Q4 2021 Altus Power Inc Earnings Call
[music].
Good morning, and welcome to the Altice power fourth quarter 2021 conference call.
Good morning and welcome to the Altus Power fourth quarter 2021 conference call.
As a reminder, today's call is being recorded and participants are in a listen-only mode. The question-and-answer session will follow the form.
As a reminder, today's call is being recorded and participants are in a listen only mode.
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 Chris Shelton, Head of Investor Relations.
At this time for opening remarks, and introductions I would like to turn the call over to Chris Shelton head of Investor Relations.
Good morning, and welcome to Alders Power's fourth quarter 2021 earnings call before we start I'd first like to express my excitement to be seated in my new role here at all if this phasing the analysts and Investor community I look forward to working with each and every one of you in the near future.
Chris Shelton: Good morning and welcome to Altus Power's fourth quarter 2021 earnings call. Before we start, I'd first like to express my excitement to be seated in my new role here at Altus, facing the analyst and investor community.
Chris Shelton: I look forward to working with each and every one of you in the near future.
Chris Shelton: Speaking on today's call are Lars Norell, Founder and Co-Chief Executive Officer of Altus Power, and Dustin Weber, Chief Financial Officer.
Speaking on today's call are Lars morale founder and co Chief Executive officer of voltage power and Duston Weber Chief Financial Officer.
In addition, founder and co Chief Executive Officer, Gregg Felton, who will be joining us for Q&A.
Speaker Change: In addition, Founder and Co-Chief Executive Officer Greg Felton will be joining us for Q&A.
Last night, we issued results in a press release that can be found on our website www dot all this power dot com in the investors section.
Greg Felton: Last night we issued results in a press release that can be found on our website www.altispower.com in the investors section.
Speaker Change: As a reminder, our comments on this column may contain forward-looking statements.
As a reminder, our comments on this call may contain forward looking statements.
Speaker Change: These statements are subject to various risks and uncertainties and may include expectations and assumptions for the company's future operations and financial performance.
These statements are subject to various risks and uncertainties that may include expectations and assumptions for the company's future operations and financial performance.
Actual results could differ materially from those predicted in the forward looking statements.
Speaker Change: Actual results could differ materially from those predicted in the forward-looking statement.
All of this power assumes no obligation to update these statements in the future or if circumstances change for more information. Please refer to the risks uncertainties and other factors discussed in our SEC filings.
Speaker Change: Altice Power assumes no obligation to update these statements in the future or if circumstances change. For more information, please refer to the risks, uncertainties, and other factors discussed in our SEC filing.
Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in last Night's press release can be found in the company's Form 10-K filed last night with the SEC and other documents filed by the company from time to time.
Speaker Change: Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in last night's press release can be found in the company's Form 10-K filed last night with the SEC and other documents filed by the company from time to time.
During this call. We will also refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin.
Speaker Change: During this call, we will also refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margins.
Speaker Change: More detailed information about these measures and a reconciliation from Gap Net Income to Adjusted EBITDA is contained in the press release issued yesterday, which is available in the investor section of our website and was furnished on Form 8K with the SEC.
More detailed information about these measures and a reconciliation from GAAP net income to adjusted EBITDA is contained in the press release issued yesterday, which is available in the investors section of our web site and was furnished on form 8-K with the SEC.
Speaker Change: And with that, I'm pleased to turn the call over to Lars Norell, Co-Chief Executive Officer of Altus Power. Lars.
And with that I'm pleased to turn the call over to Lars <unk> co Chief Executive officer of voltage power Lars.
Thanks, Chris we're very excited to speak with all of you for our first earnings call.
Lars Norell: Thanks, Chris. We're very excited to speak with all of you for our first earnings call.
Today, we're going to begin the process of communicating the uniqueness of our culture and how it makes us a leader in this market the advantage that our strategic partners bring to us and a significant market opportunity that lies ahead.
Lars Norell: Today, we're going to begin the process of communicating the uniqueness of our culture and how it makes us a leader in this market, the advantage that our strategic partners bring to us, and the significant market opportunity that lies ahead.
Lars Norell: I'd like to start by acknowledging our amazing team here at Altus. Greg, Tony, and I have been building this company together for over a decade, and we have created a business with skilled and accomplished senior leaders and an incredible and highly motivated team that we believe is the most effective group of individuals in our industry.
I'd like to start by acknowledging our amazing team here at Altice, Greg Tony and I have been building. This company together for over a decade, and we have created a business with skilled and accomplished senior leaders and an incredible and highly motivated team that we believe is the most effective group of individuals in our industry.
Lars Norell: The culture and DNA of Altus is to be in the office.
The culture and DNA of Altice is to be in the office <unk>.
Precedence and be working together, creating value as a collaborative team whether on our desk in Stamford, Connecticut or at our construction sites across the country from Honolulu, Hawaii, and the west to Frederick Maryland in the East.
Lars Norell: Be present and be working together, creating value as a collaborative team, whether on our desk in Stanford, Connecticut, or at our construction sites across the country from Honolulu, Hawaii in the West to Frederick, Maryland in the East.
Every day, we are also operating our solar and storage assets, serving clients with solar power and energy storage in 18 states across the country.
Lars Norell: Every day, we are also operating our solar and storage assets, serving clients with solar power and energy storage in 18 states across the country.
Lars Norell: All this power today is a product of the hard work, ability to overcome obstacles, and the sheer talent of every single person on our team.
Altus power today is a product of the hard work ability to overcome obstacles and the sheer talent of every single person on our team.
Lars Norell: We're also delighted to have recently welcomed a number of key personnel who will help drive our progress into the future as a public company.
We're also delighted to recently welcomed a number of key personnel, who will help drive our progress into the future as a public company.
Lars Norell: I want to thank every one of our team members for their part in building Altus into the industry leader and their help in delivering value to our clients and stakeholders.
I want to thank everyone of our team members for their part in building all of this into the industry leader and their help in delivering value to our clients and stakeholders.
This state of our company is strong one of the themes that you'll hear us repeat is our firm belief that we have created the most efficient platform in this space.
Lars Norell: The state of our company is strong. One of the themes that you will hear us repeat is our firm belief that we have created the most efficient platform in this space.
Lars Norell: evidenced by the fact that we've been cash flow generative EBITDA positive since 2017.
Evidenced by the fact that we've been cash flow generative EBITDA positive since 2017.
We are pleased to report better results in 2021 continued to build on that track record.
Lars Norell: We are pleased to report that our results in 2021 continued to build on that track record.
Lars Norell: With adjusted 2021 EBITDA of $41 million and an EBITDA margin of 57%, we delivered results above our earlier expectations.
Adjusted the 2021 EBITDA of $41 million and an EBITDA margin of 57%, we delivered results above our earlier expectations.
Lars Norell: which are for $38 million of adjusted EBITDA in a margin of 51%.
Which are for $38 million of adjusted EBITDA, and a margin of 51%, which Dustin Weber. Our CFO is with me here will cover in more detail in a moment.
Lars Norell: which Dustin Weber, our CFO , who's with me here, will cover in more detail in a moment. Staying with the discussion...
Staying with the description of our platform, let me provide some insights into what we do everyday firstly on the origination and deal structuring desk, where the team is present and working together, we seek out respond to and engage with large enterprises for the purpose of executing long term con.
Lars Norell: Let me provide some insight into what we do every day. Firstly, on the origination and deal structuring desk, where the team is present and working together, we seek out, respond to, and engage with large enterprises.
Lars Norell: for the purpose of executing long-term contracts, often 20 years or longer.
<unk>, often 20 years or longer.
Lars Norell: These contracts allow Altus to place large solar arrays on rooftops and in parking lots, and also provide battery storage systems next to buildings.
These contracts allow us to place large solar arrays on rooftops and in parking lots and also provide battery storage systems next to buildings with altice owning and operating those assets for the duration of the contract.
Lars Norell: with Altus owning and operating those assets for the duration of the contract.
Lars Norell: Second, once a contract is executed, the process moves over to the design and engineering desk that designs the solar arrays and battery storage systems, works on securing interconnection approvals from utilities across the country, and building permits from local building departments.
Second once the contract is executed the process moves over to the design and engineering desk that defines the solar arrays and battery storage systems works unsecured interconnection approvals from utilities across the country and building permits from local building departments.
Lars Norell: The skilled professionals that design and engineer these systems are Altus employees, on our desk and present in our office.
Guilt professionals that design in engineered systems, our altice employees on our desk and present in our office.
Lars Norell: 3rd, working immediately next to the design and engineering team is our construction.
Third working immediately next to the design and engineering team is our construction team, which oversees the placement and fulfillment of purchase orders for components and materials, the hiring and supervision of prime and sub contractors for roof mounted solar.
Lars Norell: which oversees the placement and fulfillment of purchase orders for components and materials, the hiring and supervision of prime and subcontractors for roof mounted solar.
Lars Norell: parking canopy solar, ground mount solar, battery storage systems, and electric vehicle charging.
Parking canopy solar ground, Mount solar battery storage systems and electric vehicle Chargers.
Lars Norell: Fourth and finally, once the construction team has completed the process of moving an asset into commercial operation, our customer team and our energy optimization team, located in our office and across the country, where our assets are, take over.
Fourth and finally once the construction team has completed the process of moving assets into commercial operation our customer team.
Energy optimization team located in our office and across the country.
Our assets are takeover.
These teams ensure to continuous and optimal system operation and accurate delivery of solar energy and energy storage benefits and the correct billing for both of those.
Lars Norell: These teams ensure the continuous and optimal system operation and accurate delivery of solar energy and energy storage benefits and the correct billing.
Lars Norell: In summary, everyone on the Altus team has an important role to play, and everyone at this company is key to the outcomes that we drive for our customers.
In summary, everyone on the Altice team has an important role to play and everyone. At this company is key to the outcomes that we drive for our clients.
While we are very pleased with the pace and growth of our activities in the first segment mentioned, namely client engagement and origination of client contracts.
Lars Norell: While we are very pleased with the pace and growth of our activities in the first segment mentioned, namely client engagement and origination of client contracts,
Lars Norell: And while our servicing and energy optimization and delivery.
And while our servicing and energy optimization and delivery.
Solar power and energy storage benefits have been largely unaffected by the current headwinds Covid Lockdowns omicron related out of office policies.
Lars Norell: of solar power and energy storage benefits have been largely unaffected by the current headwind.
Lars Norell: COVID lockdowns, Omicron-related out-of-office policies.
Lars Norell: Supply chain delays and component shortages that have become worse than we had previously foreseen have slowed down our utility interconnection processes.
Fly chain delays and component shortages that have become worse than we had previously foreseen have slowed down our utility interconnection processes.
Lars Norell: hampered our local building department interaction and pushed out the timing of our actual construction
<unk>, our local building department interaction and pushed out the timing of our actual construction schedules.
Lars Norell: In our 12-year operating history at Altus, we have not seen this combination of challenges to our pre-construction and construction schedules before, and while we suspect that they will eventually ease, we, like other market participants, are frustrated that it's taken longer than normal to begin delivering solar power, energy savings, and energy storage benefits to our customers. At the same time,
In our 12 year operating history at all at this we have not seen this combination of challenges to our pre construction and construction schedule as before.
And while we suspect that they will eventually ease we like other market participants are frustrated that it's taking longer than normal to begin delivering solar power energy savings and energy storage benefits to our customers.
At the same time.
The customer demand has never been stronger the last few months of increasing utility rates harder to predict future utility price increases.
Lars Norell: The last few months of increasing utility rates, harder to predict future utility price increases, a quest among customers for resiliency and energy security, and underlying all of this, the steadfast commitment among large enterprises for decarbonization.
First among customers for <unk> and energy security and underlying all of this.
<unk> fast commitment among large enterprises for de Carbonization, all serve to drive increased customer demand in a growing market for industrial.
Lars Norell: all serve to drive increased customer demand in a growing market.
Lars Norell: for the industrial strength solution and end-to-end delivery of decarbonization, clean power and savings that all this represents.
Real strength solution and end to end delivery of de carbonization clean power and savings that all of this represents.
Lars Norell: We continue to believe that the commercial and industrial sector...
We continue to believe that the commercial and industrial sector.
Lars Norell: or the C&I market for short, represents the most attractive sector within the broad secular shift towards clean electrification. With a very sizable total addressable
C&I market for short represents the most attractive sector within the broad secular shift towards clean electrification with a very sizeable total addressable market or Tam.
A significant part of that Tam or the master real estate portfolios owned by being developed by them being managed by our partners at Blackstone and CBRE.
Lars Norell: A significant part of that TAM are the master real estate portfolios owned by, being developed by, and being managed by our partners at Blackstone and Seabury.
Lars Norell: In the case of Blackstone, their public commitment to decarbonization and desire to have their investing activities create public benefit.
In the case of Blackstone, they're public commitment to de carbonization and desire to have their investing activities create public benefits and importantly, their partnership with altice to deliver on those goals.
Lars Norell: and importantly, their partnership with Altus to deliver on those goals.
Translate into a very direct and attractive flow of opportunities for all of this.
Lars Norell: translate into a very direct and attractive flow of opportunities for all.
Evidenced thing that flow together with Blackstone, we announced in November the 35 megawatt plus win in new Jersey's community Solar program.
Lars Norell: Evidencing that flow, together with Blackstone, we announced in November the 35-megawatt-plus win in New Jersey's community solar program.
Lars Norell: and customer contracts and solar plus storage assets in Maryland, in California, in buildings and potential customer contracts in other states, also sourced from Blackstone, are part of our pipeline.
And customer contract and solar plus storage assets in Maryland, and California, and buildings and potential customer contracts in other states also sourced from Blackstone are part of our pipeline.
This type of sustained flow of opportunities is one of the things that we love about the business model that we have at altice.
Lars Norell: This type of sustained flow of opportunities is one of the things that we love about the business model that we have at Altium.
It comes from a partner who moves with speed.
Lars Norell: It comes from a partner who moves with speed, it comes at scale and with efficiency, and importantly it constitutes a program instead of just a singular project.
It comes at scale and with efficiency and importantly, it constitutes a program instead of just a singular project.
Lars Norell: Our other strategic partner is newer to Altus, but as the largest real estate services company in the world, CBRE has already proven itself to be more impactful and in less time than we could have imagined.
Our other strategic partner is newer to us, but that's the largest real estate services company in the world.
<unk> has already proven itself to be more impactful than in less time than we could have imagined.
CBRE represent several things to all of this and we imagine that relationship will further expand over time, but for right now three important aspects stand out to us.
Lars Norell: CBRE represents several things to all of this, and we imagine the relationship will further expand over time, but for right now, three important aspects stand out to us.
First the.
Lars Norell: the efficient and low cost flow of customers for solar plus.
The efficient and low cost flow of customers for solar plus storage.
As an early example of that flow Altice is happy to announce this morning that we've contracted with CBRE investment management for up to 20 megawatts of community solar and an initial phase in the state of Maryland.
Lars Norell: As an early example of that flow, Altus is happy to announce this morning that we've contracted with CBRE Investment Management for up to 20 megawatts of community solar in an initial phase in the state of Maryland.
<unk> investment management on behalf of its tenants and investors is committed to Decarbonize think its real estate portfolio and also providing underserved communities with clean power in states without as possible.
Lars Norell: CBRE Investment Management, on behalf of its tenants and investors, is committed to decarbonizing its real estate portfolio and also providing underserved communities with clean power in states where that is possible.
Lars Norell: Maryland is a good example where we are providing that opportunity in a win-win-win manner which benefits CBRE's investors, the broader community, and Altus and its stakeholders.
Maryland is a good example, where we are providing that opportunity in a win win win manner, which benefits cbre's investors, the broader community and altice and its stakeholders.
Lars Norell: In another significant program that we are announcing this morning, Trammel Crow Company, the nation's largest developer, is partnering with Altis to add 300 megawatts of solar to the industrial and commercial portfolio it has in development and construction for scheduled completion in the next few years.
In another significant program that we are announcing this morning Trammell Crow company.
The nation's largest developer is partnering with all destroyed 300 megawatts of solar to the industrial and commercial portfolio. It has in development and construction for scheduled completion in the next few years. This is a major announcement by the country's largest developer to add clean electrification to their assets.
Lars Norell: This is a major announcement by the country's largest developer to add clean electrification to their app.
Lars Norell: They're leading by example by turning their commitment to decarbonize into action.
They are leading by example by turning their commitment to decarbonize into action pretty <unk>.
Lars Norell: for the benefit of their investors, tenants, and other stakeholders. And they've chosen to partner with Altus.
Benefit of their investors tenants and other stakeholders and they've chosen to partner with all of us to make that happen.
Lars Norell: The second area where we have early engagement with our strategic partner relates to CBRE's construction capability.
The second area, where we have early engagement with our strategic partner relates to Cbre's construction capabilities will come back to this topic over time, but our goal for the partnership with CBRE is clear we are creating the first nationwide clean electrification construction platform with end to end services and coverage and with a footprint that we think will.
Lars Norell: We'll come back to this topic over time, but our goal for the partnership with CBRE is clear.
Lars Norell: we are creating the first nationwide clean electrification construction platform.
Lars Norell: with end-to-end services and coverage, and with a footprint that we think will be very difficult for anyone else in our market to replicate. In the process to create this platform,
He is very difficult for anyone else in our market to replicate in the process to create this platform is well underway.
Third and something we will also provide more details on going forward is our collaboration with CBRE that will combine their power consumption data in our solar power and weather data.
Lars Norell: And something we will also provide more details on going forward is our collaboration with CBRE that will combine their power consumption data and our solar power and weather data.
Lars Norell: We are translating these data streams into a carbon scorecard for real estate.
We are translating these data streams into a carbon scorecard for real estate that will serve building owners with carbon reporting and function as a business to business origination engine.
Lars Norell: that will serve building owners with carbon reporting and function as a business-to-business origination end.
Lars Norell: We're also building a business to consumer digital platform and app basically, which will provide an improved experience for our community solar customers with respect to onboarding bill paying an additional electrification service.
We're also building a business to consumer digital platform and App, basically which will provide an improved experience for our community solar customers with respect to Onboarding bill paying an additional electrification services.
These efforts have begun and they reflect the strength and potential of our partnership and our intent to build sustainable competitive advantages that will be unique to all our customers and our stakeholders.
Lars Norell: These efforts have begun, and they reflect the strength and potential of our partnership and our intent to build sustainable, competitive advantages that will be unique to Altus, our customers, and our stakeholders.
Looking out over the next several quarters. Our plan is to focus our team's efforts on allocating time and attention to our two distinct sources of growth.
Lars Norell: Looking out over the next several quarters, our plan is to focus our team's efforts on allocating time and attention to our two distinct sources of growth.
Lars Norell: the flow of our new customer engagement and contracting that comes from our channel partners and from our partners at Blackstone and CBRE, and second, the growth that our customer team has begun the efforts to build from deepening and extending the relationships we already have with our existing long-term customers.
The flow of our new customer engagement and contracting that comes from our channel partners and from our partners at Blackstone and CBRE and second the growth that our customer team has begun the efforts to build from deepening and extending the relationships, we already have with our existing long term customers.
We will do this while we also acknowledge and seek to mitigate the near term delays in pre construction and construction of our customer cited assets that we had previously expected to enter commercial operation during this calendar year.
Lars Norell: We will do this while we also acknowledge and seek to mitigate the near-term delays in pre-construction and construction of our customer-sided assets that we had previously expected to enter commercial operation during this calendar year.
Lars Norell: That mitigation will take many forms, one of which is to create strategic partnerships with equipment vendors to secure preferred allocation of scarce components.
That litigation will take many forms one of which is to create strategic partnerships with equipment vendors.
Take your preferred allocation of scarce components and.
And others to make us when possible of the CBRE fusion program of which we are now apart that seeks to alleviate global supply chain issues by grouping orders from participants to create greater volume and thus preferred treatment from equipment makers.
Lars Norell: Another is to make use, when possible, of the Seabury Fusion Program, of which we are now a part, that seeks to alleviate global supply chain issues by grouping orders from participants to create greater volume and thus preferred treatment from equipment makers.
Another important part of our platform, which has served us and our stakeholders well is the discipline with which we underwrite and analyze operational assets that are available for sale to all this.
Lars Norell: Another important part of our platform, which has served us and our stakeholders well, is the discipline with which we underwrite and analyze operational assets that are available for sale to Altus, and which make up a part of our business model.
And which make up a part of our pipeline.
Lars Norell: During the last calendar year, we expected to acquire a portfolio of operating assets that would have added to EBITDA immediately. Ultimately, we opted not to consummate this particular transaction, given the valuation sought by the seller.
During the last calendar year, we expect it to acquire a portfolio of operating assets that would have added to EBITDA immediately ultimately we opted not to consummate this particular transaction given the valuation thoughts by the seller.
Moving finally to the topic of our outlook for 2022 based on the conversation we've had so far today and given the current market conditions. We are initiating guidance for this year's EBITDA in a range of $57 million to $63 million targeting close to 50% growth over last year's numbers at the midpoint.
Lars Norell: Moving finally to the topic of our outlook for 2022, based on the conversation we've had so far today, and given the current market conditions, we are initiating guidance for this year's EBITDA in the range of $57 to $63 million.
Lars Norell: Targeting close to 50% growth over last year's numbers at the
We further expect to sustain EBITDA margins in the mid 50% going forward.
Lars Norell: We further expect to sustain EBITDA margins in the mid-50% going forward.
Lars Norell: While this guidance is lower than our previous estimates, it is not indicative of a change to our overall growth prospect because it reflects an extension of our pre-construction and construction timelines and revised portfolio acquisition expectations, which are inherently lumped.
While this guidance is lower than our previous estimates it is not indicative of a change to our overall growth prospects because it reflects an extension of our pre construction and construction timelines and revised portfolio acquisition expectations, which are inherently lumpier.
Our strength in customer engagement means our growth pipeline has increased to over 1000 megawatts from over 900 megawatts in our last update.
Lars Norell: Our strength in customer engagement means our growth pipeline has increased.
Lars Norell: to over 1,000 megawatts from over 900 megawatts in our last.
Lars Norell: This updated number now excludes client engagements and assets that we've either turned into operation and added to our portfolio, or that we have stopped pursuing.
This updated number now excludes client engagements and assets that we've either turned into operation and added to our portfolio.
Or that we have stopped pursuing.
Lars Norell: But it includes some of the early engagements with CBRE since the closing of our merger.
But it includes some of the early engagements with CBRE since the closing of our merger in December .
Lars Norell: In summary, and before handing it over to Dustin, I hope my description of what our team does every day will serve to guide you on how our platform operates, how our sector is benefiting from a number of tailwinds, and how the strengths and motivations of our partners at Seabury and Blackstone add to our story.
In summary, and before handing it over to Duston I Hope my description of what our team does every day will serve to guide you on how our platform operates how our sector is benefiting from a number of tailwind and how the strength and motivations of our partners at CBRE and Blackstone add to our story.
And how their relentless focus on cash flow generation and profitable growth is a source of pride to us at all at this power.
Dustin Weber: and how the relentless focus on cash flow generation and profitable growth is a source of pride to us at Altenew.
Dustin Weber: With that, I'll hand the call over to our CFO , Dustin Webber, who will discuss our 2021 results further. Dustin. Thanks, Lars.
With that I'll hand, the call over to our CFO Duston Weber, who will discuss our 2021 results further duston.
Thanks, Lars and welcome to everyone on the call.
Dustin Webber: I look forward to helping get you all up to speed on the Elta story and what makes us truly unique over the coming quarters.
I look forward to helping get you all up to speed on the <unk> story, and what makes us truly unique over the coming quarters.
Dustin Webber: Let me begin by covering some highlights of our 2021 financial results.
Let me begin by covering some highlights of our 2021 financial results.
Dustin Webber: For full year 2021, we generated total revenues of $71.8 million.
For full year 2021, we generated total revenues of $71 8 million, a solid increase of 59% over 2020.
Dustin Webber: a solid increase of 59% over 2020.
Dustin Webber: This revenue increase was driven by the growth of our portfolio from 240 megawatts to 362 megawatts over the course of the year.
This revenue increase was driven by the growth of our portfolio from 240 megawatts to 362 megawatts over the course of the year.
Moving to GAAP net income for 2021.
Dustin Webber: Moving to gap net income for 2021, we earned $13 million compared to a net loss of $1.9 million for the full year.
We earned $13 million compared to a net loss of $1 9 million.
For the full year 2020.
Dustin Webber: This increase was largely driven by a one-time $12.8 million gain from the monetization of an asset.
This increase was largely driven by a one time $12 8 million gain from the monetization of an asset.
Turning to profitability. We are pleased to report adjusted EBITDA for 2021 of $41 million, an increase of 60% over full year 2020.
Dustin Webber: Turning to profitability, we are pleased to report adjusted EBITDA for 2021 of $41 million, an increase of 60% over full year 2020.
Dustin Webber: This beat against an estimate of $38 million not only reflects the expansion of our solar portfolio, but underscores our commitment to managing and operating the climate.
This be against an estimate of $38 million not only reflects the expansion of our solar portfolio, but underscores our commitment to managing operating expenses.
The result was our adjusted EBITDA margin for 2021 was 57% an increase from 56% in 2020.
Dustin Webber: The result was our adjusted EBITDA margin for 2021 was 57%, an increase from 56% in 2020.
I'd like to emphasize that we believe our margins in the mid Fifty's range are sustainable over the long run even as we scale our business because of our efficient and low cost customer acquisition and a constant eye towards controlling our overall cost.
Dustin Webber: I'd like to emphasize that we believe our margins in the mid-50s range are sustainable over the long run, even as we scale our business because of our efficient and low-cost customer acquisition and a constant eye towards controlling our overall cost.
Focusing on our balance sheet, we exited the year with total unrestricted cash of $326 million.
Dustin Webber: Focusing on our balance sheet, we exited the year with total unrestricted cash of $326 million.
Dustin Webber: This includes $293 million of net cash proceeds.
This includes $293 million of net cash proceeds from the closing of our business combination in December of last year.
Dustin Webber: from the closing of our business combination in December of last year. Total debt at year-end was $5,000.
Total debt at year end was 546 million the majority of which is made up of outstanding borrowings under our Blackstone senior term loan facility.
Dustin Webber: The majority of which is made up of outstanding borrowings under our Blackstone Senior Term Loan Facility.
With an attractive fixed rate of 351%.
Dustin Webber: With an attractive fixed rate of 3.51 percent, long maturity, and designed to efficiently upsize to meet our growth plans, we believe this facility arms us with some of the most efficient and lowest cost capital in the commercial industrial space and is a key differentiator for all.
Long maturity and designed to efficiently upsize to meet our growth plans. We believe this facility arms us with some of the most efficient and lowest cost capital and the commercial industrial space and is a key differentiator for altice.
In addition to our Blackstone term loan we also have financing available through our construction to term loan facility.
Dustin Webber: In addition to our Blackstone term loan, we also have financing available through our construction to term loan facility.
Dustin Webber: This facility has 200 million of committed capacity and carries an attractive floating rate, which currently sits around 2.7%.
This facility has $200 million of committed capacity and carries an attractive floating rate, which currently sits around two 7%.
The primary use of this facility is to support our projects under construction, but it also includes the option to convert outstanding borrowings into a term loan upon commercial operation.
Dustin Webber: The primary use of this facility is to support our projects under construction, but it also includes the option to convert outstanding borrowings into a term loan upon commercial operation.
Dustin Webber: To summarize, the financial position of the company is strong. Our large cash balance, flexible debt facilities, and high margin cash flows position us well to achieve our goals of driving efficient use of our capital and delivering profitable growth over the long term. With that, I'll turn it back to Lars.
To summarize the financial position of the company is strong our large cash balance flexible debt facilities and high margin cash flows position us well to achieve our goals of driving efficient use of our capital and delivering profitable growth over the long term.
With that I'll turn it back to Lars for a few closing remarks.
Thanks, Dustin and thanks, Chris and thanks, everyone for letting us begin the process of explaining how we built altice to drive customer value.
Lars Norell: Thanks Dustin and thanks Chris and thanks everyone for letting us begin the process of explaining how we've built Altus to drive customer value, how our strategic partners bring real strength and differentiation, and how this market is poised for significant growth. We're now happy to take your questions. Thank you.
Our strategic partners bring real strength and differentiation and how this market is poised for significant growth. We're now happy to take your questions.
Thank you.
Well now be conducting the question and answer session.
Lars Norell: If you'd like to ask a question at this time, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
If you'd like to ask a question at this time. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
You May press Star two few like to remove your question from the queue.
For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.
Lars Norell: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Lars Norell: One moment, please, while we poll for questions. And once again, that's star one. Thank you.
One of them. Please how we pull for questions and once again Thats star one thank you.
Thank you and our first question comes from the line of Justin Clare with Roth Capital Partners. Please proceed with your questions.
Speaker Change: Thank you and our first question comes from the line of Justin Clare with Ross Capital Partners. Pleased to see you with your questions. Hi, good morning.
Hey, good morning.
Good morning, Hey, Justin.
Justin Clare: Hey, so I guess first off here in Q4, I believe you had had 50 megawatts approximately under construction.
So I guess first off here in Q4, I believe you had had.
50 megawatts approximately under construction and was just wondering you mentioned some of the reasons for the delays here, but for those 50 megawatts could you maybe give a little bit more detail as to.
Speaker Change: And was just wondering, you know, you mentioned, you know, some of the reasons for the delays here, but for those 50 megawatts, could you maybe give a little bit more detail as to, you know, what's causing the delay and then how.
What's causing the delay and then how long could these projects be delayed until they are completed or are these anticipated to be.
Speaker Change: long could these projects be delayed until they're completed? Are these anticipated to be operating in Q1, or what's the timing that you're expecting?
Operating in Q1, or what's the timing that you're expecting.
Justin This is Lars I'll take that question so our pipeline.
Speaker Change: Justin, this is Lars. I'll take that question. So our pipeline, again, for everyone, is made up of assets in construction. Like, Justin, you just asked about in permitting, development, contracting, and client engagement, et cetera. The near-term portion of our pipeline, which are the assets that are actually in construction, in normal times, takes something, depending a little bit on how far developed they were when Altus acquired the asset or if they were developed in-house.
Again for everyone is made up of assets and construction like Justin you just asked about and permitting development contracting and client engagement et cetera. The near term portion of our pipeline, which are the assets that are actually in construction in normal times take something depending a little bit on how far developed they were in all of them.
<unk> acquired the assets or if they were developed in house. It takes somewhere between six to nine months to move through construction and then turning to operation based on the most recent update on our construction desk that timing is more like 12 to 15 months.
Lars Norell: take somewhere between six to nine months to move through construction and then turn into operation.
Lars Norell: Based on the most recent update on our construction desk, that timing is more like 12 to 15 months. Although they have told us that they're starting to see some light at the end of the tunnel with respect to delays. But that magnitude of delay is what we've been dealing with for the last quarter.
Though they have told us that they are starting to see some light at the end of the tunnel with respect to delays.
But that magnitude of delays, what we've been dealing with for the last quarter or two.
Speaker Change: Okay, and and then I wonder if you could just expand on a little bit more as to the reasons for the delays Is it primarily permitting and interconnection? Are you also seeing issues in the supply chain? You know, we've heard there could be challenges in procuring modules Potentially other equipment that you know could be delayed But what what do you see is kind of what are all the factors that are involved in in that?
Okay, and then I Wonder if you could just expand on a little bit more as to the reasons for the delays is it primarily permitting and interconnection or are you also seeing issues in the supply chain. We've heard there could be challenges in procuring modules potentially other.
That could be delayed.
But what do you see as kind of what are all the factors that are involved in.
And that timeline extending.
Sure.
Speaker Change: Sure, as we, as we said in the script, just a second ago, there are 2 main sources of these delays, sort of pushing out to the right of these construction schedules. The 1st, 1 is coded related shutdowns and issues, which basically have caused our counterparties, like permitting department.
As we as we said in the script just a second ago. There are two main sources of these delays sort of pushing out to the right of these construction schedules. The first one is COVID-19 related shutdowns and omicron.
Issues, which basically have caused our counterparties like.
Permitting departments interconnection.
Speaker Change: Interconnection desks at utilities and other stakeholders that we need to communicate with and get sign off from before we can move forward on construction projects or sometimes in the middle of construction projects.
Interconnection desks at utilities, and other stakeholders that we need to communicate with and get sign off from before we can move forward on construction projects or sometimes in the middle of construction projects.
Speaker Change: Because some of these employees and staff have not been in the office and have not responded to all this as quickly on the timing that we normally see, there are delays in basically us having to wait for them to come back to us with permits.
Because some of these employees and staff have not been in the office and have not responded to all business is quickly.
The timing that we normally see there are delays.
And basically having to wait for them to come back to us with permits.
Speaker Change: The second is the supply chain that you just mentioned. Challenges with sourcing of some components, transformers for example, are what's part of pushing up the timing to the right. We are working hard to mitigate the shortages by ordering equipment earlier, by partnering with suppliers for larger purchases.
Second is the supply chain that you just mentioned challenges with sourcing some components Transformers for example.
Whats part of pushing out the timing to the right. We are working hard to mitigate the shortages by ordering equipment earlier by partnering with suppliers for larger purchases.
Speaker Change: And we're making headway on that as well, but the progress will take some time to show up in the timing. But those are the two main sources of the delays.
And we're making headway on that as well, but the progress will take some time to show up in the timing, but those are the two main sources of the delays.
Speaker Change: Okay, got it. And then, you know, for 2022, could you share, you know, how many megawatts you plan to bring online or what might be required to meet the guidance that you've provided? And then
Okay got it.
And then for 2022 could you share how many megawatts you plan to bring online or what might be required to meet the guidance that you've provided and then.
Speaker Change: Any sense for the cadence of when projects could be brought online? Could things be more front half-weighted, back half-weighted, or is it challenging given the delays that you're seeing to provide a little bit more color there? Sure. This is Greg.
Any sense for the cadence of when projects could be brought on line could things be.
More front half weighted back half weighted or is it is it challenging.
Given the delays that youre seeing to provide a little bit more color there.
Sure. This is Gregg Justin so.
Greg Felton: As hopefully you heard, we see enormous opportunity in the pipeline, which reflects the various stages Lars alluded to from early stage development, for example, with our partners at CBRE to construction as well as the opportunities to acquire operating assets.
As hopefully you heard we see enormous opportunity in the pipeline, which reflects the various stages Lars alluded to from early stage development. For example, with our partners at CBRE to construction as well as the opportunities to acquire operating assets in terms of 2022, we're guiding investors to the EBITDA.
Greg Felton: In terms of 2022, we're guiding investors to the EBITDA range that reflects our growth expectations for the calendar year. Of course, given the macro backdrop, we expect megawatt growth to be weighted to the back half of the year.
Arrange that reflects our growth.
Expectations for the calendar year.
Of course, given the macro backdrop, we expect megawatt growth to be weighted to the back half of the year.
Okay got it.
Speaker Change: Okay, got it. And then I guess shifting gears to CBRE here, you mentioned 300 megawatts of solar projects with with Trammell Crowe, so congratulations on that. Is that already in the pipeline here? It sounds like it may not have been added yet.
And then.
Shifting gears to two CBRE here, you mentioned 300 megawatts of solar projects with Trammell Crow. So congratulations on that is that already in the pipeline here. It sounds like it may not have been added yet and then.
Speaker Change: Do you have, I'm not sure if I maybe missed it here, do you have PPAs already signed for those projects? What's the timing on when those could be constructed? Is that 12 to 15 months potentially, or what should we be thinking about?
Do you have.
I'm not sure if I maybe missed it here do you have ppas already signed for those projects.
Whats the whats the timing on when those could be constructed is that 12 to 15 months potentially or what should we be thinking about there.
Thank you. Thank you Jonathan Yes, we're very excited about it the <unk> partnership was just announced and it has not been added to our pipeline.
Speaker Change: Thank you. Thank you, Justin. Yes, we're very excited about it. The Tamil Crow partnership was just announced and it's not being added to our pipeline, but we're happy you asked about it because it evidences just in exactly the kind of program that we and our partners at CBRE are uniquely positioned.
You asked about it because it evidences just in exactly the kind of program that we and our partners at CBRE are uniquely positioned.
Speaker Change: to bring forth. Trammelcroft Company, one of the largest real estate developers in the country.
To bring to bring forth Trammell Crow company, one of the largest real estate developers in the country.
Speaker Change: And with this 300 megawatt initiative, they are leading the way for their industry by turning pledges on decarbonization into action.
The 300 megawatt initiative they are leading the way.
Their industry by turning pledges on de carbonization into action.
Speaker Change: And they're partnering with with all just to get it done. We've begun to identify candidate buildings for inclusion in the program out of there in construction and in development assets.
And they are partnering with all of us to get it done.
We have begun to identify candidate buildings for inclusion in the program out of there in construction and in development assets and as we always do we'll move those through the underwriting and documentation process and then on the sign interconnection construction and so forth as we expect that this 300.
Speaker Change: And as we always do, we'll move those through the underwriting and documentation process and then on to design interconnection, construction and so forth. As we expect that this 300 megawatt engagement will roll out over, say, 3 to 4 years, but the 1st. Buildings have already begun to be processed in into. Uh, our, our pipeline.
Megawatt engagement will rollout over say three to four years, but the first.
Buildings have already begun to be processed into.
Our pipeline.
Okay, Great and maybe just one more for me.
Speaker Change: Okay, great. And maybe just one more for me. You know, as you're progressing with your relationship from CBRE, I was wondering if you could speak to maybe just the opportunity set that you see there. Because obviously, this 300 megawatts is quite a large
Yeah.
Progressing with your relationship from from CBRE I was wondering if you could speak to maybe just the opportunity set that you see there because obviously the 300 megawatts is quite a large.
Our portfolio of assets.
Speaker Change: uh... portfolio of assets uh... but when you look more broadly at the opportunity uh... you know how how much growth could uh... could this support the head or could you speak to uh... uh... that
When you look more broadly at the opportunity.
How much growth could.
Could they support the head or could you speak to.
That opportunity a little bit more.
Speaker Change: Sure. So in terms of TAM or the total addressable market that we are addressing, as I think we all have seen WoodMAC come out and say 145 gigawatts is what the C&I market
Sure.
So in terms of Tam or the total addressable market that we are addressing.
As I think we all have seen woodmac come out and say 145, gigawatts as what the C&I market.
Speaker Change: It's size two or should be size two and I think all of us think that that's probably under counting slightly what's going on
Or should be sized student I think all of us think that that's probably be undercounting slightly what's going on.
I was just at the <unk> conference.
Speaker Change: I was just at the Seabury Conference in Phoenix, Arizona, and met with the largest corporations basically in the world, who are all Seabury clients.
In Phoenix, Arizona.
With the largest corporations basically in the World you are obviously very clients and every single one of them top of mind is sustainability and how can they move their activities.
Speaker Change: And every single one of them, top of mind, is sustainability and how can they move their activities, their manufacturing, their servicing and all their buildings to a decarbonized future.
They are manufacturing their servicing an older buildings to decarbonize future.
So the Tam.
Speaker Change: So the PAM, in terms of how do we connect with this 145 gigawatts of rooftops and parking lots? Well, one answer is through the connectivity that CBRE has with all these customers.
In terms of how do we connect with this 145 gigawatt of rooftop and parking lots with one answer is through the connectivity that CBRE has with all these customers.
Speaker Change: And to me, it seems absolutely limitless. Blackstone is another entity that has effectively gigawatts upon gigawatts of rooftops in the logistical. A large box retailer space, et cetera.
To me it seems absolutely limitless.
<unk> is another entity that has effectively.
Gigawatts upon gigawatts of rooftops in the logistical.
Large box retailer space et cetera.
<unk>.
Low single digit percentages of that.
Speaker Change: Low single digit percentages of that, if even fractions of is currently covered in solar Justin and the entire sort of subset of that building is available for us to partner with Blackstone and Seabury and all their clients on. And that's, of course, the mission that we're engaged in here. Every day of the week. Okay, great.
Fractions is currently covered in solar Justin and the entire.
For the subset of that building is available for us to partner with Blackstone and CBRE and older clients on and Thats of course, the mission that we're engaged in here.
Every day of the week.
Okay, great. Thanks, very much I will pass it on.
Okay.
Speaker Change: Our next question comes from the line of Ryan Levine with Citi. Please proceed with your question.
Next question comes from the line of Ryan Levine with Citi. Please proceed with your question.
Good morning.
Good morning, Good morning, Mike.
Ryan Levine: Good morning. Good morning. I was hoping to start off with the guidance number, trying to unpack that in terms of what's included. I think you highlighted the, what, the 50 megawatts, it seems like now Q2-22 in service. How much other commercial development megawatts are embedded in that guidance? And then, are there any third-party acquisitions?
Okay.
I'm going to start off with the guidance number trying to unpack that in terms of what's included you highlighted.
The 50 megawatts. It seems like now Q2, 'twenty, two and surface well how much other commercial development megawatts are embedded in that guidance and then are there any third party acquisitions that are embedded in that guidance or kind of can you kind of walk through what's what's the assumption there.
Ryan Levine: that are embedded in that guidance, or can you kind of walk through what's the assumptions there versus the pre-stack?
The decrease back.
That assumption.
Ryan Levine: Sure. So this is Greg, and thanks for the question. So our pipeline and what's reflected in our pipeline includes a number of different stages, of course construction stage, as well as operational assets that are, as I think we've articulated in the past, represent a portion of our pipeline as well.
Sure.
So this is Greg and thanks for the question so our pipeline and what's reflected in our pipeline includes a number of different stages of course construction stage as well as operational assets that are as I think we've articulated in the past.
<unk> represents a portion of our pipeline as well.
So in terms of our 2020 to pass a combination of assets that are in construction or combination of assets that are being pursued as it relates to operating acquisition are both intended to be executed this year.
Greg Felton: So in terms of our 2022 path.
Greg Felton: A combination of assets that are in construction, a combination of assets that are being pursued as it relates to operating acquisition are both intended to be executed this year. I think it's important for us to remind everybody, the investor base.
I think it's important for us to remind.
The.
Everybody the Investor base that there isn't a P&L event, when we actually close the cash flows that our assets produce begin to be produced once assets are operational.
Greg Felton: that there isn't a P&L event when we actually close the cash flows that our assets produce.
Greg Felton: begin to be produced once assets are operational and of course we own that cash flow stream for a period of 20 or 20 years or longer and so what we're talking about is when is the start date of revenue and cash flow contribution and again mix of the construction and smaller operating assets are reflected in our in our numbers.
And of course, we own that cash flow stream for a period of 2000.
We're 20 years or longer.
And so what we're talking about is when is the start date of revenue and cash flow contribution and again mix of the construction and smaller operating assets are reflected in our in our numbers.
Is there a <unk>.
Speaker Change: Is there a decrease in the acquisition assumption embedded in your 22 numbers versus the pre-spec or pre-decision?
Decrease in the acquisition assumption embedded in your 2018 numbers first.
Our previous guidance.
Yes, so as Lars mentioned in his prepared remarks.
Speaker Change: Yes, so as Lars mentioned in his prepared remarks, as the long-term owner and operator of these assets.
Is the long term owner and operator of these assets.
Speaker Change: We have always been disciplined in our underwriting standards and
We have always been disciplined in our underwriting standards and the larger portfolios of operating assets that we were pursuing at the very end of last year into early part of this year that would have meaningfully contributed to our cash flows this year.
Speaker Change: The larger portfolios of operating assets that we were pursuing at the very end of last year into early part of this year that would have meaningfully contributed to our cash flows this year were ultimately available to us at prices that we deemed not in the long-term interest of our shareholders, and so we elected not to close on some of those assets.
Ultimately available to us at prices that we deemed not in the long term interest of our shareholders and so we elected not to close on some of those assets and so that's the answer to your question is yes. There is a decrease relative to what we had previously expected on the larger portfolio acquisition side.
Speaker Change: The answer to your question is yes, there is a decrease relative to what we had previously expected on the larger portfolio acquisition side.
Speaker Change: And Ryan, this is Lars. Just to add to what Greg just said, we should point out that Altus is a formidable.
And Ryan this is Lars just to add to what Greg just said.
We should point out that all formidable.
Lars Norell: monetization partner for other portfolio companies or solar asset owners. We can act with speed. We have technical expertise in-house to assess.
Monetization partner for other portfolio companies or solar asset owners, we can act with speed, we have technical expertise in house to assess and remedy underperforming assets and we have immediate access to funding in a way that almost no one else that we ever compete with Hess and so youll see us continue to focus.
Lars Norell: and remedy underperforming assets and we have immediate access to funding in a way that almost no one else that we ever compete with has. And so you'll see us continue to focus intently on the market for operating asset acquisitions both large and small. I think what you're hearing us say is the smaller acquisitions we have a normal sort of a more normal cadence around and are easier for us to predict and the larger portfolio acquisitions are a little lumpier.
Intensely.
The market for operating asset acquisitions, both large and small I think what youre hearing us say is the smaller acquisitions, we have a normal sort of a more normal cadence around.
For us to predict in the larger portfolio acquisitions are a little lumpier.
Okay.
Speaker Change: And then in terms of the core kind of organic growth from the existing assets, is there any change in the embedded assumptions there, i.e., are you assuming any pickup from the inflation provisions of your non-fixed charges?
And then in terms of the core organic growth from the existing assets.
Is there any change in the embedded assumptions there I E are you assuming any pickup from the inflation provisions if youre not.
Charge contract.
Okay.
Speaker Change: Hey, yeah. Hey, Ryan, this is Dustin just on inflation.
Hey, Ryan this is dustin.
Just on inflation.
So.
Dustin: So we believe that the inflationary environment that we're experiencing is actually a tailwind to our business. So just to break that down a little bit.
We believe that the in.
Inflationary environment that were experiencing is actually a tailwind to our business.
So just to break that down a little bit more.
Dustin: Inflation should obviously correlate with higher electricity prices, which is good for us.
Inflation should obviously correlate with higher electric electricity prices.
Which is good for us.
Dustin: And with respect to new projects, inflation may result in higher build costs, but our revenue should also increase in tandem.
And with respect to new projects inflation May result in higher build costs, but our revenues should also increase in tandem so.
Dustin: So, on a net-net basis, we think that we're positively correlated with inflation.
On a net net basis, we think that were positively.
Correlated with <unk>.
Inflation.
Dustin: And one point, this is Greg, one point I want to make sure everyone remembers or if they didn't know is aware of is that a majority of our power purchase agreements, our contracts are floating rate in nature, meaning they would float up with inflationary pricing for the customer. And so that's an important ingredient. We are long that inflation upside, given the majority of our contracts are floating.
One point this is Greg one point I want to make sure everyone remembers or if they didn't know is aware of is that a majority of our power purchase agreements or contracts are floating rate in nature, meaning they would float up with inflationary pricing.
The customer and so that's an important ingredient where along that inflation upside given the majority of our contracts are floating.
Greg Felton: I was trying to get at what in your 22 numbers, how much incremental cash flow or EBITDA you're assuming due to the inflation expectations today versus several months ago when those were originally provided.
Yes, I was trying to get at what in your 'twenty two numbers, how much incremental cash flow or EBITDA, you're assuming.
Due to the two inflation expectations today versus several.
Several months ago.
Were originally provided.
Speaker Change: Yeah, Ryan, we're not including any inflation assumptions in our or additional inflation assumptions in our projection
Yeah, Ryan, we're not including any inflation assumptions and our our additional inflation assumptions in our projections.
Ryan Levine: Okay. Is there any rules of thumb around correlations between a PPI movement versus your cash flow? Yeah.
Okay is there any rules of thumb around correlations between that.
PPI movement various to your cash flow.
Yeah, Hey, Ryan it's Chris Shelton.
Ryan Levine: We've we've got a couple of metrics on that. I mean, some of the or most of the variable rates we have are correlated with the utility utility rates.
We've got a couple of metrics on that I mean some of the.
Are most of the variable rates, we have are correlated with the utility utility rates.
Ryan Levine: So, we don't have a definite forecast for when the utilities will will increase rates.
So we don't have a definite forecast for when the utilities will increase rates.
But I can we can we can follow up and maybe maybe talk about that.
Ryan Levine: But we can follow up and maybe talk about that if you have further questions.
If you have further questions.
Okay. Thanks, and then last question for me just in terms of the if I heard correctly in the prepared comments that 20 megawatts at CBRE contracts.
Speaker Change: Okay, thanks. And then last question for me, just in terms of the, if I heard correct in the prepared comments, the 20 megawatts of CPRE contracts with the community solar, when would those come online or when would those start to contribute?
The community solar.
And would those come online are willing to start to contribute.
Speaker Change: This is Lars. Those are part of our pipeline. We have begun the process of moving those assets into interconnection and acceptance into the program in Maryland. They are in sort of pre-design and pre-construction, and they will follow the normal cadence of self-developed deals that we've set out before, with the caveat that some of the construction-related timelines right now are a little extended relative to the norm. Appreciate the coverage. Thank you.
This is lars those those are part of our pipeline we have begun the process of moving those assets.
Into interconnection.
And acceptance into the program in Maryland, They are instead of pre design and pre construction and they will follow the normal cadence of self develop deals that we've set out before.
With the caveat that some of the construction related timelines right now are a little extended relative to the norm.
Appreciate the color. Thank you.
Youre welcome.
As a reminder, you May press star one to ask a question. The next question is coming from the line of Joseph Osha with Guggenheim. Please proceed with your question.
Speaker Change: The next question is coming from the line of Joseph Oshock with Guggenheim. Please proceed with your question.
Good morning folks.
Joseph Oshock: Morning. Hello, Joe. Hi. A couple of questions for you. First, just to drill down a little bit more on some of the, you know, the challenges you discussed in terms of executing projects.
Morning, Joe.
Couple of questions for you first.
Down a little bit more.
Somewhat.
The challenges you've discussed in terms of executing projects.
Joe: You know, looking more specifically at some of the equipment, I'm wondering if there's anything specific that's particularly challenging, storage, panels, racking, cables, inverters, whatever. I was wondering if we could get a little color there, and then I do have a couple other questions.
Looking more specifically at some of the debt.
Equipment I'm wondering if there is anything specific that particular way challenging storage panels, racking cables and burgers whatever I was wondering if we could get a little color. There and then I do have a couple of other questions.
Joe: Yes, this is Lars. The recent sense that we have from ordering equipment is that
Yes. This is lars.
The recent San.
It sounds that we have from ordering equipment is that.
The solar module.
Joe: The solar module procurement difficulties that were front and center in the end of last year, maybe in the middle of last year,
Procurement difficulties that were front and center in the in the end of last year and maybe in the middle of last year.
Joe: have started to slowly become a little more normalized in terms of difficulty in procuring, but still availability. Altus also has solar modules stored or in storage for assets that we're currently constructing and that are in pre-construction.
Started to slowly become a little more.
Normalized in terms of difficulty in procuring, but still availability alters also have solar modules stored or in storage for assets that were currently constructing and that are in preconstruction.
Joe: So solar module supply chain difficulties are still something to keep an eye on, and as I think you've seen, we've communicated that we are trying to take control over that part of our supply chain and do so strategically.
Some solar module.
Slide 10 difficulties are still something to keep an eye on and as I think you've seen we've communicated that we are trying to take control over that part of our supply chain and do so strategically.
Yes, the harder the harder equipment.
Joe: The harder equipment is actually transformers at this point.
Is actually Transformers at this point.
And transformative have an interesting history, where every time to utilities have a storm and a bunch of effectively power pulse go down they buy tens of thousands of Transformers and so we have in our muscle memory experienced from dealing with transformer purchasing and what you have to do is lean in earlier and instead of having it may be a <unk>.
Joe: And transformers have an interesting history where every time the utilities have a storm, and a bunch of, effectively, power poles go down, they buy tens of thousands of transformers. And so we have, in our muscle memory, experience from dealing with transformer purchasing. And what you have to do is lean in earlier. And instead of having maybe a 16 to 20-week lead time on transformers, we're now looking more like a 40-week lead time on transformers. And they come at the end of a project. And so we just have to be very mindful.
16 to 20 week lead time on Transformers, We're now looking more like a 40 week lead time on Transformers.
They call at the end of the project and so we just have to be very mindful to add that too.
Joe: to add that to our sort of expected timing. As it relates to cables, balance of system.
Our sort of expected timing as it relates to cable balance of system.
Joe: steel that go into racking etc. That is what relates back to the thing I just said about seeing some light at the end of the tunnel. Our procurement officers are noticing that while still pushed out those are no longer impossible to place orders for and there's actually a sense of easing taking place on that side.
Steel that go into racking et cetera that is what relates back to the thing I just said about seeing some light at the end of the tunnel.
Our procurement officers are noticing that while still pushed out those are no longer impossible to place orders for and there is actually a sensor bsing taking place on that site.
Yeah.
Speaker Change: Interesting, interesting. And storage, anything, anything there? How's that been?
Thank you Steven and storage anything anything there that day.
Speaker Change: Absolutely. So energy storage for the last couple of years has been a tale of two cities to some extent. Everything that goes into customer-sided storage, which is what we build most of the time, is either the containment vessel, the cables, the controllers, the medium voltage equipment that ties the storage to the solar and then to the grid and the building on the one hand, and then the actual battery cells on the other.
Absolutely so energy storage for the last couple of years has been a tale of two cities to some extent everything that goes into customer site that storage, which is what we build most of the time.
Is either the containment vessel the cables the controllers the medium voltage equipment that ties to storage to the solar and then to the grid in the building on the one hand, and then the actual battery cells on the other <unk>.
Speaker Change: The containment equipment and all the controllers, it's possible to right now place orders for and get delivered within a number of weeks.
Containment equipment and all the controllers is possible due right now placed orders for and get delivered within a number of weeks.
The cells are nine to 12 months out.
Speaker Change: But the battery cells were 9 to 12 months out a year ago as well.
But the battery sales were nine to 12 months out a year ago as well.
Speaker Change: So, we haven't seen a dramatic shift in the availability of that is just something that you have to be in front of and make sure that you at the beginning of your interconnection study or building permit process place orders for the cells so that when you're done with all the permitting and the construction of the solar system, you don't have access to the cells so that you can complete the system.
No we haven't seen a dramatic shift in the availability of that is just something that you have to be in front of and make sure that you at the beginning of your interconnection study or building permit process place orders, where the cells. So that when youre done with all the permitting and the construction of the solar system. You don't have access to the cells. So that you can complete the <unk>.
<unk>.
Yes that makes sense. Thank you.
Speaker Change: That makes sense. Thank you. The second question, I heard you refer earlier to the notion of Altus as a monetization engine for other people's projects, which I like that idea. I'm wondering, as this portfolio of assets gets bigger, do you all ever think about going to asset-backed markets and maybe pulling some of this cash flow forward, or is that not part of the plan?
Second question you I heard you referred earlier to the notion of office as a monetization.
Other people's projects, which I liked that idea I'm wondering is this portfolio of assets get bigger you will ever think about going to stay asset backed markets.
Pulling some of this cash flow quarter.
That's not part of the plan.
Speaker Change: Yeah, no, thank you. It's Greg. So we have used asset-backed technology effectively in our senior funding facility.
Yes, no. Thank you it's Greg.
So we have used asset backed technology effectively in our senior funding facility, which was designed.
Greg Felton: which was designed precisely, as you're describing, to optimize financing. And so our.
Precisely as youre, describing to optimize financing and so our current facility. As a reminder is investment grade. It was the first commercial and industrial solar facilities that was investment grade rated.
Greg Felton: Current facility, as a reminder, is investment grade. It was the first commercial and industrial solar facility that was investment grade rated.
Greg Felton: And it provides for attractive financing, industry-leading financing. We do think that there are opportunities for Altus to optimize that facility further.
And it provides for attractive financing industry, leading financing, we do think that there are opportunities for all of us to optimize that facility further.
Greg Felton: And we definitely intend to focus on optimization strategies for our debt financing over time, particularly if you look at residential solar, which has benefited with better financing given the longer history than CNI. We do think that there's room for improvement.
And we definitely intend to focus on optimization strategies for our debt financing over time, particularly if you look at residential solar which is benefited with.
With better financing given the longer history than C&I, we do think that there is room for improvement.
Speaker Change: Right, yeah, and that's what I was alluding to. And then, sorry for the background noise, the last question, you know, we're seeing lots of chatter out there from companies like Stem and Fluence about, you know, rolling up and, you know, dispatching storage assets and then some interesting dynamic new companies out there like, you know, Boltus and Seapower really kind of smoothing that process of, you know, bidding those assets into wholesale markets. As you build this portfolio of assets, do you think about
Right, Yes, Thats, what I was alluding to and then sorry for the background noise. The last question. We are seeing lots of chatter out there from companies like Dab influence about rolling up.
Dispatching forge asset again, some interesting dynamic new companies out there like bolsters, the power really kind of smoothing that process the bids.
Bidding those assets in the wholesale markets.
This portfolio of assets do you think about.
Other opportunities for monetizing them along along those path.
Speaker Change: other opportunities for monetizing them along those paths.
That's a great question and one of the benefit that altice has with its incumbency position with our clients and our customer engagements across the country that run the 18% to 20% to 25 years.
Speaker Change: That's a great question, and one of the benefits that Altus has
Speaker Change: with its incumbency position with our clients and our customer engagements across the country that run 18 to 20 to 25 years. In one of our plans
One of our plants.
Is to help clients.
Speaker Change: is to help clients monetize exactly that potential stream of revenue. A solar system on its own is, of course, something that is a little hard to control because it tends to generate energy when the sun is shining, and that energy has to be consumed. But the second you add storage to it,
Clients monetize exactly that potential stream of revenue.
A solar system on its own is.
Is of course, something that it's a little hard to control because it tends to generate energy when the Sun is shining in that energy has to sort of be consumed but the second you add storage to it.
Speaker Change: And the second you then start adding killers that the company or client is operating, and you add other sources of load, all of a sudden, you have the potential for a smart grid that you can then bid into various programs, or help the client maximize the value of the solar energy being produced. All those things you will see us engaged in going forward. Great. Thank.
And the second you then start adding chillers that their company or client is operating and you add other sources of load all of a sudden you have the potential for a smart grid that you can then bid into various programs were held at the clients maximize the value of the solar energy being produced all of those things you will see us engage in going forward.
Yeah.
Great. Thank you so much for your perspective.
Thank you.
Thank you at this time, we've reached the end of the question and answer session and I will hand, the call back to <unk> for closing remarks.
Speaker Change: At this time, we've reached the end of the question and answer session. I'll hand the call back to Lars Norell for closing
On behalf of the team here at all of this we want to thank you for participating on our first earnings call and we look forward to continuing the process of educating everyone about how do we generate value from our EBITDA positive and powerful platform. How were supported by two perfect strategic partners and CBRE and Blackstone and how we're combining that.
Lars Norell: On behalf of the team here at Altus, we want to thank you for participating on our first earnings call. And we look forward to continuing the process of educating everyone about how we generate value from our EBITDA positive and powerful platform, how we're supported by two perfect strategic partners in Seabury and Blackstone, and how we're combining that to create significant growth in a rapidly growing market with a very bright future. Thank you.
To create significant growth in a rapidly growing market with a very bright future. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's conference. We disconnect your lines at this time. Thank you for your participation.