VIVINT SOLAR, INC., 10-Q filed on 5/7/2020
Quarterly Report
v3.20.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2020
May 01, 2020
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Trading Symbol VSLR  
Entity Registrant Name VIVINT SOLAR, INC.  
Entity Central Index Key 0001607716  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity File Number 001-36642  
Entity Tax Identification Number 45-5605880  
Entity Address, Address Line One 1800 West Ashton Blvd.  
Entity Address, City or Town Lehi  
Entity Address, State or Province UT  
Entity Address, Postal Zip Code 84043  
City Area Code 877  
Local Phone Number 404-4129  
Entity Common Stock, Shares Outstanding   124,670,197
Entity Incorporation, State or Country Code DE  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Security Exchange Name NYSE  
Entity Interactive Data Current Yes  
Document Quarterly Report true  
Document Transition Report false  
v3.20.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 131,077 $ 166,048
Accounts receivable, net 25,952 24,314
Inventories 14,383 20,576
Prepaid expenses and other current assets 33,838 41,137
Total current assets 205,250 252,075
Restricted cash and cash equivalents 94,611 89,892
Solar energy systems, net 1,854,904 1,759,861
Property and equipment, net 20,888 17,500
Other non-current assets, net 683,012 680,062
TOTAL ASSETS [1] 2,858,665 2,799,390
Current liabilities:    
Accounts payable 52,355 59,007
Distributions payable to non-controlling interests and redeemable non-controlling interests 7,474 10,253
Accrued compensation 28,892 34,149
Current portion of long-term debt 24,396 16,405
Current portion of deferred revenue 24,631 40,715
Current portion of finance lease obligation 2,497 2,274
Accrued and other current liabilities 72,410 78,539
Total current liabilities 212,655 241,342
Long-term debt, net of current portion 1,548,228 1,483,256
Deferred revenue, net of current portion 20,383 17,631
Finance lease obligation, net of current portion 6,669 6,443
Deferred tax liability, net 604,473 583,695
Other non-current liabilities 137,245 74,423
Total liabilities [1] 2,529,653 2,406,790
Commitments and contingencies (Note 19)
Redeemable non-controlling interests 116,481 115,384
Stockholders’ equity:    
Common stock, $0.01 par value—1,000,000 shares authorized, 124,670 shares issued and outstanding as of March 31, 2020; 1,000,000 shares authorized, 123,056 shares issued and outstanding as of December 31, 2019 1,247 1,231
Additional paid-in capital 596,589 591,639
Accumulated other comprehensive loss (39,621) (20,436)
Accumulated deficit (422,546) (381,961)
Total stockholders’ equity 135,669 190,473
Non-controlling interests 76,862 86,743
Total equity 212,531 277,216
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY $ 2,858,665 $ 2,799,390
[1] The Company’s assets as of March 31, 2020 and December 31, 2019 include $2,287.7 million and $2,194.3 million consisting of assets of variable interest entities (“VIEs”) that can only be used to settle obligations of the VIEs. These assets include cash and cash equivalents of $59.5 million and $82.8 million as of March 31, 2020 and December 31, 2019; accounts receivable, net, of $16.0 million and $8.9 million as of March 31, 2020 and December 31, 2019; prepaid expenses and other current assets of $1.4 million and $1.7 million as of March 31, 2020 and December 31, 2019; restricted cash and cash equivalents of $9.7 million and $8.9 million as of March 31, 2020 and December 31, 2019; solar energy systems, net, of $1,645.5 million and $1,587.4 million as of March 31, 2020 and December 31, 2019; and other non-current assets, net of $555.6 million and $504.7 million as of March 31, 2020 and December 31, 2019. The Company’s liabilities as of March 31, 2020 and December 31, 2019 include $264.6 million and $233.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $7.5 million and $10.3 million as of March 31, 2020 and December 31, 2019; accrued and other current liabilities of $6.4 million and $6.4 million as of March 31, 2020 and December 31, 2019; long-term debt of $233.4 million and $201.6 million as of March 31, 2020 and December 31, 2019; deferred revenue of $16.7 million and $14.8 million as of March 31, 2020 and December 31, 2019; and other non-current liabilities of $0.6 million and $0.3 million as of March 31, 2020 and December 31, 2019. For further information see Note 14—Investment Funds.
v3.20.1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 124,670,000 123,056,000
Common stock, shares outstanding 124,670,000 123,056,000
Total assets [1] $ 2,858,665 $ 2,799,390
Cash and cash equivalents 131,077 166,048
Accounts receivable, net 25,952 24,314
Prepaid expenses and other current assets 33,838 41,137
Restricted cash and cash equivalents 94,611 89,892
Solar energy systems, net 1,854,904 1,759,861
Other non-current assets, net 683,012 680,062
Total liabilities [1] 2,529,653 2,406,790
Distributions payable to non-controlling interests and redeemable non-controlling interests 7,474 10,253
Accrued and other current liabilities 72,410 78,539
Long-term debt 1,572,624 1,499,661
Other non-current liabilities 137,245 74,423
Variable Interest Entities    
Total assets 2,287,737 2,194,274
Cash and cash equivalents 59,494 82,764
Accounts receivable, net 15,971 8,922
Prepaid expenses and other current assets 1,444 1,676
Restricted cash and cash equivalents 9,666 8,890
Solar energy systems, net 1,645,537 1,587,354
Other non-current assets, net 555,625 504,668
Total liabilities 264,581 233,354
Distributions payable to non-controlling interests and redeemable non-controlling interests 7,474 10,253
Accrued and other current liabilities 6,372 6,394
Long-term debt 233,400 201,600
Deferred revenue 16,700 14,800
Other non-current liabilities $ 576 $ 301
[1] The Company’s assets as of March 31, 2020 and December 31, 2019 include $2,287.7 million and $2,194.3 million consisting of assets of variable interest entities (“VIEs”) that can only be used to settle obligations of the VIEs. These assets include cash and cash equivalents of $59.5 million and $82.8 million as of March 31, 2020 and December 31, 2019; accounts receivable, net, of $16.0 million and $8.9 million as of March 31, 2020 and December 31, 2019; prepaid expenses and other current assets of $1.4 million and $1.7 million as of March 31, 2020 and December 31, 2019; restricted cash and cash equivalents of $9.7 million and $8.9 million as of March 31, 2020 and December 31, 2019; solar energy systems, net, of $1,645.5 million and $1,587.4 million as of March 31, 2020 and December 31, 2019; and other non-current assets, net of $555.6 million and $504.7 million as of March 31, 2020 and December 31, 2019. The Company’s liabilities as of March 31, 2020 and December 31, 2019 include $264.6 million and $233.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $7.5 million and $10.3 million as of March 31, 2020 and December 31, 2019; accrued and other current liabilities of $6.4 million and $6.4 million as of March 31, 2020 and December 31, 2019; long-term debt of $233.4 million and $201.6 million as of March 31, 2020 and December 31, 2019; deferred revenue of $16.7 million and $14.8 million as of March 31, 2020 and December 31, 2019; and other non-current liabilities of $0.6 million and $0.3 million as of March 31, 2020 and December 31, 2019. For further information see Note 14—Investment Funds.
v3.20.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Revenue:    
Total revenue $ 91,151 $ 69,371
Cost of revenue:    
Total cost of revenue 74,871 57,454
Gross profit 16,280 11,917
Operating expenses:    
Sales and marketing 39,608 29,634
Research and development 556 469
General and administrative 28,026 23,049
Total operating expenses 68,190 53,152
Loss from operations (51,910) (41,235)
Interest expense, net 21,632 19,127
Other expense, net 28,358 1,385
Loss before income taxes (101,900) (61,747)
Income tax expense 23,414 27,487
Net loss (125,314) (89,234)
Net loss attributable to non-controlling interests and redeemable non-controlling interests (85,054) (62,992)
Net loss attributable to common stockholders $ (40,260) $ (26,242)
Net loss attributable per share to common stockholders:    
Basic and diluted $ (0.32) $ (0.22)
Weighted-average shares used in computing net loss attributable per share to common stockholders:    
Basic and diluted 123,922 120,307
Customer Agreements and Incentives    
Revenue:    
Total revenue $ 51,276 $ 39,603
Cost of revenue:    
Total cost of revenue 52,823 40,191
Solar Energy System and Product Sales    
Revenue:    
Total revenue 39,875 29,768
Cost of revenue:    
Total cost of revenue $ 22,048 $ 17,263
v3.20.1
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement Of Income And Comprehensive Income [Abstract]    
Net loss attributable to common stockholders $ (40,260) $ (26,242)
Other comprehensive loss:    
Unrealized losses on cash flow hedging instruments (net of tax effect of $(7,401) and $(1,777)) (19,836) (4,883)
Less: Interest expense on derivatives recognized into earnings (net of tax effect of $(243) and $(86)) (651) (236)
Total other comprehensive loss (19,185) (4,647)
Comprehensive loss $ (59,445) $ (30,889)
v3.20.1
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement Of Income And Comprehensive Income [Abstract]    
Unrealized losses on cash flow hedging instruments, tax $ (7,401) $ (1,777)
Interest expense on derivatives recognized into earnings, tax $ (243) $ (86)
v3.20.1
Condensed Consolidated Statements of Redeemable Non-Controlling Interests and Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Redeemable Non-Controlling Interests
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive (Loss) Income
Accumulated Deficit
Total Stockholders Equity
Non-Controlling Interests
Balance at Dec. 31, 2018 $ 362,212 $ 119,572 $ 1,201 $ 574,248 $ (7,223) $ (279,631) $ 288,595 $ 73,617
Balance (in Shares) at Dec. 31, 2018     120,114          
Cumulative-effect adjustment from adoption of new ASUs (155)         (155) (155)  
Stock-based compensation expense 3,679     3,679     3,679  
Issuance of common stock, net of tax withholdings 39   $ 5 34     39  
Issuance of common stock, net of tax withholdings (in shares)     498          
Contributions from non-controlling interests and redeemable non-controlling interests 74,555 9,813           74,555
Distributions to non-controlling interests and redeemable non-controlling interests (5,567) (2,191)           (5,567)
Total other comprehensive income (loss) (4,647)       (4,647)   (4,647)  
Net loss (80,707) (8,527)       (26,242) (26,242) (54,465)
Balance at Mar. 31, 2019 349,409 118,667 $ 1,206 577,961 (11,870) (306,028) 261,269 88,140
Balance (in Shares) at Mar. 31, 2019     120,612          
Balance at Dec. 31, 2019 $ 277,216 115,384 $ 1,231 591,639 (20,436) (381,961) 190,473 86,743
Balance (in Shares) at Dec. 31, 2019 123,056   123,056          
Cumulative-effect adjustment from adoption of new ASUs $ (325)         (325) (325)  
Stock-based compensation expense 3,939     3,939     3,939  
Issuance of common stock, net of tax withholdings 1,027   $ 16 1,011     1,027  
Issuance of common stock, net of tax withholdings (in shares)     1,614          
Contributions from non-controlling interests and redeemable non-controlling interests 70,046 15,703           70,046
Distributions to non-controlling interests and redeemable non-controlling interests (8,483) (996)           (8,483)
Total other comprehensive income (loss) (19,185)       (19,185)   (19,185)  
Net loss (111,704) (13,610)       (40,260) (40,260) (71,444)
Balance at Mar. 31, 2020 $ 212,531 $ 116,481 $ 1,247 $ 596,589 $ (39,621) $ (422,546) $ 135,669 $ 76,862
Balance (in Shares) at Mar. 31, 2020 124,670   124,670          
v3.20.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (125,314) $ (89,234)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 21,224 17,659
Deferred income taxes 27,937 27,727
Stock-based compensation 3,939 3,679
Loss on solar energy systems and property and equipment 4,811 1,233
Noncash interest and other expense 1,553 1,645
Reduction in lease pass-through financing obligation (712) (695)
Losses on interest rate swaps 28,358 1,384
Changes in operating assets and liabilities:    
Accounts receivable, net (1,948) (5,785)
Inventories 6,193 1,725
Prepaid expenses and other current assets 6,227 2,746
Other non-current assets, net (51,116) (26,539)
Accounts payable 5,062 1,876
Accrued compensation (5,460) (4,068)
Deferred revenue (13,332) (2,731)
Accrued and other liabilities (3,284) (615)
Net cash used in operating activities (95,862) (69,993)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Payments for the cost of solar energy systems (79,190) (64,526)
Payments for property and equipment (2,361) (291)
Proceeds from disposals of solar energy systems and property and equipment 890 649
Purchase of intangible assets (228)  
Net cash used in investing activities (80,889) (64,168)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from investment by non-controlling interests and redeemable non-controlling interests 85,749 84,368
Distributions paid to non-controlling interests and redeemable non-controlling interests (12,258) (9,013)
Proceeds from long-term debt 77,373 61,355
Payments on long-term debt (5,073) (5,593)
Proceeds from lease pass-through financing obligation 877 864
Principal payments on finance lease obligations (1,196) (271)
Net proceeds from issuance of common stock 1,027 39
Net cash provided by financing activities 146,499 131,749
NET DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS (30,252) (2,412)
CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS—Beginning of period 255,940 290,896
CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED AMOUNTS—End of period 225,688 288,484
NONCASH INVESTING AND FINANCING ACTIVITIES:    
Costs of solar energy systems included in changes in accounts payable, accrued compensation and accrued and other liabilities 46,702 40,256
Right-of-use assets obtained in exchange for new operating lease liabilities 12,230 6,910
Right-of-use assets obtained in exchange for new finance lease liabilities $ 1,664 $ 1,053
v3.20.1
Organization
3 Months Ended
Mar. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization

1.

Organization

Vivint Solar, Inc. and its subsidiaries are collectively referred to as the “Company.” The Company most commonly offers solar energy to residential customers through long-term customer contracts, such as power purchase agreements (“PPAs”) and legal-form leases (“Solar Leases”). The Company also offers its customers the option to purchase solar energy systems (“System Sales”) through third-party loan offerings or a cash purchase. The Company enters into customer contracts through a sales organization that historically has primarily used a direct-to-home sales model. The long-term customer contracts under PPAs and Solar Leases have typically been for 20 years, but beginning in the first quarter of 2020, 25-year contracts are also being offered. These contracts require the customer to make monthly payments to the Company.

The Company has formed various investment funds and entered into long-term debt facilities to monetize the recurring customer payments under its long-term customer contracts and investment tax credits (“ITCs”), accelerated tax depreciation and other incentives associated with residential solar energy systems. The Company uses the cash received from the investment funds, long-term debt facilities and cash generated from operations, including System Sales, to finance a portion of the Company’s variable and fixed costs associated with installing solar energy systems.

v3.20.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2.

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which were considered of normal recurring nature) considered necessary to present fairly the Company’s financial results. The results of the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2020 or for any other interim period or other future year.

The unaudited condensed consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company uses a qualitative approach in assessing the consolidation requirement for VIEs. This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. All of these determinations involve significant management judgments and estimates. The Company has determined that it is the primary beneficiary in the operational VIEs in which it has an equity interest. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. For additional information, see Note 14—Investment Funds.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions including, but not limited to, ITCs; revenue recognition; solar energy systems, net; the impairment analysis of long-lived assets; stock-based compensation; the provision for income taxes; the valuation of derivative financial instruments; the recognition and measurement of loss contingencies; and non-controlling interests and redeemable non-controlling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Liquidity

The Company requires cash to finance the deployment of solar energy systems. As of the date of this filing, the Company will require additional sources of cash beyond current cash balances and currently available financing facilities to fund long-term planned growth. If the Company is unable to secure additional financing when needed, or upon desirable terms, the Company may be unable to finance installation of customers’ solar energy systems in a manner consistent with past performance, cost of capital could increase, or the Company may be required to significantly reduce the scope of operations, any of which would have a material adverse effect on its business, financial condition, results of operations and prospects.

The impact of COVID-19 has resulted in changes to the capital markets, which have negatively affected the Company’s liquidity position. The timing and type of funding the Company expected to obtain as part of its planned business processes has been disrupted. As a result, the Company has initiated other funding alternatives to allow the Company to continue business activities for at least the next 12 months from the date of this filing. These funding alternatives may prove to be more expensive, less favorable options than previously expected. The Company expects to obtain additional capital needed to resume growth and normal operations and provide the capital to satisfy its liquidity needs beyond one year. However, there continues to be significant uncertainty about the duration and long-term effects of COVID-19 and it is possible the effects of COVID-19 may further impact the Company’s liquidity and its ability to operate as it has historically. The Company may also continue to be limited in its ability to contact customers and install new solar energy systems. There is also a risk that the Company’s alternative fund-raising activities are unsuccessful.

Management has taken actions to mitigate the negative impacts of COVID-19, and to alleviate some risk to the Company’s liquidity. These actions include, but are not limited to, cost reduction initiatives such as decreasing a significant portion of its workforce through furloughs and layoffs, salary reductions, temporarily closing warehouses and sales offices, eliminating expenditures, and deferring cash tax payments through the CARES Act. However, these efforts may not prove to be sufficient given the present uncertainties about the duration and severity of the COVID-19 pandemic.

Performance Obligation—Solar Energy System and Product Sales

For certain System Sales, the Company provides limited post-sale services to monitor the productivity of the solar energy system for 20 years after it has been placed into service. The Company allocates a portion of the transaction price to the monitoring services by estimating the standalone selling price that the Company would charge for these services if offered separately from the sale of the solar energy system. As of March 31, 2020 and December 31, 2019, the Company had allocated deferred revenue of $5.3 million and $4.7 million to monitoring services that will be recognized over the term of the monitoring services.

Measurement of Credit Losses on Financial Instruments

The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”) on January 1, 2020. The objective of this update is to provide users of financial statements with more useful information by changing the incurred loss methodology for recognizing credit losses to a more forward-looking methodology that reflects expected credit losses. Under Topic 326, the Company’s accounts receivable and certain contract assets are considered financial assets measured at an amortized cost basis and will be presented at the net amount expected to be collected using this updated methodology. Utilizing the Company’s historical default rate and reviewing current economic conditions, the Company estimated the allowance for credit losses that would be required. The Company applied Topic 326 through a modified retrospective approach with a cumulative-effect adjustment of approximately $0.3 million to retained earnings as of January 1, 2020. The Company evaluates its allowance for credit losses at each reporting period and adjusts as necessary in accordance with principles of Topic 326. When evaluating its allowance for credit losses as of March 31, 2020, the Company considered the impact COVID-19 will have its financial assets based on information available to the Company. For the three months ended March 31, 2020, the Company recorded additional reserves of $0.7 million related to Topic 326.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides optional temporary expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or other rates affected by reference rate reform if certain criteria are met. This ASU is effective now through December 31, 2022. The Company has long-term debt facilities and hedging instruments that are linked to LIBOR and currently anticipates using certain of the optional expedients available under this ASU. The Company is still evaluating the impact of this update on its condensed consolidated financial statements and related disclosures.

v3.20.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements

3.

Fair Value Measurements

The following tables set forth the fair value of the Company’s financial assets and liabilities included on the condensed consolidated balance sheets measured on a recurring basis by level within the fair value hierarchy (in thousands):

 

 

March 31, 2020

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial Liabilities

$

 

 

$

79,526

 

 

$

 

 

$

79,526

 

Interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

$

 

 

$

3,245

 

 

$

 

 

$

3,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

$

 

 

$

28,070

 

 

$

 

 

$

28,070

 

 

The interest rate swaps (Level 2) were valued using a discounted cash flow model that incorporates an assessment of the risk of non-performance by the interest rate swap counterparties and the Company. The valuation model uses various observable inputs including contractual terms, interest rate curves, credit spreads and measures of volatility. Financial liabilities as of March 31, 2020 include interest rate swaps for the Warehouse Facility, which are not designated as hedges, and interest rate swaps for the Solar Asset Backed Notes, Series 2018-2, which are designated as hedges. Financial assets as of December 31, 2019 included interest rate swaps for the Warehouse Facility, which are not designated as hedges. Financial liabilities as of December 31, 2019 included interest rate swaps for the Solar Asset Backed Notes, Series 2018-2, which are designated as hedges. See Note 11—Debt Obligations for additional details about these debt instruments.

The carrying values and fair values of the Company’s long-term debt were as follows (in thousands):

 

March 31, 2020

 

 

December 31, 2019

 

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

Floating-rate long-term debt

$

845,952

 

 

$

845,952

 

 

$

894,907

 

 

$

894,907

 

Fixed-rate long-term debt

 

751,163

 

 

 

778,936

 

 

 

629,908

 

 

 

702,895

 

Subtotal long-term debt

 

1,597,115

 

 

$

1,624,888

 

 

 

1,524,815

 

 

$

1,597,802

 

Unamortized debt issuance costs

 

(24,491

)

 

 

 

 

 

 

(25,154

)

 

 

 

 

Total long-term debt

$

1,572,624

 

 

 

 

 

 

$

1,499,661

 

 

 

 

 

The Company’s outstanding balance of long-term debt is carried at cost net of unamortized debt issuance costs, where applicable. See Note 11—Debt Obligations. The Company estimated the fair values of its floating-rate debt facilities (Level 2) to approximate their carrying values as interest accrues at floating rates based on market rates. The Company’s fixed-rate debt facilities (Level 2) were valued using quoted prices for the fixed rate debt facilities that are publicly traded, or quoted prices for corporate debt with similar terms for debt facilities that are not publicly traded.

v3.20.1
Inventories
3 Months Ended
Mar. 31, 2020
Inventory Disclosure [Abstract]  
Inventories

4.

Inventories

Inventories consisted of the following (in thousands):

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

Solar energy systems held for sale

$

13,701

 

 

$

19,892

 

Photovoltaic installation products

 

682

 

 

 

684

 

Total inventories

$

14,383

 

 

$

20,576

 

Solar energy systems held for sale are solar energy systems under construction that have yet to be interconnected to the power grid and that will be sold to customers. Solar energy systems held for sale are stated at the lower of cost, on a first-in, first-out basis, or net realizable value. Photovoltaic installation products are stated at the lower of cost, on an average cost basis, or net realizable value.

v3.20.1
Solar Energy Systems
3 Months Ended
Mar. 31, 2020
Solar Energy Systems Disclosure [Abstract]  
Solar Energy Systems

5.

Solar Energy Systems

Solar energy systems, net consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

System equipment costs

$

1,994,247

 

 

$

1,926,809

 

Less: Accumulated depreciation

 

(220,108

)

 

 

(205,338

)

 

 

1,774,139

 

 

 

1,721,471

 

Solar energy system inventory

 

80,765

 

 

 

38,390

 

Solar energy systems, net

$

1,854,904

 

 

$

1,759,861

 

 

Solar energy system inventory represents the solar components and materials used in the installation of solar energy systems prior to being installed on customers’ roofs. As such, no depreciation is recorded related to this line item. The Company recorded depreciation expense related to solar energy systems of $14.8 million and $13.1 million for the three months ended March 31, 2020 and 2019.

v3.20.1
Property and Equipment
3 Months Ended
Mar. 31, 2020
Property Plant And Equipment [Abstract]  
Property and Equipment

6.

Property and Equipment

Property and equipment, net consisted of the following (in thousands):

 

 

 

Estimated

 

March 31,

 

 

December 31,

 

 

 

Useful Lives

 

2020

 

 

2019

 

Leasehold improvements

 

1-12 years

 

$

12,048

 

 

$

10,458

 

Vehicles acquired under finance leases

 

3-4 years

 

 

11,622

 

 

 

10,280

 

Furniture and computer and other equipment

 

3-5 years

 

 

6,149

 

 

 

5,021

 

 

 

 

 

 

29,819

 

 

 

25,759

 

Less: Accumulated depreciation and amortization

 

 

 

 

(8,931

)

 

 

(8,259

)

Property and equipment, net

 

 

 

$

20,888

 

 

$

17,500

 

 

The Company recorded depreciation and amortization expense related to property and equipment of $1.2 million and $0.1 million for the three months ended March 31, 2020 and 2019.

 

v3.20.1
Other Non-Current Assets
3 Months Ended
Mar. 31, 2020
Other Assets Noncurrent Disclosure [Abstract]  
Other Non-Current Assets

7.

Other Non-Current Assets

Other non-current assets consisted of the following (in thousands):

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

Costs to obtain contracts

$

668,604

 

 

$

615,385

 

Accumulated amortization of costs to obtain contracts

 

(75,739

)

 

 

(70,170

)

Operating lease right-of-use assets

 

48,986

 

 

 

39,118

 

Sales incentives

 

10,112

 

 

 

10,008

 

Debt issuance costs

 

9,049

 

 

 

9,936

 

Prepaid insurance

 

6,174

 

 

 

6,541

 

Solar Lease straight-line asset

 

5,844

 

 

 

5,722

 

Advances receivable from sales professionals

 

5,541

 

 

 

6,395

 

Prepaid inventory

 

 

 

 

50,104

 

Other non-current assets

 

4,441

 

 

 

7,023

 

Total other non-current assets

$

683,012

 

 

$

680,062

 

The Company recorded amortization of costs to obtain contracts of $5.6 million and $3.9 million for the three months ended March 31, 2020 and 2019. Costs to obtain contracts are amortized over the initial terms of customer contracts, which are either 20 years or 25 years.

v3.20.1
Intangible Assets
3 Months Ended
Mar. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangible Assets

8.

Intangible Assets

Net intangible assets are included in other non-current assets, net and consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

Cost:

 

 

 

 

 

 

 

Internal-use software

$

2,825

 

 

$

2,596

 

Developed technology

 

522

 

 

 

522

 

Trademarks/trade names

 

201

 

 

 

201

 

Total carrying value

 

3,548

 

 

 

3,319

 

Accumulated amortization:

 

 

 

 

 

 

 

Internal-use software

 

(253

)

 

 

(105

)

Developed technology

 

(404

)

 

 

(393

)

Trademarks/trade names

 

(123

)

 

 

(119

)

Total accumulated amortization

 

(780

)

 

 

(617

)

Total intangible assets, net

$

2,768

 

 

$

2,702

 

 

The Company recorded $0.2 million and $0.1 million of amortization expense for the three months ended March 31, 2020 and 2019, which is included within general and administrative expense on the condensed consolidated statements of operations.

v3.20.1
Accrued Compensation
3 Months Ended
Mar. 31, 2020
Accrued Compensation Disclosure [Abstract]  
Accrued Compensation

9.

Accrued Compensation

Accrued compensation consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

Accrued payroll

$

14,395

 

 

$

18,633

 

Accrued commissions

 

14,497

 

 

 

15,516

 

Total accrued compensation

$

28,892

 

 

$

34,149

 

 

v3.20.1
Accrued and Other Current Liabilities
3 Months Ended
Mar. 31, 2020
Payables And Accruals [Abstract]  
Accrued and Other Current Liabilities

10.

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

Accrued unused commitment fees and interest

$

18,347

 

 

$

16,995

 

Litigation Settlement

 

11,622

 

 

 

12,780

 

Current portion of operating lease liabilities

 

8,886

 

 

 

8,436

 

Accrued workers' compensation

 

7,803

 

 

 

7,166

 

Accrued professional fees

 

6,479

 

 

 

5,546

 

Current portion of lease pass-through financing obligation

 

4,764

 

 

 

5,147

 

Workmanship accrual

 

4,239

 

 

 

4,217

 

Sales, use and property taxes payable

 

3,528

 

 

 

4,321

 

External customer experience services

 

1,488

 

 

 

1,984

 

Accrued Inventory

 

163

 

 

 

4,667

 

Other accrued expenses

 

5,091

 

 

 

7,280

 

Total accrued and other current liabilities

$

72,410

 

 

$

78,539

 

 

v3.20.1
Debt Obligations
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Debt Obligations

11.

Debt Obligations

Debt obligations consisted of the following as of March 31, 2020 (in thousands, except interest rates):

 

Principal

 

 

Unamortized Debt

 

 

 

 

 

 

 

 

 

 

Unused

 

 

 

 

 

 

 

 

Borrowings

 

 

Issuance Costs

 

 

Net Carrying Value

 

 

Borrowing

 

 

Interest

 

 

Maturity

 

Outstanding

 

 

Current

 

 

Long-term

 

 

Current

 

 

Long-term

 

 

Capacity

 

 

Rate

 

 

Date

Solar asset backed notes, Series 2018-1(1)

$

448,277

 

 

$

(68

)

 

$

(8,220

)

 

$

5,588

 

 

$

434,401

 

 

$

 

 

 

5.1

%

 

October 2028

Solar asset backed notes, Series 2018-2(2)(3)

 

336,766

 

 

 

(5

)

 

 

(5,806

)

 

 

295

 

 

 

330,660

 

 

 

 

 

 

5.0

 

 

August 2023

2017 Term loan facility

 

177,437

 

 

 

(153

)

 

 

(4,214

)

 

 

6,568

 

 

 

166,502

 

 

 

 

 

 

6.0

 

 

January 2035

2018 Forward flow loan facility

 

124,188

 

 

 

(94

)

 

 

(3,031

)

 

 

3,660

 

 

 

117,403

 

 

 

 

 

 

4.7

 

 

November 2039

2019 Forward flow loan facility

 

115,186

 

 

 

(7

)

 

 

(2,805

)

 

 

268

 

 

 

112,106

 

 

 

34,814

 

 

 

4.7

 

 

(4)

Credit agreement

 

1,261

 

 

 

(1

)

 

 

(87

)

 

 

17

 

 

 

1,156

 

 

 

 

 

 

6.5

 

 

February 2023

Revolving lines of credit(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse facility

 

280,000

 

 

 

 

 

 

 

 

 

 

 

 

280,000

 

 

 

45,000

 

 

 

4.3

 

 

August 2023

Asset Financing Facility(6)

 

114,000

 

 

 

 

 

 

 

 

 

8,000

 

 

 

106,000

 

 

 

66,362

 

 

 

4.5

 

 

June 2023

Total debt

$

1,597,115

 

 

$

(328

)

 

$

(24,163

)

 

$

24,396

 

 

$

1,548,228

 

 

$

146,176

 

 

 

 

 

 

 

Debt obligations consisted of the following as of December 31, 2019 (in thousands, except interest rates):

 

Principal

 

 

Unamortized Debt

 

 

 

 

 

 

 

 

 

 

Unused

 

 

 

 

 

 

 

 

Borrowings

 

 

Issuance Costs

 

 

Net Carrying Value

 

 

Borrowing

 

 

Interest

 

 

Maturity

 

Outstanding

 

 

Current

 

 

Long-term

 

 

Current

 

 

Long-term

 

 

Capacity

 

 

Rate

 

 

Date

Solar asset backed notes, Series 2018-1(1)

$

448,277

 

 

$

(69

)

 

$

(8,414

)

 

$

3,639

 

 

$

436,155

 

 

$

 

 

 

5.1

%

 

October 2028

Solar asset backed notes, Series 2018-2(2)(3)

 

338,294

 

 

 

(5

)

 

 

(6,133

)

 

 

1,245

 

 

 

330,911

 

 

 

 

 

 

5.5

 

 

August 2023

2017 Term loan facility

 

180,365

 

 

 

(164

)

 

 

(4,235

)

 

 

7,882

 

 

 

168,084

 

 

 

 

 

 

6.0

 

 

January 2035

2018 Forward flow loan facility

 

124,800

 

 

 

(99

)

 

 

(3,083

)

 

 

3,622

 

 

 

117,996

 

 

 

 

 

 

4.7

 

 

November 2039

2019 Forward flow loan facility

 

82,813