Financial Performance - Total revenue for 2025 was $400.5 million, reflecting a 4% increase from $383.6 million in 2024[290]. - The company reported a net income of $188.2 million in 2025, a decrease of 8% from $203.6 million in 2024[290]. - Adjusted Earnings for 2025 increased to $342.4 million, or $2.70 per share, from $290.6 million, or $2.45 per share in 2024[301]. - The company reported a return of capital of $83 million in 2025, significantly higher than $17 million in 2024[298]. - Interest and rental income for 2025 totaled $286.4 million, compared to $265.9 million in 2024[304]. - The provision for loss on receivables increased significantly to $12.1 million in 2025, compared to $1.1 million in 2024[290]. - GAAP net income for 2025 was $188.2 million, down from $203.6 million in 2024 but up from $150.8 million in 2023, resulting in a GAAP-based return on equity of 7.3%[317]. - Adjusted earnings for 2025 were $342.4 million, compared to $290.6 million in 2024, leading to an adjusted return on equity of 13.4%[317]. Investment and Portfolio - The company generated returns from five primary sources: interest income, equity method investments, asset sale gains, fee revenue, and residual income from securitized assets[32]. - The company's Portfolio size was approximately $7.6 billion as of December 31, 2025, up from $6.6 billion on December 31, 2024[280]. - The company completed approximately $4.3 billion of transactions in 2025, compared to $2.3 billion in 2024[280]. - The company's Portfolio totaled approximately $7.6 billion as of December 31, 2025, with 52% in equity investments in renewable energy projects[281]. - The company’s equity method investments increased to $4.1 billion in 2025 from $3.6 billion in 2024[308]. - The company had over 700 transactions in its Portfolio, with an average size of $10 million and a weighted average remaining life of approximately 16 years[281]. - The anticipated principal repayments for receivables and debt securities included $3.3 billion due within one year and $2 billion due in 1-5 years[286]. Financing and Capital Structure - The company issued $500 million in junior subordinated notes during 2025, which improved access to capital and reduced reliance on equity issuance[52]. - The financing strategy focuses on minimizing equity issuance while diversifying capital sources, including secured and unsecured debt[51]. - The company plans to continue issuing debt and equity to finance its business, utilizing both on-balance sheet and off-balance sheet securitizations[335]. - The company entered into a strategic partnership with KKR, increasing the commitment to $1.5 billion for eligible projects, with $913 million remaining to be funded as of December 31, 2025[330]. - As of December 31, 2025, the company's debt to equity ratio was approximately 1.7 to 1, below the Board-approved leverage limit of up to 2.5 to 1[337]. - The percentage of fixed-rate debt was approximately 99% as of December 31, 2025, within the targeted range of 75% to 100%[337]. - The company plans to use financial leverage primarily for financing its portfolio and business activities, not for speculating on interest rate changes[339]. Market and Economic Conditions - The U.S. electricity demand is projected to grow by approximately 750 terawatt-hours (TWh) between 2025 and 2030, driven by data centers and electrification of various sectors[38]. - Average U.S. retail electricity prices rose by 29% from 2020 to 2025 and are projected to increase by an additional 4% from 2025 to 2027[260]. - Capacity prices in key markets like PJM reached a record $333 per MW-day in December 2025, while MISO saw an average annualized clearing price of approximately $215 per MW-day, over ten times the previous year's price[260]. - Government policies and incentives significantly impact the economic feasibility of energy transition projects, and any adverse changes could harm the company's operating results[272]. Sustainability and Corporate Responsibility - The company is committed to transparent sustainability disclosures and was one of the first to evaluate the climate impact of its investments, using its proprietary CarbonCount® score[35]. - The company has set a target for net-zero carbon emissions by 2050, with established policies to reduce its environmental impact[71]. - The company reports its corporate emissions under PCAF, a framework for consistent carbon emissions disclosure[79]. - The company is a signatory to the United Nations Global Compact, committing to responsible business practices related to human rights and the environment[70]. Employee Engagement and Corporate Governance - The company emphasizes employee engagement and retention as key to financial success, with a focus on diverse perspectives and fair compensation[59]. - The voluntary employee turnover rate for 2025 was 5%, with an average tenure of full-time employees at approximately 4.5 years[322]. - The company provides competitive benefits and compensation tied to performance, including annual bonuses and equity grants[64]. - The company has a majority vote policy for director elections, ensuring accountability and alignment with stakeholder interests[75]. Risk Management - The company utilizes interest rate derivatives to hedge against risks associated with floating rate borrowings[268]. - The company is exposed to credit risks from various renewable energy projects and has implemented rigorous underwriting processes to minimize potential losses[266]. - The company anticipates that its identified sources of liquidity will be adequate for meeting both short-term and long-term liquidity needs[342].
Hannon Armstrong Sustainable Infrastructure Capital(HASI) - 2025 Q4 - Annual Report