Sunrun Reports Third Quarter 2016 Financial Results

Revenues of $112 million, 36% Year-Over-Year Growth

Raising deployment guidance for 2016 to 285 MW, 40% Year-Over-Year Growth

SAN FRANCISCO, Nov. 10, 2016 (GLOBE NEWSWIRE) -- Sunrun (Nasdaq:RUN), the largest dedicated residential solar company in the United States, today announced financial results for the third quarter ended September 30, 2016.

Third Quarter 2016 Operating Highlights

  • Total deployments of 80 MW, an increase of 43% year-over-year 
  • Net Present Value created of $76 million, an increase of 53% year-over-year
  • Creation Cost per watt improved by $0.38, or 10% from Q3 2015
  • Cumulative MW deployed of 801 MW

“We are pleased to deliver Q3 results that beat targets on customer installations, net present value and cost improvements, and to raise guidance slightly for the full year,” said Lynn Jurich, Sunrun’s chief executive officer. “We have achieved these targets by consistently executing our strategy of delivering the industry’s most valuable and satisfied customer base, aligning our product offerings with customer demand and taking share in attractive markets. We are proud to partner with our growing base of customers to lead a transition to clean energy that will grow for decades to come.”

Key Operating Metrics 

In the third quarter of 2016, total MW deployed increased to 80 MW from 56 MW in the third quarter of 2015, a 43% year-over-year increase.

NPV created in the third quarter of 2016 was $76 million, a 53% increase from $50 million in the third quarter of 2015.  Pre-tax project value per watt was $4.43, compared to $4.70 in the third quarter of 2015. Creation cost per watt was $3.37 in the third quarter of 2016 compared to $3.75 in the third quarter of 2015. NPV per watt created in the third quarter of 2016 was $1.06 compared to $0.95 in the third quarter of 2015.

Net bookings were 79 MW, up 5 MW from Q2 2016.

Estimated nominal contracted payments remaining as of September 30, 2016 totaled $3.0 billion, up $813 million or 37% since September 30, 2015. Estimated retained value as of September 30, 2016 was $1.9 billion, up $539 million, or 39%, since September 30, 2015.

Financing Activities

As of November 10, 2016, we have project finance capacity through approximately Q2 2017.

Third Quarter 2016 GAAP Results

Total revenue grew to $112.0 million in the third quarter of 2016, up $29.4 million, or 36% from the third quarter of 2015.  Operating leases and incentives revenue grew 36% year-over-year to $43.2 million. Solar energy systems and product sales grew 35% year-over-year to $68.9 million.

Total cost of revenue was $98.0 million, an increase of 30% year-over-year. Total operating expenses were $163.1 million, an increase of 12% year-over-year.

Net income available to common stockholders was $16.9 million in the third quarter of 2016, compared to net income available to common stockholders of $32.6 million in the second quarter of 2016, and $27.7 million net loss available to common stockholders in the third quarter of 2015.

Diluted net earnings per share available to common shareholders was $0.16 per share.

Guidance for Q4 and Full Year 2016

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially.

In Q4, we expect to deploy approximately 80 MW. As such, for full year 2016, we are raising deployment guidance from 270 to 280 MW to approximately 285 MW.

Conference Call Information

Sunrun is hosting a conference call for analysts and investors to discuss its third quarter 2016 results and outlook for its fourth quarter and full year of 2016 at 2:00 p.m. Pacific Time today, November 10, 2016. A live audio webcast of the conference call along with supplemental financial information will be accessible via the “Investor Relations” section of the Company’s website at The conference call can also be accessed live over the phone by dialing (877) 470-1078 (domestic) or (615) 247-0087 (international) using ID #98536307. A replay will be available following the call via the Sunrun Investor Relations website or for one week at the following numbers (855) 859-2056 (domestic) or (404) 537-3406 (international) using ID #98536307.

About Sunrun

Sunrun (Nasdaq:RUN) is the largest dedicated residential solar company in the United States with a mission to create a planet run by the sun. Since establishing the solar as a service model in 2007, Sunrun continues to lead the industry in providing clean energy to homeowners with little to no upfront cost and at a savings to traditional electricity rates. The company designs, installs, finances, insures, monitors and maintains the solar panels on a homeowner's roof, while families receive predictable pricing for 20 years or more. For more information please visit:

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating guidance, operational and financial results such as growth, value creation, MW bookings and deployments, estimates of nominal contracted payments remaining, estimated retained value, project value, estimated creation costs and NPV, and the assumptions related to the calculation of the foregoing metrics, as well as our expectations regarding our growth and financing capacity. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to: the availability of additional financing on acceptable terms; changes in the retail prices of traditional utility generated electricity; changes in policies and regulations including net metering and interconnection limits or caps; the availability of rebates, tax credits and other incentives; the availability of solar panels and other raw materials; our limited operating history, particularly as a new public company; our ability to attract and retain our relationships with third parties, including our solar partners; our ability to meet the covenants in our investment funds and debt facilities; and such other risks identified in the reports that we file with the U.S. Securities and Exchange Commission, or SEC, from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

Consolidated Balance Sheets
(In Thousands)
    September 30, 2016     December 31, 2015  
Current assets:                
Cash   $ 207,477     $ 203,864  
Restricted cash     11,944       9,203  
Accounts receivable, net     51,031       60,275  
State tax credits receivable           9,198  
Inventories     85,941       71,258  
Prepaid expenses and other current assets     12,589       5,917  
Total current assets     368,982       359,715  
Restricted cash     6,117       8,094  
Solar energy systems, net     2,461,506       1,992,021  
Property and equipment, net     52,861       44,866  
Intangible assets, net     19,551       22,705  
Goodwill     87,543       87,543  
Prepaid tax asset     323,676       190,146  
Other assets     35,932       29,502  
Total assets   $ 3,356,168     $ 2,734,592  
Liabilities and total equity                
Current liabilities:                
Accounts payable   $ 88,669     $ 104,133  
Distributions payable to noncontrolling interests and redeemable noncontrolling interests     9,817       8,144  
Accrued expenses and other liabilities     57,363       49,146  
Deferred revenue, current portion     67,553       59,726  
Deferred grants, current portion     14,374       13,949  
Capital lease obligations, current portion     11,127       8,951  
Long-term non-recourse debt, current portion     12,573       4,722  
Lease pass-through financing obligation, current portion     5,177       3,710  
Total current liabilities     266,653       252,481  
Deferred revenue, net of current portion     582,276       559,066  
Deferred grants, net of current portion     208,952       220,784  
Capital lease obligations, net of current portion     15,582       15,042  
Recourse debt     244,000       197,000  
Long-term non-recourse debt, net of current portion     558,900       333,042  
Lease pass-through financing obligation, net of current portion     138,121       153,188  
Other liabilities     11,356       7,144  
Deferred tax liabilities     334,127       190,146  
Total liabilities     2,359,967       1,927,893  
Redeemable noncontrolling interests     150,903       147,139  
Stockholders equity     630,939       554,069  
Noncontrolling interests     214,359       105,491  
Total equity     845,298       659,560  
Total liabilities, redeemable noncontrolling interests and total equity   $ 3,356,168     $ 2,734,592  

Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
    Three months ended September 30,     Nine months ended September 30,  
    2016     2015     2016     2015  
Operating leases and incentives   $ 43,150     $ 31,650     $ 123,084     $ 88,416  
Solar energy systems and product sales     68,883       50,950       210,230       116,551  
Total revenue     112,033       82,600       333,314       204,967  
Operating expenses:                                
Cost of operating leases and incentives     40,770       28,723       117,478       77,167  
Cost of solar energy systems and product sales     57,264       46,468       176,376       106,422  
Sales and marketing     40,192       45,382       127,096       104,284  
Research and development     2,458       2,240       7,294       7,019  
General and administrative     21,331       21,486       68,193       61,469  
Amortization of intangible assets     1,051       1,051       3,154       2,644  
Total operating expenses     163,066       145,350       499,591       359,005  
Loss from operations     (51,033 )     (62,750 )     (166,277 )     (154,038 )
Interest expense, net     13,957       8,475       38,535       24,038  
Loss on early extinguishment of debt                       431  
Other expenses (income), net     42       87       (460 )     1,405  
Loss before income taxes     (65,032 )     (71,312 )     (204,352 )     (179,912 )
Income tax expense (benefit)     9,936       903       13,146       (5,312 )
Net loss     (74,968 )     (72,215 )     (217,498 )     (174,600 )
Net loss attributable to noncontrolling interests and
  redeemable noncontrolling interests
    (91,846 )     (69,447 )     (280,153 )     (161,377 )
Net income (loss) attributable to
  common stockholders
  $ 16,878     $ (2,768 )   $ 62,655     $ (13,223 )
Less: Deemed dividend to convertible preferred
          (24,890 )           (24,890 )
Net income (loss) available to
  common stockholders
  $ 16,878     $ (27,658 )   $ 62,655     $ (38,113 )
Net income (loss) per share available to
  common stockholders
Basic   $ 0.16     $ (0.41 )   $ 0.61     $ (0.96 )
Diluted   $ 0.16     $ (0.41 )   $ 0.60     $ (0.96 )
Weighted average shares used to compute net
  income (loss) per share available to
  common stockholders
Basic     102,707       67,732       101,988       39,612  
Diluted     105,092       67,732       104,698       39,612  

Consolidated Statements of Cash Flows
(In Thousands)
    Nine months ended September 30,  
    2016     2015  
Operating activities:                
Net loss   $ (217,498 )   $ (174,600 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Noncash losses     3,432       2,545  
Depreciation and amortization, net of amortization of deferred grants     73,570       51,059  
Bad debt expense     722       1,158  
Interest on lease pass-through financing obligations     9,051       9,425  
Noncash tax expense (benefit)     13,146       (5,312 )
Noncash interest expense     8,024       5,349  
Stock-based compensation expense     14,026       10,427  
Reduction in lease pass-through financing obligations     (14,149 )     (16,059 )
Changes in operating assets and liabilities:                
Accounts receivable     9,183       (5,999 )
Inventories     (14,573 )     (27,993 )
Prepaid and other assets     (5,135 )     3,039  
Accounts payable     (22,220 )     37,605  
Accrued expenses and other liabilities     8,014       5,568  
Deferred revenue     7,176       31,856  
Net cash used in operating activities     (127,231 )     (71,932 )
Investing activities:                
Payments for the costs of solar energy systems, leased and to be leased     (530,295 )     (408,861 )
Purchases of property and equipment     (10,397 )     (8,416 )
Business acquisition, net of cash acquired     (5,000 )     (14,575 )
Net cash used in investing activities     (545,692 )     (431,852 )
Financing activities:                
Proceeds from state tax credits, net of recapture     9,081       4,975  
Proceeds from recourse debt     354,400       279,000  
Repayment of recourse debt     (307,400 )     (192,224 )
Proceeds from non-recourse debt     249,820       150,000  
Repayment of non-recourse debt     (18,113 )     (8,938 )
Payment of debt fees     (13,614 )     (14,751 )
Proceeds from lease pass-through financing obligations     14,242       73,300  
Repayments of lease pass-through financing obligations           (88,918 )
Contributions received from noncontrolling interests and redeemable noncontrolling interests     422,207       215,724  
Distributions paid to noncontrolling interests and redeemable noncontrolling interests     (27,749 )     (20,248 )
Proceeds from exercises of stock options, net of withholding taxes on restricted stock units
  and issuance of shares in connection with the Employee Stock Purchase Plan
    4,704       3,188  
Proceeds received and (offering costs paid) related to initial public offering     (437 )     223,541  
Payment of capital lease obligations     (9,668 )     (2,670 )
Change in restricted cash     (937 )     (7,343 )
Net cash provided by financing activities     676,536       614,636  
Net increase in cash     3,613       110,852  
Cash, beginning of period     203,864       152,154  
Cash, end of period   $ 207,477     $ 263,006  

Key Operating Metrics
    Three Months Ended September 30,    
    2016     2015    
MW Booked (during the period)     79       95    
MW Deployed (during the period)     80       56    
Cumulative MW Deployed (end of period)     801       528    
Estimated Nominal Contracted Payments Remaining (in millions)   $ 3,031     $ 2,219    
Estimated Retained Value under Energy Contract (in millions)   $ 1,290     $ 921    
Estimated Retained Value of Purchase or Renewal (in millions)   $ 617     $ 447    
Estimated Retained Value (in millions)   $ 1,907     $ 1,368    
Estimated Retained Value (per watt)   $ 2.31     $ 2.30    
    Three Months Ended September 30,  
    2016     2015  
Project Value (per watt)   $ 4.43      $ 4.70  
Creation Cost (1) (per watt)   $ 3.37      $ 3.75  
Unlevered NPV (per watt)   $ 1.06      $ 0.95  
NPV (in millions)   $ 76      $ 50  

(1) Excludes initial direct costs (IDCs) paid prior to deployments and excludes non-cash items such as amortization of intangible assets and stock-based compensation, and contingent consideration related to an acquisition we completed in Q2 2015.


Creation Cost includes (i) certain installation and general and administrative costs after subtracting the gross margin on solar energy systems and product sales divided by watts deployed during the measurement period and (ii) certain sales and marketing expenses under new Customer Agreements, net of cancellations during such period divided by the related watts booked.

Customers refers to residential customers with solar energy systems that are installed or under contract to install, net of cancellations.

Customer Agreements refers to, collectively, solar power purchase agreements and solar leases.

Estimated Nominal Contracted Payments Remaining equals the sum of the remaining cash payments that Customers are expected to pay over the initial terms of their Customer Agreements (not including the value of any renewal or system purchase at the end of the initial contract term, but including estimated uncollected prepayments), for systems contracted as of the measurement date.

Estimated Retained Value represents the cash flows, discounted at 6%, that we expect to receive from homeowners pursuant to Customer Agreements, net of estimated cash distributions to investors in consolidated joint ventures and estimated operating, maintenance and administrative expenses for systems contracted as of the measurement date. In calculating estimated retained value, we do not deduct customer payments we are obligated to pass through to investors in lease pass-throughs as these amounts are reflected on our balance sheet as long-term and short-term lease pass-through obligations, similar to the way that debt obligations are presented. In determining our finance strategy, we use lease pass-throughs and long-term debt in an equivalent fashion as the schedule of payments of distributions to the investors is more similar to the payment of interest to lenders that the IRRs paid in other tax equity structures to investors.

Estimated Retained Value Under Energy Contract represents the net cash flows during the initial (typically 20 year) term of our Customer Agreements (less substantially all value from SRECs prior to July 1, 2015).

Estimated Retained Value of Purchase or Renewal is the forecasted net present value we would receive upon or following the expiration of the initial contract term (either in the form of cash payments during any applicable renewal period or a system purchase at the end of the initial term).

Estimated Retained Value Per Watt is calculated by dividing the estimated retained value as of the measurement date by the aggregate nameplate capacity of solar energy systems deployed with executed Customer Agreements as of such date.

MW Booked represents the aggregate megawatt production capacity of our solar energy systems sold directly to customers or subject to an executed Customer Agreement, net of cancellations.

MW Deployed represents the aggregate megawatt production capacity of our solar energy systems, whether sold directly to customers or subject to executed Customer Agreements, for which we have (i) confirmation that the systems are installed on the roof, subject to final inspection or (ii) in the case of certain system installations by our partners, accrued at least 80% of the expected project cost.

NPV equals Unlevered NPV multiplied by leased megawatts deployed in period.

Project Value represents the value of upfront and future payments by customers, the benefits received from utility and state incentives, as well as the present value of net proceeds derived through investment funds. Specifically, project value is calculated as the sum of the following items (all measured on a per-watt basis with respect to megawatts deployed under Customer Agreements during the period): (i) estimated retained value, (ii) utility or upfront state incentives, (iii) upfront payments from customers for deposits and partial or full prepayments of amounts otherwise due under Customer Agreements and which are not already included in estimated retained value and (iv) finance proceeds from tax equity investors.  Project value includes contracted SRECs for all periods after July 1, 2015. Project value does not include cash true-up payments or the value of asset contributions in lieu of cash true-up payments made to investment fund investors, the cumulative impact of which is expected to be immaterial in 2016.

Unlevered NPV equals the difference between project value and estimated creation cost on a per watt basis.

Investor Relations Contact:

Charlotte Coultrap-Bagg
(415) 510-4833

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Source: Sunrun Inc.