HA Sustainable Infrastructure Capital, Inc.

Good afternoon and welcome to Hannon Armstrong's conference call on its third quarter 2021 financial results. Leadership will be utilizing a slide presentation for this call, which is now available for download on the company's investor relations page at investors.hannonarmstrong.com. Today's call is being recorded and we have allocated 30 minutes for prepared remarks and Q&A. All participants will be in a listen-only mode. If you need operator assistance, please press star zero on your telephone keypad. At this time, I would like to turn the conference call over to Chad Reed, Vice President, Investor Relations, and ESG for the company. Thank you. You may proceed, Mr. Reed.

Thank you, operator. Good afternoon, everyone, and welcome. Earlier this afternoon, Hannon Armstrong distributed a press release detailing our third quarter 2021 results, a copy of which is available on our website. This conference hall is being webcast live on the Investor Relations page of our website, where a replay will be available later today. Before the call begins, I would like to remind you that some of the comments made in the course of this call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The company claims the protections of the safe harbor for forward-looking statements contained in such sections. The forward-looking statements made in this call are subject to the risks and uncertainties described in the risk factors section of the company's Form 10-K and other filings with the SEC. Action results may differ materially from those described during the call. In addition, all forward-looking statements are made as of today, and the company does not undertake any responsibility to update any forward-looking statements based on new circumstances or revised expectations. During this call, we will primarily discuss non-GAAP financial measures, which we believe help investors gain a meaningful understanding of our core financial results and guidance. A presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is available in our posted earnings release and slide presentation. Joining me on today's call are Jeff Echol, the company's chairman and CEO, and Jeff Lifson, our CFO and COO. With that, I'd like to turn the call over to Jeff, who will begin on slide three. Jeff?

Thanks, Chad, and good afternoon, everyone. Today we're reporting strong results for the third quarter with distributable earnings of 41 cents per share, a 14 percent increase year-over-year, and distributable net investment income of 32 million, a 79 percent increase year-over-year. Continuation of our programmatic investment relationship with Sunrun, which I will discuss in the subsequent slide. Forty-five percent growth of our portfolio year-over-year to 3.2 billion, and 28% growth in our managed assets to $8.2 billion, and declaration of a $0.35 per share dividend. And starting this quarter, we will highlight the carbon count of one transaction in order to generate a more understanding of this important metric. As a reminder, carbon count measures the efficiency with which capital is used to reduce carbon emissions, something the financial industry needs to pay attention to but does not currently. As a reference point, the average investment this quarter has a carbon count of 0.3 metric tons of greenhouse gas reduced for $1,000 of investment. Our featured transaction has a carbon count of 2.7, nine times more efficient than the average. This is a behind-the-meter energy-as-a-service investment in digital controls for HVAC at a top retailer. This is part of a larger programmatic client relationship an example of the power of digitization in the electric sector to save customers money and reduce carbon. While every investment we make improves our climate future, not every investment is equally efficient at doing so, and we believe this level of rigor is where the market needs to go. A few words on the legislative efforts in Washington. Both the proposed infrastructure and reconciliation bills are positive for our business. The biggest positives are the extension of tax credits for renewables and expansion of the tax credits to storage and EV charging. However, the more important aspect of the tax credit would be their conversion to direct pay, which potentially expands our ability to participate in more slices of the capital stack. We hope to have more to say in Q4 when the legislation is presumably finalized. Finally, and fortunately, our business success does not depend on either bill passing. Turning to slide four, we provide an update on our more than $3 billion 12-month pipeline and provide a bit more color on our client base. I will go through a few examples of the more than 30 programmatic clients who drive our pipeline in the behind-the-meter, grid-connected, and sustainable infrastructure markets. And we are adding clients each year as the climate solutions market grows. The behind-the-meter market continues to be the majority of the pipeline and has the largest number of clients, more than 20. These clients range from Amoresco, for whom we have financed close to a billion dollars of assets in over 35 projects since 2001, to residential solar firms SunPower and Sunrun, all the way to Summit Ridge, a community solar company for whom we've closed over $250 million of transactions since 2019. A note on the solar portion of the behind-the-meter pipeline. It remains relatively strong despite well-recognized supply chain issues. Because behind-the-meter projects offset the retail price of electricity and not the wholesale price, they can better manage the higher costs the industry has faced. Turning to the grid-connected pipeline, we have more than 15 clients in the wind and solar markets, including Engie and Clearway. And the pipeline remains at about the same level as last quarter. We are seeing some projects experience delays due to panel availability and the need to rework projects due to cost increases. Fortunately, we have not seen cancellations in our pipeline, but some transactions have indeed moved out in time. The transactions impacted the most are those with fixed PPA prices, but with costs which are not yet locked down, and also those involving smaller developers. Over time, we believe increases in PPA prices that we are seeing will restore balance to the market. The sustainable infrastructure market is the newest market for us and, as a result, has the fewest clients and smallest pipeline. But we continue to see great upside in this market with transaction volume, transaction size, and eventually growth in the client base. Climate resiliency is going to be a big business because, unfortunately, the weather is becoming more extreme. Building on the diversity of our clients' theme, Slide five highlights an underappreciated strength of our business model, the diversity of our markets. As you can see, 2021 has been dominated by behind-the-meter investments, while 2020 was majority grid-connected. In each of these markets, there are multiple generally uncorrelated asset classes. In any given period, any one of these asset classes may produce investment opportunities while others may not. This diversity in our origination platform and the breadth of our client base provides assurances that despite one asset class facing challenges like grid-connected solar this year, we should continue to find attractive climate solution investments. Bottom line, each of the markets we invest in are important to reducing greenhouse gas emissions, and we are built to invest across multiple markets and asset classes in order to increase the stability of the business, a result we continue to demonstrate. On slide six, we provide some more detail on our more than $200 million investment with Sunrun in a portfolio of operating residential solar leases. This is our sixth investment with Sunrun, and we believe it's a useful example of what we mean by a programmatic relationship. In addition to the attractive risk-adjusted return, this investment has long-term contracted cash flows, geographic diversity, and significant average customer savings relative to the customer's utility bill. Sunrun is also an example of how our client base is evolving into an integrator of multiple technology solutions, adding storage, EV charging, and efficiency into their solar offering. Now I'll turn it over to Jeff L. to detail our portfolio performance and financial results.