Ha Sustainable Infrastructure Capital, Inc. · NYSE:HASI
Ha Sustainable Infrastructure Capital — HASI (Hannon Armstrong Sustainable Infrastructure Capital, Inc.) — Investor Presentation (November 2023)
48 slides from Ha Sustainable Infrastructure Capital's investor presentation, Nov 13, 2023
Slide 1: Corporate Profile November 2023
Corporate Profile November 2023
Slide 2: Company Overview
Company Overview We invest in real assets that facilitate the energy transition Key Stats >$11 Billion 11% CAGR 12% 7m Managed Assets1 Distributable EPS2 Annual Total Return3 MT CO2 avoided annually1 Markets & Asset Classes Behind-the-Meter Grid-Connected Fuels, Transport & Nature Energy Efficiency
Slide 3: Key Pillars of our Business
Key Pillars of our Business Climate Clients Assets Programmatic Preeminent Climate Invest in Income Partnerships Are a Pure Play Generating Real Assets Differentiated Approach Capital to Facilitate the Solve Client Problems Proven Technologies Energy Transition Measure and Report Never Compete Non-C
Slide 4: Climate Solutions are a Multi-Decade Growth Opportunity
Climate Solutions are a Multi-Decade Growth Opportunity U.S. Clean Energy Capacity1 U.S. Annual Investment in Energy Transition2 ~$1t 896 GW 300 GW >$140b 2022 2030 2022 2023-2050 HASI is well-positioned to maintain or grow market share 1. Cumulative installed capacity for Solar PV, Wind and Storage
Slide 5: Client Ambition Expands our Opportunity Set
Client Ambition Expands our Opportunity Set Top-Tier Client Project-Level Pipelines expanding with increased focus on climate and Capital Needs ($b)1 IRA tailwinds $25 Expansion into adjacent $20 decarbonization markets $15 >$50b project-level capital needs1 through 2025 by top $10 programmatic clie
Slide 6: Assets Align with Common Attributes
Assets Align with Common Attributes Real Contracted Assets Cashflows Top-Tier Proven Clients Technologies >$11b Managed Assets1 High-Quality Climate Incented Positive Offtakers 1. As of 9/30/23 6
Slide 7: Unique Value Proposition to Investors and Clients
Unique Value Proposition to Investors and Clients Clients Investors Trusted Partnership With Access to Energy Transition Aligned Goals in Lower-Risk Structure Programmatic Transactions Non-Cyclical Improve Efficiencies Business Model Market and Diverse End Markets Policy Expertise Flexible and Attri
Slide 8: Current Valuation Presents Attractive Entry Point
Current Valuation Presents Attractive Entry Point1,2 16x 17x 17x 17x 9x ` 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 11/6/23 and estimated earnings p
Slide 9: Pipeline, Portfolio and Managed Assets
Pipeline, Portfolio and Managed Assets
Slide 10: Programmatic Clients Drive Repeat Business
Programmatic Clients Drive Repeat Business We invest in partners, and our programmatic …in multiple sectors and technologies partnership drives repeat and expanding business… within the energy transition Commencement Transactions Asset Classes 2001 >100 2 2001 >40 3 >360 10.8 GW Energy of Grid-Conne
Slide 11: Strong Pipeline Driven by Non-Cyclical End Markets
Strong Pipeline Driven by Non-Cyclical End Markets Pipeline • Well diversified pipeline avoids over- GC reliance on any one asset class 36% BTM Pipeline1 • Allows participation across entire energy 49% >$5b transition market • Energy transition assets remain preferred FTN source of incremental suppl
Slide 12: Record Volume and Asset Yields
Record Volume and Asset Yields $1.8b closed transactions in 2023 YTD % of Closed Asset Class Transactions (2023 YTD) $973m closed in 3Q23 Fuels Transport & Nature 38% Resi Solar 21% YTD & 3Q23 closed transactions yield on Public Sector 15% average > 9%1 GC Solar 12% Community Solar 8% C&I 4% Expect
Slide 13: Portfolio Yield Increased from 7.7% to 7.9% QoQ
Portfolio Yield Increased from 7.7% to 7.9% QoQ Community Solar 4% Other Community Solar C&I Public C&I GC 4% GC Solar 8% Solar Sector 5% 6% 17% 19% Wind Portfolio1 Managed 8% Fuels, $5.5b Wind Assets1 Transport & Yield: 7.9%2 18% Nature 3% $11.5b Resi Solar Public 31% Sector Resi Solar Fuels, Trans
Slide 14: Financial Performance & Funding Platform
Financial Performance & Funding Platform
Slide 15: Portfolio Increased 41% YOY
Portfolio Increased 41% YOY Financial Results (3Q23) Distributable NII1 Drives significant growth in recurring income Change Results Unaudited1 3Q22 3Q23 YoY $160 $ in millions $134 20% GAAP Diluted EPS $0.38 $0.20 Distributable EPS $0.49 $0.62 GAAP NII $11.3m $17.0m 2022 YTD 2023 YTD Distributable
Slide 16: Long Term Consistent High Growth in NII and Managed Assets
Long Term Consistent High Growth in NII and Managed Assets Distributable EPS1 and DPS2 Distributable NII1 D-EPS CAGR: 11% CAGR: 28% $180 D-EPS DPS $2.08 $ in millions $1.88 $134 $1.40 $1.55 $1.50 $1.38 $1.36 $1.40 $1.32 $1.34 $82 $88 $68 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Managed Asse
Slide 17: Illustrative Business Model
Illustrative Business Model As a % of Assets 1 Illustrative Capital Plan Portfolio Additions Portfolio Yield2 7.75% - 8.25% 60-70% Debt • 1.5-2.0x debt / equity • Investment Grade (Moody’s) (-) Interest Expense3 (3.75% - 4.25%) 30-40% Equity • Retained and new issue • Accretive to Distributable EPS
Slide 18: Growth in Margins
Growth in Margins Portfolio Yield1 vs. Cost of Debt2 Portfolio Yield Interest Expense / Avg Debt Balance 7.9% 7.6% 7.6% 7.7% 7.5% 7.5% 7.5% 6.8% 5.4% 5.1% 4.9% 4.8% 4.8% 4.9% 4.6% 4.3% 2018 2019 2020 2021 2022 1Q23 2Q23 3Q23 Proforma refinancing of 2025 and 2026 corporate bonds using current market
Slide 19: Strong Liquidity Through Capital Markets Diversification
Strong Liquidity Through Capital Markets Diversification Maintaining Ample Liquidity HASI Funding Platform Diversified Sources4 Unsecured $2.6b Revolver Bank Debt Private Debt Equity Unsecured and Institutional $2.0b Secured Investors Unsecured Bonds Cash >$710m Convertible Debt Liquidity Commercial
Slide 20: Growing Both Dividend & Retained Earnings
Growing Both Dividend & Retained Earnings Dist. EPS1 $2.53 $2.27 DPS2 …By 2030 $1.85 $2.08 $1.65 $1.88 Equity Primarily $1.55 $1.58 Generated Through $1.50 $1.40 $1.34 $1.36 $1.40 Retained Earnings Continued Dividend Growth 2019 2020 2021 2022 2023 2024 96% 88% 74% 72% 71%3 70%3 Payout Target of 50-
Slide 21: Cash Flow Sources and Uses
Cash Flow Sources and Uses $ millions1 3Q23 TTM 2022 2021 Adjusted Cash Flow from Operations Plus Other $264 $287 $259 Portfolio Collections2 (-) Dividend ($149) ($132) ($114) (=) Cash Available for Reinvestment $115 $155 $146 (-) Investments Funded3 ($1,992) ($871) ($960) (+) Capital Raised $1,672
Slide 22: Summary of Total Debt and Hedge Portfolio
Summary of Total Debt and Hedge Portfolio Debt Amount Debt Facility Interest Rate2 Maturity Year (millions) 1 Fixed Rate Debt Corporate Senior Unsecured Notes $1,000 3.38% 2026 Term Loan A $548 6.47% 2025 Floating Rate Debt, Swapped to Fixed Revolving Line of Credit3 $487 6.62% 2025 Where Noted Belo
Slide 23: Sustainability Leadership & Impact
Sustainability Leadership & Impact
Slide 24: Unwavering Commitment to Climate Action, Diversity and Social Justice
Unwavering Commitment to Climate Action, Diversity and Social Justice Engage in Meaningful Community Investment through the HASI Foundation Since 2020, HASI has declared nearly ~$4m in social dividends to fund the Foundation’s climate justice initiatives Climate Solutions Climate Solutions Local Imp
Slide 25: Q3 Sustainability and Impact Highlights
Q3 Sustainability and Impact Highlights Submitted Scope 3 Category 15 HASI employees (~50% of workforce) Launched internal biodiversity Net Zero target for validation led multiple social and climate justice reporting initiative to align with community service initiatives TNFD framework Carbon Emissi
Slide 26: CarbonCount: Transparent, Comparable, Accountable
CarbonCount®: Transparent, Comparable, Accountable Measuring the Climate Impact of Every Investment CarbonCount is a proprietary scoring tool for evaluating investments in U.S. based renewable energy, energy efficiency, and climate resilience projects to determine the efficiency by which each dollar
Slide 27: Appendix: Market Highlights & Investment Examples
Appendix Market Highlights & Investment Examples
Slide 28: GC Market Highlights
GC Market Highlights HASI GC business consists of utility-scale wind, solar and storage investments GC Market Expected to More Than Double by 20301 Strong Fundamentals With Tremendous Growth 700 600 Most cost-effective 500 energy source 400 GWs 300 200 Required for corporates and utilities to meet t
Slide 29: BTM Market Highlights
BTM Market Highlights High growth enabled by favorable legislation, technology advancement and strong demand $131b $131b of cumulative 100% 100% investments through 20261 90% 90% 80% 80% 35% 35% 44% 44% 47% 47% 51% 51% 70% 70% Key Demand Drivers: 60% capex 60% DERcapex 50% 50% Emissions / Resilience
Slide 30: Capturing Decarbonization Opportunities Beyond the Power Sector
Capturing Decarbonization Opportunities Beyond the Power Sector Carbon is Everywhere U.S. GHG Emissions by Sector1 HASI Time to Scale Grid-Connected / Behind-the-Meter Now Climate Solutions expanding to include RNG Fleet Decarbonization Industrial, Transport, Electricity Transport Agriculture, and B
Slide 31: Illustrative Investments
Illustrative Investments Fuels, Transport Fuels, Transport Behind-the-Meter Grid-Connected & Nature & Nature Renewable C&I Wind Ecological Natural Gas Solar & Solar Restoration $125 million <$30 million >1.3 GW >$40 million Senior debt investment with an Equity investment with a solar Minority stake
Slide 32: Illustrative Investments
Illustrative Investments Fuels, Transport Behind-the-Meter Behind-the-Meter Grid-Connected & Nature Residential Microgrid Solar Fleet Solar Resiliency Land Decarbonization >$200 million >$20 million >$100 million >$70 million Investment in a portfolio of high Investment in energy savings Acquisition
Slide 33: Appendix: Risk & Underwriting
Appendix Risk & Underwriting
Slide 34: 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 (%) 4 Seniority 1 Performing1 ~99% > 310k consumers Typically Residential 31% WAVG FICO: “Very 2 Slightly bel
Slide 35: Robust and Disciplined Underwriting and Monitoring
Robust and Disciplined Underwriting and Monitoring Primary Underwriting Variability of Primary Post-Closing Activities Metrics Performance Credit Quality Collection Residential Monitoring Delinquencies and Defaults (% of Re-contracting Revenue Solar total value) Regulatory Savings to Customer Grid-
Slide 36: Diversified Offtakers With Limited Concentration
Diversified Offtakers With Limited Concentration Residential Solar Community Solar Corporate / Utilities / P3 # of active # of Projects >80 >130 High Quality and Primarily >310k customers Investment Grade Offtakers WA FICO 746 # of States 5 LA Unified School District 1.9% University of Iowa 1.9% Avg
Slide 37: Appendix: Recent Financials
} ; Appendix ~e Recent Financials
Slide 38: 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 39: 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 40: 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 41: 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 Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 Revenue Interest income S 5429
Slide 42: Balance Sheet
Balance Sheet HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) September December 31, 2022, "30,2023 Assets Cash and cash equivalents $ 155,500 $ 155,714 Equity method investments 2,563,948 1,869,712 ‘Commer
Slide 43: Statement of Cashflows
Statement of Cashflows HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED) ‘Nine Months Ended Nine Months Ended September 30 tember 30, Tos 10 SEC Ros ram nancing sets Cash flows from operating activities Procee
Slide 44: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings 44
Slide 45: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings 45
Slide 46: Reconciliation of GAAP-based NII to Distributable NII
Reconciliation of GAAP-based NII to Distributable NII 46
Slide 47: Additional GAAP to Non-GAAP Reconciliations
Additional GAAP to Non-GAAP Reconciliations 47
Slide 48: 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.