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New words:
agreeable, Allred, Antitrust, ballot, cent, certified, certify, circumstance, consummated, consummation, converted, CPRA, daily, depth, document, documentation, drawn, drew, enjoining, erode, explained, furloughed, illegal, issuable, lost, Memorandum, morale, mutually, MW, NaN, Nasdaq, nearest, nonassessable, pendency, PV, reinstate, rounded, Secretary, site, Sunrun, thereof, uniform, Viking, waiting, waiver, withheld
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Financial report summary
?Risks
- Failure to complete, or delays in completing, the Merger could materially and adversely affect our results of operations and stock price.
- If the Merger is completed, the combined company may not perform as we expect, or as the market expects, which could have an adverse effect on the price of Sunrun common stock, which our stockholders will own following such completion.
- Our executive officers and directors may have interests that are different from, or in addition to, those of our stockholders generally.
- We need to enter into additional financing arrangements to facilitate new customers’ access to our solar energy systems and provide working capital, and if financing is not available to us on acceptable terms when needed, our ability to continue to grow our business would be materially adversely impacted.
- A material reduction in the retail price of traditional utility-generated electricity or electricity from other sources or other reduction in the cost of such electricity would harm our business, financial condition, results of operations and prospects.
- Electric utility industry policies and regulations may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for electricity from our solar energy systems.
- We rely on net metering and related policies to offer competitive pricing to our customers in all of our current markets, and changes to net metering policies may significantly reduce demand for electricity from our solar energy systems.
- Our business has benefited from the declining cost of equipment, and our financial results may be harmed if the cost of equipment increases in the future.
- Lack of success in System Sales could negatively impact our operating results and cash flows.
- Our business is concentrated in California, putting us at risk of region-specific disruptions.
- Technical and regulatory limitations may significantly reduce our ability to sell electricity from our solar energy systems and retain employees in certain markets.
- We have incurred operating losses before income taxes and may be unable to achieve or sustain profitability in the future.
- The majority of our business is conducted using the direct-to-home sales channel.
- We are not currently regulated as an electric utility under applicable law in the jurisdictions in which we operate (other than New York), but we may be subject to regulation as an electric utility in the future.
- Our business depends in part on the regulatory treatment of third-party owned solar energy systems.
- If the IRS or the U.S. Treasury Department makes a determination that the fair market value of our solar energy systems is materially lower than what we have reported in our fund tax returns, we may have to pay significant amounts to our investment funds, our fund investors and/or the U.S. government. Such determinations could have a material adverse effect on our business, financial condition and prospects.
- Rising interest rates could adversely impact our business.
- Our investment funds contain arrangements that provide for priority distributions to fund investors until they receive their targeted rates of return. In addition, under the terms of certain of our investment funds, we may be required to make payments to the fund investors if certain tax benefits that are allocated to such fund investors are not realized as expected. Our financial condition may be adversely impacted if a fund is required to make these priority distributions for a longer period than anticipated to achieve the fund investors’ targeted rates of return or if we are required to make any tax-related payments.
- We may incur substantially more debt or take other actions that could restrict our ability to pursue our business strategies.
- Residential solar energy is an evolving market, which makes it difficult to evaluate our prospects.
- We face competition from traditional regulated electric utilities, from less-regulated third party energy service providers, other solar companies and from new renewable energy companies.
- Developments in alternative technologies or improvements in distributed solar energy generation may materially adversely affect demand for our offerings.
- A failure to hire and retain a sufficient number of employees in key functions would constrain our ability to timely complete our customers’ projects.
- We typically act as the licensed general contractor for our customers and are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on our business and results of operations.
- We depend on a limited number of suppliers of solar energy system components and technologies to adequately meet anticipated demand for our solar energy systems. Due to the limited number of suppliers in our industry, the acquisition of any of these suppliers by a competitor or any shortage, delay, price change, imposition of tariffs or duties or other limitation in our ability to obtain components or technologies we use could result in sales and installation delays, cancellations and loss of market share.
- Our operating results may fluctuate from quarter to quarter and year to year, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations, resulting in a severe decline in the price of our common stock.
- The profitability and residual value of our solar energy systems during and at the end of the associated term of the PPA or Solar Lease may be lower than projected today and adversely affect our financial performance and valuation.
- Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.
- Failure by our component suppliers to use ethical business practices and comply with applicable laws and regulations may adversely affect our business.
- Damage to our brand and reputation, or change or loss of use of our brand, could harm our business and results of operations.
- If we fail to manage our future operations and growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges.
- The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.
- We use “open source” software in our solutions, which may restrict how we distribute our offerings, require that we release the source code of certain software subject to open source licenses or subject us to possible litigation or other actions that could adversely affect our business.
- The installation and operation of solar energy systems depends heavily on suitable solar and meteorological conditions. If meteorological conditions are unexpectedly unfavorable, the electricity production from our solar energy systems may be substantially below our expectations and our ability to timely deploy new systems may be adversely impacted.
- Disruptions to our solar monitoring systems could negatively impact the operation of our business and our revenues and increase our expenses.
- We are exposed to the credit risk of our customers.
- Any unauthorized access to, or disclosure or theft of personal information or other proprietary information we gather, store or use could harm our reputation and subject us to claims or litigation.
- We cannot be certain that we will be successful in preparing adequate disclosures now that we are no longer able to utilize certain modified disclosure requirements permitted for an emerging growth company or a smaller reporting company within the meaning of the Securities Act.
- Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.
- Our Sponsor and its affiliates control us, and their interests may conflict with ours or investors’ in the future.
- We have elected to take advantage of the “controlled company” exemption to the NYSE corporate governance rules, which could make our common stock less attractive to some investors or otherwise harm our stock price.
- If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
Management Discussion
- The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report.
- Customer Agreements and Incentives. The $18.5 million increase was due primarily to a $16.6 million increase in customer agreements revenue as the total megawatts of solar energy systems in service under these long-term customer contracts increased 21% compared to the same period in 2019 and a $1.5 million increase in SREC revenue.
- Solar Energy System and Product Sales. The $2.8 million decrease was primarily due to a decrease in solar energy systems placed in service under System Sales compared to the same period in 2019, primarily resulting from challenges associated with the COVID-19 pandemic.