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Sunrun (RUN)

Participants
Patrick Jobin Vice President-Investor Relations
Lynn Jurich Chief Executive Officer
Bob Komin Chief Financial Officer
Ed Fenster Co-Founder and Executive Chairman
Michael Weinstein Credit Suisse
Colin Rusch Oppenheimer
Brian Lee Goldman Sachs
Eric Du Bank of America
Call transcript
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Operator

Good afternoon, ladies and gentlemen, and welcome to the Q4 Sunrun Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Patrick Jobin, Vice President of Investor Relations. begin. may you Sir,

Patrick Jobin

and us for today. operator; call on for joining thank you, those you the Thank

forward-looking Before remarks on constitute we begin, will we please make this note conference that certain statements. call

risks in any and reflect as that SEC our we made currently to differ inclusive for the cause adversely. a from actual these actual note, us, Company’s our of we these disclaim and made to statements. of Although other any may materially refer best update more results known differ believe forward-looking statements results Please based on judgment filings factors statements obligation to factors with discussion may them. and being also Please to projections are revise or the today,

Sunrun’s Jurich, call turn Co-Founder Fenster, website will on Lynn are at and and Bob use available And Sunrun’s The today me Lynn. call Co-Founder slides now, the Sunrun’s the presentation Komin, Ed our over investors.sunrun.com. Executive to CFO; and Chairman. today are CEO; which On let

Lynn Jurich

Thanks, Patrick.

are out our quarter watt with than base or grew full operating XX,XXX $X,XXX megawatts We and you XX% in over We about of total the progress generated growing per $X.XX year. XX% fourth full-year Sunrun’s customers. customers, per In XXXX, quarter, again, of generation created year closed more NPV XXX deployments; volume, history. pleased record by the added XX,XXX year highest our breaking the the quarterly XXX,XXX NPV fourth we margin against we volume over the customer almost representing and In present executed value and customers and along the with and deployments We added results targets. customer. with cash of financial to for Company’s net We strategic our priorities. share in million $XXX

We are year about ahead. the excited

million. These accelerate By XX% grow the We to nearly strong generation systems be in to in our $XXX continuing unit to to in while results installed operating more XXXX, achieved to and grow of invest Brightbox Brightbox further than end by are and leadership. and growth we installations guidance expect the triple-digits margins we XXXX, can for product XXXX. and had customer over experience introducing X,XXX in to expand cash financial

large We in have already launched us by we Sunrun revenue to our strength additional Today, states to the in through of Brightbox more it protects advantages energy the leader. provides residential Home over of and Depot, demonstrating business undermine pricing further XX% power, manage solar. also announced customers It expansion a incumbents than backup against eight and and attempts the with service California. represents value with direct of services. time-of-use XX% the category ability being offers the

including in states, We solar Depot battery service California. and will offer our stores at XX Home Brightbox

ramp stores We arising expect to year. from installations new throughout the the

position country Wallace-Wells rely get available the market need destroying quickly. control a their expected, turning only XXX,XXX-plus support tale. grid growing can in base that our our Consumer they and through into advancements solar and clean battery David grid of to of costs electric rapid is of will customer pioneering is technology structures. households of onsite. we the are The for architecture very customers energy it than our the events our declining future. Not preferences building As articulates, fairy Sunrun decarbonize faster extreme weather on. independent and slowness energy climate increasingly its action mean change helping take We major millions, the size, happening regulatory work a leadership is portion rapidly

to us have designing energy XXXX. Demonstrating we our will whether importantly, provide its architectures success provide. beginning assets individual efforts, ongoing clean on as future you if world help to full XXX% your capacity ISO we to country’s panels rest to bid to energy value well of Most a for Therefore, opportunity decarbonize solar more Brightbox that battery can a as even our incorporate Sunrun initial solar our XX Americans, home of with this However, and and these assets customers. grid model these our for roof. megawatts New create energy for Sunrun not operators, from or ability Sunrun’s there service value the won are England and the provide advance grid footprint utilities the is in of

deliver from X,XXX approximately England to capacity expect this We New customers.

a from plants time the in that a alongside by system Our home energy and participation centralized market. in the traditional, solar first model in the home storage is solar United battery transformational directly the This away polluting the wholesale more shift powered toward batteries. capacity and electricity States participated has clean like local power this market centralized signals

current the to incremental future award small provide in the customer it of conservatively also source our be the size and compared could to base, represent England customer New customer of the capacity which as This is for value $X,XXX Sunrun, the regulators and assets the utilities because market represents an estimate services While recognize in of grid suggests our over We our grid. value. would is meaningful, NPV. revenue can to upside such as large growing

Impact ESG that an we and second in published ongoing accepting opportunities. these competitive leading market is committed Sunrun also Our and is Today, be sustainability. density advantage a to advantages share Report. annual our will in company

Bob X.X QX we in discuss to electricity Komin, in tons we has everyone, detail. also operate, is over over $XXX communities We’ve key highlights million our Code committed for I’ll that housing in million costs. saved as to and we the decade. approach partners. XXXX; and affordable our business committed COX. out achieved solar gender well for CFO, and guidance we supplier the customers, more point robust to households megawatts our multi-family as Our review over pay employees developing the and parity, benefit turn to our XXX% of Conduct of other A to XXX few Sunrun implemented financial to of metric now proud next call and a which prevented I’m performance

Bob Komin

the in $X.XX or NPV fourth Customer Lynn. was approximately quarter $X,XXX per watt. Thanks,

the NPV investments was the growth full or $XX,XXX target per in year XXXX, and continuing value watt reform with watt line tariffs, our per with was from despite product leadership. headwinds levels approximately $X.XX, and For in customer in tax per Project $X.XX QX.

channel in a As modest sensitive value geographic, is mix. reminder, tax fund project equity to very changes and

creation creation cost year-over-year. down cost Slide were X% project or $XX,XXX fluctuate to QX, In value, can costs were Similar watt per total customer X. now to Turning per costs quarter-to-quarter. watt. per creation approximately on $X.XX Creation

show year full battery as even cost deploy to expect declines modest we systems. We the for creation XXXX, Brightbox more

of as Sunrun-built As our to per our year-over-year partners, a is systems, those peers $X.XX improved installation watt. cost channel includes $X.XX channel well watt. of built comparable costs partner installation by watt, directly our systems Blended as business. incurred the cost Install per projects were to which tax cost because for Sunrun per reminder, of deployed not $X.XX costs for by by solar

project also a per to sales of were per marketing We but our expect rate continue the cost, carry $X.XX watt batteries increase, higher higher costs and In QX, value. which will watt. adoption a Brightbox to

in the by dividing Our means costs installation cost total higher megawatts mix sales sales calculated it per higher of in lower also deployed. lower marketing total and per due to marketing over are watt cost costs by direct unit installations reported there period and time business mix that will at blended per watt. higher be business the a watt, of A costs and results direct

lower full the higher leader. demonstrating watt and XXXX benefits costs watt. of were year leverage For XXXX, the In were compared and sales per improvement marketing the operating to approximately $X.XX as XX% costs QX, $X.XX G&A by costs $X.XX blended or were market install and year-over-year, per

we sell distribution, Finally, In when costs, or racking creation margin with XXX services. realized well trends. $X.XX we generation This watt, for in We platform quarter, a our we with the line gross recent as margin fourth megawatts. per the third-party businesses, includes we of services achieved as loan. subtract cash and solar deployed GAAP lead from platform calculate systems gross contribution our

cash mix XX% also and recent levels. in line was Our QX, with third-party loan in

mix this We the to teens XXXX. in expect in be mid-to-high

sheet. total with quarter. million a our cash, $XX increase last now year Turning in balance the ended million to $XXX from We

by attributes of tax XXXX, is For solely flows project total without increased full-year we the systems. debt raising level which underlying the we and our balances million increasing $XX deployed our cash the systems monetizing parent secured cash by from debt, non-recourse by level

note generation $XXX We in but generation million to cash timing Quarterly the define fluctuate our may that strategic XXXX. our cash finance on along We safe the in the our activities, change the with of change expect recourse plans outlook in debt. due based please plans, less can undertake. excludes best total opportunities for view generation cash project this as activities, Also, harboring to generation our beyond over represents to which year. we current ITC any cash our cash increase

net the income quarter, was the negative in slightly positive to Sunrun year. but note the for You’ll

will the be for net also income positive XXXX. We expect full-year

XX. to on Moving Slide guidance on

full-year XX% megawatts in the in of in quarter, growth or We the XX of an XX NPV. deployments, be we deployments are first guidance greater to range In economics expect watt per issuing XX% $X.XX increase megawatts. to to unit in of

turn to it over Ed. let me Now,

Ed Fenster

assets XXXX. capital issuance Thanks, runway. capital and December to for asset-backed Today I earning security plan I also Bob. our recap net will our and review discuss strategy

the to little. has market Despite for steadily. have the the cash trend when last priced residential led asset general our guidance pleased improve and we November ABS the market exceeded performance million $XXX conditions, That imperfect assets December, Over to XXXX. of cost for decade, in our strong are a transaction, said, solar capital bucked turbulence we

achieved solar print that during at that rate versus market and advantage conditions. amplified of other the than time. securitization competitors yields is hoped, the suggests higher our we lease capital advance Although the imperfect The had wasn’t the cost debt residential we cost lower a in substantially all market

project is up had X.XX%, traded asset the market market the yield yield December, loan preserving transaction for in future. the The In to years note industry, callable, closed already a fully subordinated our about and refinancing of at against and for risk as upside a First reducing improve. same secondary continue pool five a both it amortizing we and also The January comments. project of transaction thereby in subordinated tax is X.XX% conditions non-recourse to by priced against the also time. advance but in nature us XXX% similar consistent ABS loan affording National value equity is in callable total as but after transaction. through the the fund XX-year debt. the The an Grid to transaction, loan with that our This prior tax the loan at range, refinancing the implies equity, upside equity ABS advance slip structured underlying and to XX% the

advance higher rates lower for Looking capital opportunity when still and forward, we assets. seasoned cost see the refinancing

We execute a midyear. expect by such transaction to

For year we the can $XXX remain we flow. million full XXXX, than in confident cash more achieve

I in investment tax We at given also grow inventory preserve of come. associated flow number the the cash rate that with access considering XXXX before expected do free years expect on any capital the note return may our view to and purchase. beyond, of this is impact can into we to presented pre-purchasing credit XX% high to such

our progresses year firmer financing plans shape, accordingly. and we generation our will for the outlook As update cash take

cash an Slide is $XXX value after earning $XX assets $XXX XX% to was to an Net or to assets counterparties. million the financing XX% million, earning was the of XX. year-over-year. our describe to At or increase Cash payments of way Moving Sunrun million $X.X shareholders net quarter-end, year-over-year. billion, flows of increase

pipeline, debt call the turn us our equity runway and And into already commitments to capital that, provide with our tax to Lynn. back QX. finally over I’ll Turning well

Lynn Jurich

Ed. Thanks,

questions. the line for open please Let’s

Operator

first comes Suisse. Thank you. Our from Credit question Weinstein [Operator Instructions] with Michael

open. Your line is now

Michael Weinstein

guys. you this maybe on deal. update the you wanted Comcast us that’s can Hi, year, about ask expected. Very thing was One an good give growth that’s on to how I the for print going. And

Depot. through to per X,XXX I Comcast whatever the you cost this mechanics X,XXX with And customer or think compare that. you deal the were is expecting I’m customers can the to Home of at if year wondering

Lynn Jurich

Sure.

of things mix getting acquisition the that what that about underscores expanding excited of in margin. the our think we the we’re guidance more attractive we’re terms One and is ever is

and NPV and we of in ramp Home in $X.XX Depot. heavy despite pretty in expecting a XXXX So finished with north this year $X.XX that’s we’re

early spend you the to before up the of that there. ramp you start imagine get some might benefit realize to You and stores

we’re year, the that despite of to the margin. for So exceed headwind beginning the part still going

So, channels, is the like we where like I both the think is, coming mix we mix out. where

include just the those from terms of both particular, expected. make XXXX. into We will In look for numbers, then and that If ton channel hit be despite plus I margins ramp, better we they the last think us. order Depot for the comments end that parties going acquisition lead value a the they well, it the early just competitive progressing still that and we’re restructured as a to call. in the And up still issued at year. It’s warrant expanding the of as of hitting specific fee given execute in around more Comcast deal earlier for work Home not update the to in it’s the and and

Michael Weinstein

costs, Got curious. at Slide in that look I where the marketing showing XX? it. sales Is those And up that and I that? line should is just I’m when customer acquisition – on see

Lynn Jurich

yes, costs if correct. – that just make acquisition is slide on sure metrics, operating at slide me the – Let looking the look you the not key the correct, at

Michael Weinstein

some start two sales to was at And acquisition there those call see point, you costs? the that the in we’ll also and channels lower I said customer installation So that reduce marketing and interplay think during these costs. between costs

Lynn Jurich

because would installation money decrease the and Yes. capitalize shift similar the to reason more and increase, Comcast the channel a channels through that buying so will the you installation The line. it’s are is the business. and marketing we’re direct the spends see What in customer me channel we we project, a into Correct. business, bit. see happen our acquire everything, is costs that through to retail costs. explain direct business, capitalized go the the When but that, channels fulfilled you sales and the let the

decline. mix And so tax the cost overall, see but actually sales hit in that marketing what shift and point, creation the in you will slight overall that direct, slight Bob’s should is to because a see increase a line of year, the

– that little our asking question. So, there noise that peers, of is multi-channel of bit a a bit versus our is little for there Thanks given in model.

Michael Weinstein

Thank next you. Yes. that’s helpful. to very person. the I’ll see

Lynn Jurich

Michael. Thanks,

Operator

Thank you.

Our comes Colin next with Rusch from question Oppenheimer.

Your line is open. now

Colin Rusch

the being and services demonstrated Thanks markets as little talk so XXXX? can able of to bit the growth about new go from you’ve the the Obviously, guys. value opening But of cadence you much some of existing footprints. a you through balance increase opportunity

Lynn Jurich

the to but it’s with anticipate growth Yes. The are on geographies, excited utility, markets both quarter. also really just England sell ability the incremental the does in we long-term award – about new any new to those this we our New were our announcement opportunities energy terms the the service plan in targets to that entering the our in current not then markets. customers, sell services ISO hitting made markets. for was energy of growth capacity just existing and revenue

Colin Rusch

okay. Yes,

want you’re So, guiding you’re any markets or those not to not to enter new expecting growth in any XXXX from I markets? just clarify just that. to

Lynn Jurich

any contemplate guidance precisely, new expansion. not geographic does our Yes. market

Colin Rusch

installations, start little costs through bit non-equipment some can of optimizing year? where opportunities seeing the with costs to you’re then And trimming of talk those balance in of and and go about you cost Okay. as on you reduction just terms this the non-module a

Lynn Jurich

Absolutely.

Brightbox. see that attachment there’s the that first, as One we’re going to a that discussed that Bob’s and rate the puts slight – number. So decline and section, we’re that of despite the overall in is in number takes in increasing see fact we’ve you’ll we’re

that battery of that cost the into So, is line. going

pretty really it’s operating the come we where have the chain. expect they much; but So, immature supply will, are still still not – see around now, to prices positives right really battery so down We efficiencies.

efficiencies. is and And to operating we’re installation benefits going so where leverage around the really see

Colin Rusch

Okay. much. it so take off-line. Thanks rest of the I��ll

Operator

you. Thank

with Lee next question comes Sachs. Goldman Brian Our from

is line now Your open.

Brian Lee

operating healthy Thanks one over couple team. better Maybe, the seasonally taking revenue was quarter. than just bit questions. on a percentage first The the for lease It’s Hey, the up mid-teens years. of sequentially. past seen we’ve

guess and how Just here? it wondering that line wondering, helping how versus revenue driven mix item I volume the fair that much help you us [indiscernible] can volumes out of growth of much are by

Bob Komin

in including QX higher, and in they’ve been So, revenues the is the the been in QX higher recognized Brian, have revenue number, incentives ITC number if past. lease you’re that and

reason to revenue place. that’s have just big we of that a lease structure in And has the the that’s that So been line due of type the part fund increasing.

So comes we obligation it revenue. with and to revenues ITC through funds, the the lease get financing and incentive recognize with

So, I component. incentive number excluding want know to or it you’re looking the at whether including make whether sure that you’re revenue looking I at the incentives

Brian Lee

Yes.

reported GAAP all-in. at numbers, Just so looking the

ITC that as QX color of into what next don’t You in on and monetize variable helpful. know thinking about So being we is fund year. XXXX? Should you’ll be what highly QX actually that

it multi-year for see, extend or is this dynamic dynamic different next out that the couple a could a is years? be something So, that of we’ll

Ed Fenster

Ed. Brian. Hey, It’s

progresses, think strategy. add obviously, year change our we can as I financing or the

to advance. mix that was I year million the that bottom flip driving likely ITC and QX transaction at So, structures, $XX over it it’s expect fund in million to comes result predict the would as traditional the most line. complete difficult to is to and expect net between which of to That income P&L transaction in QX the of would the that on is materially this that $XX revenue increased far I in completion; year next which and the of at QX revenue QX non-controlling higher said, and be partnership the would more we the return interest loss point, attributable

Brian Lee

your XXXX. bit little model question and just talk on pass and that side business us it I’ll battery second availability will It the you the battery on. availability Maybe, supply base help component the But perspective? strategy around fine-tune helpful. business. doesn’t against of about now how worried on if there set Can the side a strategy a that’s homes the you’re based then the what for that sort availability necessarily are just target in many then kind Yes. terms revenue well is the that, Okay. positioned next you’re just year. know installed a strategy to Brightbox, the maybe that, get have related trying us at peers And battery a moment all for too just expectation installed I you shortages how chain of for mix just sound sense supply or talked positioned from is wise? or new-build issues. retrofit of growth the the embracing the could supply supply XXX,XXX-plus you’re level you the you like about this of have you some a to triple-digit of on as of Thanks, where about guys. and given

Lynn Jurich

question. not Thank we constraints. you. do Great supply any There anticipate are –

So, we lot again suppliers. believe the in we’re leader. well be good of another that have positioned. leverage advantage to is We with market A can

really also So, the it’s currently not we’re experiencing, something by all encouraged we’re innovation. and

expect, in in we’re no anticipating we’re we’re real of again, might You this plan the cost and supply that through. battery. conversations we will those improvement and confident is different a that But number manufacturers that in have optimistic with cost innovations come

So, that’s all upside for the future.

of new build, terms in In new exclusively that is number. retrofit build versus the the it

We will offer retrofit.

yet. just We reason that and launched or not a cost much effective new announced that been build. is And we’ve on have more it’s the it

us so is opportunity but where certainly. in a future been And the going we’ve that’s for for real retrofit back focusing, the opportunity

Brian Lee

it on. I’ll pass you. Thank

Operator

from question And comes with America. you. next Thank of Julien Dumoulin-Smith our Bank

open. line is Your now

Eric Du

Congrats for the on quarter. on Eric Julien. actually is this Hi.

going and see First you full-year forward? year-on-year for XXXX quarter the both and XXXX able growth direct be would talk fourth that to business you how question, about

Lynn Jurich

the what strategic most don’t that not have we We cost manage because the regionally business how to not typically the the it’s that business. And is We reason value just out. manage and chain. effective broken we is

we is it last going So how because we’re can direct that than that, quickly quicker, quickly out break the what will business We – not grow manage guidance. anymore, to baseline that say not more do the just it’s year. it But guidance the did we grow beyond business. the expect than

Eric Du

have that terms ramping the of about this? the XXXX, Home a right growth way that into more think presumably Depot contribution should And XXXX. to is in Understood. of over partnership

Lynn Jurich

XXXX more The volume expect think, partnership, be certainly, I have we would solidly than – XXXX.

but will time it see However, in we towards stores, ramp, a they weighted as to well; it should just be the take will nice in-year some we more the contribution from are back-half.

Eric Du

you. Got

a expecting from Depot come XXXX the – just we in guidance to So, guidance more. portion should still of be Home some growth

then last the in ITC growth of And XX% question Okay. view XX% Harbor, to would that to you range? Safe terms upside the as

Ed Fenster

Ed, So, the hoping answer this is to question.

we of remarks it the in rate. a to think, The in large the to prepared that an margin we’re in Harbor – will if XXXX. the effect It the megawatt that wouldn’t Safe make guidance, have capital. contemplating XXXX XXXX some And growth I or consume was extend and/or trying execute equipment we So, rate comment, cash I at equipment, was growth if be equity not that just the could do pre-purchase moment. very on

Eric Du

Right.

so thinking I’m XXXX just and So, more beyond.

so those with ITC guidance If beyond not expect into a from the for obviously Harbor I growth an XXXX have through XXXX, range you from supporting guys XXXX years. to direct would you XX%, see potentially XXXX perspective? know of business to provided broad in Safe you XX% in sustain that growth

Lynn Jurich

the that decade and can in bottoms-up. growth XX% be we to certainly, market long-term investor materials our strong belief looking support have in this rate for Yes. a that we XX%

And so we certainly stand that. by definitely

Eric Du

you. Thank Okay.

Lynn Jurich

model, out advantage to compared distinct Maybe, that Safe solar-as-a-service program. that that, as pointing for model, of homeowner one is to thing worth because advantage is able entities only a are the take Harbor on the commercial Harbor the Safe

service, that peers. well potentially than amount competitive So, a balance subsequent that of would expect our safe vis-à-vis us enables the to our of as in solar increase sheet, which long size years, enabled to the position that would tail our providers are larger as we offer harbor

Eric Du

this. could Got it. sorry last get question, I appreciated. for If one Much

I view effectively in potentially early any we early of upfront that know renewals terms you – Florida, In – battery but you’ve pricing payments could the opportunity, of on retrofit see of have contracts? far? discussed potential thus have do you

Lynn Jurich

size correctly? repeat contract market question retrofit, your you was So, battery I renewals. did get Can it? and that

Eric Du

Right.

the I of of terms just was So, early renewal a if in in retrofit. you contract wondering win, the battery the it of retrofit new opportunity potential a know upfront charge the I would effective XX-year including any battery contract the battery portion for price there’s with date for retrofit, the how guys installations. like you an Florida, you on

Lynn Jurich

We should get team. on you product our No.

had people’s think perspective a One on that earlier conversations that’s a with the to cost certainly I will to that pretty I retrofit do make suppliers, idea. believe wanted neglected be great to We [ph] I in retrofit. do make because comment Brian we’re there Lee’s question on – ways batteries. cost on we believe period shortly

So, from those tracking come to and eagerly are standpoint waiting standpoint, technologies we experience market. to customer a the customer value and

a In absolutely, to certainly battery something – we explore. I we that extend would and of terms the that would the add could opportunity think contract, I think be

Eric Du

you. Thank it. Got

Lynn Jurich

Thanks.

Operator

call over at no queue showing in questions Lynn I’d like turn for closing Jurich, back this any the I’m remarks. the time. And you. to to further Thank CEO,

Lynn Jurich

thank you, a you for Thanks evening. hope have Well, and great listening everyone.

Operator

This participation thank Everyone, your gentlemen, your day. conclude and and you a Ladies great you disconnect. have program may today’s for in all conference. does