Sunnova Energy International Inc. (NYSE: NOVA) reported Q4 EPS of ($0.21), $0.01 worse than the analyst estimate of ($0.20). Revenue for the quarter came in at $33.6 million versus the consensus estimate of $34.68 million.

• Sunnova's total number of customers was 78,600 as of December 31, 2019, an increase of 18,300 compared to December 31, 2018.
• Revenue increased to $131.6 million, or by $27.2 million, for the year ended December 31, 2019 compared to the year ended December 31, 2018. This increase in revenues is primarily the result of an increase in the number of customers served.
• Total operating expense, net increased to $153.8 million, or by $35.7 million, in the year ended December 31, 2019 compared to the year ended December 31, 2018. This increase is the result of an increase in the number of customers served, greater depreciation expense, and higher period-over-period general and administrative expenses due to costs related to our initial public offering and the hiring of personnel to support growth.
• Adjusted Operating Expense increased to $83.3 million, or by $20.0 million, in the year ended December 31, 2019 compared to the year ended December 31, 2018. This increase is the result of an increase in the number of customers served.
• Sunnova incurred a net loss of $133.4 million for the year ended December 31, 2019 compared to a net loss of $68.4 million for the year ended December 31, 2018. This larger net loss was primarily driven by the factors described above as well as higher net interest expense, including higher realized and unrealized net losses on interest rate swaps.
• Adjusted EBITDA was $48.3 million for the year ended December 31, 2019 compared to $41.1 million for the year ended December 31, 2018. This increase was due to customer growth increasing at a faster rate than expenses.
• Customer principal (net of amounts recorded in revenue) and interest payments received from solar loans increased to $20.0 million and $11.6 million, respectively, for the year ended December 31, 2019, or by $13.2 million and $5.4 million, respectively, compared to the year ended December 31, 2018 due to a larger customer loan portfolio.
• Net cash used in operating activities was $170.3 million in the year ended December 31, 2019 compared to $11.6 million in the year ended December 31, 2018. This increase was due primarily to higher inventory and prepaid inventory purchases under our safe harbor credit facility, additional higher inventory purchases to meet growing demand, an increased use of working capital and an increase in the amount of exclusivity and other bonus arrangement payments made to certain dealers that are inclusive in our asset level economics during the year ended December 31, 2019 compared to year ended December 31, 2018.
• Adjusted Operating Cash Flow was relatively unchanged at $8.3 million in the year ended December 31, 2019 compared to $8.4 million for the year ended December 31, 2018.

"The past twelve months were an exciting period of disruption for Sunnova as we became the industry leader in growth rate. In 2019, we increased our customer base 30 percent, saw escalating growth in our contracted customer value, launched new product offerings and entered new markets, saw a surge in storage attachment rates, continued to build out our differentiated dealer base, and met or exceeded our 2019 operational and financial targets," said William J. (John) Berger, Chief Executive Officer of Sunnova. "In addition, we closed on a number of important financial transactions, including our IPO, new tax equity facilities, a new credit facility for our leases and PPAs, a comprehensive amendment to the credit facility for our loan products, and a safe harbor credit facility to fund the purchase of inventory to qualify for a 30 percent federal investment tax credit. In addition, we opened 2020 with the closing of a $412.5 million asset-backed securitization at some of the strongest terms the industry has seen, which is a testament to our business model and focus on customer service."

Berger added, "With higher than expected growth in late 2019, which has continued into the new year, our outlook continues to improve, supporting an increase in our 2020 guidance. We now foresee our asset base growing at a higher rate than projected in the third quarter of 2019 while we maintain our focus on maximizing recurring cash flows from operations. In addition to overall customer growth, we have also seen our Sunnova SunSafe™ solar + storage sales and attachment rates increase at a faster pace than expected as consumers seek out more resilient sources of energy to combat severe weather events and unreliable electricity grids. Solar + storage has become an integral component of our business strategy and Sunnova SunSafe™ is now available in 16 markets. The increased pace of solar + storage sales is contributing to our growth and our customers' ability to power energy independence.

"We are proud of what we accomplished in 2019; these accomplishments have given us additional momentum to continue to produce strong growth, deliver superior energy service to our customers, and achieve our 2020 operational and financial targets."

2020 Guidance

Management announces updates to 2020 full-year guidance as follows:

• Increase guidance on customer additions from 23,000 - 27,500 to 28,000 - 30,000;
• Increase guidance on Adjusted EBITDA from $55 million - $60 million to $58 million - $62 million;
• Increase guidance on customer principal payments received from solar loans, net of amounts recorded in revenue from $30 million - $35 million to $32 million - $36 million;
• Increase guidance on customer interest payments received from solar loans from $15 million - $20 million to $17 million - $21 million; and
• Increase guidance on Adjusted Operating Cash Flow from $5 million - $15 million to $10 million - $20 million

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