Sunrun (Nasdaq: RUN), the nation’s leading provider of clean energy
as a subscription service, today announced financial results for
the quarter ended March 31, 2024.
“We are starting the year with solid momentum in the business as
our storage-first, margin-focused strategy is delivering strong
results. In the first quarter we beat the high-end of both our
storage and solar installation guidance, set new records for
storage attachment rates, and delivered another quarter of strong
net subscriber values and an increasing mix of subscription
services,” said Mary Powell, Sunrun’s Chief Executive
Officer. “We are confident in strong growth in
installation activities through the year as the fundamental demand
drivers of our business continue to be robust. Utility rates
continue to rise, due to the stress and strain of climatic events
on the grid and the massive utility capital expenditures. Solar and
storage equipment costs are declining, while our operating
efficiency continues to improve. And most importantly, customers
remain eager for clean, affordable and resilient energy to power
their lives.”
“We remain committed to driving meaningful cash generation as we
execute our margin-focused and disciplined-growth strategy. While
one-time transaction costs and timing related items impacted Cash
Generation in Q1, we expect to recover these timing headwinds in
Q2. We are reiterating our strong Cash Generation outlook for
2024,” said Danny Abajian, Sunrun’s Chief Financial
Officer.
First Quarter Updates
- Storage attachment rates reach 50%: Storage attachment rates on
installations reached 50% in Q1, up from 15% in the same period a
year ago, with 207.2 Megawatt hours installed during the quarter.
Sunrun has now installed more than 102,000 solar and storage
systems, representing over 1.5 Gigawatt hours of stored energy
capacity.
- Strong capital markets execution:Sunrun has executed two
securitizations thus far in 2024.
- In February, as previously noted, Sunrun placed a private
securitization of $361 million, with a 232.5 basis point spread,
along with a $109 million subordinated loan, resulting in a
cumulative advance rate of over 80%.
- In April, Sunrun closed a second securitization transaction of
$230 million, which included seasoned assets. The non-recourse
senior debt was rated A by Kroll and was priced at a credit spread
of 195 basis points, and had an advance rate of approximately
85%.In addition and as previously announced, Sunrun arranged new
capital or extended maturities of existing capital during Q1 to
support growth.
- This included a $483 million convertible note due in 2030; part
of the proceeds were used to repurchase a portion of the existing
2026 convertible note.
- Sunrun upsized and extended the maturity of its senior
non-recourse revolving warehouse facility. The amended facility was
expanded by $550 million to $2.35 billion (from $1.8 billion) and
the maturity was extended from April 2025 to April 2028.
- Sunrun amended and extended the maturity of its recourse
working capital facility, extending the maturity from January 2025
to November 2025 (with a springing maturity provision to March
2027, subject to certain conditions).
- CalReady VPP: For the second year in a row, Sunrun will set a
national record for the largest number of residential
solar-plus-battery systems enrolled in a virtual power
plant. More than 16,000 Sunrun customers will participate in
our CalReady VPP, which will support California’s electrical grid
during the hot, summer months. The program, which is almost twice
as large as the PG&E program last year, is set to start
dispatching in May.
- PowerOn Puerto Rico VPP: Sunrun has now enrolled
nearly 1,800 customers in its PowerOn Puerto Rico virtual
power plant. When Puerto Rico’s electric utility provider, LUMA,
foresees a power supply shortfall, Sunrun’s fleet of batteries
dispatches more than 15 megawatt hours of stored energy to
stabilize the grid. Both Sunrun and participants are compensated
for their contribution, and the program helps to avoid blackouts
while reducing reliance on polluting fossil fuel peaker power
plants.
- SolarAPP+ Update: The web-based solar permitting tool that is
helping to reduce cycle times by several weeks, continues to gain
adoption. Approximately one third of Sunrun projects in California
and ~14% nationally utilized SolarAPP+. Reducing cycle times helps
to streamline permitting and interconnection and reduces ‘soft
costs’, improving the homeowners’ experience.
Key Operating Metrics
In the first quarter of 2024, Customer Additions were 24,038
including 22,058 Subscriber Additions. As of March 31, 2024, Sunrun
had 957,313 Customers, including 803,145 Subscribers. Customers
grew 15% in the first quarter of 2024 compared to the first quarter
of 2023.
Annual Recurring Revenue from Subscribers was over $1.4 billion
as of March 31, 2024. The Average Contract Life Remaining of
Subscribers was 17.9 years as of March 31, 2024.
Subscriber Value was $50,776 in the first quarter of 2024, a 15%
increase compared to the first quarter of 2023. Creation Cost was
$38,885 in the first quarter of 2024.
Net Subscriber Value was $11,891 in the first quarter of 2024.
Total Value Generated was $262 million in the first quarter of
2024. On a pro-forma basis assuming a 7.6% discount rate,
consistent with capital costs observed in Q1, Subscriber Value was
$45,477 and Net Subscriber Value was $6,593 in the first quarter of
2024.
Gross Earning Assets as of March 31, 2024, were $15.0 billion.
Net Earning Assets were $5.2 billion, which included $783 million
in Total Cash, as of March 31, 2024.
Cash Generation was negative $311 million in the first quarter
and positive $6 million when adjusted for non-recurring timing and
transaction-related costs. Q1, which is typically the weakest
quarter for Cash Generation due to seasonality in volume, was
further impacted by a temporary but significant working capital
investment, as well as certain non-recurring costs. Our transition
to tax credit sales and away from traditional tax equity structures
caused us to invest approximately $181 million in working capital
in Q1. We expect to principally recover this investment in May
2024. We expect to close additional financing structures in Q2 to
fully recover this working capital investment. Cash from tax credit
sales is typically received in arrears, whereas cash from tax
credit allocation (through traditional tax equity structures) is
typically received at the time of installation or slightly in
advance. Financing activities in Q1 included $107 million in
one-time costs associated with the new 2030 convertible debt
issuance and (to mitigate dilution) purchase of the capped calls.
In addition, the extension of the recourse working capital facility
and non-recourse warehouse extension caused us to include
additional fees and (due to higher capital costs) a reduction to
the advance rate within the warehouse. Low-income ITC adders for
eligible systems have been delayed, which represents $30 million of
expected Cash Generation for systems installed in Q1. We expect
these funds to flow shortly.
Storage Capacity Installed was 207.2 Megawatt hours in the first
quarter of 2024. This represents a 192% year over year increase
from the 71.1 Megawatt hours of Storage Capacity Installed in the
first quarter of 2023.
Solar Energy Capacity Installed was 177.0 Megawatts in the first
quarter of 2024. Solar Energy Capacity Installed for Subscribers
was 165.3 Megawatts in the first quarter of 2024.
Networked Solar Energy Capacity was 6,866 Megawatts as of March
31, 2024. Networked Solar Energy Capacity for Subscribers was 5,802
Megawatts as of March 31, 2024. Networked Storage Capacity was 1.5
Gigawatt hours as of March 31, 2024.
The solar energy systems we deployed in Q1 are expected to
offset the emission of 3.5 million metric tons of CO2 over the next
thirty years. Over the last twelve months ended March 31, 2024,
Sunrun’s systems are estimated to have offset 3.6 million metric
tons of CO2.
Outlook
Storage Capacity Installed is expected to be in a range of 800
to 1,000 Megawatt hours the full-year 2024. This range represents
approximately 40% to 75% growth year over year.
Storage Capacity Installed is expected to be in a range of 215
to 225 Megawatt hours in the second quarter of 2024. This range
represents approximately 105% to 115% growth year over year.
Solar Energy Capacity Installed is expected to be in a range
reflecting a decline of 15% to flat growth for the full-year 2024,
a reduction from our prior guidance range of -5% to +5% growth.
Solar Energy Capacity Installed is expected to be in a range of
190 to 200 Megawatts in the second quarter of 2024.
Total Value Generated is expected to grow by over 10% for the
full-year 2024 driven by higher Subscriber Values and lower input
costs, a reduction of 5% from our prior guidance.
Management is reiterating guidance of positive Cash Generation
cumulatively from 4Q 2023 through 4Q 2024 and to reach an
annualized Cash Generation run-rate of $200 million to $500 million
in the fourth quarter of 2024, subject to the assumptions outlined
in our accompanying presentation.
First quarter 2024 GAAP Results
Total revenue was $458.2 million in the first quarter of 2024,
down $131.6 million, or 22%, from the first quarter of 2023.
Customer agreements and incentives revenue was $323.0 million, an
increase of $76.5 million, or 31%, compared to the first quarter of
2023. Solar energy systems and product sales revenue was $135.2
million, a decrease of $208.2 million, or 61%, compared to the
first quarter of 2023. The increasing mix of Subscribers results in
less upfront revenue recognition, as revenue is recognized over the
life of the Customer Agreement which is typically 20 or 25
years.
Total cost of revenue was $425.7 million, a decrease of 24%
year-over-year. Total operating expenses were $641.3 million, a
decrease of 22% year-over-year.
Net loss attributable to common stockholders was $87.8 million,
or $0.40 per basic and diluted share, in the first quarter of
2024.
Financing Activities
As of May 8, 2024, closed transactions and executed term sheets
provide us with expected tax equity to fund approximately 331
Megawatts of Solar Energy Capacity Installed for Subscribers beyond
what was deployed through March 31, 2024. As of March 31, 2024
Sunrun also had $593 million available in its non-recourse senior
revolving warehouse facility to fund over 214 Megawatts of Solar
Energy Capacity Installed for Subscribers.
Conference Call Information
Sunrun is hosting a conference call for analysts and investors
to discuss its first quarter 2024 results and business outlook at
1:30 p.m. Pacific Time today, May 8, 2024. A live audio webcast of
the conference call along with supplemental financial information
will be accessible via the “Investor Relations” section of Sunrun’s
website at https://investors.sunrun.com. The conference call can
also be accessed live over the phone by dialing (877) 407-5989
(toll free) or (201) 689-8434 (toll). An audio replay will be
available following the call on the Sunrun Investor Relations
website for approximately one month.
About Sunrun
Sunrun Inc. (Nasdaq: RUN) revolutionized the solar industry in
2007 by removing financial barriers and democratizing access to
locally-generated, renewable energy. Today, Sunrun is the nation’s
leading provider of clean energy as a subscription service,
offering residential solar and storage with no upfront costs.
Sunrun’s innovative products and solutions can connect homes to the
cleanest energy on earth, providing them with energy security,
predictability, and peace of mind. Sunrun also manages energy
services that benefit communities, utilities, and the electric grid
while enhancing customer value. Discover more at www.sunrun.com
Non-GAAP Information
This press release includes references to certain non-GAAP
financial measures, such as non-GAAP net (loss) income and non-GAAP
net (loss) income per share. We believe that these non-GAAP
financial measures, when reviewed in conjunction with GAAP
financial measures, can provide meaningful supplemental information
for investors regarding the performance of our business and
facilitate a meaningful evaluation of current period performance on
a comparable basis with prior periods. Our management uses these
non-GAAP financial measures in order to have comparable financial
results to analyze changes in our underlying business from quarter
to quarter. These non-GAAP financial measures should be considered
as a supplement to, and not as a substitute for or superior to the
GAAP financial measures presented in this press release and our
financial statements and other publicly filed reports. Non-GAAP
measures as presented herein may not be comparable to similarly
titled measures used by other companies.
Non-GAAP net (loss) income is defined as GAAP net (loss) income
adjusted by the non-cash goodwill impairment charge. Management
believes the exclusion of this non-cash and non-recurring item
provides useful supplemental information to investors and
facilitates the analysis of its operating results and comparison of
operating results across reporting periods.
Forward Looking Statements
This communication contains forward-looking statements related
to Sunrun (the “Company”) within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities Exchange
Act of 1934 and the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include, but are not limited
to, statements related to: the Company’s financial and operating
guidance and expectations; the Company’s business plan, trajectory,
expectations, market leadership, competitive advantages,
operational and financial results and metrics (and the assumptions
related to the calculation of such metrics); the Company’s momentum
in its business strategies including its ESG efforts, expectations
regarding market share, total addressable market, customer value
proposition, market penetration, financing activities, financing
capacity, product mix, and ability to manage cash flow and
liquidity; the growth of the solar industry; the Company’s
financing activities and expectations to refinance, amend, and/or
extend any financing facilities; trends or potential trends within
the solar industry, our business, customer base, and market; the
Company’s ability to derive value from the anticipated benefits of
partnerships, new technologies, and pilot programs, including
contract renewal and repowering programs; anticipated demand,
market acceptance, and market adoption of the Company’s offerings,
including new products, services, and technologies; the Company’s
strategy to be a storage-first company; the ability to increase
margins based on a shift in product focus; expectations regarding
the growth of home electrification, electric vehicles, virtual
power plants, and distributed energy resources; the Company’s
ability to manage suppliers, inventory, and workforce; supply
chains and regulatory impacts affecting supply chains; the
Company’s leadership team and talent development; the legislative
and regulatory environment of the solar industry and the potential
impacts of proposed, amended, and newly adopted legislation and
regulation on the solar industry and our business; the ongoing
expectations regarding the Company’s storage and energy services
businesses and anticipated emissions reductions due to utilization
of the Company’s solar energy systems; and factors outside of the
Company’s control such as macroeconomic trends, bank failures,
public health emergencies, natural disasters, acts of war,
terrorism, geopolitical conflict, or armed conflict / invasion, and
the impacts of climate change. These statements are not guarantees
of future performance; they reflect the Company’s current views
with respect to future events and are based on assumptions and
estimates and are subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements to be materially different from expectations or
results projected or implied by forward-looking statements. The
risks and uncertainties that could cause the Company’s results to
differ materially from those expressed or implied by such
forward-looking statements include: the Company’s continued ability
to manage costs and compete effectively; the availability of
additional financing on acceptable terms; worldwide economic
conditions, including slow or negative growth rates and inflation;
volatile or rising interest rates; changes in policies and
regulations, including net metering, interconnection limits, and
fixed fees, or caps and licensing restrictions and the impact of
these changes on the solar industry and our business; the Company’s
ability to attract and retain the Company’s business partners;
supply chain risks and associated costs; realizing the anticipated
benefits of past or future investments, partnerships, strategic
transactions, or acquisitions, and integrating those acquisitions;
the Company’s leadership team and ability to attract and retain key
employees; changes in the retail prices of traditional utility
generated electricity; the availability of rebates, tax credits and
other incentives; the availability of solar panels, batteries, and
other components and raw materials; the Company’s business plan and
the Company’s ability to effectively manage the Company’s growth
and labor constraints; the Company’s ability to meet the covenants
in the Company’s investment funds and debt facilities; factors
impacting the home electrification and solar industry generally,
and such other risks and uncertainties identified in the reports
that we file with the U.S. Securities and Exchange Commission from
time to time. All forward-looking statements used herein are based
on information available to us as of the date hereof, and we assume
no obligation to update publicly these forward-looking statements
for any reason, except as required by law.
Citations to industry and market statistics used herein may be
found in our Investor Presentation, available via the “Investor
Relations” section of Sunrun’s website at
https://investors.sunrun.com.
Consolidated Balance
Sheets(In Thousands)
|
|
March 31, 2024 |
|
December 31, 2023 |
|
|
|
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash |
|
$ |
487,280 |
|
$ |
678,821 |
Restricted cash |
|
|
295,751 |
|
|
308,869 |
Accounts receivable, net |
|
|
169,661 |
|
|
172,001 |
Inventories |
|
|
411,993 |
|
|
459,746 |
Prepaid expenses and other current assets |
|
|
305,921 |
|
|
262,822 |
Total current assets |
|
|
1,670,606 |
|
|
1,882,259 |
Restricted cash |
|
|
148 |
|
|
148 |
Solar energy systems, net |
|
|
13,422,536 |
|
|
13,028,871 |
Property and equipment, net |
|
|
157,165 |
|
|
149,139 |
Goodwill |
|
|
3,122,168 |
|
|
3,122,168 |
Other assets |
|
|
2,461,720 |
|
|
2,267,652 |
Total assets |
|
$ |
20,834,343 |
|
$ |
20,450,237 |
Liabilities and total
equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
286,923 |
|
$ |
230,723 |
Distributions payable to noncontrolling interests and redeemable
noncontrolling interests |
|
|
34,039 |
|
|
35,180 |
Accrued expenses and other liabilities |
|
|
538,117 |
|
|
499,225 |
Deferred revenue, current portion |
|
|
120,673 |
|
|
128,600 |
Deferred grants, current portion |
|
|
8,199 |
|
|
8,199 |
Finance lease obligations, current portion |
|
|
24,015 |
|
|
22,053 |
Non-recourse debt, current portion |
|
|
245,310 |
|
|
547,870 |
Pass-through financing obligation, current portion |
|
|
16,545 |
|
|
16,309 |
Total current liabilities |
|
|
1,273,821 |
|
|
1,488,159 |
Deferred revenue, net of current portion |
|
|
1,109,391 |
|
|
1,067,461 |
Deferred grants, net of current portion |
|
|
193,409 |
|
|
195,724 |
Finance lease obligations, net of current portion |
|
|
73,807 |
|
|
68,753 |
Convertible senior notes |
|
|
662,781 |
|
|
392,867 |
Line of credit |
|
|
387,002 |
|
|
539,502 |
Non-recourse debt, net of current portion |
|
|
9,852,968 |
|
|
9,191,689 |
Pass-through financing obligation, net of current portion |
|
|
253,361 |
|
|
278,333 |
Other liabilities |
|
|
147,204 |
|
|
190,866 |
Deferred tax liabilities |
|
|
122,216 |
|
|
122,870 |
Total liabilities |
|
|
14,075,960 |
|
|
13,536,224 |
Redeemable noncontrolling
interests |
|
|
656,845 |
|
|
676,177 |
Total stockholders’
equity |
|
|
5,180,451 |
|
|
5,230,228 |
Noncontrolling interests |
|
|
921,087 |
|
|
1,007,608 |
Total equity |
|
|
6,101,538 |
|
|
6,237,836 |
Total liabilities, redeemable noncontrolling interests and
total equity |
|
$ |
20,834,343 |
|
$ |
20,450,237 |
Consolidated Statements of
Operations(In Thousands, Except Per Share
Amounts)
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue: |
|
|
|
|
Customer agreements and incentives |
|
$ |
322,967 |
|
|
$ |
246,474 |
|
Solar energy systems and product sales |
|
|
135,221 |
|
|
|
343,375 |
|
Total revenue |
|
|
458,188 |
|
|
|
589,849 |
|
Operating expenses: |
|
|
|
|
Cost of customer agreements and incentives |
|
|
269,534 |
|
|
|
236,905 |
|
Cost of solar energy systems and product sales |
|
|
156,159 |
|
|
|
320,018 |
|
Sales and marketing |
|
|
152,264 |
|
|
|
202,836 |
|
Research and development |
|
|
12,087 |
|
|
|
4,557 |
|
General and administrative |
|
|
51,266 |
|
|
|
53,227 |
|
Total operating expenses |
|
|
641,310 |
|
|
|
817,543 |
|
Loss from operations |
|
|
(183,122 |
) |
|
|
(227,694 |
) |
Interest expense, net |
|
|
(192,159 |
) |
|
|
(142,698 |
) |
Other income (expense),
net |
|
|
89,930 |
|
|
|
(25,000 |
) |
Loss before income taxes |
|
|
(285,351 |
) |
|
|
(395,392 |
) |
Income tax benefit |
|
|
(2,201 |
) |
|
|
(59,619 |
) |
Net loss |
|
|
(283,150 |
) |
|
|
(335,773 |
) |
Net loss attributable to noncontrolling interests and redeemable
noncontrolling interests |
|
|
(195,332 |
) |
|
|
(95,385 |
) |
Net loss attributable to common stockholders |
|
$ |
(87,818 |
) |
|
$ |
(240,388 |
) |
Net loss per share attributable to common stockholders |
|
|
|
|
Basic |
|
$ |
(0.40 |
) |
|
$ |
(1.12 |
) |
Diluted |
|
$ |
(0.40 |
) |
|
$ |
(1.12 |
) |
Weighted average shares used to compute net loss per share
attributable to common stockholders |
|
|
|
|
Basic |
|
|
219,882 |
|
|
|
214,548 |
|
Diluted |
|
|
219,882 |
|
|
|
214,548 |
|
Consolidated Statements of Cash
Flows(In Thousands)
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Operating
activities: |
|
|
|
|
Net loss |
|
$ |
(283,150 |
) |
|
$ |
(335,773 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization, net of amortization of deferred
grants |
|
|
150,520 |
|
|
|
123,105 |
|
Deferred income taxes |
|
|
(2,202 |
) |
|
|
(59,613 |
) |
Stock-based compensation expense |
|
|
28,869 |
|
|
|
28,266 |
|
Interest on pass-through financing obligations |
|
|
4,756 |
|
|
|
4,862 |
|
Reduction in pass-through financing obligations |
|
|
(9,335 |
) |
|
|
(9,641 |
) |
Unrealized (loss) gain on derivatives |
|
|
(55,103 |
) |
|
|
30,721 |
|
Other noncash items |
|
|
14,639 |
|
|
|
27,366 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(1,371 |
) |
|
|
(9,385 |
) |
Inventories |
|
|
47,753 |
|
|
|
(103,986 |
) |
Prepaid expenses and other assets |
|
|
(135,678 |
) |
|
|
(109,454 |
) |
Accounts payable |
|
|
59,641 |
|
|
|
(1,428 |
) |
Accrued expenses and other liabilities |
|
|
3,395 |
|
|
|
(26,776 |
) |
Deferred revenue |
|
|
34,173 |
|
|
|
2,413 |
|
Net cash used in operating activities |
|
|
(143,093 |
) |
|
|
(439,323 |
) |
Investing
activities: |
|
|
|
|
Payments for the costs of solar energy systems |
|
|
(538,975 |
) |
|
|
(506,314 |
) |
Purchases of property and equipment, net |
|
|
3,531 |
|
|
|
(3,996 |
) |
Net cash used in investing activities |
|
|
(535,444 |
) |
|
|
(510,310 |
) |
Financing
activities: |
|
|
|
|
Proceeds from state tax credits, net of recapture |
|
|
— |
|
|
|
4,033 |
|
Proceeds from line of credit |
|
|
139,805 |
|
|
|
143,331 |
|
Repayment of line of credit |
|
|
(292,305 |
) |
|
|
(96,236 |
) |
Proceeds from issuance of convertible senior notes, net of capped
call transaction |
|
|
444,822 |
|
|
|
— |
|
Repurchase of convertible senior notes |
|
|
(173,715 |
) |
|
|
— |
|
Proceeds from issuance of non-recourse debt |
|
|
770,106 |
|
|
|
514,880 |
|
Repayment of non-recourse debt |
|
|
(431,532 |
) |
|
|
(50,968 |
) |
Payment of debt fees |
|
|
(47,779 |
) |
|
|
(733 |
) |
Proceeds from pass-through financing and other obligations,
net |
|
|
1,808 |
|
|
|
2,004 |
|
Early repayment of pass-through financing obligation |
|
|
(20,000 |
) |
|
|
— |
|
Payment of finance lease obligations |
|
|
(6,732 |
) |
|
|
(4,477 |
) |
Contributions received from noncontrolling interests and redeemable
noncontrolling interests |
|
|
164,337 |
|
|
|
397,750 |
|
Distributions paid to noncontrolling interests and redeemable
noncontrolling interests |
|
|
(74,834 |
) |
|
|
(63,901 |
) |
Acquisition of noncontrolling interests |
|
|
(1,159 |
) |
|
|
(7,175 |
) |
Proceeds from transfer of investment tax credits |
|
|
106,529 |
|
|
|
— |
|
Payments to redeemable noncontrolling interests and noncontrolling
interests of investment tax credits |
|
|
(106,529 |
) |
|
|
— |
|
Net proceeds related to stock-based award activities |
|
|
1,056 |
|
|
|
1,328 |
|
Net cash provided by financing activities |
|
|
473,878 |
|
|
|
839,836 |
|
Net change in cash and
restricted cash |
|
|
(204,659 |
) |
|
|
(109,797 |
) |
Cash and restricted cash,
beginning of period |
|
|
987,838 |
|
|
|
953,023 |
|
Cash and restricted cash, end
of period |
|
$ |
783,179 |
|
|
$ |
843,226 |
|
Key Operating and Financial
Metrics
The following operating metrics are used by management to
evaluate the performance of the business. Management believes these
metrics, when taken together with other information contained in
our filings with the SEC and within this press release, provide
investors with helpful information to determine the economic
performance of the business activities in a period that would
otherwise not be observable from historic GAAP measures. Management
believes that it is helpful to investors to evaluate the present
value of cash flows expected from subscribers over the full
expected relationship with such subscribers (“Subscriber Value”,
more fully defined in the definitions appendix below) in comparison
to the costs associated with adding these customers, regardless of
whether or not the costs are expensed or capitalized in the period
(“Creation Cost”, more fully defined in the definitions appendix
below). The Company also believes that Subscriber Value, Creation
Costs, and Total Value Generated are useful metrics for investors
because they present an unlevered view of all of the costs
associated with new customers in a period compared to the expected
future cash flows from these customers over a 30-year period, based
on contracted pricing terms with its customers, which is not
observable in any current or historic GAAP-derived metric.
Management believes it is useful for investors to also evaluate the
future expected cash flows from all customers that have been
deployed through the respective measurement date, less estimated
costs to maintain such systems and estimated distributions to tax
equity partners in consolidated joint venture partnership flip
structures, and distributions to project equity investors (“Gross
Earning Assets”, more fully defined in the definitions appendix
below). The Company also believes Gross Earning Assets is useful
for management and investors because it represents the remaining
future expected cash flows from existing customers, which is not a
current or historic GAAP-derived measure.
Various assumptions are made when calculating these metrics.
Both Subscriber Value and Gross Earning Assets utilize a 6% rate to
discount future cash flows to the present period. Furthermore,
these metrics assume that customers renew after the initial
contract period at a rate equal to 90% of the rate in effect at the
end of the initial contract term. For Customer Agreements with
25-year initial contract terms, a 5-year renewal period is assumed.
For a 20-year initial contract term, a 10-year renewal period is
assumed. In all instances, we assume a 30-year customer
relationship, although the customer may renew for additional years,
or purchase the system. Estimated cost of servicing assets has been
deducted and is estimated based on the service agreements
underlying each fund.
In-period volume
metrics: |
Three Months EndedMarch 31,
2024 |
|
Customer Additions |
|
24,038 |
|
Subscriber Additions |
|
22,058 |
|
Solar Energy Capacity Installed (in Megawatts) |
|
177.0 |
|
Solar Energy Capacity Installed for Subscribers (in Megawatts) |
|
165.3 |
|
Storage Capacity Installed (in Megawatt hours) |
|
207.2 |
|
|
|
|
In-period value
creation metrics: |
Three Months EndedMarch 31,
2024 |
|
Subscriber Value Contracted Period |
$46,858 |
|
Subscriber Value Renewal Period |
$3,917 |
|
Subscriber Value |
$50,776 |
|
Creation Cost |
$38,885 |
|
Net Subscriber Value |
$11,891 |
|
Total Value Generated (in millions) |
$262.3 |
|
|
|
|
In-period
environmental impact metrics: |
Three Months EndedMarch 31,
2024 |
|
Positive Environmental Impact from Customers (over trailing twelve
months, in millions of metric tons of CO2 avoidance) |
|
3.6 |
|
Positive Expected Lifetime Environmental Impact from Customer
Additions (in millions of metric tons of CO2 avoidance) |
|
3.5 |
|
|
|
|
Period-end
metrics: |
March 31, 2024 |
|
Customers |
|
957,313 |
|
Subscribers |
|
803,145 |
|
Households Served in Low-Income Multifamily Properties |
|
13,998 |
|
Networked Solar Energy Capacity (in Megawatts) |
|
6,866 |
|
Networked Solar Energy Capacity for Subscribers (in Megawatts) |
|
5,802 |
|
Networked Storage Capacity (in Megawatt hours) |
|
1,532 |
|
Annual Recurring Revenue (in millions) |
$1,414 |
|
Average Contract Life Remaining (in years) |
|
17.9 |
|
Gross Earning Assets Contracted Period (in millions) |
$11,545 |
|
Gross Earning Assets Renewal Period (in millions) |
$3,492 |
|
Gross Earning Assets (in millions) |
$15,038 |
|
Net Earning Assets (in millions) |
$5,247 |
|
|
Note that Sunrun
updated the discount rate used to calculate Subscriber Value and
Gross Earning Assets to 6% commencing with the first quarter 2023
reporting. Also note that figures presented above may not sum due
to rounding. For adjustments related to Subscriber Value and
Creation Cost, please see the supplemental Creation Cost
Methodology memo for each applicable period, which is available on
investors.sunrun.com. |
|
Definitions
Deployments represent solar or storage systems,
whether sold directly to customers or subject to executed Customer
Agreements (i) for which we have confirmation that the systems are
installed, subject to final inspection, or (ii) in the case of
certain system installations by our partners, for which we have
accrued at least 80% of the expected project cost (inclusive of
acquisitions of installed systems).
Customer Agreements refer to, collectively,
solar or storage power purchase agreements and leases.
Subscriber Additions represent the number of
Deployments in the period that are subject to executed Customer
Agreements.
Customer Additions represent the number of
Deployments in the period.
Solar Energy Capacity Installed represents the
aggregate megawatt production capacity of our solar energy systems
that were recognized as Deployments in the period.
Solar Energy Capacity Installed for Subscribers
represents the aggregate megawatt production capacity of our solar
energy systems that were recognized as Deployments in the period
that are subject to executed Customer Agreements.
Storage Capacity Installed represents the
aggregate megawatt hour capacity of storage systems that were
recognized as Deployments in the period.
Creation Cost represents the sum of certain
operating expenses and capital expenditures incurred divided by
applicable Customer Additions and Subscriber Additions in the
period. Creation Cost is comprised of (i) installation costs, which
includes the increase in gross solar energy system assets and the
cost of customer agreement revenue, excluding depreciation expense
of fixed solar assets, and operating and maintenance expenses
associated with existing Subscribers, plus (ii) sales and marketing
costs, including increases to the gross capitalized costs to obtain
contracts, net of the amortization expense of the costs to obtain
contracts, plus (iii) general and administrative costs, and less
(iv) the gross profit derived from selling systems to customers
under sale agreements and Sunrun’s product distribution and lead
generation businesses. Creation Cost excludes stock based
compensation, amortization of intangibles, and research and
development expenses, along with other items the company deems to
be non-recurring or extraordinary in nature. The gross margin
derived from solar energy systems and product sales is included as
an offset to Creation Cost since these sales are ancillary to the
overall business model and lowers our overall cost of business. The
sales, marketing, general and administrative costs in Creation
Costs is inclusive of sales, marketing, general and administrative
activities related to the entire business, including solar energy
system and product sales. As such, by including the gross margin on
solar energy system and product sales as a contra cost, the value
of all activities of the Company’s segment are represented in the
Net Subscriber Value.
Subscriber Value represents the per subscriber
value of upfront and future cash flows (discounted at 6%) from
Subscriber Additions in the period, including expected payments
from customers as set forth in Customer Agreements, net proceeds
from tax equity finance partners, payments from utility incentive
and state rebate programs, contracted net grid service program cash
flows, projected future cash flows from solar energy renewable
energy credit sales, less estimated operating and maintenance costs
to service the systems and replace equipment, consistent with
estimates by independent engineers, over the initial term of the
Customer Agreements and estimated renewal period. For Customer
Agreements with 25 year initial contract terms, a 5 year renewal
period is assumed. For a 20 year initial contract term, a 10 year
renewal period is assumed. In all instances, we assume a 30-year
customer relationship, although the customer may renew for
additional years, or purchase the system.
Net Subscriber Value represents Subscriber
Value less Creation Cost.
Total Value Generated represents Net Subscriber
Value multiplied by Subscriber Additions.
Customers represent the cumulative number of
Deployments, from the company’s inception through the measurement
date.
Subscribers represent the cumulative number of
Customer Agreements for systems that have been recognized as
Deployments through the measurement date.
Networked Solar Energy Capacity represents the
aggregate megawatt production capacity of our solar energy systems
that have been recognized as Deployments, from the company’s
inception through the measurement date.
Networked Solar Energy Capacity for Subscribers
represents the aggregate megawatt production capacity of our solar
energy systems that have been recognized as Deployments, from the
company’s inception through the measurement date, that have been
subject to executed Customer Agreements.
Networked Storage Capacity represents the
aggregate megawatt hour capacity of our storage systems that have
been recognized as Deployments, from the company’s inception
through the measurement date.
Gross Earning Assets is calculated as Gross
Earning Assets Contracted Period plus Gross Earning Assets Renewal
Period.
Gross Earning Assets Contracted Period
represents the present value of the remaining net cash flows
(discounted at 6%) during the initial term of our Customer
Agreements as of the measurement date. It is calculated as the
present value of cash flows (discounted at 6%) that we would
receive from Subscribers in future periods as set forth in Customer
Agreements, after deducting expected operating and maintenance
costs, equipment replacements costs, distributions to tax equity
partners in consolidated joint venture partnership flip structures,
and distributions to project equity investors. We include cash
flows we expect to receive in future periods from tax equity
partners, government incentive and rebate programs, contracted
sales of solar renewable energy credits, and awarded net cash flows
from grid service programs with utilities or grid operators.
Gross Earning Assets Renewal Period is the
forecasted net present value we would receive upon or following the
expiration of the initial Customer Agreement term but before the
30th anniversary of the system’s activation (either in the form of
cash payments during any applicable renewal period or a system
purchase at the end of the initial term), for Subscribers as of the
measurement date. We calculate the Gross Earning Assets Renewal
Period amount at the expiration of the initial contract term
assuming either a system purchase or a renewal, forecasting only a
30-year customer relationship (although the customer may renew for
additional years, or purchase the system), at a contract rate equal
to 90% of the customer’s contractual rate in effect at the end of
the initial contract term. After the initial contract term, our
Customer Agreements typically automatically renew on an annual
basis and the rate is initially set at up to a 10% discount to
then-prevailing utility power prices.
Net Earning Assets represents Gross Earning
Assets, plus total cash, less adjusted debt and less pass-through
financing obligations, as of the same measurement date. Debt is
adjusted to exclude a pro-rata share of non-recourse debt
associated with funds with project equity structures along with
debt associated with the company’s ITC safe harboring facility.
Because estimated cash distributions to our project equity partners
are deducted from Gross Earning Assets, a proportional share of the
corresponding project level non-recourse debt is deducted from Net
Earning Assets, as such debt would be serviced from cash flows
already excluded from Gross Earning Assets.
Cash Generation is calculated using the change
in our unrestricted cash balance from our consolidated balance
sheet, less net proceeds (or plus net repayments) from all recourse
debt (inclusive of convertible debt), and less any primary equity
issuances or net proceeds derived from employee stock award
activity (or plus any stock buybacks or dividends paid to common
stockholders) as presented on the Company’s consolidated statement
of cash flows. The Company expects to continue to raise tax equity
and asset-level non-recourse debt to fund growth, and as such,
these sources of cash are included in the definition of Cash
Generation. Cash Generation also excludes long-term asset or
business divestitures and equity investments in external
non-consolidated businesses (or less dividends or distributions
received in connection with such equity investments).
Annual Recurring Revenue represents revenue
arising from Customer Agreements over the following twelve months
for Subscribers that have met initial revenue recognition criteria
as of the measurement date.
Average Contract Life Remaining represents the
average number of years remaining in the initial term of Customer
Agreements for Subscribers that have met revenue recognition
criteria as of the measurement date.
Households Served in Low-Income Multifamily
Properties represent the number of individual rental units
served in low-income multi-family properties from shared solar
energy systems deployed by Sunrun. Households are counted when the
solar energy system has interconnected with the grid, which may
differ from Deployment recognition criteria.
Positive Environmental Impact from Customers
represents the estimated reduction in carbon emissions as a result
of energy produced from our Networked Solar Energy Capacity over
the trailing twelve months. The figure is presented in millions of
metric tons of avoided carbon emissions and is calculated using the
Environmental Protection Agency’s AVERT tool. The figure is
calculated using the most recent published tool from the EPA, using
the current-year avoided emission factor for distributed resources
on a state by state basis. The environmental impact is estimated
based on the system, regardless of whether or not Sunrun continues
to own the system or any associated renewable energy credits.
Positive Expected Lifetime Environmental Impact from
Customer Additions represents the estimated reduction in
carbon emissions over thirty years as a result of energy produced
from solar energy systems that were recognized as Deployments in
the period. The figure is presented in millions of metric tons of
avoided carbon emissions and is calculated using the Environmental
Protection Agency’s AVERT tool. The figure is calculated using the
most recent published tool from the EPA, using the current-year
avoided emission factor for distributed resources on a state by
state basis, leveraging our estimated production figures for such
systems, which degrade over time, and is extrapolated for 30 years.
The environmental impact is estimated based on the system,
regardless of whether or not Sunrun continues to own the system or
any associated renewable energy credits.
Total Cash represents the total of the
restricted cash balance and unrestricted cash balance from our
consolidated balance sheet.
Investor & Analyst Contact:Patrick
JobinSenior Vice President, Finance &
IRinvestors@sunrun.com
Media Contact:Wyatt SemanekDirector, Corporate
Communicationspress@sunrun.com
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