Sunnova Energy International Inc.

Good morning and welcome to Sunova's third quarter 2023 earnings conference call. Today's call is being recorded and we have allocated an hour for prepared remarks and question and answer. At this time, I would like to turn the conference over to Rodney McMahon, Vice President, Investor Relations at Sunova. 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 2022 Form 10-K. Please see those documents for additional information regarding those factors that may affect these forward-looking segments. 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, the non-GAAP reconciliations, and cautionary disclosures. On the call today are John Berger, Sunova's 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.

Sunova remains resilient despite the challenging market dynamics marked by higher interest rates and concerns about overall residential solar growth. Our commitment to develop a sustainable, profitable platform has positioned Sunova for long-term success in the face of significant macroeconomic challenges, as evidenced by increases to our fully burdened unlevered return as we continue to add new customers. Through our adaptive energy platform, we continue to provide our customers with a better energy service at a better price, ensuring system performance and optimized power generation and economics. The steady, robust demand for our distinct suite of energy service offerings, coupled with our dealer network and our increasing market share have been instrumental in achieving this performance. Cenova is focused on liquidity, profitability, and cash flow. We continue to act on these focus areas by raising price, reducing working capital needs, and reducing operating expenses. First, our focus on profitability has pushed up our returns to 12% for the third quarter, allowing us to achieve a healthy implied spread even in this higher interest rate environment, and we are expecting to push past 13% during the fourth quarter. Cenova's ability to continually increase prices while maintaining its growth is a testament to the value we bring to our customers and the strength of our offerings. By methodically raising prices, we aim to ensure that our returns are in alignment with the current cost of capital. This move is not only a boost for profitability, but also underscores our commitment to enhancing shareholder value. Second, we are committed to reducing working capital both used and outstanding to our value dealers and equipment manufacturing partners. This has enabled us to reduce the required amount of corporate capital for 2024 and to further reduce our operating expenses through cutting working capital interest expense. Sunova also continues to execute on its capital light businesses. of repair services, accessory loans, and upselling customer batteries are among these ventures, showcasing our commitment to capital-assistant growth. Additionally, our expansion of energy management services, including virtual power plants, is a key approach in our strategy to maximize returns and boost cash generation from our existing asset and customer base. These initiatives represent an essential component of our multifaceted approach to sustainability and profitability with less reliance on capital markets. Last, in our continuous pursuit of operational excellence, we are aggressively cutting our operating expenses by harnessing the power of cutting edge software and artificial intelligence. These technologies enable us to optimize processes, reduce the headcount needed, and drive greater efficiency throughout our operations. This strategic move is not just about cost savings, but also about positioning Sunova as an industry leader in innovation and operational effectiveness. Adjusted operating expense per customer is expected to decline by 10% of the course of 2024, and we expect this trend to accelerate as we progress through next year into 2025. Slide 3 showcases the continued strong performance in customer count, solar power generation, and energy storage under management, battery attachment rate on origination, and expected cash inflow over the next 12 months. During the third quarter, we placed over 37,000 customers into service, which brought our total customer count as of September 30, 2023, to over 386,000 customers and brought our megawatt hours under management to 981, and total solar power generation under management to 2.3 gigawatts. Rob will discuss our customer and capital expenditure expectations for 2024 later in the call, but our core residential dealer channel has been running at a comfortable pace for the last few months, and we intend to hold this pace steady. The operating leverage of scale gives us economic and strategic advantages. One of these key advantages is our large and growing amount of levered cash flows. And we will discuss these estimates for 2024 and beyond later in the call as well. Finally, we have updated our customer contract life and expected cash inflows. As of September 30th, 2023, the weighted average contract life remaining on our customer contracts equal 22 years and expected cash inflows from those customers over the next 12 months increased to $645 million. Our estimated contracted nominal cumulative cash flows totaled $14.7 billion as of September 30, 2023. We have taken decisive actions to bolster our liquidity and maintain our strong balance sheet. We have raised significant sums in multiple types of capital, including corporate capital, in a timely fashion, and we anticipate additional closings of asset-level capital in the near future. We are proud of our current achievements, and we have numerous growth opportunities on the horizon. However, these opportunities will be pursued thoughtfully at the right time and when the market conditions are more favorable. I will now hand the call over to Rob, who will walk you through our financial highlights.