Ha Sustainable Infrastructure Capital, Inc. · NYSE:HASI
Ha Sustainable Infrastructure Capital — Investor Day (March 2023)
65 slides from Ha Sustainable Infrastructure Capital's investor day presentation, Mar 21, 2023
Slide 1: 2023 Investor Day
2023 Investor Day March 21, 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: Agenda
Agenda Introduction Behind-the-Meter (BTM) 1 Neha Gaddam, IR, and Jeff Lipson, CEO 7 Daniela Shapiro, Managing Director History & Opportunity Fuels, Transport & Nature (FTN) 2 Jeff Eckel, Executive Chair 8 Annmarie Reynolds, Managing Director HASI Strategy Securitization Platform 3 Jeff Lipson, CEO
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Slide 5: What You Will Learn Today
What You Will Learn Today HASI is extremely well-positioned and has 1 a resilient business model 2 Our team is talented, diverse, and mission-driven 3 Simplified vision of our strategy Our business model for capital raising, liability management, 4 dividends, and corresponding valuation metric Our i
Slide 6: Premier Climate Solutions Investor With Proven Track Record
Premier Climate Solutions Investor With Proven Track Record ~$10 Billion Founded in 1981 Impact Managed Assets1 $4.3b Portfolio IPO in 2013 ~6m MT of CO2 Offset Annually $5.5b Off-Balance Sheet 15% Annual TSR2 0.4 CarbonCount ® 3 Distributable EPS4 Distributable NII4 Portfolio 11% CAGR 28% CAGR 21%
Slide 7: Jeff Eckel: History & Opportunity
Jeff Eckel History & Opportunity Executive Chair 7
Slide 8: More Than 40 Years of Lessons Learned
More Than 40 Years of Lessons Learned BEST MODEL Permanent Capital BEST MARKET Matches Clients’ Assets Climate Solutions Investing Is BEST CLIENTS Safe, Growing and an Enormous Opportunity Partner With Top-Tier Firms in Each Asset Class 1980 1990 2000 2010 2020 2030 8
Slide 9: The Business Model Is Incredibly Resilient
The Business Model Is Incredibly Resilient HASI Distributable Earnings Per Share1 $2.08 $1.88 $1.55 $1.38 $1.40 $1.20 $1.27 $0.93 $1.04 2014 2015 2016 2017 2018 2019 2020 2021 2022 Climate Positive Message White House Hostile to COVID-19 Not Mainstream Climate Solutions Pandemic Supply Chain Bottlen
Slide 10: HASI's Total Addressable Market Is Orders of Magnitude Larger
HASI’s Total Addressable Market Is Orders of Magnitude Larger Net million metric tons (mmt) of CO2-e U.S. Greenhouse Gas Emissions 7,000 6,500 6,000 5,500 5,000 Current policy (24-35% reduction) 4,500 Inflation Reduction Act (31-44% reduction) 4,000 U.S. Paris Agreement 2030 target 3,500 50-52% belo
Slide 11: Jeff Lipson: HASI Strategy
Jeff Lipson HASI Strategy President and Chief Executive Officer 11
Slide 12: HASI Strategy Simplified
HASI Strategy Simplified Climate Clients Assets Preeminent Climate Programmatic Partnerships Are Invest in Income Generating Pure Play a Differentiated Approach Real Assets Capital to Facilitate the Solve Client Problems Proven Technologies Energy Transition Measure and Report Non-Cyclical, Lower Ri
Slide 13: ~$10b Managed Assets: Common Attributes of Our Investments
Common Attributes of Our Investments Real Contracted Assets Cashflows Top-Tier Proven Clients Technologies ~$10b Managed Assets1 High-Quality Climate Incented Positive Offtakers 1. As of 12/31/22 13
Slide 14: Myth Busting - Simplifying Items of Perceived Complexity
Myth Busting - Simplifying Items of Perceived Complexity Perceived as Complex Simplified No direct peers Best alternative is a cross sectional peer group Finance company, investment firm, energy company, other? Investment firm most descriptive1 Both debt and equity investments Common attributes Seve
Slide 15: HASI Presents a Unique Value Proposition to Investors and Clients
HASI Presents a Unique Value Proposition to Investors and Clients Clients Shareholders Trusted Partnership With Access to Energy Transition in Aligned Goals Lower-Risk Structure Programmatic Transactions Non-Cyclical Business Model Improve Efficiencies Market and Policy Expertise Diverse End Markets
Slide 16: Marc Pangburn: Financial Overview, Metrics & Peers
Marc Pangburn Financial Overview, Metrics & Peers Chief Financial Officer 16
Slide 17: Multi-Decade Growth Opportunity
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 Technology. Source: BNE
Slide 18: Path to Earnings
Path to Earnings Portfolio Additions1 2022 Portfolio Increased Transactions Closed $0.7b 19% YoY in 2022 GC Closed, Not Funded1 $0.8b Closed, Not $1.8b $0.5b Funded as of YE 20222 BTM FTN Securitizations1 Managed Assets $0.6b Increased 11% YoY in 2022 1. Represents portion of 2022 total transactions
Slide 19: Recurring Income Drives Earnings Growth
Recurring Income Drives Earnings Growth Net Investment Income (NII)1 ($m) $400 Portfolio Additions $300 $200 Closed Transactions $100 Comprise ~75% of – 2024 NII Estimate 2019 2020 2021 2022 2023 2024 Current Investments Guidance - Midpoint Gain on Sale (GoS) ($m) Securitizations $100 $80 $60 Earnin
Slide 20: Profitable Growth in All Rate Environments
Profitable Growth in All Rate Environments Illustrative Business Model (% of Assets) Gross Asset Yield1 7.75% - 8.25% (-) Interest Expense2 (3.75% - 4.25%) = Net Investment Margin 3.50% - 4.50% Targeting Attractive Spreads in All Funding Environments (+) Gain on Sale & Fees 1.50% Management Tools (-
Slide 21: Diversified Funding Platform and ALM Support Long-Term Profitability
Diversified Funding Platform and ALM Support Long-Term Profitability Sources of Capital Disciplined liquidity and interest rate risk management 9,000 provides stability to the business 8,000 Liquidity Risk Mitigation 7,000 • Existing lending relationships with • Deploying swap >15 banks program to b
Slide 22: We Raise Capital for Accretive Investments
We Raise Capital for Accretive Investments Illustrative Capital Plan Portfolio Additions Considerations 60-70% Debt (1.5-2.0x Leverage) Investment Grade Rating Accretive to Current Shareholders 30-40% Equity (Retained Earnings & New Issue) • Capital Invested to Drive EPS Growth 22
Slide 23: Growing Both Dividend & Retained Earnings
Growing Both Dividend & Retained Earnings Dist. EPS1 $2.53 DPS2 $2.27 …By 2030 $1.85 $2.08 $1.88 $1.65 Equity Primarily Generated $1.55 $1.50 $1.58 Through Retained Earnings $1.40 $1.36 $1.40 $1.34 Continued Dividend Growth 2019 2020 2021 2022 2023 2024 Payout Target of 96% 88% 74% 72% 71%3 70%3 50-
Slide 24: Funding Our Long-Term Objectives
Funding Our Long-Term Objectives $m1 2020 2021 2022 Adjusted Cash Flow From Operations Plus Other Portfolio Collections2 309 259 287 (-) Dividend (100) (114) (132) (=) Cash Available for Reinvestment $209 $146 $155 Source of funds for majority of (-) Investments Funded3 (1,183) (960) (871) (+) Capit
Slide 25: P/E Best Aligns With Future of the Business
P/E Best Aligns With Future of the Business P E EPS Growth Growth Market + + ROE Greater Retained Earnings 25
Slide 26: HASI Overlap With Energy Transition Participants
HASI Overlap With Energy Transition Participants Vertically Renewables Energy Asset Integrated Equipment Services Managers Utilities Primary End Market Cash Flow Visibility Overlap HASI De-Risked, Cash Flowing Asset Full Exposure to Energy Transition Differentiation Investments 26
Slide 27: Broad Peer Group Valuation Methodology
Broad Peer Group Valuation Methodology Renewables Equipment Asset Manager 31x1 P/E 16x1 P/E Energy Services Vertically Integrated Utility 23x1 P/E 18x1 P/E Fully exposed to the high-growth energy transition with a lower risk business model 1. Based on broad sector group ‘23 P/E (as of 3.14.2023) 27
Slide 28: Best Model, Market, and Clients
Best Model, Market, and Clients 1 Resilient Business Model 2 High Growth Energy Transition 3 Strong Opportunity Set 4 Growing Retained Earnings & Dividend 28
Slide 29: Susan Nickey: Programmatic Client Approach
Susan Nickey Programmatic Client Approach Chief Client Officer 29
Slide 30: A Client-Centric Strategy
A Client-Centric Strategy Climate Clients Assets Preeminent Climate Programmatic Partnerships Are Invest in Income Generating Pure Play a Differentiated Approach Real Assets Capital to Facilitate the Solve Client Problems Proven Technologies Energy Transition Measure and Report Non-Cyclical, Lower R
Slide 31: Programmatic Clients Drive Repeat Business
Programmatic Clients Drive Repeat Business We invest in partners, and our programmatic partnership drives …in multiple sectors and technologies within repeat and expanding business… the energy transition Commencement Transactions Asset Classes 2001 >100 2 >290 >17 GW 8.6 GW 2001 >40 3 Energy Efficie
Slide 32: Macro Trends Accelerating the Energy Transition
Macro Trends Accelerating the Energy Transition… Integrated and decentralized energy First long-term U.S energy, industrial solutions enabled by data and polices enacted provide significant digitalization advances tailwinds for the energy transition End users with increasing Net Zero Shift to electr
Slide 33: Client Ambition Expands Our Opportunity Set
Client Ambition Expands Our Opportunity Set Increased growth targets with more Top-Tier Client Project-Level Capital Needs ($b)1 strategic focus on the U.S. $25 Expansion into adjacent $20 decarbonization markets $15 >$50b project-level capital needs1 through 2025 by top programmatic clients alone $
Slide 34: What Our Clients Value
What Our Clients Value Mission-Driven Flexible Financing First U.S. public company solely dedicated to We structure transactions creatively to solve client investments in climate solutions problems Permanent Capital Programmatic Process Lifetime partner providing significant portfolio Efficiently fi
Slide 35: Manny Haile-Mariam: Grid-Connected (GC)
Manny Haile-Mariam Grid-Connected (GC) Managing Director 35
Slide 36: 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 energy source 500 400 Required for corporates and utilities to meet their GWs 300
Slide 37: GC Business Investment Approach
GC Business Investment Approach Climate Clients Assets 1 Robust climate positive investments 2 Strategy centered around clients 3 Deep domain expertise • 365 GW of new wind/solar by 2030 • Key focus on large IPPs / Strategics • Highly efficient execution process • ~300% growth in storage by 2030 • T
Slide 38: GC Business Overview
GC Business Overview Solar $1.7b of Investments1 Wind Storage Clients Pipeline >$2b+ of Potential Opportunity1 1. As of 12/31/22 38
Slide 39: Robust GC Market Outlook
Robust GC Market Outlook ~30% price increases in PPA prices HASI participates actively in industry efforts to year-over-year enhance transmission and grid modernization 135 GW of capacity in the pipeline either Strong HASI focus on diversified projects with under construction or in advanced developm
Slide 40: Daniela Shapiro: Behind-the-Meter (BTM)
Daniela Shapiro Behind-the-Meter (BTM) Managing Director 40
Slide 41: BTM Business Overview
BTM Business Overview Portfolio $2.5b Residential / Community / C&I / MU.S.H / Federal BTM Features Investments on Balance Sheet1 • Diverse portfolios of smaller sites • Highly contracted revenue streams • Offtakers with solid credit profiles 20+ Clients HASI Value • Compelling franchise leading to
Slide 42: BTM Highlights
BTM Highlights High growth enabled by favorable legislation, technology advancement and strong demand $131b 100% 100% $131b of cumulative investments through 20261 90% 90% 80% 80% 35% 35% 44% 44% 47% 47% 51% 51% 70% 70% 60% Key Demand Drivers: capex 60% DERcapex 50% 50% Emissions / Resilience / Ener
Slide 43: BTM Investment Approach
BTM Investment Approach Climate Clients Assets • Decarbonization at deepest levels Value HASI for: • Diversified portfolios with attractive • Democratize clean energy • Decades investing in BTM economics • Disciplined execution to decrease • Emissions reduction where most felt • Market depth frictio
Slide 44: BTM Takeaways & Outlook
BTM Takeaways & Outlook Highly diversified segment with attractive Strong customer demand driven by sustainability economics goals and increasing energy prices Numerous smaller projects grouped into Enabling legislation, market regulations, portfolios for efficiencies and economies digitalization an
Slide 45: Annmarie Reynolds: Fuels, Transport & Nature (FTN)
Annmarie Reynolds Fuels, Transport & Nature (FTN) Managing Director 45
Slide 46: Driving the Energy Transition
Driving the Energy Transition Carbon is Everywhere U.S. GHG Emissions by Sector1 HASI Time to Scale Now Grid-Connected / Climate Solutions Behind-the-Meter expanding to include RNG Fleet Decarbonization Industrial, Transport, Electricity Transport Agriculture, and Built 25% 27% Environment comprisin
Slide 47: FTN Investment Approach
FTN Investment Approach The energy transition opportunity is vast; HASI’s strategy of sector focus and flexible capital will drive growth Climate Clients Assets • Material • Follow Existing Clients • Real Assets • Measurable • Expand Network • Proven Technology • CarbonCount • Growth Pipeline • Repl
Slide 48: Market Indicators of Expansion Phase
Market Indicators of Expansion Phase Market-Wide Demand State & Federal Policy Tailwinds Least-Cost Decarbonization Transportation 4% 15 States With Clean Fuel Standards...1 Commercial Residential 11% 30+ Utility/ Regulatory Actions 15% Promoting RNG2 ~$800b in annualized cost savings when Industria
Slide 49: Building HASI's Next Business Lines
Building HASI’s Next Business Lines 1 Advancing Climate Solutions Sector Assessment Scorecard Readiness Strategic Fit RNG Technology Maturity Client Base Stage TAM – Annual Spend $b HASI Client Base Overlap Sustainable (3 Years Out) Carbon Removal Fleet Decarb Agriculture Strength of Value Propositi
Slide 50: Building HASI's Next Business Lines
Building HASI’s Next Business Lines 1 Advancing Climate Solutions 2 Transaction Pipeline 3 Unique Funding Opportunity What’s RNG Next 10% Nature 10% Flexible Capital Fuels Sustainable Carbon Removal Fleet Decarb Agriculture >$600m Programmatic Approach Pipeline Transport 20% 60% SAF Low-Carbon Real
Slide 51: Nate Rose: Securitization Platform
Nate Rose Securitization Platform Chief Investment Officer 51
Slide 52: HASI's Securitization Platform Exhibits a Successful Multi-Decade Track Record
HASI’s Securitization Platform Exhibits a Successful Multi-Decade Track Record Strong Legacy Underpinning Success Notable Facts Initial closing in 2000 Over 15 institutional investors Core team from the original closing remains intact Robust market share – over 50% in Federal EE Original asset class
Slide 53: Securitization Platform – Value Add
Securitization Platform – Value Add Securitization Platform HASI Value Economics Value to HASI to Investors to HASI • Consistent and growing income • Retained equity in trust • Gain on sale stream • Diligence • Cash gain – up-front • 23-year history provides reliable • Expertise • Fair value of futu
Slide 54: Securitization Platform – Supporting Client Asset Expansion
Securitization Platform – Supporting Client Asset Expansion Gain on Sale From Securitizations1 – Since IPO $80 $70 $60 ($ m) $50 $40 Federal ESPC $30 Receivables $20 $10 – 2000 2010 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Sub-Asset Sub-Asset Sub-Asset Sub-Asset Sub-Asset Sub-Asset Class Cl
Slide 55: Rich Santoroski: Portfolio & Risk Management
Rich Santoroski Portfolio & Risk Management Chief Risk Officer 55
Slide 56: Portfolio Management Team Well Equipped to Support Business Growth
Portfolio Management Team Well Equipped to Support Business Growth People Data Clients • In-house subject matter experts • 10+ years of asset level operating • Governance structure provides • Engineering/Technical and financial data opportunity for active oversight • Power markets • Invested in the
Slide 57: Robust and Disciplined Underwriting and Monitoring
Robust and Disciplined Underwriting and Monitoring Primary Underwriting Metrics Variability of Performance Primary Post-closing Activities Credit Quality Collection Residential Solar Re-contracting Revenue Monitoring Delinquencies and Defaults (% of total value) Regulatory Savings to Customer Genera
Slide 58: Diversified Offtakers With Limited Concentration
Diversified Offtakers With Limited Concentration Residential Solar Community Solar Corporate / Utilities / P3 # of active >270k # of Projects >80 >130 High Quality and Primarily Investment Grade Offtakers customers LA Unified School District 1.9% WA FICO 747 # of States 5 University of Iowa 1.9% Wal
Slide 59: Dan McMahon: Syndications
Dan McMahon Syndications Co-Head Portfolio Management Head of Syndications 59
Slide 60: Unlocking Value by Expanding Into Syndications
Unlocking Value by Expanding Into Syndications HASI is uniquely positioned to apply its expertise in managing institutional investor funds through syndications Growing Demand From Private Funds To Balance Sheet Participate In Energy Investments Transition With Strong, Highly Diversified ESG Focus Or
Slide 61: Chuck Melko: Accounting
Chuck Melko, CPA Accounting Senior Vice President, Chief Accounting Officer and Treasurer 61
Slide 62: Wrap Up
Wrap Up 62
Slide 63: Highly Respected For Having a Meaningful Impact on the Environment & Social Justice
Highly Respected For Having a Meaningful Impact on the Environment & Social Justice Engage in Meaningful Community Investment Through HASI Foundation Since 2020, HASI has declared nearly $4.5m in social dividends to fund the Foundation’s climate Climate Solutions for Climate Solutions Local Impact j
Slide 64: Unique and Differentiated Business Model
Unique and Differentiated Business Model Climate Access to the entire energy transition Clients Partnership strategy positions us for the growth opportunity Assets Non-cyclical and lower risk business model 64
Slide 65: Q&A
Q&A 65
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