Hannon Armstrong Sustainable Infrastructure Capital(HASI) - 2024 Q2 - Quarterly Report

Portfolio Overview - The company's portfolio totaled approximately $6.2 billion as of June 30, 2024, with$3.0 billion in Behind-the-Meter (BTM) assets, $2.4 billion in Grid-Connected (GC) assets, and$0.8 billion in Fuels, Transport, and Nature (FTN) assets[141]. - Approximately 52% of the portfolio consisted of unconsolidated equity investments in renewable energy projects, while 41% consisted of fixed-rate receivables and debt securities[141]. - The average size of transactions in the portfolio was approximately $12 million, with a weighted average remaining life of about 17 years[141]. - The company managed approximately$13 billion in assets, combining the portfolio and assets in securitization trusts as of June 30, 2024[135]. Financial Performance - Total revenue for the six months ended June 30, 2024, reached $200.3 million, up 40$143.4 million in the same period of 2023[151]. - Net income for the three months ended June 30, 2024, was $26.9 million, a 99$13.5 million in the same period of 2023[148]. - Interest income for the three months ended June 30, 2024, increased to $62.8 million, a 30$48.2 million in the same period of 2023[148]. - Income from equity method investments for the six months ended June 30, 2024, surged to $185.4 million, a 652$24.7 million in the same period of 2023[151]. - Adjusted earnings for Q2 2024 were $73.683 million, compared to$53.146 million in Q2 2023, reflecting a 38.6% increase[157]. - GAAP net income attributable to controlling stockholders for Q2 2024 was $26.540 million, or$0.23 per share, up from $13.522 million, or$0.14 per share in Q2 2023[157]. Expenses and Cash Flow - Total expenses for the six months ended June 30, 2024, increased to $177.7 million, a 37$130.2 million in the same period of 2023[151]. - Cash provided by operating activities for the six months ended June 30, 2024 was $(4) million, a decrease of$70 million compared to the same period in 2023[187]. - Cash provided by investing activities increased by $873 million for the six months ended June 30, 2024, driven by higher principal collections from receivables[187]. - Cash collected for Q2 2024 was$19 million, compared to $11 million in Q2 2023, representing a 72.7$1,110 million, consisting of $146 million in unrestricted cash and$927 million in unused capacity under its unsecured revolving credit facility[176]. - The company increased the available capacity under its unsecured revolving credit facility to $1.25 billion and extended its maturity to April 2028[177]. - The debt to equity ratio was approximately 1.8 to 1 as of June 30, 2024, below the board-approved leverage limit of up to 2.5 to 1[179]. - The company has$4.1 billion of fixed-rate debt, including $820 million of floating-rate borrowings hedged with interest rate derivatives[194]. Investment Strategy and Opportunities - The pipeline of potential new opportunities as of June 30, 2024, consisted of more than$5.5 billion in new equity, debt, and real estate opportunities, with approximately 55% related to BTM assets and 22% related to GC assets[137]. - The company entered into a strategic partnership with KKR in May 2024, each committing to invest $1 billion into climate solutions projects[137]. - The company has a large and active pipeline of potential new opportunities, incentivized by the Inflation Reduction Act signed into law on August 16, 2022[137]. Risk Management - The company is exposed to credit risk from various projects, particularly those without government guarantees, such as financing for universities and privately owned commercial projects[193]. - The company employs a risk rating system to evaluate projects, estimating the probability of default and recovery rates based on obligors' credit ratings[193]. - The company faces liquidity risk as its portfolio assets are not publicly traded and may be subject to legal restrictions on resale[196]. - The company is exposed to commodity price risk, particularly in renewable energy projects that may be affected by volatility in energy prices[197]. - The company actively manages environmental risks associated with climate change through ongoing monitoring and third-party expert evaluations[200]. Accounting and Reporting - The company has identified critical accounting policies that require significant judgments and assumptions, which could materially impact reported results of operations or financial condition[140]. - The company plans to continue using adjusted earnings as a meaningful indicator of economic performance for evaluating expected dividend payments over time[154].