Sunnova Energy International Inc.

Good morning and welcome to Sanova's first quarter and full year 2022 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.

Thank you, operator. Before we begin, please note during today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in our slide presentation, earnings press release, and our 2021 Form 10-K. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. Also, we will reference certain non-GAAP measures during today's call. Please refer to the appendix of our presentation, as well as the earnings press release for the appropriate GAAP to non-GAAP reconciliations and cautionary disclosures. On the call today are John Berger, Synovus Chairman and Chief Executive Officer, and Robert Lane, Executive Vice President and Chief Financial Officer. I will now turn the call over to John. Good morning, and thank you for joining us.

Despite persistent macroeconomic headwinds, we made excellent progress against our financial goals for the year by posting strong first quarter results, a summary of which can be found on slide three. On our previous earnings call, we noted that we expected to capture approximately 12% of our full year 2022 adjusted EBITDA combined with the principal and interest we collect from solar loans in the first quarter. I'm happy to report we exceeded that target as actual financial results were ahead of that goal. While our expenses have increased in total, they have been in line with our expectations and are necessary at this stage in our evolution to take full advantage of the incredible array of profitable growth opportunities that we increasingly find in front of us. Many of these growth opportunities are not baked in to the triple-double-triple plan. Slide 4 summarizes the growth in Sanova's customers, battery penetration, and dealer network. In the first quarter of 2022, we added approximately 15,300 customers, an increase of 74% compared to the first quarter of last year. As in prior years, we expect our customer additions to escalate throughout the calendar year, and we still expect to meet our full year 2022 customer additions guidance of 85,000 In addition to the strong demand for our solar services, we are also experiencing accelerating demand for energy services beyond solar. This includes increased demand for energy services such as batteries, electric vehicle charging, generators, and load managers, and includes sales to both new and existing customers. We are also seeing a surprising surge in demand from our customers to up power or increase their solar generation capacity with us. It is the rise in these types of ancillary services that is positioning Sunova to realize the full option value of its customers. While this activity will not increase our unique customer count, it will increase our services per customer, and in turn, our net contracted customer value, or NCCB, on a per customer basis. moving us closer to our target of $18,000 to $20,000 in NCCB per customer by the end of 2025. As of March 31st, 2022, our NCCB per customer was nearly $10,800. To properly account for this change in customer appetite and to ensure we have an accurate and honest customer count, we recently deployed new software to analyze our customer data. This analysis resulted in a reduction in our total customer count of fewer than 3,000 customers from what we reported as of December 31st, 2021. This adjustment was driven by a tightening of our customer definition to ensure only homeowners with whom we have an ongoing economic relationship are counted as customers and are counted only once, regardless of the number of services we provide to them. This reduction was not specific to any one period, but rather was blended across the decades Nova has been in business and, most importantly, did not result in any loss in NCCV or require any modifications to previously issued guidance for 2022 or 2023. Additionally, installing these new stringent customer definitions will allow us to more accurately track, on a per-customer basis, the value being created through up-powerings that typically coincide with the addition of one or more new energy services. It was these previously up-powered customers that drove this customer count adjustment. Management is focused on increasing cash flow per share by driving up the value on a per-customer basis as well as growing its overall customer base. We understand that there is unfortunately little consistency in non-GAAP metrics in the residential solar industry. Since Sunova has gone public, We continue to try to increase transparency and disclosure across the industry. As a result, we know that our definition of a customer is more conservative than that of some of our peers, but our customer definition gives management and stockholders an accurate way of determining value creation. We strongly encourage investors to make sure all residential energy service providers use the same or similar customer definition. Our battery attachment rate on origination for the first quarter of 2022 was 19%. This drop in our battery attachment rate was unexpected, but was a timing issue as over the last 30 days, our battery attachment rate on origination has been 29%. The first quarter timing issue was driven by a surge in sales from Sonoma New Homes and the Northeast region and a delay in our underwriting processing caused by the huge sales volumes in March. Much more importantly, as our battery supply improved as planned, our battery penetration rate continued to grow and reach 12.5% as of March 31, 2022. This is inclusive of over 1,900 battery retrofits we've installed life to date. Our growth continues to be driven by our rapidly expanding dealer network, which as of March 31, 2022, stood at 915 dealers, sub-dealers, and new homes installers. We expect to eclipse our year-end 2022 target of 1,000 dealers in the coming months. Finally, on slide four, we have updated our information on customer contract life and expected cash inflows. As of March 31, 2022, the weighted average contract life remaining on our customer contracts equaled 22.3 years, and expected cash inflows over the next 12 months has increased to $403 million. Earlier in the month, we published our second annual ESG report, detailing the steps we have taken over the last 12 months to enhance our ESG strategy and reporting. Our new report, titled Charging Ahead, describes the impact of the growth we have seen this year and how we are integrating ESG best practices into our core business to drive positive outcomes for our business and society. Building off our first report last year, Our next step was to establish a more formal, forward-looking strategy. To start this process, we conducted a materiality assessment to identify the ESG topics that were most important to our business and to our stakeholders. We engaged our employees, investors, community partners, vendors, and other groups to assess ESG-related topics. From this assessment, we identified nine priority ESG topics for our business, as well as others that we consider material. The results of this assessment can be found in our new report. With our priority topics defined, we engage leaders from across our organization to ensure a strong oversight of these topics and to develop multi-year goals to drive progress. These goals also complement our triple-double-triple growth strategy, whereby our planned growth in our customer base will allow us to offset 52 million metric tons of CO2 by year-end 2023. Finally, we also made progress in enhancing our ESG data and aligning it with leading reporting frameworks. In 2021, we aligned our reporting with the Task Force on Climate-Related Financial Disclosures, or TCFD, reporting guidelines. This was an important step in demonstrating our commitment to climate action as a leading energy company. To continue our alignment with TCFD recommendations, Our goal is to complete a scope three inventory for all material categories and to set formal climate targets by year end 2023. We will also be working to conduct climate scenario analysis to better assess climate risk and opportunities for our business. We look forward to sharing these results in future reports. Our team is pleased with the progress we have made today and look forward to continuing to integrate ESG into everything we do. I encourage you to read our new report, which can be found on the ESG section of our investor relations website, and we welcome any questions or engagement on our current strategy. I will now hand the call over to Rob.