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Tom vonReichbauer, Sunrun CFO joins the Yahoo Finance Live panel with the latest on their Q1 earnings report.
ZACK GUZMAN: Welcome back to Yahoo Finance Live. I want to dig into a sector that was shining bright here at the end of 2020, but pulling back a bit here to start 2021. That would be the solar space. ETF that tracks that, Invesco solar ETF, ticker TAN. Year to date, down by about 30%. But the US leading installer Sunrun is bucking that trend today after earnings and Goldman reiterating their buy rating on the stock, going stronger than expected earnings there. Total revenue jumping about 59% to hit $334.8 million in the first quarter.
And for more on that, I want to dig into the results here with the CFO of Sunrun, Tom Vonreichbauer joins us right now. And Tom, appreciate you coming on here to chat with us. Talk to me about what you saw in the quarter when it comes to the way Americans are beginning and maybe, should I say, continuing to embrace solar.
TOM VONREICHBAUER: Thanks, Zack. Yeah, we had a great quarter, continuing a lot of momentum that we had built in 2020. Came into the year really well positioned. We saw incredible growth across all of our routes to market in our direct to home business, our channel partner business, and the new home business, and really continuing just the positive trends that we're seeing here, where consumers are showing more interest in distributed energy and renewable energy and tapping into the savings opportunity that we deliver them. So, had a great quarter, increased our outlook for the year as well.
AKIKO FUJITA: Tom, since we last spoke, we've seen the Biden administration unveil its infrastructure bill, obviously going big on renewable energy and really calling for a larger standard in place. I imagine that's got to be really supportive for your business. But to what extent have you already seen the impact, as more and more homeowners, business owners, shift their thinking, knowing where the policy is going to follow?
TOM VONREICHBAUER: One of the great things in our business is that there are strong consumer pull for the product. They see the need to have savings, more reliable power, things that legacy utilities continue to fail to deliver for them. And then there's great bipartisan support. We saw an extension of the tax credit at the end of 2020 under bipartisan support.
People on both sides of the aisle see the need for a cleaner energy system. They see a great opportunity with meaningful job creation. And now with the Biden administration, there's even more push on this, push for a potential 10-year extension of the investment tax credit opportunities for worker training, things to streamline the permitting process. And so, a lot of really good tailwinds on the policy front as well.
ZACK GUZMAN: And Tom, when you look at your guys' forward guidance here, expecting growth to accelerate 25% to 30%. That was up from prior guidance 20% to 25%. Talk to me about maybe some risks to that growth, what you see out there when we talk about maybe some concerns being raised pretty much in every industry about chip shortages, supply shortages. What are you seeing there?
TOM VONREICHBAUER: Yeah, this is definitely an area that we've been hearing a lot about. And we've been watching this closely certainly throughout 2020 with some of the disruptions there. We took aggressive action as we entered into this year, raised our sort of target inventory levels to get to a new level of coverage. Gives us really good visibility into the pipeline that we're seeing in demand right now and confident that we can fulfill that. So I think some of the impacts that other companies have seen are things that we've taken proactive stances on. And we feel pretty well protected on the inventory front.
Labor is another area that we've made a lot of investments in over the last few years to build a differentiated talent brand and make sure that we have all the people we need. So a lot of confidence in increasing our guidance there, not only on the volume of installations, but also our margin opportunity therein.
AKIKO FUJITA: When you look at the solar industry as a whole, there's been increasing scrutiny on the supply chain, specifically where these companies source their parts from for these solar panels with a huge, huge chunk coming from China, and within China, a big focus on Xinjiang, which is, of course, a region where the US has said that China is conducting a genocide there. And I wonder what the thinking is within Sunrun right now. Number one, to what extent do you source from China? And number two, how significant a risk does that present right now when you look at the geopolitical headwinds?
TOM VONREICHBAUER: Yeah, for a number of years, we've upheld a very strong supplier code of conduct. And over the last year, as these issues come to the forefront, have gone through extensive checks within our supply chain. There's industry standards being rolled out as well. We source from a broad array of manufacturers across the world. And so, have taken steps to make sure that we're doing the best to uphold fair labor practices and ensuring compliance up and down the supply chain, as we bring these products to market.
AKIKO FUJITA: But has that increased scrutiny meant that you'd have to shift where you're sourcing from?
TOM VONREICHBAUER: You know, yeah, we source from a variety of manufacturers. And so we often have an ability at any given point in time to shift from different parts of the world, different manufacturers. And so we've been able to make adjustments as needed.
AKIKO FUJITA: Tom Vonreichbauer, Sunrun CFO, it's always good to talk to you. Really appreciate your time.