MMA Capital (Trading Symbol(s) MMAC MMAC) 12 Nov 202020 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the MMA Capital Holdings Inc. 2020 Third Quarter Financial Results and Business Update Conference Call. My name is Emily, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session at the end of the conference call.

include performance regarding which of on expectations. will projections events are today current financial of MMA comments forward-looking future statements and based Some Capital Holdings, include to the forward-looking with and statements. in differ Exchange cause and These materially company's could Securities significant that results are in the subject uncertainties, comments the which actual those Commission from identified filings expressed risks to those reliance hereof. on as are these statements, Listeners place cautioned only date to which of undue the not speak forward-looking The obligation forward-looking the no company contained information of undertakes any update to in statements. the over now Mr. would like I to turn the call to Gary Mentesana, Capital CEO of MMA Holding. go Please ahead.

President you, call Treasurer. everyone, today Thank Financial and the Bjarnason, Dave me Vice our Chief on Sophocles, morning, and Good are Megan Officer; welcome. Emily. and With Senior our

our may many any remain of The business this results overall apologize businesses we're taking locations. COVID, quarter an third that from for our and in update. Capital today advance to with financial to inconvenience and cause. during call provide or review closed remote MMA We is Holdings purpose XXXX call issues offices connectivity As

Our updated presentation available third SEC our with filed on investor website. is and Monday, quarter was on report an the

company’s continue performance. With our the U.S. remarks book of $X.XX for for I uncertainty as value during a with share CEO the to by as by and followed period of questions, call our the $XX.XX the plans great before I'll operating per adjusted third financial reported capital of global Dave to update call to company's and for depth. detailed wrap a the the the well my general And process, that over we open quarter. investments to For we economies. navigate a prepared overview remarks near-term, increased provide results, I'll of more respect call as we for of in will summary begin quarterly our and a today, selection up prepared financial our the results, brief a our then review turn

investments this as investments these million The of the increase the primarily made the invest of company’s loans projects alongside quarter approximately company the end. institutional primarily discuss, are of investments September million partner. As of core to Dave total of was States renewable approximately by value At energy. further United construction carrying and net at XX% the represented where energy our XX, increased all carrying energy driven capital the of that value will was renewable development has to $XX.X Nearly Year-to-date, and XX. million X.X% same an in the of income. Ventures company’s through assets company's investments finance the Solar June $XX.X million, $XX.X the at recorded $XXX.X in renewable in contributions investment-related which due

The for loans September third $XXX.X to as see XXXX, of closed company the $X.X XX.X% you of of quarter quarter basis, of its return On net an for pipe ended XX. compared to XX, across Ventures across ended the the XXXX. period during June the commitments XX.X% million compared loans million of second XX Solar period $XX.X As during million investments a quarter. will during have investments of realized on Table we in income XX unlevered month recognized X trailing our the these renewable filing, to the energy related

have While invested remained the to million a also to declined origination months compared substantially of $XXX.X XXXX, the $XXX.X of Solar by during XXXX Ventures year-to-date. the nine million, months nine volume first first

liquidity, and goals, also during company’s risk-adjusted desire our business a the were and of driven expend primarily origination there of Ventures given needs. to loan our assets meet continue unfunded believe we amount to other While share of declines environmental infrastructure investment social available and periods ample volumes opportunities and capital attractive returns invest not to by are in the that other the energy, renewable that these commitments with over in Solar

As XX, or funded loans reflected have the unpaid UPB of Ventures aggregate principal Solar value balance filing, $XXX.X in XXXX, an our by at in X of September Table fair million.

remaining seven of Our months, coupon weighted substantially weighted were average XX% average XX. unchanged maturity since June of which

As as the continued only loan investments general energy have and loan origination committed renewable on target company’s from typically by schedules balances COVID-XX discussed the to modestly quarter, substantially economy. X% on and generate ranging project coupons today underwritten ranging to to on the payoffs Throughout prior from that funded and calls, loans we perform capital been and impacted fees X% X% XX%.

should such demand as be dynamics, not renewable loan but and further markets, project ERCOT certain including to, due of Council of availability portfolio national finance or competition affected the waning have it noted deterioration variety local the by pricing falls and imbalances, components been energy a the Ventures; project a underlying tax may that market Solar and the if of impact market value or some supply These dynamics merchant to resulting the exposure negatively and However, and Reliability equity be electricity and in of for materially limited equity of demand. Texas investments. of has changing the tax may in Electric and ways particularly price

and energy two negotiations but outstanding reinvested. and some commitments how ERCOT. Ventures Ventures related impact take-outs of UPB the with when was in of were usual customary financing remaining loans of loan which whose $XXX.X late-stage such two million, had in as of place agreements, projects the required in and to and invested ERCOT effective Solar XX, projects had generally is financed an associated the are actively the total and portfolio both in underlying loans September of of single At for UPB XX% sponsor Ventures’ aggregate obtain in projects. a development and under the Solar proceeding renewable could the XXXX, in repaid All Solar further of construction concentration capital markets and located the

uncertainty liquidity that $XX.X To a markets dependence remained financial a prevailing end, our on $XX.X under million we’ve we the and of the ended renewable programs. macroeconomic capacity our in functioning cash quarter unrestricted credit finance revolving the with management energy Given of investment facility. and million market, on focused conditions, and

performance of We additional monitor where capital will while explore loan the a payment, debt including expected continue ways to sources we capitalization and closely to optimize company’s appropriate.

joint non-cash XX, value capitalized increases securities Alabama, due any and depreciation expenses. non-cash the bond investments non-core those Turning venture to other changes investments quarter to during consists carrying same debt multi-family equity a the these due There to recorded not other which Virginia, were the subordinated in in losses Fort at net investments as at investments, by Winchester substantially our legacy property, assets, Fort, in business. housing June investments, of including $XX.X estate-related in on the resulting our South our our Spanish of of September from was million material XX, adjustments Spanish African offsetting real offset in

to part do sheet assets capital to balance will opportunities As contribute not and prior of consistently these at expect income quarterly stated continue we the from on we levels. recycle will this company’s attractive calls, pursue to

primarily debt a the a had at a rate carried effective at UPB value UPB the had average quarter, September was as of of of in our fair weighted interest an million, result in pay that million $XXX.X XX. the of $XXX.X the decrease of at a of estimated Lastly, debt. debt $X.X This X.X% million down million $XXX.X company with revolving

financial our end, was Dave, quarterly over call As who compliance quarter detail. With all discuss to covenants. with the of I’ll will debt greater Dave? that, results company in the turn the in

good Gary Thanks, morning, and everyone.

will value while refer shareholders increased second period. the in $XXX.X value, item share while decreased As share company by and adjusted $X.XX comparison, I million provide X while I or the $X.X book book third to $X.XX results, period. $X.X Book with an in common or various per $X.X book of our $X.XX quarter million XX-Q. the our value share ended same $XXX.X per equity $X.XX adjusted or third value during or share was per $X.X Form value per value that million overview of increased of million. quarter, during or the decreased tables quarter, book book million In million adjusted The

value which income and quarter included of million net other increase was book income, $X income. of driven $XXX,XXX by The $X.X of million comprehensive primarily comprehensive in third

though Solid $X.X million was quarter, with on recognized these Ventures. by The the renewable primarily the year-to-date investments equity investments of returns energy million third tied adjustments to the returns key recognized income the the to on company million. from second by quarter. $X.X performance Solar the difference in to these driver Returns compared increased and in mark-to-market Solar $XX.X investments reported which Ventures, decreased

compared quarter, of derivative on and the value credit gains its to losses quarter recognized rate cost $XXX,XXX the relatively company second the $X.X And the second which both as quarter, interest not Investor the respect the expenses, short-term of investments the the venture and the decreases was in equity decreased fair while quarter to the on Net derivatives, decrease adjustments which interest the with Housing slightly in other and totaled or in UPB Solar the also investments, the we mark-to-market net facility. South a third As the in other result loan September reference losses the did losses of investments income third loans $X.X indicative and and as million in bonds, in value comparable a Fund, related its comparable Spanish net Fort value the given funding quarter. $XXX,XXX on investments $X.X the at on in was the positions, LIBOR basis, in totaled which million the Ventures decreased fair million the Call remained derivatives, second netted to quarter company’s third loan of joint in draws in discussed interest other quarter-over-quarter the and XX. relatively Concerning on Workforce company’s revolving fair company’s a consequential to third of portfolio its second given equity UPB of $XXX,XXX, from of share portfolio recognize any quarter changes August, to of to quarter. approximately which primarily African magnitude in rates. was Returns

of second cost which million other caused third third in quarter in was the the the $X.X While totaled which quarter, second the or because cash also of resources equivalents cash cash, quarter. $XXX,XXX $X company which XX%, reimbursements second liquidity million million were restricted at primarily had the the which capital professional expenses and a end third the quarter. and and expense approximately and restricted. relatively million management-related $X.X to comparable Annual From compared was impairments, in recognized quarter, quarter, in come reached decreased were other compensation-related of perspective, external third aggregate million by fees, to quarter, in operating no expenses G&A, to investment-related $XX while the $XX.X the totaled in capital at all

driven table total nine X by and of provided in including increased closed year, by flows financing equivalents the in second transactions primarily of company's direct As the quarter net in the the financing involving of bond that company's cash and cash reported activities, of amount cash, investment, $XX.X the filing, estate. $XX.X infrastructure in was million from investment first restricted which million real our cash months the

flows in months the will With quarter call respectively. the from turn first million, the company back activities $XX.X year operating cash Gary. I $X.X million nine the and net Additionally, and of that, over generated of to third

Dave. Thanks,

operations. of current through offices the Business model Any mind across employees to our to could available provided successfully on want cost, I our said, to disruptions near-term requirements XXXX. office Solar market in our our operations will well continuity in at the local near-term, obligations, any timing response our COVID-XX respect have the adequate end and markets the rise external current Q&A our reopening become COVID-XX safety the any task potential manager office always to remote liquidity and monitor the right provide of and company's process. since operational the to capital the pivot at the of the we further of that performance related the to cases update force CEO a business to balance continuing believe the With to response that selection respect the where located. report without allocation fulfill plans decisions get COVID-XX, with as of as anticipate with subsequent continue work and the funding to the Ventures, opening much will With there corporate the forefront of an downturn to the continues we should be the at capital of pursue to no continue our opportunity we remains upon liquidity States, needing COVID-XX, with connection United we guidelines, – activities. time. In and Before of of decisions our we we including set consistent by right conservatism to long-term capital optimism. is That the jurisdiction plans, at back capital beginning to the

in We manage respect while loan past With focusing outstanding opportunities, for company over me contributions years. want originating to of his first of significant I the years thank our will continuing Falcone be on to pace mentorship continue company. investments high-quality to to to deliberate CEO selection, in commitments additional capital XX cost the and by also the the Mike to XX without new his

significant and interact to daily, through position his to with different on committed he the company a shareholder the of remains certainly is Board. it While Mike success the not

As replacement, forward. operations consideration selection of a the appropriate will manager is at anticipates for role. facilitate the the our Until CEO to continue we seek and approval as current Board’s results process with continuity time. I external the move providing I will permanent in in maximize engaged the and and Mike’s candidate then,

excited above, transition or opportunities are much your energy complete we economic legacy about In very believe to There high investments in long-term to take continue committed time, to investments to infrastructure-related we for and including you remain recycling assets various and uncertain return remains the support. thank took those we noted future, investments favoring even that infrastructure we continued renewable moment shareholders, poised the the of As thesis advantage the opportunities. from into and capital intact. for closing, our this remain to

call open the We questions. Emily? will now to

[Operator ahead. from investor. go private Instructions] Our question first Mark comes Please Edinburg [Ph]

numbers. the $XX dividends, am and so thank to Gary. question. per something gather, something but $XX are million, anywhere absorb, listening for hard am we you absorb in that’s $X.X the and so you. correct that’s the are like the But and me. And return actually now you that’s not that two haven’t the presentation, and Florida. But there what portfolio, be shares two, range actual the should Mark, near the It’s million, so income Bay, I to if questions. I Thank on from everything million, I meetings, share meetings. around physical Hi, Palm having to all seen XX% my be anyway, hard why like can’t $X I

you morning, So, good Mark and nice to from again. hear

if your at So, me the I numbers But I the wrong. XX.X% accurate. the think we – are shares is that are energy X.X obviously, portfolio am And correct return outstanding accurate renewable through generally correct generated million.

it Is shares?

Shares, yes.

a and we ability currently obviously as too. investor much to increase the that ventures. we are to but need is ability in the keeping the to capital think of fact we shelter how NOLs joint that to have energy dividend We member and with this respect answer to currently And that there mind balance as as the that there our considering and marketplace, in only the where to general is income is we uncertainty create share about at that’s all remain renewable there policy XX% not return initiating evidenced the the the to well like your I with that dividends future to Board which buyback the with point question, some that in are long-term by the one reinvest, the be investments components, prudent continues a So, plan kind fact respect the returns the both time. obviously feel But of in cautious it’s can out not in that optimistic just assess. we had

minds continue and its we it the going the the dependence assess very to So, that track is will in Board of much of on forward.

but value have per XX it question the now and important market so that’s An somewhere book in been $XX dollars share labor $XX. embedded, is and or on that’s confusion is that, about the the is $XX, still

it discount. you I but a question, the can’t is So, why such answer know

it rhetorical So leave a I as question.

between mean, book price I lot about share your adjusted per share, magnified which are excluding obviously book do many ways with thinking. and book right. we XX% But initiated. discount time, price sure of if some trading book Share share probably with adjusted been uncertainty in point a has at which be Yes. of of there investors at in beginning the again, disconnect I deferred and per value question. marketplace your obviously, today rhetorical the is share, share dividend since the price is value appreciate the concerned But value roughly share COVID. There But to tax the we assets. if get basically the a is to and am could traction were alone I this the not we

you. in spring Thank see in time Love or summer. to Baltimore

Sounds Mark. good. Thanks,

[Operator over Instructions] question the any would remarks. like Mentesana to and answer ahead. concludes closing conference I back Gary turn go to session. This our for Please

very standby continued you you look and think and through we it the much you to you support. full are These us. very Emily, are for the for times for much, all for company very very forward That’s today. opportunities your thank future. and of living much is certainly We that all we Thank Thank we all much. unprecedented to continuing thank