{ "docId": "019dd923-622c-750b-8b98-fa7fcd640a8d", "docSlug": "522270211ac4", "documentTitle": "Sunnova Energy International Inc. (NOVA)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-09-29 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 60, "pageCount": 91, "prevPage": 59, "nextPage": 61, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "Uses excerpts from company risk factor disclosures to undermine the credibility of the 'Contracted Customer Value' metric.", "elementsJson": [ "headline_text", "paragraph", "callout_box" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-fa7fcd640a8d/60", "deckHref": "/decks/019dd923-622c-750b-8b98-fa7fcd640a8d", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-fa7fcd640a8d.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-fa7fcd640a8d#slide-60", "components": [ { "bbox": null, "kind": "callout", "text": "PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to these operational metrics or their components.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0398-7399-b325-4efabdd5182c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.9, "x": 0.05, "y": 0.68 }, "kind": "paragraph", "text": "Furthermore, in calculating estimated gross contracted customer value, we discount our future net cash flows at 6% based on industry practice and the interest rate on certain recent securitizations. This discount rate might not be the most appropriate discount rate based on interest rates in effect from time to time and industry or company-specific risks associated with these cash flows and the appropriate discount rate for these estimates may change in the future due to the level of inflation, rising interest rates, our cost of capital, customer default rates and consumer demand for solar energy systems, among other things. We also assume customer losses of 0% in calculating these metrics even though we expect to have some minimal level of customer losses over the life of our contracts. To illustrate the way in which actual results may change, we present sensitivities around the discount rate and the rate of customer losses, although these sensitivities may not capture the most appropriate discount rate or the rate of customer losses we will experience. For a discussion of estimated gross contracted customer value and the related discount rate, see \"Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Operational Metrics—Estimated Gross Contracted Customer Value\".", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "08878ebb-4a94-43a5-ae72-0deae896e1ff", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "paragraph", "text": "In Spruce Point's experience, it is unusual for a Company to disclaim that an auditor has not reviewed or audited non-GAAP operational metrics outside of the financial statements. According to the Company's risk factor disclosure, PwC has not audited or reviewed Sunnova's Contracted Customer Value metric. Spruce Point believes investors should be concerned by a possible lack of confidence in this crucial performance metric by auditor.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "20148835-cf1e-4b4a-9cc9-ce6cf3fa3c67", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.32 }, "kind": "paragraph", "text": "Certain of our key operational metrics, including estimated gross contracted customer value, are based on various assumptions and estimates we make over an extended period of time. Actual experience may vary materially from these estimates and assumptions and therefore undue reliance should not be placed on these metrics.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2a063e54-6738-4d12-b48e-248579410445", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.88 }, "kind": "paragraph", "text": "PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to these operational metrics or their components. The estimates discussed above are based on a combination of assumptions that may prove to be inaccurate over time. Such inaccuracies could be material, particularly given the estimates relate to cash flows up to 35 years in the future.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8beec9c7-c8bb-4f7b-bfbe-7830b081462c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.9, "x": 0.05, "y": 0.43 }, "kind": "paragraph", "text": "Our key operational metrics include a number of assumptions and estimates we make over an extended period of time (up to 35 years) and may not prove accurate. In calculating estimated gross contracted customer value, we estimate projected monthly customer payments over the remaining life of our solar service agreements, which are typically 25 years in length with an opportunity for customers to renew for up to an additional 10 years, and from the future sale of related SRECs. These estimated future cash flows depend on various factors including but not limited to solar service agreement type, contracted rates, customer loss rates, expected sun hours and the projected production capacity of the solar equipment installed. Additionally, in calculating estimated gross contracted customer value we also estimate cash distributions to tax equity fund investors and operating, maintenance and administrative expenses associated with the solar service agreements, including expenses related to accounting, reporting, audit, insurance, maintenance and repairs over the remaining life of our solar service agreements.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d349ed05-30a4-4ea3-bb4b-f3efa11a11d3", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Certain of our key operational metrics, including estimated gross contracted customer value, are based on various assumptions and estimates we make over an extended period of time. Actual experience may vary materially from these estimates and assumptions and therefore undue reliance should not be placed on these metrics. — Sunnova S-1 Filing", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0398-7399-b325-536f2539de1c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.1, "x": 0.05, "y": 0.97 }, "kind": "source-note", "text": "Source: S-1 filing", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1758f4d9-48f0-493e-a4f4-eeb9616df608", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.305, "y": 0.05 }, "kind": "title", "text": "Auditor Does Not Sign Off On Metric", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c7c5788f-a5ca-45ec-8aec-968991286426", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }