HA Sustainable Infrastructure Capital, Inc.

Greetings and welcome to HACI's third 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 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, Investor Relations and Corporate Finance. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome. Earlier this afternoon, HACI distributed a press release detailing our third quarter 2023 results, a copy of which is available on our website. This conference call is being web-checked 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 risks and uncertainties described in the risk factor section of the company's boom 10K and other filings of the SEC. Actual results may differ materially from those stated. This discussion also includes some non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is available on our posted earnings release and slide presentation. Joining me on today's call are Jeff Lipson, the company's president and CEO, Mark Penburn, CFO, and Susan Hickey, our chief client officer. Susan will be available for the Q&A portion of our presentation. 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, and thank you for joining the call. We had an outstanding quarter as measured by nearly every meaningful metric, and the business remains positioned for future success. Before we discuss the quarter, I'll address an item of recent market perception. A sentiment has emerged recently which has been weighing heavily on stocks related to the energy transition. This perception assumes renewables and other clean energy sources are no longer economically viable due to the higher costs of capital, driven by the higher for longer outlook for interest rates, and that this impact will cause a substantial slowdown in project development and deployment of clean energy. We believe this view is not accurate. In fact, the energy transition is in its early stages. and continues to grow on a steady long-term trajectory. Just this week, the American Clean Power Association reported record-breaking third-quarter U.S. capacity installations and 10% year-over-year growth in the utility-scale wind, solar, and storage project pipeline. Although not every project remains viable, clean energy demand remains elevated, and the levelized cost of renewable energy remains competitive or less expensive than the alternatives. As one example, the AI-driven build-out of data centers has created significant incremental demand for renewable electricity. Likewise, the higher cost of capital and other input costs are being passed on to the end user due to the ongoing growth in demand, particularly from corporate buyers with ambitious net zero goals and utility off-takers. These economic dynamics continue to validate our business model as a provider of capital to the energy transition. The energy transition is a long-term, non-cyclical macro trend, and our team is well situated, enthusiastic, and capable of continuing to work with our clients to meet the demands of this transition. Further evidence of the strength of our business model is in our third quarter and year-to-date results. We're reporting record quarterly distributable earnings of 62 cents, record quarterly volume of almost $1 billion, and year-to-date total volume of $1.8 billion, which is similar to annual volume over the prior three years. In addition, consistent with our objective discussed throughout this year, we're reporting investment yield on new balance sheet investments year-to-date of greater than 9%, well above the expense of our incremental year-to-date debt, resulting in continued healthy markets. These results and the outlook for the business allow us to affirm our existing guidance of 10% to 13% APS growth and 5% to 8% dividend growth, through 2024. As Mark will discuss, we have deployed a thoughtful, diverse, and strategic capital plan in 2023 despite challenging markets. The $1.5 billion of debt and equity we have raised has resulted in a strong balance sheet and liquidity position and has allowed us to continue to operate the business with a strategic long-term focus rather than under any short-term duress. This capital raising in 2023 coupled with the substantial investment volumes, has also situated the business such that we do not require incremental equity to achieve our guidance. We always have and remain focused on diversifying our liquidity sources, including our recent initiatives to develop incremental channels of off-balance sheet growth that we refer to as capital likeness. Turning to slide four, I would like to discuss how well positioned we are to achieve our EPS guidance in the range of $2.27 to $2.53 per share in 2024. In part due to our success in 2023, increasing the portfolio by $1.2 billion so far this year, we are well situated for earnings growth in 2024. In fact, we can attain the guidance level of BPS without any new equity issuance or any new balance sheet investments. No incremental debt is necessary, and our gain on sale and fees can be consistent with the annual levels over the past three years. Therefore, our path to achieving guidance has limited variables. Turning to slide five, I believe a company should always have an executable plan to focus the organization. Our action plan in this period of volatile capital markets is displayed here. General capital scarcity has provided an investment opportunity at even higher level of return than we've seen in 2023 year to date. The average yield of investments in the pipeline is greater than 10%. And these are investments consistent with the risk profile of our existing portfolio. We intend to fund these new attractive investments with balance sheet rotation of seasoned assets and debt issued outside the capital markets. We also plan to expand our securitization program. We've utilized to fund $6 billion of investments off balance sheet. The final item in the action plan is to make further progress executing transactions with private capital providers that allow us to continue investing utilizing off-balance sheet sources of capital. All of our success in 2023, closing a large volume of transactions at an attractive yield, has positioned the business to expand our capital aid initiatives at a reasonable pace. It is important to note that our company has a long history of executing on these action plan items. We have a demonstrated track record of adapting our capital and funding structure in a way that allows us to continue to actively invest and grow our earnings per share. Therefore, this action plan fits well within our comfort zone. Slide six is a good summary of our year-to-date investment activity, highlighted by our $1.8 billion of volume at an average yield greater than 9%. Notably, our fuels, transport, and nature segment has been very active, producing 38% or over $600 million of the 2023 volume. We remain very disciplined regarding margins and expect future investments to be at an attractive margin to our cost of funds. On slide seven, our investment pipeline of greater than $5 billion is well diversified among non-cyclical and uncorrelated end markets. Customer demand for renewable power continues to drive more opportunities, and higher PPA prices allow projects to pass on higher costs. As discussed earlier, energy transition assets remain economic and strongly preferred by many users due to climate goals and cost competitiveness versus alternatives. I will also reiterate that the return profile in these pipeline investments is well above our current portfolio yield and at a strong margin to our cost of funds. Now I'll turn the call over to Mark Pineburn to detail our financial results.