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Vivint Solar Posts Solid Second Quarter & Closes Landmark $327 Million Financing Deal

America’s third largest residential solar provider, Vivint Solar, announced its second-quarter earnings report this week in which it posted solid installations and installations but missed analyst expectations on earnings and revenue. 

America’s third largest residential solar provider, Vivint Solar, announced its second-quarter earnings report this week in which it posted solid installations and installations but missed analyst expectations on earnings and revenue.

At the same time, however, the company also announced the closing of an industry-first financing vehicle worth $327 million that is intended to make way for approximately 95 megawatts (MW) worth of future solar energy installations.

Vivint Solar announced its second-quarter earnings report on Tuesday, revealing that the residential solar company installed approximately 47 MW across 6,678 solar installations through the second quarter and took in further bookings of 64 MW. The company has therefore now installed a total of 952 MW worth of solar.

Looking at Vivint Solar’s performance from an installation point of view, the second quarter was quite strong, with installations increasing by 17.5% on the first quarter and installing the same amount as the second quarter a year earlier.

Cost per watt for installations through the second quarter was $3.11, a decrease from the $3.15 recorded through the first quarter and an increase from the $2.88 recorded in the second quarter of 2017.

However, total revenue for the quarter missed analyst expectations, hitting $80.8 million for the quarter — up 11% year-over-year and up 18% over the first quarter, but missing expectations by $8.5 million. Similarly, the company posted a -$0.50 per share net loss, down by $0.30 on expectations.

“I saw the progress we’ve made over the past year is compelling and we completed a memorable quarter consistent with the goals we set and the guidance we provided,” said Vivint Solar CEO David Bywater to investors in their quarter earnings call.

“The second quarter further validates the success we are having in our strategy and roadmap to be the most appealing best run residential solar company in the world.

“For the second quarter second quarter, we installed 47 MW which was towards the high end of our guidance. The 64 MW we booked in the quarter represented 15% year-over-year growth and the highest bookings quarter we’ve had in the last seven quarters. Our growth and momentum are more meaningful when we consider that growth comes from improved profitability due to higher sun hours, improved pricing and better market mix.”

At the same time, Vivint Solar also announced that it had closed an “innovative multi-party forward flow funding arrangement” worth $327 million and expected to have a total aggregate value of around $410 million. The transaction is intended to generate upfront cash margin for Vivint Solar so it can develop approximately 95 MW worth of future solar installations.

“This delivers another landmark financing transaction for the company in 2018, and we look forward to using this vehicle to continue to accelerate solar power adoption across the country,” said David Bywater. “We are grateful for the continued support of Bank of America Merrill Lynch in this transaction and the faith and trust that investors continue to place in the future of our business.  Hannon Armstrong’s programmatic investment is a key piece of the capital structure in this transaction.”

“The cash margin provided by this vehicle for a portion of our future PPA and lease assets is an important step to increase Vivint Solar’s financial flexibility and to solidify a sustainable funding model for the business,” added Vivint Solar’s Chief Commercial Officer and Head of Capital Markets, Thomas Plagemann.  “We expect similar results to selling systems directly to homeowners, allowing us to continue focusing on providing the products best suited for each homeowner.”

Bank of America Merrill Lynch served in multiple roles for the transaction including acting as sole structuring and placement agent for the cash equity and multi-draw term loan.

“Providing solutions that aid in the adoption of renewable energy is core to Bank of America Merrill Lynch’s environmental commitment,” said Omer Farooq, Managing Director in Bank of America Merrill Lynch’s Cross Asset Solutions and Strategies team. “We value our relationship with Vivint Solar and Hannon Armstrong and look forward to continuing to grow the partnership.”

The move comes only days after Vivint Solar announced that it was expanding its residential services into Illinois and that it had partnered with an unnamed leading American homebuilder in preparation for mandated rooftop solar systems in California.

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