Sunnova misses on Q3 earnings, posts sunny forecast for 2024

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Sunnova Energy International posted its Q3, 2023 earnings, noting a quarterly loss of $0.53 per share, a higher loss than the consensus estimate of a loss of $0.34 per share. Losses improved from Q2, which totaled a loss of $0.74 per share.

Despite coming short on EPS, the company posted revenues of $198.4 million, narrowly exceeding estimates. The quarterly revenues represents an increase from last year’s $149.4 million in Q3 last year.

Sunnova’s share have bled over 50% since the beginning of the year, struggling in a year when the S&P 500 is up over 10%. Residential solar stocks have been hammered by regulatory changes and high interest rates in 2023.

Despite the quarterly losses, Sunnova’s stock popped 15% following the earnings call. Management has issued a strong forecast for 2024, despite the headwinds it faces.

For 2024, the company expects customer additions to reach between 185,000 and 195,000, growing from this year’s expected count of 135,000 to 145,000. EBITDA is expected to land between $350 million and $450 million for 2024, up from $235 million to $255 million this year.

The company said it is among the pioneers embracing the newly introduced transferred credit program under the Inflation Reduction Act. In the third quarter, the company entered into a tax credit transfer transaction involving the sale of up to $145 million in investment tax credits.

Sunnova said maintaining a strong focus on liquidity, increasing operating leverage and profitability, and growing cash flow are primary objectives. As of September 30, 2023, Sunnova had total cash of $725.1 million, including restricted and unrestricted cash.

“As we navigate this higher interest rate and lower liquidity environment, it’s essential to recognize the unique opportunity that arises from the convergence of declining solar equipment prices and the steady uptick in utility rates, creating a distinct wedge of value for our customers,” said William J. Berger, chief executive officer, Sunnova. “This same wedge of value enables us to continue to increase our pricing power, which is reflected in our increased fully burdened unlevered return.”

Berger said the company has taken on multiple initiatives to position Sunnova for a prolonged period of challenging macroeconomic conditions. It will make a concerted effect to reduce working capital demands, trim operating expenses, and integrate software and AI to improve efficiencies.

“We are confident we will establish a solid foundation for our enduring success in this elevated interest rate environment,” said Berger.

Last month, Sunnova announced it secured a $3 billion partial loan guarantee from the Department of Energy Loans Programs Office for its Project Hestia. The project is designed to increase access to solar and virtual power plant services in low-income communities. The company will receive indirect and partially guaranteed cash flows for the loans associated with these customer accounts.

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