Sunrun Inc.

Greetings and welcome to the Sunrun 3Q 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Patrick Jobin, Senior Vice President, Finance and Investor Relations. Please go ahead.

Thank you, Operator. Before we begin, please note that certain remarks we will make on this conference call constitute forward-looking statements. Although we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially and adversely. Please refer to the company's filings with the SEC for more inclusive discussion of risks and other factors that may cause our actual results to differ from projections made in any forward-looking statements. Please also note these statements are being made as of today, and we disclaim any obligation to update or revise them. On the call today are Mary Powell, Sunrun's CEO, and Danny Abadian, Sunrun's CFO. Ed Fenster, Sunrun's co-founder and co-executive chair, is also on the call today and will be participating in the Q&A session It follows prepared remarks. And now let me turn it over to Mary.

Thank you, Patrick. Wow, what a quarter it has been. I've been looking forward to this call to update you all on what this team has accomplished. We have more than delivered what we said we would, significantly exceeding our guidance on net subscriber value, beating the midpoint of our volume guidance despite disruptions from hurricanes, and achieving a scale of over $5 billion in net earning assets. Sunrun is now serving 760,000 customers, plus nearly 10,000 households in our multifamily housing projects, which are poised to expand significantly under the Inflation Reduction Act, providing incredible socioeconomic and clean energy benefits. All of this while continuing to lead on innovation. For instance, just yesterday, we announced our latest partnership on leveraging our clean energy assets to build a more sustainable and resilient solution for Puerto Rico. The macroeconomic environment presents tremendous opportunity for us as our clean energy as a subscription model allows customers to leverage and stack the latest innovative energy technologies to power their homes and cars while providing them an opportunity to save money. At the same time, the macroeconomic environment has provided an opportunity for us to demonstrate the power of quick, decisive action, and stellar execution as we laser focus on profitable growth. In the quarter, we delivered strong results and continued to execute on making Sunrun even faster, better, and stronger in all dimensions of the fundamentals. First, we are delivering record cost efficiency and expanding net subscriber value even as we invest in innovation and differentiation. We grew installation volumes in Sunrun's direct business sequentially at a growth rate three times the rate of headcount additions, as installation crew efficiency increased by nearly 30%. I am tremendously proud of what our team is doing in the field each and every day for our customers. We also maintained strong overhead cost discipline. with G&A expenses declining more than 6% compared to last year and reaching an all-time low of approximately $1,100 per new customer, a 20% improvement year over year, showing the benefits of our scale and disciplined approach to sustainable growth. We have been adapting to higher interest rates and strategically adjusting pricing as necessary, while still providing a strong customer value proposition. This is against a backdrop of rapidly accelerating utility prices, and a long-term trend of deteriorating reliability, particularly in California. As a result of our team's strong execution, we delivered significantly improved net subscriber value in Q3 of over $13,000, exceeding guidance, even when excluding the benefit from the passage of the Inflation Reduction Act, and we are guiding to continued increases in our margins for Q4. Second, we are driving strong profitable growth. We grew new installations by 17% year over year, deploying 256 megawatts, exceeding the midpoint of our guidance. We achieved this despite devastating hurricanes in Puerto Rico and Florida that allowed many of our existing customers to power through safely, but impacted sales and installation activities for a number of weeks. Clearly, if not for the hurricanes, volumes would have hit the top end of the range. We are on track to deliver approximately 25% growth for the full year. Third, We continue to innovate and increase our differentiation. Just this week, the board of the Puerto Rico Electric Power Authority approved a groundbreaking virtual power plant contract. Sunrun has continued to lead in the deployment of virtual power plants, adding recurring sources of cash flow we can share with our customers, and most importantly, helping to increase the reliability and affordability of the entire electric system. This is another postcard from the future of the tremendous opportunity in front of us to embrace radical collaboration and to increase the efficiency and reliability of our energy systems around the country. This quarter was a powerful demonstration of the value of our existing networked solar and battery systems, providing more than one gigawatt hour of energy back to California's grid system cumulatively over eight days, helping to prevent rolling blackouts during the recent heat wave. We also provided more than 350,000 hours of backup power to thousands of customers in Puerto Rico and Florida during grid outages following the hurricanes. We also were excited during Q3 to celebrate the unveiling of Lunar Energy, a clean energy technology company that Sunrun invested in to accelerate whole home electrification. Lunar's first product will be an integrated next generation combined battery inverter and software offering. We are excited by its launch in 2023. Our electric vehicle charger has also been very well received by our customers. We are benefiting from and helping enable the transition to electric vehicles by providing our customers the ability to run their vehicles on renewable, independently generated, affordable energy. Customers who drive electric vehicles need larger systems. These solar and battery and EV resources are incredibly valuable for homeowners, and the energy system alike. Our Ford partnership continues to deliver strong initial results. Approximately 1,000 orders for the Ford Charge Station Pro have been placed thus far, with thousands of additional initial conversations, and a high mix of customers want the additional bi-directional home backup capability. Installs are continuing to ramp. Shifting gears, let's talk about some policy updates. On the federal side, we were of course thrilled to see Congress take bold action to address climate change by passing the Inflation Reduction Act and effectively extending the investment tax credit for 10 years and reinstating it back to the 30% level. We were also very encouraged to see the focus on expanding solar to more low income communities, multifamily properties, and to encourage the adoption of electric vehicles. We believe someone will be uniquely positioned as the leading national provider of solar and storage energy subscription offerings to expand our clean energy services and make it accessible to even more communities. As I mentioned in my opening comment, we also see tremendous opportunity in the legislation to build even greater socio economic impact through our work with family with multifamily housing. Today, I am proud that Sunrun already serves nearly 10,000 households in low-income multifamily housing, and we want to dramatically increase the impact we can make in these communities. On California's pending NEM proceeding, there isn't much to update beyond the chatter everyone is hearing that we may see a new proposed decision within a few weeks. Californians have spoken loud and clear over the last year that they care passionately about their ability to generate, store, and use their own clean energy without being penalized for doing so. Further, repeatedly over the last year, we have seen the value these customers and their clean energy technology are providing to all other customers of the grid by sharing their energy back with the grid during some of the highest price periods and when the grid was literally at a potential point of failure. Therefore, we remain steadfast in our hope that the Commission's forthcoming revised proposal will not just continue to support this consumer-led revolution, but in fact, will accelerate it. With more radical collaboration between distributed energy resources and utilities, we can demonstrate a more durable, resilient, cost-effective, and clean energy grid for all. Keeping solar accessible to all communities in California is imperative for the state to achieve its clean energy goals. Accelerating distributed solar and storage is also critical for California's economy and for grid reliability. For all of these reasons, we do remain hopeful of a reasonable structure so that the entire grid can benefit from advances in technology and customer generated stored and shared energy. On trade, we continue to navigate the dynamic environment. The current bureaucratic process from the Customs and Border Patrol continues to cause delays in the timely release of modules currently sitting at the ports for us and many in the industry. following the implementation of the WRO and subsequent UFLPA regulations. We continue to source high-quality modules and are maintaining adequate supply for current needs, although we would like faster action to reduce import delays. We support UFLPA enforcement that prevents labor content from entering the United States, while also facilitating legitimate trade with unnecessary delays so that industry can deploy clean energy, meet consumer demand, and help the United States achieve its climate goals. There is no time to waste. In conclusion, Sunrun has the right strategy and the right team in place to navigate these uncertain times. Our value proposition continues to increase as utility rates escalate rapidly and consumers demand affordable, clean, and predictably priced energy. Whether continued interest rate increases or a recession, Sunrun's opportunity to deliver value to our customers and our financial partners remains incredibly strong. As always, before turning it over to Danny, I want to express my appreciation for the team I work with every day and all the Sunrun employees working so hard to create a company that is faster, better, and stronger for our customers and communities, setting the highest standards for ourselves, putting people front and center, analyzing mistakes, even when winning, and crushing it on the fundamentals of sustainable, profitable growth, customer obsession, and innovation. Never has our cause felt more urgent. I so appreciate the Sunrunners and customers who are so key to all that we can achieve together. Over to you, Danny.