Sunnova Energy International Inc.

Good morning and welcome to Sanova's fourth quarter and full year 2024 earnings conference call. Today's call is being recorded and we'll have allocated an hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Rodney McMahon, Vice President, Investor Relations at Sanova. Thank you and please go ahead, Rodney.

Thank you, Operator. Before we begin, please note that during today's call we will make forward-looking statements that are subject to various risks and uncertainties, as described in our slide presentation, earnings press release, and our 2024 Form 10-K. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. On the call today are John Berger, Sonoma's Chairman and Chief Executive Officer, Eric Williams, Executive Vice President and Chief Financial Officer, and Paul Matthews, Executive Vice President and Chief Operating Officer. I will now turn the call over to John.

Good morning, everyone, and thank you for joining today's call. As you're aware, the fourth quarter of 2024 was a challenging time for our industry. Peer distress and stubbornly high interest rates, along with regulatory and political uncertainties, made both consumers and capital providers more cautious. This backdrop slowed the flow of tax equity, which in turn lowered the amount of capital we were able to deploy, ultimately leading to our 2024 cash generation to come in below expectations. But the team delivered a strong operational performance in a few key areas. This includes, over the course of the last two years, a reduction in net service expense of 24% per customer, while also reducing the total work orders open for our fleet by 12 percent this occurred while growing our cumulative solar customer base by over 70 percent and subsequently reducing our average age of work order by 83 percent building on the strengths of the business yet also facing the realities of this market we believe we have made the adjustments needed to better position sunova for success in 2025 and beyond turning to slide four i want to share how we have positioned SNOVA against the headwinds and backdrop I described. This includes continuing to prioritize margin overgrowth by focusing our originations in the most attractive markets and offering only our highest margin energy services, such as our solar lease and PPPA offerings, which now make up effectively 100% of our solar financings. 2024 was a year of consistent price increases to offset a higher cost of capital. If necessary, we will raise pricing again to protect our margins. Second, reducing expenses and decreasing demand on our working capital. Recently, we reduced our headcount by over 15%, which is expected to contribute approximately $35 million towards a total estimated annual cash savings of approximately $70 million. Since the end of 2023, our total headcount has declined by 30%. We further optimized working capital through revised dealer payments that are better aligned with our funding cycles and the current market structure. creating less lag between tax equity and debt funding and dealer payments. We also signed a non-recourse asset-based loan facility, barring against our own net contracted cash value. You've heard me reference this embedded value before, and it was the right time to access it to strengthen the company. This facility will be used to manage our working capital, serve as a bridge to additional tax equity, and enhance our ability to advance systems in progress and add new originations. Third, we have taken additional steps to further strengthen and maximize our asset-level funding. I will walk you through the details on the next slide, but at a high level, we significantly increased our amount of asset-level financing, including closing a $500 million tax equity fund in late December. However, the structure of this fund required the $75 million received at closing to be included in restricted cash. Thus, it did not contribute to our cash generation guidance as we expected. In February, another $50 million was released under the Segment Tax Equity Fund. Executing on these three items remains our top priority. We believe doing so best positions Sonoma for success and helps us address our late 2026 corporate debt maturities by mid-2025. I want to share in more detail how we are maximizing our asset-level capital in the current environment. Despite the more cautious capital markets environment, as you can see on slide 5, in 2024, we securitized $1.8 billion worth of solar assets and customer notes receivable and raised $1.3 billion of tax equity. Combined, these two sources of capital generated over $1 billion more in asset-level financing compared to the prior year, a company record. 2024 also marked the first year in the company's history we did not issue corporate-level capital. As I noted earlier, we did not reach our cash generation target. We were well positioned to achieve it coming out of the third quarter, but our guidance was back-weighted for the fourth quarter, and then we faced a number of headwinds at year-end. Most notable was the slowdown in project finance markets as investors paused to assess the impact of the election, which resulted in delays to some of the tax equity funds we anticipated to close in the fourth quarter. In response to this market tightness, we needed to slow our originations to match the pace of our own funding, And this further impacted our ability to generate cash due to a lack of origination moving through our system. As a reminder, we generate cash through a combination of recurring cash flows from our customers and through our ability to originate new customers and raise routine financing to support investment and growth. Slide six provides an overview of our path forward. In just the first couple of months into the new year, we have taken further steps to reduce costs without sacrificing customer service or quality, adjusted dealer payment terms to better match our funding, and finally, we have signed the non-recourse asset-based loan facility. With these items accomplished, we are now focusing our attention on our late 2026 corporate debt maturities with a mid-2025 target resolution date. With this, I'll turn the call over to Eric.

Thanks, John, and good morning, everyone. Starting with slide 8, which highlights our full-year financial and operational results, revenue came in at $840 million, up 17% for the prior year. Our interest income of $150 million also rose 29%, and our principal proceeds from solo loans of $191 million grew by 21%. Cumulative customers increased by 5% despite a reduction of 57,000 non-solar customers as the number of solar customers added more than all said the non-solar loans we monetized in the second quarter of 2024. This growth in solar customers can be seen in the 20% increase in solar power under management and 53% increase in energy storage under management. Battery adoption continues to climb as our battery attachment rate in the fourth quarter of 2024 was 33%. an all-time high for the traditionally seasonally light fourth quarter. For perspective, our battery attachment rate in the fourth quarter of 2023 was 24%. Of course, over the course of 2024, Sunova stockholder equity per share increased to $14.65, representing an increase of 17% as value continues to transfer from redeemable non-controlling interest and non-controlling interest into stockholders' equity. Our net contracted customer value per share, however, decreased slightly by 4% to $24.22 due to the delays in receiving tax equity, as John discussed previously, and selling nearly all of our non-core solar loans at a loss in 2024. On slide 9, we have an overview of our 2024 capital markets highlights, and you can tell we've been busy. During the year, we issued seven securitizations versus four in 2023, totaling an additional $613 million in securitized assets, with the increase driven by lease and PPA securitizations. In 2024, our usage of tax equity also moved upward by 37% due to more lease and PPA growth and an increase in our annual weighted average ITC rate that grew from 31.5% in 2023 to 38% in 2024. This increase was driven by our greater utilization of ITC adders, most significantly relating to domestic content, as we were the first to require, beginning in September 2024, that all lease and PPA originations qualify for the domestic content adder. Additional accomplishments for the year include closing the industry's first Puerto Rico-only lease and PPA securitization, monetizing most of our non-solar loans, and retroactively collecting ITC adders associated with both 2023 and 2024 originations. On slide 10, you'll notice that we've removed our 2025 and 2026 cash generation guidance as we work to address our 2026 corporate maturities. We believe it is appropriate to remove, for now, this guidance since the outcome and timing of addressing our upcoming corporate maturities will have a material impact on our cash generation for both years. We will certainly revisit this topic on future earnings calls. With that, I'll turn the call back to John for closing remarks.

Thanks, Eric. In summary, we delivered strong operational results in critical parts of the business, but our cash generation for the quarter and the year did not meet our expectations. We are concentrating our efforts on providing excellent service, working side by side with our valued dealers, streamlining our cost structure, improving working capital efficiencies, and closing more asset level financings. I founded Sanova over 12 years ago. I've seen challenging years and difficult cycles. 2024 was without question one of the hardest. We've had to make tough decisions and take decisive actions, and there's more work to be done. But the core fundamentals of our business are solid in a market that has strong growth opportunities to meet the growing demand for more power and consumers' needs for energy affordability and reliability. I remain steadfast in my belief that the service we deliver and how Sunova uniquely does it continues to be a valuable solution that creates value for all stakeholders. I also want to thank the Sanova team and our dealers for their resilience and commitment. They show up every day to do their jobs well and deliver on our mission of powering energy independence. I am grateful for that. Now let's turn the call over to the operator to open up for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause here for the questions to be registered. Our first question comes from Philip Chen with Rock Capital Partners.

Hey, guys. Thanks for taking the questions. I know you're going through a difficult time here. You named peer distress as a reason for capital providers to be cautious in your prepared remarks, but Ron is not having these issues. What do you think you could have done to have prevented the tax equity to slow down? What would you have done differently? And did the mandate of domestic content in October of last year exacerbate the situation? Thanks.

Hey, Phil, it's John. Thanks. I think peer distress refers to SunPower's bankruptcy. And the terms that have changed in the tax equity markets and the debt markets accordingly, services become something that obviously I've talked about and pounded the table on for over a decade. And very few, candidly, very few people really paid much attention to it in capital markets. Now there's a lot of attention on it. And so There's a lot of changes that's gone into payment terms of capital, whether it's tax equity debt and the mandating and looking at service, not just collecting the bills, but rolling trucks and getting things fixed, monitoring, and so forth. And that's why we've had Paul join the call, too, to answer any questions on that, because we've seen a lot of success there. Look, we got behind well over a year ago. We talked about that in previous quarters. And candidly, I think the election just caused a lot of pausing. We still closed on tax equity, and I think we're in pretty good shape right now for the next few months as we look at it, is what we have and what we see in front of us and what we've closed on. And so we look to finally get ahead of that. I think this last securitization we did, we finally got ahead on securitizations, too. So we were behind between the SunPower bankruptcy and the election. It's been challenging in the marketplace. However, I do see more constructive dialogue going on right now with incoming tax credit buyers, tax equity, securitization. The asset market has done pretty well. So I'm cautiously optimistic as we move forward here, even with an overall economy that's slowing, which candidly is helpful with regards to the cost of debt going down, as you know. So the domestic content, that did nothing but help. That was a great call. It was a bold call, controversial. But at this point, I think everybody realizes that without the domestic content, without the domestic manufacturing, candidly, politically, we weren't in good shape. And with it, I think that the IRA changes will be much lighter than it would have been otherwise. So It was good to get ahead of that. It definitely helped on the cash generation. We still expect good cash generation. It's just simply at this point in time, it was prudent to remove guidance given the focus on dealing with the corporate debt maturities. And other than that, it really was a good call, and we see more and more value in terms of cash generation on doing domestic content. And our dealers now see that as well, even if there was skepticism. Initially, they now see that that was the right call to make on the domestic content mandate. We expect our competitors to follow if they have not already.

Okay. Thanks, Sean. In terms of the tax equity fund, you talked about the $500 million fund. I think 75 flowed, and then that was in restricted cash, another $50 million has come through. Can you talk about when that might flow more easily and freely? We've been writing about the dealer payments being restricted for some time now. And the second part to this question is, when do you expect to get caught up with the dealer payments? How much do you owe the dealers at this point? Do you need to get caught up on? And when do you think that could actually happen as well?

Yeah, sure. You know, again, the amount of capital we have and the type around the table does have us in a pretty good spot. We've got a couple of other things we want to do that's small around the edges, but we see ourselves in a pretty good spot given our run rate right now. With the loan facility that we announced that we signed last night, coupled with those sources of capital and a lot of the changes that we've made, in particular the dealer payment terms, cost reductions, and so forth, we feel pretty good that we're going to be able to get everything caught up here in the next few days and weeks. So we feel like we're in a good position into bridging into more tax equity, even if it takes us longer than we expect to close more tax equity and close more bonds. you know, securitizations, we're prepared for that and taking care of the dealer. So, you know, we're not where we want to be, but we're in a heck of a lot better spot than we were at the close of the year. And we'll get things taken care of with our dealers, appreciate them and their patience with us, and looking forward to getting on a more regular pace here very shortly.

Okay, got it. Well, one last quick question if I can. What triggered the going concern language specifically for you?

Well, I think that the overall, I'll let Eric answer this, but when you look at overall the concern around, hey, you must address the corporate maturities. And so I think that's there, whether that's explicitly mentioned or not. The overall environment is terrible. I mean, it's the political environment, the capital markets, look at the equity trading off. And so That just gets everybody in a very bad mood, candidly. I'm just going to shoot it straight. And then the fourth quarter, we struggled to close some things after the election. But again, I think things are, you know, at this point in time, the contrarian traitor in these looking at this and going, OK, well, you know, the baby's been thrown out with the bathwater, as they say. And I think that, you know, now the sentiment is so negative that at some point here, we got to start getting constructive because what we do is is very fundamentally needed right now um you know the power business i've been in it for almost 30 years and for 22 of those years up until the last couple of years has been a bear market a pretty significant one and now we're seeing a lot of energy demand that everybody is well aware of from a variety of sources reshoring manufacturing ai data centers etc electrification and transportation etc so When you look at the demands for what we sell, energy service, it's going up and the equipment pricing is going to continue to go down. And now cost of capital seems to be trending off as well. So when you look at overall the picture, fundamentally, it's really good. But the perception and, yes, the election outcome and so forth and some of those headlines that we always see coming out of the politicians is not helpful and it does generate a negative sentiment. I would tell you that under the requirements that we can go and concern, I'm not sure we would ever have met. When you look at 12 months out, We always need capital. We always will need capital. We've always had that. And so we feel like we have a plan. Candidly, we've been executing on that plan. You can see that. You'll see some more announcements in the coming weeks is what we anticipate. And we feel confident we can execute on the plan. Others may feel differently. And I'll leave it at that. Eric, you want to add anything or?

Yeah, no, I appreciate the question and and we'll have our 10 K out this afternoon and it provides a little bit more detail. The simple answer is that we do the going concern analysis every single quarter and we're assessing whether or not there's substantial doubt that the technical terminology is our ability to meet our needs over the next 12 months or 15 months from the financial statement date. And John's right, we believe that having closed tax equity, a significant tax equity plan last year, resetting our dealer payment terms to match our inflows with our outflows, and then signing the loan facility that basically closed the working capital gap as we entered 2025, was a really powerful start. But we have to assess probabilities that, you know, loosely defined, I think people look at as around 70% or greater, that we'll be able to continue to meet our needs. And I think the two things that we struggled with in the analysis that the management is still confident in, but if we're just to be objective, the ability to unilaterally control the addressing of our corporate maturities mid-year is something beyond our ability to, but we are actively working in that direction. And then just the ability to unilaterally control closing additional tax equity. We have some great things in motion and are certainly confident in our ability to do so. You've seen the industry move to more asset-level protections. You saw the cash restrictions in the last fund to provide some of those protections that we believe will enhance our ability to close that. And so we're working in that direction. We'll continue to assess this every quarter, as we always have. And so if once we've passed the hurdle of addressing the corporate maturities, closing tax equity, there's certainly a chance that we could reach a different conclusion and adjust that disclosure in our 10Qs accordingly. But for now, we felt that it was the right call at the balance sheet financial statement date to put this in.

Okay. Eric, John, thank you. Best wishes for the coming months. Thank you.

Our next question comes from Brian Lee with Goldman Sachs.

Hey guys, this is Tyler Bissett on for Brian. Thanks for taking our questions. Can you start by just discussing the factors that led you to remove your guidance? You're always assuming addressing the debt this year and had been articulating that last quarter when the guidance was reiterated. So what has changed since then?

Yeah, we can't talk much about the You know, corporate debt maturities, I will say that we are obviously very focused on, particularly after getting some of these accomplishments closed out. But we're looking to tackle those corporate debt maturities sooner rather than later, and we'll leave it at that. I think at this point in time, you know, we can go back and take a look at the Q3 call and say, well, should we not have issued the guidance or continued guidance on cash gen, knowing that we would need to tackle these corporate debt maturities? Maybe so. I would just remind everybody that was right prior to the election, too. And we've had some other, you know, tension in the markets, clearly, capital markets since then. So I think really at this point in time, It's a good time to just, frankly, just flush everything out. Let's restart and let's go tackle this corporate debt and then get back at it and reset the table. I mean, why not? Just given where things are. So I think it was just the prudent thing to do and focus on taking care of the corporate debt maturities, which clearly everybody's really focused on, whether it's equity or credit. Eric, anything you want to add to that?

No, I think it was, you know, we're just assessing momentum coming into the year and we put out adjusted cost structure targets. And so I think that we want to take a holistic approach to updating guidance once we have a little bit more clarity as to how these things are coming together.

Thank you very much. And then just curious, what trends are you guys seeing with your weighted average ITC? I think you were expecting 43% in 4Q, and it sounds like you guys were close on that. So I suppose the ITC in 4Q, and I guess how are you seeing that trending so far in Q1?

It has been in the low 40s, and we do still see that continuing. The latest domestic content guidance was a little less than Ideal, but not too bad. And we're working with that. And, you know, we have some of the other couple of adders as well. And so overall, I think that's pretty close to where we thought it would be. Maybe a little bit lighter if you look at over the year. But we're seeing the manufacturers adjust pretty quickly to the change in guidance. So I suspect it's largely going to come out where we think it will. The one thing I will say on the policy side that it's heartening to see is that the politicians, whether – regardless of what party, really love the 45X and domestic manufacturing, and they should. But what goes with that is you need the ITC and the PTC to essentially have consumers buy all those wonderful pieces of equipment. And so the combination of those and the need for the combination of those is now, I think, seen by a good majority of folks in Congress and in particular the Republican side of Congress that now leads Congress. So I think that's heartening to see and it's something to take note of.

All right, thank you very much. I'll hop back in queue.

Thanks. Our next question comes from Julian Dumoulin-Smith with Jefferies.

Hey, good morning, team. Sorry to see all these challenges here. And thanks for the time. I appreciate it. Look, John, can you speak a little bit to what you are actually seeing on the ground in origination trends year to date and just, you know, how the dealer community is responding here? I mean, obviously, we've got the payment dynamics, but you know, what are the origination trends and, and then maybe speak to that in tandem. I'm thinking about what you can do on further cost rationalization, just steady the ship, if you will, but just first on what you're seeing of late and how to just benchmark a little bit, um, even year to date on, on how we should be thinking about 25.

Yeah, Julian, uh, you know, dealers have been great, uh, overall, they've been really, um, sticking with us and, and, uh, you know, these are the times that, you know, it's easy to be partners in the good times, but it's not so easy in the bad times. And they've done a really good job. And look, there are issues across the industry. I can talk to ours, but I can also see that the industry itself is definitely challenged. I mean, there's no question about that. But again, there's great unit economics. When you look at cost structure and refer to it, we've been aggressively attacking it for well over a year now. And we continue to see more opportunities to take out costs. But at some point, you just got to continue to grow the business. And we generate cash on origination, not just recurring cash flows, which we have those in times of of need, kind of the piggy bank, if you will. And now's the time of need. And that's why we did the loan facility. And it'll help us greatly, we expect anyways, on the corporate debt maturities and addressing those. So when you look at moving forward, I like the origination pace that we've been on to really kind of right-size ourselves up to the amount of capital that we have. And I think that what we'll see as we start to get these payments caught up, as I answered Phil's question in the next few days and weeks, I think the origination will actually go up quite a bit. And we've had a very conservative forecast. And So we're looking at things, you know, that wouldn't be much different than where we were last year, maybe a little bit higher. And I kind of like to see where, you know, our dealers are coming out on that. And I expect that we'll hit that internal plan. So, you know, not so bad, actually, at the end of the day.

Got it. Understood. And then just can you speak a little bit to the dynamic or thought of like a private Yulco? You talk about the piggy bank, if you will. how would you set expectations about the ability to tap those uncommitted cash flows? I mean, just what structure are you thinking right now will it take? And then how does that kind of morph into the question about dealing with some of these forthcoming maturities here?

We're open to, you know, what's best. And I think that's, you know, why we've – you know, retained JP Morgan to help us in that effort. And, you know, so they're looking at all options at this point in time, and we'll choose and choose quickly the best option. So, you know, I think that, look, these cash flows, whether they're leases and PPAs, are performing materially better than anybody thought. They've continued to do that. And on the loans, the loans are really picking up prepayment speed significantly. And I think that with this recent back off in the 10-year, in the mortgage rates, and if that continues, these prepayments could really move up in a very, very significant way. Right now, we're materially ahead of where we thought we would be by this time last year on prepayments, I mean materially, and I think that goes even higher. So the loans are performing extremely well at this point in time. So those cash flows are cash flows, and people can argue about it. I know it's difficult to see in the financial statements, But the cash is really truly there. And you can see as an example here, be able to put together a loan facility to help us on the working capital side and get through the corporate debt maturity exercise. And I think it will obviously significantly, as I said earlier, help us on the corporate debt maturity exercise as well.

All right. Thanks, John and team. All the best. Good luck.

Our next question comes from Dylan Misano with Wolf Research.

Hey, good morning, everyone. I just want to go back to the comments on kind of during the quarter, you saw lower originations kind of due to the slower financings. It kind of sounds like it's creating a bit of a negative cycle where it's harder for you to execute on growth. So I guess just how long do you expect this kind of cycle to persist and how do you kind of break out of it? Is it a a matter of kind of waiting for the tax equity market to catch up to you, or do you have to kind of throttle growth until then? Thank you.

Yeah, we-in some ways, it was intentional to do that. If you don't have the capital coming in at the pace that you expect it to, the prudent thing to do would be to slow that-the rich nation down. And so we did-we did do that. I wouldn't say it was all, you know, a grand plan on our part, but it certainly has worked out where we've been able to get to a spot where I said we've secured capital for the foreseeable future in the next few months from our plan. And so we feel pretty good about where we sit today. So I think that, you know, look, I expect that we would see an increased amount of origination, maybe significantly so over the course of the next few weeks. And it's just in time for the selling season. The fundamentals, as I mentioned earlier, with the power rates and what's going on in the U.S. electric industry are very strong, and the equipment is improving and dropping in cost continually, and it's domestic content. So, look, the unit economics are, like I've said earlier, the best the industry has ever seen. So I like where we sit, and I like where the projected growth is. Get some of our dealers taken care of, as I mentioned, and this loan facility was a big piece of that. I think it's upwards and onwards.

Yeah, Dylan, I'd just add we began the year with $540 million of tax equity capacity. And so, as John said, this term loan allows us to put funds back into the system to get the dealers moving. I think there's pent-up energy to, as he said, enter the sales season. And with capital to allow that to flow, I think we're in much better shape.

Got it, thank you. And then my follow-up, so just to kind of circle back to the upcoming corporate maturities, and I know that you can't say a whole lot here, but I'm just curious, you know, to what extent equity funding kind of has increased or decreased in terms of likelihood of needing to do that?

I don't think that's changed at all. I mean, obviously, the stock price has gone down materially, including this, you know, this morning. But it certainly hasn't changed in terms of the cash flows, the contracted cash flows that we have and that we used to originally raise the existing corporate debt. So I don't think the environment's any different at all. And maybe with these rates coming down over the last few weeks, that actually could be incremental to positive. I will say that the asset level market, as we saw in our securitizations and our competitors have saw in their securitizations, is performing very, very well. And so that's extremely helpful to look at getting a deal that makes sense for everybody on the corporate debt side.

Got it. Thank you.

Our next question comes from Ben Carlo with PAYS.

Hey, good morning, guys. Following up kind of on maybe you addressed this a little bit, but you know, in the past you've talked about asking the sales or something like that. Maybe, you know, how much of discussions have you had in the past? And I guess I know hindsight's not where you want to talk about right now, but if there was discussions before, then why not act on it then? And then, you know, do you still think that that's an option, you know, in terms of liquidity?

Hey, Ben, John. The best thing to do is to borrow against the cash flows. It was the most economic. I would say that the asset market, you know, we're still selling some loans on a forward flow basis and, you know, we're getting a margin there. But, you know, it's certainly something we look at, but to us, the numbers are pretty clear and you wanted to borrow against it. I think a lot of it's also in the servicing side of things and the importance of that. So, yeah.

know we we're again we're open to options but it was pretty clear that this uh loan facility is the the best economics great um and then just one follow-up um you know you had the the press release and i know uh you've you've been cut um uh you know the right sizing the workforce um for the environment um is there more to do on that front or would you characterize it as you kind of you guys have gone through as much as possible

We've cut a lot. It's over 30% from our high, and we've grown the customer base significantly in that timeframe and continue to grow the customer base. So I think we are getting to a point where there's diminishing returns, certainly more cuts, but we're going to constantly look for them. I think on the capital market side, the cost of closing transactions and so forth, I think we could especially as we scale up the larger transactions that we have in front of us, I think that we can do more cutting there. And those are material in size as far as our expenditures. So I think that that's probably more of the area that we can chop the wood, so to speak.

Okay, great. Thanks, guys.

Good luck.

Thank you.

The next question comes from Praneet Satish with Sanova.

With Wells Fargo, but thanks. I'll just ask both of my questions together. So you kind of mentioned in your comments the latest rules on domestic content were less than ideal. Do you see the new rules impacting your sourcing decisions for batteries, inverters, and modules? And then do you feel like you need to safe harbor products to lock in the existing domestic content rules before the April 15th cutoff? And then finally, if so, how much capacity do you have to do safe harboring? Thanks.

Yeah, on the safe harboring side, we could do that. We're taking a look at it. You know, I think that, again, the manufacturers have been fairly nimble. And so I think when I say less than ideal, we'd love to see some consistency. And I know the manufacturers would. They make plans, and then suddenly it changes. So we've got to see some consistency there. But they have been very agile and adaptive. So let's see. where all that comes out. But I think overall, again, where our domestic content percentage on the ITC is coming out is going to be fairly close to what we expected previously. I don't know, Paul, run supply chain, any comments you want to make there?

I think I'm just really proud of the fact that we took a stand and we brought the market and the industry really with us. Our partners and our OEMs have all been really supportive They've all moved with us very quickly. They've changed plans. They've updated timelines. So we're all marching in the right direction. I'm also really proud of the fact that those actions really brought jobs back to the U.S. So we have a lot to be proud for there, and I'm looking forward to seeing where we end up.

All right. Thanks, guys. Good luck.

The next question, it comes from my neighbor. Hey, morning.

Thanks for the questions here. Just on the residual cash flows you have, I think you're using some of that against the $185 million loan. I just want to understand how much is available for future loans or for acquisitions for you?

Well, I think we'd be mostly focused on addressing the corporate debt maturities. And so I don't think it would be looking at adding any corporate-level capital like we did last year for the first time in the company's history. So I think we're at a – look, we're a pretty good size company with a very large cash flow base. And those cash flows are underlevered. compared to really almost anybody in the space, whether it's resi or utility scale is what we've been told. So we've got pretty good assets, really good assets, and we're looking to focus that on addressing the corporate debt maturities. Eric, you want to comment any more on that?

No, I think holistically, you know, the adder's provide a significant opportunity to increase cash flow. We're working to capitalize on that, as we talked about. We've adjusted our cost structure. And so I think that as we enter the year, we're still focused on that asset level cash flow and don't see the need to look beyond that.

But just in terms of something like last quarter, you mentioned, I think, $135 million of residual cash flows or levered cash flows exiting 24. Do you have a sense of how much or could you provide a sense of how much of that is used against the term loan?

Oh, well, it is comprised of emission credits, MSAP, service fees, and the residuals in the emission credits and MSA fees are not a part of this facility. So there's still quite a bit of cash. And we see increasing amounts of levered cash flows moving forward, including this year. That number keeps bumping up, frankly. So that's due to the asset level performance increasingly is just better than expected. And as more tax equity funds that we've had in our history flip, And as the prepayment speed continues to gain, to accelerate, I think all that pertains very well for the levered cash flows.

And just separately, are there any other maturities due in Q1 or Q2? I'm thinking of the revolvers, ESOP, or other facilities.

We have the loan warehouse, but that's being addressed through doing a securitization. And loans are a very small part of our business. I think at this point, solar loans are less than 2% of our origination. So it's something we just do for our dealers. And we'll probably, frankly, just get into selling those along with the other loans that we're doing a forward flow on. Got it.

Appreciate it. Thanks. Thanks, Mahit.

And our final question comes from William Griffin with UBS.

Thanks very much. Just a quick one here, but on the going concern notice, do you think that could have an impact on customer willingness to sign new lease contracts? Just given they're entering, need to be comfortable entering, you know, a 20 plus year contract.

with you folks and if so what steps could you take to potentially mitigate that impact this john i i don't think so um i think that this is a an accounting term that candidly i'm not sure how many people really understand you know what that is um we have a solid plan as eric pointed out uh we're executing on that plan it's not that we're going to execute we're executing on it we feel very good about it and frankly we'd have a different opinion um in terms of our outlook on the world of Sunova. And I think what customers really care about is great service, and we're doing that. And so my commitment is that we will not degrade our service just because that would save more and more money. I know there's some concern about that, but that is not the case. We want to make sure these assets are performing assets, engender consumers to be happy, happy consumers are paying consumers, and Paying consumers generate great asset-level returns and cash flows, and no company is more dependent on those asset-level returns and cash flows, obviously, than Sanova. So it's in our best interest to deliver great service to customers, and at the end of the day, that's what they really care about. And I think that we have seen thus far, despite all challenges and so forth and negative headlines in the press with regards to our industry and the election outcome and all this other stuff, that we have not seen a huge drop in demand from consumers. If anything, as these power bills keep getting higher and the outages keep getting more frequent, we're seeing more and more folks turn and look for a different solution that only our industry can provide against the monopolies. So, again, I see fundamentally the market's great. Capital markets, not so great, but eventually the capital markets will connect up with the fundamentals, and that is that we're delivering a better energy service at a better price.

All right. Thanks, John. Good luck, everybody, in the months ahead of you. Thank you.

So that was our final questions, and now we'll hand back over to John Berger for any final remarks.

Thank you. It's a challenging time for our industry and the capital markets, but where it really counts in the marketplace, we're seeing a huge opportunity to deliver a better energy service at a better price. We have a plan to get back to success and we expect to continue to execute on this plan and achieve that success, we look forward to sharing more with you in the coming earnings call, thank you for joining us this morning bye.

Thank you everyone have a nice day, you may now disconnect.