SolarCity, already the #1 full-service solar provider in the US, has announced a target of 1 million solar customers by 2018, following a pretty huge, $120 million purchase of the direct sales company Paramount Solar. SolarCity is currently sitting at 68,000 solar customers, quite a ways off from its 2018 target.
$116 million of the purchase was made through the transfer of stock, while the remaining $4 million was through cash.
Paramount Equity CEO Hayes Barnard will move to the role of chief revenue officer for SolarCity.
Here’s SolarCity’s full news release:
SAN MATEO, Calif., Aug. 13, 2013—SolarCity Corp. (Nasdaq: SCTY) and Paramount GR Holding, LLC, dba Paramount Equity, today announced that they have entered into a definitive agreement for SolarCity to acquire the assets of Paramount Energy Solutions, LLC dba Paramount Solar, a subsidiary of Paramount Equity, in a transaction valued at approximately $120 million. Under the terms of the agreement, SolarCity will acquire the Paramount Solar business for $116.3 million in stock, and the remainder in cash. Paramount Equity CEO Hayes Barnard will join SolarCity as chief revenue officer in charge of the company’s sales and marketing organizations upon closing of the acquisition.
Paramount Solar, one of SolarCity’s most successful channel partners, is majority-owned by Guthy│Renker, the company behind Proactiv Solution and one of the world’s leading direct marketing companies. In connection with the acquisition, Ben Van de Bunt, longtime CEO of Guthy│Renker LLC, is expected to join SolarCity’s board of directors later this year, subject to nomination procedures and board approval.
“SolarCity has developed what I believe to be the best field sales and marketing organization in the solar industry. The national residential solar market has been growing between 60-70 percent annually, and we’ve been growing at twice that rate—144% year over year in the most recent quarter—and had three times the market share of our nearest competitor in 2012,” said SolarCity CEO Lyndon Rive. “Now we’ve found the perfect complement. Hayes Barnard and Guthy│Renker have built what I strongly believe to be the best virtual sales organization in the solar industry, with an extraordinary ability to acquire customers at a low cost. We expect the addition of Hayes, Ben and the Paramount Solar team to help us attain our goal to reach one million customers in the next five years at an even lower cost than was previously possible.”
SolarCity expects a more significant impact from the acquisition in 2014, but it is updating 2013 guidance to 278 MW to account for Paramount Solar’s backlog of uninstalled customers. SolarCity is already the number one full-service solar provider in the nation with more than 3,300 employees, more than 68,000 customers and more than 400 megawatts (MW) deployed. Approximately one in every five new residential solar customers in the U.S. chooses SolarCity, according to data from GTM Research. The company’s goal to reach one million customers equates to approximately 6,000 MW deployed, or six gigawatts of total generation capacity.
“Over the past four years, the Paramount Solar team has built the company into a direct marketing and virtual sales powerhouse. We are incredibly proud of this accomplishment and feel that it is the perfect time to join forces with SolarCity, to offer more customers the ability to take control of their energy costs by producing clean, renewable energy,” said Hayes Barnard. “Together, we’ll develop the most sophisticated customer acquisition and installation system in the industry to provide one million customers with residential solar systems, forever changing the way energy is consumed, and at a lower cost.”
The transaction is structured as the acquisition of all of the assets and the assumption of certain liabilities of the business of Paramount Energy Solutions, LLC. The transaction is expected to be completed in September, subject to customary closing conditions. Following the completion of the acquisition, Paramount Equity Mortgage, LLC, Value360, LLC, and Ironstone Insurance LLC, the remaining divisions of Paramount Equity, will continue to operate as independent companies.
This release contains forward-looking statements including, but not limited to, statements regarding SolarCity’s expected customer acquisition cost reductions, SolarCity’s future customer growth, growth in megawatts deployed and the timing of closing of the acquisition. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements 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 the risk that the timing of the transaction is delayed, the closing conditions are not satisfied and that the parties do not finalize terms and complete the transfer of Paramount Solar’s tax equity fund to SolarCity. You should read the section entitled “Risk Factors” in SolarCity’s quarterly filing on Form 10-Q with the Securities and Exchange Commission that identifies certain of these and additional risks and uncertainties. SolarCity 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.
SolarCity® (NASDAQ: SCTY) provides clean energy. The company has disrupted the century-old energy industry by providing renewable electricity directly to homeowners, businesses and government organizations for less than they spend on utility bills. SolarCity gives customers control of their energy costs to protect them from rising rates. The company offers solar power, energy efficiency and electric vehicle services, and makes clean energy easy by taking care of everything from design and permitting to monitoring and maintenance. SolarCity currently serves 14 states and signs a new customer every five minutes. Visit the company online at www.solarcity.com.