Sunnova Energy International Inc.

Good morning and welcome to Sanova's fourth quarter and full year 2020 earnings conference call. Today's call is being recorded and we have allocated an hour for prepared remarks and questions and answers. At this time, I would like to turn the conference over to Rodney McMahon, Vice President, Investor Relations at Sanova. Thank you. Please go ahead.

Rodney McMahon Thank you, operator. And good morning, everyone. Yesterday, we released our earnings press release and posted a slide presentation to the investor relations portion of our website, which will be referenced during this call. Joining me today are John Berger, Synovus Chairman and Chief Executive Officer, and Robert Lane, Executive Vice President and Chief Financial Officer. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Delegation Reform Act of 1995. These include remarks about future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risk, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risk and other factors are set forth in our press releases and filings with the Securities and Exchange Commission. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. The reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. I will now turn the call over to John. Thank you, Rodney.

Good morning and thank you for joining us. We are pleased to report we closed out the year with another quarter of strong results. which allowed us to achieve our 2020 guidance objectives. This makes 2020 the second consecutive year we have met our increased guidance targets, demonstrating the strong forward visibility and predictability of our business, even through nearly a year of the pandemic. In the fourth quarter of 2020, we experienced record setting growth as we added more customers than any other quarter in the company's history, eclipsing a record set just last quarter. As we move through 2021, we will continue to focus on optimizing recurring operational cash flow, or ROCF, through exceptional customer growth, stable unit economics, declining costs on a per customer basis, and our declining cost of capital. On slide three, you will see the details of our strong operational results, where we increased our customer base and greatly expanded our dealer network. We continued our rapid growth by adding approximately 29,000 customers in 2020, which is a 57% increase from the number of customers added in 2019. This exceptional growth is fueled by our 435 dealers and subdealers who continue to power our differentiated low-cost model. We have nearly tripled our number of dealers over the past 12 months by selectively adding 280 dealers and subdealers in that timeframe. This robust dealer growth is driven by the attractiveness of Sanova's business model and technology platform to successful, established entrepreneurs in the industry. The benefits of becoming a Sanova dealer are more apparent than ever, as reflected by the fact that nearly half of the 280 dealer and subdealer additions in 2020 occurred in the fourth quarter. On storage, life to date, we've now performed over 1,100 battery retrofits, an increase of 226 from September 30, 2020. Our storage attachment rate on origination decreased from the previous quarter primarily due to the supply constraints and the energy storage system, or ESS, market, as we saw demand greatly outpace available inventory over the past several months. However, we are glad to report we have seen the battery supply constraints subside over the last few weeks as battery manufacturers ramp up production and new ESS providers enter the market. As a result, our storage attachment rate has been improving over the last few weeks. When considering how we have progressed in creating value with our storage service offerings, we believe a better metric is the storage penetration rate on our full customer base, which nearly tripled in 2020 to 9.2%. We expect the penetration rate to increase into the mid to upper teens by the end of the year, on a base of what we expect to be roughly 200,000 customers. Turning to slide four, we provide a summary of our 2020 financial results, which are further expanded on slide five. Our total customer account, adjusted EBITDA, the principal and interest we collect in solar loans, and our adjusted operating cash flow were all within guidance ranges, despite the unique challenges we faced in 2020. While many companies retracted their guidance, We never wavered from the targets we set, even though we raised our targets just days before the global pandemic impacted all of our lives. This achievement was made possible by our flexible, technology-enabled service business model and the quick response of our dealers to modify the way they do business, which allowed Persinova to not only survive, but thrive in this environment. On slide six, you will see both our gross contracted customer value, or GCCV, and our Net Contracted Customer Value, or NCCV, are experiencing significant increases year-over-year. This translates directly into shareholder value creation. Using what is now a conservative discount rate of 4%, NCCV increased from $1.2 billion on December 31, 2019, to $1.7 billion on December 31, 2020. This equates to roughly $17 per share as of December 31st, 2020, which is approximately a 20% increase year over year and a 29% increase since our IPO. These increases in NCCV per share clearly show that despite our torrid growth, we are creating value for shareholders. Looking forward, we expect NCCV per share to experience more gradual increases in 2021 due to the SunStreet acquisition. However, We fully expect that trend to pick up as we anticipate NCCV per share to increase more rapidly once the accretive nature of the SunStreet acquisition fully takes hold in 2022. Please note both our GCCV and NCCV metrics represent only our existing contracted cash flow base after MSA fees, which we collect and use to service customers and after payments to tax equity providers. It excludes all future contract renewals. It assumes we sell no complimentary products or energy services to existing customers. And it assumes no growth of our customer base. While these items are not reflected in our contracted customer values, they do have a significant value and will become more meaningful to SNOVA as the number of services sold per customer grows. And while a discount rate of 4% is the lowest rate we used in our contracted customer value calculations, Even that rate assumes a higher cost of capital than what the market is currently reflecting, given the fact that our latest securitization achieved roughly a 2% cost of capital on the Fully Burdened Cost Act. I will now turn the call over to Rob to walk you through our financial results, our recent financing activities, and our guidance in greater detail.