Altus Power, Inc.

Good morning and welcome to the Altus Power fourth quarter and year-end 2022 conference call. As a reminder, today's call is being recorded and participants are in a listen-only mode. A 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 our investors and analysts. Speaking on today's call are Lars Norell, Co-Chief Executive Officer, and Dustin Weber, Chief Financial Officer. In addition, Co-Chief Executive Officer Greg Felton will be joining us for Q&A. This morning, we issued a press release and a presentation related to the matters to be discussed on this call. You can access both the presentation and the press release on our website, www.altuspower.com, in the investor section. This information is also available on the SEC's website. As a reminder, our comments on this call may contain forward-looking statements. These forward-looking statements refer to future events, including Altus Power's future operations and financial performance. When using this call, the words expect, will, plan, forecast, estimate, outlook, and similar expressions as they relate to Altus Power, as such, identify a forward-looking statement. These statements are subject to various risks and uncertainties and are based on assumptions that could cause actual results to differ materially from those predicted in the forward-looking statements. Altus Power assumes no obligation to update these statements in the future or if circumstances change. For more information, we encourage you to review the risks, uncertainties, and other factors discussed in our SEC filings that could impact these forward-looking statements, specifically our 10-K filed today with the SEC. During this call, we will also refer to adjusted EBITDA, adjusted EBITDA margin, which are non-GAAP financial measures. Our management team uses these non-GAAP financial measures to plan, monitor, and evaluate our financial performance, and we believe this information may be useful to our investors. These non-GAAP financial measures exclude certain items that should not be considered as a substitute for comparable GAAP financial measures. Altus Power's methods of computing these non-GAAP financial measures may differ from similar non-GAAP financial measures used by other companies. More detailed information about these measures and reconciliation from GAAP to these non-GAAP financial measures is contained in both the press release and the presentation we issued today. Finally, our speakers today will reference our 2022 fourth quarter and year-end slide deck during their prepared remarks. We are providing this information to assist you in understanding certain of the financial information we will be discussing today, and it should be viewed in conjunction with this call. And with that, I'm pleased to turn the call over to Lars Norell, Co-Chief Executive Officer of Altus Power.

Good morning, and welcome to all analysts and investors who have joined us today. This earnings call marks the end of our first full year as a public company, which launched our partnership with CBRE. where we combined unrivaled access to commercial real estate with industrial strength, clean electrification. While we're busy laying the foundation for future growth, our 2022 results importantly demonstrate our ability to execute. Please join me on slide three for details on our revenue, net income, and adjusted EBITDA growth. During 2022, Altus Power earned a record of over 101 million of operating revenue. predominantly from the sale of clean energy and clean energy attributes that we generated during the year, a 40.9% increase over full year 2021. Coupled with our efficient cost structure, we generated 58.6 million of adjusted EBITDA for the fiscal year 2022, an annual increase of 42.9%. These results evidence our focus on and ability to deliver one of our key missions, which is profitable growth. During 2022, we produced 456 million kilowatt hours of clean electricity, enough to offset almost 1,800 rail cars of coal burned or over 36 million gallons of gasoline consumed. Moving to slide four, Our focus remains on delivering benefits to our customers and continued profitable growth. Today, we're issuing guidance for 2023 adjusted EBITDA in the range of 97 to $103 million, which at the midpoint would equal more than 70% growth over 2022. And we expect adjusted EBITDA margins in the mid to high 50%. We're very energized with our accomplishments and focused on our goal of growing profitably. And to better assist analysts and investors with mapping out our expected adjusted EBITDA for 2023, we are providing an estimate for what we think of as the exit portfolio annualized rate for 2022, or exit PAR, which was $79 million. To us, this number signifies both the embedded annual adjusted EBITDA potential of our client contracts and asset base that has stood on the last day of 2022, and also helps us quantify the size of the task to deliver on 2023's growth target. Today, I will briefly touch on some of the year's achievements. I will also provide an update on our asset base and growth pipeline, highlighting the increasing velocity of our customer and partner engagement process, as well as the growth of our construction capacity. Next, I will provide a brief recap of what we think are the core strengths of our platform. which has been purposely built to withstand many of the challenges of the current market backdrop. I will then hand over to Dustin who will go through numbers in more detail after we look forward to taking your questions. Turning to slide five and highlighting a number of accomplishments that we believe evidence our teams and platforms ability to execute in environments that continue to offer a varied set of challenges. During 2022, we served customers across 22 states, and pro forma for our TrueGreen acquisition, which we announced in Q4 and closed in February this year, we're now serving customers across 24 states with clean energy made from large solar arrays that we own and operate. We've also grown our position as a dominant player in the community solar space, where we now serve approximately 20,000 customers with clean energy in five states. Evidencing further our ability to access capital at attractive rates, we grew our investment grade rated funding facility with Blackstone by $204 million. We also demonstrated our ability to access alternative forms of funding by executing on $126 million bank facility with KeyBank during 2022. in support of our acquisition of customers and assets from DE Shaw Renewables. Lastly, we executed on a revolving credit facility with a number of large cap banks, a very timely accomplishment given the recent banking crisis. And to reiterate, we don't have relationships with any of the tribal banks, including Silicon Valley Bank, Signature Bank, or First Republic Bank. We expect to make opportunistic use of this access to funding by continuing to source additional customers and assets and by continuing to allocate resources to our development and construction activities. Our growing construction activities will be the last bullet on this slide. Following our previously discussed growth in customer engagement, we have reached a milestone in the number of assets that we have in construction and pre-construction, which currently numbers over 50 projects, the highest in Altus Power's history. Turning now to slide six in our asset base and operation and pipeline of growth assets, Starting with operating growth, asset growth to the top left, while true green is not closed and therefore removed from this pie chart, we've seen a consistent flow of additional opportunities that we consider sufficiently attractive to warrant allocating resources to. To remind everyone on the call why we're so enamored of this part of our business, Altus Power's mission is to build, buy, own, and operate. assets that generate clean electricity, and deliver it into enterprises, homes, and vehicles under long-term contracts. Stepping into 20-year-plus contracts, even if they were originally created by partners of ours, is an effective and attractive way for us to fulfill this mission. Just like the customer engagements and assets we develop and build in-house, winning these assets also provide us the opportunity to grow customer relationships with additional solar, storage, and charging. Moving on to the top right of this page in our development and construction growth pipeline of more than 500 megawatts. We continue to experience a steady flow of new, larger customer engagements that come to us from our partners, predominantly from CBRE, and we remain convinced that programmatic engagement with our customers and partners is the key to scale within commercial solar. The bottom of this slide you will see our asset base in operation as of February 15th of this year, which will update each quarter. With the client and asset additions that we expect during the year from our two sources of growth, the team looks forward to delivering on the growth of revenue and adjusted EBITDA that we've set forth in our guidance. Turning to slide seven, I'd like to go into some detail of the significant progress we made in streamlining the origination process for new customers, as well as some widening in the scope of the services we're signing up. One time-consuming element of our client contracting process has always been agreement on a lease for the rooftop. Today, I'm pleased to share we recently completed work on a form of master lease with both Seabury IM and Trammell Crow Company, which standardizes both the lease terms and other relevant parts of the documentation for properties across all of Seabury IM's portfolio of owned real estate. Another step we've taken is to develop a programmatic playbook for the engagement and onboarding of other stakeholders, for example, tenants. While this took some time to put in place, it will serve to increase the velocity of our origination efforts and make tenant education and onboarding easier for both Altus Power and our real estate owning partners, like CBRE and Blackstone. We believe this will be a significant advantage for our go-to-market strategy, and it's an example of how we've evolved from a platform that was more focused on individual buildings to a company that is now growing programmatic relationships involving portfolios of 25 to 50 megawatts at a time. Another highlight from our work with large property owners is their readiness to introduce storage and charging for fleets and personal vehicles. along with building-based solar for the engagements we're working on. This is an outcome we think of as triple play, and it's a creative both to Altus and to our partners. Turning now to slide eight for an update on our construction capacity, which is front and center for Altus Power, and together with a Seabury product management horsepower, a key differentiator for our platform. We previously communicated additions to our construction platform in terms of staff and resources, And we have continued to hire to bring the platform to the optimal level in order to construct and supervise the construction of the asset flow coming out of our engagement and contracting processes in our development pipeline, as well as to due diligence and onboard of assets coming out of our operating growth pipeline. In addition, The previously announced augmentation of our construction platform with CBRE project management is beginning to be put into practice and show results on actual engagements. Our deliberate additions of resources, as well as partnership with CBRE's construction platform, enable us to be in construction or pre-construction on over 50 projects right now, which is not only a major improvement over this time last year, but also a company record. I want to conclude on slide nine with some highlights before handing the call over to Dustin. We view 2022 as a successful year and feel confident of our position at the start of 2023 for a number of reasons. One, our business generates cash, which we plan to reinvest into more clients and assets. Two, we have proven our ability to execute on large operating acquisitions and to expand our customer base significantly. Three, we have demonstrated our ability to fund our business with multiple high-quality counterparties in challenging markets. Four, we are increasing our construction capacity to accommodate the significant flow of opportunities, in particular from CBRE and its clients. And finally, five, Our assets in operation and asset growth, together with a disciplined approach to SG&A expenses, produce results in the form of growing adjusted EBITDA, which we think is the most important measurement of our performance. Thank you for your time today, and I'll now hand the call over to Dustin.