Vivint Aims for Sustainable Growth, Not Growth at All Costs

  • Blackstone-backed company canceled deal with SunEdison
  • Installer focused on being ‘best and the most disciplined’

Vivint Solar Inc., the Blackstone Group LP-backed residential solar company, is focusing on sustainable growth, not growth at all costs, as it navigates beyond its failed acquisition by clean-energy giant SunEdison Inc.

Vivint will look to expand in some geographic markets and slow down in less profitable ones, according to David Bywater, the company’s interim chief executive officer. While he declined to comment on the SunEdison deal in a Monday interview, he described Vivint as “a good company coming out underneath the SunEdison dark clouds.”

The future for Vivint will depend on “solid growth that has strong unit economics,” he said. “When you come in, you look and say: is every install the right install, is every market the right market?”

Bywater took the top job in May, almost two months after the SunEdison deal was terminated. The agreement was supposed to make SunEdison an energy supermajor, combining a prolific utility-scale clean-energy developer with a leading residential rooftop installer. Instead, the pact was revised, and later scrapped. Lehi, Utah-based Vivint is now in the process of suing SunEdison, which filed for bankruptcy in April. Since Bywater took over, the shares inched up 2.8 percent to $3.30 on Tuesday.

Vivint, in a filing late last year, attributed disappointing installations in the third quarter of 2015 “to the distraction from the proposed acquisition by SunEdison.” Going forward, Bywater said a primary objective is to achieve “sustainable growth.”

‘Balanced Approach’

“If I’m not the biggest in the industry, but I’m the best and the most disciplined, I’m O.K. with that,” he said in the Monday interview. “I think shareholders are O.K. with that. They want to support companies that have a balanced approach with shareholders. Biggest is not always best.”

Colin Rusch, an analyst at Oppenheimer & Co., last week described Vivint’s focus on sustainable growth as a “more conservative strategy.” He raised his rating to the equivalent of buy from hold and set a $7-a-share 12-month price target.

The comments by Bywater represent a revised direction for Vivint. In April, in Vivint’s first conference call after the SunEdison deal collapsed, then-Chief Executive Officer Greg Butterfield said the company would focus on growth. Vivint, he said then, expected to install 260 megawatts of rooftop power systems this year, 12 percent more than 2015.

‘Immediate Fruits’

Butterfield resigned in May and Bywater, the chief operating officer of Vivint Smart Home, was named interim CEO. Last week, in Bywater’s initial earnings report, he effectively withdrew the company’s 2016 installation guidance, despite Vivint meeting its installation target after three straight quarterly declines.

“We’re seeing some immediate fruits," Bywater said on Monday. “Some will take time.”

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