Ha Sustainable Infrastructure Capital, Inc. · NYSE:HASI
Ha Sustainable Infrastructure Capital — Q1 2020 Earnings Presentation
27 slides from Ha Sustainable Infrastructure Capital's earnings presentation, May 7, 2020
Slide 1: Earnings Presentation First Quarter 2020
EARNINGS PRESENTATION First Quarter 2020
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: COVID-19 Response
COVID-19 RESPONSE Risks Mitigants • Moved to a remote workforce starting in early March; all employees were Employee Health and provided with the equipment they need to maintain productivity 1 Productivity • Renewable energy projects are generally treated as essential by relevant authorities and con
Slide 4: Investing in Climate Change Solutions
INVESTING IN CLIMATE CHANGE SOLUTIONS Recent Highlights1 • Increased YOY GAAP Diluted EPS 67% to $0.35, delivered Core Key Performance Indicators 1Q20 1Q19 EPS of $0.43, and increased YOY Core EPS (Pre-CECL Provision) 33% to $0.44 GAAP $0.35 $0.21 • Raised $550m in growth capital through April, incl
Slide 5: Robust Investment Pipeline
ROBUST INVESTMENT PIPELINE Markets P3: New MUSH1 opportunities emerging Behind-the-Meter Resi Solar: Deployments continue even as originations have slowed GC 28% Opportunities driven by our client Pipeline2 relationships, scheduled stepdown of Grid-Connected federal tax credits, and our BTM >$2.5b 5
Slide 6: Diverse Portfolio
DIVERSE PORTFOLIO Markets Energy Efficiency Behind-the-Meter Distributed Solar Public Solar Sector Yield: 8.1% Land Storage 19% 22% Green Real Estate2 3% Balance Sheet1 Grid-Connected Solar Land C&I Onshore Wind 7% ~$2.1b Yield: 7.1% Onshore Yield: 7.7% Wind 16% Sustainable Clean Water Resi Solar SI
Slide 7: Investment Spotlight
INVESTMENT SPOTLIGHT Hawkeye Energy Key Investment Highlights • >$1b aggregate utility management concession $115m HASI Investment Size • Supports University of Iowa’s sustainability goals, Funded on 3/10 including obtaining coal-free energy production on or Structure Preferred Equity before 2025 Ma
Slide 8: 1Q20 Results
1Q20 RESULTS GAAP Net Investment Income: +40% YOY Results, Unaudited1 1Q20 1Q19 Commentary ($ in millions, except per share figures) GAAP Earnings $24.3 $13.6 Increase in interest income, advisory fees and Equity Method Investment earnings GAAP Diluted EPS $0.35 $0.21 partially offset by an increase
Slide 9: Sustainable Growth in Net Investment Income
SUSTAINABLE GROWTH IN NET INVESTMENT INCOME Core Net Investment Income1 Growth in Core NII: +52% YOY $100 $82 $80 $68 $62 Continue to achieve attractive and stable $ in millions $60 $48 Core ROE $40 $36 $29 $19 $20 $0 2015 2016 2017 2018 2019 1Q19 1Q20 Portfolio Yield and Leverage1 Core Return on Eq
Slide 10: Durable Capital Structure
DURABLE CAPITAL STRUCTURE Demonstrated access to diversified funding Capital Raised ($m)1 $1,800 sources • $8.3 billion raised across multiple capital markets since $1,200 2013 IPO1 • Issued $900m corporate unsecured green bonds over last $600 year $0 2015 2016 2017 2018 2019 2020 Conservative lever
Slide 11: Strong Balance Sheet and Credit Profile
STRONG BALANCE SHEET AND CREDIT PROFILE Outstanding credit history with de minimis (~30 bps) cumulative credit losses since 2013 March 31, 2020 Assets ($ in millions) Equity method investments $582 Other Equity Method Investments Government Government receivables 259 14% Commercial receivables 873 T
Slide 12: New Credit Disclosures
NEW CREDIT DISCLOSURES CECL Implementation • Beginning in 2020, we are subject to a new accounting standard referred to as the Current Expected Credit Loss model (“CECL”) – similar to the method that banks and many finance companies have utilized for years • Implemented an expected loss methodology
Slide 13: Residential Solar Portfolio: Positive Credit Attributes
RESIDENTIAL SOLAR PORTFOLIO: POSITIVE CREDIT ATTRIBUTES Customer HASI United • Priority Payment: Monthly electricity bill savings typically range from 5% and 30%1 FICO Score Portfolio3 States4 • Affordable: Average monthly payments typically less than $150 and paid via ACH2 Average 746 703 • Creditw
Slide 14: Industry-Leading ESG
INDUSTRY-LEADING ESG COVID-19 Relief Organizations Joined Nasdaq Sustainable Bond Network E Environmental Became a signatory of the UN-supported Principles for Responsible Investment Maryland Food Bank Donated $150k to support COVID-19 relief efforts by three Maryland charities S Social Offered 100%
Slide 15: Hannon Armstrong Summary
HANNON ARMSTRONG SUMMARY • Industry leader in growing core markets Programmatic Origination 1 Platform • Robust pipeline from leading energy and infrastructure clients • Tailored investment solutions for customer base which has been developed over 30+ years • Geographically diverse portfolio of ~180
Slide 16: Appendix
APPENDIX HANNON
Slide 17: Illustrative CECL Accounting Example
ILLUSTRATIVE CECL ACCOUNTING EXAMPLE Term Value Investment $100m Closing 3/31/20 Maturity 3-year bullet Interest Rate 8% Allowance Factor 1% Post Implementation of CECL Accounting 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Total Interest Income $0 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2
Slide 18: Residential Solar Portfolio: Collections
RESIDENTIAL SOLAR PORTFOLIO: COLLECTIONS Collections Overview Typical Past Due Collection Process • Call customer and send an automated 30 days past due dunning letter • Each solar provider we work with has a defined • Send collection letter with balance due and process for collections, similar to t
Slide 19: Supplemental Financial Data
SUPPLEMENTAL FINANCIAL DATA Explanatory Notes Core Earnings and Earnings on Equity Method Investments We calculate core earnings as GAAP net income (loss) excluding non-cash equity compensation expense, certain provisions for loss on receivables, amortization of intangibles, any one-time acquisition
Slide 20: Supplemental Financial Data
SUPPLEMENTAL FINANCIAL DATA Explanatory Notes Managed Assets As we both consolidate assets on our balance sheet and securitize assets off-balance sheet, 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
Slide 21: Supplemental Financial Data
SUPPLEMENTAL FINANCIAL DATA Explanatory Notes Portfolio/Credit Quality Footnotes Equity investments in various renewable energy and energy efficiency projects. These investments are typically owned in holding companies where our equity “Other Equity Method Investments” interests are typically senior
Slide 22: Income Statement
INCOME STATEMENT — HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (@OLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) For the Three Months Ended March 31, 2020 2019 Revenue Interest income $ 23,889 $ 17,654 Rental income 6,470 6,476 Gain on sale o
Slide 23: Balance Sheet
BALANCE SHEET 23 HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Total Liabilities Preferred stock, par value $0.01 per share, $0,000,000 shares authorized, no shares issued and outstanding Addi
Slide 24: Reconciliation of GAAP Net Income to Core Earnings
RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS 24
Slide 25: Additional GAAP to Core Reconciliations
ADDITIONAL GAAP TO CORE RECONCILIATIONS 25
Slide 26: Additional GAAP to Core Reconciliations
ADDITIONAL GAAP TO CORE RECONCILIATIONS 26
Slide 27: Visit our website at www.hannonarmstrong.com
Visit our website at www.hannonarmstrong.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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