Altus Power (AMPS) 8 Aug 242024 Q2 Earnings call transcript

Good afternoon, and welcome to the Altus Power Second Quarter 2024 Conference Call.

As a reminder, today's call is being recorded and participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. At this time, for opening remarks and introductions, I would like to turn the call over to Alison Sternberg, Head of Investor Relations.

Good afternoon, and welcome to our second quarter 2024 earnings call.

are Financial Chief Officer. call Dustin Officer today's Chief Webber, on Gregg Executive Felton, and Speaking on This and to discussed a we presentation call. afternoon, issued related matters a to press release, this be

the You in on www.altuspower.com section. the press can website. Investors access release the our the also presentation is information and This SEC's website, on available both

materially When events, estimate, As used will, forward-looking and uncertainties, forward-looking the statements in These a as forward-looking contain the from statements. various statement. operations a the no call, our required reminder, this similar are statements to plan, forward-looking future risks to on statements. Altus comments identify Power as law. which including subject future to in words actual and cause may change, financial believe, Altus statements assumes update these to Power's circumstances except on relate they performance. by differ outlook this those Power call anticipate, expressions Altus refer could obligation future expect, predicted These to if or results and forecast,

to SEC information, XXXX. could the statements, more our forward-looking impact you with filings factors review our XX, encourage we other these risks, uncertainties that filed XX-K specifically on discussed in March For the and SEC

as annual production, an conditions and at During that assumes customary margin to recurring is determine this financial other time. given ARR well expenses management call, annual adjusted we uses also and economic points EBITDA potential ARR, estimate expected and seasonality. operating non-GAAP the ARR refer revenue our measures. or EBITDA, weather, asset market adjusted in revenue, are to as of which base

financial reconciliation measures this substitute measures financial monitor financial non-GAAP we financial uses computing performance, not a team methods management financial useful measures. Altus investors. to non-GAAP about exclude measures non-GAAP release over plan, Gregg these GAAP today. both believe Officer these non-GAAP of the measures pleased for be from Power. presentation issued evaluate turn certain items Felton, our comparable financial should companies. by to be detailed that we press as Power's and may our and of used non-GAAP all financial in considered similar to call other with and More may I'm these to to These that, and the information the Altus differ Our measures and contained from information of Chief a these Executive measures And GAAP is

and our the into afternoon, and well have excited fully for This area and investors activities Alison, that today. technology growth expanded designed of a of is noncore strength our believe well deprioritizing with ensuring that I recent solar the revenues optimize collect technicians our set last and have my on prioritizing data resulted synthesize demonstrable in the taken improve improve the certain are and from where the our are earnings operating forward quarter. to Thanks, review drive on findings joining support field ability on activities. One business, that we Since resources the our reprioritization are our This they our has moats as our focus newly review while that are and we We and of our particular context that the support information all is as business to specifically, as our our we efficiencies an several overall opportunity the operations we focus One role, of changes. analyze time pipeline our priority the from and efficiency More our robust will our collect insights to we our armed portfolio customers. in we projects data, analytical as to on enormous been key has generated with most to of amount ambitions some to efficiently teams. going and high call share to growth call revenues of projects. competitive review that welcome list plans. identify analysts and results focused to areas need areas the our

projects. ensuring We community our have are portfolio that data also growing focused the on necessary of customer we to support solar

how business. Before and discuss to I'd our provide turning cadence review to some like the where the our performance background our pipeline standards to and philosophy projects, of results flow around in in and of our the we the source as underwriting quarter, deal

pipeline my revenue-generating I assets. plan recall announced development that with the opportunities increasing in velocity will at a execution certainty these into our to review and put back under convert You May, which on focus

way clients developed projects, of elaborating advantages has onboard acquisitions projects of operating at the on date. but any that channels. of an to of one agility Altus from competitive want some Power diversity context. fully journey believe project is engagements been to findings, to platform driver provide early-stage to important market important a The We flexibility our Before our be I benefits to our in allows constructed significant with of origination gains this us from the yet all to projects. and our fully share milestone

do site commercial each shareholders. shapes our financially we discipline investment new they different cited, sizes. like be megawatts, As our to in accretive and we've all come scale And that requires often but

rigor that, five the principles this of size. More to attractive approach This plan. With long-term channel as level turn gigawatt portfolio fourfold stage to has development optimization is build that let's in project. early-stage the segment, the around even the achieved the added largest a of revenues from application pipeline almost the relatively sitting our generate to have we us the the notable and us Accordingly, and portfolio of Importantly, the to source allowed at upside positions returns adjusted has we is megawatts the one immaterial. to of that our nationwide in proportion to irrespective past been scale, years as see differentiated EBITDA of incremental our of over any the underwriting incremental that review. increase opportunity and same

our a engagements. have approach enacted go-to-market the to early-stage analyzing few months, three-pronged on we Over strategy past

spent a time and digging on have we've significant aspects our channel applied methodology and evaluating that acquisition the First, seen of of successfully partner with into of we business. the CBRE current our strategy team our side amount

of And enlisted strategy time moving line to findings certain in have assess our of to journey. This we other project best each of the the will feedback currently shape forward. a speed owners partners deal go-to-market evaluated finally, produced the picture estate variety across around impact that real pipeline we Secondly, from to a the how and timing the analysis development comprehensive cultivate factors that drive decision-making. channel

amplify ability a Specifically, despite the value proposition a solution. the customized unique and there We some Power's remains to tenants merits progress, truly need of broadly that must solar commercial Altus and the community landlords, continue importantly, for to to ensure end-to-end education. general understand strong business deliver

implemented they not enterprise. of CBRE at with the engagement. landlord path a Given enterprise sell-in bureaucracy. priority may the to localized needle nature not a an large level as considered of approach most not negotiate that the efficient was our through projects a a projects, client deal to good tenant across often for be strategy moving period significantly created Site-specific our top were and effective longer the This partnership we top-down and

the typically Solar enterprise customers more sites a of overall component are strategy. instead

focus solution that its renewables Altus its will program partnership member where we positioned In has of U.S. Board key as clients locations Bernard, a target markets. their partner Going Altus' to Rob in sustainability CBRE's Officer, forward, Sustainability builds with for with refine strong our of presence. will expect clients Altus strength CBRE CBRE intersection looking to Chief clients, the and as several be we in expand Power a Altus for are use

that Beyond operational also Altus will market-specific repositioning a attractive enterprises, order the healthy us Unico will approach offer client for associated that been early-stage to since a our philosophy aligns historical pipeline pleased approach our This allows announce our engagement focusing development. which the meet markets engagement to for well with as that broader I'm lead these who thresholds. In acquisition client rigorous efforts This of support as our our to level. more Phillips, strategy Solar, inception. with with pursue tenants joined direct core ultimate decision-maker on of and targeted Brett our to efforts, engagement, project has landlords returns at local following our large economics

to we our the customer Unico customer As experience barriers announced the and adoption acquisition brings feature when highlighted we last a of deepening deep year, relationships. acquisition overcoming Unico with team the key that was

our portfolio power our relationships our time. It's Jersey. of conducive several of redevelop resources not are our to investment. One continue this moving opportunity important it's a forward, growing we position So, the grow shareholder of this XX-year-old time. operating a that acquisition of robust leave can understood specific which to deliver each next engaged identify assets, Altus through partners extract also that our financing ownership New customers with with every we highlighting those worth believe portfolio possess and is where believe the day the nationwide. to there's a channel to our positions specifically, successful and have to to years which ongoing located We renewed most clear business over long-term all our revenue strategically are growing road in-place site enhance example record, repositioning on optimize recent of of expand believe X.X-megawatt infrastructure our of footprint, emphasizing value. to that over a of is to purchased worth plan land clean we assets we solar in is contracts collection we what's list intention a as project as efficient We energized over scale have ways should the and is be situated feature long-term and that aligning assets believe an us as array track Hamilton, of along One thought our an value map, us of on with captive More which generating well we additional our focus the we well that further and as and long-term therefore, next? about parts with does

This similar this Now imagine XXX incumbency is the operating power across in portfolio nearly assets. of opportunities category. our of

offering about some to the we're turning on performance, Before quarterly call value perspective how end financial environment. current thinking to by to in shareholder I'd Dustin the walk like over through

long-term the attention As investors' achieved. volume will necessarily to are consistent with targets our focused means on decisions make management with remain financial capital. of steward team, hasty a we short-term decisions management being risk ensure not making a we that savvy to investment more likely This

of over short-term lumpy the somewhat to our pace asset Given orientation, our periods. be has proven long-term growth

activity our will in we an the While CFO, Investor the let Weber, Day, on will confident Dustin upon. With remain call impact our over guidance on anticipate have which communicated additional XXXX, to of expand financial turn our highlights. the that of for our three-year now we remainder that, Dustin me cadence

to thanks and Gregg, everyone joining you, the Thank call.

were relative During shares increased the quarter our the was sold this primary for to increase to $XX.X quarter XXXX. of million of second to clean and million the drivers contracted during compared year. and change net the noncash we $X.X alignment our one electricity operating benefit our that tax year million growth the for for the in of quarter income compared XX%, This gigawatt sales net assets. the power to of of portfolio at income of in of nearly $XX.X our quarter, $XX.X of second remeasurement last kilowatt hours second revenue resulted of The electricity by of XXX income of XXXX, gain driven generated quarter from clean an from second an rates portfolio to million a customers. GAAP our customers long-term was million the

million EBITDA, revenue during on solar we expenses. like to by growth put quarter and that our production, amounting financial X%. is and note reported the revenue subscription the second of Due growth seasonally of assets increased community our be of pressure portfolio are current to the partially and XXXX, operating $XX.X while downward in customer currently million and summer an I'd to banked, credits accumulated QX the the These excess production production that of levels. to quickly during to and general credits the $XX.X administrative touch on a quarter. and the recognized increased in compared levels. This Moving spring increase of offset months, increased generated our solar meaning adjusted non-GAAP some operational XXXX, of have adjusted by have subscription half the to levels driven with measure, second expected was in deferred recognized of in we community the we

continue resources support our pleased this strategically community the ongoing see our in segment and portfolio. we of expansion invest to of solar business, are to We to

Turning to megawatt incremental growth.

of has the megawatt For than the cadence slower additions incremental quarter, the been anticipated. slightly

have anticipate a Additionally, stated the we to that XXXX to EBITDA of to second $XXX million half adjusted revenue previously while of is revenue now our EBITDA. $XXX slightly guidance $XXX additions, $XXX $XXX ramp-up of Accordingly, million of the generally are range we $XXX million than million adjusted revising we of favorable expected. to more cited previously million to year million and $XXX previously megawatt million $XXX million slower to of and

growth. on to reaffirm stated reflects be pleased our slower-than-expected guidance XX% previously XX% a megawatt of CAGR outlook in to this growth three-year While are realized we XXXX, to

with a cash balance million. Turning plan, quarter $XX.X we total to our of second the finished financing

repaid under revolver fully our corporate we balance quarter, for the borrowings efficiency. During sheet

support expand to we to our Additionally, megawatt growth. continue CapEx

we well operations, I'd ahead, our Gregg facility, equity growth remain some we to the back turn believe partnerships like call financing cash to for finance tax committed the long-term our remarks. of final positioned combination construction Looking access. With that, to and with our from

Dustin. Thanks,

power May, Investor our this be to our great clean a is During in is time I asserted view a Day company.

As the we competitive we uniquely to positioned market grow are through continue our this rapidly moats. growing market in segment, several to leader share believe

expect First, operational to significant footprint, continue able as to will our increasing maintenance we be efficiencies. expand we and drive we

gives ability us deliver customer relates solution. as a and our vertically to it to the customized Second, we including end-to-end believe engagement, localized platform integrated flexibility

enviable customer our in solar scale to the we operating community believe of our partners, bolstering enterprise network Altus nationwide Third, and footprint drives assets of equity base. and brand, Power ability our

believe assembled is believe that diversified scale in and efficiently competitive assets, on scale to our has expand produce ongoing portfolio seize to of a which a further footprint. Altus ensures access long-term Power our sector. the opportunity to our allowing diversified Finally, platform our value will we portfolio cost investors. growth us capital, to for this long-term of We positioned

months, the to and base six we of at platform. our past asset have value private and nationally executed believe internationally, the for companies, and levels intrinsic with several committed I Over shareholders, confident value which both transactions our and delivering public been support remain path and will I'm market. the we'll expand your operational commercial our business put for past that performed XX leadership days analysis the you us on we a now within solar that Thank and over time, questions. take to the position your scale

I gentlemen, Thank Instructions.) please, follow-up now your question. session. question one One begin one and we you. Ladies will each. advise and the question-and-answer everyone first like for to limit to question would please moment, to questions (Operator their

LSI. question Your Evercore of first comes James from West

So, clearly outlined enhanced Gregg, company. for new vision a the

market usually recent helping curious some pretty And hold market? but then, do relationships auctions, you that is CBRE some didn't I'm or path on gets of before? a findings when I things side, Journal secondarily, enterprise, and thought the interesting of is that on of course, Is power lot One have have you is leveraging of a educational Street things educating you it How of Wall see one, develop maybe other and the your the gets these enterprise. should the do But then which how widespread. be was the further? -- that those -- like the of yourself these events with out happened that --

Yes. Thanks question, the for James.

right everybody's as demand relates focus. to definitely backdrop that So, you're is power it the in

help provide. doubt commercial no the that, that respect and message with there's the solar scale should so, to And can opportunity that

are and Sustainability remarks, getting enterprise heard you engagement. and CBRE who rather the from reflecting to Bernard, from advisory Robert a really to benefit as a prepared of customers, long-term with solar-specific enterprises narrower Board closely with the Head we many connecting a fact restructure engagement the is also it that As member than working relationship with relates enterprises, to at

as solar within our engagement of prominently of to how we're be that that should And relationship the Altus approach going context so acknowledging an is the featured the with time, same add pleased to on-site that broader enterprise the want approach. a that, enterprises. But And bottoms-up sustainability a are a on focuses on solution approach at opportunity. very CBRE's top-down details as first approached. do oriented heard, there's focused be you bottoms-up geographies approach I real to where and enterprise And are the being we intangible

real markets dovetailing prices your bring opportunity where power high comments, there to and So, that and first commercial would solar. a be scale with need are

we we're every we existing states, compelling So, we XX to XX including what with are our programs or right? in really as bring not but might on are opportunity. new fashion to historically. it's you of market, that is something certainly targeted have know, than in try partners, We're CBRE, focused a a there opportunities, more there's states when where much working So

combination the really is of that's specific. So, approach nature of the enterprise market and bottoms-up top-down a

throw here. Okay. If I could Got in one follow-up just it.

I will As on rates adjust number existing them? of we us good higher. in of a kind contract, up, know go what give percentage your your help contracts, some that inflector have you watch Could of contracts

our rate. portfolio Dustin. XX% it's at a current floating James, our of Yes, has PPAs

So, rates, to the prevailing stand utility as we benefit. those increases

our a that's portfolio so, sure. operating for tailwind And to

comes from Roth next Capital Partners. Justin question Your of Clare

review So, approach. talked process here, taking a following targeted on the the completion of you more market-specific about

us little just understand you're opportunities? what do you're What building market, better. of how the just landlord a if wondering could a or a help near-term speak how Maybe more most And may then that bit to going the bit markets where you the just little initially? be tenant? approaching see targeted -- So, you process attractive about

Sure.

for question. the thank you So,

the this to we'd we is like on had greater with refocusing our review to can I or resources those our is where think revenue areas about prioritization. as historically sure greatest through make thing it where we've Altus comes relates the success, the first growth accelerate

key a systems rooftops focused focused that's site. big effectively often introducing that we're had the part a, opportunity, historical attractive are that an solar. those locations commercial large industrial success that a scale that which up, benefits in in bottoms-up are estate, that is that identify doing Maryland we of cases obviously, we're very we solar that land-based And and have real or of the opened or so, specific objective where where programs we're might markets the land, on or have Illinois, on markets orientation be putting this like bringing can And property. Maine landlord them So, where on. And expansion, states other or community that in building again, and landlord real could is expand be

in certainly, past markets target talked we've that and that either to partner landlords. case, partners working is with are and markets then goal the but CBRE they're work consider So, we in partners identify about these that directly to these channel many local other with along are important our partner, a an and here the

both that landlords many are lead effort. with early who directly, we But announcement working engaged. that us and been are also made partners Brett level the already that's he's stage has working and Phillips, the bringing with to we So, where at landlord opportunities around going we're today

So, intended factors, it's combination flow. to a of market-specific drive all

to XXXX your it. guide. guidance here, over reduction just Okay. I shifting the the Got to it. Maybe appreciate

of the you maybe cadence anticipated had not is activity You did here. mention what

anticipated meet maybe well. move projects build Or on of new maybe to pipeline, the seeing there and as right? maybe out return then expectations? close year some you process, you they is projects anything as moving have Was this maybe are review moved to out? of could your wondering, And the didn't acquisitions been part comment just maybe So,

Yes.

with Justin, I'll new start in build. the

a of more than this number So, issue it is megawatts. is timing a

what they're I Many same other to been was in I were at pushed solar interconnected is were a you that hit example where think project, cite the culprit But And community And others our New delays. here it at there, saw the there right. getting think in site really in you has that's interconnection on little utility York. main frustrations. one August, on solar pushed -- in the was And here solar that call if May. not are bit. our an and the like you a head completed examples the early Investor out Day heard is out still are and that's the array, utility. portfolio And by but a that you've particular ray where of probably there things

Justin, anything and taking certainly just in focus And remit my so on context predicting there context a here of of to view, assets. is the business, side challenge that, the suggest opportunity, of I in but broader we're timing the you of do in What development about the of not a been, the trying volume know, would sober add, the as particular. operationalizing necessarily these in has consistent

we're there your pipeline question So, opportunity. very that's the be acquired, focus about. On as that key robust our assets that talking a to be feature operational it of in continues are to relates to

there. deals of shortage no there's So,

opportunity, think is say with timing I see the appreciate year. will discipline fact which that that call would pipeline in to you hopefully, remarks, the the fact there prepared us of a to and the what those that -- in but it's are year, with is have for that respect steward both I the confidence also capital as -- we a that early significant, later appropriate our articulated the that next be to we that the important would also this demonstrate on opportunities

the so, with to And of of respect and opportunity. not pipeline scale scale scale large. the of the the remains the again being timing, opportunity quite we're of kind about sober The thinking

would where this opportunity. And opportunity a I happening And that's a may a in set Altus coming further think in calls, real scale opportunity on to prior put exiting very there continues say, on with the point, a to certain flow of and of frankly, there mentioned confidence greater respect Power, leadership So, we would have our space. is we has opportunities. I be position robust have that with of we spot I a lot continue market us for add to players, of see way. our the where consolidation a in this

Okay. Good to hear.

more, of if in share those you may, those were? solar in that And realizing this do were here. quarter. credits you The what anticipate QX QX one expected or recognized the Could Just this credits of I community not year? value then

I'm Yes. Justin. that going kick to off,

Just that give a little solar for to make bit this of fill to sure community the context frame we for in Dustin financials.

as here what just So, the the the consumption there case of every in reminder, quite is with talking solar, consistent proximate production. we're community about where other a are we commercial own, sites, scale that to not site

the So, think These consumption relative the of carport all a where solar. a landfill is tenant the of a community or use for cases insufficient are or to scale rooftop building project.

instead selling the adjacent on-site same to the utility we're community So, zone. to where on within instead we're specifically sites of building that consumer, selling

have it And to in to building order But us so, what our say, that power we're customers talking the let's you in sites hundreds, ultimately per acquired partners there? come take by that do want Dustin, or satisfy from the about are to generating. are the site, we're where

Yes.

is So, in terms the in of customers, a that our we've QX megawatts and how XXX% of two-year of deferral rapidly a period. business really segment function in grown

customers. onboard I sometimes say And a is would so, to new what ramp-up there's

QX that be generated to monetize worth we will revenue was QX, $X of as in million result, had about was revenue I'd we estimate in the -- instead production QX half and that book what monetize the as so, year. and that in and in second QX. generation a to we expect of And And

talking task who's at about, little anyone less again on the for And $X.XX. selling one talking it we're to credits dollar as Justin, -- thing just a that last we're just familiar, the relates about

to this a sign on anybody their And Altus really quote/unquote, power, to not is utility Power project bill. want sale. hard on from It But go bill. wants discounted community who to, money we their who should can discount benefit So, in a be York New customers again, process. the and have that's literally out acquire solar save living up for

to that XX-year Now quarter sort from a we're multi-month that contextualize talking about one of contract. the in of to out that gap from this next, referred the Dustin context pushing

So, in by this revenue recognition really immaterial is quarter. but does the it short-term of a affect sense,

sense. it. Got Makes

Okay.

question Citi comes of Group. next Bagri Vikram Your from

construction Could insight curious us mix into context time, or M&A change assets rather the the outlook. that for we of the all? should mix how you bit Does give a especially operating be little outlook of that in of on that. Just about additional does content, over versus assets opportunity three-year that thinking domestic at

Dustin. is this Vikram,

On say that's I couple last builds. of at piece, operating the would if back the you to XX% look years, of mix I think of new roughly going projects, be XX% acquisition

the participants a there's I them operate and own sense spoke think never a lot that, Gregg how that's a makes it scale certain lot about a to very the of for higher maybe of have decent to assets. go-forward. market Gregg gotten proxy. who that on spoke opportunity, fragmented market, of handful interest impacting rates

our feature do we so a of be to expect And three-year acquisition plan. the key side growth

texture the as in engaging additional we directly landlord. with which well some early channels, direct us development the is you around give stage, engage partners side, to as just clearly, the channel that the And development

with areas with, focus a of All is of different the engagement. well. But as are know, you opportunities as of respect line from robust those flow a there horizon those time initial to

the to with who consolidation way of developers the from market the earlier the in a referred different opportunities to market, I when looking that partner variety a in in Altus. are so, positive impacting And we're seeing is

to And is NOLs at business? the the one million all the that that the follow-up $XX Got benefit, on related you tax it. income was item? Or just statement, have in that onetime a

the to that noncash alignment and related fair Yes. on shares. not It's onetime, it's It's by really NOLs, Vikram. value driven the a

question Partners. Seaport Instructions.) of Campbell comes Your from (Operator next Jeffrey Research

looking prioritize connection about? sort you is of in potentially acquired. Dustin as so, that to And self-help this I about you provides that utility existing of that acquisitions recently the you're once selection that highlighted, Gregg, noted like for talked opportunities assets available was for the one issue the if that thinking does acquired New Jersey [amps]

Yes. that not like great of one highlighting we question, our you're of features to business be. understood as it maybe It's feel the and we'd is well a as

way And we just high portfolio areas about is own of the we located think country power a the we strategically obviously, to that builds asset that portfolio. acquire So, that in projects consumption. are across every of

think in given so, that you and And demand is the characteristics most to pressure palpable on the alluding the we to. opportunity grid, later as reposition life. clearly, these opportunity an And assets redevelopment are there's

was So, let's say system that in operation. that's after put a decade

that a should be interconnection. and a it's exists captive our where of permanent opportunity thought that effectively no within So, already doubt as interconnection portfolio

we have we existing when so, is of an of own an fact that mitigated great opportunity effectively asset. a an degree issue, the we consequence ourselves opportunity. redevelopment that to a course, asset as interconnection to that or And asset that when avail And of acquire there's

an So, that perspective. mean that driving interconnection focused we're not assets doesn't from new forward on

But that those So, impression is shorter those that jump correct, critical that sort can. as existing to want of I point exist timelines drive don't to we a of does assets give which your ours acquire on challenge the new over builds. that it's is focus and interconnection not we

this at questions gentlemen, concludes call. further and no are conference Ladies you this participation. Thank for There your today's time.

disconnect. You now may