Hannon Armstrong Sustainable Infrastructure Capital(HASI) - 2024 Q4 - Annual Report

Climate Commitment and Investments - The company established CarbonCount Holdings 1 LLC to jointly invest $2 billion in eligible climate-positive projects with KKR[51]. - The company is committed to achieving net-zero carbon emissions by 2050, with established targets under the Science Based Targets Initiative[69]. - The company maintains a commitment to providing capital for climate solutions, indicating a long-term growth strategy[268]. - The company entered into a strategic partnership with KKR, committing to invest$1 billion in climate solutions projects over an 18-month period[340]. - The company’s financing strategy includes the use of green bonds, which meet environmental eligibility criteria[51]. Financial Performance - Total revenue rose to $383.6 million in 2024, a 20$319.9 million in 2023[299]. - Net income increased by approximately $52.9 million, reaching$203.6 million in 2024, a 35% rise compared to $150.8 million in 2023[299]. - Interest income increased to$263.8 million in 2024, up 27% from $207.8 million in 2023[299]. - Income from equity method investments rose to$247.9 million in 2024, a 76% increase from $141 million in 2023[299]. - Adjusted earnings for 2024 were$290,636,000, or $2.45 per share, compared to$232,248,000, or $2.23 per share in 2023, reflecting a 25$2.3 billion of transactions during both 2024 and 2023, with a Portfolio totaling approximately $6.6 billion as of December 31, 2024, up from$6.2 billion in 2023[291]. - The Portfolio included approximately $3.1 billion of Behind-the-Meter (BTM) assets,$2.6 billion of Grid-Connected (GC) assets, and $0.9 billion of Front-of-the-Neter (FTN) assets, with over 550 transactions averaging$11 million each[292]. - Approximately 52% of the Portfolio consisted of unconsolidated equity investments in renewable energy projects, while 46% consisted of commercial and government receivables[292]. - The company recognized equity method investments of $3,612,000,000 in 2024, an increase from$2,966,000,000 in 2023, representing a growth of about 22%[319]. - The company evaluates its Portfolio for potential impairments on a quarterly basis, impacting net income if impairment charges are deemed necessary[288]. Employee Engagement and Diversity - The company employs 158 people as of December 31, 2024, with plans to hire additional professionals to support business strategy[65]. - The board consists of 40% women and 20% individuals from underrepresented ethnicities, promoting diversity[72]. - The average tenure of employees was approximately 4.5 years, with a voluntary employee turnover rate of 5% as of December 31, 2024[331]. - The company emphasizes employee engagement and development, with a focus on diverse perspectives and fair compensation[57]. Risk Management - The company manages credit risk through thorough due diligence, strong structural protections, and active asset management, although exposure to credit risks may increase during economic downturns[276]. - Interest rate risk is influenced by various factors, including governmental policies and economic conditions, affecting new asset originations and borrowings[277]. - The company is exposed to commodity price volatility, particularly in renewable energy projects that sell power on a wholesale basis[278]. - Government policies and incentives play a crucial role in the economic feasibility of renewable energy projects, and any adverse changes could negatively impact operating results[282]. Capital Structure and Liquidity - The debt to equity ratio was approximately 1.8 to 1 as of December 31, 2024, which is below the Board-approved leverage limit of up to 2.5 to 1[345]. - The company had total liquidity of $1.518 billion as of December 31, 2024, including$130 million in unrestricted cash and $1.241 billion in unused capacity under its unsecured revolving credit facility[337]. - The company increased the available capacity under its unsecured revolving credit facility to$1.35 billion and extended its maturity to April 2028[338]. - Cash available for reinvestment in 2024 was $717,806,000, significantly higher than$106,122,000 in 2023, showing a substantial increase[324]. Market Conditions and Economic Factors - The Federal Reserve increased the federal funds rate 11 times in 2022 and 2023, totaling a 5.25% increase, followed by three rate cuts in 2024, resulting in a 1.00% decrease[266]. - Inflationary pressures have not materially impacted the company's business to date[266]. - The average annual Henry Hub natural gas price for 2024 was $2.21/MMBtu, a decrease of 16$3.10 per MMBtu in 2025 and $4.00 per MMBtu in 2026[267]. - The company has experienced increased competition in the alternative investment and climate solutions market, impacting its operational strategies[81].