Altus Power, Inc.

Good morning and welcome to Altus Power first quarter 2023 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.

Please proceed. Good morning and welcome to our first quarter 2023 earnings call. Speaking on today's call are Greg Felton, Co-Chief Executive Officer, and Dustin Weber, Chief Financial Officer. In addition, Co-Chief Executive Officer Lars Norell will be joining us for Q&A. This morning, we issued a press release and a presentation related to matters to be discussed on this call. You can access both the press release and the presentation 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 used on 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 certain 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 with the SEC on March 30th, 2023, and our 10-Q filed with the SEC today. During this call, we will also refer to adjusted EBITDA, adjusted EBITDA margin, and exit PAR, which are non-GAAP financial measures. Our management uses these non-GAAP financial measures to plan, monitor, and evaluate financial performance, and we believe this information may be useful to our investors. These non-GAAP financial measures exclude certain items and 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. For more detailed information about these measures on a reconciliation from GAAP to these non-GAAP financial measures is contained in both the press release and the presentation that we issued today. Finally, our speakers today will reference our first quarter slide deck during prepared remarks. We are providing this information to assist you in understanding certain of the financial information we will be discussing today. And with that, I'm pleased to turn the call over to Greg Felton, Co-Chief Executive Officer of Altus Power.

Thanks, Chris, and welcome all our investors and analysts to our call. It's been just six weeks since we last spoke with you on our year-end call. But we have entered this spring season with plenty of activity to report. Let me start on slide three as I summarize first quarter earnings and our annual guidance. Today, for the first quarter, we're reporting $29.4 million of operating revenues, a 53% increase compared to first quarter of 2022. as well as adjusted EBITDA of $16 million, an 83% increase compared to first quarter of last year. These results position us to reiterate our 2023 adjusted EBITDA guidance range of 97 to 103 million and EBITDA margin in the mid to high 50% range. With that introduction, I want to use this time to provide investors with a portfolio update including insights into how we're progressing our portfolio, starting with slide four, which shows our portfolio as of March 31st. This quarter, you'll see our portfolio now totals 678 megawatts and includes the 205 megawatts from the acquisition we closed in February. One attractive feature of this transaction was an increased exposure to New York, which has now become our largest market in terms of installed megawatts. New York's clean energy program was designed to facilitate significant growth in distributed generation, including one of the largest community solar programs in the U.S. We are looking forward to growing our presence in New York and reiterate our view that community solar is an attractive and growing segment of the addressable market for commercial scale projects. You can see on this slide that Altus now owns and operates over 160 megawatts of community solar projects serving approximately 20,000 customers across the country. One final highlight, you'll notice an increase in the percentage of variable rate contracts compared to last quarter, which aligns with our internal view that utility rate inflation will persist, providing a growing stream of revenues from assets currently in our portfolio. As I move to slide five, I want to acknowledge we are engaging with sophisticated owners of large real estate portfolios, which translates to sales cycles that are both longer and more complex than we originally anticipated. While the timeline has been elongated, we are making progress. Today, we announced a new relationship with Iron Mountain, which illustrates our connectivity with both owners of large real estate portfolios as well as new customers for our clean power. Iron Mountain has agreed to a 2.6 megawatt solar and storage installation on the roof of their record storage center in Northborough, Massachusetts. For this project, Iron Mountain is expected to subscribe to 50% of the power, with the remaining serving local residents in the surrounding Northborough community. The expansion of this project to accommodate community solar is becoming a common theme across many of our discussions with other large owners of real estate as well. It allows us to build larger arrays that fully utilize building rooftops while also providing a larger lease payment to the building owners. We're currently in discussion with Iron Mountain beyond this distribution facility, including buildings in California, Illinois, and New York. This Iron Mountain relationship is an example of a programmatic customer which has been facilitated by CBRE. and that is now permeating the earlier stages of our development pipeline. This initial project also includes battery storage, which we think will ultimately facilitate fleet charging, where electric trucks can recharge as they unload and reload their cargoes. These additional services have become part of our conversations with other customers across our pipeline. Now let me move to our construction activity on slide six. This quarter, we're introducing increased visibility on the timing of our project completions. We've detailed a variety of challenges we've faced to this point, including delays on permitting and interconnection agreements and the availability of switchgear, but we're now seeing significant progress on several of our projects currently under construction. Over the past few weeks, we've announced the completion of eight megawatts of projects in Maryland, Rhode Island, and Maine, and we expect to complete an additional 67 megawatts by the end of this year, totaling 75 megawatts over the next three quarters. We continue to lay the foundation for an increased construction cadence as we head into next year. We're also providing additional granularity with a breakdown of 40 megawatts of projects in New Jersey, many of which are being sited on rooftops of warehouses owned by Blackstone, along with others originated by our channel partners. The New Jersey program had some prolonged permitting delays, but we're pleased that many of these sites are in active construction. Additionally, we have another 27 megawatts of projects across Maryland, New York, and Hawaii, also originated in partnership with CBRE and our channel partners, which we look forward to completing this year. These previous two slides have been a good prelude to our pipeline on slide seven. Our development pipeline on the right reflects the progress I just highlighted on both construction and contracting. And we look forward to delivering 75 megawatts out of this bucket this year. We're also equally focused on reloading the construction bucket with new customer contracts. Having negotiated master form leases with Seabury Investment Management, Trammell Crow, and now Iron Mountain, we expect to shorten the prospective sales cycle for these customers and increase velocity into pre-construction activities. Our playbook remains to prioritize customers with large real estate portfolios who are motivated to standardize contracting on the front end in order to accelerate execution and delivery timelines. We look forward to demonstrating additional progress. Moving now to our acquisition pipeline on the left, we continue to see an attractive flow of opportunities made up of portfolios of contracted assets. Acquisition opportunities continue to flow steadily in part as a consequence of tightening financial conditions where certain market participants have been forced to divest more quickly than they had intended. We believe that this environment plays to our strengths as we enjoy a relative advantage on cost of capital and we are importantly generating cash which is available to be deployed into new opportunities. We expect these opportunities to provide attractive, contracted returns, along with the opportunity to expand these customer relationships over time. Our focus remains on bilateral negotiations rather than competitive processes, which tend to have a lower probability of success. We've demonstrated success on acquisitions over the past few years, and given the current environment, we would be disappointed not to execute on a portion of this pipeline over the course of 2023. We remain very much aligned with our stockholders in terms of minimizing dilution and increasing shareholder value. We have capacity to execute on transactions with internal cash flow generation, cash on our balance sheet, or other sources which aren't linked to our common equity. With that, let me now turn the call over to our CFO, Dustin Weber, for additional financial highlights.