Vivint Solar Announces Second Quarter 2017 Results

LEHI, Utah, Aug. 8, 2017 /PRNewswire/ -- Vivint Solar (NYSE: VSLR), today announced financial results for the second quarter ended June 30, 2017.

Second Quarter 2017 Operating Highlights

Key operating and development highlights for the quarter ended June 30, 2017 include:

    --  MW Booked of approximately 55 MWs for the quarter.
    --  MW Installed of approximately 47 MWs. Total cumulative MWs installed
        were approximately 774 MWs.
    --  Installations were 7,108 for the quarter. Cumulative installations were
        113,287.
    --  Estimated Nominal Contracted Payments Remaining increased by
        approximately $111 million during the quarter to approximately $2.8
        billion.
    --  Estimated Retained Value increased by approximately $75 million during
        the quarter to approximately $1.5 billion.
    --  Estimated Retained Value per Watt was $1.98.
    --  Cost per Watt was $2.88, a decrease from $2.98 in the first quarter of
        2017 and down from $2.94 in the second quarter of 2016.

Second Quarter 2017 GAAP Financial Results

Summary GAAP financial results for the quarter ended June 30, 2017 include:

    --  Operating Leases and Incentives Revenue was $43.4 million, up 45% from
        $30.0 million in the second quarter of the prior year. Total revenue for
        the quarter was $73.0 million, up 109% from $34.9 million in the second
        quarter of the prior year.
    --  Cost of Revenue - Operating Leases and Incentives was $33.8 million,
        down from $38.5 million in the same period of 2016.
    --  Total Operating Expenses, including cost of revenue, were $87.3 million,
        compared to $71.4 million in the second quarter of 2016.
    --  Loss from Operations was $14.3 million compared to $36.5 million in the
        same period of 2016.
    --  GAAP Net Income Available (Loss Attributable) per Diluted Share to
        Common Stockholders was $0.04, down from $0.11 in the second quarter of
        2016.
    --  Non-GAAP Net Loss Attributable Before Non-Controlling Interests and
        Redeemable Non-Controlling Interests per Share was ($0.33), up from
        ($0.49) in the same period of 2016. See below for a further discussion
        of Non-GAAP Loss per Share.
    --  Cash and Cash Equivalents as of June 30, 2017 were $115.6 million.

Financing Activity

As of June 30, 2017, the Company had $15 million in undrawn capacity in the working capital facility, had $308 million in undrawn capacity in the aggregation facility, and had approximately 109 MWs of installation capacity remaining in its tax equity funds.

Guidance for Third Quarter 2017

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 2017 financial results.

For the third quarter of 2017, Vivint Solar expects:

    --  MW Installed: 46 to 52 MWs
    --  Cost per Watt: $2.80 - $2.90

Earnings Conference Call

Vivint Solar will host an investor conference call and live webcast today, Tuesday, August 8, 2017, at 5:00 p.m. ET to discuss these financial results. To access the conference call, dial 1.844.579.6824 or 1.763.488.9145 for international callers. The conference ID is 5190 5606. A listen-only webcast will be accessible on the investor relations page of the Company's website at http://investors.vivintsolar.com and will be archived and available on this site until August 31, 2017. 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 http://investors.vivintsolar.com.

About Vivint Solar

Vivint Solar is a leading full-service residential solar provider in the United States. With Vivint Solar, customers can power their homes with clean, renewable energy and typically achieve significant financial savings over time. Offering integrated residential solar solutions for the entire customer lifecycle, Vivint Solar designs and installs the solar energy systems for its customers, and offers monitoring and maintenance services. In addition to being able to purchase a solar energy system outright, customers may benefit from Vivint Solar's affordable, flexible financing options, power purchase agreements, or lease agreements, where available. Through an exclusive collaboration, Vivint Solar also offers solar plus storage systems with Mercedes-Benz batteries. For more information, visit www.vivintsolar.com or follow @VivintSolar on Twitter.

Note on Forward-Looking Statements

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 Vivint Solar's guidance for megawatts installed and cost per watt, installation capacity remaining in tax equity funds, growth prospects, and operating and financial results, such as estimates of nominal contracted payments remaining, estimated retained value, estimated retained value per watt, including 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 effectively, including attracting, training and retaining sales personnel and solar energy system installers; the availability and price of solar panels and other system components, the assumptions employed in calculating our operating metrics may be inaccurate; 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 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 Investor Relations section of the Company's website at http://investors.vivintsolar.com.




                                                    Vivint Solar, Inc.

                                      Condensed Consolidated Unaudited Balance Sheets

                                                      (In thousands)


                                                      June 30,                        December 31,

                                                           2017                                2016
                                                           ----                                ----

    ASSETS

    Current assets:

    Cash and cash equivalents                                        $115,612                           $96,586

    Accounts receivable, net                                         21,673                            12,658

    Inventories                                                      16,141                            11,285

    Prepaid expenses and other current
     assets                                                          26,516                            46,683
                                                                     ------                            ------

    Total current assets                                            179,942                           167,212

    Restricted cash and cash equivalents                             43,284                            26,853

    Solar energy systems, net                                     1,567,598                         1,458,355

    Property and equipment, net                                      18,934                            23,199

    Intangible assets, net                                            1,141                             1,420

    Prepaid tax asset, net                                          462,580                           419,474

    Other non-current assets, net                                    38,186                            29,843
                                                                     ------                            ------

    TOTAL ASSETS                                                   $2,311,665                        $2,126,356
                                                                   ==========                        ==========

    LIABILITIES, REDEEMABLE NON-CONTROLLING
     INTERESTS AND EQUITY

    Current liabilities:

    Accounts payable                                                  $38,830                           $46,630

    Accounts payable-related party                                      138                               191

    Distributions payable to non-
     controlling interests and redeemable
     non-controlling interests                                        9,455                            16,176

    Accrued compensation                                             18,276                            20,003

    Current portion of long-term debt                                12,940                             6,252

    Current portion of deferred revenue                              27,173                            19,911

    Current portion of capital lease
     obligation                                                       4,684                             5,163

    Accrued and other current liabilities                            24,890                            19,364
                                                                     ------                            ------

    Total current liabilities                                       136,386                           133,690

    Long-term debt, net of current portion                          854,838                           750,728

    Deferred revenue, net of current portion                         33,786                            34,379

    Capital lease obligation, net of current
     portion                                                          3,262                             5,476

    Deferred tax liability, net                                     458,865                           395,218

    Other non-current liabilities                                    13,679                            10,355
                                                                     ------                            ------

    Total liabilities                                             1,500,816                         1,329,846

    Commitments and contingencies

    Redeemable non-controlling interests                            132,392                           129,676

    Stockholders' equity:

    Common stock                                                      1,142                             1,102

    Additional paid-in capital                                      551,807                           542,348

    Accumulated other comprehensive income                            6,430                             7,631

    Retained earnings                                                22,281                             5,217
                                                                     ------                             -----

    Total stockholders' equity                                      581,660                           556,298

    Non-controlling interests                                        96,797                           110,536
                                                                     ------                           -------

    Total equity                                                    678,457                           666,834
                                                                    -------                           -------

    TOTAL LIABILITIES, REDEEMABLE
     NON-CONTROLLING INTERESTS AND
     EQUITY                                                        $2,311,665                        $2,126,356
                                                                   ==========                        ==========



                                                                                   Vivint Solar, Inc.

                                                                Condensed Consolidated Unaudited Statements of Operations

                                                                          (In thousands, except per share data)


                                             Three Months Ended                                             Six Months Ended

                                                  June 30,                                                      June 30,
                                                --------                                                  --------

                                          2017                                  2016                                   2017                2016
                                          ----                                  ----                                   ----                ----

    Revenue:

    Operating leases and
     incentives                                     $43,413                                            $30,061                         $73,802                $46,639

    Solar energy system and product sales          29,582                                              4,843                          52,307                  5,495
                                                   ------                                              -----                          ------                  -----

    Total revenue                                  72,995                                             34,904                         126,109                 52,134

    Operating expenses:

    Cost of revenue-operating leases and
     incentives                                    33,763                                             38,538                          68,833                 76,298

    Cost of revenue-solar energy system
     and product sales                             22,831                                              3,716                          41,496                  4,138

    Sales and marketing                             9,411                                             10,813                          18,229                 23,461

    Research and development                          895                                                144                           1,791                  1,376

    General and administrative                     20,301                                             18,064                          40,880                 40,984

    Amortization of intangible assets                 139                                                155                             279                    420

    Impairment of goodwill                   -                                                 -                               -                36,601
                                           ---                                               ---                             ---                ------

    Total operating expenses                       87,340                                             71,430                         171,508                183,278
                                                   ------                                             ------                         -------                -------

    Loss from operations                         (14,345)                                          (36,526)                       (45,399)             (131,144)

    Interest expense                               16,838                                              7,413                          31,559                 13,178

    Other expense, net                                715                                                309                             991                    339
                                                      ---                                                ---                             ---                    ---

    Loss before income taxes                     (31,898)                                          (44,248)                       (77,949)             (144,661)

    Income tax expense                              5,156                                              8,055                          14,557                 13,204
                                                    -----                                              -----                          ------                 ------

    Net loss                                     (37,054)                                          (52,303)                       (92,506)             (157,865)

    Net loss attributable to non-
     controlling interests and redeemable
     non-controlling interests                   (42,034)                                          (64,674)                      (110,778)             (139,017)
                                                  -------                                            -------                        --------               --------

    Net income available (loss
     attributable) to common
     stockholders                                    $4,980                                            $12,371                         $18,272              $(18,848)
                                                     ======                                            =======                         =======               ========

    Net income available (loss
     attributable) per share to common
     stockholders:

    Basic                                             $0.04                                              $0.12                           $0.16                $(0.18)
                                                      =====                                              =====                           =====                 ======

    Diluted                                           $0.04                                              $0.11                           $0.16                $(0.18)
                                                      =====                                              =====                           =====                 ======

    Weighted-average shares used in
     computing net income available (loss
     attributable) per share to common
     stockholders:

    Basic                                         112,351                                            107,226                         111,562                106,922
                                                  =======                                            =======                         =======                =======

    Diluted                                       117,570                                            111,380                         116,988                106,922
                                                  =======                                            =======                         =======                =======



                                                                                              Vivint Solar, Inc.

                                                                           Condensed Consolidated Unaudited Statements of Cash Flows

                                                                                                (In thousands)


                                                                 Three Months Ended                                            Six Months Ended

                                                                      June 30,                                                     June 30,

                                                              2017                                 2016                                   2017                       2016
                                                              ----                                 ----                                   ----                       ----

    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net loss                                                          $(37,054)                                        $(52,303)                             $(92,506)              $(157,865)

    Adjustments to reconcile net loss to net cash used in
     operating activities:

    Depreciation and amortization                                      14,877                                            10,773                                 29,039                   19,876

    Amortization of intangible assets                                     139                                               155                                    279                      420

    Impairment of goodwill                                       -                                                -                                     -                  36,601

    Deferred income taxes                                              29,130                                            39,466                                 65,255                   83,837

    Stock-based compensation                                            3,330                                               842                                  7,252                    2,467

    Loss on solar energy systems and property and
     equipment                                                          1,741                                             (185)                                 3,766                      259

    Non-cash interest and other expense                                 3,185                                             1,567                                  5,311                    2,997

    Reduction in lease pass-through financing obligation              (1,346)                                          (1,228)                               (1,995)                 (1,666)

    Losses on interest rate swaps                              717                                                 -                                   993                        -

    Excess tax detriment from stock-based compensation           -                                            (588)                                     -                   (981)

    Changes in operating assets and liabilities:

    Accounts receivable, net                                          (4,534)                                          (4,915)                               (9,015)                 (8,304)

    Inventories                                                       (2,741)                                          (2,337)                               (4,856)                 (3,236)

    Prepaid expenses and other current assets                         (6,528)                                            4,449                                 21,373                    2,307

    Prepaid tax asset, net                                           (18,925)                                         (45,043)                              (43,106)                (87,040)

    Other non-current assets, net                                     (2,164)                                          (1,587)                               (6,025)                 (3,294)

    Accounts payable                                                    (358)                                            (623)                                  (62)                 (1,078)

    Accounts payable-related party                                      (398)                                            (393)                                  (53)                 (1,412)

    Accrued compensation                                                (259)                                              308                                (2,022)                   4,638

    Deferred revenue                                                    4,560                                               116                                  6,669                    1,174

    Accrued and other liabilities                                       (194)                                            3,293                                  6,279                    1,578
                                                                         ----                                             -----                                  -----                    -----

    Net cash used in operating activities                            (16,822)                                         (48,233)                              (13,424)               (108,722)
                                                                      -------                                           -------                                -------                 --------

    CASH FLOWS FROM INVESTING ACTIVITIES:

    Payments for the cost of solar energy systems                    (69,893)                                        (104,925)                             (145,033)               (211,622)

    Payments for property and equipment                                 (355)                                            (496)                                 (633)                 (1,888)

    Proceeds from disposals of solar energy systems and
     property and equipment                                               929                                               374                                  1,100                      374

    Change in restricted cash and cash equivalents                      3,326                                           (1,904)                              (16,431)                 (4,517)

    Purchase of intangible assets                                -                                                -                                     -                   (291)
                                                               ---                                              ---                                   ---                    ----

    Net cash used in investing activities                            (65,993)                                        (106,951)                             (160,997)               (217,944)
                                                                      -------                                          --------                               --------                 --------

    CASH FLOWS FROM FINANCING ACTIVITIES:

    Proceeds from investment by non-controlling interests
     and redeemable non-controlling interests                          56,954                                            93,277                                115,514                  183,263

    Distributions paid to non-controlling interests and
     redeemable non-controlling interests                             (7,453)                                          (5,419)                              (22,480)                (11,813)

    Proceeds from long-term debt                                       20,000                                            50,204                                273,750                  144,706

    Payments on long-term debt                            (18,145)                                                -                             (159,304)                 (4,150)

    Payments for debt issuance costs                       (2,980)                                                -                              (13,410)                 (6,230)

    Proceeds from lease pass-through financing obligation                 635                                               579                                  1,487                      860

    Principal payments on capital lease obligations                   (1,147)                                          (1,497)                               (2,343)                 (3,059)

    Proceeds from issuance of common stock                                 86                                               490                                    233                      490
                                                                          ---                                               ---                                    ---                      ---

    Net cash provided by financing activities                          47,950                                           137,634                                193,447                  304,067
                                                                       ------                                           -------                                -------                  -------

    NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS             (34,865)                                         (17,550)                                19,026                 (22,599)

    CASH AND CASH EQUIVALENTS-Beginning of period                     150,477                                            87,164                                 96,586                   92,213
                                                                      -------                                            ------                                 ------                   ------

    CASH AND CASH EQUIVALENTS-End of period                            $115,612                                           $69,614                               $115,612                  $69,614
                                                                       ========                                           =======                               ========                  =======


                                                         Vivint Solar, Inc.

                                                       Key Operating Metrics



                                    Three Months Ended

                          June 30,                           March 31,                June 30,

                               2017                                2017                     2016
                               ----                                ----                     ----


     Installations                              7,108                           6,581               8,641

     Megawatts
      installed                                  46.9                            45.8                61.4

     Cumulative
      installations                           113,287                         106,179              84,872

     Cumulative
      megawatts
      installed                                 773.8                           726.9               575.2

     Estimated nominal
      contracted
      payments
      remaining (in
      millions)                              $2,802.4                        $2,691.9            $2,255.3

          Estimated
           retained value
           under energy
           contract (in
           millions)                         $1,121.6                        $1,068.3              $862.0

          Estimated
           retained value
           of renewal (in
           millions)                           $339.0                          $317.4              $252.9

     Estimated
      retained value
      (in millions)                          $1,460.6                        $1,385.7            $1,115.0

     Estimated
      retained value
      per watt                                  $1.98                           $1.97               $1.95

Sensitivity Analysis for Retained Value

The following table provides quantitative sensitivity analysis of our estimate of retained value of solar energy systems under contract as of June 30, 2017, including both the contracted and estimated renewal portion, at a range of discount rates (retained value amounts in million):



                                       4%      6%      8%
                                      ---      ---      ---

     Estimated retained value
      under energy contract      $1,342.6 $1,121.6   $948.6

     Estimated retained value of
      renewal                       532.2    339.0    218.4
                                    -----    -----    -----

     Total estimated retained
      value                      $1,874.8 $1,460.6 $1,167.0
                                 ======== ======== ========

Non-GAAP Earnings per Share (EPS) Before Noncontrolling Interests

We report GAAP EPS, which is based upon net income available (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. Additionally, we have excluded the effect of the goodwill impairment for the six months ended June 30, 2016 as it is a non-cash, non-recurring event that is not representative of our ongoing business. 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 ($0.33) and ($0.83) for the three and six months ended June 30, 2017.


                                                                                  Vivint Solar, Inc.

                                                                     Reconciliation from GAAP EPS to Non-GAAP EPS

                                                                        (In thousands, except per share data)



                                                                          Three Months Ended

                                                      June 30, 2017                                      June 30, 2016
                                                      -------------                                      -------------

                                              Net Loss                        EPS                                Net Loss             EPS
                                              --------                        ---                                --------             ---

    Net income available (loss
     attributable) to common
     stockholders                                             $4,980                                      $0.04                        $12,371                $0.12

    Net loss attributable to non-controlling
     interests and redeemable non-controlling
     interests                                            (42,034)                                    (0.37)                      (64,674)              (0.61)
                                                           -------                                      -----                        -------                -----

    Non-GAAP net loss                                      $(37,054)                                   $(0.33)                     $(52,303)             $(0.49)
                                                            ========                                     ======                       ========               ======

    Weighted-average shares used in computing
     net loss per share                                                                   112,351                                              107,226
                                                                                          =======                                              =======



                                                                       Six Months Ended

                                                      June 30, 2017                                      June 30, 2016
                                                      -------------                                      -------------

                                              Net Loss                        EPS                                Net Loss             EPS
                                              --------                        ---                                --------             ---

    Net income available (loss
     attributable) to common
     stockholders                                            $18,272                                      $0.16                      $(18,848)             $(0.18)

    Net loss attributable to non-controlling
     interests and redeemable non-controlling
     interests                                           (110,778)                                   $(0.99)                     (139,017)             $(1.29)

    Impairment of goodwill                            -                            $            -                         36,601                 $0.34
                                                    ---                          ---          ---                         ------                 -----

    Non-GAAP net loss                                      $(92,506)                                   $(0.83)                    $(121,264)             $(1.13)
                                                            ========                                     ======                      =========               ======

    Weighted-average shares used in computing
     net loss per share:                                                                  111,562                                              106,922
                                                                                          =======                                              =======

Glossary of Definitions

"Installations" represents the number of solar energy systems installed on customers' premises.

"MWs or megawatts" represents the DC nameplate megawatt production capacity.

"MW Booked" represents the aggregate megawatt nameplate capacity of solar energy systems that were permitted during the period net of cancellations in the period.

"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.

"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, 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.

"Retained Value" represents the net cash flows, discounted at 6%, that Vivint Solar expects to receive from customers pursuant to long-term customer contracts net of estimated cash distributions to fund investors 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, 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.

"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.

"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.

Investor Contact:

Rob Kain
Vice President of Investor Relations
855-842-1844
ir@vivintsolar.com

Media Contact:

Helen Langan
Director of Public Relations
385-202-6577
pr@vivintsolar.com

Agency Contact:

Ashlyn Hewlett
Method Communications
801-461-9772
ashlyn@methodcommunications.com

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SOURCE Vivint Solar