HA Sustainable Infrastructure Capital, Inc.

Greetings and welcome to HACI's first quarter earnings conference call and webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Neha Gadam, Senior Director of Investor Relations and Corporate Finance.

Thank you, Operator. Good afternoon, everyone, and welcome. Earlier this afternoon, HACI distributed a press release detailing our first quarter 2023 results, a copy of which is available on our website. This conference call is being webcast live on our Investor Relations page of the website, where a replay will be available later today. Some of the comments made in this call are forward-looking statements, which are subject to the risks and uncertainties described in the risk factor section of the company's form 10-K and other filings with the SEC. Actual results may differ materially from those stated, and today's discussion also includes some non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is available on our slide presentation. Joining me on today's call are Jeff Lipson, the company's president and CEO, Mark Pangburn, CFO. Now, I'd like to turn the call over to Jeff, who will begin on slide three. Jeff?

Thank you, Neha, and good afternoon, everyone. First, I'm pleased to report that the leadership transition we announced last quarter has been smooth and successful, and I'd like to thank Jeff Eckel, our board of directors, my colleagues, as well as our clients and shareholders for providing their support of Mark and me during this transition. I'll note we've had two significant milestones in the last two months. Number one, our first investor day, which occurred on March 21st. And number two, we rang the closing bell at the New York Stock Exchange on April 13th, commemorating the 10th anniversary of our IPO. As we begin our second decade as a public company, I want to begin with an assessment of the long-term trajectory of our business. Our business is as strong, if not stronger than ever. During the first 10 years as a public company, we've built a managed asset balance of over $10 billion and achieved annual average growth of 11% in earnings and a total shareholder return in excess of 15% per year, which was well above the S&P 500 over the same period. As we think about the next 10 years, we are optimistic this demonstrated track record of success can be built upon to achieve even greater success. This optimism is in part driven by the fact that we are in the early stages of the energy transition and our addressable market will continue to grow substantially as our clients will continue to construct and develop projects that facilitate this transition. We believe our differentiated business model and our strategic relationships with our clients will result in ongoing growth in the size and profitability of our business. Consistent with this trajectory, in the first quarter, we are announcing distributable earnings of 53 cents per share and gap EPS of 26 cents. We have declared a quarterly dividend of 39.5 cents per share, and we are reaffirming our earnings and dividend guidance. We also had record level of first quarter transaction closings at an average yield greater than 8 percent, increased our pipeline to greater than 5 billion, and increased the portfolio by 9 percent in the quarter. As we turn to slide four, let me take a moment to reiterate some of the themes from Investor Day. The feedback from this event has been very positive, as investors appreciated many new disclosures and clarifications. In my introductory remarks that day, I used the phrase, we are a business that is well positioned, but at times not well understood, and that we intended to simplify the story. By the end of the day, I believe we were successful in that effort. and investors had an improved understanding of our company. With that context, I'll summarize a few of the key themes. First, the simplification of our strategy into the three pillars of climate, clients, assets has resonated and has facilitated an understanding of the differentiated nature of our business model as a climate positive investor partnering with programmatic clients and investing at the asset level in energy transition projects. We expect this differentiated business model will result in ongoing growth in the size and profitability of our business. We also engaged in some myth busting and provided a simplified framework of our risks and opportunities. Next, we continue to prove the resiliency of our business model. Over the last 10 years, we have persisted in posting strong results despite the challenges of interest rate volatility, inflation, supply chain disruptions, macroeconomic uncertainty, shifting public policy, and other real or perceived headwinds. On Investor Day, we also provided significant detail, including several client testimonials describing the unique nature of our client relationships and the programmatic aspect that results in repeat business over many years. This client focus is a significant differentiating facet of our business model, and we believe will be a strategy that allows our business to scale efficiently over time. Following Investor Day, we also received particularly consistent and positive feedback regarding our leadership team as this event became a forum for the investor community to meet and hear from several talented members of our team. The execution of our business plan and our consistently strong financial performance are indeed the result of a deep, talented, and motivated team. Our mission-driven culture results in remarkably high retention and commitment. And lastly, Investor Day allowed us to provide our thoughts on valuation, cash flow, and a long-term dividend framework. We discussed the very unique value proposition we provide to clients and investors, notably including access to the energy transition in a diversified, lower-risk business model with an attractive dividend yield and multiple. Our Investor Day had several other important messages and detailed content, and I encourage investors to view it if they have not done so already. Turning to slide five, we are reporting a larger 12-month pipeline of greater than $5 billion, up from greater than $4.5 billion last quarter. The larger pipeline is primarily the result of three items. One, our clients accelerating their pipelines. Two, the growth in our investment team, allowing us to review a larger volume of transactions. And three, certain asset classes beginning to see the impacts of the IRA. The larger pipeline will also allow us to be selective, as we remain focused on margin and profitability as Mark will discuss further. Although various timing headwinds exist in our markets, the diversity of our asset classes and diversity of our clients provide confidence that we will be able to invest in a generally consistent pattern. In fact, our clients, as leaders in their industries, are expected to increase their market share, which we expect will result in additional transactions for us to consider. I will also note in our grid-connected segment, development cycles do not entirely drive our volumes. We also invest in transactions in which our clients are recycling capital on operating projects. The grid-connected business also continues to benefit from higher PPA prices, which have increased more than 25% over the past year. We also remain active in our behind-the-meter business, as the recent press releases regarding transactions with Mitsui Forefront and SunPower indicate. Our RESI Solar pipeline includes several transactions, and we do not envision NEM 3.0 will be a significant headwind as we continue to see increasing levels of storage adoption and our clients remain the industry leaders in this rapidly growing business. RESI, Community, and CNI Solar all continue to benefit from higher utility rates, and all of our solar businesses will likely benefit from the easing of the panel import backlog. Another catalyst to pipeline growth has been our focus on incremental asset classes, which we now refer to as our fuels, transport, and nature business. This segment has added several investments to the pipeline, particularly in fuel-related transactions. On Investor Day, Anne Marie did an excellent job describing when various asset classes will likely become investable for us, and she is building a team and identifying opportunities accordingly. This segment remains on track towards our goals. To wrap up this slide, our diverse pipeline provides resilience to timing headwinds, and it consistently provides short- and long-term opportunities as we continue to identify transactions that fit both our risk and return profile, providing us confidence in our ability to meet our profitability objectives. Before turning the call over to Mark, I will touch briefly on the current challenges in the banking sector. Support from our banks has been unimpacted by the recent regional bank failures. The banks in our revolving line of credit and our term loan all continue to be stable and supportive, and we expect no direct impact of these bank failures. Any wider impact on the economy of potentially tightening credit markets are unlikely to have any unique impact on HSE or on our markets. Now I'll turn it over to Mark Pangborn to detail our financial results.