Hannon Armstrong Sustainable Infrastructure Capital, Inc.
("HASI," "we," "our" or the "Company") (NYSE: HASI), a leading
investor in climate solutions, today reported results for the first
quarter of 2023.
Business Highlights
- Highest-ever first quarter volume and increased pipeline of
investment opportunities
- 15% annual total shareholder return over first ten years as a
public company, outperforming the S&P 5001
- Conducted successful Investor Day providing detailed
description of the business
- Completed leadership transition with Jeff W. Eckel assuming the
role of Executive Chair, Jeffrey A. Lipson becoming the President
and CEO, and Marc Pangburn assuming the role of CFO
Financial Highlights
- Delivered $0.26 GAAP diluted EPS compared with $0.51 a year
ago
- Delivered $0.53 Distributable EPS compared to $0.52 a year
ago
- Increased Portfolio by 9% in the quarter and 25% in the last
twelve months to $4.7 billion. Managed assets grew 15% year over
year to $10.4 billion
- Increased GAAP-based Net Investment Income of $12.4 million by
23% and Distributable Net Investment Income of $47.1 million by 11%
year over year
- Closed $389 million of investments in the first quarter of
2023, up 18% from a year ago
- Declared dividend of $0.395 per share
- Affirm guidance that Distributable Earnings Per Share is
expected to grow at a compound annual rate of 10% to 13% from 2021
to 2024, relative to the 2020 baseline of $1.55 per share, which is
equivalent to a 2024 midpoint of $2.40 per share
1 Total shareholder return since IPO based on the closing price
4/18/13 to 4/18/23, which marks the 10th anniversary
ESG Highlights
- An estimated 92,000 metric tons of carbon emissions will be
avoided annually by our transactions closed this quarter, equating
to a CarbonCount® score of 0.24 metric tons per $1,000
invested
- Released 2022 HASI Impact Report that details our approach,
targets and performance across material ESG topics
“We completed another quarter of strong performance, capping ten
years of consistent success,” said Jeffrey A. Lipson, HASI
President and Chief Executive Officer. “Our business is poised for
further growth as we commence our second decade as a public
company.”
A summary of our results is shown in the table below:
For the three months
ended
March 31, 2023
For the three months
ended
March 31, 2022
$ in thousands
Per Share
(Diluted)
$ in thousands
Per Share
(Diluted)
GAAP Net Income
$
24,106
$
0.26
$
45,346
$
0.51
Distributable earnings
49,658
0.53
45,734
0.52
Financial Results
“We have maintained substantial liquidity and ongoing access to
capital at costs which provide investment margins that support our
short and long-term profitability targets,” said Marc Pangburn,
HASI Chief Financial Officer.
Comparison of the quarter ended March 31, 2023 to the quarter
ended March 31, 2022
Total revenue increased by $11 million, driven by $14 million in
higher interest and securitization income from larger portfolio and
managed assets balances. There was a $3 million decrease in gain on
sale and other income, driven by a change in the mix and volume of
assets being securitized as well as lower fee generating
opportunities.
Interest expense increased $11 million primarily due to a larger
average outstanding debt balance and a higher average interest
rate. We recorded a $2 million provision for loss on receivables as
a result of loans and loan commitments made during the quarter.
Other expenses (compensation and benefits and general and
administrative expenses) increased by approximately $4 million
primarily due to share-based compensation recognized upon the grant
of certain awards for employees eligible for retirement as well as
additional investment in corporate infrastructure.
We recognized income of $22 million using the hypothetical
liquidation at book value method (HLBV) for our equity method
investments in the first quarter of 2023, compared to income of $48
million for the same period in 2022, primarily due to fewer tax
attributes recognized by our co-investors in this quarter which
decreases our HLBV allocation of earnings.
Income tax expense decreased by approximately $10 million in the
first quarter of 2023 compared to the same period in 2022 due to a
decrease in GAAP earnings.
GAAP net income (loss) in the first quarter of 2023 was $24
million, compared to $45 million in the same period in 2022.
Distributable earnings in the first quarter of 2023 was
approximately $50 million, or an increase of approximately $4
million from the same period in 2022 due primarily to new assets
added to our portfolio.
Leverage
The calculation of our fixed-rate debt and leverage ratios as of
March 31, 2023 and December 31, 2022 are shown in the table
below:
March 31, 2023
% of Total
December 31, 2022
% of Total
($ in millions)
($ in millions)
Floating-rate borrowings (1)
$
439
13
%
$
431
14
%
Fixed-rate debt (2)
2,921
87
%
2,545
86
%
Total
$
3,360
100
%
$
2,976
100
%
Leverage (3)
2.0 to 1
1.8 to 1
(1)
Floating-rate borrowings include borrowings under our
floating-rate credit facilities and commercial paper issuances with
less than six months original maturity, to the extent such
borrowings are not hedged using interest rate swaps.
(2)
Fixed-rate debt includes the present notional value of debt that
is hedged using interest rate swaps. Debt excludes securitizations
that are not consolidated on our balance sheet.
(3)
Leverage, as measured by our debt-to-equity ratio.
Portfolio
Our balance sheet portfolio totaled approximately $4.7 billion
as of March 31, 2023, which included approximately $2.5 billion of
behind-the-meter assets and approximately $2.0 billion of
grid-connected assets, with the remainder in fuels, transport, and
nature. The following is an analysis of the Performance Ratings of
our portfolio as of March 31, 2023:
Portfolio Performance
Government
Commercial
1 (1)
1 (1)
2 (2)
3 (3)
Total
(dollars in millions)
Total receivables
98
1,995
—
11
2,104
Less: Allowance for loss on
receivables
—
(38
)
—
(5
)
(43
)
Net receivables (4)
98
1,957
—
6
2,061
Receivables held-for-sale
—
17
—
—
17
Investments
2
8
—
—
10
Real estate
—
352
—
—
352
Equity method investments (5)
—
2,227
23
—
2,250
Total
$
100
$
4,561
$
23
$
6
$
4,690
Percent of Portfolio
2
%
97
%
1
%
—
%
100
%
(1)
This category includes our assets where
based on our credit criteria and performance to date, we believe
that our risk of not receiving our invested capital remains
low.
(2)
This category includes our assets where
based on our credit criteria and performance to date, we believe
there is a moderate level of risk of not receiving some or all of
our invested capital.
(3)
This category includes our assets where
based on our credit criteria and performance to date, we believe
there is substantial doubt regarding our ability to recover some or
all of our invested capital. Loans in this category are placed on
non-accrual status.
(4)
Total reconciles to the total of the
government receivables and commercial receivables lines of the
consolidated balance sheets.
(5)
Some of the individual projects included
in portfolios that make up our equity method investments have
government off-takers. As they are part of large portfolios, they
are not classified separately.
Guidance
The Company expects that annual distributable earnings per share
will grow at a compounded annual rate of 10% to 13% from 2021 to
2024, relative to the 2020 baseline of $1.55 per share, which is
equivalent to a 2024 midpoint of $2.40 per share. The Company also
expects growth of annual dividends per share to be at a compounded
annual rate of 5% to 8%. This guidance reflects the Company’s
judgments and estimates of (i) yield on its existing portfolio;
(ii) yield on incremental portfolio investments, inclusive of the
Company’s existing pipeline; (iii) the volume and profitability of
transactions; (iv) amount, timing, and costs of debt and equity
capital to fund new investments; (v) changes in costs and expenses
reflective of the Company’s forecasted operations; and (vi) the
general interest rate and market environment. All guidance is based
on current expectations of the regulatory environment, the dynamics
of the markets in which we operate and the judgment of the
Company’s management team, among other factors. In addition,
distributions are subject to approval by the Company’s Board of
Directors on a quarterly basis. The Company has not provided GAAP
guidance as discussed in the Forward-Looking Statements section of
this press release.
Dividend
The Company is announcing today that its Board of Directors
approved a quarterly cash dividend of $0.395 per share of common
stock. This dividend will be paid on July 12, 2023, to stockholders
of record as of July 5, 2023.
Conference Call and Webcast Information
HASI will host an investor conference call today, Thursday, May
4, 2023, at 5:00 p.m. Eastern Time. The conference call can be
accessed live over the phone by dialing 1-877-407-0890 (Toll-Free)
or +1-201-389-0918 (toll). Participants should inform the operator
you want to be joined to the HASI call. The conference call will
also be accessible as an audio webcast with slides on our website.
A replay after the event will be accessible as on-demand webcast on
our website.
About HASI
HASI (NYSE: HASI) is a leading climate positive investment firm
that actively partners with clients to deploy real assets that
facilitate the energy transition. With more than $10 billion in
managed assets, our vision is that every investment improves our
climate future. For more information, please visit hasi.com.
Forward-Looking Statements:
Some of the information contained in this press release is
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that are subject to
risks and uncertainties. For these statements, we claim the
protections of the safe harbor for forward-looking statements
contained in such Sections. These forward-looking statements
include information about possible or assumed future results of our
business, financial condition, liquidity, results of operations,
plans and objectives. When we use the words “believe,” “expect,”
“anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,”
“may” or similar expressions, we intend to identify forward-looking
statements. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking.
All statements that address operating performance, events or
developments that we expect or anticipate will occur in the future
are forward-looking statements.
Forward-looking statements are subject to significant risks and
uncertainties. Investors are cautioned against placing undue
reliance on such statements. Actual results may differ materially
from those set forth in the forward-looking statements. Factors
that could cause actual results to differ materially from those
described in the forward-looking statements include those discussed
under the caption “Risk Factors” included in our most recent Annual
Report on Form 10-K as well as in other periodic reports that we
file with the U.S. Securities and Exchange Commission.
Any forward-looking statement speaks only as of the date on
which such statement is made, and we undertake no obligation to
update any forward-looking statement to reflect events or
circumstances, including, but not limited to, unanticipated events,
after the date on which such statement is made, unless otherwise
required by law. New factors emerge from time to time and it is not
possible for management to predict all of such factors, nor can it
assess the impact of each such factor on the business or the extent
to which any factor, or combination of factors, may cause actual
results to differ materially from those contained or implied in any
forward-looking statement.
The Company has not provided GAAP guidance as forecasting a
comparable GAAP financial measure, such as net income, would
require that the Company apply the HLBV method to these
investments. In order to forecast under the HLBV method, the
Company would be required to make various assumptions related to
expected changes in the net asset value of the various entities and
how such changes would be allocated under HLBV. GAAP HLBV earnings
over a period of time are very sensitive to these assumptions
especially in regard to when a partnership transaction flips and
thus the liquidation scenarios change materially. The Company
believes that these assumptions would require unreasonable efforts
to complete and if completed, the wide variation in projected GAAP
earnings based upon a range of scenarios would not be meaningful to
investors. Accordingly, the Company has not included a GAAP
reconciliation table related to any distributable earnings
guidance.
Estimated carbon savings are calculated using the estimated
kilowatt hours, gallons of fuel oil, million British thermal units
of natural gas and gallons of water saved as appropriate, for each
project. The energy savings are converted into an estimate of
metric tons of CO2 equivalent emissions based upon the project’s
location and the corresponding emissions factor data from the U.S.
Government and International Energy Agency. Portfolios of projects
are represented on an aggregate basis.
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
For the Three Months Ended
March 31,
2023
2022
Revenue
Interest income
$
43,108
$
30,242
Rental income
6,487
6,499
Gain on sale of receivables and
investments
15,719
17,099
Securitization income
3,432
2,741
Other income
355
1,895
Total revenue
69,101
58,476
Expenses
Interest expense
37,216
26,652
Provision for loss on receivables
1,883
621
Compensation and benefits
18,369
14,929
General and administrative
8,022
7,138
Total expenses
65,490
49,340
Income before equity method
investments
3,611
9,136
Income (loss) from equity method
investments
22,418
47,566
Income (loss) before income
taxes
26,029
56,702
Income tax (expense) benefit
(1,431
)
(10,999
)
Net income (loss)
$
24,598
$
45,703
Net income (loss) attributable to
non-controlling interest holders
492
357
Net income (loss) attributable to
controlling stockholders
$
24,106
$
45,346
Basic earnings (loss) per common share
$
0.26
$
0.53
Diluted earnings (loss) per common
share
$
0.26
$
0.51
Weighted average common shares
outstanding—basic
91,102,374
85,583,152
Weighted average common shares
outstanding—diluted
94,129,174
89,052,167
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
March 31, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
142,489
$
155,714
Equity method investments
2,249,684
1,869,712
Commercial receivables, net of allowance
of $43 million and $41 million, respectively
1,962,793
1,887,483
Government receivables
97,968
102,511
Receivables held-for-sale
16,603
85,254
Real estate
352,227
353,000
Investments
10,499
10,200
Securitization assets
193,378
177,032
Other assets
114,229
119,242
Total Assets
$
5,139,870
$
4,760,148
Liabilities and Stockholders’
Equity
Liabilities:
Accounts payable, accrued expenses and
other
$
120,968
$
120,114
Credit facilities
358,728
50,698
Green commercial paper notes
99,899
192
Term loan facility
380,102
379,742
Non-recourse debt (secured by assets of
$602 million and $632 million, respectively)
395,002
432,756
Senior unsecured notes
1,779,749
1,767,647
Convertible notes
346,607
344,253
Total Liabilities
3,481,055
3,095,402
Stockholders’ Equity:
Preferred stock, par value $0.01 per
share, 50,000,000 shares authorized, no shares issued and
outstanding
—
—
Common stock, par value $0.01 per share,
450,000,000 shares authorized, 91,657,822 and 90,837,008 shares
issued and outstanding, respectively
917
908
Additional paid in capital
1,946,904
1,924,200
Accumulated deficit
(297,708
)
(285,474
)
Accumulated other comprehensive income
(loss)
(32,820
)
(10,397
)
Non-controlling interest
41,522
35,509
Total Stockholders’ Equity
1,658,815
1,664,746
Total Liabilities and Stockholders’
Equity
$
5,139,870
$
4,760,148
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
2023
2022
Cash flows from operating
activities
Net income (loss)
$
24,598
$
45,703
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Provision for loss on receivables
1,883
621
Depreciation and amortization
926
987
Amortization of financing costs
3,250
2,716
Equity-based compensation
7,898
3,540
Equity method investments
(11,415
)
(38,564
)
Non-cash gain on securitization
(6,882
)
(4,532
)
(Gain) loss on sale of receivables and
investments
1,305
29
Changes in receivables held-for-sale
37,249
(43,482
)
Changes in accounts payable and accrued
expenses
936
11,709
Change in accrued interest on receivables
and investments
(12,231
)
(2,925
)
Other
1,287
(7,745
)
Net cash provided by (used in) operating
activities
48,804
(31,943
)
Cash flows from investing
activities
Equity method investments
(362,831
)
(78,717
)
Equity method investment distributions
received
1,469
4,217
Proceeds from sales of equity method
investments
—
1,700
Purchases of and investments in
receivables
(96,842
)
(35,018
)
Principal collections from receivables
22,741
19,850
Proceeds from sales of receivables
7,634
—
Purchases of real estate
—
(4,550
)
Posting of hedge collateral
(20,350
)
—
Other
(548
)
(2,975
)
Net cash provided by (used in) investing
activities
(448,727
)
(95,493
)
Cash flows from financing
activities
Proceeds from credit facilities
312,000
—
Principal payments on credit
facilities
(5,000
)
—
Proceeds from issuance of commercial paper
notes
100,000
25,000
Principal payments on non-recourse
debt
(5,140
)
(5,577
)
Net proceeds of common stock issuances
23,256
50,011
Payments of dividends and
distributions
(35,142
)
(31,810
)
Withholdings on employee share vesting
(1,317
)
(2,211
)
Payment of financing costs
—
(3,421
)
Other
(503
)
(461
)
Net cash provided by (used in) financing
activities
388,154
31,531
Increase (decrease) in cash, cash
equivalents, and restricted cash
(11,769
)
(95,905
)
Cash, cash equivalents, and restricted
cash at beginning of period
175,972
251,073
Cash, cash equivalents, and restricted
cash at end of period
$
164,203
$
155,168
Interest paid
$
20,343
$
13,145
Supplemental disclosure of non-cash
activity
Residual assets retained from
securitization transactions
$
5,330
$
4,532
Issuance of common stock from conversion
of Convertible Notes
—
7,674
Deconsolidation of non-recourse debt
32,923
—
Deconsolidation of assets pledged for
non-recourse debt
31,371
—
EXPLANATORY NOTES
Non-GAAP Financial Measures
Distributable Earnings
We calculate distributable earnings as GAAP net income (loss)
excluding non-cash equity compensation expense, provisions for loss
on receivables, amortization of intangibles, non-cash provision
(benefit) for taxes, losses or (gains) from modification or
extinguishment of debt facilities, any one-time acquisition related
costs or non-cash tax charges and the earnings attributable to our
non-controlling interest of Hannon Armstrong Sustainable
Infrastructure, L.P., a Delaware limited partnership (our
“Operating Partnership”). We also make an adjustment to our equity
method investments in the renewable energy projects as described
below. We will use judgment in determining when we will reflect the
losses on receivables in our distributable earnings, and will
consider certain circumstances such as the time period in default,
sufficiency of collateral as well as the outcomes of any related
litigation. In the future, distributable earnings may also exclude
one-time events pursuant to changes in GAAP and certain other
adjustments as approved by a majority of our independent
directors.
We believe a non-GAAP measure, such as distributable earnings,
that adjusts for the items discussed above is and has been a
meaningful indicator of our economic performance in any one period
and is useful to our investors as well as management in evaluating
our performance as it relates to expected dividend payments over
time. As a REIT, we are required to distribute substantially all of
our taxable income to investors in the form of dividends, which is
a principal focus of our investors. Additionally, we believe that
our investors also use distributable earnings, or a comparable
supplemental performance measure, to evaluate and compare our
performance to that of our peers, and as such, we believe that the
disclosure of distributable earnings is useful to our
investors.
Certain of our equity method investments in renewable energy and
energy efficiency projects are structured using typical partnership
“flip” structures where the investors with cash distribution
preferences receive a pre-negotiated return consisting of priority
distributions from the project cash flows, in many cases, along
with tax attributes. Once this preferred return is achieved, the
partnership “flips” and the common equity investor, often the
operator or sponsor of the project, receives more of the cash flows
through its equity interests while the previously preferred
investors retain an ongoing residual interest. We have made
investments in both the preferred and common equity of these
structures. Regardless of the nature of our equity interest, we
typically negotiate the purchase prices of our equity investments,
which have a finite expected life, based on our underwritten
project cash flows discounted back to the net present value, based
on a target investment rate, with the cash flows to be received in
the future reflecting both a return on the capital (at the
investment rate) and a return of the capital we have committed to
the project. We use a similar approach in the underwriting of our
receivables.
Under GAAP, we account for these equity method investments
utilizing the HLBV method. Under this method, we recognize income
or loss based on the change in the amount each partner would
receive, typically based on the negotiated profit and loss
allocation, if the assets were liquidated at book value, after
adjusting for any distributions or contributions made during such
quarter. The HLBV allocations of income or loss may be impacted by
the receipt of tax attributes, as tax equity investors are
allocated losses in proportion to the tax benefits received, while
the sponsors of the project are allocated gains of a similar
amount. The investment tax credit available for election in solar
projects is a one-time credit realized in the quarter when the
project is considered operational for tax purposes and is fully
allocated under HLBV in that quarter (subject to an impairment
test), while the production tax credit required for wind projects
and electable for solar projects is a ten year credit and thus is
allocated under HLBV over a ten year period. In addition, the
agreed upon allocations of the project’s cash flows may differ
materially from the profit and loss allocation used for the HLBV
calculations in a given period. We also consider the impact of any
OTTI in determining our income from equity method investments.
The cash distributions for those equity method investments where
we apply HLBV are segregated into a return on and return of capital
on our cash flow statement based on the cumulative income (loss)
that has been allocated using the HLBV method. However, as a result
of the application of the HLBV method, including the impact of tax
allocations, the high levels of depreciation and other non-cash
expenses that are common to renewable energy projects and the
differences between the agreed upon profit and loss and the cash
flow allocations, the distributions and thus the economic returns
(i.e. return on capital) achieved from the investment are often
significantly different from the income or loss that is allocated
to us under the HLBV method in any one period. Thus, in calculating
distributable earnings, for certain of these investments where
there are characteristics as described above, we further adjust
GAAP net income (loss) to take into account our calculation of the
return on capital (based upon the underwritten investment rate)
from our renewable energy equity method investments, as adjusted to
reflect the performance of the project and the cash distributed. We
believe this equity method investment adjustment to our GAAP net
income (loss) in calculating our distributable earnings measure is
an important supplement to the HLBV income allocations determined
under GAAP for an investor to understand the economic performance
of these investments where HLBV income can differ substantially
from the economic returns in any one period.
We have acquired equity investments in portfolios of renewable
energy projects which have the majority of the distributions
payable to more senior investors in the first few years of the
project. The following table provides our results related to our
equity method investments for the three months ended March 31, 2023
and 2022.
Three Months Ended
March 31,
2023
2022
(in millions)
Income (loss) under GAAP
$
22
$
48
Collections of Distributable earnings
$
9
$
8
Return of capital
3
5
Cash collected
$
12
$
13
Distributable earnings does not represent cash generated from
operating activities in accordance with GAAP and should not be
considered as an alternative to net income (determined in
accordance with GAAP), or an indication of our cash flow from
operating activities (determined in accordance with GAAP), or a
measure of our liquidity, or an indication of funds available to
fund our cash needs, including our ability to make cash
distributions. In addition, our methodology for calculating
distributable earnings may differ from the methodologies employed
by other companies to calculate the same or similar supplemental
performance measures, and accordingly, our reported distributable
earnings may not be comparable to similar metrics reported by other
companies.
Reconciliation of our GAAP Net Income to Distributable
Earnings
We have calculated our distributable earnings and provided a
reconciliation of our GAAP net income to distributable earnings for
the three months ended March 31, 2023 and 2022 in the tables
below.
For the three months ended
March 31, 2023
For the three months ended
March 31, 2022
(dollars in thousands, except per
share amounts)
$
per share
$
per share
Net income attributable to controlling
stockholders (1)
$
24,106
$
0.26
$
45,346
$
0.51
Distributable earnings adjustments:
Reverse GAAP (income) loss from equity
method investments
(22,418
)
(47,566
)
Add equity method investments earnings
33,957
31,598
Equity-based expense
9,435
3,540
Provision for loss on receivables
1,883
621
Other adjustments (2)
2,695
12,195
Distributable earnings (3)
$
49,658
$
0.53
$
45,734
$
0.52
(1)
The per share amounts represent GAAP diluted earnings per share
and is the most comparable GAAP measure to our distributable
earnings per share.
(2)
See Other adjustments table below.
(3)
Distributable earnings per share for the three months ended
March 31, 2023 and 2022, are based on 93,266,916 shares and
87,206,540 shares outstanding, respectively, which represents the
weighted average number of fully-diluted shares outstanding
including our restricted stock awards, restricted stock units,
long-term incentive plan units, and the non-controlling interest in
our Operating Partnership. We include any potential common stock
issuances related to share based compensation units in the amount
we believe is reasonably certain to vest. As it relates to
Convertible Notes, we will assess the market characteristics around
the instrument to determine if it is more akin to debt or equity
based on the value of the underlying shares upon conversion. If the
instrument is more debt-like then we will include any related
interest expense and exclude the underlying shares issuable upon
conversion of the instrument. If the instrument is more equity-like
and is more dilutive when treated as equity then we will exclude
any related interest expense and include the weighted average
shares underlying the instrument.
The table below provides a reconciliation of the Other
adjustments:
For the Three Months Ended
March 31,
2023
2022
(in thousands)
Other adjustments
Amortization of intangibles (1)
$
772
$
839
Non-cash provision (benefit) for income
taxes
1,431
10,999
Net income attributable to non-controlling
interest
492
357
Other adjustments
$
2,695
$
12,195
(1)Adds back non-cash
amortization of lease and pre-IPO intangibles.
The table below provides a reconciliation of GAAP SG&A
expenses to Distributable SG&A expenses:
For the Three Months Ended
March 31,
2023
2022
(in thousands)
GAAP SG&A expenses
Compensation and benefits
$
18,369
$
14,929
General and administrative
8,022
7,138
Total SG&A expenses (GAAP)
$
26,391
$
22,067
Distributable SG&A expenses
adjustments:
Non-cash equity-based expenses (1)
$
(9,435
)
$
(3,540
)
Amortization of intangibles (2)
—
(68
)
Distributable SG&A expenses
adjustments
(9,435
)
(3,608
)
Distributable SG&A expenses
$
16,956
$
18,459
(1)
Reflects add back of non-cash amortization
of equity-based expenses. Outstanding grants related to
equity-based expenses are included in the distributable earnings
per share calculation.
(2)
Adds back non-cash amortization of pre-IPO
intangibles.
Distributable Net Investment Income
We have a portfolio of debt and equity investments in climate
change solutions. We calculate distributable net investment income
by adjusting GAAP-based net investment income for those
distributable earnings adjustments described above which impact
investment income. We believe that this measure is useful to
investors as it shows the recurring income generated by our
Portfolio after the associated interest cost of debt financing. Our
management also uses distributable net investment income in this
way. Our non-GAAP distributable net investment income measure may
not be comparable to similarly titled measures used by other
companies. The following is a reconciliation of our GAAP-based net
investment income to our distributable net investment income:
Three months ended March
31,
2023
2022
(in thousands)
Interest income
$
43,108
$
30,242
Rental income
6,487
6,499
GAAP-based investment revenue
49,595
36,741
Interest expense
37,216
26,652
GAAP-based net investment income
12,379
10,089
Equity method earnings adjustment (1)
33,957
31,598
Amortization of real estate intangibles
(2)
772
771
Distributable net investment
income
$
47,108
$
42,458
(1)
Reflects adjustment for equity method
investments described above.
(2)
Adds back non-cash amortization related to
acquired real estate leases.
Managed Assets
As we both consolidate assets on our balance sheet and
securitize assets, certain of our receivables and other assets are
not reflected on our balance sheet where we may have a residual
interest in the performance of the investment, such as servicing
rights or a retained interest in cash flows. Thus, we present our
investments on a non-GAAP “managed” basis, which assumes that
securitized receivables are not sold. We believe that our Managed
Asset information is useful to investors because it portrays the
amount of both on- and off-balance sheet receivables that we
manage, which enables investors to understand and evaluate the
credit performance associated with our portfolio of receivables,
investments, and residual assets in securitized receivables. Our
non-GAAP Managed Assets measure may not be comparable to similarly
titled measures used by other companies.
The following is a reconciliation of our GAAP-based Portfolio to
our Managed Assets as of March 31, 2023 and December 31, 2022:
As of
March 31, 2023
December 31, 2022
(dollars in millions)
Equity method investments
$
2,250
$
1,870
Commercial receivables, net of
allowance
1,963
1,887
Government receivables
98
103
Receivables held-for-sale
17
85
Real estate
352
353
Investments
10
10
GAAP-Based Portfolio
4,690
4,308
Assets held in securitization trusts
5,686
5,486
Managed assets
$
10,376
$
9,794
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504006038/en/
Investor Contact:
Neha Gaddam investors@hasi.com 410-571-6189
Media Contact:
Gil Jenkins media@hasi.com 443-321-5753
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