8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 10, 2014

Vivint Solar, Inc.

(Exact name of registrant as specified in its charter)

 Delaware (State or other jurisdiction of incorporation) 001-36642 (Commission File Number) 45-5605880 (IRS Employer Identification No.)

3301 N. Thanksgiving Way, Suite 500
Lehi, Utah 84043
(Address of principal executive offices, including zip code)

(877) 404-4129
(Registrant’s telephone number, including area code)

(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):

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

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

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

¨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 10, 2014, Vivint Solar, Inc. issued a press release reporting its financial results for the third quarter of 2014. A copy of the press release is furnished herewith as Exhibit 99.1.

Vivint Solar, Inc. makes reference to non-GAAP financial measures in the press release, and includes information regarding such measures in the press release.

The information furnished in this Current Report under Item 2.02 and the exhibit attached hereto shall not be deemed “filed” for the 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  7.01 Regulation FD Disclosure.

On November 10, 2014, Vivint Solar, Inc. published on its website a memorandum outlining Vivint Solar, Inc.’s methodology for estimating its cost per watt for installing solar energy systems.  A copy of the memorandum is furnished herewith as Exhibit 99.2. 

The information furnished in this Current Report under Item 7.01 and the exhibit attached hereto shall not be deemed “filed” for the 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.
Pursuant to the rules and regulations of the Securities and Exchange Commission, the attached exhibit is deemed to have been furnished to, but not filed with, the Securities and Exchange Commission:
Exhibit Number		Description
99.1		Vivint Solar, Inc. Press Release dated November 10, 2014
99.2		Vivint Solar, Inc. Estimated Cost per Watt Methodology dated November 10, 2014

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.

Vivint Solar, Inc.

By: /s/ DANA C. RUSSELL
Dana C. Russell
Chief Financial Officer and
Executive Vice President

Date: November 10, 2014

EXHIBIT INDEX

Exhibit Number	Description
99.1	Vivint Solar, Inc. Press Release dated November 10, 2014
99.2	Vivint Solar, Inc. Estimated Cost per Watt Methodology dated September 30, 2014

EX-99.1

Exhibit 99.1

VIVINT SOLAR ANNOUNCES THIRD QUARTER 2014 FINANCIAL RESULTS

Megawatts Installed Grew 196% Year-over-Year

Retained Value Grew 172% Year-over-Year

Closed 91 Megawatts of Tax Equity Funding with Two New Partners

LEHI, Utah, Nov. 10, 2014 -- Vivint Solar (NYSE: VSLR), today announced financial results for the three and nine months ended September 30, 2014.

“I am pleased with our performance in the third quarter. Vivint Solar continues to build momentum,” said Greg Butterfield, Vivint Solar’s CEO. “This year, the business is on track to more than double the megawatts we installed in all the previous years combined.”

Third Quarter 2014 Operating Highlights

Key operating and development highlights for the quarter ended September 30, 2014 include:

· MW Booked of approximately 62 MWs for the quarter, up 206% year-over-year.

· MW Installed of approximately 49 MWs, up 196% year-over-year. Total cumulative MWs installed were approximately 178 MWs as of September 30, 2014.

· Installations were 6,935 for the quarter, up 137% year-over-year. Cumulative installations were 28,856 as of September 30, 2014.

· Estimated Nominal Contracted Payments Remaining increased by approximately $195 million during the quarter and was approximately $842 million at September 30, 2014, up 175% year-over-year.

· Estimated Retained Value increased by approximately $89 million during the quarter to approximately $399 million at September 30, 2014, up 172% compared to the third quarter of 2013.

· Estimated Retained Value per Watt was $2.24 as of September 30, 2014.

Third Quarter 2014 GAAP Financial Results

Summary GAAP financial results for the quarter ended September 30, 2014 include:

· Operating Leases and Incentives Revenue was $7.1 million, up 236% from $2.1 million in the third quarter of the prior year. Total revenue for the quarter was $8.3 million, up 266% from $2.3 million in the third quarter of the prior year.

· Cost of Revenue – Operating Leases and Incentives was $19.5 million, up  from $4.8 million in the same period of 2013.

· Total Operating Expenses were $66.7 million, compared to $15.7 million in the third quarter of 2013. Operating expenses included non-cash stock-based compensation expense of $20.0 million and amortization of intangibles of $3.8 million.

· Loss from Operations was $58.4 million compared to $13.5 million in the same period of 2013.

· GAAP Net Loss Attributable to Stockholders per Diluted Share was ($0.45).

· Non-GAAP Earnings Before Non-Controlling Interests and Redeemable Non-Controlling Interests per Share was ($0.66).  See below for a further discussion of Non-GAAP Earnings per Share.

Third Quarter 2014 Financing Highlights

Vivint Solar secured additional financing during the quarter including:

· Available Tax Equity increased in the quarter as the company closed two new investment funds with new partners, which made tax equity commitments to fund approximately 91 MWs of installations. As of quarter end, Vivint Solar’s total undeployed tax equity financing capacity was 74 MWs.

· Financing Capacity increased as a result of entering into an aggregation credit facility pursuant to which the company may borrow up to an aggregate of $350 million in term loan borrowings.

· Equity Financing increased in the quarter due to the sale and issuance of $103.5 million of common stock to 313 Acquisition LLC and two of the company’s directors.

· Cash and Cash Equivalentsas of September 30, 2014 were $66.1 million.

Subsequent Events

In October 2014, we closed our initial public offering of common stock that generated net proceeds to the company of approximately $301 million.

Guidance for Fourth Quarter 2014

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements supersede all prior statements regarding 2014 financial results.

For the fourth quarter of 2014, we expect:

· MW Installed:45 to 47 MWs

· Total Revenue: $5.5 – $6.5 million

· Total Operating Expenses: $47 – $51 million

Earnings Conference Call

Vivint Solar will host an investor conference call and live webcast today, Monday, November 10, 2014, at 5:00 p.m. ET to discuss these financial results. To access the conference call, dial 1.877.201.0168 or 1.647.788.4901 for international callers. The conference ID is 2508 7674. A listen-only webcast will be accessible on the investor relations page of our website at http://investors.vivintsolar.com and will be archived and available on this site until November 24, 2014. Participants should follow the instructions provided on the website to download and install the necessary audio applications in advance of the call. In addition, the earnings presentation slides will be available on our Investor Relations site by 5:00 p.m. ET. This press release and the financial information discussed on today’s conference call are available on the investor relations page of our website at http://investors.vivintsolar.com.

About Vivint Solar

Vivint Solar is a leading provider of distributed solar energy – electricity generated by a solar energy system installed at a customer’s location – to residential customers in the United States. Vivint Solar’s customers pay little to no money upfront, receive significant savings relative to utility generated electricity and continue to benefit from guaranteed energy prices over the 20-year term of their contracts.  Vivint Solar finances, designs, installs, monitors and services the solar energy systems to make things easy for its customers. For more information, visit www.vivintsolar.com or follow @VivintSolar.

Note on 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 Vivint Solar’s growth prospects, and operating and financial results such as estimates of nominal contracted payments remaining, the capacity of solar energy systems expected to be installed, estimated total revenue, and estimated total operating expenses and the assumptions related to the calculation of the foregoing metrics.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Forward-looking statements should not be read as a guarantee of future performance or results, and they will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. These statements are based on current expectations and assumptions regarding future events and business performance as of the date of this press release, and they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including but not limited to: the availability of additional financing on acceptable terms; changes in the retail price of traditional utility generated electricity; changes in electric utility policies and regulations; the availability of rebates, tax credits and other incentives that affect the pricing of our offering, including regulations related to net metering; changes in regulations, tariffs and other trade barriers and tax policy affecting us and our industry; our ability to manage our recent and future growth effectively, including attracting, training and retaining sales personnel and solar energy system installers;  the availability and price of solar panels and other system components, the assumptions employed in calculating our operating metrics may be inaccurate; and Vivint Solar’s limited operating history, particularly as a new public company. You should read the section captioned “Risk Factors” in the final prospectus dated September 30, 2014 related to our initial public offering, which was filed with the U.S. Securities and Exchange Commission, or SEC, on October 1, 2014, as well as the other reports the company files with the SEC from time to time, which identify certain of these and additional risks and uncertainties associated with the company’s business. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in those statements will be achieved or will occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Except as required by law, Vivint Solar does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. You should read the documents Vivint Solar has filed with the SEC for more complete information about the company. These documents are available on both the EDGAR section of the SEC’s website at www.sec.gov and the Investor Relations section of the company’s website at www.vivintsolar.com

Vivint Solar, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
	September 30,			December 31,
	2014			2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	66,149		$	6,038
Accounts receivable, net		2,712			608
Inventories, net		559			—
Prepaid expenses and other current assets		16,720			5,938
Total current assets		86,140			12,584
Restricted cash, non-current		6,516			5,000
Solar energy systems, net		467,460			188,058
Property, net		11,034			3,640
Intangible assets, net		22,157			27,364
Goodwill		36,431			29,545
Prepaid tax asset, net		76,555			30,738
Other non-current assets, net		17,912			778
TOTAL ASSETS	$	724,205		$	297,707
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY
Current liabilities:
Accounts payable	$	54,761		$	25,356
Accounts payable—related party		7			3,068
Distributions payable to non-controlling interests and redeemable non-controlling interests		3,879			1,576
Accrued compensation		15,680			15,491
Current portion of deferred revenue		180			68
Current portion of capital lease obligation		2,915			1,275
Accrued and other current liabilities		21,010			10,307
Total current liabilities		98,432			57,141
Capital lease obligation, net of current portion		5,457			2,486
Revolving lines of credit—related party		58,692			41,412
Long-term debt		87,000			—
Deferred tax liability, net		88,427			41,510
Deferred revenue, net of current portion		2,554			1,272
Total liabilities		340,562			143,821
Commitments and contingencies
Redeemable non-controlling interests		122,955			73,265
Stockholders’ equity:
Common stock		847			750
Additional paid-in capital		199,479			75,049
(Accumulated deficit) retained earnings		(19,710	)		3,034
Total stockholders’ equity		180,616			78,833
Non-controlling interests		80,072			1,788
Total equity		260,688			80,621
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	$	724,205		$	297,707

Vivint Solar, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenue:
Operating leases and incentives	$	7,131		$	2,123		$	15,798		$	3,916
Solar energy system and product sales		1,202			151			2,600			283
Total revenue		8,333			2,274			18,398			4,199
Operating expenses:
Cost of revenue—operating leases and incentives		19,515			4,811			47,161			12,824
Cost of revenue—solar energy system and product sales		627			32			1,510			108
Sales and marketing		5,220			2,105			16,229			4,995
Research and development		431			—			1,403			—
General and administrative		37,170			5,135			63,276			9,967
Amortization of intangible assets		3,727			3,649			11,155			10,946
Total operating expenses		66,690			15,732			140,734			38,840
Loss from operations		(58,357	)		(13,458	)		(122,336	)		(34,641	)
Interest expense		3,261			963			7,335			1,954
Other expense		297			541			1,462			1,063
Loss before income taxes		(61,915	)		(14,962	)		(131,133	)		(37,658	)
Income tax (benefit) expense		(10,222	)		31			(3,286	)		76
Net loss		(51,693	)		(14,993	)		(127,847	)		(37,734	)
Net loss attributable to non-controlling interests and redeemable    non-controlling interests		(16,415	)		(37,848	)		(105,103	)		(40,155	)
Net (loss attributable) income available to common stockholders	$	(35,278	)	$	22,855		$	(22,744	)	$	2,421
Net (loss attributable) income available per share to common    stockholders:
Basic	$	(0.45	)	$	0.30		$	(0.30	)	$	0.03
Diluted	$	(0.45	)	$	0.30		$	(0.30	)	$	0.03
Weighted-average shares used in computing net (loss attributable) income    available per share to common stockholders:
Basic		78,428,498		75,000,000				76,159,639		75,000,000
Diluted		78,428,498			75,000,912			76,159,639			75,013,624

Vivint Solar, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended
	September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(51,693	)	$	(14,993	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,426			304
Amortization of intangible assets		3,769			3,649
Stock-based compensation		20,030			336
Amortization of deferred financing costs		855			—
Noncash contributions for services		62			40
Noncash interest expense		1,403			963
Deferred income taxes		9,702			15,091
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net		(192	)		(306	)
Inventories, net		5			—
Prepaid expenses and other current assets		(2,682	)		(364	)
Prepaid tax asset, net		(22,017	)		(14,714	)
Other non-current assets, net		(5,079	)		(241	)
Accounts payable		(3,848	)		1,322
Accounts payable—related party		(2,300	)		930
Accrued compensation		565			2,333
Deferred revenue		660			109
Accrued and other current liabilities		1,680			765
Net cash used in operating activities		(46,654	)		(4,776	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for the cost of solar energy systems		(99,163	)		(43,652	)
Payments for property		(2,908	)		—
Change in restricted cash		84			—
Purchase of intangible assets		(269	)		—
Proceeds from U.S. Treasury grants		—			2,232
Net cash used in investing activities		(102,256	)		(41,420	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from investment by non-controlling interests and redeemable non-controlling interests		83,417			62,019
Proceeds from issuance of common stock		103,500			—
Distributions paid to non-controlling interests and redeemable non-controlling interests		(3,552	)		(591	)
Proceeds from long-term debt		87,000			—
Payments on short-term debt		(75,500	)		—
Proceeds from revolving lines of credit—related party		40,500			40,000
Payments on revolving lines of credit—related party		(40,500	)		(40,000	)
Principal payments on capital lease obligations		(695	)		(267	)
Payments for deferred offering costs		(4,341	)		—
Net cash provided by financing activities		189,829			61,161
NET INCREASE IN CASH AND CASH EQUIVALENTS		40,919			14,965
CASH AND CASH EQUIVALENTS—Beginning of period		25,230			—
CASH AND CASH EQUIVALENTS—End of period	$	66,149		$	14,965

Vivint Solar, Inc.
Key Operating Metrics
	Three Months Ended
	September 30,		June 30,		September 30,
	2014		2014		2013
Installations		6,935		5,406		2,921
Megawatts installed		48.6		36.8		16.4
Cumulative installations		28,856		21,921		10,375
Cumulative megawatts installed		178.2		129.7		55.6
Estimated nominal contracted payments remaining (in millions)	$	842.3	$	647.5	$	306.8
Estimated retained value under energy contract (in millions)	$	316.7	$	246.2	$	116.1
Estimated retained value of renewal (in millions)	$	81.8	$	63.7	$	30.2
Estimated retained value (in millions)	$	398.6	$	309.9	$	146.3
Estimated retained value per watt	$	2.24	$	2.39	$	2.64

Non-GAAP Earnings per Share (EPS) Before Non-controlling Interests

While GAAP EPS is based upon net (loss attributable) income to common stockholders, we also report non-GAAP based upon net loss. The only difference between GAAP EPS and non-GAAP EPS is the sole line item net (loss attributable) income to non-controlling interests and redeemable non-controlling interests.

Under GAAP accounting, we report net (loss attributable) income to non-controlling interests and redeemable non-controlling interests to reflect our joint venture fund investors’ allocable share in the results of these joint venture financing funds. Net (loss attributable) income to non-controlling interests and redeemable non-controlling interests is calculated based primarily on the hypothetical liquidation at book value, or HLBV, method, which assumes that the joint venture funds are liquidated at the reporting date, even though liquidation may or may not ever occur. Additionally the returns that will be allocated to the investors over the expected terms of the funds may differ significantly from the amounts calculated under the HLBV method. Accordingly, we also report non-GAAP EPS based on earnings before net (loss attributable) income to non-controlling interests and redeemable non-controlling interests per share, which we view as a better measure of our operating performance.  The use of non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

According to this definition, non-GAAP earnings before the allocation of loss attributable to non-controlling interests and redeemable non-controlling interests per share was ($0.66) in the third quarter of 2014 and ($1.68) year-to-date.

Vivint Solar, Inc.
Non-GAAP Net Loss per Share
(In thousands, except share and per share data)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net loss	$	(51,693	)	$	(14,993	)	$	(127,847	)	$	(37,734	)
Net loss per share:
Basic	$	(0.66	)	$	(0.20	)	$	(1.68	)	$	(0.50	)
Diluted	$	(0.66	)	$	(0.20	)	$	(1.68	)	$	(0.50	)
Weighted-average shares used in computing net loss per share:
Basic		78,428,498		75,000,000				76,159,639		75,000,000
Diluted		78,428,498			75,000,912			76,159,639			75,013,624

Glossary of Definitions

“Installations” represents the number of solar energy systems installed on customers’ premises.

“MWs or megawatts” represents the DC nameplate megawatt production capacity.

“MW Booked” represents the aggregate megawatt nameplate capacity of solar energy systems that were permitted during the period net of cancellations in the period.

“MW Installed” represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed during the applicable period.

“Nominal Contracted Payments Remaining” equals the sum of the remaining cash payments that Vivint Solar’s customers are expected to pay over the term of their agreements for systems installed as of the measurement date. For a power purchase agreement, Vivint Solar multiplies the contract price per kilowatt-hour by the estimated annual energy output of the associated solar energy system to determine the estimated nominal contracted payments. For a customer lease, Vivint Solar includes the monthly fees and upfront fee, if any, as set forth in the lease.

“Retained Value”represents the net cash flows, discounted at 6%, that Vivint Solar expects to receive from customers pursuant to long-term customer contracts net of estimated cash distributions to fund investors and estimated operating expenses for systems installed as of the measurement date. For purposes of the calculation, Vivint Solar aggregates the estimated retained value from the solar energy systems during the typical 20-year term of Vivint Solar’s contracts, which Vivint Solar refers to as estimated retained value under energy contracts, and the estimated retained value associated with an assumed 10-year renewal term following the expiration of the initial contract term, which Vivint Solar refers to as estimated retained value of renewal. To calculate estimated retained value of renewal, Vivint Solar assumes all contracts are renewed at 90% of the contractual price in effect at the expiration of the initial term.

“Retained Value per Watt” is calculated by dividing the estimated retained value as of the measurement date by the aggregate nameplate capacity of solar energy systems under long-term customer contracts that have been installed as of such date, and is subject to the same assumptions and uncertainties as estimated retained value.

“Undeployed Tax Equity Financing Capacity” represents a forecast of the amount of megawatts that can be deployed based on committed available tax equity financing for Energy Contracts.

###

Investor Contact:

Vivint Solar
Rob Kain
Vice President of Investor Relations
801-234-7066

ir@vivintsolar.com

Media Contact:

Vivint Solar
Kady Cooper
Director of Public Relations
415-706-9778

kady.cooper@vivintsolar.com

EX-99.2

Exhibit 99.2

Estimated Cost per Watt Methodology

November 10, 2014

Cost per watt is an important metric in understanding Vivint Solar’s business. This memo shows how Vivint Solar’s cost per watt can be estimated using the company’s reported GAAP financial statements and other reported operating metrics. All data and calculations shown in this memo are as of September 30, 2014.

Installation

Vivint Solar only capitalizes a portion of its installation expense. Equipment expense as well as a portion of other installation expense including direct labor is capitalized on the balance sheet. The portion of installation expense that is not capitalized is expensed through the Income Statement in the period it is incurred. To calculate total installation expense, add the change in system equipment costs with the cost of revenue – operating leases and incentives less non-cash expenses (stock-based compensation and depreciation and amortization).

Sales & Marketing

Much like installation expenses, only a portion of sales & marketing expense is capitalized. The remaining portion is expensed through the Income Statement in the period it is incurred. This portion includes non-cash stock-based compensation and this needs to be removed from the number. To calculate the total sales & marketing cost per watt, the portion of sales & marketing expense that is capitalized is divided by the MW installed during the period. The portion that flows through the income statement is divided by the MW booked during the quarter. These two components are then summed to reach the total sales & marketing cost per watt.

Note that this quarter’s (third quarter 2014) sales and marketing cost per watt benefited from a change related to our sales compensation policies, which resulted in a one-time expense benefit. On a normalized basis sales and marketing cost per watt for the third quarter 2014 would have been approximately $0.41.

General & Administrative

General & Administrative expense is taken from the income statement and the non-cash stock-based compensation portion is removed from the number. The resultant number is divided by the MW installed during the quarter to calculate the total general & administrative cost per watt.

Total Estimated Cost per Watt

The sum of installation cost per watt, sales & marketing cost per watt, and general & administrative cost per watt results in the total estimated cost per watt for the period.