Altus Power, Inc.

Good morning and welcome to the Altus Power fourth quarter 2021 conference call. As a reminder, today's call is being recorded and participants are in a listen-only mode. The question and answer session will follow the formal presentation. At this time, for opening remarks and introductions, I would like to turn the call over to Chris Shelton, Head of Investor Relations.

Good morning and welcome to Altus Power's fourth quarter 2021 earnings call. Before we start, I'd first like to express my excitement to be seated in my new role here at Altus, facing the analyst and investor community. I look forward to working with each and every one of you in the near future. Speaking on today's call are Lars Norell, Founder and Co-Chief Executive Officer of Altus Power, and Dustin Weber, Chief Financial Officer. In addition, Founder and Co-Chief Executive Officer Greg Felton will be joining us for Q&A. Last night, we issued results in a press release that can be found on our website, www.altispower.com, in the Investor section. As a reminder, our comments on this call may contain forward-looking statements. These statements are subject to various risks and uncertainties and may include expectations and assumptions for the company's future operations and financial performance. Actual results could differ materially from those predicted in the forward-looking statements. All this power assumes no obligation to update these statements in the future or if circumstances change. For more information, please refer to the risks, uncertainties, and other factors discussed in our SEC filings. Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in last night's press release can be found in the company's Form 10-K, filed last night with the SEC and other documents filed by the company from time to time. During this call, we will also refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. More detailed information about these measures and a reconciliation from GAAP net income to adjusted EBITDA is contained in the press release issued yesterday, which is available in the investor section of our website and was furnished on Form 8K with the SEC. And with that, I'm pleased to turn the call over to Lars Norell, Co-Chief Executive Officer of Altus Power, Lars.

Thanks, Chris. We're very excited to speak with all of you for our first earnings call. Today, we're going to begin the process of communicating the uniqueness of our culture and how it makes us a leader in this market, the advantage that our strategic partners bring to us, and a significant market opportunity that lies ahead. I'd like to start by acknowledging our amazing team here at Altus. Greg, Tony, and I have been building this company together for over a decade, and we have created a business with skilled and accomplished senior leaders and an incredible and highly motivated team that we believe is the most effective group of individuals in our industry. The culture and DNA of Altus is to be in the office, be present, and be working together, creating value as a collaborative team, whether on our desk in Stanford, Connecticut, or at our construction sites across the country. from Honolulu, Hawaii in the west to Frederick, Maryland in the east. Every day, we are also operating our solar and storage assets, serving clients with solar power and energy storage in 18 states across the country. Altus Power today is a product of the hard work, ability to overcome obstacles, and the sheer talent of every single person on our team. We're also delighted to have recently welcomed a number of key personnel who will help drive our progress into the future as a public company. I want to thank every one of our team members for their part in building Altus into the industry leader and their help in delivering value to our clients and stakeholders. The state of our company is strong. One of the themes that you will hear us repeat is our firm belief that we have created the most efficient platform in this space. Evidence by the fact that we've been cash flow generative EBITDA positive since 2017. We are pleased to report that our results in 2021 continued to build on that track record. With adjusted 2021 EBITDA of $41 million and an EBITDA margin of 57%, we delivered results above our earlier expectations. which are for $38 million of adjusted EBITDA in a margin of 51%, which Dustin Weber, our CFO who's with me here, will cover in more detail in a moment. Staying with the description of our platform, let me provide some insights into what we do every day. Firstly, on the origination and deal structuring desk where the team is present and working together, we seek out, respond to, and engage with large enterprises. for the purpose of executing long-term contracts, often 20 years or longer. These contracts allow ALTAs to place large solar arrays on rooftops and in parking lots and also provide battery storage systems next to buildings, with ALTAs owning and operating those assets for the duration of the contract. Second, once the contract is executed, the process moves over to the design and engineering desk. that designs the solar arrays and battery storage systems, works on securing interconnection approvals from utilities across the country, and building permits from local building departments. The skilled professionals that design and engineer these systems are Altus employees on our desk and present in our office. Third, working immediately next to the design and engineering team is our construction team. which oversees the placement and fulfillment of purchase orders for components and materials, the hiring and supervision of prime and subcontractors for roof mounted solar, parking canopy solar, ground mount solar, battery storage systems, and electric vehicle chargers. Fourth and finally, once the construction team has completed the process of moving an asset into commercial operation, our customer team and our energy optimization team located in our office and across the country where our assets are take over. These teams ensure the continuous and optimal system operation and accurate delivery of solar energy and energy storage benefits and the correct billing for both of those. In summary, everyone on the Altus team has an important role to play and everyone at this company is key to the outcomes that we drive for our clients. While we are very pleased with the pace and growth of our activities in the first segment mentioned, namely client engagement and origination of client contracts, and while our servicing and energy optimization and delivery of solar power and energy storage benefits have been largely unaffected by the current headwinds, COVID lockdowns, Omicron related out of office policies, supply chain delays and component shortages that have become worse than we had previously foreseen, have slowed down our utility interconnection processes, hampered our local building department interaction, and pushed out the timing of our actual construction schedules. In our 12-year operating history at Altus, we have not seen this combination of challenges to our pre-construction and construction schedules before. And while we suspect that they will eventually ease, we, like other market participants, are frustrated. that it's taken longer than normal to begin delivering solar power, energy savings, and energy storage benefits to our customers. At the same time, the customer demand has never been stronger. The last few months of increasing utility rates, harder to predict future utility price increases, a quest among customers for resiliency and energy security, and underlying all of this, the steadfast commitment among large enterprises for decarbonization, all serve to drive increased customer demand in a growing market for the industrial strength solution and end-to-end delivery of decarbonization, clean power, and savings that Altus represents. We continue to believe that the commercial and industrial sector, or the CNI market for short, represents the most attractive sector within the broad secular shift towards clean electrification. With a very sizable total addressable market, or TAM, A significant part of that TAM are the massive real estate portfolios owned by, being developed by, and being managed by our partners at Blackstone and CBRE. In the case of Blackstone, their public commitment to decarbonization and desire to have their investing activities create public benefits, and importantly, their partnership with Altus to deliver on those goals, translate into a very direct and attractive flow of opportunities for Altus. Evidencing that flow, together with Blackstone, we announced in November the 35 megawatt plus win in New Jersey's community solar program. And customer contracts and solar plus storage assets in Maryland, in California, in buildings, and potential customer contracts in other states, also sourced from Blackstone, are part of our pipeline. This type of sustained flow of opportunities is one of the things that we love about the business model that we have at Altus. It comes from a partner who moves with speed. It comes at scale and with efficiency. And importantly, it constitutes a program instead of just a singular project. Our other strategic partner is newer to Altus, but as the largest real estate services company in the world, CBRE has already proven itself to be more impactful and in less time than we could have imagined. CBRE represents several things to Altus, and we imagine the relationship will further expand over time, But for right now, three important aspects stand out to us. First, the efficient and low-cost flow of customers for solar plus storage. As an early example of that flow, Altus is happy to announce this morning that we have contracted with CBRE Investment Management for up to 20 megawatts of community solar in an initial phase in the state of Maryland. CBRE Investment Management, on behalf of its tenants and investors, is committed to decarbonizing its real estate portfolio and also providing underserved communities with clean power in states where that is possible. Maryland is a good example where we are providing that opportunity in a win-win-win manner, which benefits CBRE's investors, the broader community, and Altus and its stakeholders. In another significant program that we are announcing this morning, Trammell Crow Company, the nation's largest developer, is partnering with Altus to add 300 megawatts of solar to the industrial and commercial portfolio it has in development and construction for scheduled completion in the next few years. This is a major announcement by the country's largest developer to add clean electrification to their assets. They're leading by example by turning their commitment to decarbonize into action for the benefit of their investors, tenants, and other stakeholders. And they've chosen to partner with Altus to make that happen. The second area where we have early engagement with our strategic partner relates to CBRE's construction capabilities. We'll come back to this topic over time, but our goal for the partnership with CBRE is clear. We are creating the first nationwide clean electrification construction platform with end-to-end services and coverage and with a footprint that we think will be very difficult for anyone else in our market to replicate. And the process to create this platform is well underway. Third, And something we will also provide more details on going forward is our collaboration with CBRE that will combine their power consumption data and our solar power and weather data. We are translating these data streams into a carbon scorecard for real estate that will serve building owners with carbon reporting and function as a business-to-business origination engine. We're also building a business-to-consumer digital platform, an app basically, which will provide an improved experience for our community solar customers with respect to onboarding, bill paying, and additional electrification services. These efforts have begun and they reflect the strength and potential of our partnership and our intent to build sustainable, competitive advantages that will be unique to Altus, our customers, and our stakeholders. Looking out over the next several quarters, our plan is to focus our team's efforts on allocating time and attention to our two distinct sources of growth. The flow of our new customer engagement and contracting that comes from our channel partners and from our partners at Blackstone and CBRE. And second, the growth that our customer team has begun the efforts to build from deepening and extending the relationships we already have with our existing long-term customers. We will do this while we also acknowledge and seek to mitigate the near-term delays in pre-construction and construction of our customer-cited assets that we had previously expected to enter commercial operation during this calendar year. That mitigation will take many forms, one of which is to create strategic partnerships with equipment vendors to secure preferred allocation of scarce components, and others to make use, when possible, of the CBRE fusion program, of which we are now a part. that seeks to alleviate global supply chain issues by grouping orders from participants to create greater volume and thus preferred treatment from equipment makers. Another important part of our platform, which has served us and our stakeholders well, is the discipline with which we underwrite and analyze operational assets that are available for sale to Altus and which make up a part of our pipelines. During the last calendar year, we expected to acquire a portfolio of operating assets that would have added to EBITDA immediately. Ultimately, we opted not to consummate this particular transaction, given the valuation sought by the seller. Moving finally to the topic of our outlook for 2022, based on the conversation we've had so far today, and given the current market conditions, we are initiating guidance for this year's EBITDA in the range of $57 to $63 million, targeting close to 50% growth over last year's numbers at the midpoint. We further expect to sustain EBITDA margins in the mid-50% going forward. While this guidance is lower than our previous estimates, it is not indicative of a change to our overall growth prospects because it reflects an extension of our pre-construction and construction timelines and revised portfolio acquisition expectations which are inherently lumpier. Our strength in customer engagement means our growth pipeline has increased to over 1,000 megawatts from over 900 megawatts in our last update. This updated number now excludes client engagements and assets that we've either turned into operation and added to our portfolio or that we have stopped pursuing. But it includes some of the early engagements with CBRE since the closing of our merger in December. In summary, and before handing it over to Dustin, I hope my description of what our team does every day will serve to guide you on how our platform operates, how our sector is benefiting from a number of tailwinds, and how the strengths and motivations of our partners at Seabury and Blackstone add to our story, and how the relentless focus on cash flow generation and profitable growth is a source of pride to us at Altus Power. With that, I'll hand the call over to our CFO, Dustin Weber, who will discuss our 2021 results further. Dustin?