HA Sustainable Infrastructure Capital, Inc.

in 2027 and beyond. It is reasonable to assume that by that time our developer clients will have adapted to any remaining tariffs by both on showing more of their procurement and passing on any increased costs. In fact, most of the public developers and sponsors who have already reported their first quarter results have confirmed strong confidence in their long-term pipelines just in the last few weeks. We also have a portion of our business that involves capital recycling on existing projects, which is an investment profile unimpacted by tariffs. In summary, we expect very limited impact from any increased tariffs on our business, particularly in the guidance period. Turning to page five, another issue worth discussing is the expected impact of a recession on our business. GDP contracted in the first quarter of 2025 and many economic forecasts have increased the likelihood of a 2025 recession above 50%. However, as depicted on the slide, U.S. electric generation capacity continues to expand, even during economic downturns, in recent years substantially driven by wind and solar. If a recession occurs in 2025, we would expect investments in clean energy generation to be only marginally impacted and we would not expect any resulting material impact on our financial results. Also, as stated a few moments ago related to tariffs, the vast majority of our pipeline includes projects under construction, which are unlikely to be impacted by a recession. In summary, we have a non-cyclical business model in which growth and profitability are typically not directly tied to macroeconomic cycles. In addition related to both the tariff issue and the potential slowdown, the forecasted demand for energy is expected to drive clean energy development in all policy and macroeconomic scenarios, resulting in a large volume of investment opportunities. As we mentioned frequently, our business model is resilient and adaptable. We have demonstrated the ability to thrive despite interest rate fluctuations, policy changes, and economic cycles. Turning to slide six, our pipeline of new investments is sizable and well balanced among our business lines. As stated earlier, the demand from sponsors is elevated as more projects are being developed to address the significant expected increase in load growth. Behind the meter solutions continue to be driven by fundamental consumer economics, increasing the demand for resi and community solar solutions, and by government efficiency initiatives, particularly at the state and local level. Grid connected activity has been elevated due to the impending increase in load growth, and in addition to several solar projects, wind opportunities have reemerged in the pipeline. And our FTN business continues to identify numerous opportunities, most notably in RNG, as that asset class has contributed meaningfully to our growth. Although not yet reflected in our pipeline, we continue to evaluate some of the new frontier asset classes that we discussed last quarter. and expect at least some of these sectors will become investable for us. As we turn to slide seven, we note that our managed assets have increased 12% year over year, and that our robust pipeline has been successfully converted into a high volume of closed transactions in the first quarter. Significant investments in RETZI solar and public sector energy efficiency led to a first quarter volume above $700 million. We continue to see strong performance from ResiSolar assets, which we expect to remain an attractive consumer alternative as retail utility rates continue to increase. Importantly, the corporate issues that ResiSolar originators have faced are separate from the performance of the underlying assets in which we invest, and thus we expect to remain active in this asset class. In addition, our CCH1 co-investment vehicle with KKR now has a funded balance of $1 billion. And we are considering placing debt at the vehicle, which will increase its investment capacity. And we have correspondingly extended the investment period until the fourth quarter of 2026. This partnership continues to provide significant value to our business as we maintain diverse sources of funding with several of these sources outside of capital markets. And with that, I'll pass the call on to our CFO, Chuck Malco.

Thanks, Jeff. Over the past few months, we have certainly seen uncertainty in the markets from the public policy backdrop. And I believe we have constructed a portfolio that is well positioned to continue to deliver earnings growth through these periods of volatility. In addition, our healthy level of liquidity and our capital platform will continue to provide access to capital to fund the business and preserve, if not expand, our investment margins. Starting on slide eight, Our portfolio is now at $7.1 billion. And as Jeff mentioned, we are delivering meaningful growth in our closed transactions. We had another quarter of delivering double-digit yields on new investments with an average yield greater than 10.5% in Q1 and are continuing our success at generating growth in our portfolio with recurring earnings at attractive risk-adjusted returns. As a reminder, Fifty percent of the balance sheet transactions that we close into CCH1 do not show up in our portfolio growth, but do provide earnings through upfront and annual management fees. Our portfolio continues to be well diversified across our different asset classes, which we believe is a key strength to the resilience of our business. On slide nine is a trend of our portfolio yield and average debt cost. Our portfolio yield is at 8.3% and our cost of debt at 5.7%. As we continue to originate and fund investments at higher yields, we expect our portfolio yield to continue to increase. On the cost of debt side, we have mentioned on several calls our active hedging strategy to manage the risk of increases in interest rates and want to reiterate the success we have had in managing our debt costs through this program. In addition to fixing the cost of our floating rate borrowings, we also have hedged a base rate for the refinancing of our 26 and 27 bond maturities, and recently executed base rate hedges with a notional amount of $300 million related to expected debt issuances later in the year. These hedges were executed in early April, fixing base rates at an average of 3.5% when treasuries had declined meaningfully. and are a great example of the active management of our cost of capital. The details of our hedging activities are included in the appendix. Turning to slide 10, for our key profitability metrics, we ended the quarter with an adjusted EPS of 64 cents. The growth in our portfolio and yield drove an increase of 11% in our adjusted net investment income to 72 million compared to the same period last year. In addition, we continue to see growth in our other recurring sources of income related to our securitization activities and our CCH-1 asset management fees. Our gain on sale and other income were lower this quarter at 24 million compared to 30 million last year due to higher than normal gain on sale activity in the prior year from asset rotations. As discussed in our Q4 call, our full year gain on sale activity is expected to be more in line with the level seen in 2021 through 2023, and we expect that the majority of the total gain on sale this year to come through in the second half of the year due to the expected timing of closings. Overall, we delivered strong adjusted EPS that continues to be predominantly generated from recurring earnings and is a large contributor to the confidence we have in achieving our adjusted EPS guidance. On slide 11, we illustrate key characteristics of our finance platform. Our available liquidity as of March 31st was $1.3 billion. We have been very focused on building a liquidity and capital platform that enhances the resilience of our business. And a key strength of this platform is the credit facility that we have enhanced over the years. We recently increased our credit facility by $200 million and now have approximately $1.6 billion in total capacity. and includes 16 relationship banks. This facility ensures we can continue to fund the growth of our business in times of market volatility and opportunistically time our longer-term capital market issuances. In addition, our commercial paper program has been a success at reducing our overall cost. We have a well-adhered maturity profile and are actively focused on our plan for refinancing our upcoming maturities. We recently, this past April, paid off our convertible bond due in Q2 with a portion of our available revolver commitments. And related to our upcoming bond maturity in 2026, our available liquidity will provide us flexibility in our refinancing plans, which we will likely address later this year or early 2026. We remain committed to managing our capital structure at a one and a half to two times leverage ratio, and we're at 1.9 times as of the end of the quarter. It is also important to highlight that Moody's recently reaffirmed in April our investment grade rating in the current environment. It is our liquidity, access to capital, and diversified sources of funding that will allow us to thrive in these periods of market volatility and is a key strength in the continued growth of our business. I will now turn the call back to Jeff for some closing remarks.

Thank you, Chuck. Great job. Turning to page 12, we highlight our progress regarding carbon count and water count, as well as noting that our seventh annual sustainability and impact report was recently published and is available on our website. Including on page 13, with a reminder that we have substantial liquidity and ongoing access to capital, we have a demonstrated track record of successfully growing our earnings in all interest rate public policy and macroeconomic environments. Therefore, we are able to affirm our 2027 guidance despite the current volatility. The long-term fundamentals of our business are powerful and position us effectively for continued earnings growth over many years. I thank our outstanding team for their execution as we completed a successful first quarter of 2025 and continue to position ourselves for further prosperity. Thank you for your attention. Operator, please open the line for questions.