vslr-ex991

LEHI, Utah, November 6, 2019 -- Vivint Solar, Inc. (NYSE: VSLR), today announced financial results for the third quarter ended September 30, 2019.

As of September 30, 2019, the company had approximately $100 million in undrawn capacity in the forward flow loan facilities, $155 million in undrawn capacity in the warehouse facility, and approximately 126 MWs of undeployed tax equity financing capacity.

$ amounts in millions, except per share data
	Three Months Ended Sept. 30,
	2019			2018			YoY
Revenue:
Customer agreements and incentives	$	70.8		$	53.5		up 32%
Solar energy system and product sales		33.0			24.3		up 36%
Total Revenue		103.8			77.8		up 33%
Cost of revenue:
Customer agreements and incentives		49.0			42.1		up 16%
Solar energy system and product sales		19.4			17.7		up 10%
Total cost of revenue		68.4			59.8		up 14%
Gross profit		35.4			18.0		up 97%
Loss from operations		(44.0	)		(28.3	)	down 56%
Net loss attributable to common stockholders	$	(13.8	)	$	(7.9	)	down 76%
Net loss attributable per share to common stockholders	$	(0.11	)	$	(0.07	)	down 57%
Non-GAAP net loss per share	$	(0.99	)	$	(0.61	)	down 62%

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements supersede all prior statements regarding projected 2019 financial results.

Vivint Solar will host an investor conference call and live webcast today, Wednesday, November 6, 2019, at 5:00 p.m. ET to discuss these financial results. To access the conference call, dial 1.833.286.5799 or 1.647.689.4443 for international callers. The conference ID is 817 9606. A listen-only webcast will be accessible on the investor relations page of the company’s website at investors.vivintsolar.com/. Participants should follow the instructions provided on the website to download and install the necessary audio applications in advance of the call. In addition, the earnings presentation slides will be available on the investor relations page of the site by 5:00 p.m. ET along with this press release and the financial information discussed on today’s conference call at investors.vivintsolar.com/.

Vivint Solar is a leading full-service residential solar provider in the United States. With the help of Vivint Solar, homeowners can power their homes with clean, renewable energy, typically achieving significant financial savings over time. Vivint Solar designs and installs solar energy systems for homeowners and offers monitoring and maintenance services. In addition to being able to purchase a solar energy system outright, homeowners may benefit from Vivint Solar's affordable, flexible financing options, including power purchase agreements, or lease agreements, where available. Vivint Solar also offers solar plus storage systems with LG Chem home batteries and electric vehicle chargers with ChargePoint Home. For more information, visit www.vivintsolar.com or follow @VivintSolar on Twitter.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements regarding, but not limited to, Vivint Solar’s guidance for Megawatts Installed and Cost per Watt, undeployed tax equity financing capacity, growth prospects, and operating and financial results, such as estimates of nominal contracted payments remaining, estimated retained value, estimated retained value per watt, margin created and unlevered NPV per Watt and the assumptions related to the calculation of the foregoing metrics.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Forward-looking statements should not be read as a guarantee of future performance or results, and they will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. These statements are based on current expectations and assumptions regarding future events and business performance as of the date of this press release, and they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including but not limited to: the availability of additional financing on acceptable terms; changes in the retail price of traditional utility generated electricity; changes in electric utility policies and regulations; the availability of rebates, tax credits and other incentives, including solar renewable energy certificates, or SRECs, and other federal and state incentives; regulations and policies related to net metering; changes in regulations, tariffs and other trade barriers and tax policy affecting us and our industry; our ability to manage our recent and future growth, product offering mix, and costs effectively, including attracting, training and retaining sales professionals and solar energy system installers; the availability and price of solar panels and other system components; the potential inaccuracy of the assumptions employed in calculating our operating metrics; the course and outcome of litigation, regulatory investigations and other disputes; and such other risks identified in the registration statements and reports that Vivint Solar files with the U.S. Securities and Exchange

Commission, or SEC, from time to time. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in those statements will be achieved or will occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Except as required by law, Vivint Solar does not undertake and expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. You should read the documents Vivint Solar has filed with the SEC for more complete information about the company. These documents are available on both the EDGAR section of the SEC’s website at www.sec.gov and the Investors section of the company’s website at investors.vivintsolar.com/.

Vivint Solar, Inc.
Condensed Consolidated Unaudited Balance Sheets
(In thousands)

	September 30,			December 31,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	260,753		$	219,591
Accounts receivable, net		27,203			14,207
Inventories		13,727			13,257
Prepaid expenses and other current assets		31,895			31,201
Total current assets		333,578			278,256
Restricted cash and cash equivalents		83,743			71,305
Solar energy systems, net		1,696,129			1,938,874
Property and equipment, net		14,332			10,730
Other non-current assets, net		567,872			28,090
TOTAL ASSETS	$	2,695,654		$	2,327,255
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
Current liabilities:
Accounts payable	$	48,118		$	45,929
Distributions payable to non-controlling interests and redeemable non-controlling interests		17,328			7,846
Accrued compensation		40,647			25,520
Current portion of long-term debt		144,532			12,155
Current portion of deferred revenue		28,684			30,199
Current portion of finance lease obligation		1,529			1,921
Accrued and other current liabilities		70,238			42,860
Total current liabilities		351,076			166,430
Long-term debt, net of current portion		1,282,868			1,203,282
Deferred revenue, net of current portion		16,450			13,524
Finance lease obligation, net of current portion		4,308			505
Deferred tax liability, net		539,190			437,120
Other non-current liabilities		81,740			24,610
Total liabilities		2,275,632			1,845,471
Commitments and contingencies
Redeemable non-controlling interests		118,251			119,572
Stockholders’ equity:
Common stock		1,221			1,201
Additional paid-in capital		586,517			574,248
Accumulated other comprehensive loss		(24,388	)		(7,223	)
Accumulated deficit		(348,430	)		(279,631	)
Total stockholders’ equity		214,920			288,595
Non-controlling interests		86,851			73,617
Total equity		301,771			362,212
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY	$	2,695,654		$	2,327,255

Vivint Solar, Inc.
Condensed Consolidated Unaudited Statements of Operations
(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenue:
Customer agreements and incentives	$	70,819		$	53,470		$	173,777		$	139,349
Solar energy system and product sales		33,030			24,346			90,200			87,515
Total revenue		103,849			77,816			263,977			226,864
Cost of revenue:
Cost of revenue—customer agreements and incentives		48,993			42,135			132,258			122,188
Cost of revenue—solar energy system and product sales		19,444			17,700			52,498			62,735
Total cost of revenue		68,437			59,835			184,756			184,923
Gross profit		35,412			17,981			79,221			41,941
Operating expenses:
Sales and marketing		46,121			15,841			112,792			40,999
Research and development		510			475			1,503			1,472
General and administrative		32,760			29,945			87,014			71,941
Total operating expenses		79,391			46,261			201,309			114,412
Loss from operations		(43,979	)		(28,280	)		(122,088	)		(72,471	)
Interest expense, net		22,804			18,715			61,403			46,973
Other expense (income), net		3,907			(1	)		6,657			(6,371	)
Loss before income taxes		(70,690	)		(46,994	)		(190,148	)		(113,073	)
Income tax expense		50,410			25,698			107,847			79,693
Net loss		(121,100	)		(72,692	)		(297,995	)		(192,766	)
Net loss attributable to non-controlling interests and redeemable non-controlling interests		(107,265	)		(64,824	)		(229,351	)		(190,038	)
Net loss attributable to common stockholders	$	(13,835	)	$	(7,868	)	$	(68,644	)	$	(2,728	)
Net loss attributable per share to common stockholders:
Basic and diluted	$	(0.11	)	$	(0.07	)	$	(0.57	)	$	(0.02	)
Weighted-average shares used in computing net loss attributable per share to common stockholders:
Basic and diluted		121,730			118,767			120,974			116,871

Vivint Solar, Inc.
Condensed Consolidated Unaudited Statements of Cash Flows
(In thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(121,100	)	$	(72,692	)	$	(297,995	)	$	(192,766	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		21,926			17,807			61,243			51,247
Deferred income taxes		50,666			25,948			108,344			80,121
Stock-based compensation		4,150			3,103			11,985			9,884
Loss on solar energy systems and property and equipment		5,097			1,414			9,254			4,439
Noncash interest and other expense		3,986			1,661			7,288			15,317
Reduction in lease pass-through financing obligation		(1,630	)		(1,385	)		(3,662	)		(3,549	)
(Gains) losses on interest rate swaps		(1,904	)		—			846			(1,279	)
Changes in operating assets and liabilities:
Accounts receivable, net		983			4,444			(12,996	)		(245	)
Inventories		(656	)		(2,645	)		(470	)		6,817
Prepaid expenses and other current assets		(75	)		655			741			8,931
Other non-current assets, net		(61,770	)		(1,429	)		(126,402	)		(8,042	)
Accounts payable		1,516			(957	)		2,032			941
Accrued compensation		15,408			6,719			14,409			4,390
Deferred revenue		694			4,073			1,411			(6,441	)
Accrued and other liabilities		8,871			9,092			9,050			7,177
Net cash used in operating activities		(73,838	)		(4,192	)		(214,922	)		(23,058	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for the cost of solar energy systems		(62,928	)		(87,301	)		(187,328	)		(233,548	)
Payments for property and equipment		(225	)		(64	)		(1,219	)		(129	)
Proceeds from disposals of solar energy systems and property and equipment		897			492			2,025			2,335
Purchase of intangible assets		(974	)		(223	)		(1,089	)		(223	)
Net cash used in investing activities		(63,230	)		(87,096	)		(187,611	)		(231,565	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from investment by non-controlling interests and redeemable non-controlling interests		124,417			86,634			284,055			194,921
Distributions paid to non-controlling interests and redeemable non-controlling interests		(15,258	)		(13,171	)		(33,309	)		(41,729	)
Proceeds from long-term debt		218,808			41,748			351,972			917,748
Payments on long-term debt		(118,167	)		(4,462	)		(139,080	)		(693,782	)
Payments for debt issuance and deferred offering costs		(6,420	)		(3,494	)		(9,382	)		(21,209	)
Proceeds from lease pass-through financing obligation		1,009			994			2,527			2,491
Principal payments on finance lease obligations		(377	)		(732	)		(954	)		(2,663	)
Proceeds from issuance of common stock		34			39			304			876
Net cash provided by financing activities		204,046			107,556			456,133			356,653
NET INCREASE IN CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS		66,978			16,268			53,600			102,030
CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS—Beginning of period		277,518			240,700			290,896			154,938
CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS—End of period	$	344,496		$	256,968		$	344,496		$	256,968

Vivint Solar, Inc.
Key Operating Metrics

	Three Months Ended
	September 30,		June 30,		September 30,
	2019		2019		2018
Installations		9,458		8,163		7,547
Megawatts installed		65.1		56.0		54.3

	As of
	September 30,		June 30,		September 30,
	2019		2019		2018
Cumulative installations		178,733		169,275		146,868
Cumulative megawatts installed		1,227.6		1,162.5		1,006.6
Estimated nominal contracted payments remaining (in millions)	$	4,200.3	$	3,976.2	$	3,444.4
Estimated retained value under energy contracts (in millions)	$	1,626.3	$	1,587.0	$	1,482.7
Estimated retained value of renewal (in millions)	$	566.5	$	531.6	$	451.8
Estimated gross retained value (in millions)	$	2,192.8	$	2,118.6	$	1,934.5
Estimated gross retained value per watt	$	1.98	$	2.02	$	2.09

The following table provides quantitative sensitivity analysis of our estimate of retained value of solar energy systems under contracts as of September 30, 2019, including both the contracted and estimated renewal portion, at a range of discount rates (retained value amounts in millions):

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

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

According to this definition, the non-GAAP loss before the allocation of loss attributable to non-controlling interests and redeemable non-controlling interests per share was ($0.99) and ($2.46) for the three and nine months ended September 30, 2019.

“Installations” represents the number of solar energy systems installed on customers’ premises.

“MWs or megawatts” represents the DC nameplate megawatt production capacity.

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

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

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

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

“Project Value” represents the net cash flows, discounted at 6% that Vivint Solar expects to receive from customers net of estimated distributions to fund investors and operating expenses, estimated utility and state incentives, and estimated finance proceeds from fund investors.

“NPV per watt” represents the estimated weighted average unit margin of Vivint Solar’s PPA and customer lease business and its system sales business. It is calculated by dividing Margin Created during the period by the total MWs Installed during the period.

“Margin Created” represents the estimated margin created during the period. It is the estimated value of Vivint Solar’s PPA and customer lease agreements and the value of the system sales less the costs required to create the value. Specifically, it is the sum of the project value per watt multiplied by “MWs Installed – PPA/Lease” and “Revenue – solar energy system and product sales” less total creation costs.

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

	4%		6%		8%
Estimated retained value under energy contracts	$	1,909.4	$	1,626.3	$	1,401.3
Estimated retained value of renewal		870.1		566.5		373.0
Total estimated gross retained value	$	2,779.5	$	2,192.8	$	1,774.3

Vivint Solar, Inc.
Reconciliation from GAAP EPS to Non-GAAP EPS
(In thousands, except per share data)


	Three Months Ended
	September 30, 2019						September 30, 2018
	Net Loss			EPS			Net Loss			EPS
Net loss attributable to common stockholders	$	(13,835	)	$	(0.11	)	$	(7,868	)	$	(0.07	)
Net loss attributable to non-controlling interests and redeemable non-controlling interests		(107,265	)		(0.88	)		(64,824	)		(0.54	)
Non-GAAP net loss	$	(121,100	)	$	(0.99	)	$	(72,692	)	$	(0.61	)
Weighted-average shares used in computing net loss per share					121,730						118,767