Sunnova’s Q3 Loss Jumps 75% YoY to $56.5 Million, as Operating Expenses Mount

U.S.-based residential solar firm Sunnova reported a net loss of $56.5 million in the third quarter (Q3) of the year, an increase of 74.9% year-over-year (YoY) in contrast to a net loss of $32.3 million for the corresponding period in 2022.

The heightened net loss can be attributed mainly to a surge in interest expenses, totaling $36.8 million, and increased general and administrative expenses. However, this negative impact was partially mitigated by a boost in interest income amounting to $14.4 million, primarily due to the company’s larger customer loan portfolio.

Operating expenses grew by 33% YoY, reaching $236.6 million in the three months ending September 30, 2023. This increase was primarily driven by the rising number of solar energy systems in service, increased revenue from inventory sales to dealers and other parties, and a surge in service revenue due to an enhanced focus on directly offering additional services to existing customers.

The company’s revenue rose to $198.4 million, a 32.8% YoY increase during Q3 2023.

Adjusted EBITDA remained relatively steady at $40.4 million for the quarter ending on September 30, 2023, in comparison to $41.3 million for the same period in the previous year.

“Maintaining a strong focus on liquidity, increasing operating leverage and profitability, and growing cash flow remain the top objectives of management,” said William J. (John) Berger, the founder and CEO of Sunnova. “As we navigate this higher interest rate and lower liquidity environment, it’s essential to recognize the unique opportunity that arises from the convergence of declining solar equipment prices and the steady uptick in utility rates, creating a distinct wedge of value for our customers. This same wedge of value enables us to continue to increase our pricing power, which is reflected in our increased, fully burdened, unleveled return.

Operational Highlights

In the third quarter, the company added over 37,000 customers, bringing the total customer count to 386,200 as of September 30, 2023.

Several strategic actions were taken to enhance corporate liquidity, reducing the projected 2024 corporate capital requirement from $500 million to $0.

Additionally, the company said it achieved a milestone by pricing its inaugural U.S. Department of Energy guaranteed loan securitization, marking the residential solar industry’s first AAA-rated securitization.

Furthermore, the company entered a $145 million tax credit transfer transaction involving the sale of investment tax credits to a tax credit buyer, with $14.4 million in sales completed as of September 30, 2023.

9M 2023

For the first nine months of the year (9M), Sunnova reported a net loss of $267.6 million, an increase of 291% YoY from the $68.3 million net loss.

The higher loss resulted mainly from a rise in interest expenses of $155.8 million and increased general and administrative costs. However, it was partially offset by higher interest income of $41.2 million, driven by a larger customer loan portfolio, and an increased income tax benefit primarily due to income from investment tax credit sales.

Operating expenses rose by $246.5 million to $673.2 million, a YoY increase of 57.7% in 9M 2023. The surge in operating expenses during the period was primarily due to more solar energy systems in service, an increased focus on direct sales of additional services to existing customers, and higher inventory sales revenue from sales to dealers and other parties, initiated in April 2022.

The company’s revenue in 9M 2023 grew to $526.5 million, marking a $164.4 million increase and 45% YoY compared to the same period in 2022.

Adjusted EBITDA amounted to $83 million, down by 11.2% YoY from $93.5 million during the same period in 2022. This decline primarily resulted from increased spending associated with higher-than-expected growth.

As of September 30, 2023, Sunnova’s total cash amounted to $725.1 million, encompassing restricted and unrestricted cash.

Sunnova’s net loss widened to $100.8 million during the second quarter (Q2) of 2023, a year-over-year increase of 628.6% compared to a net loss of $13.8 million.

The company posted a net loss of $61.9 million for the fourth quarter of 2022 compared to $31.2 million YoY.


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