470 and $1,926 as of June 30, 2020 and December 31, 2019, respectively; accrued expenses of $96 and $35 as of June 30, 2020 and December 31, 2019, respectively; other current liabilities of $485 and $612 as of June 30, 2020 and December 31, 2019, respectively; and other long-term liabilities of $14,912 and $10,867 as of June 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 June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenue	$	42,790	$	34,612	$	72,619	$	61,327

Operating expense:
Cost of revenue—depreciation	14,021		10,225		27,007		19,878
Cost of revenue—other	2,869		1,076		3,912		1,728
Operations and maintenance	2,926		2,289		5,145		4,543
General and administrative	28,133		23,794		56,026		42,475
Other operating income	(16)		(62)		(22)		(80)
Total operating expense, net	47,933		37,322		92,068		68,544

Operating loss	(5,143)		(2,710)		(19,449)		(7,217)

Interest expense, net	30,532		37,310		97,850		68,971
Interest expense, net—affiliates	—		1,575		—		3,397
Interest income	(6,680)		(2,967)		(11,300)		(5,461)
Loss on extinguishment of long-term debt, net—affiliates	—		10,645		—		10,645
Other (income) expense	(266)		534		(266)		534
Loss before income tax	(28,729)		(49,807)		(105,733)		(85,303)

Income tax	—		—		—		—
Net loss	(28,729)		(49,807)		(105,733)		(85,303)
Net income (loss) attributable to redeemable noncontrolling interests	(3,471)		931		(9,400)		3,949
Net loss attributable to stockholders	(25,258)		(50,738)		(96,333)		(89,252)
Dividends earned on Series A convertible preferred stock	—		(9,760)		—		(19,271)

Dividends earned on Series C convertible preferred stock	—		(2,762)		—		(5,454)

Net loss attributable to common stockholders—basic and diluted	$	(25,258)	$	(63,260)	$	(96,333)	$	(113,977)

Net loss per share attributable to common stockholders—basic and diluted	$	(0.30)	$	(7.32)	$	(1.15)	$	(13.20)
Weighted average common shares outstanding—basic and diluted	84,033,278		8,636,598		84,017,214		8,636,065

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)


	Six Months Ended June 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(105,733)	$	(85,303)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	30,814		22,639
Impairment and loss on disposals, net	1,222		851
Amortization of deferred financing costs	5,409		7,770
Amortization of debt discount	7,610		1,292

Non-cash effect of equity-based compensation plans	6,044		994
Non-cash payment-in-kind interest on loan	679		—
Non-cash payment-in-kind interest on loan—affiliates	—		2,201
Unrealized loss on derivatives	4,543		17,449
Unrealized (gain) loss on fair value option instruments	(256)		534
Loss on extinguishment of long-term debt, net—affiliates	—		10,645
Other non-cash items	7,302		3,470
Changes in components of operating assets and liabilities:
Accounts receivable	(1,941)		(6,597)

Other current assets	(81)		(9,357)
Other assets	(21,504)		(26,063)
Accounts payable	(706)		2,279
Accrued expenses	(16,033)		(1,995)
Other current liabilities	4,631		5,362

Other long-term liabilities	(4,928)		(1,865)
Net cash used in operating activities	(82,928)		(55,694)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(274,333)		(164,796)
Payments for investments and customer notes receivable	(99,016)		(62,360)
Proceeds from customer notes receivable	15,090		9,336
State utility rebates and tax credits	172		227
Other, net	490		183
Net cash used in investing activities	(357,597)		(217,410)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	936,938		526,045
Payments of long-term debt	(629,268)		(287,363)
Proceeds of long-term debt from affiliates	—		15,000

Payments on notes payable	(2,451)		(248)
Payments of deferred financing costs	(16,819)		(7,268)
Payments of debt discounts	(3,132)		(1,084)
Proceeds from issuance of common stock, net	(129)		(478)
Proceeds from equity component of debt instrument, net	73,657		—
Proceeds from issuance of convertible preferred stock, net	—		(2,509)
Contributions from redeemable noncontrolling interests	120,653		50,237
Distributions to redeemable noncontrolling interests	(2,600)		(5,143)
Payments of costs related to redeemable noncontrolling interests	(2,187)		(1,622)
Other, net	(1)		(13)
Net cash provided by financing activities	474,661		285,554
Net increase in cash and restricted cash	34,136		12,450
Cash and restricted cash at beginning of period	150,291		87,046
Cash and restricted cash at end of period	184,427		99,496
Restricted cash included in other current assets	(18,644)		(482)
Restricted cash included in other assets	(63,504)		(40,238)
Cash at end of period	$	102,279	$	58,776

Table of Contents


	Six Months Ended June 30,
	2020		2019
Non-cash investing and financing activities:

Change in accounts payable and accrued expenses related to purchases of property and equipment	$	(318)	$	28,343
Change in accounts payable and accrued expenses related to payments for investments and customer notes receivable	$	(7,738)	$	(4,369)
Change in accounts payable and accrued expenses related to financing costs	$	(768)	$	3,854
Transfers of inventory to property and equipment, net and customer notes receivable	$	20,347	$	1,255




Supplemental cash flow information:
Cash paid for interest	$	38,476	$	25,395
Cash paid for income taxes	$	—	$	—

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 STOCKHOLDERS' EQUITY

(in thousands, except share amounts)


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


				Shares			Amount		Shares			Amount		Shares			Amount		Shares			Amount
December 31, 2018	$	85,680	44,942,594		$	449		13,006,780		$	130		8,612,728		$	86		21,727		$	—			$	701,326	$	85,439	$	(286,312)	$	501,118
Net income (loss)	3,018		—		—			—		—			—		—			—		—				—		—		(38,514)		(38,514)
Issuance of common stock	—		—		—			—		—			—		—			2,143		—				—		4		—		4
Repurchase of convertible preferred stock	—		(13,484)		—			—		—			—		—			—		—				(183)		—		(8)		(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
Equity-based compensation expense	—		—		—			—		—			—		—			—		—				—		281		—		281
Other, net	2,627		—		—			—		—			—		—			—		—				493		—		(2)		491
March 31, 2019	94,016		44,929,110		449			13,006,780		130			8,612,728		86			23,870		—				701,636		85,724		(314,711)		473,314
Net income (loss)	931		—		—			—		—			—		—			—		—				—		—		(50,738)

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	2020-06-30	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	2020-07-29	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-31.1	exhibit311-q22020.htm
EX-31.2	exhibit312-q22020.htm
EX-32.1	exhibit321-q22020.htm
EX-32.2	exhibit322-q22020.htm

NOVA 10Q Quarterly Report

Sunnova Energy Earnings 2020-06-30