More worryingly, this was a major supplier as well – the charge represents >30% of total advances to tier 3/medium risk suppliers based on SUNL’s latest 10-Q filing. SUNL’s announced $30-33m non-cash impairment charge (~$0.25/share or ~10% of the pre-announcement equity value) on advances made to an installer facing liquidity challenges came as a negative surprise. All in all, I would hold off on SUNL stock on platform fee revenue headwinds due to the current interest rate environment, as well as future production losses as more installers come under pressure in the coming months.ĭata by YCharts Solar Installer Bankruptcy Drives Major Impairment Charge Its growing direct loan business with depositary institutions should also help with the interest rate impact, although any offset is likely to be limited for now. Still, SUNL has some redeeming features, including its relatively low California exposure, which insulates it from the pending Net Energy Metering Scheme (NEM) 3.0 changes. While management has claimed that the latest impairment is isolated to this particular installer, there is a worrying pattern emerging on the credit front, which, coupled with the ongoing Fed rate hikes, could see loan production significantly impacted in the coming months. Of note, this announcement comes right after the company's Q2 missed on another $85m write-down (related to a failed lender merger). ( NYSE: SUNL), a residential solar point-of-sale financing platform, recently withdrew its full-year guidance after recognizing significant impairment charges related to a cash-strapped installer.
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