Q3 2023 Altus Power Inc Earnings Call
Ladies and gentlemen, good morning, and welcome to the I'll just follow up Doug what else do I need 23 earnings conference calls.
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It is now my pleasure to introduce your host Chris Shelton head of Investor Relations. Please.
Please go ahead Sir.
Good morning, and welcome to our third quarter 2000, 2030 earnings call. Joining me on today's call are Gregg Felton co Chief Executive Officer, Julia <unk>, Chief Digital Officer, and Dustin Weber Chief Financial Officer. In addition, co Chief Executive Officer, Lars and rail will be joining us for Q&A.
This morning, we issued a press release and a presentation related to matters to be discussed on this call you can access both the press release and the presentation on our website at Www Dot Altice tower Dot com in the investors section.
The information is also available on the Sec's website.
As a reminder, our comments on this call may contain forward looking statements. These forward looking statements refer to future events, including <unk> future operations and financial performance.
When used on this call the words, except anticipate believe we'll plan estimate and similar expressions as they relate to the oldest power identify a forward looking statement.
These statements are subject to various risks and uncertainties and could cause actual results to differ materially from those predicted in the forward looking statements.
All of this power assumes no obligation to update these statements in the future or a circumstances change for more information and we encourage you to review the risks uncertainties and other factors discussed in our SEC filings that could impact. These forward looking statements specifically, our 10-K filed with the SEC on March 32023.
During this call. We will also refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures. Our management team uses non-GAAP financial measures to plan monitor and evaluate our financial performance and we believe this information may be useful to our investors. These non-GAAP financial measures exclude certain items that should not.
Be considered as a substitute for comparable GAAP financial measures.
Power's methods of computing. These non-GAAP financial measures may differ from similar non-GAAP financial measures used by other companies more detailed information about these measures and reconciliation from GAAP to these non-GAAP financial measures is contained in both the press release and the presentation that we issued today.
With that I will now turn the call over to Gregg Felton co Chief Executive Officer of <unk> power.
Thanks, Chris and welcome to all our investors and analysts.
Please join me on slide three as I summarize our accomplishments during the quarter.
First we have a unique opportunity to expand our leadership position in the current environment.
The secular tailwind of the commercial scale solar market are very much intact and our opportunity set has never been greater rise.
Rising power prices sustainability objectives, and expanding community solar programs provide an excellent backdrop for our long term growth plans to be clear the greatest challenge of the current environment is that access to traditional bank financing continues to be constrained for most of the market.
Many developers have limited access to financing and are looking to align with long term partners prior to construction.
In that context, one of <unk> core strengths are unique funding architecture is proving to be a particularly compelling competitive advantage.
We deliberately designed our business to be attractive to long term capital providers in particular insurance companies, who unlike banks continue to have significant demand to fund our activities.
Today, we are pleased to announce an important expansion of our funding architecture, which is a very innovative construction facility with Blackstone and our insurance partners are new construction facility enables us to borrow up to $200 million for assets during development and construction.
Importantly, the source of this capital are the very same insurance partners, who wish to provide long term funding for our assets. Once construction is completed.
In our existing and scalable Blackstone long term funding facility.
<unk> will provide additional details regarding the benefits of this facility later on this call.
Second.
We continue to grow the flow of opportunities from our origination sources and in particular from CBRE and our channel partners and we are pleased to have welcomed a number of new partnerships, which will contribute to our pipeline, including Transwestern investment group Morgan Stanley and Brendan investment group.
Third today, we announced our purchase of a 121 megawatt portfolio, which will increase our market share in a rapidly growing segment.
We remain selective and opportunistic on the deals we pursue but once again, we expect to demonstrate how the demand for our capital our technical skill and our efficiency as a counterparty all play a role in our ability to execute.
Finally, reminding everyone of our relentless focus on profitable growth even in this challenging market environment. We are pleased to reaffirm our guidance range of <unk>, 97% to $103 million with an adjusted.
<unk> EBITDA margin in the mid to high Fifty's.
The theme of profitable growth remains Paramount for Altus power and our third quarter results continue to build out our track record is shown on slide four profitability for Altus power is measured by our adjusted EBITDA and also underscored by our cash generated from our operating activities.
We believe both measures of profitability to be key and differentiating characteristics relative to most other clean tech companies.
The long term contracted nature of our assets produces cash flow that is not only recurring but is expected to continue to grow.
Net of debt service and payments to tax equity partners, we expect to continue to generate increasing levels of cash flow, which can be reinvested into our growing asset base and customer reach.
On slide five during the third quarter, we added 22 megawatts of long term contracted assets, bringing our total to 721 megawatts, representing 91% growth versus third quarter of 2022.
Over the first three quarters of 2023, we have added 251 megawatts and we expect this total to grow substantially in the fourth quarter supported by the expected closing of our portfolio acquisition and additional assets currently under construction both of which I will detail in the next two slides.
Yeah.
Starting on slide six during this year, we have completed construction of 53 megawatts of development assets and we continue to expect approximately 75 megawatts to be completed by year end.
Community solar represents an important component of our growth opportunity as it serves to expand our total addressable market.
This year, we've entered new Jersey, Hawaii, and mean to serve new community solar customers.
We are seeing the rapid adoption of community solar programs around the country and see potential to aggressively scale in this segment.
Since our last call our newly completed assets include 28 megawatts in New Jersey, all of which will serve our growing segment of community solar customers. We continue to lay the foundation to meet the significant development growth, we expect in 2024, which would represent a record level of construction activity.
<unk> for Altus power.
Now on slide seven for details of our most recent acquisition.
This portfolio of 121 megawatts across 35 discrete sites fits well into our existing portfolio, providing additional scale in key markets.
Upon closing, which we expect this quarter, our portfolio will expand significantly within north and South Carolina, adding both geographic diversification and an attractive set of customers to the <unk> power brand within the southeast region of the United States, where we look forward to further expansion.
As with all our large acquisitions. This transaction was the result of intense financial legal and technical diligence and bilateral negotiation with the seller.
Once these assets are on boarded to the altice power platform, our team will be focused on asset performance and other opportunities to optimize operating margins.
We plan to efficiently finance, the $120 million purchase price with our Blackstone long term funding facility combined with cash on hand.
The financing benefits from our interest rate hedge which was opportunistically established in January of 2023 and proved valuable at a time when cost of capital has been increasing dramatically.
As a serial acquirer of large portfolios like this altice power has developed a strong reputation for providing sellers with competitive pricing and execution certainty.
Our technical expertise continues to be an important competitive advantage during the diligence process, providing us with critical insights regarding asset quality and system performance and allowing for an efficient transaction.
Please turn to slide eight for a pipeline update.
Starting with our development asset pipeline, our relationship with CBRE Blackstone and our channel partners provides us with the critical advantage when negotiating long term agreements with real estate owners across large asset portfolios have multiple buildings.
We are focused on expanding relationships with existing customers and this quarter provides an excellent example of altice powers execution capability as we were awarded 18 megawatts under Illinois, New community Solar program.
This scale of contract leveraged our work to secure master lease agreements with multiple large property owners, which all of this is already serving in other markets include.
Including CBRE investment management Iron Mountain and another large institutional real estate owner.
We further announced last week, an exclusive agreement with Transwestern investment group to install new solar arrays across its national portfolio of 24, industrial and logistics properties.
Transwestern as another CBRE introduction that was motivated to negotiate a master lease agreement with altice to begin decarbonising its portfolio and secure a stream of lease payments.
These are examples of numerous relationships, where all this is origination and development teams are engaged with large developers and owners of real estate.
As our market continues to expand these partnerships promise a growing pipeline of buildings, which are not included in our one gigawatt pipeline.
With successful execution on our long term model to serve our customers, we anticipate significant opportunities to add many more buildings within our clients' portfolios and we would expect increased velocity of incremental contracts as these relationships season over time.
Moving now to acquisitions, our pipeline of opportunities is particularly robust as the precipitous rise in long term interest rates over the past several months is creating something of a buyer's market.
Many market participants are particularly motivated and sometimes even forced to sell in order to make capital available for other purposes. As a result, our opportunity set is growing and we are currently negotiating multiple opportunities such as the one we announced this morning.
Turning to slide nine while the foundation of our business is energy as a service our long term business model is to land and expand by offering our customer relationships additional altice power products and services.
This quarter, we're excited to announce Altice Iq.
Our digital customer interface as our software as a service offering.
Especially invited to tell us more on our call today I am happy to introduce Julia Sears, who joined US as Chief Digital officer in 2021, after a successful career with NASDAQ and TIAA.
For the past two years, Julia and the Altice power team have been busy developing this proprietary software, which we have just recently introduced to our clients.
I'll now turn the call over to Julia who will share the exciting details about altice IQ welcome Julia.
Thank you Greg.
We're excited to unveil also thank you to our investors and analysts today.
We believe it reflects the value that altice can uniquely bring to our customers.
We've collected and analyzed years of customer energy data for the purposes of right sizing, our solar and storage deployment.
Our team of data scientists.
Usability designers and climate experts have leveraged AI and machine learning.
Turn that trove of data into actionable intelligence that aims to provide three fold value for our customers.
NRG transparency.
Insights and transact ability.
On slide nine you can see an example of the Altice IQ platform, which was designed with usability and transparency in mind.
Our customers see their total energy usage with the option of including clean electric power purchased from Altus <unk>.
And they are savings relative to utility rates.
This dashboard our customers can view detailed carbon footprint measurement across specific property.
Armed with the transparency of their footprint and data driven insights into recommended carbon reduction actions.
Customers can transact directly through the altice I can't platforms.
Customers choose from a menu of de carbonization options.
Including purchasing solar opting in for storage are having altice identify and source the best renewable credits or carbon offsets to close any remaining gaps.
We've been pleased with the initial feedback from customers during the pilot phase.
And our plan is to continue to enhance the altice IQ platform in order to deploy it to the vast majority of our corporate customers.
That concludes the brief description of our new software as a service offering Greg Let me turn the call back to you.
Thanks, Julia we believe <unk> will be particularly valuable for our customers who are facing increasing requirements to disclosed carbon emissions to the regulators and are currently struggling to track progress of their own carbon reduction as well as their tenants at a portfolio level.
We have recently introduced altice IQ to a subset of voltage power customers and we look forward to onboarding many more customers in the quarters ahead.
Now, let me hand, the call over to Dustin for a review of our financials and further details on our new construction facility.
Thanks, Greg and welcome to everyone on the call. Please join me on Slide 10, as I cover our third quarter financials and guidance for the year.
This review will include a discussion of GAAP measures and non-GAAP measures, which include adjusted EBITDA and adjusted EBITDA margin.
During the third quarter, our revenues grew to $45 1 million compared to $30 4 million in the third quarter of 2022, an increase of 48% driven predominantly by the additions of our larger acquisitions and new development assets placed into service during the year.
Turning to GAAP net income for the quarter, we posted income of $6 8 million compared to a net loss of $96 6 million during the third quarter of last year.
This increase primarily resulted from the fair value remeasurement of our alignment shares during both periods.
As a reminder, these re measurements are noncash and driven by movements in our share price from quarter to quarter.
Shifting to adjusted EBITDA, we reported $29 1 million compared to $19 4 million in the third quarter 2022.
Amounting to growth of approximately 50% and reflecting an adjusted EBITDA margin of 64% for the quarter.
Our third quarter results put us on track to achieve our 2023, adjusted EBITDA guidance range of $97 million to $103 million and EBIT margins in the mid to high 50% range.
At this late stage of the year, we expect the remaining 22 megawatts of soon to be completed construction assets and our large portfolio acquisition.
Only a modest impact on our 'twenty three results, but the recurring revenue of these asset additions will be fully reflected in our 2024 results.
There will be more details to come on our year end call in March when we plan to provide our 2020 for guidance.
Turning to financing on slide 11. This illustration shows advantages provided by our new Blackstone construction facility, which allows us to finance up to $200 million of costs, including equipment labor interconnection and other development costs necessary to build the solar.
Hey.
The additional flexibility to finance. These construction cost is an important piece of our plan to manage our cash position as we accelerate our construction pace into next year.
Once construction assets are completed and begin generating revenue they will be eligible for a long term fixed rate funding facility, which as of the end of the quarter carried a weighted average interest rate of 435% on existing borrowings.
During the third quarter, we upsized the long term funding facility by $28 million and have plans for an additional upsize in the next few months to finance our portfolio acquisition and other newly constructed assets.
In anticipation of the expected draw in October we unwound, the remaining portion of our interest rate hedge for accumulative realized gain of approximately $17 million.
The rate hedge proved extremely beneficial in a rising interest rate environment and is another example of our ability to execute creative and market leading financing solutions.
Moving to tax equity this quarter, we received additional proceeds from our tax equity partnerships, which monetize tax attributes of newly completed assets are.
Our partners have indicated ongoing tax appetite to support our growth.
Worth, noting that we've evaluated the direct sale of investment tax credits and as of now we believe tax equity arrangements provide superior economics.
We will of course continue to evaluate both markets for the best execution of our tax credits in the future.
In summary, we believe we are well positioned to take advantage of the robust growth opportunities available to us thanks to our industry, leading platform, which generate significant cash flow and has access to the necessary financing to support our growth.
That concludes my review of our financials.
I will now pass the call back to Gregg for some additional remarks.
Thanks, Dustin I hope our prepared remarks today illustrate how all of this has been built to execute on the large and growing market opportunity in commercial scale solar.
This should be particularly apparent at a time when financial forecast from other industry participants are being slashed and capital access is limited <unk>.
Our roster of commercial and community customers is expanding as power prices rise and community solar programs proliferate.
<unk> in our industry is set to accelerate and Altus power has both the capabilities and the capital to be distinct beneficiary.
With that we're now available to take your questions.
Okay.
Thank you.
Ladies and gentlemen, we will now be conducting a question and answer session.
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Ladies and gentlemen, we will wait for a moment.
Poll for questions.
Our first question is from the line of Andrew <unk> with Morgan Stanley. Please go ahead.
Alright. Thanks, so much good morning, guys congrats on another strong quarter.
I just wanted to come back to the financing for a second we do see the market grappling with any company in need of ongoing financing. So if you could just help us understand how conversations with Blackstone have evolved and if you can maybe give us a sense for where you would expect the cost of debt to land on that incremental term loan that youll be using.
Finance debt 121 megawatt acquisition that'd be great I think the last financing in June was in the mid 5% range. So just curious how thats changed its base rates at the tire.
Thanks, Thanks, Andrew Thanks for the question this is Greg.
First on the construction facility, we're quite proud of that accomplishment is hopefully you can tell.
It's the most important aspect of the construction facility is having access to capital in an environment, where others do not that.
That access comes courtesy of the same insurance companies that are providing long term funding and their motivation of course is to have access to providing us long term funding. So as it relates to the cost of the long term funding. It's the same methodology that we've used in the past which is effectively were.
Pricing it at a spread to the then prevailing 10 year treasury rate. So think of it as 10 year plus a two handle type of spread.
But as Duston mentioned that the financing does benefit from the fact that we had in place.
10 year interest rate hedges that we put in place in.
In January and so.
While the <unk>.
The ongoing or future spreads should be thought of as to handle over we do have a benefit of an interest rate hedge for this particular transaction that we completed.
We might want to add hey, Andrew This is Lars thanks, a lot for your question. There is tremendous strength involved in having a funding facility that allows us to take a 25 year contract to sell power to an investment grade.
Power buyer, which is a large enterprise or an entity and then take that and fund it with 25 year depth you take away the rate risk you take away the refinancing risks and the risks that you somehow have to find new money to back that asset in the middle of the contract and so while it took us a while to put this investment grade facility.
Together 10 years in fact from women started in 2009 when it got done in 2019, the strength of being able to fund our assets that are long term with long term capital is profound in the way we look at the business.
That's super helpful. And then just wanted to come back to this AI tool.
How do you think about that in terms of how you monetize it is it more of a customer acquisition tool today I know, it's still pretty early days, but just wondering how you are envisioning this tool whether it be additional monetization or just a way to get your foot in the door with additional customers. Thank you.
Sure. It's Lars again, and then duston can maybe give some details I think a little bit of both but we believe based on the initial received receipts of reception by some enterprises that this thing is tremendously valuable to them. It allows them to begin the process of controlling and measuring their power consumption.
You might think that for someone like a home depot, it's easy to know what power they consume because.
Because they obviously have a service from utility and they get builds every months and that would be true but.
But for somebody like link the portfolio logistics company for Blackstone or CBRE investment management, who own these gigantic.
Distribution centers, it's not so easy for them to know of power is being consumed in those buildings because their landlords in triple net lease situations <unk> ability to come in and begin to shed light on the amount of power being consumed and what that would result in the carbon footprint.
And then of course, giving them the ability to sort of clicking a button and have a solar system appear over the next nine to 12 months, that's very very valuable to them and.
And so we intend to.
To make sure that we charge for that value. It represents a sort of ancillary revenue source for altice.
And maybe dust and we can talk about what we think the impact of that revenue will be overall financials.
Sure.
Yes, Lars I think you did a nice job highlighting the value of the <unk>.
<unk> is providing to our customers.
I would just add that it's always been our intention to have this land and expand and offer additional <unk>.
Solutions to our customers.
This is an example of that.
We while we expect IQ to have a growing impact on our revenue in years to come I would say in isolation for the immediate financial forecast.
We're going to it's not going to change our immediate forecast.
I would also add Andrew just on top of that I think a couple of interesting questions. One on acquisition, absolutely that bringing in new clients and growing our path that's going to be a key part of our strategy, but also our existing clients for the past 15 years managing their capabilities and include increasing our efficiency as a.
<unk> and their efficiency to manage their bills or look at their savings are growing at market.
Strategic for us and important for us.
Great. Thank you so much.
Thank you.
Our next question is from Justin Clare with Roth.
Please go ahead.
Yes, hi, thanks for taking my questions here.
So thank you Joseph.
Good morning.
So first I just wanted to ask about the acquisition it looks like youre paying about $1 per watt for the 121 megawatt acquisition that you just announced here.
Seems to be a little bit lower than.
Prior acquisitions that you've made.
Typical cost I would assume to build commercial assets. So I was wondering if you could just speak to the lower per watt price here and then can you give us any sense for the revenue and EBITDA contribution here I think historically, you've paid maybe 10% to 11 times EBITDA for prior acquisitions is that a reasonable assumption here or any.
Meaningful.
Difference it seems like multiples may have compressed so maybe you could speak to that as well.
Sure. Thanks for the question so let.
Let me touch on the first the.
Second question first.
As it relates to the current environment and the valuations.
That is true that we are seeing obviously more favorable pricing and so in this case that benchmark rule of thumb of tended to 11% or 10 to 12 that we've historically talked about we think is still.
Appropriate and this particular acquisition was at the low end of the range in terms of a multiple.
As you know we are underwriting to cash flows through sort of a discounted cash flow methodology.
And not all megawatts are created equal as you know adjusted so in this particular case, we're acquiring a portfolio that is national but it has healthy concentration in the southeast, which we like it's a nice diversified for us and the price of power in the southeast tends to be lower than it might be in other parts of the country and so the cash flow.
Profile of that asset base warranted, a dollar per watt type of number but it is an excellent acquisition.
Very accretive to the company.
For a variety of reasons.
Got it Okay. That's helpful. And then just on the financing of the acquisition can you share the mix of the <unk>.
Financing between the Blackstone facility and then how much equity is required here and then you did talk about the.
Possibility for attractive further acquisitions here could you talk about your capacity to make further acquisitions given your cash on hand, and your the different sources of debt financing thats available to you.
Sure.
The first point to make is that this financing fits nice sorry. This acquisition fits nicely into our current facilities that will be upsized to support the acquisition and there'll be a good portion of the acquisition will be funded through the Blackstone long term debt facility.
And bind with cash on hand, as as you heard the effective rate of this financing will be a bit lower I E there'll be a benefit from the interest rate hedge.
So there'll be a predominant use of long term debt and some lesser amount of cash on hand in terms of our long term capacity to continue to pursue the robust opportunity of deals in front of us both on the development and the acquisition side, we do have plenty.
Plenty of capital to support those transactions.
And I want to reiterate that we have no intention of issuing equity or equity linked instruments to support that growth.
The access to debt financing that we have whether it be blackstone or other debt financing.
Adequate in order to support our growth plans.
Gotcha, Okay, and then maybe just one more.
It looks like you moved a decent amount of assets into the construction bucket here in this in this quarter.
Wondering.
What youre seeing for construction timelines.
So trying to get a sense for when do you need to have all the assets under construction.
Order to hit your target for next year of 150 megawatts of self developed assets.
Sure, Yes, Justin we're very happy over 50 of the 75 megawatts.
That had been in construction this year have been moved into operation.
Finishing up the rest in fact, many of the ones that are not yet in the finished column are actually completed their built in there just sitting around waiting for utility to come by either an inspected or for the utility to put up their polls. So that we can complete those so it's been a very interesting year.
A lot of companies in our space.
Apparently.
I've had some headwinds.
And are running into market conditions that are causing them to slow down. We are not we have had and will have the best construction year ever for Altice with 75 megawatts of completion once we get to the end of the year in six or so weeks, we feel very good about continuing to grow that platform.
And so while others are sort of cutting and slowing down we are increasing the size of the platform, we're investing in more staff and expanding our capacity further.
Continuing to scale up.
We have already started with some of the construction for assets that are going to be completed next year and.
And we look forward to providing some more details on our fourth quarter call as we have more visibility into the exact number and makeup of the outlets we're going to complete building next year.
Got it okay alright, thank you.
Thank you.
Thank you.
Our next question is from the line of James West with Evercore ISI. Please go ahead.
Hey, good morning, guys.
Good morning.
Yes.
Good I wanted to follow up on Altice IQ really interesting introduction here I know you dug into some of the details, but I was curious about the rollout of this product I know you've.
You've rolled it out to a few customers so far what's the plan to attack the rest of the existing customer base and then maybe secondarily what will those be offered kind of with every project going toward I'm, assuming that will be.
Hi, James Thats, a great question and nice to meet you.
To your point rollout earlier this year, we started in February with several clients and we will continue to do that with clients that are part of what we call ultra step so whether they are a part of looking at energy optimization for their organizations or they are looking at solar solution and offsets we wanted to provide a solution.
That helps any any one of those categories and can help grow that space.
From a rollout perspective today, if you go to the public website, you can look under commercial and see a tad for IQ you can see that based features of the product and also had a request as schedule demo and get involved with our team internally. We welcome folks that are either within our organization and then existing client.
New clients are part of our partners to be a part of that growth.
And James this is Lars.
We've been beta testing IQ with some of our existing customers that we have been delivering clean electric power to for some time to make sure that we can begin to have a sense for how they want this user interface to work.
And we ultimately we will roll it out so that all our existing customers are able to be on it and frankly one of the very simple features in there is to pay your bill.
And so the ability for large corporates to basically access their billing in one.
One place is proven to be very valuable to them and it's relatively straightforward for us to set up but it's in it's in the interaction with new customers New development customers, both from Blackstone and from CBRE in particular that we're noticing that theres a great deal of excitement about what it can do for them.
And so one of the things that it takes a while.
For us as we've talked about on prior calls it takes a while for us to onboard a large enterprise customer into our solar program. There is a lot of stakeholders at very large entities and they all need to be consulted and to have their internal processes etcetera etcetera.
We've been sort of we've been wanting to see if there's some way that we can connect early with those customers in an actual commercial relationship and so to frankly take them off the market a little bit while they're busy.
Looking through buildings and listening to engineering reports et cetera, and so forth and so all of this IQ.
Is that way.
We can now begin to serve these corporate customers very early in the process and while the solar system might take nine or 12, or even 15 months to build onboarding buildings onto <unk> can be done in a day.
So the ability for us to connect with those customers is going we think to prove very very.
It is going to provide us with a very nice competitive advantage.
Okay got it. Thanks, Thanks, Julian Thanks, Loren and then maybe just another.
<unk> for me.
Greg when I saw you recently, we talked a bit about community.
And I think that's going to be a pretty big.
That form going forward in a pretty big opportunity going forward and I Wonder if you could elaborate on how you guys are thinking about community solar I know theres, nine or 10, or so states that.
Do have programs in place so that will probably roll out to more over time and what how also is going to participate in this.
Sure It is.
Great topic of conversation James and we are incredibly well positioned to continue to rollout community solar programs across the country as and when these programs proliferate and we really view this as a tam or total addressable market expander for the company.
As you know, we're our reach in terms of our relationships with our customer relationships and the real estate that we touch is.
It's global but its specifically across the U S.
And as.
As community solar programs rollout for example, the largest state in the country, California.
As yet to introduce but is on the horizon in 2024. Its anticipated. So we are well positioned we already have the real estate relationships and we will look to pursue community solar expansion in every market, where it's coming in so it's a very exciting opportunity for us larger.
Yes.
Yes DJ Mr.
One of the most practical implications that come into the solar instead.
Instead, it works as a <unk>.
System Seiser enhancements to us with a very large commercial rooftop from a logistical building, we might be able to fit like a quarter or a third of that roof with solar because thats all that building consumer in terms of electricity.
The second building is in the community.
Community Solar state, we cannot fill the entire roof with a solar system and sell the excess power back into the community, which is an awesome way for us to.
To take our natural flow in customer engagement and maximize the impact to <unk> from each of those deals.
Got it.
Thanks, guys.
I would add.
And community solar one of our key efforts here is democratizing power to our end users and you can see if you go to our site or any one of our applications that we have to help acquire new community solar customers are serviced them as we do in Hawaii.
Are we are trying to make sure that it's accessible.
Digestible and reachable by all of our consumers. So we are prepared to support that with large and Greg to comment.
Got it great. Thanks, everybody.
Alright, thank you.
Thank you.
Ladies and gentlemen, if you wish to ask a question Please press star and one.
Our next question is from the line of Chris <unk> with B Riley Securities. Please go ahead.
Hey, guys. Thanks for taking my questions here.
Maybe just touch on the <unk> results a bit.
Pretty rough weather in the northeast during the quarter, where your footprint is pretty large I am curious how asset performance tracked in the quarter versus your expectations.
No you've reiterated the guidance I'm just curious.
How were kind of tracking within that.
EBITDA guidance given expected seasonality in the fourth quarter there.
Yes, Hey, Chris is a dust and thanks for the question.
Yes.
Thanks for highlighting the weather, particularly in the northeast.
Where where we do have a nice footprint.
It was a little lighter than our expectations in Q3.
Typically as forecasted Q2, and Q3 are going to be very similar from an expected some.
Sunlight or radiant standpoint, which of course tracks closely to generation.
This year, we saw slightly better irradiance and Q2 and as I just noted slightly lower in Q3 so.
No.
One of the things, we like best about our business is the.
The fact that were distributed across the country in 25 states and growing.
Typically what you get when you have that diversified portfolio.
Is that weather can be good on the on the West coast and bad on the East coast in.
Tend to cancel out over the portfolio and importantly over the course of the year.
And so.
So despite sunlight being a little light in Q3.
Our models allow for that level of variability and that's why we're confident in reiterating our guidance range for the year.
Chris I would also add just something to add just as <unk> points about geographic mix, which we have on slide five we show the states that are most.
Where we have sort of greatest presence today, but that is excluding.
<unk> the impact of this 121 megawatt acquisition, we announced which is predominantly in the Carolinas. So.
That acquisition will be a nice diversify or expand our market presence as well.
Yes, definitely that's great great.
And then on the construction facility.
How should we think about the size of the construction pipeline that could essentially funded at about 200 megawatts.
I'm curious.
How much construction in progress you have today, how much capital that would kind of unlock potential like overnight I think you had about $89 million in construction in progress at the end of last year, but I'm, just curious kind of where that.
Okay.
Yes.
I'll take that first and then maybe Greg.
Can I follow up basically one of the questions that we're dealing with is to make sure that we removed bottlenecks that are preventing us there that would prevent us from getting to the growth of <unk>.
Assets, adding importantly to our operating portfolio, which is where the revenue comes from that we want to have in construction funding would definitely represent the bottleneck and given the size of the construction platform. The size of the development platform sites of engineering and so with the.
With the launch of this particular, new construction facility, which we are deeply deeply enamored with because it's from the same source that our long term funding comes from one of those bottlenecks is removed.
We of course also used cash on balance sheet to build.
Both the size and the strength of our growing construction teams engineering teams the development teams and now the ready availability of construction funding is what allows us to grow our pipeline significantly from where we're sitting right now in 24 over to construction throughput 23, Greg Yes, the thing I would add.
To that is that the facility that we announced this morning is unique relative to bank facilities, it's $200 million of commitment it's multi year.
It actually there is no commitment fee that we're paying for that which is excellent.
As you saw on slide 11, just to highlight unlike a construction facility. There is a lot more flexibility that we have to use that facility for equipment for labor. So you think about the inventory.
We're able to houses so it's a bit of a working capital facility. In addition to our construction facility.
And there's a lot more.
Really flexibility.
And given the fact that these are long term lenders. It's also much more streamlined relative to dealing with the construction Syndicate. That's bank led and then rolling it into a different long term financing partners. So there are huge advantages in terms of reducing bottlenecks as Lawrence described and it is also highly flexible in nature, so that 200.
Third million commitment that we have which again is multi year does allow us the runway to be able to plan for our next handful of years of construction growth.
Yes.
That's great to hear thanks, I'll hop in the queue.
Thanks.
Thank you.
As there are no further questions I'll now hand, the conference over to Gregg Felton for closing comments.
Thanks, everyone. As you can tell we are well positioned to take advantage of the growth opportunity in front of us and we believe the current dislocation is creating an opportunity for the company to accelerate our growth. We look forward to updating you further on our Q4 call. Thanks again.
Thank you the conference. So far also follow has now concluded. Thank you for your participation you may now disconnect your lines.
Okay.
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