Sunrun (Nasdaq: RUN), the nation’s leading provider of residential
solar, storage and energy services, today announced financial
results for the fourth quarter and full year ended December 31,
2023.
“Sunrun ended 2023 in a great position and is starting off 2024
with incredible momentum. Our team is driving an increased mix of
higher-margin storage offerings and delivering positive Cash
Generation in Q4. We are extending our differentiation by not only
making clean, affordable and reliable energy accessible to families
across America with the most pro-consumer offerings, but by
delivering a superior customer experience and service in the
industry. Our strong sales activities and market position gives us
confidence that installations will grow considerably from Q1
levels,” said Mary Powell, Sunrun’s Chief Executive
Officer. “We are focused on customer lifetime engagement
by not only providing the best service for our customers during
their multi-decade relationship with us, but by providing
additional products and services customers want, including offering
early renewals, adding storage to existing systems, and providing
additional products. The pilot of our early renewal product is
incredibly encouraging and demonstrates how Sunrun is uniquely
positioned to benefit from providing customers valuable services
beyond their initial subscription agreement.”
“We are driving positive Cash Generation by executing on our
margin-focused strategy, optimizing our geographic and product mix,
and increasing installation labor efficiency. Cash Generation was
$11 million in the fourth quarter, and we are reiterating our
strong Cash Generation outlook for 2024,” said Danny
Abajian, Sunrun’s Chief Financial Officer. “We have been
active in the capital markets, raising more than $3 billion in
capital thus far in Q1, largely with non-recourse asset financing
and tax equity to support our growth, and proactively extending
maturities to maintain a strong and healthy balance sheet. In the
fourth quarter, and into 2024, we repurchased approximately $26
million in principal value of our 2026 convertible bonds at a
substantial discount to par, driving shareholder value.”
Fourth Quarter Updates
- Storage attachment rates accelerating: Storage attachment rates
on installations reached 45% in Q4, up from 15% at the beginning of
year, with 219.7 Megawatt hours installed during the quarter.
Recent sales activities are at ~48% nationally, with California
exceeding 85% of all new customers including storage with the solar
system. Sunrun has now installed more than 90,000 solar and storage
systems, representing over 1.3 Gigawatt hours of stored energy
capacity.
- Strong results from renewal pilot: Sunrun has launched a pilot
to offer customers the ability to renew their subscription
agreements early and extend the price protection and peace of mind
our service provides. Initial results demonstrate strong value
creation potential beyond our initial contracts. So far, nearly 75%
of the customers reached are eager to renew contracts for >5
years with their current rate escalation or are in the process of
evaluating proposals. Only about 25% of customers opted not to
renew early at our first attempt of presenting the offer (about 5
years before contract expiration). However, about half of these
customers have expressed interest to buy the system outright,
explore upsizing their systems with Sunrun with new equipment, or
expressed that they might be moving. All of these scenarios provide
opportunities for incremental margin for Sunrun. Economics of
executed renewals represents >10% higher Gross Earning Assets
(GEA) on average compared to what is embedded in our reported
metrics (Contracted + Renewal periods). In addition, approximately
half of the Renewal GEA would become Contracted-period GEA. We will
continue to optimize our customer-offers and approach and learn
from this pilot.
- Standalone Storage and Retrofit Update: Consistent with the
company’s strategy to provide customers value beyond their initial
subscription agreements, and consistent with our objective to be a
leader in storage, Sunrun commenced both standalone storage and
retrofit product sales during the fourth quarter. While it's still
early days and only available in select areas, orders have been
growing rapidly.
- Partnership with Lowe’s: Today Sunrun announced the company has
selected Lowe’s as our preferred home improvement retail partner.
Sunrun is already staffing stores and generating leads, launching
in stores last week. Sunrun representatives began staffing more
than 260 Lowe’s stores in 10 states, including California,
Illinois, and Texas, and are now available to answer questions and
guide customers through the process of going solar at their homes.
Sunrun determined Lowe’s presented a superior, attractive
opportunity with considerable strategic alignment.
- Strong capital market execution: Sunrun has arranged new
capital or extended maturities of existing capital during Q1 to
support growth. 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 also 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). The size was reduced slightly
from $600 million to $447.5 million, with an option to upsize the
facility to up to $477.5 million prior to September 30, 2024.
- SolarAPP+ Update: As a founding member developing the
industry-wide web-based solar permitting tool, SolarAPP+, we are
pleased to see the growing adoption and benefits in streamlining
permitting and interconnection. In California, approximately one
third of our installations in the fourth quarter utilized
SolarAPP+, up from around 4% at the start of the year. We are
seeing a dramatic improvement in cycle times in areas utilizing
SolarApp+, providing a 13 day reduction in the cycle times awaiting
permits. Reducing cycle times helps reduce ‘soft costs’ and
improves the homeowners’ experience.
Key Operating Metrics
In the fourth quarter of 2023, Customer Additions were 30,005,
including 27,000 Subscriber Additions. As of December 31, 2023,
Sunrun had 933,275 Customers, including 781,087 Subscribers.
Customers grew 17% in the fourth quarter of 2023 compared to the
fourth quarter of 2022.
Annual Recurring Revenue from Subscribers was over $1.3 billion
as of December 31, 2023. The Average Contract Life Remaining of
Subscribers was 17.8 years as of December 31, 2023.
Subscriber Value was $50,302 in the fourth quarter of 2023, an
18% increase compared to the fourth quarter of 2022. Creation Cost
was $36,857 in the fourth quarter of 2023.
Net Subscriber Value was $13,445 in the fourth quarter of 2023.
Total Value Generated was $363 million in the fourth quarter of
2023. On a pro-forma basis assuming a 7.5% discount rate,
consistent with current capital costs, Subscriber Value was $45,304
and Net Subscriber Value was $8,447 in the fourth quarter of 2023.
Commencing in the third quarter of 2023, Subscriber Value included
benefits obtained from the energy communities ITC adder for systems
deployed during the quarter and commencing in the fourth quarter of
2023, Subscriber Value included expected benefits from the
low-income communities (LMI) ITC adder awards for systems deployed
during the quarter. Subscriber Value does not yet include value we
may receive from the domestic content ITC adder and additional
value we may obtain from systems that are eligible for LMI adders.
These critical ITC adders will make solar more affordable and
accessible to a broader consumer population.
Additionally, hardware costs for key items such as modules,
inverters and batteries continue to fall based on current
procurement activities, and are expected to provide additional
benefits of $1,046 in future periods to Net Subscriber Value. While
these cost tailwinds do not benefit Q4 deployments, we have
provided the impact of the cost benefits we expect to achieve in
future periods as we work through higher-cost inventory. Pro-forma
for these benefits, at a 6% discount rate, Net Subscriber Value was
$15,256 in Q4. Adjusted for an 7.5% discount rate, but including
the full ITC adder benefits and cost deflation, pro-forma Net
Subscriber Value was $10,258 in Q4.
Gross Earning Assets as of December 31, 2023, were $14.2
billion. Net Earning Assets were $5.0 billion, which included $988
million in Total Cash, as of December 31, 2023.
Cash Generation was $10.9 million in the fourth quarter of
2023.
Storage Capacity Installed was 219.7 Megawatt hours in the
fourth quarter of 2023. This represents a 25% sequential increase
from the 175.6 Megawatt hours of Storage Capacity Installed in the
third quarter of 2023 and 154% year over year increase from the
86.6 Megawatt hours of Storage Capacity Installed in the fourth
quarter of 2022.
Solar Energy Capacity Installed was 227.1 Megawatts in the
fourth quarter of 2023. Solar Energy Capacity Installed for
Subscribers was 208.2 Megawatts in the fourth quarter of 2023.
Networked Solar Energy Capacity was 6,689 Megawatts as of
December 31, 2023. Networked Solar Energy Capacity for Subscribers
was 5,636 Megawatts as of December 31, 2023. Networked Storage
Capacity was 1.3 Gigawatt hours as of December 31, 2023.
The solar energy systems we deployed in Q4 are expected to
offset the emission of 4.6 million metric tons of CO2 over the next
thirty years. Over the last twelve months, Sunrun’s systems are
estimated to have offset 3.8 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 160
to 170 Megawatt hours in the first quarter of 2024. This range
represents approximately 125% to 139% growth year over year.
Solar Energy Capacity Installed is expected to be in a range of
approximately 971 to 1,073 Megawatts for the full-year 2024,
reflecting a range representing a 5% decline to 5% growth year over
year.
Solar Energy Capacity Installed is expected to be in a range of
165 to 175 Megawatts in the first quarter of 2024. This range
represents a decline of approximately 23% to 27% from the fourth
quarter, as volumes are typically seasonally lower in the first
quarter owing to the timing of sales activities and weather-related
limitations on installations.
Net Subscriber Value is expected to be sequentially lower in Q1,
following typical seasonal patterns owing to fixed cost absorption
and timing of sales activities and volume recognition. More
favorable cost absorption, an increasing mix of storage, meaningful
hardware cost deflation tailwinds and forthcoming ITC adder value
is expected to provide material uplift to our Net Subscriber Values
in Q2 through Q4 of 2024. Management expects Net Subscriber Value
to reach levels during 2024 which exceed the realized amount in the
fourth quarter of 2023.
Total Value Generated is expected to grow by over 15% for the
full-year 2024 driven by higher Subscriber Values and lower input
costs.
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.
Fourth Quarter 2023 GAAP Results
Total revenue was $516.6 million in the fourth quarter of 2023,
down $92.6 million, or 15%, from the fourth quarter of 2022.
Customer agreements and incentives revenue was $321.6 million, an
increase of $79.3 million, or 33%, compared to the fourth quarter
of 2022. Solar energy systems and product sales revenue was $195.0
million, a decrease of $171.9 million, or 47%, compared to the
fourth quarter of 2022. 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 $482.6 million, a decrease of 13%
year-over-year. Total operating expenses were $714.1 million, a
decrease of 11% year-over-year.
During the fourth quarter of 2023, Sunrun recorded a $58.7
million non-cash charge related to its investment in Lunar Energy.
The company recorded a non-cash charge in Other Expenses of $58.7
million or $0.27 per basic share.
Net loss attributable to common stockholders was $350.1 million,
or $1.60 per basic and diluted share, in the fourth quarter of
2023. Pro-forma to exclude the non-cash charge in Q4, non-GAAP net
loss would have been $291.5 million or $1.33 per diluted share in
the fourth quarter of 2023.
Full Year 2023 GAAP Results
Total revenue was $2,259.8 million in the full year 2023, down
$61.6 million, or 3%, from the full year 2022. Customer agreements
and incentives revenue was $1,186.7 million, an increase of $203.7
million, or 21%, compared to the full year 2022. Solar energy
systems and product sales revenue was $1,073.1 million, a decrease
of $265.3 million, or 20%, compared to the full year 2022.
Total cost of revenue was $2,096.8 million, an increase of 4%
year-over-year. Total operating expenses were $3,080.5 million
excluding goodwill impairment, an increase of 3%
year-over-year.
During the year, Sunrun recorded a non-cash goodwill impairment
charge of approximately $1.2 billion. Due to the decline in our
stock price, we wrote down our goodwill from $4.3 billion to $3.1
billion during the third quarter of 2023. The goodwill primarily
arose following the stock-for-stock acquisition of Vivint Solar in
October 2020, with the majority arising from and determined based
on the market capitalizations at the time of the acquisition. The
company recorded a non-cash goodwill impairment charge of $1.2
billion, or $5.35 per basic share, in our Consolidated Statement of
Operations for the full year 2023, which was reflected in the
Company’s third quarter results.
Net loss attributable to common stockholders was
$1,604.5million, or $7.41 per basic and diluted share for the full
year 2023. Pro-forma to exclude the non-cash goodwill impairment
charge in Q3, and non-cash loss on an equity investment in Lunar
Energy in Q4, non-GAAP net loss would have been $387.8 million or
$1.79 per diluted share for the full-year 2023.
Financing Activities
As of February 21, 2024, closed transactions and executed term
sheets provide us with expected tax equity to fund approximately
195 Megawatts of Solar Energy Capacity Installed for Subscribers
beyond what was deployed through December 31, 2023. As of December
31, 2023 Sunrun also had $577 million available in its non-recourse
senior revolving warehouse facility to fund over 211 Megawatts of
Solar Energy Capacity Installed for Subscribers, pro-forma to
include the upsize and amendment which was closed subsequent to the
end of the quarter.
Conference Call Information
Sunrun is hosting a conference call for analysts and investors
to discuss its fourth quarter and full year 2023 results and
business outlook at 1:30 p.m. Pacific Time today, February 21,
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; 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) |
|
|
As of December 31, |
|
2023 |
|
2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
678,821 |
|
|
$ |
740,508 |
|
Restricted cash |
|
308,869 |
|
|
|
212,367 |
|
Accounts receivable, net |
|
172,001 |
|
|
|
214,255 |
|
Inventories |
|
459,746 |
|
|
|
783,904 |
|
Prepaid expenses and other current assets |
|
262,822 |
|
|
|
146,609 |
|
Total current assets |
|
1,882,259 |
|
|
|
2,097,643 |
|
Restricted cash |
|
148 |
|
|
|
148 |
|
Solar energy systems, net |
|
13,028,871 |
|
|
|
10,988,361 |
|
Property and equipment, net |
|
149,139 |
|
|
|
67,439 |
|
Goodwill |
|
3,122,168 |
|
|
|
4,280,169 |
|
Other assets |
|
2,267,652 |
|
|
|
1,835,045 |
|
Total assets |
$ |
20,450,237 |
|
|
$ |
19,268,805 |
|
Liabilities and total equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
230,723 |
|
|
$ |
339,166 |
|
Distributions payable to noncontrolling interests and redeemable
noncontrolling interests |
|
35,180 |
|
|
|
32,050 |
|
Accrued expenses and other liabilities |
|
499,225 |
|
|
|
406,466 |
|
Deferred revenue, current portion |
|
128,600 |
|
|
|
183,719 |
|
Deferred grants, current portion |
|
8,199 |
|
|
|
8,252 |
|
Finance lease obligations, current portion |
|
22,053 |
|
|
|
11,444 |
|
Non-recourse debt, current portion |
|
547,870 |
|
|
|
157,810 |
|
Pass-through financing obligation, current portion |
|
16,309 |
|
|
|
16,544 |
|
Total current liabilities |
|
1,488,159 |
|
|
|
1,155,451 |
|
Deferred revenue, net of current portion |
|
1,067,461 |
|
|
|
912,254 |
|
Deferred grants, net of current portion |
|
195,724 |
|
|
|
201,094 |
|
Finance lease obligations, net of current portion |
|
68,753 |
|
|
|
17,302 |
|
Line of credit |
|
539,502 |
|
|
|
505,158 |
|
Non-recourse debt, net of current portion |
|
9,191,689 |
|
|
|
7,343,299 |
|
Convertible senior notes |
|
392,867 |
|
|
|
392,882 |
|
Pass-through financing obligation, net of current portion |
|
278,333 |
|
|
|
289,011 |
|
Other liabilities |
|
190,866 |
|
|
|
140,290 |
|
Deferred tax liabilities |
|
122,870 |
|
|
|
133,047 |
|
Total liabilities |
|
13,536,224 |
|
|
|
11,089,788 |
|
Redeemable noncontrolling interests |
|
676,177 |
|
|
|
609,702 |
|
Total stockholders’ equity |
|
5,230,228 |
|
|
|
6,708,122 |
|
Noncontrolling interests |
|
1,007,608 |
|
|
|
861,193 |
|
Total equity |
|
6,237,836 |
|
|
|
7,569,315 |
|
Total liabilities, redeemable noncontrolling interests and
total equity |
$ |
20,450,237 |
|
|
$ |
19,268,805 |
|
Consolidated Statements of Operations |
(In Thousands, Except Per Share Amounts) |
|
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Customer agreements and incentives |
$ |
321,555 |
|
|
$ |
242,258 |
|
|
$ |
1,186,706 |
|
|
$ |
983,047 |
|
Solar energy systems and product sales |
|
195,035 |
|
|
|
366,894 |
|
|
|
1,073,107 |
|
|
|
1,338,375 |
|
Total revenue |
|
516,590 |
|
|
|
609,152 |
|
|
|
2,259,813 |
|
|
|
2,321,422 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of customer agreements and incentives |
|
287,780 |
|
|
|
230,284 |
|
|
|
1,077,114 |
|
|
|
844,162 |
|
Cost of solar energy systems and product sales |
|
194,808 |
|
|
|
324,443 |
|
|
|
1,019,638 |
|
|
|
1,178,548 |
|
Sales and marketing |
|
166,760 |
|
|
|
189,040 |
|
|
|
740,821 |
|
|
|
745,386 |
|
Research and development |
|
7,663 |
|
|
|
4,113 |
|
|
|
21,816 |
|
|
|
20,907 |
|
General and administrative |
|
57,110 |
|
|
|
50,462 |
|
|
|
221,067 |
|
|
|
194,611 |
|
Goodwill Impairment |
|
— |
|
|
|
— |
|
|
|
1,158,000 |
|
|
|
— |
|
Total operating expenses |
|
714,121 |
|
|
|
798,342 |
|
|
|
4,238,456 |
|
|
|
2,983,614 |
|
Loss
from operations |
|
(197,531 |
) |
|
|
(189,190 |
) |
|
|
(1,978,643 |
) |
|
|
(662,192 |
) |
Interest expense, net |
|
(181,826 |
) |
|
|
(133,306 |
) |
|
|
(652,989 |
) |
|
|
(445,819 |
) |
Other
(expense) income, net |
|
(157,644 |
) |
|
|
(3,127 |
) |
|
|
(63,900 |
) |
|
|
260,657 |
|
Loss
before income taxes |
|
(537,001 |
) |
|
|
(325,623 |
) |
|
|
(2,695,532 |
) |
|
|
(847,354 |
) |
Income tax (benefit) expense |
|
(1,595 |
) |
|
|
2,291 |
|
|
|
(12,691 |
) |
|
|
2,291 |
|
Net
loss |
|
(535,406 |
) |
|
|
(327,914 |
) |
|
|
(2,682,841 |
) |
|
|
(849,645 |
) |
Net loss attributable to
noncontrolling interests and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
redeemable noncontrolling interests |
|
(185,282 |
) |
|
|
(390,935 |
) |
|
|
(1,078,344 |
) |
|
|
(1,023,022 |
) |
Net
(loss) income attributable to common stockholders |
$ |
(350,124 |
) |
|
$ |
63,021 |
|
|
$ |
(1,604,497 |
) |
|
$ |
173,377 |
|
Net
(loss) income per share attributable to common stockholders |
|
|
|
|
|
|
|
Basic |
$ |
(1.60 |
) |
|
$ |
0.30 |
|
|
$ |
(7.41 |
) |
|
$ |
0.82 |
|
Diluted |
$ |
(1.60 |
) |
|
$ |
0.29 |
|
|
$ |
(7.41 |
) |
|
$ |
0.80 |
|
Weighted average shares used
to compute net (loss) |
|
|
|
|
|
|
|
income per share attributable to common stockholders |
|
|
|
|
|
|
|
Basic |
|
218,461 |
|
|
|
213,534 |
|
|
|
216,642 |
|
|
|
211,347 |
|
Diluted |
|
218,461 |
|
|
|
220,614 |
|
|
|
216,642 |
|
|
|
219,157 |
|
Consolidated Statements of Cash Flows |
(In Thousands) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating activities: |
|
|
|
|
|
|
|
Net
loss |
$ |
(535,406 |
) |
|
$ |
(327,914 |
) |
|
$ |
(2,682,841 |
) |
|
$ |
(849,645 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization, net of amortization of deferred
grants |
|
143,024 |
|
|
|
119,190 |
|
|
|
531,669 |
|
|
|
451,046 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
1,158,000 |
|
|
|
— |
|
Deferred income taxes |
|
(1,623 |
) |
|
|
2,291 |
|
|
|
(12,716 |
) |
|
|
2,291 |
|
Stock-based compensation expense |
|
27,555 |
|
|
|
21,931 |
|
|
|
111,781 |
|
|
|
110,633 |
|
Interest on pass-through financing obligations |
|
4,862 |
|
|
|
4,997 |
|
|
|
19,504 |
|
|
|
20,076 |
|
Reduction in pass-through financing obligations |
|
(9,820 |
) |
|
|
(10,059 |
) |
|
|
(40,352 |
) |
|
|
(41,164 |
) |
Unrealized gain on derivatives |
|
108,226 |
|
|
|
6,914 |
|
|
|
28,105 |
|
|
|
(184,904 |
) |
Other noncash items |
|
118,956 |
|
|
|
27,283 |
|
|
|
261,390 |
|
|
|
53,651 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
5,762 |
|
|
|
545 |
|
|
|
15,748 |
|
|
|
(86,762 |
) |
Inventories |
|
202,055 |
|
|
|
(194,810 |
) |
|
|
324,158 |
|
|
|
(277,085 |
) |
Prepaid expenses and other current assets |
|
(142,438 |
) |
|
|
(95,092 |
) |
|
|
(476,628 |
) |
|
|
(378,807 |
) |
Accounts payable |
|
(52,514 |
) |
|
|
55,221 |
|
|
|
(108,785 |
) |
|
|
40,458 |
|
Accrued expenses and other liabilities |
|
(31,986 |
) |
|
|
(8,679 |
) |
|
|
(56,473 |
) |
|
|
64,122 |
|
Deferred revenue |
|
47,340 |
|
|
|
93,509 |
|
|
|
106,700 |
|
|
|
227,297 |
|
Net cash used in operating activities |
|
(116,007 |
) |
|
|
(304,673 |
) |
|
|
(820,740 |
) |
|
|
(848,793 |
) |
Investing activities: |
|
|
|
|
|
|
|
Payments for the costs of solar energy systems |
|
(651,462 |
) |
|
|
(511,307 |
) |
|
|
(2,587,183 |
) |
|
|
(1,992,863 |
) |
Purchase of equity investment |
|
(5,000 |
) |
|
|
— |
|
|
|
(5,000 |
) |
|
|
(75,000 |
) |
Purchases of property and equipment, net |
|
(4,662 |
) |
|
|
(7,383 |
) |
|
|
(20,960 |
) |
|
|
(18,203 |
) |
Net cash provided by (used in) investing activities |
|
(661,124 |
) |
|
|
(518,690 |
) |
|
|
(2,613,143 |
) |
|
|
(2,086,066 |
) |
Financing activities: |
|
|
|
|
|
|
|
Proceeds from state tax credits, net of recapture |
|
— |
|
|
|
— |
|
|
|
4,033 |
|
|
|
— |
|
Proceeds from line of credit |
|
514,502 |
|
|
|
146,300 |
|
|
|
1,165,900 |
|
|
|
1,165,267 |
|
Repayment of line of credit |
|
(492,248 |
) |
|
|
(147,109 |
) |
|
|
(1,131,556 |
) |
|
|
(871,175 |
) |
Repurchase of convertible senior notes |
|
(1,545 |
) |
|
|
— |
|
|
|
(1,545 |
) |
|
|
— |
|
Proceeds from issuance of non-recourse debt |
|
556,100 |
|
|
|
1,047,200 |
|
|
|
3,745,580 |
|
|
|
3,428,830 |
|
Repayment of non-recourse debt |
|
(175,728 |
) |
|
|
(632,708 |
) |
|
|
(1,575,527 |
) |
|
|
(1,799,428 |
) |
Payment of debt fees |
|
(412 |
) |
|
|
(20,712 |
) |
|
|
(47,342 |
) |
|
|
(62,994 |
) |
Proceeds from pass-through financing and other obligations,
net |
|
2,100 |
|
|
|
2,194 |
|
|
|
8,812 |
|
|
|
3,645 |
|
Payment of finance lease obligations |
|
(6,484 |
) |
|
|
(3,657 |
) |
|
|
(23,279 |
) |
|
|
(14,146 |
) |
Contributions received from noncontrolling interests and redeemable
noncontrolling interests |
|
459,858 |
|
|
|
489,243 |
|
|
|
1,572,399 |
|
|
|
1,414,793 |
|
Distributions paid to noncontrolling interests and redeemable
noncontrolling interests |
|
(51,578 |
) |
|
|
(65,528 |
) |
|
|
(225,114 |
) |
|
|
(217,633 |
) |
Acquisition of noncontrolling interest |
|
— |
|
|
|
(5,198 |
) |
|
|
(46,274 |
) |
|
|
(42,571 |
) |
Net proceeds related to stock-based award activities |
|
8,459 |
|
|
|
10,308 |
|
|
|
22,611 |
|
|
|
32,863 |
|
Net cash provided by financing activities |
|
813,024 |
|
|
|
820,333 |
|
|
|
3,468,698 |
|
|
|
3,037,451 |
|
Net
change in cash and restricted cash |
|
35,893 |
|
|
|
(3,030 |
) |
|
|
34,815 |
|
|
|
102,592 |
|
Cash
and restricted cash, beginning of period |
|
951,945 |
|
|
|
956,053 |
|
|
|
953,023 |
|
|
|
850,431 |
|
Cash
and restricted cash, end of period |
$ |
987,838 |
|
|
$ |
953,023 |
|
|
$ |
987,838 |
|
|
$ |
953,023 |
|
Reconciliation between GAAP and Non-GAAP diluted loss per
share:
|
Three Months EndedDecember 31, 2023 |
|
Year Ended December 31, 2023 |
|
Net Loss |
|
Diluted EPS |
|
Net Loss |
|
Diluted EPS |
GAAP diluted loss per share |
$ |
(350,124 |
) |
|
$ |
(1.60 |
) |
|
$ |
(1,604,497 |
) |
|
$ |
(7.41 |
) |
Goodwill impairment (2) |
|
— |
|
|
|
— |
|
|
|
1,158,000 |
|
|
|
5.35 |
|
Lunar
Energy equity investment (2) |
|
58,662 |
|
|
|
0.27 |
|
|
|
58,662 |
|
|
|
0.27 |
|
Non-GAAP diluted loss per share (1) |
$ |
(291,462 |
) |
|
$ |
(1.33 |
) |
|
$ |
(387,835 |
) |
|
$ |
(1.79 |
) |
|
|
|
|
|
|
|
|
GAAP
weighted average shares for diluted EPS |
|
218,461 |
|
|
|
|
|
216,642 |
|
|
|
Non-GAAP weighted average shares for diluted EPS |
|
218,461 |
|
|
|
|
|
216,642 |
|
|
|
(1) Non-GAAP diluted loss per share excludes
the effects of the pro forma adjustment detailed above. Non- GAAP
diluted loss per share is adjusted to exclude this item, as it is
not used by management to evaluate the performance of the
business.(2) Excluding this item of non-recurring,
infrequent or unusual nature and its impact on the comparability of
our results for the period to prior periods and future expected
trends.
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 EndedDecember 31,
2023 |
|
Customer Additions |
|
30,005 |
|
Subscriber Additions |
|
27,000 |
|
Solar Energy Capacity Installed (in Megawatts) |
|
227.1 |
|
Solar Energy Capacity Installed for Subscribers (in Megawatts) |
|
208.2 |
|
Storage Capacity Installed (in Megawatt hours) |
|
219.7 |
|
|
|
|
In-period value
creation metrics: |
Three Months EndedDecember 31,
2023 |
|
Subscriber Value Contracted Period |
|
$46,530 |
|
Subscriber Value Renewal Period |
|
$3,772 |
|
Subscriber Value |
|
$50,302 |
|
Creation Cost |
|
$36,857 |
|
Net Subscriber Value |
|
$13,445 |
|
Total Value Generated (in millions) |
|
$363.0 |
|
|
|
|
In-period
environmental impact metrics: |
Three Months EndedDecember 31,
2023 |
|
Positive Environmental Impact from Customers (over trailing twelve
months, in millions of metric tons of CO2 avoidance) |
|
3.8 |
|
Positive Expected Lifetime Environmental Impact from Customer
Additions (in millions of metric tons of CO2 avoidance) |
|
4.6 |
|
|
|
|
Period-end
metrics: |
December 31, 2023 |
|
Customers |
|
933,275 |
|
Subscribers |
|
781,087 |
|
Households Served in Low-Income Multifamily Properties |
|
12,185 |
|
Networked Solar Energy Capacity (in Megawatts) |
|
6,689 |
|
Networked Solar Energy Capacity for Subscribers (in Megawatts) |
|
5,636 |
|
Networked Storage Capacity (in Megawatt hours) |
|
1,324 |
|
Annual Recurring Revenue (in millions) |
|
$1,336 |
|
Average Contract Life Remaining (in years) |
|
17.8 |
|
Gross Earning Assets Contracted Period (in millions) |
|
$10,802 |
|
Gross Earning Assets Renewal Period (in millions) |
|
$3,364 |
|
Gross Earning Assets (in millions) |
|
$14,167 |
|
Net Earning Assets (in millions) |
|
$5,040 |
|
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 energy systems,
whether sold directly to customers or subject to executed Customer
Agreements (i) for which we have confirmation that the systems are
installed on the roof, subject to final inspection, (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), or (iii) for multi-family
and any other systems that have reached our internal milestone
signaling construction can commence following design completion,
measured on the percentage of the system that has been completed
based on expected system cost.
Customer Agreements refer to, collectively,
solar power purchase agreements and solar 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 state 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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