Financial Data and Key Metrics Changes - Distributable earnings increased by 21% to $1.88 per share, with net investment income rising by 52% to $134 million, and the portfolio growing by 24% to $33.6 billion [5][16][17] - The reported pipeline increased to over $4 billion, up $1 billion from the last report, following $1.7 billion in closings during 2021 [5][12] Business Line Data and Key Metrics Changes - The balance sheet portfolio grew by 24% from $2.9 billion at year-end 2020 to $3.6 billion at the end of 2021, with a steady portfolio yield of 7.5% [17][18] - Gain-on-sale income from securitized assets was $80 million in 2021, reflecting a 21% annual increase [16] Market Data and Key Metrics Changes - The clean energy industry is adapting to rising interest rates and higher costs, with reports indicating a 5% increase in Power Purchase Agreement (PPA) prices in Q4 [9] - Supply chain delays have pushed transactions in the pipeline out by only 1 to 2 months on average, with minimal impact on the business [10] Company Strategy and Development Direction - The company is confident in its business model, increasing guidance for annual growth in distributable EPS to 10% to 13% through 2024, and extending dividend growth guidance to 5% to 8% annually [5][8] - The diversity of markets and asset classes provides assurance for continued growth, with a focus on sustainable infrastructure investments [13][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds but expressed confidence in the ability to absorb higher costs and maintain returns [9][10] - The company remains optimistic about potential climate provisions and tax credit extensions as tailwinds for growth [10] Other Important Information - The company declared a dividend of $0.375, representing a 7% increase over the previous quarter [5] - The company has extended its CarbonCount unsecured revolving credit facility from $400 million to $600 million, enhancing its liquidity position [19] Q&A Session Summary Question: Inquiry about new guidance and yield assumptions - Management indicated that yields are expected to remain in the mid-7% range, with a well-spread pipeline throughout the year [29][30] Question: Changes in competition and macroeconomic impacts - Management noted no significant changes in competition but emphasized strong programmatic relationships that help win deals [31][32] Question: Confidence in growth range amidst uncertainties - Management stated that various factors could influence the growth range, but specific policy items were not singled out as having a direct impact [36][37] Question: Asset class performance expectations - Management highlighted sustainable infrastructure investments as potential higher-yielding opportunities, though still in nascent markets [38] Question: Mix of gain on sale versus net investment income - Management expects both distributable net investment income and gain on sale to rise, with a consistent growth trajectory [42][43] Question: Update on programmatic opportunities with partners - Management expressed strong programmatic opportunities with various partners, emphasizing the mutual benefits of these relationships [59] Question: Energy efficiency opportunity and RFP activity - Management noted that while there has been some slowdown in energy efficiency projects, deals are still being completed [60] Question: Sustainable infrastructure asset class developments - Management pointed to state legislation and growing activity in sustainable farming and renewable natural gas as potential catalysts for growth in this asset class [64]
Hannon Armstrong Sustainable Infrastructure Capital(HASI) - 2021 Q4 - Earnings Call Transcript