Altus Power, Inc.

Good afternoon and welcome to the Altus Power second quarter 2024 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 Alison Stenberg, Head of Investor Relations.

Good afternoon and welcome to our second quarter 2024 earnings call. Speaking on today's call are Greg Felton, Chief Executive Officer, and Dustin Weber, Chief Financial Officer. This afternoon, 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, anticipate, believe, will, plan, forecast, estimate, outlook, and similar expressions as they relate to Altus Power identify a forward-looking statement. These statements are subject to various risks and uncertainties which 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, except as required by law. 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 14th, 2024. During this call, we also refer to adjusted EBITDA, adjusted EBITDA margin, and ARR, or annual recurring revenue, which are non-GAAP financial measures. ARR is an estimate that management uses to determine the expected annual revenue potential of our operating asset base at given points in time. ARR assumes customary weather, production, expenses, and other economic and market conditions as well as seasonality. Our management team uses all of 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 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. More detailed information about these measures and a reconciliation from GAAP to these non-GAAP financial measures is contained in both the press release and the presentation that we issued today. And with that, I'm pleased to turn the call over to Greg Felton, Chief Executive Officer of Altus Power.

Thanks, Alison. and welcome to all our investors and analysts joining our call today. This afternoon, we are excited to share some insights into our overall business, the findings from our pipeline review, and the competitive modes that we believe will support our growth ambitions going forward, as well as our results for the most recent quarter. Since our last earnings call, in the context of my newly expanded role, I have taken the time to fully review our business and operations to identify areas of strength, as well as areas where we have the opportunity to improve and drive efficiencies that support our growth plans. This review has resulted in several demonstrable changes. One key area of focus has been the reprioritization of our resources with a particular focus on our technology and analytical teams. More specifically, we are prioritizing activities designed to improve revenues and operating efficiency while deprioritizing certain non-core activities. One priority that is high on our list is our ability to synthesize and efficiently analyze the robust data set that we collect on our projects and customers. We collect an enormous amount of data, and we are focused on ensuring that our field technicians armed with the information that they need to optimize the revenues generated from our portfolio of solar projects. We are also focused on ensuring that we have the necessary customer data to support our growing portfolio of community solar projects. Before turning to the performance in the quarter, I'd like to discuss the results of our pipeline review and provide some background as to where and how we source our projects. our philosophy around underwriting standards, and the cadence of deal flow in our business. You will recall that back in May, I announced my plan to put our development pipeline under review with a focus on execution certainty and increasing the velocity at which these opportunities convert into revenue generating assets. Before elaborating on our findings, I want to provide some important context. Altus Power benefits from a diversity of origination channels. The agility of our platform allows us to onboard projects at any milestone in the project journey, from early stage engagements with clients to fully developed but yet to be constructed projects, all the way to acquisitions of fully operating projects. We believe that this flexibility is one of our significant competitive advantages and has been an important driver of our market share gains to date. As we've often cited, we like all commercial scale megawatts, but they do come in different shapes and sizes. And our investment discipline requires that each new site be financially accretive to our shareholders. Importantly, our rigor around the application of the same underwriting principles to any opportunity positions us to generate attractive returns irrespective of the source and stage of the project. This differentiated approach has allowed us to increase our revenues and adjusted EBITDA fourfold over the past five years and build a nationwide portfolio that is the largest in the segment, sitting at almost one gigawatt in size. More notable is that we have achieved this level of scale even as the proportion of incremental megawatts added to the portfolio from early stage development has been relatively immaterial. Accordingly, we see the optimization of that channel as incremental upside to our long-term plan. With that, let's turn to the pipeline review. Over the past few months, we have enacted a three-pronged approach to analyzing our go-to-market strategy on early stage engagements. First, We've spent a significant amount of time with the CBRE team digging into our current methodology and evaluating aspects of our strategy that we have seen successfully applied on the channel partner and acquisition side of our business. Secondly, we have enlisted feedback from a variety of other channel partners and real estate owners to cultivate a comprehensive picture of how best to drive speed around decision making. And finally, we evaluated the timeline across each development deal currently in the pipeline to assess the factors that impact the timing of the project journey. This analysis produced certain findings that will shape our go-to-market strategy moving forward. Specifically, despite some progress, there remains a strong need for education. We must continue to amplify the merits of commercial solar broadly to ensure that landlords, tenants, and the general business community understand the value proposition, and importantly, Altus Power's unique ability to deliver a truly customized end-to-end solution. Given the localized nature of our projects, the top-down strategy that we implemented through our CBRE partnership to negotiate at an enterprise level was not the most efficient and effective path to client engagement. This approach created a significantly longer sell-in period for the landlord and tenant with a good deal of bureaucracy. Site-specific projects were not often considered a top priority, as they may not be needle-moving across a large enterprise. Solar sites are instead more typically a component of the enterprise customer's overall strategy. Going forward, as CBRE builds its sustainability solution program for its clients, We expect Altus Power will be positioned as a key partner for clients that are looking to expand their use of renewables in locations where Altus has a strong presence. In partnership with Altus board member and CBRE chief sustainability officer Rob Bernard, we will refine our focus to target the intersection of CBRE's clients with Altus' strength in several U.S. markets. Beyond repositioning our engagement with large enterprises, Altus will pursue a more targeted market specific approach to our broader client engagement, which has been our core operational philosophy since inception. This approach allows for a direct pipeline to the ultimate decision maker at the local level. This also aligns with our historical strategy of focusing on markets that offer attractive economics for landlords and tenants, as well as healthy project returns that meet our rigorous thresholds. In order to support these efforts, I'm pleased to announce that Brett Phillips, who joined us following our acquisition of Unico Solar, will lead our client engagement efforts associated with early stage development. As we highlighted when we announced our acquisition last year, a key feature of the Unico acquisition was the deep experience that the Unico team brings with overcoming barriers to customer adoption and deepening customer relationships. So where does this leave us and what's next? We believe we have a clear roadmap, an engaged and growing list of channel partners, as well as efficient financing to scale our business. With a renewed focus on aligning our resources with the most successful parts of our track record, We are energized about our plan moving forward, which we believe positions us to expand our footprint, continue to deliver clean power to our customers through long-term contracts, and identify ways to grow those relationships over time. It's also worth emphasizing that we have a robust and growing in-place portfolio of operating assets that are generating revenue every day nationwide. One important feature of our ownership position that we believe is not well understood is the captive opportunity that we possess to redevelop and further optimize all of our assets over time. More specifically, our portfolio should be thought of as a collection of long-term infrastructure assets, each of which is strategically located and therefore conducive to ongoing investment. One example worth highlighting is our recent acquisition of an eight and a half megawatt solar array in Hamilton, New Jersey. We purchased this 11-year-old project along with the land on which it's situated with the specific intention of repositioning the site over the next several years, as we believe there's additional value that Altus can extract to enhance long-term shareholder value. Now imagine similar opportunities across our portfolio of nearly 500 operating assets. This is the power of incumbency in this category. Before turning the call over to Dustin to walk through quarterly financial performance, I'd like to end by offering some perspective on how we're thinking about shareholder value in the current environment. As a management team, we remain focused on making savvy, long-term investment decisions with the attention to risk management consistent with being a financial steward of our investors' capital. This necessarily means that we will not make hasty decisions more likely to ensure short-term volume targets are achieved. Given our long-term orientation, the pace of our asset growth has proven to be somewhat lumpy over short-term periods. While we remain confident in our three-year guidance communicated on our investor day, we anticipate that the cadence of our activity will have an impact on the remainder of 2024, which Dustin will expand upon. With that, let me now turn the call over to our CFO, Dustin Weber, for additional financial highlights.