Financial Data and Key Metrics Changes - The company reported distributable earnings of $0.52 per share, a 21% increase year-over-year [8] - Net investment income grew by 41% year-over-year, reaching over $42 million [20] - The gain on sale revenue was approximately $22 million, representing an 8% increase year-over-year [21] Business Line Data and Key Metrics Changes - The portfolio balance grew to $3.7 billion, a 28% increase from $2.9 billion year-over-year [23] - The weighted average life of the portfolio is 18 years, with no asset class comprising more than 30% of the portfolio [23] - The forward-looking portfolio yield at quarter end was 7.3%, down from 7.5% at year-end [24] Market Data and Key Metrics Changes - The clean energy industry is adapting to inflation by raising Power Purchase Agreement (PPA) prices [11] - Higher commodity prices and retail rates are benefiting the portfolio, particularly for behind-the-meter generation [13] - The anti-circumvention investigation by the Department of Commerce is disrupting the solar supply chain, primarily affecting grid-connected solar projects [14] Company Strategy and Development Direction - The company reaffirms guidance for annual growth in distributable EPS of 10% to 13% through 2024 [9] - The focus remains on a diverse set of clients, technologies, and assets to mitigate macroeconomic challenges [9] - The company is looking favorably on common equity investments due to elevated natural gas prices [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that inflation has minimal impact on the portfolio due to fixed-price O&M contracts [12] - The war in Ukraine highlights the importance of energy security, reinforcing the investment strategy in clean energy [17] - Management expects a manageable softness in the solar pipeline in the next six to nine months due to supply chain disruptions [15] Other Important Information - The company successfully offered $200 million of carbon count exchangeable notes with a 0% coupon [26] - Total available sources of liquidity increased to over $930 million, with no material debt maturities until 2025 [27] - The company continues to manage interest rate risk effectively, with 96% of debt being fixed rate [28] Q&A Session Summary Question: Yield decline and PPA rates - The yield decline was due to congestion in the Southwest Power Pool affecting IRRs on certain investments, not new assets [42] Question: Common equity investments - The company is considering common equity investments due to favorable gas prices but will only take risks where returns justify it [43][45] Question: Transactions and pipeline movements - There were no significant shifts in the pipeline, and the held-for-sale assets indicate timing for securitization rather than a trend [53] Question: Electricity prices and PPAs - Higher electricity prices are leading to increased interest in energy efficiency and modifications in contracts [60] Question: Competition and funding needs - Competition remains stable, with new entrants focusing on sponsor-level investments rather than asset-level [82] - The company plans to utilize diverse funding sources, including term debt and securitization, to support its pipeline [83]
Hannon Armstrong Sustainable Infrastructure Capital(HASI) - 2022 Q1 - Earnings Call Transcript