Q3 2020 Sunnova Energy International Inc Earnings Call
[laughter].
[music].
Good morning, and welcome to T Mobile's talked about doing swing earnings conference call.
Today's call is being recorded on sales on the P. pick an awful prepared remarks on quick jump on.
At this time I would like to turn the conference over to Wilton Mcmahan Vice.
Right to pursue them.
Sean I T mobile. Thank you. Please go ahead Sir.
Thank you operator, and good morning, everyone yesterday, we released our earnings press release and posted a slide presentation to the Investor Relations portion of our website at investors that Sonova dot com, which will be referenced during this call join.
Joining me today are Jon Berger, Cenovus, Chairman and Chief Executive Officer, and Robert Lane, Executive Vice President and Chief Financial Officer before.
Before we begin let me remind everyone that this call may contain certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These include remarks about future expectations beliefs estimates plans and prospects such statements are subject to a variety of risks uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements.
Demise recurring operating cash flow and company growth for 2021 and beyond.
Simply click will either investor grow profitable cash flows quicker.
We will preserve the recurring cashflows for our shareholders.
On slide three you'll see the details of yet another quarter. It strong operational results, we increased our customer base expanded our dealer network and maintained a robust storage attachment right.
We continued our rapid growth by adding over 7000, new customers in the third quarter of 2020, 40% increase from what was added in the same quarter and 2019.
This exceptional growth is fueled by that 270 dealers in sub dealers, who power are differentiated low cost model.
So nobody has nearly doubled its number of dealers over the past 12 months by selectively adding 134 dealers in sub dealers.
If you are a contractor seeking a solar and storage service provider partner that does not compete with you that offers the broadest array of products with all the financing types loans leases and ppas.
That partners with the leading energy storage and other technology providers and that has a stable capitalization strategy. There is only one solar and storage service provider available to you and that is to Nova.
As a result, we expect to see our dealer count continue to rise during the remainder of this year and well in to 2021.
Our storage attachment right on origination increase from 15% in Q3, 2019% to 34% in Q3 2020, as we continue to see strong consumer appetite for solar plus storage. The large driver of our robust storage attachment right over the past several quarters has been our 100% attachment right.
And our island market that Guam, Si Pan Hawaii in Puerto Rico.
However, we've recently seen storage attach rates rapidly increase and select non island markets, such as Florida, and California, which had Q3 2020 attachment rates on origination of 16% and 12% respectively. In fact to date, we have sold storage service.
And 17 states and territories and.
In addition to providing battery storage to new customers. We've also been busy retroactively, adding battery storage to previously solar only customers.
Since we began offering storage as a service we have performed 883 battery retrofits through September 30th 2024 boats to Nova and nonsense of our customers alike.
We expect to double this amount over the next two quarters.
Turning to slide for we provide a summary of our third quarter of 2020 financial results, which are further expanded on slide five.
Our total customer count adjusted EBITDA. The principal interests, we collect on solar loans and are adjusted operating cash flow, we're all at or above our expectations.
On slide six you'll see both are gross contracted customer value or GCB, and our net contracted customer value or and CTV are experiencing significant increases year over year.
This translates directly into shareholder value creation used.
Using a discount rate of 4% NCB increase from $1.1 billion on September 30th 2019 to one 4 billion on September 30th 2020.
This equates to approximately $15 and 63 per share as of September 30th 2020, which is nearly 817% year over year increase this increased clearly shows or rapid growth is creating value for shareholders.
Please note both are GCB and NCB metrics represent only our existing contracted cash flow base after MSA fees, which would collect and used to service the contracts and after payments to tax equity providers. It excludes all future contract renewals and it seems we sell no complimentary products and energy services.
To existing customers and and assumes no growth while.
While these items are not reflected in our contracted customer values. They do have value and will become more meaningful to sort of a number of services so poor customer growth.
Later in the call I'll expand upon these additional service opportunities and provide an overview of how we expect them to grow over time.
Impacts they will have on our end CVV.
At four unit economics, we continue to see stable returns and expect those to continue.
For instance over the last 90 days, we achieved approximately nine 7% unlevered and eight 6% fully burden unlevered returns.
As you can see through the slight improvement and are fully burden unlevel returns.
We have seen improve single customer net margins.
We accomplish this through scaling our sales overhead by increasing our nominal per quarter customer growth.
Add to Nova we believe in consumer choice, which is why we offer our customers the broadest portfolio service offerings in the industry.
Recently, we've seen loans make up a larger percentage of our contract next going from 27% of originations in June over 40% in October we expect this trend to continue into next year and have set our 2021 guidance accordingly.
I will now turn the call over to Rob to walk you through our financial results are recent financing activities and our guidance in greater detail.
Thank you John Slide eight shows the period over a period changes in our key financial performance metrics across the board are results improved on the back of our significant customer count increases and the fact that our business continues to scale on and adjusted operating expenses per customer basis.
On slide nine you will see a summary of several important financing transactions completed during the year to ensure some of our has the capital it needs to continue funding it's high level of growth.
2020 financing transactions completed to date include just over $570 million in new securitization $235 million in new tax equity funds multiple expansion of our third party operated warehouse facilities, a new $60 million loan facility and $190 million and convertible that much of a.
Which has already been converted into common stock.
If market conditions continued to be favorable we anticipate closing an additional securitization in the coming weeks as investors no doubt recall, we were one of the few companies who maintain guidance throughout the pandemic this year and one of only a handful of renewable companies to do so.
On slide 11, once again confirm are 2020 guidance ranges, which is a testament to the predictability scalability and flexibility of our business model.
Unchanged from last quarter's call, we still expect our adjusted EBITDA and the principal and interest we received from solar loans to trend towards the upper end of guidance and <unk> the trend towards the lower end.
Again this bifurcation is because of growth related initiatives that have increased interest expense is working capital needs of increased as well as marginally increased spending for growth and efficiency projects to accelerate growth and value creation.
And the previous earnings call, we introduced guidance for recurring operating cash flow Rlcs as a reminder, rlcs's revenues and principal interest from solar loans less the principal and interest repay on our permanent debt, including securitization and corporate level that.
We also subtract out service related expenses and allocated overhead, which together account for approximately 60% of our annual SG&A in service cash costs.
As previously mentioned, we were able to generate new assets at more or less cash flow neutral on a fully securitize basis. After taking into account sales related operating expenses, including approximately 40% of our overhead and all of the interest paid on working capital.
<unk> looked at the casual created or consumed by existing customers and assets after that service and service expenses put another way, we generate new services into our utility and roughly breakeven while rof's CF measures the cash flows from our utility.
The balance of our cash consumption is directly related to the working capital required for the high growth of our business.
We believe <unk> is an important measure of our financial performance and gives investors greater insight into how we are increasing our operating leverage and reducing risks for our debt and equity holders.
Together with our <unk> television for which more accurately captures the capital cost of our leases and loans versus the television.
Oh C. F gives investors a clear view of value creation. After all expenditures and cause a permanent that are taken into account as a growing company. We will expect to continue to be a net consumer of working capital, but the trend in wrong CF continues to be up and to the right.
Turning to slide 12, we are introducing 2021 full year guidance of customer additions, a 42% to 48000, adjusted EBITDA of 77% to $83 million customer principal payments received from solar loans net of amounts recorded in revenue $57 million to $63 million interest received.
From solar loans of $28 million to $34 million adjusted operating cash flow of $20 million to $30 million and recurring operating cash flow of negative 15 to positive $5 million.
We have a high level of comfort and hitting our 2021 targets as the nature of our business provides excellent visibility. This visibility is reflected in the fact that approximately 80% of the midpoint of 2021 target revenue and principal and interest we received from solar loans will be locked into existing customers as of December 31 2020.
And our previous earnings call, we introduced a customer growth target of 40% for 2021 and 2022.
Using the midpoint of 2021 customer additions, we are now anticipating that growth target to exceed 50% for the upcoming year for 2022, we will continue to estimate a conservative customer growth rate of 40%.
Our ability to lead the industry and growth rate continues to be a major component of our success later in the call John will dive deeper into how we are driving and thinking about that growth.
Our customer base and business model is expected to continue to produce industry, leading operating leverage as a result, even with me to replacement cost of $5 million in 2020 and $11 million in 2021, we expect to reduce our adjusted operating expense per customer by as much as 35% between 2019.
2022.
Looking forward, we expect <unk> to be positive in 2022 and beyond.
In fact, we would've expected to reach positive all Scf ahead of schedule in 2021, if not for our decision to replace our <unk> and <unk> meters next year to invest in measures to increase efficiency uptime empower production in order to further decrease are already low delinquency and captain loss rates and investments to further.
Increase our foreign growth.
This is normal tension every high growth company managers balancing between higher growth and generating larger cash flows through the equity.
The same tension is showing in our per customer cost reduction pace and that the rate of the reduction would be much quicker. If we limited growth investments and lowered our growth rate overall are rlcs is growing faster than our customer growth due to our ability to increase operating leverage as previously discussed our continued decline in our all.
Then cost of capital and our natural deleveraging driven by front end loaded amortization schedules and soon are on <unk> further propelled by tax equity slips and that refinancings I will now turn the call back over to John to provide closing remarks.
Thanks, Rob as to Nova our goal is to be the best source of clean affordable and reliable energy with a simple mission the power energy independence. So that homeowners has the freedom to live life uninterrupted so.
Cheat. This goal we're reinventing the way energy is generated and consume by offering homeowners a better energy service at a better for us.
Beginning on slide 14, you'll see how energy options for homeowners have evolved over time from the traditional energy service model rely entirely upon centralized electric grids to the new energy paradigm of distributed solar and solar plus storage looking.
Looking forward by utilizing the latest technologies and solar storage secondary generation demand control, we are endeavoring to turn our customers homes into partially or even fully self sufficient nano grids.
Whereby our customers will no longer need to completely rely on centralized power and have gained true energy independence.
We are aggregating these nano grids into what we call. The Sonoma network. This network will create value for consumers synovus stakeholders and even the centralized grits.
Slide 15 provide the lifting of synovus array of current core offerings, which already includes a wide variety of services.
For example, all of our customers benefit from our Synovia protect comprehensive service plan, which provides both maintenance and system monitoring.
Additionally, as our battery penetration rate increases more customers are benefiting from the reliability and resiliency of our synovus unsafe solar plus storage service offering.
Over the next several quarters, we expect our core offerings to continue to grow as we offer even more energy services to our existing and new customers.
This includes but is not limited to electric vehicle charging energy management solutions and secondary generation.
Before further exploring the impact of our expanding energy offerings, we want to quickly defined some terminology.
So notified the service as a transaction thats to Nova <unk> Designee performed in exchange for a fee from the customer and is counted for the duration of the customer relationships. So long as that service is still in effect.
Furthermore, a customer relationship is defined by the presence of at least one active agreement such as a service plan or a similar offering.
As noted on slide 16, we currently provide an average of three six services per customer, which equates to approximately $14000 of net contracted customer value generated per customer.
As we begin to provide more holistic energy offerings. It is only natural the number of services for customer will continue to increase.
As a result, we estimate by 2025, we will be providing anywhere between five to nine services per customer.
This in turn will increase the amount of and CCD per customer regenerate by an additional amount anywhere from between $15000 to $17000 for customers with five services to 18000 to $20000 for customers of seven services and 21000 to two.
$3000 for customers with nine services.
<unk> goal is to sell seven services per customer by the end of 2025 or nearly double our current services per customer.
Another example of our expanded energy service offerings can be found in a recent qualification to participate in the ico, new England for capacity auction.
This ability to participate in capacity markets and other grade services will drive even further value for both to Nova and its customers.
A key to our success has been and will continue to be our industry leading growth.
Which allows us to achieve the scale necessary to dramatically lower our cost per customer and as a result further improve our single customer net margins and closing as technology continues to rapidly improve residential solar as quickly transitioning from being a product sale the service sale.
There are a growing number of hardware technologies that are being integrated with software by large scale Anarchy service providers, such as the Nova and this integration is going to help make the power industry. The grid look more like the internet instead.
Instead of having 100% centralized assets with command and control and no intelligence at the endpoints of the system you had power industry is heading toward a hybrid of centralized and decentralized that will become more durable more reliable mortgage carbonized and more useful to consumers.
Forced to Nova as this vision is realized it has opened further growth opportunities for us to create and sell more energy services to our existing customers, creating further value for our customers and shareholders.
Our vision has been that we would go from just putting panels on a roof, adding solar plus storage to integrating low control Navy charging two essentially creating a nano grid system on our customers homes.
All of which facilitates our long term vision of becoming a global wireless power company.
With that operator, please open the line for questions.
Q so ask the question.
Five one.
Let me tell Ya.
Okay.
Uh-huh.
<unk> why we compiled the coupon.
Yeah.
First question comes from <unk> I'll think.
Lines.
Then you there.
<unk>.
Hello can you hear me now.
Yes, we can.
Sorry about that so for all the information.
Question is about just.
Value per customer and held us trendy.
You can give us the putting takes as we look into the into the next year.
Those.
Those covid stuff too.
It's a forecast blue.
Can you talk to as well.
Plus mood value.
Oh God.
Lola.
Okay.
Good morning this John.
Referring to the in CPB I assume.
Sure.
Okay.
We do it we caution in the past and the first two quarters were.
Fairly flat and we said that it would pick up given the.
Their ability and tax equity closings and.
Other financings and it did obviously was a big jump from Q2 Q3 is.
It didn't forecasted.
For this quarter will also be fairly large so we do see a growing.
Right and I do think the right way to look at this.
Is on a per share basis. So it takes into account any dilution any equity issuance and so forth and so you can see the trend is decidedly.
Moving up as we gain more and more scale and that goes to the point about having.
And increasing growth rate the amount the nominal amount of growth that we have per year is obviously, increasing at a very rapid rate and then the cost per customers that throughput per quarter, and I think you'll even see a lot better visibility into that this quarter I know you will.
Scales are overhead and drops our cost and so the way that we've conservatively counted a customer has cree creates a lag in that in that metric. If you think about it you spend on a customer and then six months later or so approximately you originate that customer and then six months later that customer for us when it goes in service become.
The customers so there's about a year lag.
Plus or minus from spending too to generating the growth and so therefore, you'll continue to see an upward trend in CCG.
Great.
You guys mentioned.
For this year cause you talked about so far.
Okay.
Low.
Corporate level.
I think it.
Yeah No I. Appreciate it then this is Rob generally speaking we're going to continue to.
Focus on concentrating the tax equity that we have in the pipeline.
And get back to a regular cadence.
On our securitization I think when we first talked about our goals for for this year before Covid, we're expecting to have.
Four to five securitization is a year.
Covid slowed things down it costs, a major disruptions in the avs market, we seem to snap back to.
Good point on investment grade side.
High yield side on the securitization market is much recovered, but still lagging a little bit from where it was the beginning of the year I think though you should still expect us to try to follow that expected cadence of four to five securitization a year and to continue closing on tax equity we've got.
We do expect to close on other transactions this quarter and we've got some very good visibility into 21 and 22 based on commitments.
We're not going to call it.
Not going to call it closed until it's closed.
But we feel very comfortable with our position there.
It had been that the growth that we've been seeing has been massive.
And the.
Growth outlook and guidance that we put in for 2021 is pretty easy for us because that's where the trend right. We've been growing up for the last several months.
So I want to see more I think everybody does what happens on Tuesday get some more information and see what happens over the next few weeks on a macro basis and then I think just like we did this year, we'll revisit guidance and growth for.
For next year and early next year, when everybody else issues, there first guidance and we'll probably look at 2022 guidance as well just given the significant growth we're seeing.
That also goes to working capital and when you.
The vast majority of working capital attacks equity and that.
There is a little corporate captain.
Capital involved that can be a debt or equity. So we'll take a look at everything as we go through the next few weeks. So I'm sure I know I'm not alone is the CEO, they're going to do that after.
Election.
We'll just know as again all of US will a lot more after hopefully Tuesday, it's over and then we'll come back in and and get any updates later this year or for certain in the next quarterly earnings call an early next year.
Great. Thank you very much for us.
Your next question comes from Brian of Goldman Sachs.
In mind.
Hey, guys. Good morning, Thanks for taking my questions.
John maybe first off on the guidance.
It sounds like you guys have.
Hi degree of visibility per year business model.
Construct I think he talked about 80% number.
Can you dive into that a bit more just trying to figure it out.
Or or get a better understanding of how derisked the.
Customer growth target here is for 2021, I think you had been talking about a low 40000 new customers.
Target or so prior to this official guidance so seems like some upside has materialized here so.
Wondering what's driving that and then Q, how exactly defining the backlog of visibility on that 80% you talked about.
To gain comfort what can you targets and then I had a follow up.
Certainly good morning, Brian.
First is.
We spoke about 80% locked in in terms of revenue and then principal and interest from our loans by the end of the year. We made a very similar I think in the exact same number. This time last year. If you recall that goes to our metrics of adjusted EBITDA, plus P&I and then recurring operational cash flow adjusted operating.
Cash flow as well so it's all in the financial aspect of our major metrics. If you will so that's what that 80% refers to so that gives us very very good solid visibility into 2021, because we have 80, 80% of the revenue so as long as we manage the expenses and balanced setup against growth as we referenced.
Will will hit our targets just look we've been doing quarter and quarter out. So we'll start to give more than we have more confidence as you start to look.
Early part of 21 into even 22, there can go that far out in terms of customer growth what I just referenced and said in answer to Ben is a couple of those questions is that we feel comfortable about this guidance because we've been running at this pace for the last several months and therefore, we have.
Half the work in progress or backlog booked in at this level. So we anticipate on taking in.
Roughly maybe a little bit less than half of the contracts needed to hit this midpoint target for next year that we laid out leaf.
We expect to have that by the end of the year going into 2021 if.
If the growth continues to accelerate and again as.
As we laid out we grow three ways, we grow through adding dealers in sub dealers, which we see strong traction and picking up.
Grow through adding and selling additional services are up selling to our existing customer base and we're growing by selling additional services to our new customers, what you've been doing quite a bit of particularly on the storage side of things. So that's that's how we are growing and we see more and more growth, especially in those last two.
In terms of adding additional services, we've laid out for everybody about what that looks like and how.
How you can model that out with regards to in a margin or NCB.
And hopefully that gives us some more help and visibility of modeling out the company not into just 2021, but 2022 and beyond.
Yeah, No that's helpful.
And then just my follow up question on the.
The adjusted guidance, specifically, it looks lower than than most people had.
Pennsylvania for next year, but when when you factor in the P&I payments from customers. It looks like the aggregate across those two buckets is actually moving higher so is that is that right.
Sumption Slash math, and then what's driving the higher P&I. It sounds like it's just more loans and mix shift, but can you provide a bit more specific as to why you think you are seeing some of that and what's baked into your.
Assumptions for for 2021 versus what you are seeing in 2020, thanks guys.
Yes, Sir yes.
Have been seeing as we referenced a pretty significant surge in our market share I mean, we're seeing it across the board in terms of contract side.
Lease PPA loan, but loan has been growing at a much faster rate this past quarter in fact.
Updated number last week, we were hitting about 46% of our origination was loans.
Significantly up so we don't see that trend debating, what's causing that our view is is that.
One the company's growing and it is I think it's well known the majority of the market share out there is loan and so we're just picking up we're doing a better job and the loan market with our products all of our loan products come with service and that's really attractive to customers. They want that long term service and that's unique to us.
So that's driving I feel that's driving a lot of interest in our loan products, we're certainly doing very well and that's on the net margins on those products. So we did model that out to continue and therefore, you do have a drop because remember.
Adjusted EBITDA as I think Rob reminded everybody in his comments only includes the revenue from the Leafs in Ppas, but includes 100% of the cost. So when you look at the P&I. There is about zero cost associated with the P&I. So therefore, you can have big jumps in the P&I and not so big jumps in the adjusted EBITDA as a.
Bold to that will also add this that we've built in a little more spending an adjusted EBITDA.
And the rough breakout is.
Roughly about 40% of that spending increase and it is not much most of this to be very very clear is driven by the mix going to from to loan from lease PPA, but we've added in because we do see faster and faster growth as we laid out in this.
Additional services per customer that were selling for 2021 and beyond about 40% of that just general growth in terms of the spending increase year over year that we expect and baked in our numbers about 40% of that change the business is what we call. It. So that's the additional services and so forth most of that you'll start to see an impact in late 21, certainly 2020.
<unk>, so it's a little bit longer dated investment and then 20 percentage we've laid out the last couple of quarters is need a replacement now what this means is that if we choose to drive up adjusted EBITDA and recurring operating cash flow faster as Rob said in his comments, we can certainly delay that spending and push it out we do have that flexibility. So if we wanted to do that.
We can we can push those investments out that made sense from a macro economic standpoint.
Or form what capital market standpoint.
But.
In this I think is a real salient point.
If we chose to just stop growth, which we're not going to obviously, but if we chose to do that we can shut grow thought growth off and just blow cash we were at that point.
Understood appreciate the additional context.
Thanks, Brian.
Your next question comes from unilaterally Coney also G&P and lines.
Alright, Thanks for taking my question today.
Hutch on your comments around the reasoning.
And you get to speak a little bit more tier strategy on how you guys are looking to monetize.
Strong that thank you.
Okay.
Certainly thanks Hillary so we we have a rather large deal of nipple.
It's about 95 megawatts, we won't know the exact.
Money side of things if you will of revenue side of things, which is pretty much all margin.
For us until after the auction in February timeframe, I believe and so when.
When we get done with the auction and we'll go out and report those numbers LCL, but it should be a fairly significant amount of money that's will be recurring for a number of years.
On our connected solutions, we're working with our partners.
Across the board, whether that's a generale Tesla.
And phase solar edge is obviously coming out with a product on the esfs side as well.
And we're going to be networking up.
The customers with the storage and driving even further value.
In these respective regions and so we.
We do see increasingly and I think we're not alone in this in the industry. Our competitors are seeing as well ability to capture more and more revenues through through grid services grade services can be a very broad term you can cover energy capacity. It can cover ancillary services.
Cover obviously selling is of energy by also there is increasing amount of inter.
Interest from policymakers to make the customer system as I discussed and having a more hybrid decentralized and centralize versus 100% centralized to be more beneficial to be stronger more resilient reliable full for consumers and so we anticipate seeing more value being associated with distributing.
Having distributed batteries at the endpoints of the system.
Specifically on our customers homes.
Okay, great and cooking it just kind of wondering if you could share your thoughts on and when you look at your customer granted how you think about that in terms of game within your existing footprint.
Versus perhaps extending here gave ethics.
Thank you.
You bet.
We as always prioritize existing footprint growth because the densification drives our per customer service costs down which continue to drop this year per per a plan and we expect further drop next year and beyond as we continue to scale. The business. So densification is really impactful for us.
It has a high utilization increases our utilization rate of labor in the field our service technicians.
And basically a big part of why we have a dealer model is at is increasing utilization rates.
For.
For the labor everywhere.
With that said at some point in time you continue your geographic expansion, we do expect to grow and more geography's in the coming year.
And that will hopefully as we've gotten much much larger will be able to deploy more customers in those new geographies faster, therefore, increasing our utilization rate a faster than we have previously so we do find ourselves in a good spot to expand geographic.
<unk> I would say that we probably would've done more we would have done more this year in terms of geographic expansion, but the pandemic crisis got in the way shall we say and so look forward to next year. When we will we will have a quite a bit more geographic expansion.
And therefore, we'll see we'll see incrementally more growth and we've been seeing even even today.
Your next system comes from Michael Weinstein of Credence me your lines.
Hey, John.
Good morning, and welcome the morning on the.
Leases versus alone Smith.
Okay are you seeing pick up and loans, mainly because of competition and leases market is it a market share shoe or is it more of the.
More of a general trend.
Loans.
Yeah, no we're not seeing a competition I think everybody is doing.
We've all got more than enough growth, we can probably handle respectively.
I know that.
It certainly.
Everything we can do to keep up with the growth here.
So I think everybody is so-called behaving themselves in the market is rather stable you look at our unit economics or on Mother'd returns, they're very stable or fully burdened is.
Is moving up as we scale of the business.
Again scaling our sales overhead so no I don't see any pricing pressure and Luis PPA market.
And that's interesting because the cost of capital right is really plummeting and but we still see.
Thank you and you have a few others over the last couple of months basically the industry's margins of have expanded when you have the lower cost of capital and kept the lease PPA pricing stable I think it's simply just that we've become very big and when you become very big you must reflect what the market waiting is in the market waiting is not 80%.
Or 75% rather at least Ppas you know in 25% loan is more like the flip of that.
Typical of that so I think it's simply just we're growing into the.
Being our size and growing into we've picked up significant market share clearly and we expect to continue to pick up soon as get market share and having service senior loans and taking care of customers is what they want I think that just makes sense and when you start adding storage to it the demanding.
And so it goes from a simple putting panels on the roof too optimizing again, creating a nano grid on each customer's home, they're going to want a service provider. This is not a product sales anymore. It's a service sale and what that means is that people increasingly even with loans want to say that sign up for a service contract. So they are coming in and taking.
Product versus maybe some others in the marketplace.
Alright that makes sense I mean do you think there's any.
Sensitivity to tax credit extension.
Let's say, there's a fall off in demand next year because of.
<unk> extended and so people don't have to rush.
Iowa.
Do you think that could affect the mix.
It's possible that's what I want to see it's one of the things many things that I wanted to see come Tuesday, what happens and then we've got.
Scenario.
Multiple scenarios, depending on the outcomes on Tuesday about what would happen with the ITC and therefore, the mix of the business to business is going to be.
No matter, who wins on Tuesday, the business will be fine.
Do we have one preference over any other anything sure and everybody knows what it is for.
For the obvious reason of ITC. So that is a fair point and I'm looking at that I will tell you Michael I'm surprised that we didn't see more of an impact this year with a 4% drop from a 32 26, and therefore lease PPA was advantaged and if you could safe harbor, which ourselves in three.
Three or other competitor two or three other competitors did as you know and so I think it's possible you could see a swing back a little bit towards the end of next year, but the other thing is is that you got a balance is if you are truly not going to have an ITC extension for whatever you're going to have a rush to get the loan to even at the 22% versus a zero percent as you move into 2022.
Right. So at this point in time, there's just too many unknowns and hopefully we'll have I'll have more information and be able to update.
Post post Tuesday.
Given the the emphasis on value per customer.
16 and 17.
Do you think you are moving more towards.
The company on that basis, rather than adjusted EBITDA just in general.
At all.
Patrick to look at the most important metric down valuable customer.
I think I look at it personally just the way I look at things and Michael is I look at our hybrid approach and and I think that gives a pretty good indication because it has with you have as a contracted cash flow and add value in terms of option dies, we put it and you can put renewal value in there as well.
As you and many others analysts like to do and we certainly are supportive in that I think that's reasonable but.
But I think that's a long term value. So I look at is that $16 or 15 63 per share I look at that is kind of a pet rock value.
Obviously I believe the bedrock is quite a bit higher than that I think that frankly via the stock is pretty compelling personally in terms of evaluation.
But an adjusted EBITDA it doesn't reflect the capital structure.
I've always been upfront about that it doesn't but what it does tell you is are you getting operating leverage and even with about a year lag on spending to growth. What it is showing very clearly is that we are and so that I look at from my personal point of view is in how I run the business as I make sure that we're scaling the business.
By essentially scaling adjusted EBITDA, plus P&I faster than the customer growth, even with that lag impact, which is really compelling and that we're scaling the recurring operational cash flow of the cash flow of the company even faster than any adjusted EBITDA, plus P&I, which is clearly doing that's telling you that we're gaining more and more operating leveraged.
That we're making progress and then I'll look at that Mcd per customer and I'm, saying. This is the amount of value of bedrock value that we're creating for the companies for the company's equity. So I think the answer here and this is why we have all these metrics is there is a balancing act here as far as the way that look at.
Valuation to make sure that we're doing our job creating value for the shareholders.
One last question I mean as long as you were talking about recurring operating cash flowing recurring numbers.
Would it make sense to maybe excludes some of the investments you talked about computers.
Anything that might be.
Non recurring for instance.
Forward.
We do believe it does make sense to exclude those.
We just didn't want to be criticized for excluding a lot of different things. We already had some exclusions and obviously was late them out very clearly we don't have a lot of them, but we had some of them on the adjusted EBITDA calculation. So we didn't we didn't want to exclude it to trying to play games.
So we were pretty direction and saying here's all the information when.
When we talk about cash flows there's no expenses left out.
Spending left out and it's this is what you see is what you get.
But do I feel like it's better to look at a trend in the way that I look at it excluding the meters, yes, because like you said they are one time in nature and.
To get a better sense of the trend I would I would exclude them and I. Just we don't want to do that just to make sure that we had the right.
Culture, and setting as far as being.
Very direct and and get every single expense out there for everybody like yourself to know.
Alright, Thanks, a lot John.
Yeah. Thank you so I'm calm.
Next question comes from Mark strong J P Morgan remind.
Good morning, Thank you very much for taking our questions just a follow up to Michael's question about the election in one of the things that.
Biden has is targeted pretty dramatic increase in rooftop solar deployments.
Just wanted to get your opinion on how workable you think a high level plan like that is and and how how quickly or just generally speaking house in Nova might react if that plan comes to fruition.
Yes, certainly give more mark.
I think it's very workable.
I think if you want to and I think we all do we want to get this economy, moving again and I think what what all of US know it being Ceos is that the economy is not in great shape at all at this point in time, that's a fact.
And we need we need more job growth, we need more people out there and certainly being in Houston.
Oil and gas industry is obviously hemorrhaging.
Quite a bit because of the overcapacity in the marketplace.
The shell oil and gas was way too expensive at the end of the day.
And so we need to have a policy that makes sense that addresses the transition that is going to happen, regardless of who wins on Tuesday, we need to have policy makes sense to create jobs and do so very quickly and we've got a very good track record industry to do this and so when you look at.
What simple moves can be made by the by the fed by Congress and the president to make these job show up and they're good paying jobs are great paying jobs by the way is that you extend the ITC then we don't have to deal with all the safe Harbor equipment machinations and spending and spending more money on interest bank.
And such and all this other things we can put that money in the pocket of the people where it belongs so that's a very very simple.
Action to take the other is to start having more and more accommodative policy that focuses on consumers not monopolies not big energy companies Big oil and such focus on what's right for the people and make sure that the lines of permitting for instance, and that any sort of impediments to consumers having.
Choice, we hope they choose to Nova we strive and everybody at snow that worked so hard including are and for dealers in our technology supplier partners and everybody else to make sure we earn their business, but the point here is that we feel like we must earn their business and in the energy business, particularly in the power business that's not the case.
There's no choice, they're so open things up give consumers choice create jobs and the momentum and the wealth creation the job creation there'll be unleashed through residential solar and obviously, we're talking about so much more here that we've laid out with services will be immense. So we're looking forward to it regardless of who wins to working with.
The Congress and the President next year to put these policies in place, let's get moving let's get back to work.
Okay. That's it for us thank you.
Your next question comes from the line.
Kim cough drop off the call partner.
Oh.
Hey, guys. Thanks for taking my questions.
How much do you think it would be grow your dealer base.
And 21 John.
Can you talk about the latest in terms of your dealer concentration now at the time of the IPO one dealer represented a substantial amount of your originations.
So just.
Talk to us through where things stand now and in spite of exclusivity payments and we can talk through the risks that you could lose a top Taylor.
And what that.
Could look like you know I know, it's a low probability type events, but.
One to understand how you think through that and then what's your latest thinking is thanks.
Okay sure. Thanks so.
So the dealer and sub dealer growth, obviously is a lot higher than what we expected at the beginning of the year and frankly, a lot higher than expected even monster earnings call. We don't see any a basement and that trend if anything we see an escalation and.
Why is that.
As I laid out in my car.
Comments.
We don't compete with them.
We have the broadest product array out there.
When it come to one stop shop of of leases Ppas loans, and we are mixing the contract financing types. Together for instance, you can do it.
A solar only lease and then up cell with the with the battery loan.
Having that all on one platform is very helpful. We and we create we have a very powerful engine and creating new products that are interesting to various different.
Segments in the marketplace of customers.
And we have the best technology partners, some intestinal awesome general awesome and phase and solar edge awesome. So all of these different.
Things that come to the table and you think about this if you're a contractor where the only place to go to get all this.
If you want and not have somebody compete with you want the broadest product raised we want the best technology available to you you can come to Sonoma and then last is we have a very stable capitalization strategy. We have long term contracted cash flows better now measured in the billions regardless of discount rate and that's extremely attractive to a lot of contractors that are coming on the dealer.
Side. So we do expect this trend to continue to accelerate not not just a.
The current trends so.
And I would say the fourth and first quarter as I mentioned in the past or the times, where most of the dealers given the low point in the seasonality of origination make make a switch and so.
We're excited to see what the next few months bring us in terms of concentration.
Way different way way way different and.
And let me be very clear.
Highly value each and every dealer.
Especially those who had been with us for a long number of years. Some are personal friends of mine I would do anything for.
<unk>.
Greatly value their contribution and greatly value of their business relationship and friendship and we will do so for years to come.
So hopefully that.
That will never happen, but life events take place.
People can't stay on Earth Forever, and certainly won't work forever and need to enjoy the fruits of their labor and.
Hopefully no bad events happened, which do happen in life with sickness and so forth. So it's about people.
At the end of the day and when you look at the number of potential of loss of if any one large dealer right now we're pretty we're pretty optimized for that in terms of being able to take it it's our.
Ration is significantly below.
25% is closer to 20% and falling on any one dealer.
And we do see opportunities for.
Many other dealers coming on board, so I see that further dropping over the next two quarters quite significantly so.
We don't see that risk really being applicable to us much at all at this point in time, but again I want to stress personally very appreciative of each and every one of our dealers through hard work and your friendship.
Great shifting over to storage.
<unk> had strong attach rates.
<unk>.
Very clear and the matrix on storage in terms of one on a blended basis.
As well as with certain states can you give us a target for 21.
And maybe even split it up between attach rates for.
New customers as well as retrofit.
Yes, we we don't have that and I don't think we want a guide to that at this point in time fill so what I would say is is that the.
The origination.
In terms of certain Geography's, obviously, if you have some geography's as we've laid out and I think I.
We are at least today to given out way more information anybody else and storage attachment right.
And when you have 100% attachment rates in some markets if those markets happen to not generate as much.
Originated in that quarter or more than you expect that quarter, you can fluctuate quite wildly.
We are very pleased to see other markets and we're very focused on having other markets such that we laid out, Florida and California continue to move up we're seeing a lot of traction in the northeast mid Atlantic.
Finally, and interestingly enough, we're seeing a lot of traction in Texas, I'm really surprised about how fast Texas is drawing not only in in storage attachment right, but also just nominally with even solar only so.
Unfortunately, I am not going to give you what you want to but hopefully I took a step forward forward here and gave you a break out for at least the the top few.
A few markets here a storage attach right I do expect and I wouldn't say look the numbers are working against US in terms of math is it's a lot harder to double 34% than it is 15% right or 11%.
So I wouldn't expect that kind of move and I've been very clear on that.
But you will see quarter to quarter fluctuations in the attachment right, but overall, we're simply selling a lot more batteries and expect to do so in both in new origination and in in our existing base, we see a lot of interest in that and we're gearing up and continue and you sell more and more to our existing customer base.
Great that's.
Helpful in around the edges, but maybe I'll try to a different way in terms of Puerto Rico.
You guys have grown.
Geo really nicely and so as you think about Puerto Rico through 21, what kind of growth could that specific region give ya.
I think that market is going to stay strong for us, but other market stay strong for us as well.
I think that we've given out our growth guidance and I don't want to start breaking it out by region I've already got enough pressure on my right to make sure. We continue to it that for you guys and ladies so.
I expect I don't see why if you're sending in Puerto Rico and you can qualify for the service I don't know why you don't sign up for it and it's it's pretty compelling to say the least both it's a better energy service at a better price Full-stop and that's why I founded the company was to deliver that for people all across the world and in Puerto Rico is really important.
Morton, great market and everybody in Puerto Rico.
Deserves a better energy service at a better price.
Great. Thanks, John pass it on.
Your next question comes from <unk> Jemal, 19th of Bank of America the nineties.
Hey, good morning him. Thanks for your time.
Thanks, Julian good morning.
Hi, Good morning wanted to follow up here can you talk about the labor dynamics out there obviously, we've seen commentary times about.
It would seem as the backdrop as you say with the economy and certainly improved here.
In terms of labor availability right, given given a challenge economic backdrop.
Play into your ability to execute with confidence on on the even higher numbers on customer adds next year.
In light of the customer had some 21, what does it say about the trajectory thereafter at.
At this point and again I know impacting for more but.
Because we can't drive.
Yes.
Okay. That's okay.
Look I think it's as I've seen some commentary out there it's easier to grow a very large dispersed labor force through this then then otherwise with a smaller more.
More fleet footed base, if you will a smaller dealers and slash contractors I haven't seen that that doesn't make any sense. It makes more sense that you have that entrepreneur that man or woman that can go out there and know enough people in that area and build up a contractor.
Hopefully they become a dealer for us and so I think those folks.
Are are really able to more optimize the labor market, if you will and when labour was tight.
Remind everybody back last year and early part of this year before the pandemic crisis really fell upon us we were blown and go in our dealers youre doing an awesome job little medium and big and some of the look you've got if you're running a big dealer you got a lot of management skill than hiring people in my hat's off to you because I've done that before it.
A hard job.
What we expect is our dealers and what we're seeing are doing a fantastic job of making sure they get the labor and the door to get to match the increasing growth rate.
On our side of things we were.
Advantage by being in Houston, which is the most diversity in the United States by the way.
And the labor pool, and the talent here available to us at various like the rates is fantastic at this point in time, and we're hiring like Crazy here, we're hiring people accounting legal finance I mean, you named in customer care, everybody and we're hiring a lot of field service techs across the country as well some mark.
Are tighter than others Julian as far as for the for those type of folks, but we're seeing a lot of good folks come into the industry and that's my point is we are done a great job as a company being where we're located being our model with dealers pulling people out of other industries in some cases, yes oil and gas.
Into our industry and that's really what we need is to do.
Not only ourselves, but our competitors is to continue to increase.
The labor availability through training programs and others to get people.
To work in this industry, so again going back into answering the.
Another question was previously asked I see this is an enormous job creation opportunity for the United States and really encourage more than encourage.
Whoever wins on Tuesday to take to see this advantage take advantage of the job creation potential and let us put people back to work across the board.
In 2022.
I do feel like that we're going to continue to see a lot of momentum and I do feel with all these additional services. There is so much more that we can sell there's a lot of work, we have to do and putting together and developing software in.
In many ways, where a software company.
Amount of money and I assume our competitors are the same way they've made similar remarks in the past where spending a lot of money on software development integrating software. It's extremely complex to do think about adding all of these different components solar panels smart inverters ESF storage Jen sets fuel cells load management, putting a altogether.
Other than optimizing both for the customer and for grade services that is really complex takes a lot of software development.
And it's something that's pretty unique and it's hard to replicate so icy just a lot more growth not only as I laid out adding more dealers in sub dealers and continuing that momentum growth into 2022, which will revisit under 40% in the next quarterly update and I think you can read through that and then we will email growing more.
More on services upscale poor customer an existing customer base and we're selling more service first customer in there which is why in some cases you see the cost that we in the amount of capital. We deploy has been going up our customer we see growth growth growth. That's what we're seeing in so 2022 should be pretty fantastic.
I could technicality, if I can I know, we're running a little late here the meters.
The $11 million going into next year.
Clear that is included in that even in a bright so that's kind of a one time item. If you think about it that runs through your cash flow needs a matrix right.
Correct.
Okay, Alright, so I just wanted to call that thank you.
Thank you.
Your next question comes from Pedro motion of remote and.
Thanks for taking the question.
Two quick question both about the ITC.
Let's suppose that there is no extension.
For the residential ITC beyond December of 21 so.
In which case, presumably there will be demand pull in by the end of 21 why would there not be a decline in installation.
In 2002 under this scenario given what we've seen for example back in 2016 in a <unk>.
Similar.
In a pattern of events.
Yep. Thank you.
So the reason why we wouldn't see it is is that the lease ppas. We the major service providers, the major residential solar and service providers of which than others. Obviously one of them have done a lot of safe Harbor.
The 30% ITC, we're obviously blowing through that inventory is where our growth rates are accelerating but we bought a lot and I think there was some questions about the larger biola, because we're growing really fast, but that's why we need it.
And so I think that we would look at and this is what I one of the things that Rob and I want to do is sit around along with the obviously the board see what happens on Tuesday, and then.
Make an assessment about what we need to do on further safe Harbor for the 26%. So that we can look at even further out on the time timeline. If you will so that's first and foremost the least and PPA you can safe Harbor. So you can continue to go with a pretty nice tax credit and all the way out to 2025 currently if nothing else was done and then on alone.
<unk>.
Thank you actually see a lot of pull in and next year.
So it's counter let you said because the 22% is going to be ending for loans right in 2022. So.
I think you'll actually see a huge year next year. If nothing was done if something is done I think it actually levels itself out a little bit because there's not as much.
Call to action, if you will and the sale by the end of the next year is there is there is if nothing is done on the ITC does that makes sense.
Yeah well.
And you're right obviously, we've got to wait until next Tuesday in part.
<unk>.
My other question is the CIA and.
The other renewable trade groups have been pushing.
Since March as I recall to get the IPC to cover storage.
That is not integrated with solar.
Correct Lee.
And such.
Enhancement to the ICC were to be enacted.
Do anything for your business specifically.
I think it's incrementally positive.
Most people in fact, obviously all people at this point in time, when they won't stores to go get solar because they want the quote fuel for the battery right and in fact, what we're seeing in sure. We're not alone. In this is is that we're seeing in a huge move.
Higher efficiency panels.
Because of storage and we've seen a huge jump in terms of the wattage, let's put on our customers homes. This year and then we also see people wanting more panels put on their home and so that was something that a couple of years ago. When we started doing this I guess, two and a half three years ago.
We didn't anticipate but that's another.
Service and offering we figured out how to blend with the contractor issue. Another one is to put more solar panels on so I.
I think that would be predominantly regardless of that extension or.
Having the ITC cover storage without solar.
Most of the vast majority of people are going to want solar bell, but obviously incrementally it's positive for us if that were to take place.
Thanks, John.
Thank you.
Your next question comes from Kashi, Harrington fine long and itchy.
Good morning, everyone. Thanks for taking my questions and congratulations on hitting 100000 customers earlier this month.
Thank you. Thank you.
So John just just a follow up question on on mix, you talked about traverse or convergence with with market trends in terms of mix between leases Ppas move that so and so is your expectation as we move maybe beyond 2022 or beyond 2020.
Three we should eventually start expecting loan business to be something maybe closer to 70% from 40 ish today.
Is that is that what you were getting out there and then and then are there any implications two sources of financing for project development.
Yes, I will I'll take the first question they were robbing take the second one.
I think again, Chris we need to see what happens on Tuesday to answer that question.
Everything the mix like I said, we'll be fine either way, depending on what happens on Tuesday, but.
Alone market will definitely be impacted with Ah with.
It is not extended right going from 22% ITC to zero when the service providers. The large service providers like ourselves have ITC and lease PPA of 30% or 26% or eventually maybe 22 and then permanent 10, that's a huge evaluation difference in value.
Mission for the customer right. So I can't give you a better.
I am stepping out a little bit here to give a mix.
Forecasts, but we needed to do it for guidance for next year and assume the trend current trend stays the same.
But past 2021.
Really hard for us to do without having a better understanding about what the political environment is but again, we're going to be fine either way, if we sell more leases and ppas. If I could have done in the past versus this past quarter. We're doing great. If we sell more loans like we did this past quarter then.
Then we have in the past.
We're doing we're doing great. So we're we're agnostic and that is a unique position for all the service providers were ignostic, if a customer wants elise possible customer wants alone Awesome you get the same great service from.
Ellis of how you want to finance the equipment.
And just on the financing side, we've got great relationships with our banks with multiple tax equity providers.
Larger funds that are coming out we've been able to be accommodated as well.
Bye bye our banks as you could see we just expanded are.
Backward facility for our leases and Ppas for.
For the loans. We've also had a lot of fantastic cooperation an axe and open a second loan facility as well.
Over this past quarter, so we definitely got the capacity.
And that and then getting back again into that regular kidney securitization just allows us to continue reloading those facilities and give us a financing that we need.
And John's made this point a couple of times and Ah I made it wants to myself is that the cost of capital again, it's not.
We continue to be an asset class, where even at our absolute best pricing.
We are still the best return for the risks if you look at the default and delinquency rates in our industry versus other securitization industries we.
We still have the widest spread premium out there, but we continue to shrink it we continued to get it.
<unk> and tighter.
And so.
We'll continue we believe to do well on the cost of capital side.
And and then just allows us to continue.
Pricing securitizing, reloading and making sure that we're set out there on the financing side.
That's very helpful. Thanks. Thanks, Thanks for responding to those questions and then just my my quick follow up.
Is there a a long term targeted in terms of market share or specific customers are under contract.
Before you start eventually transitioning towards Ah Mark growth rate. So for example, you're going to 55% next year, probably another robustly of 2022.
Do you have a specific longterm customer target before you start transitioning it towards something like 15, 20% growth rate.
Hey, Cassie.
No. We don't we don't focus on market share refocus on cash flow and we're going to continue to do that we just our business model is built to scale.
Operating expenses and the scale very quickly and grow faster. So you should always expect us to grow faster than others I would say don't have the dealer model for instance.
With that said, obviously the law numbers takes over at some point in time as a reference done the storage.
Right side of things right, but.
I don't know where that is frankly.
And we certainly still have a very relatively low market share.
Out there in the marketplace I don't I will say this I do find that most investors think that this.
Marketplace in terms of the residential solar and storage service providers is quote fragmented it's not it's actually fairly concentrated obviously in the past quarter, it's gotten more concentrated.
In terms of the number of players. It's a relatively small number do I think consolidation continues to occur in this space absolutely.
Just look at the the valuation differential between companies out there.
We obviously are extremely in my opinion extremely compelling.
Value out there in the in the equity marketplace and I think consolidation continues to happen. So it's going to be a relatively small number of players. So I don't think that we've.
Neared Norwood, we start to near a top out point, if you will just based on math on the market share it certainly not before.
22 2023.
Got it thank you.
Thank you.
Your next question comes from Christopher.
D right.
<unk>.
Hey, guys. Thanks for taking the question on the dealer network growth, which has been better than you expected can you provide any color on what the mix of these sports looks like is it are they coming from some large.
Seasonal players are small independent teams that are kind of getting folded into the next year.
Yeah, Chris John.
What I'll say is that there is a mixture. Some some are rather large some are medium. Some are smaller smart. Some some teams that go into some dealers for large.
Wholesale dealers.
So it is a mixture do we pull them from other competitors primarily yes.
And but there's also more and more teams being formed out there.
If you're if you're an independent.
Person and you've been doing a great job selling or doing a great job installing and so forth you may want to.
Came up with some of your colleagues and go out and start your own dealership with us if you've got a track record.
We will happily invites you on board and we've got pretty strict protocols tard become a dealer. It's no good but I don't think that's necessary and certainly gives all of our stakeholders and especially our customers a lot of comfort, but we're seeing more and more dealers being formed all the time and so and that's why we have our model.
I mean, it's enabling the American entrepreneur and there's no better people in our industry than the folks at.
Own and operate and run our dealers and so we're quite quite proud to happen.
Keep looking forward to look.
Welcoming more and more as the as the weeks move forward here.
That's helpful and then.
Recently announced you're expanding storage in a few markets, Connecticut, Pennsylvania, Rhode Island.
What is it that kind of flip the switch for these these things where you would.
Allow.
Selling storage as well in these kind of key regions as far as the retrofit opportunity that you're talking about doubling hopefully think about that.
Yes.
Got a pretty broad as I mentioned that we sell we have sold storage now and 17 U S States and territories will continue to broaden that out as you as you mentioned Chris.
The primary reason for that you just don't roll everything out at one time as it is actually fairly heavy lift for any company to go out there and make sure you properly license make sure. Your dealers are properly licensed make sure you have all the equipment I mean, there has been some supply shortages and the battery side of things I think it's fairly well known starting around July.
Hi, this year that that continues so you got a lineup your your partner.
<unk> in that area, we're very proud of our relationship with Tesla Jen rack and others.
And then you got a train help train your dealers and on how to sell which is a completely different sales and how to install and so you do all of that and make sure. All your processes are working your software is up to date. You are counting is all buckled up and working that's actually a fairly heavy lift it's not trivial to do.
<unk> It and then you Gotta make sure you have the service technicians out there because increasingly as consumers start to put on batteries. The idea that you can fix their system in a few months that's been the industry's norm that becomes unacceptable right. So if you are there and you want your battery there for when the lights go off because you've been shut off due to wildfire.
Ours are you got a hurricane that's raging on your doorstep overhead whatever.
All this means that you want the power to be there and so if something goes wrong and we can't fix it remotely we've got a role one of our Austin service technicians go out there and get it fixed and so.
Anyways, it's it's definitely not trivial to continue to grow geographic geographically, but we're obviously filling it out and we expect to have our storage service offering an all of our territories within the next few months.
That's good to hear.
Thanks.
Thanks, Chris.
Your next question comes from Sophie Cop off Keybanc your line.
Fluffy Cup of Keybanc Your line Okay.
There are no for that Christians have it all planned to call back or not too chunk breakdown for closing remarks.
Thank you everyone.
We are very proud of the quarter, we put especially given all the challenges out there and I just wanted to say again to all of the people to Nova.
Thank you very much for working so hard to make this happen. It's very impressive. Thank you to all of our dealers those of.
They have been with us for years and those of just joined US you're awesome, you're the whole reason why we're successful and literally couldn't do it without you. Thank you to our technology partners.
The partnership is just a key part of the DNA here. It's the we don't believe that one company should rule.
Rule, the space and be out there, making sure that customers get a better choice better energy service at a better price and residential solar and storage service and we feel that the industry ought to be more collaborative and indeed, we take that to heart. We are a great partner, we're not perfect, but we are a great part.
In or out there and we endeavor to bring more and more partnerships to bear to serve our customers better and the highlights for the quarter and then I would say as I look out out in the next the next quarter this quarter and into next year and even beyond that and of 2022 is we're growing we're growing massively where there are three ways, we're growing we're growing by adding.
Dealers in sub dealers were growing by selling additional services to our existing customers are are grown by selling more services to our new customers and we've laid out very clearly how we view that value.
Reducing our costs, we're increasing our margins on a per customer basis through scaling are are fixed costs and we're doing a fantastic job on that expect more of that in the coming quarters and were flowing more cash we're seeing faster recurring operational cash flow generation.
We seem more opportunity for refinancing and even down the road potentially issuing a bond and and doing a lot more to drive more and more cash flow to to the company's equity and therefore, we've got a very very good feeling about as we move forward into the next into the next year and look forward to the next earnings call. Thank you all.
Very much.
And this concludes today's conference call. Thank you for participating you may know.
[noise].