Part I [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Altus Power reported Q1 2022 operating revenues of $19.2 million, with net income surging to $60.1 million primarily from non-cash gains [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2022 operating revenues grew 54% to $19.2 million, with net income reaching $60.1 million driven by significant non-cash fair value gains Q1 2022 vs Q1 2021 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Operating revenues, net** | **$19,199** | **$12,471** | | Operating income | $161 | $3,028 | | Total other (income) expense | $(59,851) | $3,802 | | **Net income** | **$60,135** | **$263** | | Net income attributable to Altus Power, Inc. | $60,419 | $962 | | **Diluted EPS** | **$0.39** | **$0.01** | - The significant increase in net income was primarily driven by a **$18.5 million** gain on the change in fair value of redeemable warrant liability and a **$46.3 million** gain on the change in fair value of alignment shares liability, which are non-cash items[8](index=8&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets were **$1.104 billion**, with liabilities decreasing to **$702.6 million** and equity increasing to **$365.9 million** Balance Sheet Summary (in thousands) | Metric | As of March 31, 2022 | As of December 31, 2021 | | :--- | :--- | :--- | | Cash | $318,177 | $325,983 | | Total current assets | $335,848 | $344,404 | | Property, plant and equipment, net | $745,991 | $745,711 | | **Total assets** | **$1,104,349** | **$1,113,249** | | Total current liabilities | $31,473 | $32,891 | | Long-term debt, net | $521,869 | $524,837 | | **Total liabilities** | **$702,636** | **$771,711** | | **Total stockholders' equity** | **$365,945** | **$304,918** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 net cash from operations was **$3.5 million**, while investing activities used **$6.6 million** and financing activities used **$4.7 million** Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,499 | $3,222 | | Net cash used for investing activities | $(6,571) | $(8,671) | | Net cash used for financing activities | $(4,720) | $(8,201) | | **Net decrease in cash and restricted cash** | **$(7,792)** | **$(13,650)** | [Notes to Financial Statements](index=10&type=section&id=Notes%20to%20Financial%20Statements) Notes detail accounting policies, revenue streams, debt, and fair value measurements, highlighting a single operating segment and significant non-cash gains - The company operates as a single operating segment, focusing on developing, owning, and operating solar energy generation and storage systems in the United States[22](index=22&type=chunk)[29](index=29&type=chunk) Disaggregation of Revenue (in thousands) | Revenue Source | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue under power purchase agreements | $4,182 | $3,132 | | Revenue from net metering credit agreements | $3,910 | $2,944 | | Solar renewable energy certificate revenue | $9,531 | $5,565 | | Rental income | $644 | $114 | | Performance based incentives | $359 | $551 | | Other revenue | $573 | $165 | | **Total** | **$19,199** | **$12,471** | - Total principal long-term debt as of March 31, 2022, was **$552.6 million**, primarily consisting of a **$496.6 million** Amended Rated Term Loan with a fixed weighted average interest rate of **3.51%**[51](index=51&type=chunk)[52](index=52&type=chunk) - The fair value of the redeemable warrant liability decreased by **$18.5 million**, and the alignment shares liability decreased by **$46.3 million** during Q1 2022, resulting in significant non-cash gains[70](index=70&type=chunk)[75](index=75&type=chunk) - The company recognized **$1.3 million** in stock-based compensation expense in Q1 2022, a significant increase from **$0.1 million** in Q1 2021, mainly due to new RSU grants under the Omnibus Incentive Plan[94](index=94&type=chunk)[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 54% revenue growth, **38% Adjusted EBITDA** increase, a **one-gigawatt pipeline**, and internal control remediation efforts [Overview and Key Factors](index=26&type=section&id=MD%26A%20Overview) Altus Power operates over **350 MW** of solar and storage systems, leveraging long-term contracts and strategic partnerships for growth - The company's portfolio consists of over **350 MW** of solar PV, with long-term PPAs with over 300 C&I entities and contracts with over 5,000 residential community solar customers[109](index=109&type=chunk) - Key growth strategies include expanding EV charging and energy storage offerings and leveraging partnerships with Blackstone and CBRE to access new customers[113](index=113&type=chunk) - The average remaining life of the company's contracts is approximately **18 years**, with about **60%** of the current installed portfolio having variable rates tied to local utility prices[115](index=115&type=chunk) - As of March 31, 2022, the company has a project pipeline of over **one gigawatt**, split between potential operating acquisitions and development projects, though supply chain challenges have extended timelines by **3 to 6 months**[121](index=121&type=chunk)[122](index=122&type=chunk) [Key Financial and Operational Metrics](index=30&type=section&id=Key%20Financial%20and%20Operational%20Metrics) Cumulative installed capacity reached **362 MW**, with Adjusted EBITDA growing **38%** to **$8.8 million** and an Adjusted EBITDA margin of **46%** Cumulative Megawatts Installed | Metric | As of March 31, 2022 | As of March 31, 2021 | | :--- | :--- | :--- | | Megawatts installed | 362 MW | 247 MW | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net income | $60,135 | $263 | | Adjustments (Interest, D&A, non-cash/non-recurring items) | $(51,384) | $6,062 | | **Adjusted EBITDA** | **$8,751** | **$6,325** | | Operating revenues, net | $19,199 | $12,471 | | **Adjusted EBITDA margin** | **46%** | **51%** | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2022 operating revenues grew **53.9%** to **$19.2 million**, while G&A expenses increased **97.9%** due to higher headcount and non-cash gains - Operating revenues increased by **$6.7 million (53.9%)** in Q1 2022 compared to Q1 2021, primarily due to the increased number of solar energy facilities from acquisitions and projects placed in service[160](index=160&type=chunk) - General and administrative expenses increased by **$3.2 million (97.9%)** year-over-year, mainly due to increased personnel costs from higher headcount[162](index=162&type=chunk) - Stock-based compensation increased by **$1.3 million**, primarily due to RSU grants under the new Omnibus Incentive Plan adopted in July 2021[166](index=166&type=chunk) - The company recorded a non-cash gain of **$18.5 million** from the change in fair value of its redeemable warrant liability and a **$46.3 million** gain from its alignment shares liability, driven by a decrease in the company's stock and warrant prices[167](index=167&type=chunk)[169](index=169&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company held **$322.5 million** in cash, with future growth dependent on external financing and existing debt facilities - As of March 31, 2022, the Company had total cash and restricted cash of **$322.5 million**[176](index=176&type=chunk) - The company's business model requires substantial outside financing to grow, and it plans to use existing debt facilities, tax equity investors, and operating cash flow to fund expansion[177](index=177&type=chunk) - The company has outstanding letters of credit and surety bonds totaling **$10.6 million** as of March 31, 2022, primarily for performance-related obligations and debt service reserves[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks, primarily interest rate and credit risk, through fixed-rate debt, derivatives, and credit evaluations - A significant portion of the company's debt has a fixed interest rate, and derivative instruments are sometimes used to hedge floating-rate interest rate exposure[201](index=201&type=chunk)[202](index=202&type=chunk) - Credit risk from cash and restricted cash is managed by using high-quality financial institutions, while customer credit risk is monitored through ongoing evaluations[203](index=203&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses, with a remediation plan underway including new hires and ERP implementation - Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to previously identified material weaknesses in internal control over financial reporting[205](index=205&type=chunk) - The company's remediation plan includes hiring key finance and SOX personnel, formalizing risk assessment, and implementing a new ERP system to improve financial reporting controls[206](index=206&type=chunk) - During the quarter, the company completed the implementation of a new accounting system to create a more efficient financial statement closing process[208](index=208&type=chunk) Part II [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings not expected to materially affect its financial position or operations - Current legal proceedings are considered ordinary and are not expected to have a material adverse effect on the company[210](index=210&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the 2021 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2021 Annual Report on Form 10-K[211](index=211&type=chunk) [Other Part II Items](index=44&type=section&id=Other%20Part%20II%20Items) The report indicates no unregistered sales of equity, no defaults on senior securities, and no mine safety disclosures - Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) were all reported as 'None' or 'Not applicable'[211](index=211&type=chunk)

Altus Power, Inc. (NYSE:AMPS) Q4 2021 Earnings Conference Call March 25, 2022 8:30 AM ET Company Participants Chris Shelton - Head of Investor Relations Lars Norell - Co-Founder and Co-CEO Gregg Felton - Co-Founder and Co-CEO Dustin Weber - Chief Financial and Operating Officer Conference Call Participants Justin Clare - ROTH Capital Partners Ryan Levine - Citi Joseph Osha - Guggenheim Securities Operator Good morning and welcome to the Altus Power Fourth Quarter 2021 Conference Call. As a reminder, today's ...

PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements, management's analysis, market risk disclosures, and internal controls for the period [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements detail the company's financial position as a SPAC, highlighting trust account assets, warrant liabilities, and the subsequent Altus Power business combination agreement [Balance Sheets](index=3&type=section&id=Balance%20Sheets) As of June 30, 2021, assets primarily comprised **$402.5 million** in the Trust Account, with liabilities including **$10.9 million** in warrant liability and a **$26.6 million** stockholders' deficit Condensed Balance Sheet Data (as of June 30, 2021) | Metric | Amount (USD) | | :--- | :--- | | **Assets** | | | Cash | $391,397 | | Assets held in Trust Account | $402,510,957 | | **Total Assets** | **$404,229,116** | | **Liabilities & Equity** | | | Total Current Liabilities | $2,302,161 | | Deferred underwriting commission | $14,087,500 | | Redeemable warrant liability | $10,867,500 | | **Total Liabilities** | **$28,357,161** | | Class A common stock subject to possible redemption | $402,510,957 | | **Total Stockholders' Deficit** | **($26,639,002)** | [Statements of Operations](index=4&type=section&id=Statements%20of%20Operations) Net income for the six months ended June 30, 2021, was **$4.2 million**, primarily due to a **$7.8 million** non-cash gain on warrant liability, while the three-month period saw a **$4.3 million** net loss Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2021 | | :--- | :--- | :--- | | Loss from operations | ($2,663,665) | ($3,622,908) | | Change in fair value of redeemable warrant liability | ($1,610,000) | $7,848,750 | | Interest income earned on assets held in Trust Account | $3,899 | $9,949 | | **Net Income (Loss)** | **($4,269,766)** | **$4,235,791** | | **Net Income (Loss) per Share** | **($0.10)** | **$0.10** | [Statement of Changes in Stockholders' Deficit](index=5&type=section&id=Statement%20of%20Changes%20in%20Stockholders'%20Deficit) The total stockholders' deficit improved from **$30.9 million** at year-end 2020 to **$26.6 million** by June 30, 2021, driven by **$4.2 million** in net income - The total stockholders' deficit decreased from **$30,864,844** at the end of 2020 to **$26,639,002** at the end of Q2 2021, mainly driven by net income recognized during the period[19](index=19&type=chunk) [Statement of Cash Flows](index=6&type=section&id=Statement%20of%20Cash%20Flows) Net cash used in operating activities was **$1.3 million** for the six months ended June 30, 2021, partially offset by **$1.1 million** from financing, leading to a cash balance decrease Cash Flow Summary for Six Months Ended June 30, 2021 | Cash Flow Activity | Amount (USD) | | :--- | :--- | | Net cash used in operating activities | ($1,334,519) | | Net cash provided by financing activities | $1,100,000 | | **Decrease in cash** | **($234,519)** | | Cash at beginning of period | $625,916 | | **Cash at end of period** | **$391,397** | [Notes to Unaudited Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Financial%20Statements) Notes detail SPAC formation, IPO terms, warrant reclassification to liability, related-party transactions, and the subsequent Business Combination Agreement with Altus Power - The company was formed to effect a business combination and completed its Initial Public Offering on December 15, 2020, raising **$402.5 million** which was placed in a trust account[24](index=24&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Following SEC guidance issued in April 2021, the company reclassified its redeemable warrants from equity to a liability, requiring them to be measured at fair value with changes reported in earnings, which led to a revision of the December 31, 2020 financial statements[36](index=36&type=chunk)[37](index=37&type=chunk) - On July 12, 2021, the company entered into a definitive Business Combination Agreement with Altus Power, Inc, with the transaction supported by a **$275 million** PIPE investment[104](index=104&type=chunk)[105](index=105&type=chunk) - The company has a **$3 million** promissory note facility with its Sponsor to finance transaction costs, of which **$1.1 million** was drawn as of June 30, 2021[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's blank check status, the Altus Power business combination, the impact of warrant liability fair value changes on results, and liquidity sources - The company is a blank check company that completed its IPO on December 15, 2020, and its primary activity has been identifying a business combination target[109](index=109&type=chunk) - On July 12, 2021, the company entered into a Business Combination Agreement to acquire Altus Power, Inc, with the deal including a concurrent **$275 million** PIPE investment[110](index=110&type=chunk)[111](index=111&type=chunk) - Net income for the six months ended June 30, 2021 was **$4.2 million**, driven by a decrease in the fair value of the redeemable warrant liability, while net loss for the three-month period was **$4.3 million** due to an increase in the warrant liability's fair value[113](index=113&type=chunk) - As of June 30, 2021, the company had **$391,397** in cash outside the trust account for working capital, supplemented by a **$3 million** promissory note from the Sponsor, of which **$1.1 million** was drawn[117](index=117&type=chunk)[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces no material market or interest rate risk, as IPO proceeds in the trust account are invested in short-term U.S. government securities - The company's market risk is limited as funds in the trust account are invested in short-term U.S. government treasury obligations with maturities of 185 days or less[128](index=128&type=chunk) - Due to the short-term nature of its investments, management believes there is no material exposure to interest rate risk[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2021, following the remediation of a material weakness in internal control over financial reporting related to warrant accounting - A material weakness in internal control over financial reporting related to the accounting for redeemable warrants, identified in Q1 2021, was remediated as of June 30, 2021[131](index=131&type=chunk) - Remediation actions included adding expertise to the management team, engaging third-party accounting advisors, and enhancing oversight and review controls for complex transactions[131](index=131&type=chunk) - As a result of the remediation, management concluded that disclosure controls and procedures were effective as of June 30, 2021[130](index=130&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings - The company is not involved in any legal proceedings[133](index=133&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors include potential conflicts of interest for the Sponsor and officers in the Altus business combination, and earnings volatility from warrant liability accounting - A key risk is that the Sponsor, directors, and officers have financial interests in the business combination that differ from public stockholders, which may have influenced their decision to approve the deal with Altus[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - The accounting for redeemable warrants as derivative liabilities, which are re-measured to fair value each quarter, may cause significant non-cash fluctuations in reported earnings and could adversely affect the company's stock price[136](index=136&type=chunk)[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the reporting period - There were no unregistered sales of equity securities[139](index=139&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company [Item 4. Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No other information is reported for the period - There is no other information to report for the period[139](index=139&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed, including the Business Combination Agreement with Altus Power and related support and rights agreements - Key exhibits filed include the Business Combination Agreement dated July 12, 2021, and related documents such as the Sponsor Support Agreement, PIPE Subscription Agreement, and Investor Rights Agreement[141](index=141&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)