Sunrun Inc. (RUN) Q2 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Second Quarter 2017 Sunrun Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference to Patrick Jobin, Vice President of Investor Relations, you may begin.

Thank you, operator, and thank you to those on the call for joining us today. Before we begin, please note that certain remarks we will make on this conference call constitute forward-looking statements. Although we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially and adversely. Please refer to the company’s filings with the SEC for a more inclusive discussion of risks and other factors that may cause our actual results to differ from projections made in any forward-looking statements. Please also note that these statements are being made as of today and we disclaim any obligation to update or revise them. On the call today are Lynn Jurich, Sunrun’s Co-founder and CEO; Bob Komin, Sunrun’s CFO; and Ed Fenster, Sunrun’s Co-Founder and Executive Chairman. The presentation today will use slides which are available on our website, at investors.sunrun.com. And now let me turn the call over to Lynn.

Thanks Patrick. We’re pleased to share with you Sunrun’s second quarter financial and operating results along with progress against our priorities for 2017. In the second quarter we deployed 76 megawatts, generating $74 million of NPV, up 56% year-over-year. We gained market share and increased unit economics while maintaining our cash position above $200 million for the eighth consecutive quarter. A huge thank you to our customers and our employees for building the industry’s most soluble and satisfied customer base and delivering the financial and operating results to prove it. We have now surpassed 1 gigawatt of deployed systems, we are most proud of what this means for our customers and deployment. We have helped families save over $150 million on their electric bills, proving that it doesn’t need to be inconvenient to help to feed extreme weather and climate change. Our strong financial and operating results in the quarter were complimented by progress against our long-term strategic priorities and supported by an increasingly constructive regulatory environment. Turning to Slide 6 now; Sunrun is focused on building long-term customer relationships and modernizing our inefficient and dirty $1 trillion energy infrastructure. We can both help our customers save money and better manage their energy while lowering prices for the entire electric system. It’s a simple concept. Using the existing infrastructure of rooftop and delivering power right where it’s consumed is a more efficient model. When you add batteries and the power of the Internet, you can build a more resilient, secure, dynamic and efficient system to benefit everyone. This is starting to be realized faster than we expected, the cost improvements and innovation are stunning. As you know, we continue to innovate with BrightBox, the first zero down solar plus storage-as-a-service offering for residential customers. Home owners benefit from backup power during power outages and can optimize when they can consume or export power to the grid. We have received over 2,000 BrightBox orders and installs are ramping nicely in Hawaii and California, more states are just getting underway. There is also a value proposition for the electric grid at large as these resources can provide energy when and where it is needed most. Because our resources are located where power is consumed, they are at the most valuable locations on the grid and can improve stability through participation and capacity, energy in ancillary service market. We can solve imbalances or acute congestion much more cost effectively than investing in centralized resources and transmission and distribution. And because we have a decade building customer relationships and a large install base, we are well positioned to deliver products that meet the needs of both homeowners and the utilities operating the grid. It is in fact this opportunity that we are exploring as part of a partnership with National Grid. We recently welcomed an industry veteran from Advanced Microgrid Solutions, Audrey Lee to help spearhead these initiatives as our Vice President of Grid Services. And while we are still in the early phases of exploring monetization options, an initial analysis suggest that grid services could represent an additional 2,000 or more in net present value on top of the 7,000 value per customer today. In support of this feature, we were successful in securing grid services opportunities in PG&E’s DRAM program. While the program itself is small, our fleet of over 1 gigawatt of capacity is massive and growing. Over the last few months we have also launched into seven new geographies, nearly doubling our available market size and establishing the foundation for long-term growth. We are particularly pleased to reenter Nevada after the state legislature unanimously approved the reinstatement of net metering. The voice of consumer is strong and clear, they want the ability to choose lower cost, predictable and clean energy options. While many view Nevada’s 2015 accident precedent-setting, the reversal sets an even stronger precedence that consumer choice for rooftop solar will be protected and regulated, but don’t get it right the first time will correct. Retail net metering coupled with TOE rates and open-access print service markets is a sound and proven policy to encourage cost effective modernization of our grid, even up to high-levels of penetration of around 40%. In fact, over the last five years net metering has been protected or expended 32 times and only reduced 6 times. When NEM was reduced, it was often overturned when the full set of facts were appropriately evaluated. Despite the media hype and well-funded lobbering [ph] efforts of many utilities, the adoption of distributed resources is the future. The market opportunity ahead remains massive. Residential energy sales is $175 billion annual market and there are more than 61 million single-family owner-occupied homes in the U.S., we are just 2% penetrated today, but we know the housing stock and customer interest supports much higher adoption. In Hawaii for instance, where the value proposition was first evident, 38% of houses have solar and adoption continues to grow. I’ll now turn the call over to Bob Komin, our CFO to review Q2 performance in more details and discuss guidance.

Thanks Lynn. In the second quarter we exceeded our deployment guidance and made solid progress on our 2017 goals. NPV was $1.10 per watt in Q2, resulting in aggregate NPV created of $74 million, representing 56% growth compared to the prior year. We delivered strong NPV per watt in Q2 and a solid first half of the year that sets us up well to achieve our dollar per watt target for all of 2017. NPV per watt can fluctuate quarter-to-quarter given business mix and Q2 was somewhat favorable. We calculate NPV as project value less creation cost, so let’s go through each of the components next. Q2 project value of $4.47 per watt was $0.26 higher than Q1, principally due to the mix of business in the quarter. As a reminder, project value is very sensitive to modest changes in geographic channel and tax equity fund mix. We expect project value will continue to decline slightly over time with cost declining more, although in the short run there can be quarterly fluctuations. Turning now to creation costs on Slide 11. In Q2 total creation cost was $3.37 per watt, an improvement of $0.38 or 10% year-over-year. Similar to project value, creation cost can fluctuate quarter-to-quarter due to changes in geographic and channel mix. As a reminder, our cost stack is not directly comparable to those of peers because of our channel partner business. Blended installation cost per watt, which includes both solar projects deployed by our channel partners, as well as by Sunrun improved by $0.10 or 4% year-over-year to $2.70 per watt. Install costs for systems built by Sunrun however were $1.87 per watt, reflecting a $0.40 or 18% year-over-year improvement. Sunrun’s installation cost benefited from lower equipment cost this quarter as we worked through higher cost inventory. We expect installation cost to remain roughly stable owning to fluctuations in business as we remain on offense by investing in new geography and Grid services. We also expect the attachment rate of storage to increase which carries a higher per watt cost, but also delivers higher NPV. In Q2, our sales and marketing costs were $0.54 per watt, a 37% improvement from the prior year, primarily driven by channel mix and our focus on the most cost-effective customer acquisition channels. Next, G&A cost watt was $0.29 flat from Q1 and a $0.04 improvement from the prior year. These costs remain largely flat for the last several quarters. We expect to realize further operating leverage, with volume growth exceeding G&A cost increases over time, although, there can be quarterly fluctuations. Finally, when we calculate creation costs, we subtract the GAAP gross margin contribution realized from our platform services. This includes our distribution, racking and lead generation businesses, as well as solar systems we sell for cash or with third-party loan. We achieved platform services gross margin of $0.16 per watt higher than Q1, due primarily to a slightly higher mix of solar system sales that have better gross margins. In the second quarter, deployments increased 16% year-over-year to 76 megawatts, exceeding our guidance of 72 megawatts.The strength was primarily attributable to an increase in our channel volumes. Flexibility of our multichannel platform model continue to serve us well in the current market conditions. As we’ve highlighted over the past year, we’re seeing more opportunities that are favorable to work with partners, while meeting our NPV and cash contribution goals. We did not manage to a specific mix for volume target, we instead prioritize realization of NPV. Our cash and third-party loan mix was a 11% in Q2, slightly higher than Q1, but in line with recent levels and our outlook of low to mid-teens. In Q2, our net bookings were 88 megawatts, an increase of 28% from the prior year. As a reminder, bookings are calculated net of cancellations. Turning now to our balance sheet. Our liquidity position remains strong. We ended Q2 with $211 million in unrestricted cash, the eighth consecutive quarter we’ve been about $200 million. We believe we will increase our cash balance by the end of the year. Our primary objective is to maximize equity returns over the long run, while optimizing for the most efficient capital structure, balanced with near term cash generation. We plan to continue to invest in ramping new geographies and further increasing our market share. Our cash generation outlook excludes any strategic opportunities or accelerated market entries beyond our current plan. Our primary objective is to optimize for the lowest long-term cost of capital and we focus first and foremost on the best execution of this financing, which could impact the timing of our cash balance on a specific quarter and measurement date. Moving on to guidance on Slide 11. We remain confident in our growth trajectory with Q3 guidance of 88 megawatts, which reflects approximately 15% year-over-year growth for the first three quarters of 2017. We’re reiterating our guidance of 325 megawatts for 2017, reflecting a 15% growth rate year-over-year. Our principal focus is generating approximately $1 of NPV per watt for the year. We continue to believe we can generate approximately $290 million in aggregate NPV in 2017, which is about a 35% increase from the prior year. Before I turn the call over to Ed, I wanted to share an update on the independent review that we asked the Audit Committee to launch in June, following media claims about Sunrun’s historical practices relating to the timing and processing of customer cancellations. The Audit Committee completed its inquiry and determined that the claims in the Wall Street Journal report were unfounded. Specifically, the committee concluded that; one, senior management did not instruct employees to hold back or delay the recording of customer cancellations; and two, representatives did not alter cancellation dates. Based on its review the Audit Committee expressed confidence in the company’s current cancellation processes and did not recommend any changes. Now, let me turn it over to Ed.

Thanks, Bob. Today, I want to touch on three items. First, I will discuss gross and net earning asset figures for the quarter and how our use of cash equity with National Grid impacted these figures during the quarter. Second, I’ll report on what we see is a strong project finance environment generally. And third, I’ll provide an update on the Section 2014 trade case and how Sunrun is positioned. Turning first to our installed asset base. We’re pleased to report that as of June 30, net earning assets rose slightly to $1.1 billion, reflecting a 29% year-over-year increase. net earning assets totaled $10 per share. As a reminder, net earning assets represent the present value of cash flows that Sunrun Inc expects to receive from our fleet of deployed solar systems after deducting our estimated operating and maintenance costs, project level debt service and distributions to cash equity and tax equity partners. The use of cash equity capital, such as the National Grid partnership increases our corporate cash balance compared to the use of just non-recourse debt. As I mentioned last call, growth in net earning assets slows as we utilize cash equity, because the solar facilities in such partnerships are largely monetized upfront. This quarter, we continue to contribute certain assets to the National Grid partnership, which resulted in high upfront monetization of those assets within the range previously guided. As a result, in the quarter, we generated approximately $20 million in restricted and unrestricted cash, offset by a final payment of $9 million for our 2015 acquisition of Clean Energy Experts, resulting in a net increase in total cash of about $11 million during the quarter. We expect to be able to increase cash, while adding to net earning assets between now and year-end. Including executed term sheets, we have tax equity capacity into the second quarter of 2018 and back-leverage capacity into the fourth quarter. We continue to see robust interest from tax equity providers and lenders in providing Sunrun additional capital. We observe improving terms for back-leverage project debt and in particular non-recourse subordinated or term loan B debt. Non-recourse term loan B debt may increasingly allow us to achieve much of the proceeds benefits of cash equity, while allowing us to maintain more flexibility in long-term upside, as capital costs continue to fall. At the same time, there is a growing market for cash equity. Particularly, as we further improve our development margins, we see non-recourse fee loans or cash equity transactions as potentially part of our capital strategy. While we have capacity remaining within the National Grid partnership, we continuously consider options to balance our goals of maximizing long-term equity returns, minimizing our capital costs, and exposure to changes in base interest rates and providing attractive upfront cash flow dynamics. I turn now to my final topic on Slide 14, the Suniva trade case. Sunrun is actively involved in the case to the Solar Energy Industry Association and as a direct participant in the case. A diverse group of unusual bedfellows, including the Heritage Foundation, the American Legislative Exchange Council, the Solar Energy Industry Association and many utilities have all taken actions in opposition to the petition. America needs and the president who has promised to provide jobs that cannot be automated or exploited, and they create opportunity for all Americans. The U.S. solar industry now employees more than 260,000 workers, up almost fourfold since 2010, who reside in thousands of communities across the country. 99% of U.S. solar jobs are outside of solar cell manufacturing. As details on the slide, the procedural hurdles for the petitioners are real and the opposing coalition is strong. That said, we have module supply secured through 2017 and have already established frameworks for a large portion of 2018 volumes and terms that remain favorable for Sunrun. We remain comfortable with our overall outlook on equipment cost reductions at about $0.15 by the end of the year. I’ll now turn the call back to Lynn for closing remarks.

Thanks, Ed. It is truly amazing what we can do with technology in the sun. The solar eclipse highlights just how bright the future will be. The sun is one of the most reliable and predictable energy sources in the world, just think about it. At any given place on earth, the sun on average takes a break once every 300 to 400 years, and we know about it well in advance. In contrast, our aging fossil fuel plants are riddled with unexpected outages and our nuclear plants are being abandoned after years of delays and billions of dollars wasted. We build clean power assets in as little as one day on budget and capable of generating low-cost power within hours. Operator, please open the line for questions.

Thank you. [Operator Instructions] And our first question comes from Brian Lee of Goldman Sachs. Your line is now open.

Hey, Lynn, thanks for taking the questions. Maybe just first off, on the cost deck, housekeeping one. Can you give us some sense of the puts and takes on the blended cost trajectory, it’s up a little bit quarter-on-quarter. So I’m curious what was the mix of direct versus channel in Q2 versus Q1? And then did you actually see an uptick in channel costs sequentially? And if so what were some of the drivers behind that?

Sure, Brian. So first, as we’ve described in the past, we don’t manage to a mix between the channel versus the direct. We’re very much focused market-by-market, channel-by-channel on generating the NPV target of $1 a watt, and we’re really pleased with the delivery of the $1.10. In terms of the general trend in the mix, as we’ve talked about over the last couple of quarters, we have seen a slight increase in the percentage coming from the channel, and in the quarter that that sustained, so not materially different at all. And so I think in terms of go-forward again, we’re confident with that $1 a watt of generation, but again, that’s the focus not necessarily a specific cost target.

Okay. Well, maybe just as a follow-up to that. Is it from a like-for-like standpoint did you see any uptick in channel costs. The reason I asked being curious if the channel for you is seeing any potential pricing impacts from Section 201 and the trade case uncertainty?

So the channel costs are highly variable based on the geography. And so it’s really tricky to start to forecast any sort of same-stores sort of same-stores cost there – in that number. So I would caution against that. But to answer the question, we have not seen an increase in the price of those projects due to the trade case.

Okay, fair enough. That’s helpful. On the – Ed, you mentioned increasing developer margins when you were talking about some context for cash equity going forward. Is there any way you can kind of quantify where you guys stand now on that metric what a reasonable target might be, and some of the drivers behind expansion in those margins. And then I guess, to round it off how that factored into your cash equity financing trends as you think about that source of capital going forward?

I think, Brian, the – so we did see very strong expansion in the margin in the quarter. We’re pretty excited about that. So if you just look at the deployment, overall growth rate year-over-year was 16%, but the actual aggregate NPV we were able to generate was growing at 56%, so pretty strong growth in the quarter. We like where that that NPV sits in terms of – there’s always a trade off of how much you spend to acquire customers, but sort of natural margin in the industry. Certainly, we’re going to continue – we do think that it’s proving out that they’re real strong entry barriers in this market. And so we do expect to – over a medium to longer-term period of time expect to see real operating leverage in those numbers and real advantage accretive to us. But for the remainder of the year, we’re sticking with that $1 a watt guidance that we open up the year with.

Okay great. Last one from me and I’ll pass it on. When you started off the call speaking to Nevada, which has obviously been a positive development. Can you maybe speak a little bit more to the traction you’re seeing there. How quickly you’re able to reengage the customer base? And how additive it could be to volume this, or if maybe that’s more of a 2018 story? Thank you.

Sure, absolutely. Yes, I think it’s – the short answer is it’s more of a 2018 story. And I would put that at all the new markets that we’ve expanded to this year. We’re excited to be on offense this year, it’s fun to play on offense. And so as you know, we expanded into seven states. And but again, it takes a little while for those to ramp in Nevada in particular, and they’re still working through some tariff thing. And so we think it sets a strong foundation for great growth in 2018 and beyond. But we don’t expect it to materially impact any of the deployments this year.

All right. Thank you.

Thanks, Brian.

Thank you. And our next question comes from Collin Rusch of Oppenheimer. Your line is now open.

Thanks so much. Guys you had a pretty impressive drop in the built cost or the sun built cost down $0.27 quarter-over-quarter. Can you walk through a little bit of what the drivers were there and what we might expect as we go through the balance of the year?

So this is Bob. We talked about how we thought that we would be able to start to see improvement in equipment cost, as we worked our way through the year. The bulk of the improvement for us was due to lower equipment costs, which includes primarily module costs. We think for the rest of the year, I think, we’ve talked about 15% or $0.15 or so as the amount that we’d see in Sunrun kind of cost improvement. We still think that that’s a reasonable goal for the year. And as I said in my kind of messaging the number can move based on our product mix. And now that we’ve introduced storage in particular and also to some extent high efficiency panels, they can cause the cost to go up. But the NPV contribution from those products is also higher. So as we kind of talk about our goals for NPV, we’re looking at that and trying to stay above the dollar and all of the product mix that we have. And we think that we can still do that. We don’t focus just on the installed cost number.

Okay, great. And then as you look at some of these new markets and the awareness also in the education process, you’ve gone through a long period of time where you’ve really educated a lot of customers. Are you seeing any real changes as you moves into these new markets in terms of awareness and the time to market and the time to really ramp and grow in some of these new markets?

It tends to be pretty local. So, yes, so – but the broader trend I think that we’re seeing happen is that people are really waking up to climate change. And so we’re riding in a two massive wave of unit trends, megatrends we think, one, which is it people paying attention to the fact that the weather is quite extreme. And secondly, the fact that we’re starting to deliver real meaningful savings. And so when you get into the market both of those facts, I think really help you. But generally, it’s still a little bit of the story where people need to see their neighbors and communities adopting it for them to get comfortable with it. And so I think it’s not materially different.

Okay. And then follow-on for me, just in terms of the preparedness of different geographies for these grid services, as you look at the installed base you have, is that opportunity right now with all of the installed base or a portion of it, and how should we think about the cadence of that?

Yes, sure. Right now, it’s very much driven by the policy landscape. So if you think about it the overarching storage by proposition has two value prop. One is the backup power value prop and there are a meaningful number of people who are willing to pay a little extra to have that backup power and you just look at the generator market or markets like that and you can see 10% to 20% of homeowners have the appetite to spend $2,000 or $3,000, $4,000 for backup power. So you have that driving in attach rate that can drive an attachment, I think, of that kind of call it 10% to 20% rate, then what really drives the saving proposition for the customer is time of use rates. And so as you see those coming into play in California, in San Diego, in particular, where there’s a big differential between off peak and on peak. You’re starting to see that this solar plus storage package actually is accretive to savings for the customer even though it may – it’s more expensive. And so we believe that a lot of regulators are looking to these types of time of use rates because it just make sense to match the supply and demand appropriately, and that’s why the opportunity for storage becomes so significant, because it really adds value to the whole system. But it will be dependent on how do we evolve rate structures, what happens to time of use rate structures. So I think that’s how it will play out. I mean, right now what we’re excited about is these pilot programs that we’re operating on with are really proving to regulator that these – our assets have real value, real capacity value to the whole system. And so what that means is, now we are entering a whole new market. So not only as our residential electricity sales market of $175 billion annual market, but utilities are set to spend $90 billion on infrastructure, and if we can defer that, that’s an entire new market that’s billable to us, so we are very excited about that, promise of that.

Great. Thanks so much.

Thank you and our next question comes from Vishal Shah of Deutsche Bank. Your line is now open.

Hi, thanks for taking my question. Just on the cost side, you mentioned your installation costs would remain flattish over the next couple of quarters. I’m just curious as to what you are seeing in the industry prices; the module prices have gone up by about 25% since the Suniva case was announced. I understand that you had some high cost inventory that helped you in Q2 in term of overall cost, but how you are managing the price increases in the supply chain and is your cost guidance taking into account some of the price increase that you’ve seen in the market?

Hi, this is Ed. I think that which give us think it that way, so there have been periods where our contracting into the future has been helpful and there have periods it’s not been as helpful, but it does reduce risk and volatility overall. And so we are in a position where we feel good about the reminder of 2017, we have secured modules supply definitely through 2017 and have established frameworks with a – for a large portion of our 2018 volumes in terms that remain favorable for us, despite some of the noise in the market. So I think we are comfortable overall with the outlook on equipment reductions.

Okay. Great. And your books were quite good in the second quarter, where seasonally I think Q3 tends to be a strong quarter from a booking standpoint, so should we – the guidance assumes relatively flat shipments in the fourth quarter. I’m just curious as to what are some of the puts and takes on Q4 volumes, especially in light of stronger Q3?

Did you say – Vishal, you said in Q4, I mean where we’re at is, we feel really great that in this first half of the year we think we’ve taken considerable share in the market versus where the competition is and I think we are reiterating that 15% growth for the entire year and that’s where we feel comfortable.

Okay. So just one last question on the trade case. Assuming – so when you talk about the 2018 outlook with some of the framework agreements, are your discussions in an environment where the trade case goes away? What kind of pricing are you hearing in the market place? I mean, is this pricing going back to the low 30’s, mid 30’s that we saw in the first half of the year or are we seeing a different pricing environment?

I mean I think that the increase in demand that we’ve seen in 2017 in our view is more of a pull forward of demand in the utilities scale sector rather than an increase in overall demand levels. And so you would potentially expect that in the absence of tariff, you would see a decline in the spot pricing of modules in 2018. However, we haven’t really been purchasers of panels in the spot market because we hedge our exposure in that regard and enter into long term contracts. So I’m not sure I see a lot of volatility there, but I think you would expect a reduction in spot pricing if that’s your question.

Okay. Great, thank you.

Thanks.

Thank you. And our next question comes from Krish Sankar of Bank of America. Your line is now open.

Hey, this is Chirag Odhav on for Krish. I was just curious if you could comment a little more on how you are preparing for an outcome from the Suniva petition. I know you just mentioned that module inventory through the rest of the year is pretty secured, but I was also just wondering looking 2018, if you could give more clarity on what do you mean by favorable terms and how far in advance into 2018 you are able to secure pricing?

Hi, it’s Ed. So, first I do want to reiterate that the outcome of the trade case is uncertain and that if you for instance compare the cast to prior case with Chinese imports, here the petitioners had a much tougher case to prove and the commission itself must consider any impact on the downstream market where as in the previous instance they were forbidden from considering impact on the downstream market. So under the law, interesting, kind of definitionally there isn’t supposed to be a material impact on downstream businesses such as Sunrun. That said, when we talk about the module contracts that we have and we say they are favorable, we certainly mean that in the context of the prices that we’re currently paying, and we feel comfortable about that. And I would also reiterate that module prices are approximately 15% of the total cost that’s for residential solar and if there were a tariff that would an increase in input price across the board to all competitors. So, we continue to remain optimistic, involved in the tariff case and are managing our risk – I also don’t want to over rotate in any way on the topic.

Okay, great. Thank you.

Thank you. [Operator Instructions] And our next question comes from Joseph Osha with JMP Securities. Your lines are open.

Hi there, I’m not going to ask about 201, so there. Listen, on storage, I just want to put this idea out there, obviously right now storage is sort of being coupled with solar to help owners take advantage of time-of-day pricing and stuff like this, but I’m wondering whether the next step here is something like, say, what STEM is doing where? You start going out and aggregating that capacity and offering it as a service to somebody, is this part of the plan as your storage business grows?

Yes, absolutely and I think we believe we are well positioned to be there. Well, that’s a lot of what the partnership with National Grid is envisioned to develop to and why we hired Audrey, who was one of the leaders in this area, Advance Microgrid Solutions. So, absolutely, I think it’s another reason why there will be a real entry barrier in this industry and that there will be real – there will be partner share leaders like Sunrun because as it gets – as there are monetization opportunities from aggregating your fleet, that’s an event that’s going to continue to accrue to the large players with the large install base and we’re – And also the service model, there is a lot of discussions here around this, little long and we [indiscernible]. We do believe that as that gets more complex and you really are the energy, we are managing this, that’s this service model will be important and that’s how this will be delivered. Thanks for the question.

Okay. Then to follow-on then, it would be a logical jump maybe to imagine you all going to some commercial market opportunities where maybe there is not even solar, right, where you are just going in, having built this, the cloud service model and figured how to do all this, you’ve start going in and just doing storage, I mean is that possible?

I think it’s certainly impossible, I mean I think we are very much focused on – we think there is so much runway in our existing business and our existing go-to-market strategy that we are really focused on that. I mean one of the things that is – one of the thing that’s pretty cool about what we are building is that, a lot of people will have to ask about the industry’s customer commission costs are high, but you know what’s, that’s because along with that is that you really had a consultative sale with that customer and you have this, and we are setting up with long term relationship and so one of the benefit of our current business is that we do get to have that relationship with the customer. So, I think we are well positioned to potentially orient around the home other produces and service to the home, it could be something that we’re well positioned to do. So I think again oriented for us, we are homeowner driven, we are consumer driven, for end market, so it’s really more of that than sort of the commercial business that we think has lower returns.

Okay, thank you very much.

Thank you. And this does conclude our question and answer session. I would now like to turn the call back to over to Lynn Jurich for any further remarks.

Well, that’s it guys. Thanks, we look forward to talking with you guys again next quarter. Take care.