Sunrun continues to post positive news in an edgy residential solar market. In contrast to rival SolarCity's travails and the relative malaise of the larger market players, Sunrun has been exceeding estimates and raising guidance.

Last quarter, Sunrun installed 65 megawatts of residential solar systems, a 69 percent jump that beat the PV installer and financier's forecast, as well as the Street's expectations. In this quarter's earnings call, Lynn Jurich, the CEO of Sunrun, noted, "Year-to-date, we have taken market share" and "realized a 43 percent year-over-year increase in megawatts deployed, a 53 percent increase in net present value creation, [and] a 10 percent year-over-year improvement in our cost."    

Here are the takeaways from the earnings call.

  • Revenues grew to $112 million -- a jump of 36 percent year-over-year.
  • Total deployments were 80 megawatts, up 43 percent year-over-year.
  • Creation cost-per-watt was $3.37 in the third quarter of 2016, down 10 percent from Q3 2015.
  • Net present value created was $76 million, up 53 percent year-over-year.
  • The firm has project finance capacity through the second quarter of next year.
  • Net income was $16.9 million in the third quarter of 2016. Sunrun posted a Q2 net income of $32.6 million.
  • Net bookings were 79 megawatts, up 5 megawatts from the previous quarter.
  • Net G&A cost per watt declined to $0.24, a 27 percent decrease from Q2.

Sunrun's CEO bumped its 2016 guidance up a little bit, saying, "For full-year 2016, we are raising deployment guidance from 270 to 280 megawatts to approximately 285 megawatts." She also said, "We expect industry growth in California to be approximately 10 percent in 2016."

Equity analysts at UBS said, "While the company is gaining share, the challenge was always whether the company could do so while maintaining funding and margin. So far, RUN has delivered in what is clearly a challenging environment. In light of overall resi[dential] market concerns, we continue to view RUN as the best-in-class resi installer today," adding, "We actually see commentary around 20 cents of hardware cost reduction as easily achievable, while Nevada re-entry and Arizona rush could provide further upside." The investment analysts added, "Balance-sheet management continues to run ahead of residential solar peers."

Oppenheimer's equity analysts contend that "RUN continued to demonstrate the resiliency of its multi-channel model. Value creation and growth are running ahead of competitors. RUN noted it continues to see strong fundamentals, even as competitors guide installations lower. The company is also making progress on reducing cost, both from an installation and an overhead perspective."

Considering potential impacts to solar in the new administration, CEO Lynn Jurich said, "The bipartisan support is strong, and in fact, the renewal that we just went through last year was led by prominent Republicans." She added, "Importantly, the solar industry employs hundreds of thousands of solar workers across the country, adding workers at a rate nearly 12 times faster than the overall economy. These are jobs that are not going to be exported; these are blue-collar jobs; these are well-paying jobs."

Jurich said, "Rooftop solar is the anti-establishment energy choice, and that's what we offer."

Sunrun's Edward Fenster added, "The Clean Power Plan was really a utility-scale item that didn't really affect rooftops. In fact, you could easily argue that it could be positive and negative for rooftops."

Jurich said, "First of all, most of our customers are Republicans. The psychology is: 'I want competition, I want freedom from the monopoly, I don’t want people telling me what to do.'"


Thanks to SA for the call transcript.