Good morning, and welcome to Sunnova's Second Quarter 2022 Earnings Conference Call. Today’s call is being recorded. And we have allocated an hour for prepared remarks and questions-and- answers. At this time, I would now like to turn the conference over to Rodney McMahan, Vice President, Investor Relations of Sunnova. Thank you. Please go ahead, sir..

Thank you, operator. Before we begin, please note during today's call we will make forward-looking statements that are subject to various risks and uncertainties that are described in our slide presentation, earnings press release, and our 2021 Form 10-K.

Please see those documents for additional information regarding those factors that may affect these forward-looking statements. Also, we will reference certain non-GAAP measures during today's call.

Please refer to the appendix of our presentation, as well as the earnings press release for the appropriate GAAP to non-GAAP reconciliations and cautionary disclosures. On the call today are John Berger, Sunnova's Chairman and Chief Executive Officer and Robert Lane, Executive Vice President and Chief Financial Officer.

I will now turn the call over to John..

Good morning and thank you for joining us. Sunnova delivered solid second quarter results as we delivered where it counts the most. Growth was strong in revenue and adjusted EBITDA. We grew our quarterly fully burdened unlevered return by 50 basis points from the prior quarter.

And we increased our net contracted customer value or NCCV during what is typically a light quarter for NCCV growth. Additionally, we saw both our adjusted operating expense on a per customer basis and our customer default and delinquency rates decline.

However, we did fall short of our expectations in customer additions, primarily due to delays in receiving permission to operate or PTO from some utilities that we believe were stressed due to high industry growth.

We also collected less than expected unscheduled principal payments on our solar loans, as the economic recession and the sudden spike in mortgage rates led to a significant decline in mortgage and mortgage refinancing activities.

While missing these targets was frustrating, investors should consider these shortfalls to be timing driven, as we still expect to hit our 2022 customer additions target with a more back-end weighting and we will ultimately still collect the principal owed to us over the terms of the solar loans.

More importantly, we are able to reaffirm our 2022 guidance, as well as our intermediate term major metric growth plan, the Triple-Double Triple Plan due to the following reasons. The large backlog of customers we have under contract, but not yet placed in service.

Sunnova had its best quarter for sales in company history in the second quarter, creating a significant backlog of customers, which we expect to be placed in-service by the end of the year; the increasing traction with upselling energy services to existing customers; the earnings stability our long-term contracted cash flows generate that allow us to meet and in some cases exceed expectations for adjusted EBITDA and the interest payments we collect on solar loans, even when customer additions fall below expectations; and the robust demand we are seeing for our essential energy services even in the face of waning consumer confidence as homeowners seek an offset to rapidly rising energy costs.

Slide four summarizes the growth in Sunnova's customer's, battery attachment rate on origination, battery penetration and dealer network. In the second quarter of 2022, we added approximately 17,300 customers, bringing our total customer count to 225,000 customers, as of June 30, 2022, a 40% increase in cumulative customers from June 30, 2021.

As I just noted, the delay in customer additions was primarily driven by slower than expected interconnection times in select utility areas, but was also impacted by battery deliveries scheduled to occur late in the second quarter moving into earlier in the third quarter and accessory and service only sales ramping later in the second quarter than initially anticipated.

While these factors impacted the number of customers we placed in service in Q2, we still expect to fall within our guidance range of 85,000 to 89,000 customer additions for full year 2022. As anticipated, our battery attachment rate on origination increased in the second quarter of 2022 to 31%.

More importantly, our battery penetration rate continues to grow and reached 14.2% as of June 30, 2022, inclusive of over 2,000 battery retrofits we have performed life to date. Our backlog of battery retrofit sales also grew materially in the second quarter.

Our growth continues to be driven by our dealer network, which as of June 30, 2022 stood at 986 dealers, sub-dealers and new homes installers, only a few dealers shy of our year-end target of 1,000. We expect our dealer growth to accelerate further, as we move out of the current peak selling season.

Finally, on slide four, we have updated our information on customer contract life and expected cash inflows.

As of June 30, 2022, the weighted average contract life remaining on our customer contracts equaled 22.3 years and expected cash inflows from those customers over the next 12 months increased to $432 million, an increase of 45% versus June 30, 2021.

On slide five, we provide a summary of the broad and rapidly growing energy services we offer, centered around our vision of the Sunnova Adaptive Home, which is increasingly being demanded by both current and new customers.

When we discuss our goal of increasing the number of services sold on a per customer basis to seven by the end of 2025, these service offerings position Sunnova to achieve that goal.

We derive the number of services per customer by dividing the total number of unique service transactions by our cumulative customer base which as of the end of Q2 stood at 225,000. As you can see on slide five, we sold on average 3.84 services per customer as of June 30, 2022 compared to 3.52 when we established this goal last year.

In addition to growing our services per customer, we have also seen an increase in non-unique transactions. These non-unique transactions consist of upsells to our existing customer base.

And while they do not increase our cumulative customer count, they will assist us in our ability to achieve our NCCV per share and services sold per customer targets included in the Triple-Double Triple plan. We currently offer 29 distinct services categorized here to both current and new customers.

As technological advancements in our industry continue to accelerate allowing us to create a margin-rich integrated and comprehensive energy service for our customers, we are increasingly called upon to expand the number of services we sell to meet our customers' demands as we move beyond just the solar panel. I will now hand the call over to Rob..

Thank you, John. Starting on slide seven, you will see the year-over-year improvement in our second quarter results.

This includes a 121% increase in revenues, significant increases to both adjusted operating cash flow and recurring operating cash flow, and a 44% year-over-year increase in the adjusted EBITDA together with the principal and interest we collect on solar loans.

Our increase in revenue includes a change in how we have been sourcing some equipment for our dealers that resulted in $54.2 million in inventory sales revenue in the second quarter of 2022. Excluding that number, our revenue increase was 39%.

While collections on solar loans increased from the same period last year, we had initially expected this increase to be even greater. As John noted earlier, we were anticipating a much higher level of principal payments from our customers during the quarter.

This lag in payments was due to customers delaying unscheduled principal payments given rising interest rates, materially lower refinancings of mortgages, and overall concerns about the economy. Scheduled payments, however, were better than expected.

And so we consider the unscheduled payments merely delayed and thus there is no loss of cash value to Sunnova.

Furthermore, our second quarter 2022 adjusted operating expense per customer on a trailing 12-month basis declined by 7% compared to the first quarter of 2022 despite our continued strong investment in growth an inflationary environment and spending on the recently completed 5G meter replacement cycle.

This was driven by our business continuing to scale and our focus on managing spending. Slide eight summarizes our recent financing activity and liquidity position. The 2022 financing transactions completed to date include $167 million in tax equity funds and $653 million in asset-backed securitizations.

While our June securitization priced at a yield above previous issuances, even with that most recent print, our weighted average cost of debt at issuance remains well within the 400 basis points range at 4.15%. Our total liquidity as of June 30th, 2022 was $482 million, down from $703 million as of March 31st 2022.

This planned utilization of liquidity was partially driven by an acceleration of work in progress as we entered the strong sales portion of the calendar. Additionally, as investors recall in August of last year, we issued the residential solar industry's first ever green bond.

This issuance effectively prefunded our balance sheet allowing us to forgo issuing any non-investment grade tranches in our next several securitizations to better match the earnings profile of our assets to our debt maturities. As such, our liquidity glide path is on target as we work through the prefunding from the green bond.

Included in these numbers are both our restricted and unrestricted cash as well as the available collateralized liquidity we could draw upon from our tax equity and warehouse credit facilities. Given available unencumbered assets as of June 30th, 2022, this available collateralized liquidity equaled $118 million.

Beyond that subject to available collateral, we had $470 million of additional capacity in our warehouses and open tax equity funds.

That represents just over $950 million of liquidity available exclusive of any additional tax equity funds securitization closures the cash value of our deep-in-the-money interest rate swaps or warehouse expansions later this year including an expansion of our loan warehouse just last week.

On slide nine, you will see our fully burdened unlevered returns on new origination was 9.2% as of June 30th, 2022 based on a trailing 12 months.

While our returns remained flat from last quarter on a trailing 12-month basis due to lower returns in the second half of 2021 the fully burdened unlevered return for the three months ended June 30th, 2022 increased to 9.7%, an increase of 50 basis points compared to the three months ended March 31st, 2022.

Since the beginning of the year, we have raised our returns by 100 basis points and we expect a further increase of 30 to 50 basis points in the third quarter.

As we discussed on our last earnings call, high and rising utility rates have enabled us to raise our pricing on newly originated customers and thus allow us to offset our own increases in costs, specifically the higher cost of debt.

Additionally, higher utility rates are driving even greater value to Sunnova on a per share basis by improving our customer payment performance. Currently, we are seeing just under, 30 basis points in value loss from net defaults, a number that continues to decline while the market assumes this loss rate to be closer to 120 basis points.

The spread between these two assumptions equals approximately $69 million or $0.60 per share every year and growing, as we grow our contracted cash base and keep our value loss rate low.

These price increases together with the high growth of our industry our increasing operating leverage and our continued growth in additional energy services should keep margins wider in the near-term and position the company to push our implied spread on a trailing 12 months, back towards the 600 basis point range later this year.

However, as we have noted before, we model a long-term average for our implied spread in the 500 basis point range to estimate our guidance targets. Slide 10 reflects the strong growth we have seen in both our Gross Contracted Customer Value or GCCV and NCCV.

As of June 30th 2022, NCCV was $2.4 billion discounted at 4% an increase of 41% compared to June 30th 2021. Our June 30th 2022 NCCV at this discount rate equates to approximately $10,800 per customer and $21.16 per share. At a 6% discount rate, our June 30th 2022 NCCV was $1.9 billion or $16.64 per share an increase of 48% since June 30th 2021.

And our June 30th 2022 NCCV, at a 5% discount rate was $2.1 billion or $18.74 per share. These current per share values demonstrate that even at a higher discount rate Sunnova is receiving little to no credit for either its platform, customer optionality or expected growth.

Looking back further, our net contracted customer value on a per share basis is up approximately 60% since our IPO three years ago this week. Over these three years this growth on a per share basis regardless of discount rate used has been accelerating and we expect that trend to continue.

Beginning on slide 12 through slide 14, you will find our detailed 2022 guidance liquidity forecast and our major metric growth plan the Triple-Double Triple Plan. There are no changes to these estimates as we remain on target as it relates to both our liquidity forecast and our overall guidance.

Regarding the uncertainty around a potential investment tax credit extension, neither Sunnova's 2022 guidance nor the Triple-Double Triple Plan are dependent on any extension as one was never included in our assumptions.

As of June 30th 2022 over 95% and approximately 75% of the midpoints of our 2022 and 2023 targeted customer revenue and principal and interest we expect to collect on solar loans was locked in through existing customers as of that same day respectively.

As John mentioned our second quarter origination created a significant backlog of customers who have signed up for our services, but are not included in our customer count as we do not count an originated customer in our cumulative customer count until they have been placed into service.

While receiving permission to operate was slower than we would have preferred in Q2 we have seen PTO's start to free up in July, adding to our confidence that these originated customers will be interconnected in the coming months and thus added to our customer count before the end of the year.

Finally, despite concerns about the housing market, our new homes business continues to generate new customers and take market share in key territories. I will now turn the call back over to John..

raising significant liquidity in 2021, well before the recent interest rate hikes; locking in matching debt for historical growth; keeping inventory on our balance sheet to provide a safety net for our dealers to meet unwavering demand; vetting and adding new equipment manufacturers to our approved vendor list to further insulate ourselves from equipment constraints as they arise; and finally, prioritizing service to ensure our customers remain happy paying customers, who will engage us when ready to add new energy services.

While some in the investment community have begun to question the outlook of our industry in both the near and mid-term, we remain bullish due to the following reasons. We have a sizable backlog. As of today, we have originated all the customers needed to meet our 2022 customer additions guidance and have begun to originate for 2023.

We expect hydrocarbon prices to stay relatively high despite a recession, which will therefore drive strong consumer demand for our energy services. We have demonstrated our pricing power in a material way and expect that ability to continue.

We expect our cost of capital to slow its growth relative to rising utility rates or even decline in the near-term as the recession impacts the global economy.

We expect our service offerings global software platform, service capabilities and capacity and geographic growth to be more mature in 2023, providing us even greater earnings and cash flow growth.

And we expect to continue the trend of decreasing our costs on a per customer basis, a trend that will escalate now with the completion of the 5G meter replacement cycle. Finally, it is difficult to ignore the recent wildfires heatwaves and flooding around the world including record summer temperatures in our home state of Texas.

To combat these challenges, the world is in desperate need of clean resilient and reliable energy more than ever.

At Sunnova, we are working diligently to bring solutions to the global energy crisis trifecta – energy affordability, energy security and climate change by providing an unparalleled energy service to help homeowners gain true energy independence in the face of growing economic hardship and climate change realities.

With that operator, please open the line for questions..

Thank you. We will now start a Q&A session Our first question comes from Mark Strouse from JPMorgan. Your line is now open, Mark..

Yes, good morning, everybody. Thanks very much for taking our questions. I do want to come back to the Senate bill here in a minute. But just real quick, any color that you can provide on your inventory sales to dealers? It looks like there was some benefit that you had in EBITDA in 2Q.

How should we think about that going forward? And was that the EBITDA guidance that you had previously provided earlier this year, were those sales already baked into that outlook?.

Yes. That accounting treatment – sorry. Mark, this is Rob. That accounting treatment was already baked into some of our assumptions.

The bottom line is that we've been really focused on inventory, on supply chain, on making sure that our dealers get the absolute best pricing and making sure that they get the inventory in that they need in order to do their installs. So we had previously, when we were in safe harbor been contributing it directly.

It was actually more costly for us to do that both to our invest – sorry to our dealers and to us. By the changes that we made it was more efficient for us to get the equipment to the dealers.

And although we do pick up some margin in the process and certainly that is beneficial and that is cash margin that we do in fact pick up, really this was always within the plan that we had for ourselves and it was in our projections.

And you've seen that there's other aspects and benefits to this but the biggest one for us is that our dealers have inventory and supply at very good pricing that they're able to deploy quickly and get their systems installed..

Okay. Thanks, Rob. And then John, just coming back to the bill in the Senate. I know it's still a bit early. But assuming that does pass just kind of your initial thoughts what you've seen so far how this might be better or worse than some of the puts and takes that we've seen over the last year or so from Build Back Better..

Yes, Mark. This is John. It was a pretty nice surprise, wasn't it? Certainly, we thought that there was – as I've said publicly, we were optimistic, cautiously optimistic that something would happen here maybe in extenders at the end of the year kind of a worst case scenario and then this came about.

Obviously, this is a big bang for our industry in a material way. And what I would say is that as it's written now and let me heavily qualify this, we've had my government affairs experts, lawyers, et cetera combing through this obviously overnight.

I'm sure that I'm wrong in some of the things that I'll say, but what I would say is that, if you had to write a bill that was perfect for our company as a residential energy service provider like a Sunnova, this bill would be the perfect bill. And let me tell you why.

First, the ITC extension most importantly and that was what 90% of what we wanted is now done on a 10-year basis. It moves to a clean technology agnostic, which fits very well with the Sunnova Adaptive Home; not just solar. And that gives investors a high degree of visibility that we frankly have lacked my entire career.

The other is that the manufacturing credits are something that -- we, obviously, will never manufacture anything. We have partners that do that.

But, the tariffs the wranglings, of all of the issues that we've had with regards to forced labor, seizures of cargoes, of panels, et cetera all that is only going to be addressed on a long-term basis by bringing manufacturing back to the US and those jobs. This does that. And then, we have bonus investment tax credits on top of this.

Looks like the top end for us on some of the things that we do and many more things that we have in the pipeline that we haven't disclosed publicly yet that could be as much as a 50% ITC there. There's some other things there. We're obviously a little bit involved in fuel cells and so that was very helpful.

And like I said, there's a lot of other growth initiatives hadn't been public yet. They'll come out in the next few weeks and months that we'll -- that are being addressed in this bill as well. So, gosh, I hope it happens. I think it will. And this is beyond great for the industry..

Excellent. Thank you very much..

Thank you..

Our next question comes from Philip Shen from ROTH Capital. Your line is now open..

Hey, guys. Thanks for taking my questions. Good news in terms of the bill here. As it relates to looking ahead to liquidity and you have your forecast through 2023, was wondering if you could give us a little more color on how you're thinking about on the $300 million for next year. Historically, John, I think you've talked about the green bond.

And just was wondering if you're still thinking about the $300 million in terms of green bond or if there might be some other sources that might be more likely to be attractive. Thanks..

Hey, Phil. This is Rob. Thanks so much for asking the question. I mean, obviously, we've been talking about this for quite some time. We've clearly signaled to the market that by the first part of 2023, we would be looking to enhance our liquidity position. We really haven't made a decision as far as how we're going to end up doing that.

We still have a number of options available. I know it probably doesn't help too much with your modeling, but certainly, the debt markets are still very attractive to us. But what we want to do is make sure that whatever we do and whatever the timing is, it's the one that's going to be most beneficial to our shareholders.

So, we're going to continue to follow that path. Sorry, not to give you too much more on there, but it's still the target. As you can see from the reiterated guidance, it's still -- that's still what we perceive the needs to be.

And on a go-forward basis, we -- continuing along the trajectory and our anticipated growth path, we think that that's still the right number..

Great. Thanks, Rob. And then, as a follow-up there. When you think about 2024, I know you haven't provided guidance or an outlook or even commentary yet.

But as we get closer and you guys have a long term -- or an ability to view and have a view pretty far out, was wondering if you could talk about whether or not after the $300 million if you still think you will have hit exit velocity and not require any more corporate capital, because the core business itself can generate enough of the capital needed for the incremental annual installations.

And so, do you think your ROCF can get you guys there? So, just wanted to see if that view is still there. Thanks..

Yes. I appreciate the question and it really is the right question. If you take a look at our business, there's two aspects of it. One is the recurring operating cash flow and we are really hitting that exit velocity. And frankly, if we were to stop growing today, there would never be any need at all for anything else, whatsoever.

But at our current growth trajectory and where we see the growth for ourselves in the industry, we would assume that would be the case. Now, the only thing that would change that would be a very strong increase in growth, because the only thing that this is funding is working capital. It's not funding operations.

It's really just funding the fact that we continue to grow at a very high pace. And if we were to ever reach a sort of steady state of, call it, the same number or a good modest increase 20%, 25% growth or less, we don't think that we would ever need anything more.

But if we start getting into some of this hypergrowth where we've been growing 100% or 85% second derivative growth year-over-year, that obviously creates working capital needs in the timing there. And that's where the only reason why we've been out there in the market in the past for any sort of corporate capital.

Otherwise, just -- if you take a look at our business and our decision really in founding from over 10 years ago, the decision has been to hold onto our cash flows by and large. And because of doing that, we've been able to build up this big bank of cash flows.

And as the tax equity reaches its flips and as we hit ARDs in our securitizations that's when we expect the cash to really flow and to see even more realization of all that NCCV that we've spent time banking..

Great. Thank you Rob for the color. And just one last question if I may. In terms of -- that was the long-term view. If we bring it more near-term and look at the next two quarters, you have your first two quarter customer additions and John highlighted that PTO and interconnections were taking a little bit of time. Things appear to have accelerated.

But that said, you have a bigger number per customer additions in Q3 and Q4. What gives you the confidence that those interconnections will not slow down again? And what's the risk around the customer additions in the back half and how you think about that? Thanks..

Hi, Phil this is John. Yeah. It's -- I would say that July has been pretty good as far as the permission to operate is picking up speed. Some of the utility areas still have some issues with the overwhelming demand.

Quite candidly, the utilities need to hire some more people to process and automate, which they are very slow to do being typical utilities.

So some of our dealers have moved service territories several months ago because of some of those constraints, and so some of our composition of our work in progress or our backlog has changed up a bit over the last quarter or so.

And so we feel that if you look at the sheer number and then the different services that are being offered those are really taking off at this point in time. Unfortunately it was just at the tail end of the second quarter of last month. We've seen continued high growth in July and we expect that all the way through.

And those typically have very short durations as well. On the supply side of things, the batteries didn't quite come in like we wanted to in the last two weeks of June, came in really the first three weeks of this month. So we already have those batteries and they're being deployed as we speak. So that was another mover there as well.

So there's a lot here in terms of growth, in terms of the backlog, the composition of that growth with regards to utilities, the additional services that growth and then just the supply chain continues to improve particularly given what we have done in the past as evidenced by that 1.1 billion and inventory position that we talked about last quarter.

All those are coming together to give us a pretty good degree of confidence that we'll hit this year. One thing that I know has been chattered about at Sunnova new homes. So the new homes market. I think it won't be a surprise to anybody that we were quite bearish on the new homes market a year ago.

I don't think that you can go into a recession with a white hot housing market and expect that housing market to stay white hot. And we've been very conservative yet again as I know some competitors count when you win a community that that is their work-in-progress. We do not do that. We only count a work-in-progress when the home breaks ground.

And so that should give you further confidence that we not only have the new homes, we think in a pretty decent shape regardless of the new homes market, housing market for this year but we've already booked several thousand groundbreakings in for 2023 as of today as well. So we're looking forward to 2023.

And quite candidly I see a pretty big boom regardless of this bill in 2023 even towards with how do we think about maybe higher growth than we've laid out. But certainly with this bill, I think any growth forecast for 2023 certainly for us I can speak for that but I would think for the industry are absolutely going to be shredded.

I think this is going to be a big boom time in our industry..

Great. Thanks John. I’ll pass it on..

Our next question comes from Julien Dumoulin-Smith from Bank of America. Your line is now open..

Hey, team thank you and congratulations on all the successes here. Hopefully this comes together. Maybe just coming back to the spread and this implied spread we talk about the unlevered versus the cost of debt.

Can we talk about your pricing power, how you see that maintaining or improving unlevered returns as to maintain your spread, right? So can we talk about a forecasted view of that spread and what that pricing power is doing to it? Just want to -- as you think about that 4% trailing here weighted average cost of debt, where do you see that trending to? Obviously that's going to be higher here.

And how do you maintain that spread or how do you think about that just if you can break apart the pieces. Obviously it's a cost reduction element of this as well..

Yeah Julien. This is John. So we've had a lot of -- we moved early. We moved quite a bit more than everybody else has on pricing. I think that's pretty well-known in the marketplace. And I think that that's the responsible thing to do.

And so giving back a little bit of growth when we already had a very blistering record smashing Q2 as far as sales go and building a backlog. So it certainly didn't hurt us. And we built quite a bit margin in those transactions and then on a forward basis.

So I would tell you that as we said today, our fully burdened unlevered returns are higher than that 9.7% that we printed for Q2 already, and so pretty much everything that we had planned for is already baked in.

Now that doesn't mean that as the cost of capital were to increase from its recent over the last month a decline since that asset-backed securitization we did back in June. We would take a look at that and continue to increase price and we feel quite confident we have that pricing power.

We're confident that competitors are going to have to move in the next few days on pricing and that will further bolster the pricing power that we would have in the marketplace. Now on the cost of capital side there's a couple of things.

One, we had some transactions that we'll be excited to announce in not-too-distant future on lowering cost of capital that I think will be pretty interesting to investors.

The second thing is, if this bill does pass -- if you look at the transferability of the credit which I failed to mention earlier to Mark's question, that can't do anything, but reduce the cost of tax equity, right? And so when you look at a lot of these different things there's a likelihood that the cost of capital for us is going to at least marginally go down.

And then when you look at where we sit on the asset-backed securitization market or even doing commercial bank debt, I would say that right now we're at least 50 basis points -- 60 basis points wide on the -- or narrowed, sorry, tightened on the risk-free from when we had done our securitization.

So when you look at a weighted average between loans that was lease PPA securitization we did which trades wide of loan securitizations it's pretty clear that we're already back into the high-4s if you will of cost of capital here. So we'll see where this goes. I don't know where the bond market's going to go.

I will say that it looks like we are now technically could be deemed in a recession which very few people predicted. We obviously were a little bit ahead of that. And so we feel pretty strongly that our pricing power is going to continue to be high because energy prices are going to continue to be high relative to the economy.

And the cost of capital as relayed in our prepared remarks, we think is probably going to marginally drop even from here. So, all that together is that we feel pretty good about where we're trying to get back to our 600 basis point spread.

And we feel pretty confident, we can get there one way or the other, either a drop in cost of capital or some further increases in pricing or a combination of both..

So – hey, John just to clarify that super quick.

As you think about the next couple quarters here in particular given, sort of, the delay in the dynamic of the timeline for when you price something when you install it et cetera, do you think that you can get back that 6% over the next couple quarters or how do you think about that timeline playing out given the backlog and the higher costs versus the timeline to implement that higher pricing?.

Yes, much of our backlog if not all of it has already got much higher pricing in it. And so you'll see that come out as far as in a 12-month trailing basis it'1l be just math right Julien? So some of the -- obviously all the origination that we do from now until the end of the year won't be securitized until next year.

So it's something to take -- that's why we've always looked at this on a trailing 12-month basis. I know, I would too. I'd look at the front end of an ABS and see what that implied a trajectory the cost of capital is. But at the same time, there is a lot -- a timing lag between when we originate and when we would securitize.

Rob, do you have any more comments on that?.

Yes. I would also point out that so much of our competition that's out there who just originates and then sells almost immediately, they are a lot more impacted by this than we are.

So if you see these sharp increases in -- that we had in the 10-year that really, sort of, peaked about a month or so ago that impacted them a lot more we believe than it impacted us. For those that look at the ABS market, you're able to take a more long-term view and you're also able to take the time to actually change some of the pricing.

But the required returns for a lot of the buyers out there in the loan purchase and the whole loan market have -- those have gone up significantly. And what it means is that for anyone who did originate a loan with the purpose of actually selling it, and by the time that loan ends up getting into service they could find themselves underwater on that.

Given where we are in the market, given the fact that we've held onto those cash flows, we are in a much better position. And certainly we're not alone. There are others within the industry that have chosen to go with the ABS path as well instead of just selling everything off.

But I think that you're really going to see the benefits of the long-term discipline of staying and holding onto those cash flows really be reflected in those of us who have chosen to keep them..

All right. Fair enough. Thank you, guys. Good luck..

Thanks, Julien..

Our next question comes from Maheep Mandloi from Credit Suisse. Your line is now open..

Hi. Good morning and congratulations on the bill. A lot of good work from you guys over there. Just quickly on the leases versus loans over here -- PPAs and leases versus loans.

How should we think of that mix going forward? Sort of, multiple constructs here but like as you're pushing higher prices, does it push dealers to go more towards loans versus leases? And how does this mix change if there's no direct pay in the 25D in this proposal? Thanks..

Hi, Maheep, this is John. Yeah, we've actually seen a swing back towards, as I say TPO leases PPAs over the last few months. That's been stronger than I anticipated. And to be clear about it, we're agnostic, so it's something that for us is fine. We'll take it either way.

I will say as interest rates continue to move, what I believe to be a long-term secular inflationary problem, mainly caused by the structural issues with regards to energy and food exacerbated by the war in Europe.

I would say that, you look at this and it is as highly likely even away from this bill, which I think does favor lease and PPA on a slight basis, right? As I laid out earlier, I think that you're going to see more and more leases and PPAs being sold versus loans.

So I think we've definitely seen the loan in my opinion the top of the market share, as far as that regards in terms of a split. And I think maybe it topped out at 75% of the market or 80% of the market. I've never thought it would go beyond that. It's just math. And we're certainly seeing that trajectory on the way down. But again, we're agnostic to it.

But I would say that, if you look ahead given everything, the environment, macro environment interest rate this proposed bill by Senator Manchin Senator Schumer, I think you've got to come be a lot more constructive on the growth of elite PPAs versus loans..

Got you. I appreciate that color. Not sure, if this was touched upon, but just on your expectations on equipment supply be it modules or batteries for later this year or next year given logistics and US LPA. Thanks..

Yeah. We're continuing to see the battery supply loosen up materially, and a lot more choices out there in the marketplace. We've got fantastic partners in Tesla, Generac and SolarEdge and Enphase. And we continue to see an improvement in the product itself the ease of installation.

Badri of Enphase yesterday made that clear, he was very focused on that. I can second that. He definitely is as well as the other gentlemen that run the – some key supplier partnerships with us. So, I would say that the supply is only going to get better from here. Now that, also is relative to demand, right? So let's be clear about that.

As demand really continues to outstrip even my expectations that, there will always be a little bit of tightness in the marketplace, if not quite a bit, all the way through all different types of equipment. And on the panel side, we have taken steps to procure panels. We do have some equipment directly.

And we've been facilitating making sure our dealers are taken care of. And I feel very comfortable about the panel supply given the information that I have right now as well. So, we're in pretty good shape across the board as far as equipment goes.

Maybe a little bit a few months, or a couple of quarters longer in terms of how it took to get through the quote supply chain hell, but we're here now and we're in pretty good shape..

Got you. Thanks for that..

Our next question comes from Ben Kallo from Baird. Your line is now open..

Hey, good morning. Thanks for taking my question, guys.

First, just Rob some housekeeping, the 95%, 65% did that just have – did that have to do with the EBITDA or were those percentages correct for the coverage for 2022 and 2023?.

95% and 75%. It's EBITDA and P&I. It's – sorry, it is revenue and P&I is what we're looking at. But it does exclude revenue impacts from things like the inventory sales. So it's really the coverage of the recurring revenue from customers..

So revenue and P&I. Got it. John, could you just talk maybe, because you're closing in on the 1000-plus – 1,000 dealership number early, could you talk about maybe the progress there? And then also just with the current economic environment the health of the dealers because I know they vary in size.

And then finally, just on that – last on that front. Could you talk about the – remind us of the level of exclusivity that you have with the dealers? Thank you, guys..

Yeah, Ben. So first and foremost on the exclusivity, it's something that we continue to see a lot of dealers interested in and we continue to sign more of those relationships up. I would say, I could be a little off on this but somewhere around 75%, 80% of our origination flows under exclusivity.

So that's continued to be about, where it has been over the last few years. We don't expect that to change. In terms of growth of dealers, that continues to be strong. We continue to add additional services namely generators, load management, EV charging. And so those bring additional contractors into the fold into the family so to speak.

And then, we can help them be able to sell other things like solar and storage and so forth. So, there's a lot of the different channels, and it's a big key piece part of the company's growth plan to bring these different dealers to the platform that is Sunnova and serve them the way that they want to be served.

And so we see that the trajectory of dealer growth is going to continue to be strong. We will obviously blow past 1,000 by the end of the year our set goal that we gave out last year. And in terms of the health of the dealers, it's a tricky time. You got to be careful. You got to know what you're doing.

Obviously, almost 10 years into this just with this company, we know what we're doing and we know how to be good partners. We know that you need to have the inventory there to take care of them because they've got payroll that's going out the door, sometimes daily, certainly weekly.

And if they don't have the equipment that can chew up capital pretty quickly. You got to stay on top of them. Can't just sit there and wire money and hope for the best.

It's something that this is a partnership and we got to make sure that we understand what their needs are and what the customers are looking for and make sure that they're in good financial state. And they are across the board. We're pretty pleased with the health of our dealers. Again, we're going to stay vigilant on that.

But as of this point, we're quite confident in their financial health. And we're confident in continuing to see small dealers become very large dealers. That's another continuing trend.

It always warms my heart being the entrepreneur to see somebody come and have nothing and really build a multimillion dollar business and they can take that money home back to their families and so forth. And it's the American dream. And we're a big proud sponsor of the American Dream..

Thank you. Our next question comes from Sophie Karp from KeyBanc. Your line is now open, Sophie..

Hi. Good morning. Thank you for taking my questions. Congrats on a solid quarter and the good news from Washington. Just a couple of questions for me.

So you guys are talking about the backlog of interconnections with the utility, right? Is it possible to quantify sort of if not for the utilities' inability to interconnect as fast as you want them to what the customer additions would look like this quarter?.

We've taken into account the elongated duration Sophie. And I would tell you just under roughly around 27%, 28% of our backlog's already installed and in some cases have been installed for weeks on end. So we've got a pretty good idea about where things are.

I would say that things would have to materially worsen from here to be in bad shape on the number on the guidance range. And we don't see that. We see a slight improvement as we move forward in time. So the confidence there is that the WIP is frankly as we would say aged quite a bit.

And so we're starting to get to the point where several months in it's difficult to see that that would actually worsen materially from where we sit today..

Got it. And then just kind of curious one of the points that the industry has made in the longstanding debate about net metering et cetera is that, ultimately you don't have to interconnect with the utility right, if you have storage.

Is that something that you might use I guess as a strategy to maybe in the future go around it? Even where I don't know that may not be tariff-driven I guess but more of a speed to connect to make this -- to make the system like operational? Does that make sense?.

Yes, it does make sense. We have used that in the past quite a bit and continue to do so. Love to expand it. Love to have a open market and capitalistic market where utilities have to provide great service and I think that regulators should look very intently at that.

Not providing speedy interconnection to consumers, harms consumers in a period of rising energy and in what is now obviously a recession. And so it harms the consumers that they're supposed to serve. And it's something that I think that regulators ought to take a look at as far as anticompetitive behavior as well.

And so anything we can do as far as changing technology, if the regulators won't act or are slow to act, as they clearly are in many states and territories, we will certainly do that. There's a technological shift here that's pretty big and is getting bigger and bigger as the technology improves.

And I would hope that the utilities can start to think about us as being more of facilitating consumers as customers. But if they don't, then technology will fill the gap and we will need less and less of their services..

Thank you. And then one last one, if I may. I guess just maybe too early to answer definitively, but comment on this bill and assuming that it goes through unchanged, seems like there's a little bit of everything in there. There's rebates for heat pumps for example for incentives for EVs et cetera.

What is the low-hanging fruit for you guys, if this goes through I guess to add services? Would you be interested in heat pumps and kind of integrating that into the whole energy management system or EV chargers? What's the most obvious next addition I guess as far as that bill?.

Yes. We already have EV chargers and we've got some things going on in the fuel cell area. Obviously, that's nascent. But the other thing is, we do a lot of other accessories. Roofing. Obviously, there’s been the necessity of having a new roof and a good idea there before you put solar, is something that we've been promoting out there.

It's better for consumers. And then, when you look at something on the demand side of things, load management, we're already involved in that and selling that. The consumers need to ramp that up a lot more.

And then when you start adding EVs then you sell a lot more solar, right? We're seeing -- again, we talked about it last quarter, surprised me and we continue to see this as additional contracts. We call them up-powerings when people want more solar, more inverters, more solar service to fill that EV up, if you will, and the batteries.

Will we get more in the heat pump side and demand side? Most likely, yes.

That's something as we're looking at wanting to not only manage the supply, but the demand side of the customer and making sure everything is working and working well, particularly when they are off grid for whatever reason, because they don't have a choice, because of the lack of reliability of the grid that's increasing due to climate change issues wildfires flooding, et cetera, hurricanes.

But whatever the case may be, those big loads are something that we've definitely been keeping our eye on and targeting. So don't be surprised if we get involved in that and to help our customers as well.

Rob, do you have any comment?.

powering energy independence. It's all about how do we take everything that we can offer out there and really use it to benefit the consumer..

Thank you..

Our next question comes from Pavel Molchanov from Raymond James. Your line is now open..

Thanks for taking the questions. You highlighted the ability to push through higher lease and PPA pricing. If we go back maybe 18 months before the inflationary spirals began, there was a common rule of thumb that $0.15 a kilowatt hour at the utility rate is kind of the threshold for where rooftop solar makes economic sense.

With everything that's happened since then, what is that new threshold if there is one?.

Hey, Pavel, it's John. Look, I've always thought it -- my number was roughly about $0.13 $0.135. But I don't think that we could really quibble on looking across the country. And so a place like Houston, Texas, for instance, we've gone from a market that was roughly around the $0.10 $0.12 range. Dallas is a little bit higher, as you're aware of.

And now we are minimum $0.16 and these natural gas pricing closer, I think, this week to $0.18 $0.20. We see Houston as a fantastic market. One of the largest metropolitan areas; very, very low penetration. We're very, very bullish on these markets because of the material kilowatt hour rate movement driven by natural gas and coal pricing primarily.

What I would say is that, at this point, you're probably looking at something closer to $0.16 -- $0.15 $0.16 from my $0.13 $0.135. And so, clearly, we're there across the board, even in places that used to be very low cost, like Houston.

So we're -- again, as a data point we talked about last quarter, but we see a very rapidly expanding geography as far as market base across the United States. And for the first time, I think this really sticks, we're going to see every state as a place where we can offer our services very profitably..

A lot of questions already on headlines out of Washington. I'll ask about a slightly different policy dynamic, which is California. There's presumably nothing happening before the midterms with net metering.

But what's your expectation for California doing something after November?.

I think that they'll do something that'll tilt towards the utilities. So I'm a broken record on this. This has been our position from day one.

With that said, as the utility rates continue to skyrocket, particularly in California, and more and more spending is -- massive spending is desired by the utilities there, that's going to push rates up even further.

I don't know how Governor Newsom is going to do anything, but at least pay attention to his consumers, his voters and do the right thing. He's a smart -- obviously, a smart guy, smart politician. Clearly, wants to run for president. And I think we all know what his likely opponent, at least one of them is.

And we all know what Governor DeSantis did for the consumers and people of Florida. So I think there's a very strong possibility here that things end up very good for the consumers and therefore us in the state of California.

The one thing I'll just leave with is, my previous answer to your previous question is, California will make up I predict in the next couple of years a smaller and smaller portion of our overall sales, just by definition as the geographies greatly expand due to the global energy crisis..

Thank you very much.

Thanks a lot..

Our next question comes from David Peters from Wolfe Research. Apologies, David's question has dropped off. So our next question comes from Sean Morgan from Evercore. Your line is open, Sean.

Hi, guys. I'll try and make it real short here. Just circling back to the inventory sales to dealers.

Can we just think of that as a onetime accounting change, so that -- we had this pretty big spike quarter-over-quarter in sales and also the COGS, but this is really just a sort of onetime change that will not be sort of recurring?.

It's a change, but we expect it to be recurring. It's still a matter of how we're making sure that our dealers get their inventory. But the other thing, I think to point out is, we always point to the ROCF and the AOCF metrics, as being really the best proxy for our actual cash flow. And these numbers that margin is excluded from those.

So we back that margin out because it's a lot more related to, how we view our returns on origination, than it is on a recurring cash flow basis. So it's viewed much more as part of our sales rather than our service type of revenue.

So you should expect to continue to see it, but it's -- when we really look at ROCF, it's not going to be an impact there..

Okay. Thanks, Rob..

Thanks, Sean.

Our next question comes from David Peters from Wolfe Research. Your line is now open, David..

Hi, good morning. Question just on the OpEx on a per customer basis. You guys noted the 7% improvement on a trailing 12 despite inflationary pressures, the meter investments you've made and so forth.

Just wondering, if you have a view where this settles out I guess, kind of the run rate if you will?.

Yes. Our long-term view from two three years ago was that we were going to ultimately get to about 25% savings from where we had started from the end of 2019 to the end of 2022. We still feel very strongly, that we'll get there.

What we've really seen that's been very encouraging is that we've continued to see that scaling the investment and service really pay off for us, so that the densification of our service areas, our ability to deploy our people our investment in technology has all really been beneficial and continues to drive that down.

So, it's been a long-term mission and we still look at ourselves as being well on target for that..

And I would also add there, that that's despite some things that in terms of growth efforts that we haven't disclosed yet, and been public about that spending that goes along there as well. So it's quite remarkable to Rob's point, the amount of operating leverage this company is demonstrating.

And as the company gets bigger and bigger and those growth initiatives are out there and they throw cash here, next year and the year after -- the years after then, that operating leverage is going to even increase more.

So we're in really good shape, as far as our long-term expectations of the company and reduction of costs, despite the inflationary environment..

Thanks a lot. Just one last one just to squeeze in. Wondering, if you could expand on the new homes market just a bit. I think you said, things are still strong there and even taking share in some key markets.

But just curious, if you could clarify within the Triple-Double, Triple Plan like what percentage of new customers you're expecting to come from the new homes segment specifically?.

About 15%..

Okay. Thank you..

Our next question comes from Abhishek Sinha from Northland. Your line is now open. .

Yes. Hi. Good morning, guys. So most of the questions have been answered. I just wanted to now delve into the question that was asked last question on the CapEx per customer.

If you could just provide a little more color like, what exactly were the drivers? I know you talk about technology but exactly sort of see, what are the main drivers in terms of, what you guys are doing there..

This is Rob. I think when you take a look at it where are we spending money and where are we really able to find -- what scales and what doesn't scale.

So as we continue to deploy out into new markets and as we continue to have new customers, we're making investments both on the technology side and we're making investments on the side of customer service, both within the call centers and out in the field. Most of the rest of our business departments tend to scale with that.

So we don't need to add necessarily more assets on -- personal assets or other assets onto that side of the business. Where we have found things that don't scale have been really in the construction the construction management sales, and sales management side of the business which is why we have focused on the dealer model, primarily.

That scales very well for us. And as we continue to grow, we don't have to add a bunch of additional layers of management there which is from our experience where a lot of the diseconomies of scale can happen.

So, we're focusing a lot more on the service side where we do find economies of scale where even though we continue to have an open technology platform our dealers who do have this -- sorry our service folks who do have specific knowledge are able to deploy that knowledge across a more geographically concentrated base.

And on other aspects of our business we're able to add a lot more customers without necessarily adding a lot more expense especially on the administrative side..

One thing I will add is culture. From the very beginning when I founded this company, we wanted to make sure that we had everybody understand, particularly management that it's not management's money. It's the shareholders' money. Don't spend it. And I think that that culture is clearly still with us today..

Got it. And then one following if I could -- can you provide some color on the termination side? So we saw like 193 terminations this quarter. Just trying to see what's going on there.

Anything special about that?.

Yes, it's a good detail to catch. I caught my eye too quite frankly. And what I would say is that looking into it there's a little bit of catch-up so it's obviously immaterial by a long shot. But some calculation catch-up if you will from the first quarter. Secondly, there are some of these service-only contracts that may have dropped off.

That's what it looks like to me after a little bit of digging anyway. We need to do a better job. I need to do a better job of going back to those customers and reconnecting signing them up again because clearly they still value the service. And so I think we -- I dropped the ball on that one a little bit.

We'll pick that ball up and we'll fill that gap. If there's anything more than that, we'll certainly be upfront and talk about that. But I think it's really just more of a calculation catch-up and a little bit of better job we need to do as far as some of these service-only contracts we signed years ago that are coming due..

But I will also say that it goes to how strict we are in our definitions. We're counting a customer if they are someone with whom we have an ongoing service relationship and they're a paying customer. We're not just saying hey we sold you something five years ago so therefore you're a customer. This isn't McDonald's.

We're not saying that we've had billions and billions served. If you're in the restaurant and we're serving you, you're a customer..

Perfect. Got it. Thank you very much and that’s all I had..

Thank you..

Our next question comes from Brian Lee from Goldman Sachs. Your line is now open Brian..

Hi, thanks for taking the question. This is Grace on for Brian.

I guess for my first question going back to the inventory sales just wondering why are you changing the accounting? And with the inventory that you bought in the quarter and sold in the quarter -- or is this the previously held inventory now being sold? And did it help add some cash to your balance sheet this quarter? Thanks.

Then I have a follow-up..

Sure. So this is -- it's not a change in the accounting. Accounting has basically been GAAP rules as long as it's been GAAP. It's been a change in how we've been moving the equipment to our dealers.

So, previously, especially with the safe harbored inventory that we had, what we were doing was putting it in a subsidiary and then contributing it directly down to the project. In this case, what we're doing is we are is we're selling it to the dealer and then the dealer is putting it in their project.

So, it's a technicality, but it's one that the accountants insisted that we go ahead and make. So, we went ahead and did that with the change in how we're deploying it.

As far as the amount of inventory that we're bringing on we -- if you can look at the inventory levels we basically started the quarter with $150 million of inventory at cost and we ended the quarter with $150 million of inventory at cost. So, we're keeping fairly consistent inventory levels. It's just a matter of how we're moving.

And while it did certainly add cash net as we've been moving that inventory, again, we bring on two pieces onto the balance sheet. One is accounts receivable and the other is inventory. So, as we see the accounts receivable move that's obviously something that's going to have a lag effect there while we do some of the collections.

But it really is as far as we're concerned something that from an AR standpoint, it's probably -- that's the only thing that's onetime really is sort of the boost in AR. We would expect that to be fairly consistent there. And then for the inventory as we buy the inventory and as the AR gets paid off we'd expect that to be matching up fairly well..

Okay,. got it. Understood. I guess my second question on your guidance you talked about like all these macro factors impacting your Q2 principal payments. So, why are your principal payments soft in 2Q, but not changing the guide for 2022? Is there a risk to your principal payments slowing down in the current environment? Thanks..

We would look at the principal payments as being something that's certainly complex and we've seen it go up and down. Where the big piece is that we saw the unscheduled principal payments start to slow down.

And -- but we also have a big chunk of our unscheduled principal payments really weighted much more towards the second quarter than any other quarter, because that's when folks tend to get their income refunds and that's what drives a lot of the unscheduled principal payment.

The scheduled principal payments, as we said, were actually stronger than we had expected. And that's really a reflection of how much lower our default and delinquency rates have been. Look, we keep talking about how this is an essential service. This is not something that consumers are looking as an option.

It's something they need, and it's more reliable, and it's cheaper than what the utility is providing them. So this is the bill they're going to pay. They're going to pay this before they pay the car, the cell phone, the rent.

This is -- it's the most -- it means that when we do end up in an environment that's potentially -- pardon me, a recessionary and an inflationary environment, we do well. We are built for this type of environment.

And so we would expect that the scheduled principal payments will remain strong and we still expect to be able to come in within that guidance range as of right now..

All right. Got it. Thank you. I’ll pass it on..

Our next question comes from Praneeth Satish from Wells Fargo. Your line is now open..

Thanks. Good morning. It looks like the battery attach rate moved up quite a bit in Q2. And I just wanted to clarify. Are you still supply constrained at all on batteries or has supply caught up to demand? And then maybe as a follow-up.

Any comments in terms of where the attach rate could trend in 2023 under NEM or this new climate package? It's been kind of hovering in this 20% to 30% range over the last few quarters.

But is there a point where the attach rates just really kind of step change higher?.

This is John. As I answered earlier, the supply situation of batteries continues to improve. And so I think that we'll -- we find ourselves in pretty good shape as we sit here today relative to the demand that we see out there. In terms of demand changing and inflecting out of that 20%, 30% range, I do feel like that's still going to happen.

We obviously need more options out there that is happening for the marketplace in general. So, more manufacturers producing more gear. We need a little -- some more price relative to the kilowatt hour rate.

So, as the kilowatt hour rate moves up more and more people are willing to go ahead and spend on the battery side, because frankly the power's more valuable. They don't want to give it back to the utility for free even under net metering.

And they had more and more concerns on reliability, right? So as climate change, bites down on the current antiquated infrastructure. So, you look at Europe, you've got many countries over there 80-plus percent attachment rates. I don't know why that wouldn't be the case here in the United States pretty soon.

So we see very, very strong signs in looking at the economics that consumers are going to continue to gravitate to more and more batteries..

Okay. I’ll leave it there. Thank you..

Our next question comes from Antoine Aurimond from Bank of America. Your line is now open..

Hey, guys, good morning. Thanks for taking my question and congratulations on the very good quarter. I just had a question on the credit side. So as you reaffirm your Triple-Double Triple Growth Plan curious if you can talk about sort of the credit trajectory once you reach that goal.

And any sort of like near-term and longer-term sort of credit expirations that you may have?.

Yes, this is Rob. What I would say is that, as we continue to grow the company and we've held onto a lot of the cash flows that the credit quality, certainly as you've seen will continue -- has continued to improve and will continue to improve. There are a number of things that we've done, that have actually been very credit accretive.

But as we continue to pay down our existing securitizations that ends up being credit accretive. We expect as we've shown the Cs, a continued growth in the ROCF. And that is a big piece of where a lot of the credit metrics really begin. I would say that when we've talked to the rating agencies, the feedback has generally been positive.

So, we're continuing to stay very close them. Let them know sort of what our plans are. But generally speaking, I think you're seeing improving credit metrics. Certainly, that's a lot of where my focus is and where John's focus is. It has to be good credit metrics and we think that accrues to our shareholders as well.

But we're very conscious of making sure that we satisfy the debt holders..

Very well. Thank you so much guys. Thanks..

That concludes the Q&A session on today's call. I will now hand you back to John Berger for further remarks..

Thank you. And thanks to everybody for joining us this morning. Obviously a very exciting morning, given the news out of Washington.

When we look ahead for the business though away from any action in Washington, we're very comfortable for three reasons and very -- in terms of interested as to where this whole thing will take us, with regards to the strong planning, strong strategy, strong balance sheet that we've built. First and foremost is our match funding of debt.

We've locked in spreads that I think are really not appreciated for years and years to come with the asset-backed securitization market built over several years. And that spread is locked in.

The second thing is the value of losses, the terminations of the contracts and so forth that were expected previously and still expected in the marketplace are far, far and away way too conservative. And we are actually generating a faster paydown of debt a faster paydown of tax equity and faster cash flow to shareholders than expected.

And lastly energy prices are rising faster than the overall economic growth. And we do see that trend unfortunately continuing. We see a global crisis in energy. The energy crisis trifecta, if you will. And we continue to see that this business will continue to boom.

And then lastly finishing on the news out of Washington yesterday afternoon, a step in the right direction. Great policy for not only the United States, but the world.

We applaud it and we look forward to having a just really big bang in the industry and looking ahead to growth that would be substantially stripped of any expectations we've had previously. So, we're very bullish on -- and even more so after yesterday afternoon. Look forward to joining you on the next quarter call hopefully after that bill passed.

And looking forward to giving you more updates on the future of Sunnova. Thank you for joining us..

That concludes today's call. You may now disconnect your lines..