Sunrun, the largest home storage and solar installer in the U.S., delivered a third record quarter to round out 2018.
The company installed 115 megawatts in Q4, according to earnings amounts published Thursday. That deployment follows two consecutive record quarters: 100 megawatts in Q3 and 91 megawatts in Q2. The deployments achieved 35 percent year-over-year growth from 85 megawatts in Q4 2017.
The repeated growth solidified Sunrun's direct as the top rooftop solar installer following market leader SolarCity shrank activities after its acquisition by Tesla. Tesla only deployed 73 megawatts of solar in Q4, highlighting both homes and commercial installations.
In recent months, Sunrun has established footholds beyond the standalone solar sector. CEO Lynn Jurich confirmed to GTM that BrightBox solar-plus-storage installations fulfilled the 2018 target of”nearly 5,000,” and have since surpassed it.
The guidance for 2019 is to grow BrightBox deployments she said. Growing the installed base of batteries, which can store energy and dispatch it on command, will be crucial for Sunrun's strategy of expanding into grid services.
The company reached a historical milestone in that effort when it won a 20-megawatt bid from the ISO New England forward capacity market this month. Now Sunrun must deliver 5,000 homes in that region by 2022.
“The market leadership position we’ve been enjoying brings a lot of advantages,” like referrals from customers and partnerships with large retailers, Jurich said. “We’re excited by our scale now, because we can really bring meaningful value to the energy system.”
Only a few years ago, turmoil in the house solar space led many observers to doubt the viability of domestic installer models. Sungevity went bankrupt, NRG left residential solar, SolarCity sold . Sunrun, nevertheless, continues to expand its client base while leaning on the model, where it owns the assets, even as the overall market shifts toward cash and loan deals.
“Sunrun's earnings show that it is possible for a large national installer to still grow, and to do so with the third-party-owned model,” stated Allison Mond, a senior analyst tracking rooftop solar in Wood Mackenzie Power & Renewables.
RUN stock price has trended up as a dip in January. It closed above $15.50 on Thursday, before earnings were announced.
Big-box sales channel
Jurich hinted at a previous interview the company was reaching out to big-box retailers, which outreach paid off this week. Sunrun revealed a partnership expansion with Home Depot to put its storage and solar product .
Under these kinds of partnerships, businesses that are solar get a shot at wooing customers shopping for house improvements. The chance doesn't come free: The solar firm has to cover the shop for customers.
“It's an expensive way to acquire a customer, but it definitely works,” Mond said.
SolarCity got a great deal of customers like , she noted, before Tesla pulled from the partnership last summer to focus on sales online and in its retail stores. The company announced Thursday it would take that strategy a step further, closing down a lot of its stores. Meanwhile, Sunrun's Home Depot investment adds to its retailer sales strategy; the company acquires customers through selling in Costco stores nationwide.
Regardless of the costs, Jurich called the Home Depot expansion an”attractive acquisition channel,” and said it will become a meaningful contributor to overall sales.
Sunrun is guiding to increase net present value margins, which measure the long-term value of an installation, to over $1.10 per watt in 2019. One way to get there is currently spending than before.
15 percent annual growth
As of the last earnings call, Sunrun's complete 2018 deployments were on track to deliver 15 percent growth over 2017, and they hit on that guidance, clocking in at 373 megawatts. The company expects 16 to 18 percent growth for 2019 deployments.
Cumulatively, 1,575 megawatts, up from 1,460 megawatts quarter have been set up by the company. That portfolio amounts to $1.4 billion in net earning assets.
The customer installation creates $9,600 in present value as of Q4. Layering on the potential earnings from the ISO New England bargain, assuming Sunrun keeps winning those contracts after the first one expires, can add more than $2,000 to that NPV, Jurich said.
“As these energy services opportunities come up, that will benefit the larger parties that have this scale and density, and will further differentiate the companies that are owners and operators of the energy assets and can come in and provide meaningful capacity to the market.”
Sunrun appears positioned to take advantage of these chances, given its scale of battery deployment and higher rate of ownership. Of 2018 systems installed, 86 percent were rented to customers.
Sunrun ended the quarter with $304 million in cash and restricted cash on its balance sheet, compared to $275 million last quarter.
Q4 generated a net loss per share of $0.05, but the year as a whole delivered earnings per share of $0.23.
Cash flow delivers a much better indication of the company's financial performance than EPS, Jurich said, because Sunrun incurs costs upfront to put in. Sunrun exceeded guidance on that metric, bringing $63 million in cash for 2018. It expects to grow to over $100 million in 2019.
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