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Sunrun CFO on rebuilding America’s energy infrastructure

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Home solar and energy service company Sunrun reported fourth-quarter earnings on Thursday. Sunrun CFO Tom vonReichbauer joins Yahoo Finance Live to break down the company’s strong financial results and weigh in on the global energy outlook for years to come.

Video Transcript

AKIKO FUJITA: Welcome back to Yahoo Finance Live. Renewable energy services provider Sunrun seeing a big pop in the session on the back of strong earnings. That stock is up nearly 8%.

Total revenue for the company jumped 31% year-on-year to $320 million. It was up 7% for the full year. Its customer base grew by nearly 20% on the year, and Sunrun now says it expects its growth rate to accelerate 20% to 25% this year.

Let's bring in the CFO of Sunrun Tom vineReich-- vonReichbauer. Almost got it right, Tom. Let me just talk to you beyond the quarterly results, because you're coming off of a very busy week on the back of those power outages that we saw in Texas. No question a lot of homeowners in the aftermath sort of thinking or rethinking their energy mix. What does the demand picture look like for you on that front?

TOM VONREICHBAUER: Yeah, great to be here, Akiko. You know, Texas is simply the most recent proof point that we need to rebuild our energy infrastructure in this country. The outages there were-- were devastating for many homeowners there, and we saw a 350% increase in web traffic and-- on the heels of that. You know, we offer a cleaner, more affordable, more reliable solution with solar and home energy storage.

And the distributed nature of that is not only good for consumers, but also for the grid at large. So you know, it's-- it's the first of many. We saw wildfires in California last year, hurricanes in the Northeast, and on the backs of all these events, you know, there's increased interest in moving away from a legacy grid and the legacy energy provider that-- that continues to fail them with higher and higher prices every year.

BRIAN CHEUNG: Hey, Tom, Brian Cheung here. Now obviously, the numbers speak for themselves. There's a lot of demand for this. But the company has pointed out that it's expensive to build up this infrastructure, and it's not something you can put up overnight. So how does the company plan on scaling that up? That can be very expensive for the company itself in areas like California, in areas like Texas, especially with the-- I guess the pandemic and some of these nature-related issues also kind of accelerating demand for that.

TOM VONREICHBAUER: Yeah. So the really exciting thing, I think, for Sunrun capping off 2020 and looking ahead to 2021 is we're at a newfound level of scale, more than 550,000 total customers, more than twice the size of our next largest competitor. And our growth rates are accelerating. And on top of that, we're seeing margin expansion. So in Q4, we grew volumes 10% quarter-over-quarter and saw margins expand to our highest level on the year.

As we look forward to 2021, we guided to more than $700 million of total value generated, which is our view of net subscriber margin. And-- and so it's-- it's a accelerating growth story and a margin expansion story, you know, and we're able to do that because we've built a lean capital structure. We're able to continue to raise project capital at lower and lower rates. And we feel well set up for the year ahead.

AKIKO FUJITA: That growth rate that you talked about, 20% to 25% acceleration this year, what do you see as the key catalyst? How do you get there?

TOM VONREICHBAUER: Yeah, so our-- our newfound scale, we acquired our largest competitor last year, Vivint Solar. That added a new route to market for us. So we have the largest omnichannel approach in the industry. You can find us online. We sell door-to-door. We sell in retail. We have channel partners, as well, so not just our direct business.

And so I think we have the broadest footprint out there. We're growing an increasingly recognizable brand. We bring a great product offering to consumers, you know, historically just solar, but now solar and battery in an increasing mix. And I think that product offering really has been the right product for-- for this moment in time, where consumers are spending more time at home, their energy bills are up, and they're seeing their rates from legacy providers continue to increase year-over-year.

And so we really have a great product offering here. I think the recognition, more broadly, that we need to rebuild this energy infrastructure, that consumers want distributed assets, they want independence from, you know, a monopolistic utility. And-- and there-- there's a lot of excitement for that. So I think we feel well positioned operationally. We've got a good brand. We've got good products. And the consumer demand just continues to rise.

BRIAN CHEUNG: And Tom, we just had a senator at the top of the block talking about infrastructure. As a private player in that space, what do you see as your role in maybe boosting and improving the infrastructure specifically for green energy in this country? For a company like yours, is it tax breaks, tax credits, grants? What would you see as most helpful in building that up?

TOM VONREICHBAUER: Yeah. So there have been a number of really positive moves for this industry historically and more recently. At year-end 2020, the solar investment tax credit was extended at the 26% level for a number of years now. And so that's an obvious boost for the industry.

And it's been a proven policy mechanism that's helped drive not only adoption of the technology, but meaningful job growth. The solar industry employs more than a quarter million people in the United States. And that tax credit has helped drive down costs in the industry and create good-paying jobs. And so we see a lot of interest from policy makers, frankly on both sides of the aisle, that-- that's very positive.

I think there's work being done within the Biden administration now to reduce permitting and interconnection delays to help eliminate some of the soft costs in the industry. And those are going to be positive for us moving forward as well. But the good news is, the solutions are here. We're not waiting on some large scientific breakthrough. We have solutions to the problem today to update our energy infrastructure. And we're excited to bring them to more consumers in the year ahead.

AKIKO FUJITA: Yeah, a lot of tailwinds forming there, especially on the policy side. Tom vonReichbauer, the CFO of Sunrun, it's good to talk to you today.