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 Sunnova Energy International, Inc.

20 Greenway Plaza, Suite 540

Houston, TX 77046

sunnova.com

SUNNOVA ENERGY INTERNATIONAL INC.

20 East Greenway Plaza, Suite 540

Houston, Texas 77046

August 15, 2024

BY EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Division of Corporation Finance

Attention: Robert Babula and Mark Wojciechowski

Re:    Sunnova Energy International Inc.

Form 10-K for the Fiscal Year ended December 31, 2023

Filed February 22, 2024
SEC File No. 001-38995

Dear Messrs. Babula and Wojciechowski:

Set forth below are the responses of Sunnova Energy International Inc., a Delaware corporation (the “Company” or “our”), to comments received from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated August 1, 2024 (the “Comment Letter”), with respect to the above referenced Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Commission on February 22, 2024 (the “2023 Form 10-K”). For the Staff’s convenience, our responses correspond to the captions and numbering included in the Comment Letter and are prefaced by the exact text of the Staff’s comments in bold text.

Form 10-K for the Fiscal Year ended December 31, 2023

Management's Discussion and Analysis of Financial Condition and Results of Operations

Key Financial and Operational Metrics, page 68

1.We note that you present various non-GAAP measures as Key Financial and Operational Metrics though do not characterize any GAAP measures in this manner. We also note that your disclosures pertaining to Adjusted EBITDA and Adjusted Operating Expense appear to hold a more prominent position on pages 68-71 of MD&A, than your disclosures pertaining to the GAAP measures which reside on pages 77-80.

We believe that you will need to be substantially revise your disclosures in MD&A to comply with Item 10(e)(1)(i)(A) of Regulation S-K, which requires a presentation of the most directly comparable GAAP measure, having equal or greater prominence, when presenting a non-GAAP measure. Please refer to the guidance under Question 102.10 of our Compliance & Disclosure Interpretations on Non-GAAP Financial Measures.

For example, it appears that you would need to identify GAAP measures among the Key Financial and Operational Metrics and reposition the presentation of non-GAAP measures to follow the discussion and analysis of GAAP measures. Please submit the revisions that you propose to address this disclosure requirement.

RESPONSE:

We agree with the Staff’s comment, and in connection with our announced plans to refocus on our core solar originations and with the recent appointment of our new Chief Financial Officer, we stated during our second quarter earnings call our intent to reevaluate our non-GAAP measure reporting with an eye towards ensuring its

usefulness for stakeholders. In future periodic filings on Form 10-Q and Form 10-K, we will exclude references to Adjusted EBITDA and Adjusted Operating Expense.

Should we modify or retain non-GAAP measures (i.e., Adjusted EBITDA and Adjusted Operating Expense) in our future earnings release and investor presentation, we will present such measure(s) in accordance with the applicable guidance ensuring GAAP's prominence. Similarly, we will move the portion of MD&A titled “—Key Financial and Operational Metrics,” toward the end of MD&A, to follow the GAAP analysis of our period-over-period “—Results of Operations” and “—Historical Cash Flow” discussion.

2.We note that in compiling your 2023 Adjusted EBITDA measure of $275 million, you made eighteen adjustments to the $(502) million GAAP measure of net loss; and in compiling your 2023 Adjusted Operating Expense measure of $377 million, you made seventeen adjustments to the $964 million GAAP measure of operating expense.

In describing Adjusted EBITDA, you indicate that it represents "...a measure of core financial performance adjusted to allow for comparisons of results of operations across reporting periods on a consistent basis," that your adjustments "...are intended to exclude items that are not indicative of the ongoing operating performance of the business," and the measure "provides a more complete understanding of ongoing business performance and trends than GAAP measures alone;" and in describing Adjusted Operating Expense, you indicate the adjustments exclude the effects of "certain non-recurring items" that you do not consider to be indicative of ongoing operating performance, that the measure is an "indicator of the efficiency" of your operations, and provides a more complete understanding of your performance than GAAP measures alone.

Please explain to us how your measure of Adjusted EBITDA has the utility that you describe, specifically with respect to being not a measure of core financial performance but rather an adjusted measure of core financial performance; how the measure facilitates a comparison by removing items that would ordinarily be noted in a comparison; and how the partial measure of performance has enhanced an understanding of your ongoing business performance and trends, in your view. Please similarly explain how your measure of Adjusted Operating Expense has the utility ascribed, specifically as to being more indicative of operating performance by removing items that you do not consider to be indicative, and how the measure reflects efficiency of your operations as stated.

In conjunction with the foregoing, provide us with a composition analysis of each adjustment, including a description that is sufficiently detailed to convey its nature and how this aligns with the specific reasons you have cited for its exclusion, particularly where you do not regard the activity that it reflects, as measured and reported in accordance with GAAP, as indicative of performance. It should be clear how you are able to demonstrate the characteristics ascribed to each measure; the rationale for adjustments identified as expected credit losses, non-cash inventory, other impairments, ITC sales, provision for current expected credit losses, non-cash inventory and other impairments, and cost of revenue related to cash and inventory sales is particularly unclear.

RESPONSE:

We appreciate the Staff’s comments, and we designed Adjusted EBITDA and Adjusted Operating Expense, as performance measures, to provide the users of our financial statements with supplemental information useful in evaluating our business. As noted in our response to Comment #1, we discussed during our fourth quarter 2023 and first quarter 2024 earnings calls plans to refocus on our core residential solar business. Additionally, we recently appointed a new Chief Financial Officer in June 2024. With these two catalysts, we are currently reevaluating the non-GAAP measures we present.

As we detail below and in an effort to enhance the usefulness of these measures, we expect to modify Adjusted EBITDA and Adjusted Operating Expense if we include them in future earnings releases and investor presentations. As tax rules related to our business change (such as the continued proliferation of ITC sales) and as market conditions change both for our industry and in the macros, some of our previously presented adjustments to

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arrive at these non-GAAP adjustments may be less useful. Accordingly, we expect to modify our presentation of this information while ensuring appropriate period-over-period comparability and a clear reconciliation to the nearest GAAP measure.

Adjusted EBITDA

Description of Utility

We view our core business as originating and servicing our customers with solar energy systems or solar energy and storage systems. We designed Adjusted EBITDA to be useful to management, investors and analysts in providing a consistent measure of our financial performance to enhance the comparability of results of operations across reporting periods. Specifically, we exclude the items we list below that we believe are unrelated to our future operating performance.

We also use Adjusted EBITDA as a measure when developing our consolidated operating budget and to measure our performance against our budget. Our board of directors also uses Adjusted EBITDA when establishing performance-based compensation targets to align Management and Stakeholders interests.

For these reasons, we believe Adjusted EBITDA is useful for investors and analysts to understand our performance “through the eyes of management,” a core tenant of MD&A, and aids in their assessment of our performance toward achieving those targets.

Description of Adjustments

In calculating EBITDA, we make customary adjustments for interest expense, net, interest income, income tax (benefit) expense, depreciation expense, and amortization expense.

We also ‘adjust’ EBITDA for non-cash expenses, gains, or losses flowing through our GAAP statement of operations, with limited exception prior to 2024 for financing deal costs, the cash portion of net natural disaster losses and related charges, acquisition costs, and legal settlements. Starting with our first quarter Form 10-Q in 2024, we only adjust non-cash amounts related to these items and may revisit this decision with the recent appointment of our new Chief Financial Officer. For example, we now include any cash disaster losses in Adjusted EBITDA.

We further ‘adjust’ EBITDA for non-routine or event-specific items unrelated to our core business as we defined it above, including natural disaster losses and related charges, net (cash and non-cash prior to 2024 and only non-cash beginning with the first quarter of 2024), and non-cash inventory and other non-cash impairments. We intend these adjustments to exclude items that are not indicative of or necessary for the ongoing operating performance of our business as these items are non-routine and are unrelated to the future performance of our fleet of solar energy systems and our customers.

We also adjust EBITDA to exclude non-cash recurring items such as (1) non-cash compensation expense, (2) ARO accretion expense, (3) unrealized gains and losses on fair value instruments and equity securities, (4) amortization of payments to dealers for exclusivity and other bonus arrangements, and (5) provision for current expected credit losses, which we believe are customary when providing this non-GAAP measure. Provision for current expected credit losses results in charges on the statement of operations for which there is no related income in that period and may not reflect the timing of the matching of income from our customer notes receivable or the performance of our ongoing business operations. We view the amortization of payments to dealers for exclusivity and other bonus arrangements akin to investing activities that are part of our engineering, procurement and construction (“EPC”) costs that, due to their nature, users may expect we would capitalize to property and equipment. ARO expense typically includes accretion expense and changes in the estimated cost of retiring and removing the asset. We believe this exclusion is similar to excluding depreciation from EBITDA as a non-cash item in the period of expense and tied to a long-term future obligation that does not reflect the current operating performance of the company. Also, while our GAAP financials include ARO expense for the estimated removal

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costs of a solar energy system, they do not include estimated renewal value or customer purchases that we believe provide a more complete view of the financial impact of these future costs.

Historically, we have ‘adjusted’ for ITC sales to reflect the amount of investment tax credits contracted and sold in the period to third parties. Our recently appointed CFO observed that their significant growth in 2024, due to rapid market adoption of ITC sales among tax equity funding vehicles, and began assessing the usefulness of this adjustment with an eye towards comparability of Adjusted EBITDA between periods. Reflective of his comments during our second quarter 2024 earnings call, he plans to converse with various Company stakeholders including analysts, investors and lenders to determine the usefulness of this – and other – adjustments to Adjustments EBITDA. Based on early feedback, we expect to remove ITC sales in determining Adjusted EBITDA. With this, and potentially other changes to the adjustment we make, we will re-present comparative periods on the same basis to ensure comparability.

The following table includes the annual adjustments we included in our adjustments from EBITDA in arriving at Adjusted EBITDA for the year ended December 31, 2023 (in thousands):

(1) Interest expense, net

 $ 371,937

(2) Interest income

 $ (115,872)

(3) Income tax benefit

 $ (1,023)

(4) Depreciation expense

 $ 153,387

(5) Amortization expense

 $ 29,583

(6) Non-cash compensation expense

 $ 25,535

(7) ARO accretion expense

 $ 4,905

(8) Financing deal costs

 $ 1,723

(9) Natural disaster losses and related charges, net

 $ 2,831

(10) Acquisition costs

 $ 1,224

 (11) Loss on extinguishment of long-term debt, net $ —

(12) Unrealized loss on fair value instruments and equity securities

 $ 188

(13) Amortization of payments to dealers for exclusivity and other bonus arrangements

 $ 6,944

(14) Legal settlements

 $ 1,680

(15) Provision for current expected credit losses

 $ 35,515

(16) Non-cash inventory and other impairments

 $ 50,995

(17) Indemnification payments to tax equity investors

 $ (22)

 (18) ITC sales $ 207,425

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(1)Customary: Represents customary interest expense, net addback to EBITDA.

(2)Customary: Represents customary interest income addback to EBITDA.

(3)Customary: Represents customary income tax benefit addback to EBITDA.

(4)Customary: Represents customary depreciation expense addback to EBITDA.

(5)Customary: Represents customary amortization expense addback to EBITDA.

(6)Non-cash: Represents non-cash charges related to our various employee stock-based compensation plans that recur each quarter.

(7)Non-cash: Represents non-cash expenses to recognize the future, estimated cost we will spend to retire solar systems and restore the related site to its original condition. This obligation recurs each quarter.

(8)Non-routine; Discontinued adjustment in 2024: Represents transactional legal or professional costs incurred during the period, which are non-routine in nature and relate to initial costs for a particular financing structure or new product endeavor, which we otherwise exclude from amounts capitalized under GAAP. Beginning in 2024, we ceased adjusting for these particular items in arriving at Adjusted EBITDA but may reconsider this decision.

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(9)Non-routine; Discontinued adjustment in 2024: Represents charges incurred related to natural disasters, such as tropical storms, hurricanes or fires, which we previously believed were non-routine in nature. These charges include service-related costs for customers impacted by a natural disaster or impairments incurred on solar energy systems from the natural disaster. As we reevaluated this adjustment at the start of 2024, we ceased adjusting for cash- amounts while continuing to exclude non-cash impairment charges but may reconsider this decision.

(10)Non-routine; Discontinued adjustment in 2024: Represents costs related to evaluating, pursuing or completing an acquisition including consulting, legal and some internal allocated costs as these amounts are not representative of the costs to support our ongoing business. Beginning in 2024, we ceased adjusting for these particular items in arriving at Adjusted EBITDA but may reconsider this decision.

(11)Non-cash: While this adjustment is not applicable for fiscal year ended December 31, 2023, we included it in 2021 as it represents a loss that resulted from a make-whole pay