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Vivint Solar Reports Second Quarter 2018 Results

LEHI, Utah, Aug. 7, 2018 -- Vivint Solar (NYSE: VSLR), today announced financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Operating Highlights

Key operating and development highlights include:

  • MWs Booked of approximately 64 MWs for the quarter.
  • MWs Installed of approximately 47 MWs for the quarter. Total cumulative MWs installed were approximately 952 MWs.
  • Installations were 6,678 for the quarter. Cumulative installations were 139,321.
  • Estimated Retained Value increased by approximately $112 million during the quarter to approximately $1.8 billion. Estimated Retained Value per Watt at quarter end was $2.06.
  • Cost per Watt was $3.11, a decrease from $3.15 in the first quarter of 2018 and an increase from $2.88 in the second quarter of 2017.

Financing Activity

As of June 30, 2018, the company had $375 million in undrawn capacity in the aggregation facility and approximately 62 MWs of available installation capacity remaining in its tax equity funds. Subsequent to quarter end, the company closed a new tax equity partnership with a $50 million commitment that will fund the installation of approximately 32 MWs with a new tax equity investor. In addition, the company entered into a project financing transaction with a total commitment of up to $327 million for 95 MWs of new residential installations.

Summary Second Quarter 2018 Financial Results

$ amounts in millions, except per share data

                 
 

Three Months Ended June 30,

 

2018

   

2017

   

YoY

Revenue:

                 

     Operating leases and incentives

$

54.8

   

$

43.4

   

up 26%

     Solar energy system and product sales

 

26.0

     

29.6

   

down 12%

Total Revenue

 

80.8

     

73.0

   

up 11%

Cost of revenue:

                 

     Operating leases and incentives

 

41.4

     

33.8

   

up 23%

     Solar energy system and product sales

 

19.0

     

22.8

   

down 17%

Total cost of revenue

 

60.4

     

56.6

   

up 7%

Gross profit

 

20.4

     

16.4

   

up 25%

Loss from Operations

 

(16.1)

     

(14.3)

   

down 12%

Net income

$

18.1

   

$

5.0

   

up 264%

Net income per diluted share

$

0.15

   

$

0.04

   

up 275%

Non-GAAP net loss per share

$

(0.50)

   

$

(0.33)

   

down 52%

Note: Totals may not sum due to rounding.

 

Guidance for the Third Quarter 2018

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements supersede all prior statements regarding projected 2018 financial results.

For the third quarter of 2018, Vivint Solar expects:

  • MW Installed: 51 to 54 MWs
  • Cost per Watt: $3.15 - $3.23

Earnings Conference Call

Vivint Solar will host an investor conference call and live webcast today, Tuesday, August 7, 2018, at 5:00 p.m. ET to discuss these financial results. To access the conference call, dial 1.866.393.4306 or 1.734.385.2616 for international callers. The conference ID is 118 1885. A listen-only webcast will be accessible on the investor relations page of the company's website at investors.vivintsolar.com/ and will be archived and available on this site until October 31, 2018. Participants should follow the instructions provided on the website to download and install the necessary audio applications in advance of the call. In addition, the earnings presentation slides will be available on the investor relations page of the site by 5:00 p.m. ET along with this press release and the financial information discussed on today's conference call at investors.vivintsolar.com/.

About Vivint Solar

Vivint Solar is a leading full-service residential solar provider in the United States. With Vivint Solar, customers can power their homes with clean, renewable energy and typically achieve significant financial savings over time. Offering integrated residential solar solutions for the entire customer lifecycle, Vivint Solar designs and installs the solar energy systems for its customers, and offers monitoring and maintenance services. In addition to being able to purchase a solar energy system outright, customers may benefit from Vivint Solar's affordable, flexible financing options, power purchase agreements, or lease agreements, where available. For more information, visit www.vivintsolar.com or follow @VivintSolar on Twitter.

Note on Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements regarding Vivint Solar's guidance for Megawatts Installed and Cost per Watt, installation capacity remaining in tax equity funds, growth prospects, and operating and financial results, such as estimates of nominal contracted payments remaining, estimated retained value, and estimated retained value per watt, including the assumptions related to the calculation of the foregoing metrics.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Forward-looking statements should not be read as a guarantee of future performance or results, and they will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. These statements are based on current expectations and assumptions regarding future events and business performance as of the date of this press release, and they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including but not limited to: the availability of additional financing on acceptable terms; changes in the retail price of traditional utility generated electricity; changes in electric utility policies and regulations; the availability of rebates, tax credits and other incentives, including solar renewable energy certificates, or SRECs, and other federal and state incentives; regulations and policies related to net metering; changes in regulations, tariffs and other trade barriers and tax policy affecting us and our industry; our ability to manage growth, product offering mix, and costs effectively, including attracting, training and retaining sales personnel and solar energy system installers; the availability and price of solar panels and other system components, the assumptions employed in calculating our operating metrics may be inaccurate; and such other risks identified in the registration statements and reports that Vivint Solar files with the U.S. Securities and Exchange Commission, or SEC, from time to time. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in those statements will be achieved or will occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Except as required by law, Vivint Solar does not undertake and expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. You should read the documents Vivint Solar has filed with the SEC for more complete information about the company. These documents are available on both the EDGAR section of the SEC's website at www.sec.gov and the Investor Relations section of the company's website at investors.vivintsolar.com/.

 

Vivint Solar, Inc.

Condensed Consolidated Unaudited Balance Sheets

(In thousands)

             
 

June 30,

   

December 31,

 

2018

   

2017

ASSETS

           

Current assets:

           

Cash and cash equivalents

$

174,006

   

$

108,452

Accounts receivable, net

 

24,354

     

19,665

Inventories

 

13,135

     

22,597

Prepaid expenses and other current assets

 

25,620

     

34,049

Total current assets

 

237,115

     

184,763

Restricted cash and cash equivalents

 

66,694

     

46,486

Solar energy systems, net

 

1,784,800

     

1,673,532

Property and equipment, net

 

12,018

     

15,078

Intangible assets, net

 

595

     

862

Prepaid tax asset, net

 

     

505,883

Other non-current assets, net

 

28,064

     

37,325

TOTAL ASSETS

$

2,129,286

   

$

2,463,929

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY

           

Current liabilities:

           

Accounts payable

$

44,435

   

$

40,736

Accounts payable—related party

 

73

     

163

Distributions payable to non-controlling interests and redeemable non-controlling interests

 

10,114

     

16,437

Accrued compensation

 

18,015

     

20,992

Current portion of long-term debt

 

10,018

     

13,585

Current portion of deferred revenue

 

22,108

     

41,846

Current portion of capital lease obligation

 

2,758

     

4,166

Accrued and other current liabilities

 

26,090

     

29,675

Total current liabilities

 

133,611

     

167,600

Long-term debt, net of current portion

 

1,110,044

     

925,964

Deferred revenue, net of current portion

 

12,027

     

29,200

Capital lease obligation, net of current portion

 

957

     

1,599

Deferred tax liability, net

 

385,907

     

342,382

Other non-current liabilities

 

16,870

     

13,674

Total liabilities

 

1,659,416

     

1,480,419

Commitments and contingencies

           

Redeemable non-controlling interests

 

122,647

     

122,444

Stockholders' equity:

           

Common stock

 

1,185

     

1,151

Additional paid-in capital

 

567,372

     

559,788

Accumulated other comprehensive (loss) income

 

(3,185)

     

6,905

(Accumulated deficit) retained earnings

 

(258,899)

     

213,107

Total stockholders' equity

 

306,473

     

780,951

Non-controlling interests

 

40,750

     

80,115

Total equity

 

347,223

     

861,066

TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY

$

2,129,286

   

$

2,463,929

 

Vivint Solar, Inc.

Condensed Consolidated Unaudited Statements of Operations

(In thousands, except per share data)

                             
 

Three Months Ended

   

Six Months Ended

 

June 30,

   

June 30,

 

2018

   

2017

   

2018

   

2017

Revenue:

                           

Operating leases and incentives

$

54,765

   

$

43,413

   

$

85,879

   

$

73,802

Solar energy system and product sales

 

26,033

     

29,582

     

63,169

     

52,307

Total revenue

 

80,798

     

72,995

     

149,048

     

126,109

Cost of revenue:

                           

Cost of revenue—operating leases and incentives

 

41,366

     

33,763

     

80,053

     

68,833

Cost of revenue—solar energy system and product sales

 

18,990

     

22,831

     

45,035

     

41,496

Total cost of revenue

 

60,356

     

56,594

     

125,088

     

110,329

Gross profit

 

20,442

     

16,401

     

23,960

     

15,780

Operating expenses:

                           

Sales and marketing

 

14,033

     

9,411

     

25,158

     

18,229

Research and development

 

511

     

895

     

997

     

1,791

General and administrative

 

21,879

     

20,301

     

41,730

     

40,880

Amortization of intangible assets

 

130

     

139

     

266

     

279

Total operating expenses

 

36,553

     

30,746

     

68,151

     

61,179

Loss from operations

 

(16,111)

     

(14,345)

     

(44,191)

     

(45,399)

Interest expense

 

11,336

     

16,838

     

28,258

     

31,559

Other (income) expense, net

 

(4,109)

     

715

     

(6,370)

     

991

Loss before income taxes

 

(23,338)

     

(31,898)

     

(66,079)

     

(77,949)

Income tax expense

 

35,352

     

5,156

     

53,995

     

14,557

Net loss

 

(58,690)

     

(37,054)

     

(120,074)

     

(92,506)

Net loss attributable to non-controlling interests and redeemable non-controlling interests

 

(76,806)

     

(42,034)

     

(125,214)

     

(110,778)

Net income available to common stockholders

$

18,116

   

$

4,980

   

$

5,140

   

$

18,272

Net income available per share to common stockholders:

                           

Basic

$

0.16

   

$

0.04

   

$

0.04

   

$

0.16

Diluted

$

0.15

   

$

0.04

   

$

0.04

   

$

0.16

Weighted-average shares used in computing net income available per share to common stockholders:

                           

Basic

 

116,650

     

112,351

     

115,907

     

111,562

Diluted

 

121,753

     

117,570

     

120,969

     

116,988

 

Vivint Solar, Inc.

Condensed Consolidated Unaudited Statements of Cash Flows

(In thousands)

                             
 

Three Months Ended

   

Six Months Ended

 

June 30,

   

June 30,

 

2018

   

2017

   

2018

   

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

                           

Net loss

$

(58,690)

   

$

(37,054)

   

$

(120,074)

   

$

(92,506)

Adjustments to reconcile net loss to net cash used in operating activities:

                           

Depreciation and amortization

 

16,867

     

14,877

     

33,174

     

29,039

Amortization of intangible assets

 

130

     

139

     

266

     

279

Deferred income taxes

 

35,204

     

29,130

     

54,173

     

65,255

Stock-based compensation

 

3,812

     

3,330

     

6,781

     

7,252

Loss on solar energy systems and property and equipment

 

2,455

     

1,741

     

3,025

     

3,766

Non-cash interest and other expense

 

11,649

     

3,185

     

13,656

     

5,311

Reduction in lease pass-through financing obligation

 

(1,477)

     

(1,346)

     

(2,164)

     

(1,995)

Losses (gains) on interest rate swaps

 

983

     

717

     

(1,279)

     

993

Changes in operating assets and liabilities:

                           

Accounts receivable, net

 

(6,118)

     

(4,534)

     

(4,689)

     

(9,015)

Inventories

 

2,655

     

(2,741)

     

9,462

     

(4,856)

Prepaid expenses and other current assets

 

(3,470)

     

(6,528)

     

8,276

     

21,373

Prepaid tax asset, net

 

     

(18,925)

     

     

(43,106)

Other non-current assets, net

 

(6,998)

     

(2,164)

     

(6,613)

     

(6,025)

Accounts payable

 

1,524

     

(756)

     

1,898

     

(115)

Accrued compensation

 

22

     

(259)

     

(2,329)

     

(2,022)

Deferred revenue

 

(1,431)

     

4,560

     

(10,514)

     

6,669

Accrued and other liabilities

 

(1,812)

     

(194)

     

(1,915)

     

6,279

Net cash used in operating activities

 

(4,695)

     

(16,822)

     

(18,866)

     

(13,424)

CASH FLOWS FROM INVESTING ACTIVITIES:

                           

Payments for the cost of solar energy systems

 

(74,039)

     

(69,893)

     

(146,247)

     

(145,033)

Payments for property and equipment

 

(25)

     

(355)

     

(65)

     

(633)

Proceeds from disposals of solar energy systems and property and equipment

 

1,068

     

929

     

1,843

     

1,100

Net cash used in investing activities

 

(72,996)

     

(69,319)

     

(144,469)

     

(144,566)

CASH FLOWS FROM FINANCING ACTIVITIES:

                           

Proceeds from investment by non-controlling interests and redeemable non-controlling interests

 

65,516

     

56,954

     

108,287

     

115,514

Distributions paid to non-controlling interests and redeemable non-controlling interests

 

(10,436)

     

(7,453)

     

(28,558)

     

(22,480)

Proceeds from long-term debt

 

836,000

     

20,000

     

876,000

     

273,750

Payments on long-term debt

 

(681,572)

     

(18,145)

     

(689,320)

     

(159,304)

Payments for debt issuance and deferred offering costs

 

(17,715)

     

(2,980)

     

(17,715)

     

(13,410)

Proceeds from lease pass-through financing obligation

 

645

     

635

     

1,497

     

1,487

Principal payments on capital lease obligations

 

(916)

     

(1,147)

     

(1,931)

     

(2,343)

Proceeds from issuance of common stock

 

630

     

86

     

837

     

233

Net cash provided by financing activities

 

192,152

     

47,950

     

249,097

     

193,447

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS

 

114,461

     

(38,191)

     

85,762

     

35,457

CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS—Beginning of period

 

126,239

     

197,087

     

154,938

     

123,439

CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS—End of period

$

240,700

   

$

158,896

   

$

240,700

   

$

158,896

 

Vivint Solar, Inc.

Key Operating Metrics

                     
                     
 

Three Months Ended

 

June 30,

   

March 31,

   

June 30,

 

2018

   

2018

   

2017

                     

 Installations

 

6,678

     

5,813

     

7,108

 Megawatts installed

 

47.0

     

40.4

     

46.9

 Cumulative installations

 

139,321

     

132,643

     

113,287

 Cumulative megawatts installed

 

952.3

     

905.3

     

773.8

 Estimated nominal contracted payments remaining (in millions)

$

3,267.3

   

$

3,128.2

   

$

2,802.4

      Estimated retained value under energy contracts (in millions)

$

1,379.8

   

$

1,295.7

   

$

1,121.6

      Estimated retained value of renewal (in millions)

$

424.7

   

$

396.6

   

$

339.0

 Estimated retained value (in millions)

$

1,804.5

   

$

1,692.3

   

$

1,460.6

 Estimated retained value per watt

$

2.06

   

$

2.02

   

$

1.98

 

Sensitivity Analysis for Retained Value

The following table provides quantitative sensitivity analysis of our estimate of retained value of solar energy systems under contracts as of June 30, 2018, including both the contracted and estimated renewal portion, at a range of discount rates (retained value amounts in millions):

 

4%

 

6%

 

8%

 Estimated retained value under energy contracts

$

1,636.5

 

$

1,379.8

 

$

1,177.5

 Estimated retained value of renewal

 

658.4

   

424.7

   

277.0

 Total estimated retained value

$

2,294.9

 

$

1,804.5

 

$

1,454.5

 

Non-GAAP Earnings per Share (EPS) Before Non-controlling Interests

We report GAAP EPS, which is based upon net income available to common stockholders. We also report non-GAAP EPS. The difference between GAAP EPS and non-GAAP EPS is that non-GAAP EPS is based on net loss, which excludes net loss attributable to non-controlling interests and redeemable non-controlling interests. As we are in a net loss position for all periods reported, potentially issuable shares are excluded from the diluted EPS calculation since the effect would be antidilutive. Therefore, basic and diluted non-GAAP EPS are the same in each period presented.

Under GAAP accounting, we report net loss attributable to non-controlling interests and redeemable non-controlling interests to reflect our joint venture fund investors' allocable share in the results of these joint venture investment funds. Net loss attributable to non-controlling interests and redeemable non-controlling interests is calculated based primarily on the hypothetical liquidation at book value, or HLBV, method, which assumes that the joint venture funds are liquidated at the reporting date, even though liquidation may or may not ever occur. Additionally, the returns that will be allocated to the investors over the expected terms of the investment funds may differ significantly from the amounts calculated under the HLBV method. Accordingly, we also report non-GAAP EPS based on our losses before net loss attributable to non-controlling interests and redeemable non-controlling interests per share, which we view as a better measure of our operating performance.  Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

According to this definition, the non-GAAP loss before the allocation of loss attributable to non-controlling interests and redeemable non-controlling interests per share was ($0.50) and ($1.04) for the three and six months ended June 30, 2018.

 

Vivint Solar, Inc.

Reconciliation from GAAP EPS to Non-GAAP EPS

(In thousands, except per share data)

                             
                             
 

Three Months Ended

 

June 30, 2018

   

June 30, 2017

 

Net Loss

   

EPS

   

Net Loss

   

EPS

Net income available to common stockholders

$

18,116

   

$

0.16

   

$

4,980

   

$

0.04

Net loss attributable to non-controlling interests and redeemable non-controlling interests

 

(76,806)

     

(0.66)

     

(42,034)

     

(0.37)

Non-GAAP net loss

$

(58,690)

   

$

(0.50)

   

$

(37,054)

   

$

(0.33)

Weighted-average shares used in computing net loss per share

         

116,650

             

112,351

   
   
 

Six Months Ended

 

June 30, 2018

   

June 30, 2017

 

Net Loss

   

EPS

   

Net Loss

   

EPS

Net income available to common stockholders

$

5,140

   

$

0.04

   

$

18,272

   

$

0.16

Net loss attributable to non-controlling interests and redeemable non-controlling interests

 

(125,214)

   

$

(1.08)

     

(110,778)

   

$

(0.99)

Non-GAAP net loss

$

(120,074)

   

$

(1.04)

   

$

(92,506)

   

$

(0.83)

Weighted-average shares used in computing net loss per share:

         

115,907

             

111,562

 

 

Glossary of Definitions

"Installations" represents the number of solar energy systems installed on customers' premises.

"MWs or megawatts" represents the DC nameplate megawatt production capacity.

"MW Booked" represents the aggregate megawatt nameplate capacity of solar energy systems that were permitted during the period net of cancellations in the period.

"MW Installed" represents the aggregate megawatt nameplate capacity of solar energy systems for which panels, inverters, and mounting and racking hardware have been installed on customer premises in the period.

"Nominal Contracted Payments Remaining" equals the sum of the remaining cash payments that Vivint Solar's customers are expected to pay over the term of their agreements for systems installed as of the measurement date. For a power purchase agreement, Vivint Solar multiplies the contract price per kilowatt-hour by the estimated annual energy output of the associated solar energy system to determine the estimated nominal contracted payments. For a customer lease, Vivint Solar includes the monthly fees and upfront fee, if any, as set forth in the lease.

"Retained Value" represents the net cash flows, discounted at 6%, that Vivint Solar expects to receive from customers pursuant to long-term customer contracts net of estimated cash distributions to fund investors and estimated operating expenses for systems installed as of the measurement date. For purposes of the calculation, Vivint Solar aggregates the estimated retained value from the solar energy systems during the typical 20-year term of Vivint Solar's contracts, which Vivint Solar refers to as estimated retained value under energy contracts, and the estimated retained value associated with an assumed 10-year renewal term following the expiration of the initial contract term, which Vivint Solar refers to as estimated retained value of renewal. To calculate estimated retained value of renewal, Vivint Solar assumes all contracts are renewed at 90% of the contractual price in effect at the expiration of the initial term.

"Retained Value per Watt" is calculated by dividing the estimated retained value as of the measurement date by the aggregate nameplate capacity of solar energy systems under long-term customer contracts that have been installed as of such date, and is subject to the same assumptions and uncertainties as estimated retained value.

"Undeployed Tax Equity Financing Capacity" represents a forecast of the amount of megawatts that can be deployed based on committed available tax equity financing for energy contracts.

 

Investor Contact:
Rob Kain 
855-842-1844
ir@vivintsolar.com

 

Press Contact:
Helen Langan
385-202-6577
pr@vivintsolar.com