Sunrun (RUN) 3rd quarter 2020 earnings report review
Category: Sunrun (RUN)
Date: 26 January 2021 Stock price of Sunrun (RUN): $78.61 We take a look at the 3rd quarter 2020 earnings report of Sunrun (RUN) a leading home solar, battery storage and energy services company. The group has 326 000 customers. For the quarter the group reported revenues of $209.7 million and net income of $37.45 million.
|
Lynn Jurich, Sunrun’s Chief Executive Officer and co-founder - Sunrun aims to be the consumer brand synonymous with powering your home with renewable energy. We’ve taken significant steps to support this vision. We completed the acquisition of Vivint Solar to create a combined customer base of over 500,000 and today announced the launch of Brightbox in all of our markets "
More About Sunrun (RUN)
Sunrun Inc. (Nasdaq: RUN) is the nation’s leading home solar, battery storage, and energy services company. Founded in 2007, Sunrun pioneered home solar service plans to make local clean energy more accessible to everyone for little to no upfront cost. Sunrun’s innovative home battery solution, Brightbox, brings families affordable, resilient, and reliable energy. The company can also manage and share stored solar energy from the batteries to provide benefits to households, utilities, and the electric grid while reducing our reliance on polluting energy sources
Overview of Sunrun 3rd quarter 2020 earnings report
Third Quarter 2020 GAAP Results
Total revenue was $209.8 million in the third quarter of 2020, down $5.8 million, or 3%, from the third quarter of 2019. Customer agreements and incentives revenue was $114.5 million, an increase of $18.2 million, or 19%, compared to the third quarter of 2019.
Solar energy systems and product sales revenue was $95.3 million, a decrease of $24.0 million, or 20%, compared to the third quarter of 2019. Total cost of revenue was $153.0 million, a decrease of 4% year-over-year. Total operating expenses were $272.0 million, a decrease of 1% year-over-year. Net income attributable to common stockholders was $37.4 million, or $0.28 per share, in the third quarter of 2020.
Financing Activities
As of November 5, 2020, closed transactions and executed term sheets provide us expected tax equity and project debt capacity to fund over 275 MW of leased projects beyond what was deployed through the end of the third quarter of 2020. Sunrun and Vivint together have closed $2.4 billion in project capital in 2020 year-to-date.
Key Operating Metrics & Outlook
Note that the following key operating metrics and GAAP results do not reflect Vivint Solar as the acquisition closed on October 8, 2020, subsequent to the end of the third quarter. In the third quarter of 2020, Megawatts Deployed (MW) were 109 MW, compared to 78 MW in the second quarter of 2020, a 40% sequential increase, and 107 MW in the third quarter of 2019, a 2% year-over-year increase. NPV created in the third quarter of 2020 was $81 million. Unlevered NPV in the third quarter of 2020 was $0.86 per watt, representing approximately $6,500 per leased customer. Gross Earning Assets as of September 30, 2020 were $4.0 billion, up $621 million, or 18%, from the prior year. Net Earning Assets as of September 30, 2020 were $1.7 billion, up $220 million, or 15%, from the prior year. Cash, including restricted cash, increased $8.1 million from the prior year.
Cash Generation was $22 million in the third quarter of 2020. Sunrun defines Cash Generation as the increase in total cash, including restricted cash, less any increases in recourse debt, and adjusted for certain items. In the third quarter of 2020, Cash Generation was adjusted by ($6.7) million related to the company’s Investment Tax Credit safe harbor program, $1.3 million for restructuring related activities, ($6.9) million for costs related to the Vivint Solar acquisition and SK joint venture transaction and ($5.0) million for the deferral of social security payroll taxes. Management expects to grow Megawatts Deployed by over 10% sequentially in the fourth quarter, pro-forma for the acquisition of Vivint Solar, at improving net customer margin levels. We expect net customer margins to increase to above $8,000 per leased customer in the fourth quarter.
Total revenue was $209.8 million in the third quarter of 2020, down $5.8 million, or 3%, from the third quarter of 2019. Customer agreements and incentives revenue was $114.5 million, an increase of $18.2 million, or 19%, compared to the third quarter of 2019.
Solar energy systems and product sales revenue was $95.3 million, a decrease of $24.0 million, or 20%, compared to the third quarter of 2019. Total cost of revenue was $153.0 million, a decrease of 4% year-over-year. Total operating expenses were $272.0 million, a decrease of 1% year-over-year. Net income attributable to common stockholders was $37.4 million, or $0.28 per share, in the third quarter of 2020.
Financing Activities
As of November 5, 2020, closed transactions and executed term sheets provide us expected tax equity and project debt capacity to fund over 275 MW of leased projects beyond what was deployed through the end of the third quarter of 2020. Sunrun and Vivint together have closed $2.4 billion in project capital in 2020 year-to-date.
Key Operating Metrics & Outlook
Note that the following key operating metrics and GAAP results do not reflect Vivint Solar as the acquisition closed on October 8, 2020, subsequent to the end of the third quarter. In the third quarter of 2020, Megawatts Deployed (MW) were 109 MW, compared to 78 MW in the second quarter of 2020, a 40% sequential increase, and 107 MW in the third quarter of 2019, a 2% year-over-year increase. NPV created in the third quarter of 2020 was $81 million. Unlevered NPV in the third quarter of 2020 was $0.86 per watt, representing approximately $6,500 per leased customer. Gross Earning Assets as of September 30, 2020 were $4.0 billion, up $621 million, or 18%, from the prior year. Net Earning Assets as of September 30, 2020 were $1.7 billion, up $220 million, or 15%, from the prior year. Cash, including restricted cash, increased $8.1 million from the prior year.
Cash Generation was $22 million in the third quarter of 2020. Sunrun defines Cash Generation as the increase in total cash, including restricted cash, less any increases in recourse debt, and adjusted for certain items. In the third quarter of 2020, Cash Generation was adjusted by ($6.7) million related to the company’s Investment Tax Credit safe harbor program, $1.3 million for restructuring related activities, ($6.9) million for costs related to the Vivint Solar acquisition and SK joint venture transaction and ($5.0) million for the deferral of social security payroll taxes. Management expects to grow Megawatts Deployed by over 10% sequentially in the fourth quarter, pro-forma for the acquisition of Vivint Solar, at improving net customer margin levels. We expect net customer margins to increase to above $8,000 per leased customer in the fourth quarter.
Sunrun management commentary on their 3rd quarter 2020 earnings report
SAN FRANCISCO, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Sunrun (Nasdaq: RUN), the nation’s leading provider of residential solar, storage and energy services, today announced financial results for the third quarter ended September 30, 2020. “We are at the early stages of significant innovation in electrifying our buildings and transportation,” said Lynn Jurich, Sunrun’s Chief Executive Officer and co-founder. “Sunrun aims to be the consumer brand synonymous with powering your home with renewable energy. We’ve taken significant steps to support this vision. We completed the acquisition of Vivint Solar to create a combined customer base of over 500,000 and today announced the launch of Brightbox in all of our markets. In the third quarter we grew battery installations more than 45% versus last year and we continue to lead the development of virtual power plants, including an additional contract with Southern California Edison, to improve the efficiency and resiliency of our antiquated energy system.”
“The Sunrun team delivered another strong quarter, increasing volumes 40% sequentially and 2% year-over year, rebounding net customer margins, and continuing to build a strong balance sheet,” said Tom vonReichbauer, Sunrun’s Chief Financial Officer. “We expect to see continued growth into the fourth quarter at improving net customer margins, and expect to accelerate growth in 2021 with an improved cost structure and higher net customer margins.”
“The Sunrun team delivered another strong quarter, increasing volumes 40% sequentially and 2% year-over year, rebounding net customer margins, and continuing to build a strong balance sheet,” said Tom vonReichbauer, Sunrun’s Chief Financial Officer. “We expect to see continued growth into the fourth quarter at improving net customer margins, and expect to accelerate growth in 2021 with an improved cost structure and higher net customer margins.”
Growth & Market Leadership
On October 8, 2020, Sunrun announced that it had completed its acquisition of Vivint Solar, following approval by regulators and stockholders of both companies. The transaction solidified Sunrun’s position as the leader in home solar and energy services across the United States and a top owner of solar assets globally with more than three gigawatts of solar energy and more than 500,000 customers. Sunrun estimates cost synergies of $90 million on an annual basis, to be realized 12 to 18 months following the acquisition. Today, Sunrun announced that it is bringing its rechargeable solar battery system, Brightbox, to all of the company’s active markets, including eight additional states (New Hampshire, Connecticut, Rhode Island, Pennsylvania, Maryland, Illinois, South Carolina and New Mexico) and Washington, D.C. Record storms, heat waves, and wildfires this year have uncovered vulnerabilities with the electric grid’s aging infrastructure, leaving millions of people without power. Usually lasting for several hours, recent power outages have come while millions of Americans have transitioned to working and schooling from home due to the COVID-19 pandemic. Sunrun’s Brightbox offers homeowners the ability to power through such power outages with clean, reliable and immediate home energy. From May to September 2020, existing Brightbox customers powered essential needs during grid outages for a total of 7,583 hours, the equivalent of 315 days. Sunrun currently has deployed more than 13,000 Brightbox systems nationwide, and this announcement will expand access to millions of new potential customers.
On July 30, 2020 Sunrun announced exclusive partnerships with three Community Choice Aggregators (CCAs) in California, which collectively provide power for approximately one million homes in the Bay Area, for co-marketing and building virtual power plants. The partnerships are with East Bay Community Energy, Silicon Valley Clean Energy, and Peninsula Clean Energy. The CCAs sought options to help increase the use of clean, affordable energy by leveraging these virtual power plants while also providing backup power to more of their customers following forced blackouts by PG&E that affected hundreds of thousands of customers in the Bay Area.
On October 8, 2020, Sunrun announced that it had completed its acquisition of Vivint Solar, following approval by regulators and stockholders of both companies. The transaction solidified Sunrun’s position as the leader in home solar and energy services across the United States and a top owner of solar assets globally with more than three gigawatts of solar energy and more than 500,000 customers. Sunrun estimates cost synergies of $90 million on an annual basis, to be realized 12 to 18 months following the acquisition. Today, Sunrun announced that it is bringing its rechargeable solar battery system, Brightbox, to all of the company’s active markets, including eight additional states (New Hampshire, Connecticut, Rhode Island, Pennsylvania, Maryland, Illinois, South Carolina and New Mexico) and Washington, D.C. Record storms, heat waves, and wildfires this year have uncovered vulnerabilities with the electric grid’s aging infrastructure, leaving millions of people without power. Usually lasting for several hours, recent power outages have come while millions of Americans have transitioned to working and schooling from home due to the COVID-19 pandemic. Sunrun’s Brightbox offers homeowners the ability to power through such power outages with clean, reliable and immediate home energy. From May to September 2020, existing Brightbox customers powered essential needs during grid outages for a total of 7,583 hours, the equivalent of 315 days. Sunrun currently has deployed more than 13,000 Brightbox systems nationwide, and this announcement will expand access to millions of new potential customers.
On July 30, 2020 Sunrun announced exclusive partnerships with three Community Choice Aggregators (CCAs) in California, which collectively provide power for approximately one million homes in the Bay Area, for co-marketing and building virtual power plants. The partnerships are with East Bay Community Energy, Silicon Valley Clean Energy, and Peninsula Clean Energy. The CCAs sought options to help increase the use of clean, affordable energy by leveraging these virtual power plants while also providing backup power to more of their customers following forced blackouts by PG&E that affected hundreds of thousands of customers in the Bay Area.
Sunrun (RUN) stock price chart over the last 5 years
The image below shows the stock price history of Sunrun (RUN) over the last 5 years. And its been a very good time for Sunrun (RUN) stockholders with the stock increasing sharply by 1453.3% over the last 5 years.
The stock of Sunrun (RUN) is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Sunrun stock is positive at this point in time.
The stock of Sunrun (RUN) is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Sunrun stock is positive at this point in time.
Latest stock valuation of Sunrun (RUN)
So what is Sunrun (RUN) stock worth based on their 3rd quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Sunrun at $37.20 a stock.
We therefore believe the stock of Sunrun is overvalued at its current price of $78.61
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $37.20 thus a good entry point into Sunrun would be at $33.50 or below.
We expect the stock of Sunrun to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued right now
We therefore believe the stock of Sunrun is overvalued at its current price of $78.61
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $37.20 thus a good entry point into Sunrun would be at $33.50 or below.
We expect the stock of Sunrun to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued right now
Next earnings release of Sunrun (RUN)
It is expected that Sunrun will release their 4th quarter 2020 earnings report in early February 2021
Related Topics