Sunnova sets multiyear growth strategy, shrugs off supply chain problems

As the global solar industry struggles to deal with inflation and snarled supply chains, Sunnova Energy International Inc. is undaunted, forecasting big increases in customer growth and earnings in the coming years.

On Oct. 27, the residential energy provider reaffirmed 2021 guidance for organic customer growth of at least 90% and an increase in adjusted EBITDA of at least 34%. Sunnova Chairman, President and CEO John Berger unveiled even more ambitious projections for the next two years Oct. 28, telling analysts that he expects to double the company's total customer count by the end of 2023 and triple adjusted EBITDA along with the principle and interest it collects on solar loans.

In addition to signing up more new customers, Sunnova's plans hinge on expanding the number of services that each customer buys.

So far in 2021, for example, a shortage of batteries has kept Sunnova from upselling existing customers on energy storage systems, Berger said on an earnings call, but "that is materially changing now" as more equipment becomes available and competition among manufacturers increases.

Sunnova said Oct. 26 that it is partnering with ChargePoint Holdings Inc. to offer a bundled service of solar power and electric vehicle charging. More partnerships are "imminent," Berger said.

"I do expect to beat this growth profile that we laid out, and it's already very, very aggressive," Berger said Oct. 28. "So I would expect as you move forward in [2023], we'll see even bigger increases" in cash flow and earnings.

Sunnova reported a third-quarter net loss of $25.9 million, or a loss of 25 cents per share, compared to a year-earlier loss of $73.3 million, or a loss of 73 cents per share. Analysts expected a third-quarter loss of 24 cents per share, according to the S&P Capital IQ consensus mean estimate.

Revenues increased by 37% in the third quarter to $68.9 million from $50.2 million a year earlier.

The company added 14,300 customers during the period, bringing its total customer count to 176,900 at the end of September.

Sunnova reaffirmed guidance for customer additions in 2021 of between 55,000 and 58,000, excluding its acquisition of SunStreet, compared to additions of approximately 29,000 in 2020. It expects 2021 adjusted EBITDA in the range of $80 million to $85 million, compared to $59.6 million in 2020.

The company said it expects to add at least 83,000 customers in 2022 and book adjusted EBITDA of at least $117 million.

Sunnova shares were up 5.75% at $44.90 in midday trading Oct. 28. Like other companies in the renewable energy industry, Sunnova has seen its stock price underperform the broader market in 2021, which analysts say is in part a reflection of investor concerns that supply chain disruptions and commodities inflation will keep companies from completing projects profitably and on schedule.

While solar panel supplies are tight right now, Sunnova is sitting on some inventory "just in case our dealers foot-fault on some of the deliveries that they were expecting or should have procured," Berger said. "So we feel pretty good about the panel situation."

Supplies of inverters and energy storage systems are improving, Berger said, and increased competition will likely limit manufacturers' ability to pass on higher costs.