Robert Lane: Yes. The only other thing I would add is that just everything that we look at from a standpoint, John’s talking about the returns and we are pushing those returns up, but we also need to make sure that we finance fully through the stack of available capital. We’re not looking to do something where it’s done on a flyer. Let’s just see if it works or not. Then we’ll address financing later. Anything that we do has to be fully financed really from day one. And that means that some newer stuff, some exciting stuff will continue to develop, but we’re not going to pull a trigger on it unless we know it’s something that’s going to be corporate capital accretive to Sunnova. So that’s – that’s really the guiding principle.
Unidentified Analyst: Got it. Super clear guys. And if I may just, listen; there’s been a lot of concern out there. To your point, John, I mean, you guys are pricing in no growth or negative growth. You can end up in various, I guess, sort of permutations of that. If we look at the bonds out in 2026, 2028 clearly trading it, it almost sort of fire sell prices. I’m curious if, where you sit today? I understand that’s a long way off. You’re sort of thinking about addressing that. Obviously, there’s some callability there where you could take down quite a bit of notional value if you chose. But just curious, how do you think about the sort of hold comaturity [ph] wall, if you will, out in those years given where they’re trading currently? Thanks.
John Berger: Yes. I think, first of all to your point, Alex, it’s pretty far out there. And so, I think that’s first and foremost, but with that said we’ve always got the ability to do asset sales. And indeed, I think that we will do some of those next years our anticipation. And that’s going to bring to what Rob just said focusing on corporate liquidity, right, pulling more cash into the company. So we have that weapon, we have our leverage cash flows off our base, which is going to continue to grow quite nicely. And so we’ll be able to pile up cash and then be able to take part of those facilities down at the right time. And yes, they are trading deeply discounted. We note that. I’ll leave it at that. And there’s a number of strategies we couldn’t employ, we can refinance but we have a $14.7 billion of notional cash flow, we pile more on every single day.
We have a number of financial weapons, whether people want to see them or not, we have it and we’ll take care of that maturity, probably well ahead of time. And to underline the point noted where they’re trading, it’s quite appealing.
Robert Lane: Yes. The only other thing I’d say is that, we’d rather build up the resources for execute on it. In a normal course, I mean, most folks when they have a – when they see a maturity date, they’re executing a year or so before that maturity date. They’re not executing three years before, especially when the rate on our 26s are 25 bips on the converts and 5.875 on the high yield. I mean, those are still really attractive cost of capital that we had locked in for five years. And we’re not really in a hurry to go and explain and replace that with more expensive capital today. But we’re in a hurry to make sure that we have the resource and everything in place to do so in an efficient manner at the appropriate time.
Unidentified Analyst: Makes a ton of sense, presumably leveraged FCF is a much bigger number by the time you’re one year out. But thanks again, guys. Congrats. I’ll take the rest off web.
John Berger: Absolutely. Thanks, Alex.
Robert Lane: Thanks, Alex.
Operator: Our next question comes from James West with Evercore ISI. James, please go ahead. Your line is now open.
James West: Great. Thanks. Good morning, guys.
John Berger: Good morning.
James West: So maybe to start off with, John. John, how are you thinking about VPPs or Virtual Power Plants for [indiscernible] as part of your strategy going forward here, given that it’s becoming abundantly clear to everybody in the energy business that we’re going to go distributed and utilities are not keeping up? And so how much is that driving kind of any change or any shift or just part of your overall strategy?
John Berger: Yes. James, it’s key. Frankly, it’s why I got into this business years ago is I saw that the new energy system, the power system and industry was going to look more like the internet with instead of 100% centralized, some combination of decentralized and centralized and different fuels as well. Yes, natural gas will be a part of it, particularly on the centralized side of things. But solar and batteries really are very decentralized technologies and very key to essentially provide more resiliency, reliability at a much cheaper cost to say the least, and a lot less friction, to say the least, as far as getting permitting and installation with regards to transmission distribution line, upgrades and all the other stuff.
So this is inevitable, to your point, and we’re already executing more and more of what we call energy services, others call VPPs. We see this as a key part of the strategy and frankly negates a lot of the net metering concerns and so forth. So we’ll take an open market that’s transparent, open consumer choice, basically. Let’s bring capitalism and consumer choice into play here. Blow it wide open and let’s see who wins. And we’re seeing more of these type of deals. We didn’t announce anything right now, but you’ll see those over the coming days and weeks where we’re able to essentially aggregate, connect all our customers over our sentient software platform and be able to sell into the wholesale system and give some more value back to our customers.
Case in point, if you’re a customer in Houston, Dallas, this past summer which the summer seemed to last longer than usual, right, there’s a lot of our customers that not only wiped out the remaining power bill they have at the retail electric provider, but they also wiped out our bill and then took home some money. So just think about that. So that’s the way Australia works, Japan works, Europe works, UK works. We got to get moving here. Let’s overhaul and update the power regulations of this country so we can move this country forward instead of having monopolies jack rates up like we talked about in our prepared comments at a ridiculous pace, which is obviously continuing. So huge amount of value here – huge amount of value. We talked about $1 billion over the next few years in the 2030s in cumulative basis, and I stand by that.
There’s a lot of opportunity here that we can squeeze more out of our asset and customer base and we’re doing it.
James West: Right, right, totally agree there. And then maybe a quick follow up, a little bit unrelated. But I don’t know, you said, I think you made some comments in the press release about capital needs, but either John or Rob, and it can be literally a one word answer, but it seems to me you don’t need to access the capital markets next year at all to fund the growth that you’ve outlawed. Is that fair?
John Berger: That’s fair, yes.
James West: Got it. All right. Great. Thanks, guys.
John Berger: Thanks.
Operator: Our next question comes from Ben Kallo with Baird. Ben, please go ahead. Your line is now open.
Ben Kallo: Hey, good morning, guys. Congrats.
John Berger: Thanks, Ben.
Ben Kallo: Maybe following up on the last question, just to be clear and I know you guys probably said it a couple times, but removing the $500 million corporate capital funding for 2024, is it because there’s enough growth that, that was going to be stuff you’d like to have versus stuff you need to have for the growth that you’ve outlined here? Or are there other factors in removing that $500 million since the last quarter?
John Berger: Well, I’ll answer first and then turn over to Rob to give a little more detail. Look at, one, it was a forecast pretty far out, really far out. Nobody else does that. Nobody else is going to give 2024 guidance at any part of the value chain in this industry other than us on these round of Q3 earnings calls. And so things can change in terms of a forecast that far out and what we looked at was the market enabled by just tightening up. And I’ve talked about our pricing power. We’ve never had more pricing power in the company’s history, and we’re exercising that; so that’s a part of it. Raising prices, reducing working capital, working capital’s got expensive to non-existent in the industry. And we are working with our dealers and reducing that and our OEM partners, and we’re reducing operating expenses and we can.
The labor market is moving in our favor. The overall economy is moving in our favor in that regard. We tend to do better in downturns in the economy than upturns. Go look at the stock price. Go look at the business. You can tell, and part of that is we are more like a long-term power company or quasi-utility, if you will. And so we saw a lot of opportunity to take advantage of raising price, reducing working capital and reducing operating expenses. And when you are running a large company that we have become very large and you shave a little bit here, you shave a little bit there, suddenly it adds up to real money. So this is, we feel comfortable. We’re going to continue to execute. I’d like to see us even outdo that and continue to pile cash up and pile those levered cash flows or grow them over a period of time, next few years like we have been doing.
And we see ample opportunity to be able to do that. So we’re focused on the liquidity, profitability and cash flow to close the gap and then some. And we’ve done that already, and more is to come. Rob, anything you want to add.
