Altus Power (AMPS) 12 Nov 242024 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Altus Power, Inc.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Tuesday, November 12, 2024. I would now like to turn the conference over to Alison Sternberg, Head of Investor Relations. Please go ahead.

afternoon. Good third call. our XXXX quarter to earnings Welcome

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

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

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

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

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

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

joining welcome our and Alison, Thanks, to call our and analysts today. investors all

by toward Our continued third growth momentum was meaningful business marked the across progress plan. and quarter our long-term

front step the in why turning about our us. Before see wanted to the first we to opportunity current highlights and everyone that specific take to we are a incredibly back I positioning from excited quarter, market remind of

power scale the that that increasingly in clean and where pressing demands communities uniquely addressing energy dynamic positioned As Power of the as with as the of on landscape. industry, Rankings assets and focus solar surpassed power being Ownership strain Altus Total operating is thrive generating an per a We market directly grid. in June the is XXXX, portfolio leader resulting of Wood Solar nationwide consumed, gigawatt, Mackenzie's on to the commercial X has enterprises Commercial X,

of proximity help to needed alleviate areas to consumption. solutions importantly, of Our generation but generation provide issues not much our only capacity, the transmission additional given

from we to gigawatt our advantages X significant back of the milestone the our our incumbency benefits important assets, derive and reaching of scale. Turning it's to of operating highlight

is be key assets, aspect infrastructure fully that of portfolio but daily over not Our optimize assets operating as country. robust an not projects, and for each just and individual our unique growing opportunity ownership positioned may portfolio assets as is across value creation. of our time. We view the continually these appreciated a generating strategically long-term to revenue continued of power associated our A collection

to scale scale solidifies market. in serve, in which density competitive enhances portfolio, the large with markets our Our increasing solar our continues edge efficiency, operational commercial we not but also only

the portfolio faster encouraging Looking favorable grow and ahead, as to than federal we the state-level have supply to to of total overall expect years market significant reshoring our the our addressable few are next already within environment, chain improve associated detailed as operating we our programs On market I'm reshaped over both dynamics. Notably, domestic due undertaking identify several key a focus by I expanding positioning to cost has sector. combined electricity prices additional the results projects, to states providing to the business. One adopt call, secular more policies, as our with rise of area clean for development our locations the go-to-market a The for set continued the our decline intended growth. With create compelling we incentives poised and us drive opportunities to solar. have opportunity strength well build renewed efficiencies these and report believe landscape more efforts that expand eager favorable strategy energy supportive for in were yielding in our earnings early-stage solar financial to the growth been we well pipeline. last support work we areas pleased growing that capture areas our across plans. are with as where expansion, of of to

plan will which put nature opportunities This the market-specific client has the that historical solar assets. I highly these announced of our in You revenue-generating hallmark engagement, increasing velocity at more a development and a to localized targeted approach development. execution to return a to the in of resulted on been review reflects a back approach certainty my convert into that May, which pipeline with recall focus our under success,

our focus Bernardino, renewed on seeing a and announced While projects the results energized our we resources ways identifying to Trammell aligning in customers new track within our show servicing Crow are forward, with working, us is partnership of over our be positions including that our already with announced exciting Company time. strategy weeks. still parts relationships footprint believe originated our which to that solar we this successful most San our expand early, approach project expand coming existing we other and in also to the customers moving recently record, while the about With with are

the of area has of Solar our Community key focus growth been portfolio. Another

the base to quarter, XXX% two representing we our unlock number area our to announced XX,XXX access projects in Within Community years. our solutions lead total customers, bringing new projects to with Colorado benefits and In Solar rapid the of Community Maine, value states Solar while approximately in last close this support Head of of solar. of a Community growth customer efforts the the the within new of our Solar our both of expanding we to delivering growth innovative that appointed in recently business, in X

Our is due our activities send to favorite brownfield of solutions, Altus well-positioned team and and a helping tax Internally, locations, announced for of operating a are into in structured and efficiency. of support set restructuring and also rigorously and In we offering on example, local proposition support the and critical Community value as better deepening it our and that unique to projects improve Solar structures market debt bench ensure takes team strength. This revenues also site expanding enables non-developable investment finance financing to Power's community. executing while recently of prioritized opportunities. sources charge opportunities. project equity the the designed component portfolio investment to this, diligence process in and power have capitalize opportunity us to we we originating, This of that our our streamline on negotiating team

our During of new for the projects for successfully a traditional investment Power The our of efficiency allocation opportunities to investors. renewable which competitiveness partners tax market our ability energy from solar model allows quarter, significant partnership highlights transfer to project equity form credits of new to equity with credits model capacity. Altus outside and commitment to for completed transaction, value creation structured partnership financing. This in and the the third-party partners both innovative maximizing tax tax buyers tax tax unlocks

financial call that are with our access strategic recently focused assessment the well-positioned end perspective shareholder in through walk comprehensive opportunities. announced long-term to for Dustin ensure by to capital, review. This some a immense on on market industry turning success I'd our enhancing like while Before to helping offering to value growing we quarterly to unlocking performance, is

our want highlights. to now than assurance information. team's day-to-day and said is That call share refrain from As will that outcome, result will its the additional no review growth let found CFO, that the review completion additional Dustin there me is on focus transaction Weber, has value comments stronger we or in approved our process over otherwise to for that, until hand emphasize it Board transaction, of particular concluded any necessary ever. With to or the creation financial additional specific a I

Gregg, Thanks, everyone joining thanks call. again and this to

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

reported general of non-GAAP was to administrative EBITDA; in of increase of we by the the amounting compared million the and and XXXX, expenses. of growth to by quarter our measure portfolio, third to offset partially growth increased million of adjusted operating Moving levels driven $XX.X XX%. This $XX

very performance in driving context traction returns towards we that our in for plans. quarter the We the our of investments in with noting continued ongoing every growth long-term worth think platform the are our of and dollar attractive It's pleased the spent.

project our onset cash disclosed XXXX. lot revenue announced general run current X% we represent data million approximately our quarter, with the that reaffirming complete corresponds our the confirm net we of in investments of to are previously of Specifically, half year in and and we can the by Accordingly, put majority early-stage are analytics. To million to development, emphasizing in million expense we We've be flow. targeted $XXX XXXX. of megawatts May, first in a to into a revenue given track of remainder $XXX production of the refined and that the certainty. the guidance team approach completed $XXX construction to to increases EBITDA. Since and revenue it XX then originally million execution million activity XXXX projects our in increase adjusted and optimization range our at to end on Last on engagement $X administrative the every we've in to energy speed market-specific of stated outlined increase context, some rate, and of since our these $XXX progress

beginning By shift XX% the X-year at best, previously of we're to us across positioned drive in seeing megawatts. call, XX% of what's stated on base, As the existing we business confidence our achievement the on referenced expand sustainable of this momentum the worked customer paying focusing guidance gives already our and Gregg growth. CAGR to The are off. is deepen relationships better

QX. million cash at the $XX financing Turning million we the our a $XXX quarter third with to balance plan; of versus finished end of

the During Gregg from and in the we support cash continued tax of transfer we CapEx proceeds to investment growth our to $XX that quarter, achieved alluded earlier. million expand to credits megawatt

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

assets, grid than it's strategically demands where more Thank operating continue Power by in is while With you, positioned power mitigating to solar, rising strain leadership in Altus addressing on generating our Dustin. X market commercial the energy needed. scale the gigawatt

our and portfolio our approach edge. competitive scale and enhances strengthens Our efficiency

restructuring time market to front renewable in our focused operational allowing execution, powering coupled with to unwaveringly sustainable on pipeline us go-to-market us position engagement, improved maximize team keeps innovation for opportunity continue potential. efforts, enables in aligns internal on resources our market and development and that the strategy our our a growth. These Altus a believe forward The your have refined customer executing taking for look Altus our revenue we We emerging the prospects and of recent thriving. Thank to while opportunities solidify for sector. today, customer and relationships growth focus your We business to day-to-day leadership market energy a strong you business remains questions. efficiency and large has Power's seize maximizes and deepen us

Instructions] from from Clare comes [Operator of Capital Justin Our the Partners. question first ROTH line

to here. wanted start I out So

to you year. I megawatts about of mentioned majority in the was Dustin, that think, that that you XX the had complete earlier you under expect talked the construction

to complete expect it You in XXXX.

So here, if maybe order ballpark? could megawatts just the math before it you and trying that's number Wondering some anticipating a in QX an install XX in plus completions there. right we you in get looks do to now like additional So be year-end? of should to

have some lot long on. recent as going additions of we And a in I Yeah. activity think ago too Hi Justin, construction announced yeah, Maine. well we not

that those referenced megawatts and megawatts on likely we end we just majority of have get the done expect year, And the the remarks, prior of to also worth we now think but in in in to year of I other are construction. construction, of it year. I additional do the that I with first XXXX. capacity. began the finalized active rest for call, add full in expect a but noting, the those the so -- XX XX And half were will our earlier do And still the And the between and said

operational then it this of enables are guide end? the guidance, you year, given end the the the performance you matter high you at projects Okay, got just the where high of of achieve get what or And the got in end those to we weather versus on a contribute QX just order in range? to Is it. to some low really it, wondering, be the to the the to do assets QX completed in point of the of and and kind the conditions in of need revenue

in megawatt year's limited revenue as Justin, here a the Yeah. relates you is know, mid-November impact. Sure. it And contribution pretty as to current the to

hit you portfolio will And and in-place factor biggest range end so operating influence I there well can factors we where think plays weather as as as, course on the a the well. of The that up within the it. be performance

Right, right.

Okay. into one could going question incentives in it's just to heading administration to the new on look we're that It the new that year. then get we like possible IRA. the have, changes next And does President some

or do potentially value might on get just state-level down Solar would for we or was earlier be proposition you impacted see forward I could here? if So wondering if phase an comment increased ITC? how of the Solar path the how Community Commercial going you And the you anticipate incentives

Sure. Thanks question. for the

operating start as were saying about surprised our and particularly we on optimistic not as X-year execute ability very let So to me the by remain we our the environment by plan. outcome, well

most as sources as provisions anticipate the in the would may We business. to said, other businesses Act, headline. provisions to are Reduction IRA, the before, materially business And that's think that Inflation the sensitivities more note that I certain risks. whereas being of of our have administration some the that relevant greater the of we see as provisions we've the of focus most we to are don't alter opposed would upside all that new which the of for said

Our line Seaport Research next Campbell Partners. of the question comes Jeffrey from from

a Community a by that you Congratulations last connection. I on utility the waiting wanted you mentioned was asking, to Solar had in solid call Westchester in begin that quarter. a installation on

gating utilities be I a new Community So or item seeing at Solar that as improvement you're projects a wondered using with to this higher undertaken? are conversely, you for level, any if on end the potential

Yeah.

as interconnection we historically fair have we'll to matter. and business, update, had and through, an think it's would delays our of do to general manage real that are element from I always continue call no say, it's something There's our So that. to say that I material a prior

As site, is it not project relates the extremely Morgan it's that Stanley frustrating. to operational. And still yet

-- we're that them do last the their work, the detailed work yet think to schedule highlighted call pretty agreed-upon for an I utility on not have is I that complete. with and we

can. do And future. to that the and as we that project placed in manage expect we're in hope near we continuing be will best service And through so that,

bit as just commentary And of sort broader little well. me of let provide a

I absolutely that general sort dynamic interconnection there's a is is in think referenced, utility-by-utility, there of location-by-location. industry that while Dustin general, around it -- just

So as of you've operationalized a also heard, number we are and have sites coming being online. that

pipeline are And we much particular converting a of have this deals robust so to is very the on. solution that to problem

look of should terms pipeline of the opportunity, of one lot the that a you generally so in have And conversion we speaking, enthusiasm at pipeline. is

would in put is Commercial anybody's on difficulty I positive Solar side argue are installations Commercial Solar potentially to not the a words Community for side the utility. but the avoiding mouth, the Solar Well, the that because

[indiscernible] So one there's size opportunity.

Yeah.

I make create challenge. think what It that we want that to is I perception a writ don't sure that's a Solar Community is not. large

Community sites Dustin The online in Maine Solar a have country Community in We interconnection and coming are and terms in of that Maine of around success we that the Maryland, referenced in number deals there. elsewhere. having projects, are all are Solar

the particular dealing responsive what So that being relates point requirement. an particular and interconnection as to be would that more Solar utility you're the probably how to utility be might Community with read-through it

yeah. So

you're their what you that. one Yeah, is wondered well. the I my really focusing promote working doing within solar color. is just ESG highlighted paraphrasing And to is to good I -- how trying your appreciate on control side return how that's last CBRE portfolio. I'm you've on

will feature a announcements and objectives. some on and prominently made leaning public ESG discussions. clients advising in advisory, And those Altus actually has it's No, CBRE question, about into their Yeah. sustainability certainly, great

ability really is consultative excellent which needed us. room solutions provide Altus discussions can in the up Fortune XXX in context opportunity for you are solar something with is the and and the services, as to definitely CBRE, that those the be know, offer their has connectivity and So that an of provide

comes of Our Street. the line from from next Clear question Tim Moore

on earlier your conversion you touch lot X in or the quarter. of you to up of profitability else. that that have emphasis put in opening execution the Do wanted if thread about was on operational customers? That on And elaborating do last on enhancements about to mind lead mentioned to projects. see. you nice the to increase just have Good appeasing the place timing new remarks the I was a a the velocity? in the on can times really timing talk it narrow enterprise Does national might maybe with sales cycle less months and improvements anything

Yeah. Thanks for question. the

pipeline real So specific from as with our And at and and generating together our new ensuring on pipeline, specific both that the revenue sometimes these to focus build channel execution opportunities as increasing certainty can well opportunities was flow. source estate therefore, has into assets operating resource and the through we owners, cash allocation the been convert partners. which move focus velocity

a with on decision-makers economics that well most And focus approach more as a so market-specific attractive are we are markets as pursuing to offer who solar on focusing approach and much execute. targeted a for the looking

might perhaps model. some and -- And degree, a are in the know nature much So It for So that is a us. enterprise of we instead may in you call to opportunity, point, states with more it albeit lucrative focus your national player, that market-specific a back-to-basics are market be right? opportunity. states. There a we're national XX to not be the

and heard opportunity. the flow are seeing results go-to-market on actionable strategy worked encouraging, has a deal remarks, early significant and you focusing we And are and as are the historically. well prepared for activities us in that We

stacks hurdles. was I you against for talk the one and can That's or question which The other wondering I'm If priorities could in in how redevelopment about in if elaborate seeing you versus your kind just of ROI I and helpful, go maybe through Northeast. projects? up how kind allocation. new rank the picking you're as you of IRR projects capital had mean especially you just Community do the only more maybe near-term? Solar that pipeline concentrate you

Sure.

try some to make question let multifaceted and degree, a just to me break that down. I it's it So sure

as revenue and we on on know, very First are revenue return you driving off, focused with attractive investment. driving

very are So everything that thoughtful respect and sure with we're to returns us. that making that on we're to available doing being is efficient the focused

how to sense and sometimes a the way if X-megawatt a without to in brownfield, varies. a From we relative which we demand large about is we've in solar could were Community been where you're sure market ask associated vantage industrial are lot the on a around relates both dynamics, costs as if a to the describe if to the solution years. And acquisition and XX-megawatt in up for a -- commercial successful develop roughly which, Community common making point, the think the leader deals, stack with there's the service you to Solar and how rooftop those understand sometimes corner just our the there, course, key that remote at those the the a you're our denominator in business, to tenant scale program there building market of with a a So now That demand. you That sites is Solar on other actually customer, build behind-the-meter offtake, etcetera. ingredient customer or servicing, does Solar Solar be but opportunities, the going solar. to community, of the the right sites. we offtake look Community want demand we is business no way The we our offtake naturally customers, the would is it that lot make you building. It's is XX of Community in-building captive

case extent that's upside question candidly, have, moderate and that, you Solar for focused underwrite to the for income to available opportunity is offtake. But if is look a right an think, deals disproportionately upside on the the assumption there from approach where I offtake adders, away the those Community market. IRA So have and base the return our in opportunity with people low

we Solar as that's with any about really Community compared asset. how other So think

about other minutes is a or just question in terms your that of Now of redevelopment, that is a explanation. category worthy of optimization whole couple of

opportunity or an more out portfolio. constantly We to have create of optimize value our

portfolio projects And power we for demand the now everybody our power that are that located, assets of should located and a in power particularly represents huge high appreciate higher country in prices, those Our associated increasing areas that's areas strategically opportunity. across consumption. own that where are

Our contracts time power us an think in And to opportunity we our to floating rate allow higher participate capacity prices. at there's increase over also site.

able So years that's creating the redevelopment increasing opportunity. and That's power have or actually only operating years greater probably power and capacity X greater that spend in more taking elucidating. of and a base been site something volume ago the power that a opportunity higher built associated obviously, to our some sell. of a but XX prices, more that large you're that time big volume of with or opportunity, might ago we site, Big energy participating not should

Stanley. the from Morgan of Percoco comes question Andrew next Our from line

second. really more the unit just I I'm election, portfolio these the I'm economics added how point, I the curious, of some over customers is solar with only aim Gregg, just just take administration, quarters a the it of agree with when back friction fits to I how the you're but customers. Has real a just sitting that mentioned But would totally some into kind around the natural some conversations? at of of about there's your prospective on of sure estate table projects or inhibited to that and the you've we is solar. come uncertainty with past we're the week know view the new and depending natural you've prospective your in And continued want further with piece not friction around creating election the seem. the and for of months their of selling IRA those portfolio few level how to conversations have just customers? process past

at Yeah. the We're We're level or that customer by the those at conversations. Thanks way. not all. that seeing seeing in question, at the for all not

and I And and want think the this understand people comment might predominantly time question. to uncertainty noise around mean an take are businesses the is it impacted. to the investor or what understandably, which

sensitivities different changes. businesses Act potential have I think different to Inflation the So and it as Reduction relates

our our of much domestic in, it business. I position the how site then our portfolio. the find influenced not ITC. A which essentially production associated relates to obviously include business the a adders foundational piece around a which that to land ultimately down perspective, from we're available, as is that's points codifying opportunities if the a or going for and not our to really and our the lease rent business natural can of rooftop. elements just -- ourselves ultimately block those is or development we XX% content, with pay which basics are That on the foundational around to think to just associated and other It we comes and the new -- IRA, engaging upside of expand lot is with the -- offtake profile,

that on particularly in customers. it not focused really seeing we're our So we're the that dialogues play we nor with a role having are

at further questions Please no this There continue. are time.

following you for everyone, with look and we up to time today, the forward Thanks, one-on-one.

call. you for this today's Thank Ladies and your gentlemen, concludes participation. conference

may You now disconnect.