Altus Power(AMPS) - 2023 Q4 - Annual Results

Financial & Business Highlights Altus Power achieved significant 2023 revenue and EBITDA growth, expanding its portfolio and customer base, with strong cash for 2024 funding Full Year 2023 Financial Highlights Altus Power reported significant growth in 2023, with a 53% increase in revenue and a 59% rise in Adjusted EBITDA. Despite this operational growth, the company recorded a GAAP net loss of $26.0 million, a reversal from the net income of $52.2 million in 2022. Net cash from operating activities saw a substantial 125% increase Full Year 2023 Key Financial Metrics | Metric | Full Year 2023 | Full Year 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $155.2 million | $101.2 million | 53% | | GAAP Net (Loss) Income | ($26.0 million) | $52.2 million | N/A | | Adjusted EBITDA* | $93.1 million | $58.6 million | 59% | | Net cash provided by operating activities | $79.4 million | $35.3 million | 125% | | Adjusted EBITDA margin* | 60% | 58% | +2 p.p. | Business Highlights In 2023, Altus Power significantly expanded its operational footprint, nearly doubling its portfolio size to 896 MW and growing its enterprise customer base to over 450. The company solidified its position as the largest owner of commercial scale solar assets in the US and ended the year with a strong cash balance of $219 million, which is expected to fund 2024 growth without the need for new equity financing - Portfolio size increased by 91% to 896 MW during 2023, comprising ~74 MW of new-build assets and ~352 MW of operating assets[2] - Added approximately 150 enterprise customers, bringing the total to over 450[2] - The year-end cash balance of $219 million underpins the financing plan for 2024 with no expected equity needs[2] - The company is approaching a 1 gigawatt portfolio following the closing of an 84 MW acquisition from Vitol in January 2024[2] Financial Results Altus Power reported strong operating revenue and Adjusted EBITDA growth for Q4 and full year 2023, despite GAAP net losses Fourth Quarter 2023 Financial Results In Q4 2023, operating revenues grew 28% year-over-year to $34.2 million. However, the company posted a GAAP net loss of $40.0 million, a significant shift from the $67.1 million net income in Q4 2022. This loss was primarily driven by a $17.7 million non-cash loss from the remeasurement of alignment shares, contrasting with a large non-cash gain in the prior-year period. Adjusted EBITDA saw a modest 5% increase to $17.3 million Q4 2023 Financial Performance vs. Q4 2022 | Metric | Q4 2023 | Q4 2022 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $34.2 million | $26.8 million | 28% | | GAAP Net (Loss) Income | ($40.0 million) | $67.1 million | N/A | | Adjusted EBITDA* | $17.3 million | $16.6 million | 5% | - The decrease in GAAP net income was primarily driven by a $17.7 million non-cash loss from the remeasurement of alignment shares in Q4 2023, compared to a $71.5 million non-cash gain from remeasurement of warrants and alignment shares in Q4 2022[4] Full Year 2023 Financial Results For the full year 2023, operating revenues increased 53% to $155.2 million, driven by customer additions and asset growth. The company recorded a GAAP net loss of $26.0 million, compared to a net income of $52.2 million in 2022, a change primarily attributed to a significant non-cash net gain from the remeasurement of warrants and alignment shares in 2022 that did not recur. Adjusted EBITDA grew 59% to $93.1 million Full Year 2023 Financial Performance vs. Full Year 2022 | Metric | Full Year 2023 | Full Year 2022 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $155.2 million | $101.2 million | 53% | | GAAP Net (Loss) Income | ($26.0 million) | $52.2 million | N/A | | Adjusted EBITDA* | $93.1 million | $58.6 million | 59% | 2024 Guidance Altus Power projects continued strong growth for 2024, anticipating significant increases in operating revenues and Adjusted EBITDA Initiating 2024 Guidance Altus Power has initiated its financial guidance for 2024, projecting continued strong growth. The company expects operating revenues to be between $200 million and $222 million and Adjusted EBITDA to be in the range of $115 million to $135 million. At their midpoints, these forecasts represent year-over-year growth of 36% and 34%, respectively 2024 Financial Guidance | Metric | 2024 Guidance Range | Midpoint Growth vs. 2023 | | :--- | :--- | :--- | | Operating Revenues | $200 - $222 million | 36% | | Adjusted EBITDA* | $115 - $135 million | 34% | Consolidated Financial Statements The 2023 consolidated statements reflect substantial revenue growth, a net loss, significant asset expansion, and strong operating cash flow Consolidated Statements of Operations The 2023 consolidated statements of operations show a 53% increase in operating revenues to $155.2 million. However, a significant rise in operating expenses, particularly depreciation and interest expense, coupled with non-cash charges, resulted in a net loss of $26.0 million for the year, compared to a net income of $52.2 million in 2022 Consolidated Statements of Operations (in thousands) | Description | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Operating revenues, net | $155,162 | $101,163 | | Total operating expenses | $138,064 | $83,048 | | Operating income | $17,098 | $18,115 | | Total other expense (income) | $43,754 | ($35,128) | | (Loss) income before income tax | ($26,656) | $53,243 | | Net (loss) income | ($25,973) | $52,167 | | Net (loss) income per share, diluted | ($0.06) | $0.35 | Consolidated Balance Sheets As of December 31, 2023, Altus Power's total assets grew to $2.09 billion from $1.38 billion in 2022, primarily driven by a substantial increase in property, plant, and equipment. This asset growth was financed largely through an increase in long-term debt, which pushed total liabilities up to $1.57 billion from $913.8 million in the prior year Consolidated Balance Sheet Highlights (in thousands) | Description | As of Dec 31, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $160,817 | $193,016 | | Property, plant and equipment, net | $1,619,047 | $1,005,147 | | Total assets | $2,090,349 | $1,376,888 | | Current portion of long-term debt | $39,611 | $29,959 | | Long-term debt, net | $1,163,307 | $634,603 | | Total liabilities | $1,565,338 | $913,829 | | Total stockholders' equity | $447,078 | $424,101 | Consolidated Statements of Cash Flows For the year ended December 31, 2023, net cash from operating activities more than doubled to $79.4 million. The company made significant investments, with net cash used for investing activities totaling $586.8 million, primarily for acquiring renewable energy businesses. These investments were largely funded by net cash from financing activities of $527.0 million, mainly from the issuance of new long-term debt Consolidated Cash Flow Highlights (in thousands) | Description | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $79,357 | $35,242 | | Net cash used for investing activities | ($586,813) | ($163,212) | | Net cash provided by (used for) financing activities | $526,985 | ($2,953) | | Net increase (decrease) in cash | $19,529 | ($130,923) | | Cash, cash equivalents, and restricted cash, end of year | $218,927 | $199,398 | Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted EBITDA and ARR to clarify core operating performance, with detailed reconciliations Use and Definition of Non-GAAP Measures Altus Power utilizes non-GAAP financial measures like Adjusted EBITDA and Adjusted EBITDA margin to supplement its GAAP results. The company believes these metrics offer a clearer view of its core operating performance by excluding certain non-recurring or non-cash items, such as fair value remeasurements of contingent consideration and alignment shares, acquisition costs, and stock-based compensation. These measures are used by management for internal planning and performance evaluation - Adjusted EBITDA is defined as net income adjusted for interest, taxes, depreciation, amortization, accretion, stock-based compensation, acquisition costs, and other non-recurring items like changes in fair value of warrants and alignment shares[10][12] - The company also refers to Annual Recurring Revenue (ARR), a non-GAAP estimate of the expected annual revenue from its operating asset base, assuming customary conditions. It is not derived from a GAAP measure[13][14] Reconciliation of Net (Loss) Income to Adjusted EBITDA The company provides a detailed reconciliation from GAAP Net (Loss) Income to non-GAAP Adjusted EBITDA. For the full year 2023, a net loss of $26.0 million was adjusted for items including interest ($47.5M), D&A ($53.6M), stock-based compensation ($15.0M), and fair value changes, resulting in an Adjusted EBITDA of $93.1 million. This corresponds to an Adjusted EBITDA margin of 60% on operating revenues of $155.2 million Reconciliation of Net (Loss) Income to Adjusted EBITDA (Full Year, in thousands) | Description | 2023 | 2022 | | :--- | :--- | :--- | | Net (loss) income | ($25,973) | $52,167 | | Income tax (benefit) expense | (683) | 1,076 | | Interest expense, net | 47,486 | 22,162 | | Depreciation, amortization and accretion expense | 53,627 | 29,600 | | Stock-based compensation | 14,984 | 9,404 | | Acquisition and entity formation costs | 4,508 | 3,629 | | Change in fair value of Alignment Shares liability | (5,632) | (61,314) | | Other adjustments | 4,756 | (1,124) | | Adjusted EBITDA | $93,073 | $58,605 | Adjusted EBITDA Margin Calculation (Full Year, in thousands) | Description | 2023 | 2022 | | :--- | :--- | :--- | | Adjusted EBITDA | $93,073 | $58,605 | | Operating revenues, net | $155,162 | $101,163 | | Adjusted EBITDA margin | 60% | 58% |