Ha Sustainable Infrastructure Capital, Inc. · NYSE:HASI
Ha Sustainable Infrastructure Capital — Q2 2023 Earnings Presentation
28 slides from Ha Sustainable Infrastructure Capital's earnings presentation, Aug 3, 2023
Slide 1: Earnings Presentation Second Quarter 2023
Earnings Presentation Second Quarter 2023 1
Slide 2: Forward Looking Statements
Forward Looking Statements Some of the information contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used herein, words such as "believe," "expect," "an
Slide 3: Record Investment Volume and Higher Yields Highlight Successful First Half
Record Investment Volume and Higher Yields Highlight Successful First Half • Largest first half volume with weighted avg. yield >8.5%1 Business Momentum • Portfolio Yield increased from 7.5% to 7.7%2 Driven by Increasing • Closed $426m of transactions in the quarter, $815m YTD Volumes and Returns •
Slide 4: Robust Pipeline Driven by Diversity of Clients and Asset Classes
Robust Pipeline Driven by Diversity of Clients and Asset Classes Primarily solar and stand-alone storage Growth in GC community solar, HASI 35% public sector 12-mo BTM 50% Pipeline1 >$5b FTN Increasing pipeline contribution 15% primarily from renewable fuels > 40 programmatic clients providing deal
Slide 5: Successful Pipeline Conversion at Attractive Asset Yields
Successful Pipeline Conversion at Attractive Asset Yields Pace of strong execution continues in 2nd Successful Recent Transactions With quarter with $815m closed transactions Measurable Impact • 147MW battery storage % of Closed Clearway expansion to an existing solar Asset Class Transactions Rosamo
Slide 6: Continued Growth in Recurring Income
Continued Growth in Recurring Income Financial Results (2Q23) Distributable NII1 Growing portfolio generates higher recurring income Change Results Unaudited1 2Q22 2Q23 $101.1 YoY $90.4 $ in millions 12% GAAP Diluted EPS $(0.21) $0.14 Distributable EPS $0.60 $0.53 GAAP NII $11.1m $14.8m 1H22 1H23 Di
Slide 7: Portfolio Yield Increased to 7.7%
Portfolio Yield Increased to 7.7% Portfolio grew 14% in 1H23 from funding Anticipated Funding of Previously new and previously closed investments Closed Transactions3 2H 2023 ~ $500m Green Real Estate 1% Community 1H 2024 ~ $110m Solar C&I 8% GC Solar 6% 22% Public Sector 6% Portfolio Change ($m)4 P
Slide 8: Improved Margins
Improved Margins Portfolio Yield1 vs. Cost of Debt2 • Disciplined focus on margins Portfolio Yield • Improving credit spreads in debt markets Interest Expense / Avg Debt Balance 7.6% 7.6% 7.7% 7.5% 7.5% 7.5% Illustrative 6.8% 10-12% ROE3 5.4% 5.1% 4.9% 4.8% 4.8% 4.6% 4.3% 2018 2019 2020 2021 2022 1Q
Slide 9: Resilient Capital Structure
Resilient Capital Structure Strong Liquidity Cash • Increased unsecured revolver capacity by $240m to $840m capacity with 15 banks. Revolver credit spread remains 1.875% >$790m Liquidity • Placed on BB+ Positive Outlook by Fitch. Credit rating of Sources1 Baa3 (Investment Grade) by Moody’s and BB+ b
Slide 10: Recent ESG Activity
Recent ESG Activity Quantified our Scope 3, Category 15 portfolio emissions for 2022 with the goal of E Environmental setting a Scope 3 Science-Based Target later this year S Social HASI Foundation approved over $300k in grants to mission-aligned nonprofits Board members who are women and from under
Slide 11: Growing Opportunity Set Drives Change in Tax Election
Growing Opportunity Set Drives Change in Tax Election Plan to discontinue electing REIT status starting with 2024 year, subject to board approval Strategic Impact Tax Impact • Expands investment opportunities in • Anticipate de minimis cash tax due to significant renewables and FTN NOLs2 and other o
Slide 12: Simplified Strategy and Structure → Long-Term Profitability
Simplified Strategy and Structure → Long-Term Profitability Strategy Climate | Clients | Assets Corporate Structure Align organization with growth Attractive and Demonstrated success of consistent earnings in all Resilient Returns interest rate cycles 12
Slide 13: Appendix
Appendix
Slide 14: Change in Tax Election - Investor FAQ
Change in Tax Election - Investor FAQ Q: What new corporate structure are you considering should you Q: If REIT status if discontinued, how will HASI achieve tax revoke your REIT status? efficiency? A: If we revoke our REIT status, our publicly traded parent company A: The company has a substantial
Slide 15: Current Valuation Presents Attractive Entry Point
Current Valuation Presents Attractive Entry Point1,2 27x 22x 21x 17x 11x ` Renewables Energy Services Vertically Asset Managers HASI Equipment Integrated Utilities Income Generating, Growth Company, at an Attractive Value 1. P/E calculated based on closing price as of 8/1/23 and expected median 2023
Slide 16: Strong Portfolio with Positive Credit Attributes
Strong Portfolio with Positive Credit Attributes Recent Portfolio Performance Positive Credit Attributes Rating Description Performance Metric Portfolio Structural Asset Class Obligor Credit (%) 6 Seniority 1 Performing1 ~100% > 325k consumers Typically Residential 30% WAVG FICO: “Very 2 Slightly be
Slide 17: Cash Flow Sources and Uses
Cash Flow Sources and Uses $ millions1 2Q23 TTM 2022 2021 Adjusted Cash Flow from Operations Plus Other Portfolio Collections2 $228 $287 $259 (-) Dividend ($139) ($132) ($114) (=) Cash Available for Reinvestment $89 $155 $146 3 (-) Investments Funded ($1,224) ($871) ($960) (+) Capital Raised $957 $6
Slide 18: Explanatory Notes
Explanatory Notes Adjusted Cash Flow from Operations plus Other Portfolio Collections We operate our business in a manner that considers total cash collected from our portfolio and necessary operating and debt service payments to assess the amount of cash we have available to fund investments and di
Slide 19: Supplemental Financial Data
Supplemental Financial Data Distributable Earnings and Earnings on Equity Method Investments We calculate distributable earnings as GAAP net income (loss) excluding non-cash equity compensation expense, provisions for loss on receivables, amortization of intangibles, non-cash provision (benefit) for
Slide 20: Supplemental Financial Data
Supplemental Financial Data Managed Assets As we both consolidate assets on our balance sheet and securitize assets, certain of our receivables and other assets are not reflected on our balance sheet where we may have a residual interest in the performance of the investment, such as servicing rights
Slide 21: Income Statement
Income Statement HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) For the Three Months For the Six Months Ended June 30. Ended June 30. 2023 2022 2023, 2022 Revenue Interest income $ $s 33.358 $ 91
Slide 22: Balance Sheet
Balance Sheet HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) June 30, December 31, 2023 | 2022 Assets Cash and cash equivalents $ 126907 $ 155,714 Equity method investments 2,298,962 1,869,712 Commercial r
Slide 23: Statement of Cashflows
Statement of Cashflows HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED) Six Months Ended June 30, Six Months Ended June 31 a re Cash flows from operating activities Cash flows from financing activites Net inc
Slide 24: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings 24
Slide 25: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings 25
Slide 26: Reconciliation of GAAP-based NII to Distributable NII
Reconciliation of GAAP-based NII to Distributable NII 26
Slide 27: Additional GAAP to Non-GAAP Reconciliations
Additional GAAP to Non-GAAP Reconciliations 27
Slide 28: Visit our website at www.hasi.com
Visit our website at www.hasi.com Securities are offered by Hannon Armstrong Securities, LLC, a registered broker dealer, member FINRA and SIPC and subsidiary of Hannon Armstrong Sustainable Infrastructure Capital, Inc.
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