8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

November 12, 2015

Sunrun Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-37511	26-2841711
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

595 Market Street, 29th Floor

San Francisco, California 94105

(Address of principal executive offices, including zip code)

(415) 580-6900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 12, 2015, Sunrun Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2015.  In the press release, the Company also announced that it would be holding a conference call on November 12, 2015 to discuss its financial results for the fiscal quarter ended September 30, 2015.  The full text of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information set forth in this Item 2.02, including Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release issued by Sunrun Inc. dated November 12, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SUNRUN INC.
By:	/s/ Mina Kim
	Mina Kim General Counsel

Date:  November 12, 2015

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by Sunrun Inc. dated November 12, 2015.

EX-99.1

Exhibit 99.1

Sunrun Reports Third Quarter 2015 Financial Results

MW Booked Growth of 115% Year-Over-Year

Quarterly NPV Creation of $49.5 million, a 112% Increase from Q1 2015

Creation Costs per Watt Decreased $0.61 or 14% from Q1 2015

528 MW Cumulatively Deployed

SAN FRANCISCO, November 12, 2015, Sunrun (Nasdaq:RUN), the largest dedicated residential solar company in the United States, today announced financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Operating Highlights

· 94.5 MW booked, an increase of 54% quarter-over-quarter and 115% year-over-year.

· 55.7 MW deployed, representing 85% organic growth year-over-year.

· Cumulative MW deployed of 528.2 MW.

· Quarterly NPV creation was $49.5 million, an increase of 33% quarter-over-quarter.

· Pre-tax Project Value per watt was $4.70, compared to $5.00 in the prior quarter.  

· Creation Cost per watt of $3.75 decreased $0.33, or 8% quarter-over-quarter.

“Our NPV growth in the third quarter demonstrates our ongoing focus on value creation,” said Lynn Jurich, Sunrun’s CEO. “Successful execution on MW deployed and bookings growth means we are poised to continue our strong growth in 2016. We recently added our 100,000^th solar customer, a new milestone as we rapidly add to the nation’s second largest residential solar fleet.”

Key Operating Metrics  

In the third quarter of 2015, MW booked increased to 94.5 MW from 44.0 MW in the third quarter of 2014 and MW deployed increased to 55.7 MW from 30.1 MW in the third quarter of 2014, excluding the impact of an opportunistic asset portfolio purchase in 2014. This resulted in 115% year-over-year growth in MW booked and 85% year-over-year organic growth in MW deployed.

NPV created in the third quarter of 2015 was $49.5 million, compared to $37.2 million in the second quarter of 2015.  Pre-tax project value per watt was $4.70, compared to $5.00 in the second quarter of 2015. Creation cost per watt was $3.75 in the third quarter of 2015 compared to $4.08 in the second quarter of 2015.

Estimated nominal contracted payments remaining as of September 30, 2015 totaled $2,219 million, compared to $1,423 million as of September 30, 2014, an increase of 56%.  Estimated retained value as of September 30, 2015 was $1,368 million compared to $897 million as of September 30, 2014, an increase of 53%.

Financing Activities

As of November 12, 2015, we have closed on tax equity commitments to fund $4,018 million in cumulative value of solar systems, an increase of $916 million from the $3,102 million in system value funded by tax equity commitments as of the end of the second quarter.  

Third Quarter 2015 GAAP Results

Total revenue grew to $82.6 million in the third quarter of 2015 from $56.1 million in the third quarter of 2014.  Operating leases and incentives revenue grew 46% year-over-year to $31.7 million.  Solar energy systems and product sales were $51.0 million in the third quarter of 2015, an increase of 48% year-over-year.

Total cost of revenue was $75.2 million, an increase of 52% year-over-year. Total operating expenses were $145.4 million in the third quarter of 2015, up 56% year-over-year.

Net loss attributable to common stockholders was $2.8 million in the third quarter of 2015, compared to a net income of $7.5 million in the second quarter of 2015 and a net loss of $15.2 million in the third quarter of 2014.

Non-GAAP net loss per share available to common shareholders, excluding a non-recurring, non-cash deemed dividend to preferred shareholders in connection with our IPO, was ($0.04) per share. GAAP net loss per share available to common shareholders was ($0.41) per share.

Guidance for Full Year 2015

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially.

For the full year 2015, we expect MW deployed of approximately 205, which represents 79% organic growth year-over-year.

Conference Call Information

Sunrun is hosting a conference call for analysts and investors to discuss its third quarter 2015 results and outlook for its full year of 2015 at 2:00 p.m. Pacific Time today, November 12, 2015. A live audio webcast of the conference call along with supplemental financial information will also be accessible from the “Investors” section of the Company’s website at http://investors.sunrun.com.  The conference call can be accessed live via the Sunrun Investor Relations website at  http://investors.sunrun.com or over the phone by dialing (866) 430-5027 (domestic) or (704) 908-0432 (international) using ID# 53341828.  A replay will be available following the call via the Sunrun Investor Relations website or for one week at the following numbers (855) 859-2056 (domestic) or (404) 537-3406 (international) using ID# 53341828.

About Sunrun

Sunrun (NASDAQ:RUN) is the largest dedicated residential solar company in the United States with a mission to create a planet run by the sun. Since establishing the solar as a service model in 2007, Sunrun continues to lead the industry in providing clean energy to homeowners with little to no upfront cost and at a savings to traditional electricity. The company designs, installs, finances, insures, monitors and maintains the solar panels on a homeowner's roof, while families receive predictable pricing for 20 years or more. For more information please visit: www.sunrun.com.

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 our future financial and operating guidance, operational and financial results such as growth, value creation, MW bookings and deployments, estimates of nominal contracted payments remaining, estimated retained value, project value, estimated creation costs and NPV, and the assumptions related to the calculation of the foregoing metrics.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: the availability of additional financing on acceptable terms; changes in the retail prices of traditional utility generated electricity; changes in policies and regulations including net metering and interconnection limits or caps; the availability of rebates, tax credits and other incentives; the availability of solar panels and other raw materials; our limited operating history, particularly as a new public company; our ability to attract and retain our relationships with third parties, including our solar partners; our ability to meet the covenants in our investment funds and debt facilities; and such other risks identified in the registration statements and reports that we have file with the U.S. Securities and Exchange Commission, or SEC, from time to time.  All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share values)

	September 30, 2015		December 31, 2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	263,006	$	152,154
Restricted cash		8,076		2,534
Accounts receivable (net of allowances for doubtful accounts of $1,200 and $703    as of September 30, 2015 and December 31, 2014, respectively)		53,717		43,189
Grants receivable		9,198		5,183
Inventories		51,907		23,914
Prepaid expenses and other current assets		8,375		9,560
Deferred tax assets, current		4,632		3,048
Total current assets		398,911		239,582
Restricted cash		7,813		6,012
Solar energy systems, net		1,837,047		1,480,223
Property and equipment, net		34,743		22,195
Intangible assets, net		23,756		13,111
Goodwill		87,555		51,786
Prepaid tax asset		170,000		109,381
Other assets		23,201		13,342
Total assets	$	2,583,026	$	1,935,632
Liabilities and total equity
Current liabilities:
Accounts payable	$	97,908	$	51,166
Distributions payable to noncontrolling interests and redeemable noncontrolling    interests		7,224		6,764
Accrued expenses and other liabilities		45,636		25,445
Deferred revenue, current portion		52,590		44,398
Deferred grants, current portion		13,980		13,754
Capital lease obligation, current portion		6,441		1,593
Long-term debt, current portion		1,803		2,602
Solar asset-backed notes, current portion		2,967		—
Lease pass-through financing obligation, current portion		2,837		5,161
Total current liabilities		231,386		150,883
Deferred revenue, net of current portion		524,950		467,726
Deferred grants, net of current portion		224,689		226,801
Capital lease obligation, net of current portion		11,406		5,761
Line of credit		133,294		48,597
Long-term debt, net of current portion		224,021		188,052
Solar asset-backed notes, net of current portion		106,731		—
Lease pass-through financing obligation, net of current portion		124,160		180,224
Other liabilities		4,810		2,424
Deferred tax liabilities		174,631		112,597
Total liabilities		1,760,078		1,383,065
Redeemable noncontrolling interests		176,705		135,948
Stockholders’ equity		561,606		324,864
Noncontrolling interests		84,637		91,755
Total equity		646,243		416,619
Total liabilities, redeemable noncontrolling interests and    total equity	$	2,583,026	$	1,935,632

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share values)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue:
Operating leases and incentives	$	31,650		$	21,612		$	88,416		$	63,040
Solar energy systems and product sales		50,950			34,464			116,551			75,378
Total revenue		82,600			56,076			204,967			138,418
Operating expenses:
Cost of operating leases and incentives		28,723			19,112			77,167			51,367
Cost of solar energy systems and product    sales		46,468			30,235			106,422			66,043
Sales and marketing		45,382			23,445			104,284			53,207
Research and development		2,240			2,036			7,019			5,962
General and administrative		21,486			17,700			61,469			50,387
Amortization of intangible assets		1,051			575			2,644			1,693
Total operating expenses		145,350			93,103			359,005			228,659
Loss from operations		(62,750	)		(37,027	)		(154,038	)		(90,241	)
Interest expense, net		8,475			7,433			24,038			19,757
Loss on early extinguishment of debt		—			—			431			—
Other expenses		87			657			1,405			2,503
Loss before income taxes		(71,312	)		(45,117	)		(179,912	)		(112,501	)
Income tax expense (benefit)		903			—			(5,312	)		(10,043	)
Net loss		(72,215	)		(45,117	)		(174,600	)		(102,458	)
Net loss attributable to noncontrolling interests    and redeemable noncontrolling interests		(69,447	)		(29,903	)		(161,377	)		(58,292	)
Net loss attributable to common    stockholders	$	(2,768	)	$	(15,214	)	$	(13,223	)	$	(44,166	)
Deemed dividend to convertible preferred    stockholders		(24,890	)		—			(24,890	)		—
Net loss available to common    stockholders	$	(27,658	)	$	(15,214	)	$	(38,113	)	$	(44,166	)
Net loss per share available to common    shareholders—basic and diluted	$	(0.41	)	$	(0.64	)	$	(0.96	)	$	(1.98	)
Weighted average shares used to compute net    loss per share available to common    stockholders—basic and diluted		67,732			23,943			39,612			22,282

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine months Ended September 30,
	2015			2014
Operating activities:
Net loss	$	(174,600	)	$	(102,458	)
Adjustments to reconcile net loss to net cash provided by (used in) operating    activities:
Noncash losses and impairments		2,545			—
Depreciation and amortization, net of amortization of deferred grants		51,059			35,443
Bad debt expense		1,158			356
Interest on lease pass-through financing		9,425			7,042
Noncash tax benefit		(5,312	)		(10,043	)
Noncash interest expense		5,349			1,784
Stock—based compensation expense		10,427			6,037
Reduction in lease pass—through financing obligations		(16,059	)		(8,337	)
Changes in operating assets and liabilities:
Accounts receivable		(5,999	)		(6,008	)
Inventories		(27,993	)		(4,928	)
Prepaid and other assets		3,039			4,317
Accounts payable		37,605			10,173
Accrued expenses and other liabilities		5,568			7,545
Deferred revenue		31,856			63,040
Net cash provided by (used in) operating activities		(71,932	)		3,963
Investing activities:
Payments for the costs of solar energy systems, leased and to be leased		(408,861	)		(296,810	)
Purchases of property and equipment		(8,416	)		(6,185	)
Acquisitions of businesses, net of cash acquired		(14,575	)		(36,384	)
Net cash used in investing activities		(431,852	)		(339,379	)
Financing activities:
Proceeds from grants and state tax credits		4,975			72
Proceeds from issuance of debt		318,000			13,546
Repayment of debt		(199,860	)		(3,683	)
Payment of debt fees		(14,751	)		(285	)
Proceeds from solar asset-backed notes		111,000			—
Repayment of solar asset-backed notes		(1,302	)		—
Proceeds from issuance of convertible preferred stock, net of issuance costs		—			143,393
Proceeds from lease pass-through financing obligations		73,300			119,596
Repayment of lease pass-through financing obligations		(88,918	)		—
Contributions received from noncontrolling interests and    redeemable noncontrolling interests		215,724			144,480
Distributions paid to noncontrolling interests and redeemable    noncontrolling interests		(20,248	)		(26,294	)
Proceeds from exercises of stock options		3,188			2,404
Proceeds from initial public offering, net of offering costs		223,541			—
Payment of capital lease obligation		(2,670	)		(843	)
Change in restricted cash		(7,343	)		(1,016	)
Net cash provided by financing activities		614,636			391,370
Net increase in cash and cash equivalents		110,852			55,954
Cash and cash equivalents, beginning of period		152,154			99,699
Cash and cash equivalents, end of period	$	263,006		$	155,653

Reconciliation of Non-GAAP EPS to GAAP EPS in Q3 2015	Non-GAAP EPS			GAAP EPS
Net loss available to common shareholders	$	(27,658	)	$	(27,658	)
Plus: Deemed dividend to convertible preferred stockholders	$	24,890
Non-GAAP net loss available to common shareholders excluding deemed dividend	$	(2,768	)
Weighted average shares used to compute net loss per share available to common shareholders --basic and diluted		67,732			67,732
Net loss per share available to common shareholders --basic and diluted	$	(0.04	)	$	(0.41	)

Non-GAAP EPS represents the net loss per share available to common shareholders excluding a non-recurring, non-cash deemed dividend to preferred shareholders in connection with our IPO. The presentation of financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to period comparisons. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

Key Operating Metrics

	Three Months Ended
	(In thousands, except MW values and per Watt values)
	September 30, 2015		June 30, 2015		September 30, 2014
MW Booked		94.5		61.2		44.0
MW Deployed		55.7		42.4		33.5 (1	)
Cumulative MW Deployed		528.2		472.5		356.2
Estimated Nominal Contracted Payments Remaining (in millions)	$	2,219	$	1,917	$	1,423
Estimated Retained Value (in millions)	$	1,368	$	1,223	$	897
Estimated retained value under energy contract (in millions)	$	921	$	808	$	567
Estimated retained value of purchase (in millions)	$	447	$	415	$	330
Estimated retained value per watt	$	2.30	$	2.39	$	2.40

(1) Includes 3.4 MWs associated with purchase of asset portfolio in 2014.

	Three Months Ended
	September 30, 2015		June 30, 2015
Project Value (per watt)	$	4.70	$	5.00 (1	)
Creation Costs (2) (per watt)	$	3.75	$	4.08
Unlevered NPV (per watt)	$	0.95	$	0.92
NPV (in millions)	$	49.5	$	37.2

(1) Excludes substantially all SREC value.

(2) Excludes IDC costs paid prior to deployments and excludes non-cash items such as amortization of intangible assets and stock-based compensation.

Definitions

MW Booked represents the aggregate megawatt production capacity of our solar energy systems sold to customers or subject to an executed customer agreement, net of cancellations.

MW Deployed represents the aggregate megawatt production capacity of our solar energy systems, whether sold directly to customers or subject to customer agreements, for which we have (i) confirmation that the systems are installed on the

roof, subject to final inspection or (ii) in the case of certain system installations by our partners, accrued at least 80% of the expected project cost.

Customers refers to residential customers with solar energy systems that are installed or under contract to install, net of cancellations.

Estimated Nominal Contracted Payments Remaining equals the sum of the remaining cash payments that customers are expected to pay over the initial terms of their agreements (not including the value of any renewal or system purchase at the end of the initial agreement term), including estimated uncollected prepayments, for systems contracted as of the measurement date.

Estimated Retained Value represents the cash flows (discounted at 6%) we expect to receive pursuant to customer agreements during the initial agreement term, excluding substantially all value from SRECs prior to July 1, 2015. It also includes a discounted estimate of the value of the purchase or renewal of the agreement at the end of the initial term.  Estimated retained value excludes estimated distributions to investors in consolidated joint ventures and estimated operating, maintenance and administrative expenses for systems contracted as of the measurement date.  We do not deduct amounts we are obligated to pass through to investors in lease pass-throughs. Estimated retained value under energy contract represents the net cash flows during the initial 20-year term of our customer agreements. Estimated retained value of purchase or renewal is the forecasted net present value we would receive upon or following the expiration of the initial contract term.

Project Value represents the value of upfront and future payments by customers, the benefits received from utility and state incentives, as well as the present value of net proceeds derived through investment funds. Project value is calculated as the sum of the following items (all measured on a per-watt basis with respect to megawatts deployed under customer agreements during the period): (i) estimated retained value, (ii) utility or upfront state incentives, (iii) upfront payments from customers for deposits and partial or full prepayments of amounts otherwise due under customer agreements and which are not already included in estimated retained value and (iv) finance proceeds from tax equity investors.  Project value includes contracted SRECs. Project value does not include cash true-up payments or the value of asset contributions in lieu of cash true-up payments made to investment fund investors, the cumulative impact of which is expected to be immaterial in 2015.

Creation Costs includes (i) certain installation and general and administrative costs after subtracting the gross margin on solar energy systems and product sales divided by watts deployed and (ii) certain sales and marketing expenses under new customer agreements, net of cancellations during the period divided by the related watts booked.

Unlevered NPV equals the difference between project value and estimated creation costs on a per watt basis.

NPV equals unlevered NPV multiplied by leased megawatts booked in period.

Investor Relations Contact:

Nicole Noutsios

Investors@sunrun.com

(510) 315-1003