Altus Power(US:AMPS)2022-11-14 17:57Financial Data and Key Metrics Changes - The third quarter of 2022 was the most profitable in the company's history, with record revenues of $30.4 million, a 51% increase over Q3 2021 [27] - Adjusted EBITDA reached $19.4 million, a 57% increase year-over-year, resulting in an adjusted EBITDA margin of 64% [27][28] - For the first nine months of 2022, revenues were $74.4 million, up 48% from $50.2 million in the same period of 2021, while adjusted EBITDA increased by 49% to $42.1 million [28][31] Business Line Data and Key Metrics Changes - The company reported strong performance in its commercial scale segment, benefiting from long-term contracted revenues and a majority of contracts structured to escalate over time [14][21] - The recent acquisition of approximately 97 megawatts of solar assets and an additional 88 megawatts from D.E. Shaw renewable investments are expected to contribute positively to long-term recurring revenue and cash flow [19][20] Market Data and Key Metrics Changes - The company operates in 22 states, with a diverse portfolio that allows it to benefit from rising power prices through variable rate contracts [27][46] - The company has seen a significant increase in power prices, which has positively impacted its revenue per megawatt hour generated, up about 25% [45] Company Strategy and Development Direction - The company focuses on the commercial scale segment of the solar market, which has more attractive unit economics and long-term contracted revenues [14] - The strategic partnership with Blackstone enhances the company's access to capital and supports its growth through securitization [16][17] - The company aims to achieve a throughput of 200 to 250 megawatts of new construction assets per year, working to reduce obstacles in permitting and component availability [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to thrive despite industry challenges, including supply chain issues and tightening financial conditions [11][12] - The company anticipates significant increases in recurring cash flow due to asset growth, which will support platform growth while maintaining attractive profit margins [15][18] Other Important Information - The company recorded a GAAP net loss of $97 million in Q3, primarily due to a non-cash loss related to the mark-to-market of redeemable warrants [29] - The company is focused on minimizing shareholder dilution and has redeemed public and private warrants to achieve this goal [31][32] Q&A Session Summary Question: Progress on assets in pre-construction and construction phases - Management indicated that some assets are expected to come online in late 2022 and early 2023, with ongoing efforts to overcome challenges related to permitting and component availability [34][35] Question: Timing of acquisitions and market environment - The company expects to close several transactions within months, maintaining a strong position in the market despite rising interest rates [37][39] Question: Accessibility of financing for new assets and acquisitions - Management highlighted diverse funding sources, including a new revolving credit facility, which provides flexibility in financing decisions [40][42] Question: Year-over-year rate among variable rate contracts - The company experienced increases in power prices, which, along with seasonality, were key drivers for Q3 margins [45][46] Question: Impact of IRA on pipeline and tax credits - Management noted that clients are currently more influenced by rising power prices than the IRA, but they are well-positioned to take advantage of potential tax credit adders in 2023 [58][62] Question: Update on CBRE relationship and storage integration - The partnership with CBRE is progressing well, with plans to integrate storage into solar projects where beneficial, particularly in markets with favorable rate structures [67][72]