CONFIDENTIAL

Second Quarter 2020

Earnings

July 29, 2020

sunnova.com

Legal Disclaimer

  • This presentation and the accompanying oral presentations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or Sunnova's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "going to," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern Sunnova's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this presentation include, but are not limited to, statements regarding Sunnova's future customer growth rate, future contracted customer value, future financial and operating performance, including its outlook and guidance, demand for Sunnova's products and services, future financing and ability to raise capital therefrom, maintenance and growth of our dealer network and the future of solar energy and energy storage services. Sunnova's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including risks regarding our ability to forecast our business due to our limited operating history, the effects of the coronavirus pandemic on our business and operations, our competition, fluctuations in the solar and home-building markets, our ability to attract and retain dealers and customers and our dealer and strategic partner relationships. The forward-looking statements contained in this presentation are also subject to other risks and uncertainties, including those more fully described in Sunnova's filings with the Securities and Exchange Commission, including Sunnova's annual report on Form 10-K for the year ended December 31, 2019. The forward-looking statements in this presentation are based on information available to Sunnova as of the date hereof, and Sunnova disclaims any obligation to update any forward-looking statements, except as required by law.
  • In addition to financial information presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation and the accompanying oral presentation include certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Operating Cash Flow, Recurring Operating Cash Flow and Adjusted Operating Expense. These non-GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP measures have limitations as analytical tools, and they should not be considered in isolation or as a substitute for analysis of other GAAP financial measures. Adjusted EBITDA and Adjusted Operating Expense are non-GAAP financial measures that help management, investors and securities analysts in evaluating Sunnova's performance. These measurements are not recognized in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. The GAAP measures most directly comparable to Adjusted EBITDA and Adjusted Operating Expense are net income/loss and total operating expense, respectively. Adjusted Operating Cash Flows and Recurring Operating Cash Flow are non-GAAP measures that helps management, investors and analysts in evaluating Sunnova's liquidity and ability to service its contractual obligations. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of liquidity. The GAAP measure most directly comparable to Adjusted Operating Cash Flow and Recurring Operating Cash Flow is net cash used in operating activities. Adjusted EBITDA, Adjusted Operating Cash Flows, Recurring Operating Cash Flow, and Adjusted Operating Expense have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of Sunnova's results as reported under GAAP. In addition, Adjusted EBITDA, Adjusted Operating Cash Flow, Recurring Operating Cash Flows and Adjusted Operating Expense are not necessarily comparable to Adjusted EBITDA, Adjusted Operating Cash Flow, Recurring Operating Cash Flows or Adjusted Operating Expense as calculated by other companies. Reconciliations of each of these measures to their most directly comparable GAAP measure are included in the appendix to this presentation for historical periods. Sunnova is unable to reconcile projected Adjusted EBITDA, Adjusted Operating Expense, Recurring Operating Cash Flow and Adjusted Operating Cash Flow to the most comparable financial measures calculated in accordance with GAAP because of fluctuations in interest rates and their impact on our unrealized and realized interest rate hedge gains or losses. Sunnova provides a range for the forecasts of Adjusted EBITDA, Adjusted Operating Expense, Recurring Operating Cash Flows and Adjusted Operating Cash Flow to allow for the variability in the timing of cash receipts and disbursements, customer utilization of our assets, and the impact on the related reconciling items, many of which interplay with each other. Therefore, the reconciliation of projected Adjusted EBITDA, Adjusted Operating Expense, Recurring Operating Cash Flow and Adjusted Operating Cash Flow to projected net income (loss), total operating expense, or net cash provided by (used in) operating activities, as the case may be, is not available without unreasonable effort.
  • This presentation includes operational metrics such as number of customers, weighted average number of customers and estimated net and gross contracted customer value. These operational metrics are not necessarily comparable to the same or similar metrics as calculated by other companies.
  • This presentation and the accompanying oral presentation also contain market data, statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to such information. Some data are also based on Sunnova's good faith estimates, which are derived from its review of internal sources as well as the independent sources described above. Although Sunnova believes these sources are reliable, we have not independently verified the accuracy or completeness of the information contained in the industry publications and other publicly available information. Accordingly, Sunnova makes no representations as to the accuracy or completeness of that information nor do we undertake to update such information after the date of this presentation.

2

Accelerating Growth Rates

91.6K Customers as of 6/30/2020

  • Approximately 6,200 customers added in Q2 2020
  • Rate of customer acquisition increased 54% in Q2 2020 vs Q2 2019

227 Dealers and

Sub-Dealers as of

6/30/2020

  • Up from a total dealer and sub-dealer count of 191 at 3/31/2020

34% Storage

Attachment Rate in

Q2 2020(1)

  • Up from Q1 2020 attachment rate of 30%
  • Penetration rate of storage in customer base is 5.6% at 6/30/2020

3

1. Attachment rate on origination

Second Quarter 2020 Financial Results

$18.0 Million

$14.1 Million

Q2 2020 Adjusted EBITDA(1)

Q2 2020 Principal(2) and Interest

Payments Received on Solar Loans

$18.8 Million

$2.2 Billion

Q2 2020 Adjusted Operating Cash

Estimated Gross Contracted Customer

Flow(1)

Value at 6/30/2020 Discounted at 6%

4

1.

Adjusted EBITDA and Adjusted Operating Cash Flows are non-GAAP financial measures. Please see the Appendix for a reconciliation to the most directly comparable GAAP measure

2.

Net of amounts recorded in revenue

Customer Growth Driving Improvements to

Financial Profile

Total Customers (000s)

Adjusted EBITDA(1) and P(2) & I ($M)

91.6

Adj. EBITDA

Interest

Principal

$7.5

67.6

$5.2

$6.6

53.6

$2.0

$2.7

$1.4

$13.2

$13.6

$18.0

6/30/2018

6/30/2019

6/30/2020

Q2 2018

Q2 2019

Q2 2020

Battery Attachment Rate at Origination

Adjusted Operating Cash Flow(1) ($M)

$18.8

30%

34%

24%

11%

15%

$5.4

$2.7

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q2 2018

Q2 2019

Q2 2020

5

1.

Adjusted EBITDA and Adjusted Operating Cash Flows are non-GAAP financial measures. Please see the Appendix for a reconciliation to the most directly comparable GAAP measure

2.

Net of amounts recorded in revenue

Escalating Contracted Customer Value

Estimated Net Contracted

Estimated Gross Contracted

Customer Value ($M)

Customer Value ($M)

$2,534

$2,194

$1,920

$1,652

$1,545

$1,316

$1,204

$831

$932

$864

$606

$681

6/30/2018

6/30/2019

6/30/2020

6/30/2018

6/30/2019

6/30/2020

6%

Discount Rate

4% Discount Rate

6%

Discount Rate

4% Discount Rate

Creating shareholder value by growing high quality, long-term contracted revenues

6

Financial Highlights

Key Financial Update

$ millions

Six Months Ended

Three Months Ended

June 30

June 30

Key Financial Results

2020

2019

2018

2020

2019

2018

Revenue

$72.6

$61.3

$48.7

$42.8

$34.6

$29.0

Adjusted Operating Expense(1)

$48.4

$39.7

$30.9

$24.8

$21.0

$15.8

Adjusted EBITDA(1)

$24.2

$21.7

$17.8

$18.0

$13.6

$13.2

Loan Principal Payments Received(2)

$13.9

$8.7

$3.4

$7.5

$5.2

$2.0

Loan Interest Payments Received

$10.9

$5.0

$2.5

$6.6

$2.7

$1.4

Adjusted Operating Cash Flow(1)

$(1.3)

$(10.5)

$(13.2)

$18.8

$5.4

$2.7

$ millions

6/30/2020

6/30/2019

6/30/2018

Est. Gross Contracted Customer Value (6% discount rate)

$2,194

$1,652

$1,316

Est. Gross Contracted Customer Value (4% discount rate)

$2,534

$1,920

$1,545

Est. Net Contracted Customer Value (6% discount rate)

$864

$681

$606

Est. Net Contracted Customer Value (4% discount rate)

$1,204

$932

$831

8

1.

Adjusted Operating Expense, Adjusted EBITDA, and Adjusted Operating Cash Flow are non-GAAP financial measures. Please see the Appendix for a reconciliation to the most directly comparable GAAP measure

2.

Net of amounts recorded in revenue

2020 Financing Activity

2020 Selected Accomplishments YTD1 ($M)

Feb

2020-1 Securitization

$412.5

Feb

TPO Warehouse Increase

$50

Feb

Tax Equity

$75

Mar

TPO Warehouse Increase

$200

May

Tax Equity

$75

May

Convertible Debt

$190

May /

TPO Warehouse Increase

$37.5

June

June

2020-A Securitization

$158.5

July

Homebuilder Tax Equity

$10

Cash ($M)

6/30/2020

6/30/2019

Unrestricted Cash

$102.3

$58.8

Restricted Cash

$82.1

$40.7

Total Cash

$184.4

$99.5

9

1.

Amounts listed represent principal amounts and not net proceeds to Company after associated expenses

Guidance and Key Takeaways

2020 Full Year Guidance

Customer Additions

28,000 - 30,000

Adjusted EBITDA(1)

$58 - $62 Million

Principal Payments Received from Solar Loans(2)

$32 - $36 Million

Interest Payments Received from Solar Loans

$17 - $21 Million

Adjusted Operating Cash Flow(1)

$10 - $20 Million

Previously

Issued 2020

Guidance

Reaffirmed

11

1. Adjusted EBITDA and Adjusted Operating Cash Flow are non-GAAP financial measures.

2. Net of amounts recorded in revenue

Projected Recurring Operating Cash Flow

Definition:

We define Recurring Operating Cash Flow as Adjusted Operating Cash Flow less principal payments on our securitizations and corporate capital expenditures, plus sales-related and sales-allocated cash operating expenses and interest expense from our credit warehouses and inventory facility.

AOCF to ROCF Bridge

AOCF

  • Growth / Working Capital Interest Expense(1)
  • Sales-RelatedAdjusted Operating Expense
  • Sales-AllocatedAdjusted Operating Expense Overhead - Principal Payments on Securitizations
  • Corporate CapEx
    ROCF

ROCF Preliminary Guidance

2020: $(20) - $(5) million(2)

2021: $(15) - $5 million(3)

1.

ROCF is inclusive of interest on our securitizations and convertible debt but excludes warehouse interest expense

12

2.

Inclusive of approximately $5 million of meter replacement costs in 2020 ; meter replacements will be complete by the end of 2021

3.

Inclusive of approximately $15 million of meter replacement costs in 2021; meter replacements will be complete by the end of 2021

Key Takeaways

GROWTH: Projecting faster than previously expected growth in the future years

COST REDUCTION: Despite significant growth, per customer costs are dropping and expect further reductions in future years

CASH FLOW: At tipping point for reaching scale and generating recurring operational cash flow

13

Appendix

Non-GAAP Reconciliation - Adjusted EBITDA

Three Months Ended

June 30,

2020

2019

2018

Reconciliation of Net Loss to Adjusted EBITDA:

(in thousands)

Net loss

$(28,729)

$(49,807)

$(9,224)

Interest expense, net

30,532

37,310

10,724

Interest expense, net-affiliates

-

1,575

2,354

Interest income

(6,680)

(2,967)

(1,418)

Depreciation expense

15,868

11,627

9,386

Amortization expense

7

7

34

EBITDA

10,998

(2,255)

11,856

Non-cash compensation expense

3,354

1,884

824

ARO accretion expense

524

327

402

Financing deal costs

1,571

849

(182)

Natural disaster losses and related charges, net

-

-

296

IPO costs

-

1,307

1

Loss on extinguishment of long-term debt, net-affiliates

-

10,645

-

Unrealized (gain) loss on fair value option instruments

(256)

534

-

Amortization of payments to dealers for exclusivity and other bonus arrangements

396

14

-

Legal settlements

-

293

-

Provision for current expected credit losses

1,416

-

-

Adjusted EBITDA

$18,003

$13,598

$13,197

15

Non-GAAP Reconciliation - Adjusted Operating Cash Flow

Three Months Ended

June 30,

2020

2019

2018

Reconciliation of Net Cash Used in Operating Activities to Adjusted Operating

(in thousands)

Cash Flow:

Net cash used in operating activities

$(24,816)

$(31,264)

$(1,341)

Principal proceeds from customer notes receivable

8,150

5,579

2,242

Financed insurance payments

(53)

(248)

-

Derivative breakage fees from financing structure changes

5,772

8,652

-

Distributions to redeemable noncontrolling interests

(1,227)

(1,491)

(450)

Payments to dealers for exclusivity and other bonus arrangements

11,387

20,000

-

Net inventory and prepaid inventory purchases

19,595

4,180

2,298

Adjusted Operating Cash Flow

$18,808

$5,408

$2,749

16

Non-GAAP Reconciliation - Adjusted Operating Expense

Three Months Ended

June 30,

2020

2019

2018

Reconciliation of Total Operating Expense, Net to Adjusted Operating Expense:

(in thousands, except per customer data)

Total operating expense, net

$47,933

$37,322

$26,528

Depreciation expense

(15,868)

(11,627)

(9,386)

Amortization expense

(7)

(7)

(34)

Non-cash compensation expense

(3,354)

(1,884)

(824)

ARO accretion expense

(524)

(327)

(402)

Financing deal costs

(1,571)

(849)

182

Natural disaster losses and related charges, net

-

-

(296)

IPO costs

-

(1,307)

(1)

Amortization of payments to dealers for exclusivity and other bonus arrangements

(396)

(14)

-

Legal settlements

-

(293)

-

Provision for current expected credit losses

(1,416)

-

-

Adjusted Operating Expense

$24,797

$21,014

$15,767

Adjusted Operating Expense per weighted average customer

$281

$319

$304

17

Non-GAAP Reconciliation - Adjusted EBITDA

Six Months Ended

June 30,

2020

2019

2018

Reconciliation of Net Loss to Adjusted EBITDA:

(in thousands)

Net loss

$(105,733)

$(85,303)

$(22,660)

Interest expense, net

97,850

68,971

15,707

Interest expense, net-affiliates

-

3,397

4,847

Interest income

(11,300)

(5,461)

(2,610)

Depreciation expense

30,814

22,639

18,350

Amortization expense

16

12

67

EBITDA

11,647

4,255

13,701

Non-cash compensation expense

6,044

2,271

1,550

ARO accretion expense

1,013

640

613

Financing deal costs

1,687

968

1,341

Natural disaster losses and related charges, net

31

-

612

IPO costs

-

2,046

1

Loss on extinguishment of long-term debt, net-affiliates

-

10,645

-

Unrealized (gain) loss on fair value option instruments

(256)

534

-

Amortization of payments to dealers for exclusivity and other bonus arrangements

747

14

-

Legal settlements

-

293

-

Provision for current expected credit losses

3,280

-

-

Adjusted EBITDA

$24,193

$21,666

$17,818

18

Non-GAAP Reconciliation - Adjusted Operating Cash Flow

Six Months Ended

June 30,

2020

2019

2018

Reconciliation of Net Cash Used in Operating Activities to Adjusted Operating

(in thousands)

Cash Flow:

Net cash used in operating activities

$(82,928)

$(55,694)

$(20,561)

Principal proceeds from customer notes receivable

15,090

9,336

3,768

Financed insurance payments

(2,451)

(248)

-

Derivative breakage fees from financing structure changes

36,894

12,080

(666)

Distributions to redeemable noncontrolling interests

(2,600)

(5,143)

(789)

Payments to dealers for exclusivity and other bonus arrangements

16,731

22,000

-

Net inventory and prepaid inventory purchases

18,002

7,147

5,040

Adjusted Operating Cash Flow

$(1,262)

$(10,522)

$(13,208)

19

Non-GAAP Reconciliation - Adjusted Operating Expense

Six Months Ended

June 30,

2020

2019

2018

Reconciliation of Total Operating Expense, Net to Adjusted Operating Expense:

(in thousands, except per customer data)

Total operating expense, net

$92,068

$68,544

$53,464

Depreciation expense

(30,814)

(22,639)

(18,350)

Amortization expense

(16)

(12)

(67)

Non-cash compensation expense

(6,044)

(2,271)

(1,550)

ARO accretion expense

(1,013)

(640)

(613)

Financing deal costs

(1,687)

(968)

(1,341)

Natural disaster losses and related charges, net

(31)

-

(612)

IPO costs

-

(2,046)

(1)

Amortization of payments to dealers for exclusivity and other bonus arrangements

(747)

(14)

-

Legal settlement

-

(293)

-

Provision for current expected credit losses

(3,280)

-

-

Adjusted Operating Expense

$48,436

$39,661

$30,930

Adjusted Operating Expense per weighted average customer

$568

$621

$621

20

Financial Statements & Operating Metrics

(dollars in thousands; customer counts and per customer values in units; customer values in millions)

BALANCE SHEET

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

Assets

Current assets:

Cash

$

15,509

$

56,318

$

100,026

$

53,723

$

71,149

$

52,706

$

43,858

$

58,776

$

51,026

$

83,485

$

73,436

$

102,279

Accounts receivable - trade, net

5,222

4,331

5,197

7,728

7,650

6,312

7,363

11,150

10,383

10,672

10,039

12,504

Accounts receivable - other

2,442

7,821

5,744

7,571

10,050

3,721

3,153

4,531

5,922

6,147

9,264

6,094

Dealer advances

(A)

12,306

-

-

-

-

-

-

-

-

-

45

25

Other current assets

7,016

12,807

13,787

20,148

18,088

26,794

31,580

34,546

59,058

174,016

187,172

165,903

Total current assets

42,495

81,277

124,754

89,170

106,937

89,533

85,954

109,003

126,389

274,320

279,956

286,805

Property and equipment, net

(B)

1,044,741

1,113,073

1,165,281

1,224,378

1,280,802

1,328,457

1,399,299

1,499,891

1,620,048

1,745,060

1,884,576

2,006,115

Customer notes receivable, net

(C)

60,435

73,657

93,714

118,872

143,682

172,031

197,780

223,645

255,070

297,975

338,514

378,976

Other assets

51,641

60,781

71,264

78,146

93,814

75,064

86,430

120,125

148,279

169,712

179,134

195,699

Total assets

$

1,199,312

$

1,328,788

$

1,455,013

$

1,510,566

$

1,625,235

$

1,665,085

$

1,769,463

$

1,952,664

$

2,149,786

$

2,487,067

$

2,682,180

$

2,867,595

Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity

Current liabilities:

Accounts payable

$

27,997

$

23,867

$

18,838

$

21,377

$

25,612

$

20,075

$

34,904

$

45,134

$

40,342

$

36,190

$

59,657

$

27,590

Accrued expenses

(D)

11,957

13,976

11,206

10,770

16,436

18,650

12,495

18,861

17,904

39,544

15,158

21,496

Current portion of long-term debt

25,550

107,628

101,301

356,695

365,821

43,465

51,470

75,908

59,404

97,464

100,716

114,141

Other current liabilities

(E)

3,652

8,425

7,527

10,109

6,636

13,214

11,206

18,701

13,501

21,804

15,324

26,534

Total current liabilities

69,156

153,896

138,872

398,951

414,505

95,404

110,075

158,604

131,151

195,002

190,855

189,761

Long-term debt, net

(D)

765,883

723,697

763,015

543,536

572,303

916,430

1,016,412

1,152,884

1,116,369

1,346,419

1,511,555

1,628,672

Other long-term liabilities

(F)

38,398

41,422

42,747

48,195

53,057

66,453

75,645

92,044

119,128

127,406

145,323

149,169

Total liabilities

873,437

919,015

944,634

990,682

1,039,865

1,078,287

1,202,132

1,403,532

1,366,648

1,668,827

1,847,733

1,967,602

Redeemable noncontrolling interests

22,992

38,590

49,357

65,230

73,348

85,680

94,016

107,547

156,578

172,305

242,427

238,305

Stockholders' equity

302,883

371,183

461,022

454,654

512,022

501,118

473,315

441,585

626,560

645,935

592,020

661,688

Total liabilities, redeemable noncontrolling interests and stockholders' equity

$

1,199,312

$

1,328,788

$

1,455,013

$

1,510,566

$

1,625,235

$

1,665,085

$

1,769,463

$

1,952,664

$

2,149,786

$

2,487,067

$

2,682,180

$

2,867,595

INCOME STATEMENT

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

Revenue

(G) $

22,359

$

17,802

$

19,784

$

28,963

$

30,429

$

25,206

$

26,715

$

34,612

$

36,615

$

33,614

$

29,829

$

42,790

Operating expense:

Cost of revenue - depreciation

6,701

7,192

7,845

8,274

9,349

9,242

9,653

10,225

10,942

12,716

12,986

14,021

Cost of revenue - other

398

429

412

448

614

533

652

1,076

1,186

963

1,043

2,869

Other operating expenses, net

14,644

16,412

18,679

17,806

17,062

27,848

20,917

26,021

30,385

29,090

30,106

31,043

Total operating expense, net

21,743

24,033

26,936

26,528

27,025

37,623

31,222

37,322

42,513

42,769

44,135

47,933

Operating income (loss)

616

(6,231)

(7,152)

2,435

3,404

(12,417)

(4,507)

(2,710)

(5,898)

(9,155)

(14,306)

(5,143)

Interest expense, net

15,523

12,243

4,983

10,724

9,416

26,459

31,661

37,310

30,884

8,169

67,318

30,532

Interest expense, net - affiliates

2,665

2,523

2,493

2,354

2,398

2,303

1,822

1,575

701

-

-

-

Interest income

(854)

(959)

(1,192)

(1,418)

(1,763)

(2,077)

(2,494)

(2,967)

(3,407)

(3,615)

(4,620)

(6,680)

Loss on extinguishment of long-term debt, net - affiliates

-

-

-

-

-

-

-

10,645

-

-

-

-

Other (income) expense

-

-

-

(1)

-

-

-

534

293

53

-

(266)

Loss before income tax

(16,718)

(20,038)

(13,436)

(9,224)

(6,647)

(39,102)

(35,496)

(49,807)

(34,369)

(13,762)

(77,004)

(28,729)

Income tax

-

-

-

-

-

-

-

-

-

-

-

-

Net loss

(16,718)

(20,038)

(13,436)

(9,224)

(6,647)

(39,102)

(35,496)

(49,807)

(34,369)

(13,762)

(77,004)

(28,729)

Net income (loss) attributable to redeemable noncontrolling interests

213

(996)

774

3,350

(13)

1,726

3,018

931

3,221

3,747

(5,929)

(3,471)

Net loss attributable to stockholders

$

(16,931)

$

(19,042)

$

(14,210)

$

(12,574)

$

(6,634)

$

(40,828)

$

(38,514)

$

(50,738)

$

(37,590)

$

(17,509)

$

(71,075)

$

(25,258)

21

Financial Statements & Operating Metrics

(dollars in thousands; customer counts and per customer values in units; customer values in millions)

STATEMENT OF CASH FLOWS

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(16,718)

$

(20,038)

$

(13,436)

$

(9,224)

$

(6,647)

$

(39,102)

$

(35,496)

$

(49,807)

$

(34,369)

$

(13,762)

$

(77,004)

$

(28,729)

Adjustments to reconcile net loss to net cash (used in)

operating activities:

Depreciation

7,612

8,219

8,964

9,386

10,650

10,290

11,012

11,627

12,348

14,353

14,946

15,868

Impairment and loss on disposals, net

259

1,043

704

451

80

6,330

364

487

385

536

331

891

Amortization of deferred financing costs

2,510

2,293

2,570

1,793

2,125

2,586

6,324

1,446

1,025

1,027

3,494

1,915

Amortization of debt discount

453

269

242

259

265

317

472

820

735

991

4,663

2,947

Non-cash effect of equity-based compensation plans

532

350

726

682

774

802

281

713

5,980

2,261

2,690

3,354

Non-cashpayment-in-kind interest on loan

-

-

-

-

-

-

-

-

-

-

-

679

Non-cashpayment-in-kind interest on loan - affiliates

1,426

1,263

1,297

1,403

1,432

1,392

1,158

1,043

515

-

-

-

Unrealized (gain) loss on derivatives

1,832

(1,502)

(9,140)

(4,518)

(6,989)

26,747

7,032

10,417

12,813

(11,025)

7,596

(3,053)

Unrealized (gain) loss on fair value option instruments

-

-

-

-

-

-

-

534

(437)

53

-

(256)

Loss on extinguishment of long-term debt, net - affiliates

-

-

-

-

-

-

-

10,645

-

-

-

-

Other non-cash items

731

1,075

1,599

1,026

976

1,217

1,000

2,470

1,167

3,805

3,424

3,878

Changes in components of operating assets and liabilities:

(1,167)

(5,430)

(1,409)

(1,343)

(2,755)

814

Accounts receivable

867

643

(1,154)

(3,328)

(3,192)

2,691

Dealer advances

(5,065)

(2,734)

(237)

-

-

-

-

-

-

-

(45)

20

Other current assets

1,065

(1,157)

(3,640)

(2,965)

(789)

(3,937)

(8,961)

(396)

(2,396)

(119,988)

4,169

(4,225)

Other assets

(1,050)

(1,107)

(1,546)

(2,054)

(2,971)

(1,958)

(3,979)

(22,084)

(11,724)

(2,331)

(8,682)

(12,822)

Accounts payable

987

267

(1,064)

485

434

(851)

6,771

(4,492)

2,877

136

13,768

(14,474)

Accrued expenses

2,003

1,079

(2,134)

2,072

2,149

2,147

(4,455)

2,460

(460)

17,554

(17,227)

1,194

Other current liabilities

(2,469)

4,654

(776)

2,603

(3,471)

6,582

(2,206)

7,568

(5,287)

8,377

(6,446)

11,077

Long-term debt - paid-in-kind - affiliates

-

-

(1,144)

-

-

(2,040)

-

-

(719)

-

-

-

Other long-term liabilities

445

1,026

(1,051)

588

493

459

(2,580)

715

112

3,632

(1,034)

(3,894)

Net cash provided by (used in) operating activities

(4,580)

(4,357)

(19,220)

(1,341)

(4,681)

13,672

(24,430)

(31,264)

(18,844)

(95,724)

(58,112)

(24,816)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(63,923)

(70,818)

(60,977)

(63,090)

(60,193)

(68,358)

(68,902)

(95,894)

(134,403)

(131,623)

(141,231)

(133,102)

Payments for investments and customer notes receivable

(13,220)

(20,871)

(23,462)

(27,047)

(30,048)

(27,797)

(27,732)

(34,628)

(42,031)

(54,912)

(50,448)

(48,568)

Proceeds from customer notes receivable

615

739

1,526

2,242

1,965

1,982

3,757

5,579

4,736

7,532

6,940

8,150

State utility rebates and tax credits

68

534

189

261

241

162

111

116

174

267

135

37

Other, net

224

1,022

(1,586)

101

46

4,994

86

97

(767)

121

289

201

Net cash used in investing activities

(76,236)

(89,394)

(84,310)

(87,533)

(87,989)

(89,017)

(92,680)

(124,730)

(172,291)

(178,615)

(184,315)

(173,282)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt

90,614

57,126

45,967

36,940

49,767

312,912

227,930

298,115

62,108

295,207

583,681

353,257

Payments of long-term debt

(51,666)

(4,912)

(10,448)

(3,973)

(12,624)

(265,046)

(123,858)

(163,505)

(31,492)

(23,685)

(408,695)

(220,573)

Proceeds of long-term debt from affiliates

15,000

-

15,000

-

-

-

-

15,000

-

-

-

-

Payments of long-term debt to affiliates

-

-

(20,000)

-

-

(20,000)

-

-

(56,236)

-

-

-

Payments on notes payable

-

-

-

-

-

-

-

(248)

(1,929)

(2,495)

(2,398)

(53)

Payments of deferred financing costs

(2,788)

(1,576)

(572)

(178)

(1,003)

(6,845)

(5,281)

(1,987)

(3,167)

(1,675)

(10,619)

(6,200)

Payments of debt discounts

-

-

-

(70)

(1,813)

(582)

(525)

(559)

-

-

(229)

(2,903)

Proceeds from issuance of common stock, net

-

-

-

-

-

-

6

(484)

165,173

(243)

(41)

(88)

Proceeds from equity component of debt instrument, net

-

-

-

-

-

-

-

-

-

13,984

-

73,657

Proceeds from issuance of convertible preferred stock, net

-

64,890

99,877

(2,731)

59,971

15,654

(2,253)

(256)

(1)

-

-

-

Contributions from redeemable noncontrolling interests

22,105

25,871

17,139

17,726

16,562

27,590

18,030

32,207

69,135

37,777

102,342

18,311

Distributions to redeemable noncontrolling interests

-

(294)

(339)

(450)

(533)

(695)

(3,652)

(1,491)

(1,146)

(1,270)

(1,373)

(1,227)

Payments of costs related to redeemable noncontrolling interests

(44)

(877)

(832)

(47)

(106)

(525)

(1,035)

(587)

(1,533)

(2,240)

(1,295)

(892)

Other, net

(19)

(19)

(1)

-

(5)

-

(11)

(2)

(2)

(1)

(1)

-

Net cash provided by financing activities

73,202

140,209

145,791

47,217

110,216

62,463

109,351

176,203

200,910

315,359

261,372

213,289

Net increase (decrease) in cash and restricted cash

(7,614)

46,458

42,261

(41,657)

17,546

(12,882)

(7,759)

20,209

9,775

41,020

18,945

15,191

Cash and restricted cash at beginning of period

42,934

35,320

81,778

124,039

82,382

99,928

87,046

79,287

99,496

109,271

150,291

169,236

Cash and restricted cash at end of period

35,320

81,778

124,039

82,382

99,928

87,046

79,287

99,496

109,271

150,291

169,236

184,427

Restricted cash included in other current assets

(430)

(4,555)

(293)

(2,979)

(368)

(5,190)

(430)

(482)

(16,688)

(10,474)

(30,502)

(18,644)

Restricted cash included in other assets

(19,381)

(20,905)

(23,720)

(25,680)

(28,411)

(29,150)

(34,999)

(40,238)

(41,557)

(56,332)

(65,298)

(63,504)

Cash at end of period

$

15,509

$

56,318

$

100,026

$

53,723

$

71,149

$

52,706

$

43,858

$

58,776

$

51,026

$

83,485

$

73,436

$

102,279

22

Financial Statements & Operating Metrics

(dollars in thousands; customer counts and per customer values in units; customer values in millions)

SELECTED BALANCE SHEET AND INCOME STATEMENT DETAIL

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

A - Other current assets

Prepaid inventory

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

96,167

$

17,100

$

-

Inventory

773

1,853

2,711

4,339

4,627

9,187

15,787

16,526

17,125

43,749

115,107

120,804

Restricted cash

430

4,555

293

2,979

368

5,190

430

482

16,688

10,474

30,502

18,644

Other prepaid assets

2,728

3,030

4,999

5,047

4,197

2,739

4,559

5,510

9,626

7,380

7,123

4,980

Deferred receivables

487

251

252

585

917

555

477

842

2,961

1,506

1,222

2,937

Current portion of customer notes receivable

2,475

2,994

3,820

4,824

5,896

7,601

8,827

10,143

11,652

13,758

15,170

17,620

Current portion of other notes receivable

123

124

1,712

1,647

1,588

1,522

1,500

1,043

1,006

982

947

918

Other

-

-

-

727

495

-

-

-

-

-

1

-

Total other current assets

$

7,016

$

12,807

$

13,787

$

20,148

$

18,088

$

26,794

$

31,580

$

34,546

$

59,058

$

174,016

$

187,172

$

165,903

B - Property and equipment, net

Solar energy systems

$

935,719

$

1,031,555

$

1,114,849

$

1,186,890

$

1,253,662

$

1,311,458

$

1,373,925

$

1,459,249

$

1,567,521

$

1,689,457

$

1,836,111

$

1,976,596

Construction in progress

135,661

112,399

89,057

84,443

83,120

77,847

94,743

118,581

141,432

143,449

148,412

141,826

Asset retirement obligations

12,729

13,864

14,948

15,893

16,687

17,381

18,160

19,118

20,335

26,967

29,021

30,950

Information technology systems

9,299

12,063

12,103

12,159

12,854

17,380

18,618

20,488

20,488

28,320

28,495

28,697

Computers and equipment

1,069

1,103

1,151

1,146

1,190

1,251

1,337

1,433

1,489

1,499

1,644

1,630

Leasehold improvements

883

883

883

883

883

883

883

883

883

1,014

1,314

2,467

Furniture and fixtures

732

733

733

733

733

735

735

735

735

735

811

836

Vehicles

495

532

539

543

543

548

807

869

885

1,632

1,636

1,640

Other

25

23

24

50

52

52

92

116

147

146

157

158

Property and equipment, gross

1,096,612

1,173,155

1,234,287

1,302,740

1,369,724

1,427,535

1,509,300

1,621,472

1,753,915

1,893,219

2,047,601

2,184,800

Accumulated depreciation

(51,871)

(60,082)

(69,006)

(78,362)

(88,922)

(99,078)

(110,001)

(121,581)

(133,867)

(148,159)

(163,025)

(178,685)

Total property and equipment, net

$

1,044,741

$

1,113,073

$

1,165,281

$

1,224,378

$

1,280,802

$

1,328,457

$

1,399,299

$

1,499,891

$

1,620,048

$

1,745,060

$

1,884,576

$

2,006,115

C - Other assets

Restricted cash

$

19,381

$

20,905

$

23,720

$

25,680

$

28,411

$

29,150

$

34,999

$

40,238

$

41,557

$

56,332

$

65,298

$

63,504

Construction in progress - customer notes receivable

12,562

18,235

19,937

19,661

22,441

20,395

19,209

23,124

32,184

37,137

33,903

37,942

Exclusivity and other bonus arrangements with dealers, net

-

-

-

-

-

-

2,166

22,120

32,430

32,791

37,273

47,190

Straight-line revenue adjustment

8,647

9,868

11,328

12,981

14,793

16,682

18,624

20,602

22,673

24,852

26,183

28,565

Other

11,051

11,773

16,279

19,824

28,169

8,837

11,432

14,041

19,435

18,600

16,477

18,498

Total other assets

$

51,641

$

60,781

$

71,264

$

78,146

$

93,814

$

75,064

$

86,430

$

120,125

$

148,279

$

169,712

$

179,134

$

195,699

D - Debt

Sunnova Energy International Inc.

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

37,607

$

38,267

$

146,561

Sunnova Energy Corporation

95,275

81,791

77,603

79,316

81,155

60,681

61,855

90,827

4,924

2,428

30

472

Secure term loans and warehouse facilities:

LV3

1,222

-

-

-

-

-

-

-

-

-

-

-

AP4

105,467

106,212

105,583

104,805

104,148

103,442

102,775

94,763

93,328

91,830

-

-

AP6WII

63,026

82,927

114,525

135,281

133,602

54,294

70,765

-

-

-

-

-

LAPH

236,603

234,666

232,697

230,823

227,060

43,170

42,877

42,865

42,490

42,119

10,402

10,404

EZOP

29,880

29,740

29,350

28,523

40,500

58,200

96,204

41,318

54,799

119,222

166,459

20,896

TEPIH

27,096

62,319

76,789

93,084

102,139

105,641

-

-

-

-

-

-

TEPIIH

-

-

-

-

26,119

54,230

95,481

195,552

201,966

232,431

-

-

TEPH

-

-

-

-

-

-

-

-

32,875

89,680

192,944

226,482

TEPINV

-

-

-

-

-

-

-

-

-

90,144

84,427

72,758

Solar asset-backed and loan-backed notes:

HELI

232,864

233,670

227,769

228,399

223,401

224,017

217,038

217,641

212,956

213,550

209,304

209,890

HELII

-

-

-

-

-

256,220

252,939

253,154

248,187

248,392

239,199

239,398

RAYSI

-

-

-

-

-

-

127,948

130,035

129,147

126,849

124,389

123,506

HELIII

-

-

-

-

-

-

-

162,637

155,101

149,631

144,167

139,657

SOLI

-

-

-

-

-

-

-

-

-

-

402,683

399,319

HELIV

-

-

-

-

-

-

-

-

-

-

-

153,470

Total debt

$

791,433

$

831,325

$

864,316

$

900,231

$

938,124

$

959,895

$

1,067,882

$

1,228,792

$

1,175,773

$

1,443,883

$

1,612,271

$

1,742,813

23

Financial Statements & Operating Metrics

(dollars in thousands; customer counts and per customer values in units; customer values in millions)

SELECTED BALANCE SHEET AND INCOME STATEMENT DETAIL (continued)

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

E - Other current liabilities

Interest payable

$

1,391

$

5,216

$

1,964

$

5,660

$

2,538

$

8,150

$

5,063

$

13,486

$

7,257

$

14,680

$

8,978

$

17,809

Current portion of performance guarantee obligations

754

958

1,961

2,215

2,529

2,580

3,058

3,618

3,885

4,067

2,502

2,947

Deferred revenue

639

1,229

2,696

1,327

654

1,593

2,045

651

1,286

2,086

2,893

4,733

Current portion of lease liability

860

875

891

907

914

871

1,032

946

531

561

924

1,045

Other

8

147

15

-

1

20

8

-

542

410

27

-

Total other current liabilities

$

3,652

$

8,425

$

7,527

$

10,109

$

6,636

$

13,214

$

11,206

$

18,701

$

13,501

$

21,804

$

15,324

$

26,534

F - Other long-term liabilities

$

25,248

$

28,595

$

32,455

$

35,900

$

40,089

$

45,609

$

56,767

$

65,664

$

70,848

Deferred revenue

$

15,539

$

17,779

$

21,296

Long-term derivative liability

3,285

2,018

-

-

-

8,161

14,925

25,341

37,633

27,092

34,771

31,724

Asset retirement obligations

14,011

15,347

16,641

17,988

19,056

20,033

21,123

22,407

23,970

31,053

33,594

36,043

Other

5,563

6,278

4,810

4,959

5,406

5,804

3,697

4,207

11,916

12,494

11,294

10,554

Total other long-term liabilities

$

38,398

$

41,422

$

42,747

$

48,195

$

53,057

$

66,453

$

75,645

$

92,044

$

119,128

$

127,406

$

145,323

$

149,169

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

G - Revenue

PPA revenue

$

8,530

$

5,198

$

7,288

$

11,459

$

11,508

$

8,695

$

9,612

$

13,954

$

14,329

$

10,146

$

12,633

$

19,922

Lease revenue

5,799

5,940

7,237

8,144

8,452

9,247

9,638

9,620

10,238

10,695

11,542

12,338

SREC revenue

7,773

6,406

4,964

8,898

9,944

6,824

6,592

9,716

10,603

11,542

4,363

8,735

Loan revenue

122

147

178

224

251

280

371

363

418

493

599

634

Other revenue

135

111

117

238

274

160

502

959

1,027

738

692

1,161

Total revenue

$

22,359

$

17,802

$

19,784

$

28,963

$

30,429

$

25,206

$

26,715

$

34,612

$

36,615

$

33,614

$

29,829

$

42,790

KEY PERFORMANCE METRICS, NON-GAAP RECONCILIATIONS AND OTHER METRICS

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

Cumulative number of customers

Lease

14,252

15,951

17,606

19,259

20,507

21,561

22,361

23,176

24,223

25,430

26,988

28,497

PPA

25,375

27,259

28,934

30,228

31,449

32,634

34,180

36,355

39,104

42,115

45,595

48,846

Loan

2,036

2,503

3,247

4,156

5,080

6,104

7,021

8,026

9,227

10,888

12,598

14,002

Other

-

-

-

-

-

-

13

31

67

205

227

229

Total cumulative number of customers

41,663

45,713

49,787

53,643

57,036

60,299

63,575

67,588

72,621

78,638

85,408

91,574

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

Weighted average number of customers

Lease

13,488

15,079

16,782

18,501

19,892

21,078

21,967

22,762

23,682

24,858

26,149

27,644

PPA

24,788

26,211

28,123

29,576

30,850

32,062

33,361

35,268

37,728

40,580

43,818

47,243

Loan

1,900

2,239

2,882

3,710

4,649

5,620

6,673

7,727

8,925

10,339

11,757

13,292

Other

-

-

-

-

-

-

6

25

40

105

222

229

Total weighted average number of customers

40,176

43,529

47,787

51,787

55,391

58,760

62,007

65,782

70,375

75,882

81,946

88,408

Estimated gross customer value (customer values in millions; per customer values in units)

Estimated gross contracted customer value

$

1,027

$

1,127

$

1,270

$

1,316

$

1,382

$

1,476

$

1,568

$

1,652

$

1,739

$

1,879

$

2,035

$

2,194

Estimated gross renewal customer value

139

149

158

164

191

199

203

209

228

248

$

269

287

Estimated gross total customer value

$

1,166

$

1,276

$

1,428

$

1,480

$

1,573

$

1,675

$

1,771

$

1,861

$

1,967

$

2,127

$

2,304

$

2,481

Estimated gross total customer value per customer

$

27,962

$

27,921

$

28,675

$

27,612

$

27,596

$

27,778

$

27,846

$

27,530

$

27,094

$

27,061

$

26,984

$

27,087

Estimated gross contracted customer value per customer

$

24,628

$

24,661

$

25,502

$

24,552

$

24,246

$

24,478

$

24,654

$

24,438

$

23,953

$

23,906

$

23,832

$

23,956

24

Financial Statements & Operating Metrics

(dollars in thousands; customer counts and per customer values in units; customer values in millions)

KEY PERFORMANCE METRICS, NON-GAAP RECONCILIATIONS AND OTHER METRICS (continued)

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

Reconciliation of Net Loss to Adjusted EBITDA

Net loss

$

(16,718)

$

(20,038)

$

(13,436)

$

(9,224)

$

(6,647)

$

(39,102)

$

(35,496)

$

(49,807)

$

(34,369)

$

(13,762)

$

(77,004)

$

(28,729)

Interest expense, net

15,523

12,243

4,983

10,724

9,416

26,459

31,661

37,310

30,884

8,169

67,318

30,532

Interest expense, net - affiliates

2,665

2,523

2,493

2,354

2,398

2,303

1,822

1,575

701

-

-

-

Interest income

(854)

(959)

(1,192)

(1,418)

(1,763)

(2,077)

(2,494)

(2,967)

(3,407)

(3,615)

(4,620)

(6,680)

Depreciation expense

7,612

8,219

8,964

9,386

10,650

10,290

11,012

11,627

12,348

14,353

14,946

15,868

Amortization expense

34

33

33

34

33

33

5

7

8

9

9

7

EBITDA

8,262

2,021

1,845

11,856

14,087

(2,094)

6,510

(2,255)

6,165

5,154

649

10,998

Non-cash compensation expense

532

350

726

824

916

944

387

1,884

5,980

2,261

2,690

3,354

ARO accretion expense

188

203

211

402

278

292

313

327

349

454

489

524

Financing deal costs

(51)

16

1,523

(182)

(3)

564

119

849

60

133

116

1,571

Natural disaster losses and related charges, net

98

936

316

296

(182)

7,787

-

-

54

-

31

-

IPO costs

-

-

-

1

80

482

739

1,307

1,758

-

-

-

Loss on unenforceable contracts

-

-

-

-

-

-

-

-

-

2,381

-

-

Loss on extinguishment of long-term debt, net - affiliates

-

-

-

-

-

-

-

10,645

-

-

-

-

Unrealized (gain) loss on fair value option instruments

-

-

-

-

-

-

-

534

(437)

53

-

(256)

Realized loss on fair value option instruments

-

-

-

-

-

-

-

-

730

-

-

-

Amortization of payments to dealers for exclusivity and other bonus arrangements

-

-

-

-

-

-

-

14

241

328

351

396

Legal settlements

-

575

-

-

150

-

-

293

967

-

-

-

Provision for current expected credit losses

-

-

-

-

-

-

-

-

-

-

1,864

1,416

Adjusted EBITDA

$

9,029

$

4,101

$

4,621

$

13,197

$

15,326

$

7,975

$

8,068

$

13,598

$

15,867

$

10,764

$

6,190

$

18,003

Interest income from customer notes receivable

$

796

$

899

$

1,133

$

1,355

$

1,672

$

1,987

$

2,328

$

2,692

$

3,136

$

3,432

$

4,372

$

6,568

Principal proceeds from customer notes receivable, net of related revenue

$

495

$

592

$

1,349

$

2,031

$

1,718

$

1,714

$

3,429

$

5,224

$

4,333

$

7,058

$

6,378

$

7,541

Adjusted Operating Cash Flow

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Adjusted Operating Cash Flow

Net cash provided by (used in) operating activities

$

(4,580)

$

(4,357)

$

(19,220)

$

(1,341)

$

(4,681)

$

13,672

$

(24,430)

$

(31,264)

$

(18,844)

$

(95,724)

$

(58,112)

$

(24,816)

Principal proceeds from customer note receivable

615

739

1,526

2,242

1,965

1,982

3,757

5,579

4,736

7,532

6,940

8,150

Financed insurance payments

-

-

-

-

-

-

-

(248)

(1,929)

(2,495)

(2,398)

(53)

Derivative breakage fees from financing structure changes

-

-

(666)

-

-

(17,127)

3,428

8,652

-

-

31,122

5,772

Distributions to redeemable noncontrolling interests

-

(294)

(339)

(450)

(533)

(695)

(3,652)

(1,491)

(1,146)

(1,270)

(1,373)

(1,227)

Payments to dealers for exclusivity and other bonus arrangements

-

-

-

-

-

-

2,000

20,000

9,733

-

5,344

11,387

Net inventory and prepaid inventory purchases

90

1,671

2,742

2,298

1,710

6,350

2,967

4,180

1,036

110,366

(1,593)

19,595

Payments of non-capitalized costs related to IPO

-

-

-

-

-

-

-

-

4,060

884

-

-

Adjusted Operating Cash Flow

$

(3,875)

$

(2,241)

$

(15,957)

$

2,749

$

(1,539)

$

4,182

$

(15,930)

$

5,408

$

(2,354)

$

19,293

$

(20,070)

$

18,808

Adjusted Operating Expense

Reconciliation of Total Operating Expense, Net to Adjusted Operating Expense

Total operating expense, net

$

21,743

$

24,033

$

26,936

$

26,528

$

27,025

$

37,623

$

31,222

$

37,322

$

42,513

$

42,769

$

44,135

$

47,933

Depreciation expense

(7,612)

(8,219)

(8,964)

(9,386)

(10,650)

(10,290)

(11,012)

(11,627)

(12,348)

(14,353)

(14,946)

(15,868)

Amortization expense

(34)

(33)

(33)

(34)

(33)

(33)

(5)

(7)

(8)

(9)

(9)

(7)

Non-cash compensation expense

(532)

(350)

(726)

(824)

(916)

(944)

(387)

(1,884)

(5,980)

(2,261)

(2,690)

(3,354)

ARO accretion expense

(188)

(203)

(211)

(402)

(278)

(292)

(313)

(327)

(349)

(454)

(489)

(524)

Financing deal costs

51

(16)

(1,523)

182

3

(564)

(119)

(849)

(60)

(133)

(116)

(1,571)

Natural disaster losses and related charges, net

(98)

(936)

(316)

(296)

182

(7,787)

-

-

(54)

-

(31)

-

IPO costs

-

-

-

(1)

(80)

(482)

(739)

(1,307)

(1,758)

-

-

-

Loss on unenforceable contracts

-

-

-

-

-

-

-

-

-

(2,381)

-

-

Amortization of payments to dealers for exclusivity and other bonus arrangements

-

-

-

-

-

-

-

(14)

(241)

(328)

(351)

(396)

Legal settlements

-

(575)

-

-

(150)

-

-

(293)

(967)

-

-

-

Provision for current expected credit losses

-

-

-

-

-

-

-

-

-

-

(1,864)

(1,416)

Adjusted Operating Expense

$

13,330

$

13,701

$

15,163

$

15,767

$

15,103

$

17,231

$

18,647

$

21,014

$

20,748

$

22,850

$

23,639

$

24,797

Adjusted Operating Expense per weighted average customer

$

332

$

315

$

317

$

304

$

273

$

293

$

301

$

319

$

295

$

301

$

289

$

281

25

Financial Statements & Operating Metrics

(dollars in thousands; customer counts and per customer values in units; customer values in millions)

KEY PERFORMANCE METRICS, NON-GAAP RECONCILIATIONS AND OTHER METRICS (continued)

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

Number of customers deployed during the period

Lease

1,459

1,699

1,655

1,653

1,248

1,054

800

815

1,047

1,207

1,558

1,509

PPA

1,180

1,884

1,675

1,294

1,221

1,185

1,546

2,175

2,749

3,011

3,480

3,251

Loan

266

467

744

909

924

1,024

917

1,005

1,201

1,661

1,710

1,404

Other

-

-

-

-

-

-

13

18

36

138

22

2

Total number of customers deployed during the period

2,905

4,050

4,074

3,856

3,393

3,263

3,276

4,013

5,033

6,017

6,770

6,166

Average kw per customer

7.6

7.6

7.2

7.4

7.5

7.7

7.8

7.9

7.8

7.7

7.9

7.8

Estimated net system value deployed (in millions)

$

29

$

35

$

35

$

34

$

28

$

28

$

25

$

32

$

38

$

43

$

49

$

46

Estimated net system value deployed per new customer

$

9,983

$

8,642

$

8,591

$

8,817

$

8,252

$

8,581

$

7,639

$

7,974

$

7,550

$

7,146

$

7,276

$

7,393

Estimated net system value deployed, leases and PPAs (in millions)

$

28

$

34

$

34

$

32

$

27

$

26

$

24

$

31

$

36

$

39

$

45

$

41

Estimated net system value deployed per new customer, leases and PPAs

$

10,610

$

9,489

$

10,210

$

10,859

$

10,936

$

11,612

$

10,230

$

10,368

$

9,484

$

9,246

$

8,859

$

8,659

26

Key Performance Indicators & Other Metrics and Calculations

(dollars in millions; customer and per customer values in units)

KEY PERFORMANCE INDICATORS

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

Cumulative number of customers

41,663

45,713

49,787

53,643

57,036

60,299

63,575

67,588

72,621

78,638

85,408

91,574

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

Weighted average number of customers

40,176

43,529

47,787

51,787

55,391

58,760

62,007

65,782

70,375

75,882

81,946

88,408

Adjusted EBITDA

$

9.0

$

4.1

$

4.6

$

13.2

$

15.3

$

8.0

$

8.1

$

13.6

$

15.9

$

10.8

$

6.2

$

18.0

Interest income from customer notes receivable

$

0.8

$

0.9

$

1.1

$

1.4

$

1.7

$

2.0

$

2.3

$

2.7

$

3.1

$

3.4

$

4.4

$

6.6

Principal proceeds from customer notes receivable, net of related revenue

$

0.5

$

0.6

$

1.3

$

2.0

$

1.7

$

1.7

$

3.4

$

5.2

$

4.3

$

7.1

$

6.4

$

7.5

Adjusted Operating Cash Flow

$

(3.9)

$

(2.2)

$

(16.0)

$

2.7

$

(1.5)

$

4.2

$

(15.9)

$

5.4

$

(2.4)

$

19.3

$

(20.1)

$

18.8

Adjusted Operating Expense

$

13.3

$

13.7

$

15.2

$

15.8

$

15.1

$

17.2

$

18.6

$

21.0

$

20.7

$

22.9

$

23.6

$

24.8

Adjusted Operating Expense per weighted average customer

$

332

$

315

$

317

$

304

$

273

$

293

$

301

$

319

$

295

$

301

$

289

$

281

Adjusted Operating Expense per customer, trailing twelve months

$

1,361

$

1,288

$

1,255

$

1,210

$

1,194

$

1,178

$

1,188

$

1,198

$

1,199

$

1,185

$

1,156

OTHER METRICS AND CALCULATIONS

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

Estimated gross contracted customer value

$

1,027

$

1,127

$

1,270

$

1,316

$

1,382

$

1,476

$

1,568

$

1,652

$

1,739

$

1,879

$

2,035

$

2,194

Estimated gross contracted customer value per customer

$

24,628

$

24,661

$

25,502

$

24,552

$

24,246

$

24,478

$

24,654

$

24,438

$

23,953

$

23,906

$

23,832

$

23,956

Estimated gross total customer value

$

1,166

$

1,276

$

1,428

$

1,480

$

1,573

$

1,675

$

1,771

$

1,861

$

1,967

$

2,127

$

2,304

$

2,481

Estimated gross total customer value per customer

$

27,962

$

27,921

$

28,675

$

27,612

$

27,596

$

27,778

$

27,846

$

27,530

$

27,094

$

27,061

$

26,984

$

27,087

Estimated gross contracted customer value

$

1,027

$

1,127

$

1,270

$

1,316

$

1,382

$

1,476

$

1,568

$

1,652

$

1,739

$

1,879

$

2,035

$

2,194

(+) Estimated gross renewal customer value

139

149

158

164

191

199

203

209

228

248

269

287

Estimated gross customer value

1,166

1,276

1,428

1,480

1,573

1,675

1,771

1,861

1,967

2,127

2,304

2,481

(-) Project debt, net

(696)

(750)

(787)

(821)

(857)

(899)

(1,006)

(1,138)

(1,171)

(1,404)

(1,574)

(1,596)

Estimated net earning assets

470

526

641

659

716

776

765

723

796

723

730

885

(-) Corporate debt, net (including equity component)

(95)

(82)

(78)

(79)

(81)

(61)

(62)

(91)

(5)

(54)

(52)

(235)

(+) Cash and restricted cash

35

82

124

82

100

87

79

99

109

150

169

184

(+) Construction in process

148

131

109

104

106

98

114

142

174

181

182

180

(+) Inventory, prepaid inventory and inventory receivable

1

2

3

4

5

9

16

17

17

140

135

137

Estimated net customer value

559

659

799

770

846

909

912

890

1,091

1,140

1,164

1,151

(-) Estimated gross renewal customer value

(139)

(149)

(158)

(164)

(191)

(199)

(203)

(209)

(228)

(248)

(269)

(287)

Estimated net contracted customer value

$

420

$

510

$

641

$

606

$

655

$

710

$

709

$

681

$

863

$

892

$

895

$

864

Cumulative capital deployed in solar energy systems

$

936

$

1,032

$

1,115

$

1,187

$

1,254

$

1,311

$

1,374

$

1,459

$

1,568

$

1,689

$

1,836

$

1,977

Cumulative capital deployed in customer notes receivable

47

58

74

97

120

146

169

193

220

253

285

321

Exclusivity and other bonus arrangements with dealers, net

-

-

-

-

-

-

2

22

32

33

37

47

Cumulative capital deployed

$

983

$

1,090

$

1,189

$

1,284

$

1,374

$

1,457

$

1,545

$

1,674

$

1,820

$

1,975

$

2,158

$

2,345

Average cumulative capital deployed, trailing twelve months

$

937

$

1,020

$

1,099

$

1,179

$

1,274

$

1,367

$

1,479

$

1,597

$

1,716

$

1,852

$

2,010

Revenue

$

22.4

$

17.8

$

19.8

$

29.0

$

30.4

$

25.2

$

26.7

$

34.6

$

36.6

$

33.6

$

29.8

$

42.8

Interest income from customer notes receivable

$

0.8

$

0.9

$

1.1

$

1.4

$

1.7

$

2.0

$

2.3

$

2.7

$

3.1

$

3.4

$

4.4

$

6.6

Principal proceeds from customer notes receivable, net of related revenue

$

0.5

$

0.6

$

1.3

$

2.0

$

1.7

$

1.7

$

3.4

$

5.2

$

4.3

$

7.1

$

6.4

$

7.5

Adjusted EBITDA

$

9.0

$

4.1

$

4.6

$

13.2

$

15.3

$

8.0

$

8.1

$

13.6

$

15.9

$

10.8

$

6.2

$

18.0

Note: Revenue, interest income from customer notes receivable, and principal proceeds from customer notes receivable, net of related revenue, all exclude benefits from tax credits, which are in financing cash flows, "platform services," loan sales and sales of other future cash flow streams.

27

Key Performance Indicators & Other Metrics and Calculations

(dollars in millions; customer and per customer values in units)

OTHER METRICS AND CALCULATIONS (continued)

Period

3Q 2017

4Q 2017

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

1Q 2020

2Q 2020

Number of customers deployed during the period

CA

425

550

662

643

672

618

702

947

1,178

1,372

1,230

1,151

NJ

1,477

1,406

1,021

1,146

859

735

692

681

658

920

1,131

752

CT

91

258

406

530

563

603

525

740

752

732

783

884

MA

101

188

220

392

289

343

221

325

340

558

605

560

MD

57

182

103

118

116

160

250

194

171

225

258

282

NY

248

498

451

402

317

277

196

214

578

384

425

53

PA

-

2

39

74

136

182

183

212

272

278

277

316

PR

338

762

931

350

240

128

102

269

289

678

850

1,012

RI

1

6

8

18

62

60

94

112

135

135

165

124

TX

58

89

149

76

48

36

78

97

150

241

370

357

All others

109

109

84

107

91

121

233

222

510

494

676

675

Total number of customers deployed during the period

2,905

4,050

4,074

3,856

3,393

3,263

3,276

4,013

5,033

6,017

6,770

6,166

Cumulative MW deployed

Lease

103.9

117.8

130.0

142.0

151.4

159.3

165.8

172.8

181.4

191.2

203.5

215.0

PPA

172.2

185.2

196.4

205.9

215.2

224.6

236.3

253.5

275.5

300.0

328.0

354.2

Loan

13.9

17.8

23.8

30.9

37.8

45.5

52.9

60.6

69.1

80.9

94.1

104.7

Total cumulative MW deployed

290.0

320.8

350.2

378.8

404.4

429.4

455.0

486.9

526.0

572.1

625.6

673.9

MW deployed during the period

Lease

11.8

13.9

12.2

12.0

9.4

7.9

6.5

7.0

8.6

9.8

12.3

11.5

PPA

7.9

13.0

11.2

9.5

9.3

9.4

11.7

17.2

22.0

24.5

28.0

26.2

Loan

2.3

3.9

6.0

7.1

6.9

7.7

7.4

7.7

8.5

11.8

13.2

10.6

Total MW deployed during period

22.0

30.8

29.4

28.6

25.6

25.0

25.6

31.9

39.1

46.1

53.5

48.3

Creation costs - total

$

76

$

117

$

107

$

99

$

97

$

86

$

91

$

125

$

158

$

185

$

206

$

196

Creation costs - leases and PPAs

$

63

$

96

$

83

$

72

$

67

$

58

$

63

$

91

$

116

$

130

$

155

$

147

Adjusted operating expense allocation

Customer service

$

6.9

$

6.8

$

8.7

$

8.4

$

6.7

$

10.0

$

11.2

$

12.2

$

12.5

$

13.6

$

14.4

$

17.2

Sales and marketing

$

6.4

$

6.9

$

6.5

$

7.4

$

8.4

$

7.3

$

7.5

$

8.9

$

8.3

$

9.2

$

9.3

$

7.6

Other

$

0.0

$

(0.0)

$

(0.0)

$

(0.0)

$

(0.0)

$

(0.0)

$

(0.0)

$

(0.1)

$

(0.0)

$

(0.0)

$

(0.0)

$

(0.0)

Estimated net system value deployed

$

29

$

35

$

35

$

34

$

28

$

28

$

25

$

32

$

38

$

43

$

49

$

46

Estimated net system value deployed per new customer

$

9,983

$

8,642

$

8,591

$

8,817

$

8,252

$

8,581

$

7,639

$

7,974

$

7,550

$

7,146

$

7,276

$

7,393

Estimated net system value deployed, leases and PPAs

$

28

$

34

$

34

$

32

$

27

$

26

$

24

$

31

$

36

$

39

$

45

$

41

Estimated net system value deployed per new customer, leases and PPAs

$

10,610

$

9,489

$

10,210

$

10,859

$

10,936

$

11,612

$

10,230

$

10,368

$

9,484

$

9,246

$

8,859

$

8,659

As of

9/30/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

Customer contract sensitivities

Estimated gross total customer value - 4% discount rate

$

1,452

$

1,585

$

1,762

$

1,826

$

1,943

$

2,059

$

2,170

$

2,274

$

2,403

$

2,593

$

2,804

$

3,016

Estimated gross total customer value - 6% discount rate

$

1,166

$

1,276

$

1,428

$

1,480

$

1,573

$

1,675

$

1,771

$

1,861

$

1,967

$

2,127

$

2,304

$

2,481

Estimated gross contracted customer value - 4% discount rate

$

1,214

$

1,330

$

1,492

$

1,545

$

1,619

$

1,723

$

1,827

$

1,920

$

2,018

$

2,175

$

2,351

$

2,534

Estimated gross contracted customer value - 6% discount rate

$

1,027

$

1,127

$

1,270

$

1,316

$

1,382

$

1,476

$

1,568

$

1,652

$

1,739

$

1,879

$

2,035

$

2,194

Estimated net contracted customer value - 4% discount rate

$

606

$

711

$

861

$

831

$

886

$

948

$

952

$

932

$

1,125

$

1,188

$

1,211

$

1,204

Estimated net contracted customer value - 6% discount rate

$

420

$

510

$

641

$

606

$

655

$

710

$

709

$

681

$

863

$

892

$

895

$

864

28

Definitions

For more information about metrics and important notes regarding our financial statements please refer to our periodic reports filed with the SEC and our quarterly earnings presentations available on our website at investors.sunnova.com.

Cumulative Number of Customers includes each customer that is party to an in-service solar service agreement. For our leases, power purchase agreements ("PPA") and loan agreements, in-service means the related solar energy system and, if applicable, energy storage system, must have met all the requirements to begin operation and be interconnected to the electrical grid. For our Sunnova Protect services, in-service means the customer's system must have met the requirements to have the service activated. We do not include in our number of customers any customer under a lease, PPA or loan agreement for whom we have terminated the contract and removed the solar energy system. We also do not include in our number of customers any customer of our Sunnova Protect services that has been in default under his or her solar service agreement in excess of six months.

Weighted Average Number of Customers is calculated based on the number of months a given customer is in-service during a given measurement period. The weighted average number of customers reflects the number of customers at the beginning of the period, plus the total number of customers deployed during the period adjusted by a factor that accounts for the partial period nature of those new customers. For purposes of this calculation, we assume all customers deployed during a month were added in the middle of that month.

Number of Customers Deployed includes the change in the cumulative number of customers during a given measurement period.

Adjusted EBITDA is calculated as net income (loss) plus net interest expense, depreciation and amortization expense, income tax expense, financing deal costs, natural disaster losses and related charges, net, amortization of payments to dealers for exclusivity and other bonus arrangements, legal settlements and excluding the effect of certain non-recurring items we do not consider to be indicative of our ongoing operating performance such as, but not limited to, costs of our initial public offering ("IPO"), losses on unenforceable contracts, losses on extinguishment of long-term debt, realized and unrealized gains and losses on fair value option instruments and other non-cash items such as non-cash compensation expense, asset retirement obligation ("ARO") accretion expense and provision for current expected credit losses.

Interest Income and Principal Proceeds from Customer Notes Receivable, Net of Related Revenue are considered key performance metrics because under our loan agreements, the customer obtains financing for the purchase of a solar energy system from us, and we agree to operate and maintain the solar energy system throughout the duration of the agreement. Pursuant to the terms of the loan agreement, the customer makes scheduled principal and interest payments to us and has the option to prepay principal at any time in part or in full. Whereas we typically recognize payments from customers under our leases and PPAs as revenue, we recognize payments received from customers under our loan agreements (a) as interest income, to the extent attributable to earned interest on the contract that financed the customer's purchase of the solar energy system; (b) as a reduction of a note receivable on the balance sheet, to the extent attributable to a return of principal (whether scheduled or prepaid) on the contract that financed the customer's purchase of the solar energy system; and (c) as revenue, to the extent attributable to payments for operations and maintenance services provided by us.

Adjusted Operating Cash Flow is calculated as net cash used in operating activities plus principal proceeds from customer notes receivable, financed insurance payments and distributions to redeemable noncontrolling interests less derivative breakage fees from financing structure changes, payments to dealers for exclusivity and other bonus arrangements, net inventory and prepaid inventory (sales) purchases and payments of non-capitalized costs related to our IPO.

Adjusted Operating Expense is calculated as total operating expense less depreciation and amortization expense, financing deal costs, natural disaster losses and related charges, net, amortization of payments to dealers for exclusivity and other bonus arrangements, legal settlements and excluding the effect of certain non-recurring items we do not consider to be indicative of our ongoing operating performance such as, but not limited to, costs of our IPO, losses on unenforceable contracts and other non-cash items such as non-cash compensation expense, ARO accretion expense and provision for current expected credit losses.

Estimated Gross Contracted Customer Value represents the sum of the present value of the remaining estimated future net cash flows we expect to receive from existing customers during the initial contract term of our leases and PPAs, which are typically 25 years in length, plus the present value of future net cash flows we expect to receive from the sale of related solar renewable energy certificates ("SREC"), either under existing contracts or in future sales, plus the carrying value of outstanding customer loans on our balance sheet. From these aggregate estimated initial cash flows, we subtract the present value of estimated net cash distributions to redeemable noncontrolling interests and estimated operating, maintenance and administrative expenses associated with the solar service agreements. These estimated future cash flows reflect the projected monthly customer payments over the life of our solar service agreements and depend on various factors including but not limited to solar service agreement type, contracted rates, expected sun hours and the projected production capacity of the solar equipment installed. For the purpose of calculating this metric, we discount all future cash flows at 6% "unless otherwise specified". The anticipated operating, maintenance and administrative expenses included in the calculation of estimated gross contracted customer value include, among other things, expenses related to accounting, reporting, audit, insurance, maintenance and repairs. In the aggregate, we estimate these expenses are $20 per kilowatt per year initially, with 2% annual increases for inflation. We do not include maintenance and repair costs for inverters and similar equipment as those are largely covered by the applicable product and dealer warranties for the life of the product, but we do include additional cost for energy storage systems, which are only covered by a 10-year warranty.

Estimated Gross Renewal Customer Value represents the sum of the present value of future net cash flows we would receive from customers during two five-year renewal terms of our leases and PPAs, plus the present value of future net cash flows we expect to receive from the sale of related SRECs, either under existing contracts or in future sales. From these aggregate estimated renewal cash flows we subtract the present value of estimated net cash distributions to redeemable noncontrolling interests and the estimated operating, maintenance and administrative expenses associated with the solar service agreements. For the purpose of calculating this metric, we discount all future cash flows at 6% "unless otherwise specified". To calculate estimated renewal gross customer value, we use the established industry convention, which assumes 100% of solar leases and PPAs are renewed, due to the expected useful life of the system and costs to the customer associated with an election to purchase or remove the equipment. We further assume that these contracts are renewed at 90% of the contractual price in effect at expiration of the term of the solar service agreement. Because the customer has two renewal options of five years each, for the second renewal period we assume a contractual price of 90% of the price in the first renewal period. Our loan agreements do not contain a renewal feature, and therefore are not included in estimated renewal gross customer value.

Estimated Net Contracted Customer Value represents estimated gross contracted customer value, less debt, plus cash and restricted cash, construction in progress, inventory, prepaid inventory and inventory receivable.

Estimated Net System Value Deployed represents the sum of estimated gross customer value (which includes both contracted and renewal value), plus expected or received utility and up-front governmental incentives, to the extent not included in such estimated gross customer value, plus expected or received contributions from tax equity fund investors for redeemable noncontrolling interests in tax equity vehicles, as each relates to new customers placed in service within a specified period. From these aggregate estimated values, we subtract payments made or expected to be made to our dealers associated with customer solar energy systems.

Estimated Net System Value Deployed, Leases and PPAs represents the Estimated Net System Value Deployed attributable to our lease and PPA contracts and excludes amounts attributable to our loan contracts.

Creation Costs represents the property and equipment attributable to solar energy systems over the period plus all cash paid for customer notes receivable during the period plus the average amount recognized in each quarter for the trailing twelve months of payments to dealers for exclusivity and other bonus arrangements.

Creation Costs, Leases and PPAs represents Creation Costs attributable to our lease and PPA contracts and excludes amounts attributable to our loan contracts.

Cumulative Capital Deployed represents the property and equipment attributable to solar energy systems plus net customer notes receivable, less deferred revenue in other current liabilities and other long-term liabilities, plus payments to dealers for exclusivity and other bonus arrangements.

29

Sunnova

Investor

Relations

Investor and Media Contacts

Rodney McMahan - Investors Kelsey Hultberg - Media

investors.sunnova.com

IR@sunnova.com 877-770-5211

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Sunnova Energy International Inc. published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2020 20:45:08 UTC