Q1 2025 HA Sustainable Infrastructure Capital Inc Earnings Call
Speaker Change: greetings and welcome to Hattie's first quarter 2025 earnings conference call and webcast. At this time all participants are in need listen only mode.
Speaker Change: A brief question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operators administering the conference, please press the star and then zero on your telephone keypad As a reminder, this conference is being recorded It is now my pleasure to introduce you
Speaker Change: Post Aaron Chew, Senior Vice President of Investor Relations, please go ahead Aaron.
Aaron Chew: Thank you, operator, and good afternoon to everyone joining us today for Hassees' first quarter 2025 conference call.
Speaker Change: Earlier this afternoon, Hasey distributed a press release reporting our first quarter 2025 results, a copy of which is available on our website along with a slide presentation we will be referring to today.
Speaker Change: This conference call is being broadcast live on the investor relations page of our website where a right replay will be available later today.
Speaker Change: Some of the comments made in this call are for looking statements which are subject to risks and uncertainties described in the risk factor section of the company's form 10K and other filings with the SEC.
Speaker Change: Actual results may differ materially from those stated. Today's discussion also includes some non-GAAP financial measures, a reconciliation of gap to non-GAAP financial measures available in our earnings release and presentation.
Jeff Lipson: Joining us on the call today are Jeff Lipson, the company's president and CEO as well as Chuck Melko, our CFO , and also available for Q&A, our Susan Nickey, our chief client officer, and Mark Pangburn, our chief revenue and strategy officer.
Speaker Change: Take things off. I will first turn it over to our president and CEO , Jeff Lipson, who will open the presentation today on slide three. Jeff?
Jeff Lipson: Thank you, Aaron. And thanks to everyone for joining our first quarter, 2025 call.
Jeff Lipson: Despite heightened policy and economic uncertainty, Hasse is currently operating in a business as usual mode As we continue to close new investments, maintain a large pipeline, enhance our liquidity platform, and steadily grow our adjusted earnings for share
Jeff Lipson: In fact, business activity is robust and we are experiencing a historically high volume of incoming requests for capital from sponsors and developers [inaudible]
Jeff Lipson: We had the most active first quarter of new originations in our history, closing over $700 million of new investments. The average yield on these new investments was greater than 10.5% and our adjusted earnings per share was $0.64 per cent.
Jeff Lipson: These results are further evidence of the resilience of our business model.
Jeff Lipson: One of the key reasons we've been operating without meaningful disruption is the powerful funding and liquidity platform we have constructed over the past several years.
Jeff Lipson: Having substantial liquidity in periods of volatility is vital to capitalizing on opportunities.
Jeff Lipson: We currently have an excess of $1.3 billion in available liquidity resulting from our diverse funding strategy.
Jeff Lipson: including our CCH-1 partnership, investment-grade ratings and a large and supportive bank group.
Jeff Lipson: This combination of a strong pipeline of investment opportunity, access to capital, and our recurring revenue model allow us to reaffirm our guidance of 8-10%
Jeff Lipson: Turning to page 4, I'd like to discuss an issue which is on the minds of all investors, the impact of tariffs on our business.
Jeff Lipson: As a reminder, we are not a developer and do not directly procure any materials, so we are only impacted as related to the overall volume of project development.
Jeff Lipson: To assess the impact in more detail, let's begin with our portfolio and simply state that these projects are already operational or near operational and are unimpacted by tariffs.
Jeff Lipson: Likewise, the projects in our pipeline, which will likely comprise the vast majority of our investments over the next 12 to 18 months are typically partially or fully constructed and that's not impacted by tariffs [inaudible] a little bit more of a little bit more of a little bit more
Jeff Lipson: Our clients who are generally among the largest developers of renewables, energy efficiency and R&G projects have been effectively addressing various supply chain and tariff challenges for over 10 years.
Jeff Lipson: In addressing these challenges, our clients have invested significantly in their domestic supply chains and inventories, allowing them to deliver a positive message of minimal tariff impact in their quarterly reports.
Jeff Lipson: The post-pipeline impact refers to projects that will be constructed in 2027 and beyond.
Jeff Lipson: It is reasonable to assume that by that time, our developer clients will have adapted to any remaining tariffs by both ensuring more of their procurement than passing on any increased costs.
Jeff Lipson: In fact, most of the public developers and sponsors who have already reported their first quarter results have confirmed strong confidence in their long-term pipelines just in the last few weeks.
Jeff Lipson: We also have a portion of our business that involves capital recycling on existing projects, which is an investment profile unimpacted by tariffs.
Jeff Lipson: In summary, we expect very limited impact from any increased tariffs on our business, particularly in the guidance period [inaudible]
Jeff Lipson: Turning to page five, another issue worth discussing is the expected impact of a recession on their buses.
Jeff Lipson: GDP contracted in the first quarter of 2025, and many economic forecasts have increased the likelihood of a 2025 recession above 50 percent.
Jeff Lipson: However, as depicted on the slide, U.S. Electric Generation capacity continues to expand even during economic downturns in recent years substantially driven by Wyndon Solar
Jeff Lipson: If a recession occurs in 2025, we would expect investments in clean energy generation to be only marginally impacted, and we expect any resulting, we would not expect any resulting material impact on our financial results.
Jeff Lipson: Also, as stated a few moments ago related to tariffs, the vast majority of our pipeline includes projects under construction which are unlikely to be impacted by a recession. Thank you very much.
Jeff Lipson: In summary, we have a non-cyclical business model in which growth and profitability are typically not directly tied to macroeconomic cycles.
Jeff Lipson: In addition related to both the tire issue and the potential slowdown, the forecasted demand for energy is expected to drive clean energy development in all policy and macroeconomic scenarios resulting in a large volume of investment opportunities.
Jeff Lipson: As we mentioned frequently, our business model is resilient and adaptable. We have demonstrated the ability to thrive, despite interest rate fluctuations, policy changes and economic cycles. [inaudible]
Speaker Change: I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Jeff Lipson: During the slide six, our pipeline of new investments is sizeable and well-balanced among our business lines [inaudible]
Jeff Lipson: As stated earlier, the demand from sponsors is elevated, as more projects are being developed to address the significant expected increase in load growth.
Jeff Lipson: Behind the meter solutions, continued to be driven by fundamental consumer economics, increasing the demand for rising and community solar solutions.
Jeff Lipson: and by government efficiency initiatives, particularly at the state and local level . . . .
Jeff Lipson: Grid Connected Activity has been elevated due to the impending increase in load growth, and in addition to several solar projects, wind opportunities have reemerged in the pipeline. Thank you very much.
Jeff Lipson: and our FTN business continues to identify numerous opportunities, most notably in RNG, as that asset of the class has contributed meaningfully to our growth.
Jeff Lipson: Although not yet reflected in our pipeline, we continue to evaluate some of the new frontier asset classes that we discussed last quarter, and expect at least some of these sectors will become investible for us.
Jeff Lipson: As we turn to slide seven, we note that our managed assets have increased 12% year over year, and that our robust pipeline has been successfully converted into a high volume of closed transactions in the first quarter.
Jeff Lipson: Significant investments in Regis Solar and Public Sector Energy Efficiency led to a first-quarter volume above $700 million $700 million.
Jeff Lipson: We continue to see strong performance from reservoir assets, which we expect to remain an attractive consumer alternative, as retail utility rates continue to increase
Jeff Lipson: Importantly, the corporate issues that Rezzy Solar originators have faced are separate from the performance of the underlying assets in which we invest. And that's what we expect to remain active in this asset class.
Jeff Lipson: In addition, our CCH-1 Co-investment vehicle with KKR now has a funded balance of $1 billion and we are considering placing debt at the vehicle which will increase its investment capacity.
Jeff Lipson: And we have correspondingly extended the investment period until the fourth quarter of 2026
Jeff Lipson: This partnership continues to provide significant value to our business, as we maintain diverse sources of funding with several of these sources outside of capital markets.
Jeff Lipson: And with that, I'll pass the call onto our CFO , Chuck Knuckle. Thank you.
Thank you. Thank you.
Speaker Change: Thanks, Jeff. Over past few months we have certainly seen uncertainty in the markets from the public policy backdrop and I believe we have constructed a portfolio that is well positioned to continue to deliver earnings growth through these periods of volatility.
Jeff Lipson: In addition, our healthy level of liquidity and our capital platform will continue to provide access to capital to fund the business and preserve if not expand our investment margins.
Speaker Change: Starting on slide 8, our portfolio is now at $7.1 billion, and as Jeff mentioned, we are delivering meaningful growth in our closed transactions.
Speaker Change: We had another quarter of delivering double-digit yields on new investments.
Speaker Change: with an average yield greater than 10.5% in Q1, and are continuing our success at generating growth in our portfolio, with recurring earnings at attractive risk adjusted returns. Thank you very much.
Speaker Change: As a reminder, 50% of the balance sheet transactions that we close into CCH1 do not show up in our portfolio growth, but do provide earnings through upfront and annual management fees.
Speaker Change: Our portfolio continues to be well diversified across our different asset classes, which we believe is a key strength to the resilience of our business.
Speaker Change: On Slide 9, is a trend of our portfolio yield and average debt costs. Our portfolio yield is at 8.3% and our cost of debt at 5.7%.
Speaker Change: As we continue to originate and fund investments at higher yields, we expect our portfolio yield to continue to increase.
Speaker Change: On the cost of debt side, we have mentioned on several calls, our active hedging strategy to manage the risk of increases in interest rates.
Speaker Change: and want to reiterate the success we have had in managing our debt costs through this program.
Speaker Change: In addition to fixing the cost of our floating rate borrowings, we also have hedged a base rate for the refinancing of our 26 and 27 ball maturities.
Speaker Change: and recently executed base rate hedges with a notional amount of 300 million related to expected debt issuances later in the year.
Speaker Change: These hedges were executed in early April , fixing base rapes at an average of 3.5%, when treasuries had the climb meaningfully, and are a great example of the active management of our cost of capital.
Speaker Change: The details of our hedging activities are included in the appendix.
Speaker Change: Parring to 5-10th for our key profitability metrics, we end of the quarter with an adjusted EPS of 64 cents.
Speaker Change: The growth in our portfolio and yield drove an increase of 11 percent in our adjusted net investment income to 72 million compared to the same period last year [inaudible]
Speaker Change: In addition, we continue to see growth in our other recurring sources of income related to our Securitization Activities and our CCH-1 Asset Management Fees.
Speaker Change: Our gain on sale and other income were lower this quarter, at 24 million compared to 30 million last year, due to higher than normal gain on sale activity in the prior year, from asset rotations. [inaudible]
Speaker Change: As discussed in our Q4 call, our full-year Game On Sale activity is expected to be more in line with the level seen in 2021 through 2023.
Speaker Change: And we expect at the majority of the total gain on sale this year to come through in the second half of the year due to the expected timing of closence.
Speaker Change: Overall, we delivered strong adjusted EPS that continues to be predominantly generated from recurring earnings and as a large contributor to the confidence we have in achieving our adjusted EPS guidance.
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On Slide 11
We illustrate key characteristics of our finance platform.
Our available liquidity as of March 31st was 1.3 billion. [inaudible]
Speaker Change: We have been very focused on building a liquidity and capital platform that enhances the resilience of our business And a key strength of this platform is the credit facility that we have enhanced over the years [inaudible]
Speaker Change: We recently increased our credit facility by 200 million and now have approximately 1.6 billion and total capacity, and include 16 relationship banks.
Speaker Change: This facility ensures we can continue to fund the growth of our business in times of market volatility and opportunistically time our longer-term capital market issuances.
Speaker Change: In addition, our commercial paper program has been a success at reducing our overall cost.
Speaker Change: We have a well-addered maturity profile and are actively focused on our plans for refinancing our upcoming maturities.
Speaker Change: We recently, this past April , paid off our convertible bond due in Q2 with a portion of our available revolver commitments and related to our upcoming bond maturity in 2026.
Speaker Change: Our available equity will provide us flexibility in our refinancing plants, which we will likely address later this year or early 2026.
Speaker Change: We remain committed to managing our capital structure at a one and a half to two times leverage ratio, and we're at 1.9 times as of the end of the quarter.
Speaker Change: It is also important to highlight that Moody's recently reaffirmed in April our investment in grade rating in the current environment.
Speaker Change: It is our liquidity, access to capital, and diversified sources of funding that will allow us to thrive in these periods of market volatility and is a key strength in the continued growth of our business.
Speaker Change: I will now turn the call back to Jeff for some closing remarks
Jeff Lipson: Thank you, Chuck. Great job. Turning to page 12, we highlight our progress regarding carbon count and water count as well as noting that our seventh annual sustainability and impact report was recently published and is available on our website.
Jeff Lipson: including on page 13, with a reminder that we have substantial liquidity and ongoing access to capital. We have a demonstrated track record of successfully growing our earnings in all interest rate public policy and macro economic environments.
Jeff Lipson: Therefore, we are able to affirm our 2027 guidance despite the current volatility. [inaudible]
Jeff Lipson: The long-term fundamentals of our business are powerful and position us effectively for continued earnings growth over many years.
Jeff Lipson: I thank our outstanding team for their execution as we completed a successful first quarter of 2025 and continue to position ourselves for further prosperity.
Jeff Lipson: Thank you for your attention. Operator, please open the line for questions.
Thank you. We will now begin.
Speaker Change: Conducting a question in on-sufficient. If you would like to ask a question, be first star and then one on your different keypad. Thank you very much.
Speaker Change: A confirmation tone will indicate your line isn't a question cue. You move first and then do if you would like to remove your question.
Speaker Change: from the Q. Please may also ask if good limits your questions to one question and one for our question.
Speaker Change: For part, distance using speaker equipment, it may be necessary for you to pick up your handset before pressing the start keys. One moment please while we pull for questions.
The first question.
Speaker Change: Comes from Chris Dendrinos from RBC Capital Markets. Please proceed with your questions, Chris.
Yeah, good evening and thanks for taking the question.
I guess maybe to start here, you mentioned...
Doing some debt at the CCH-1 level.
Speaker Change: Could you maybe discuss, you know, I guess, what kind of leverage profile that would look like, and then, you know, does that interest rate look similar to has these interest rate, or how do we think about, I guess, the interest rate there, maybe just the strategy in general to put the data at that level, thanks? Thank you very much.
Sure, thanks for the question, Chris. I would envision.
Speaker Change: The leverage of CCH-1 would be relatively low, certainly more equity than debt.
Speaker Change: And in terms of interest rate, you know, it's probably premature, but I would say an investment grade type cost of funds would be very likely at the CCH-1 level.
Speaker Change: I guess would that be below the Hassee level cost of debt potentially?
Speaker Change: I would say it would be in the same general vicinity would be our expectation.
Speaker Change: Got it, okay. And then I guess maybe just as a follow-up here. Here.
Speaker Change: You know, I figure out how you all factor that into the thought process of the rate that you go at, thanks.
Speaker Change: Sure, so I think we've reduced substantially the number of shares we need to issue to go our business.
both through CCH-1.
Speaker Change: through what we've done with the payout ratio. The CCH1 debt we were just talking about in addition ultimately reduces the number of shares we have to issue. So I think we've moved the business in a direction of issuing fewer shares per dollar invested, which I think over time is is a very positive thing.
Thank you
Thank you, Chris. Thank you.
Speaker Change: The next question comes from Noah Kaye from Oppenheimer & Company. Please proceed with your questions Noah.
Hi, all. Thanks for taking the questions. Nice quarter.
Thanks a lot.
Uh...
The extending of the CCH-1 term through 4Q-26 The extending of the CCH-1 term through 4Q-26 [inaudible]
Speaker Change: I assume we should not read into that as an indication of not getting to the $2 billion target funding by the end of 2025, or can you kind of comment on...
Timing of Expectations there.
Speaker Change: Sure. I think you should definitely not read into that into the extension, the extension.
Speaker Change: is ultimately a reflection that we will increase the capacity of CCH-1 and therefore it was logical to extend the investment period in mutual agreement between HACI and KKR. So it's just going to be a larger vehicle than originally contemplated.
and therefore, the investment period would naturally be longer. [inaudible]
Speaker Change: Thank you. Second one, just on the record transactions in one queue. You know, we understand that timing can be lumpy with everything.
Speaker Change: Unique to the environment or the types of conversations with the clients that...
Speaker Change: He pulled forward some originations with this, I think you mentioned business as usual at the outset. In other words, what do we make of the one-cure record originations and any implications for future quarters? [inaudible]
Speaker Change: Sure, I'm going to ask Mark to jump in on that one. Thanks for the question. No, I would not attribute it to any specific pool forward of pipeline, but simply...
Speaker Change: You know, just the level of our business activity growing and I do think it would be reasonable to assume that with
Speaker Change: The macro and political uncertainty that our competitive position has increased, and we've seen some of our competition leave the market, which has certainly helped as well . . . . . . . . . . .
Could take you while I'll follow up offline.
Thank you [inaudible]
John Hurley, David
Speaker Change: Thank you. The next question comes from Moses Sutton from BMP. Please be seated with your questions, Moses.
Speaker Change: This is Jonah Hunter, Moses Sutton. Thanks for taking my question. Average yield on new investments is pushing north at 10.5%. How would you break out the dispersion of that blended yield, anything pushing 12-13% or higher? Are the mes debt slices of the capital stack pushing in double digits or the yield expansion coming more from equity investments?
Thank you.
Speaker Change: Yeah, I think in general the asset yields that we saw in the quarter are pretty consistent with the yields on closing of transactions last quarter. We're not really seeing asset yields jumping into the mid-double digits by any stretch of the means right now based on the nature of the assets that...
Speaker Change: that we are investing in, but we are continuing to see strong yields in double digits.
For more information, visit www.FEMA.gov
and many more. Thank you. Thank you.
Great, thank you.
Thanks for watching!
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Speaker Change: Thank you. The next question comes from Mark Strouse from Dapy Morgan. Is this a secret to questions, Mark?
Speaker Change: Yeah, hey, this is Michael on from Mark. It looks like it was a pretty strong quarter of volumes within Rezzi Solar. Can you give some color on the dynamics that play there? And is that related to Sunstrung?
Speaker Change: I'll start and maybe Mark can add to my answer, but no, that is unrelated to Sunstrong. Sunstrong at this point is a servicing platform.
Speaker Change: and the investments we made in Rezzy Solar were consistent with the Rezzy Solar investments we've made historically in terms of being mezzanine loans on pools of Rezzy Solar leases. Mark, would you add anything else to that?
Marc Strauss: I would just want to reinforce that we invest at the asset level and are continuing to see strong performance in our underlying rezisolar assets.
Speaker Change: and that performance is not impacted by the sponsors financial position which I understand has been a little bit more volatile.
Go to www.Flydreamers.com for more.
Speaker Change: Got it. And then maybe just as a follow-up, you mentioned a historically high volume of inquests for capital. Can you? I know you mentioned some competitors dropping out of the market, and maybe that has something to do with it, but are there any other underlying drivers there?
Thanks for watching!
Speaker Change: Thanks for the question. I think really the underlying factors here continue to be the high demand growth, really across all sectors and our clients.
Speaker Change: transacting on the pipelines that they've had in place for a while. So we don't see that as again I think the question about a pull forward of tariffs or uncertainty and our our clients and partners
Speaker Change: have been insulated themselves largely from some of that volatility.
and many more. Thank you. Thank you.
May I just confirm that there's all your questions?
Yes, thank you [inaudible]
Speaker Change: Thank you. Thank you so much. The next question comes from Ben Kallo from Bayard,
Ben Kello: Hey guys, I'm just thinking about like the cadence of investment with uncertainty about R.A.
Speaker Change: I know that there's like a long timeline with what you guys do. So how should we think about like Q2, Q3? I have that. And then is there a...
Speaker Change: a sub-sector that you guys find more appealing right now than others. Thank you.
Thanks, Ben, I would say... [inaudible]
The pipeline is...
Speaker Change: Well-balanced by timing of closings as well. So again, to reiterate, a high first quarter was not a pull-forward of a number of things that may have closed later in the year. That's not how to view the first quarter. We're very...
Speaker Change: and a lot of impacts of IRA or tariffs from our developers. Again, for all the reasons we've mentioned in terms of fundamental economics and low demand. We still view it as low probability.
that the core components of the IRA will be repealed. [inaudible]
Speaker Change: And so again, we go back to that sort of business as usual phrase, if anything, business even slightly elevated from usual, if anything. So we're just not seeing the impact of these policy items in our business right now. Thank you.
Thank you.
Speaker Change: Thank you. Thank you. The next question comes from Brian Lee from Goldman Sachs.
Please proceed with your questions, Brian.
Speaker Change: Hey guys, this is Tyler Bisset on for Brian . Thanks for taking our questions. So just want to pick you back on the last question on the IRA. I'm just curious, what's your latest view on the outlook for and timing of potential changes to the IRA? All right.
Speaker Change: Sure, Susan, why don't you go ahead on that one? Thank you. The anticipation of next steps with...
Speaker Change: The IRA and the Reconciliation Bill, I think for public now, but sometime in the next few days or weeks, the first draft of the bill is anticipated to come out from the House ways and means as well as other. Thank you very much.
Speaker Change: perhaps that come from, that are related to come from committees. But again, we anticipate and certainly...
Speaker Change: in the American Clean Power Association that were involved with anticipate this is the beginning and certainly there may be rocky headlines.
But it's a process and negotiation.
Speaker Change: and the industry remains confident that the bill won't be repealed.
Speaker Change: and that the majority, majority, both in the House and the Senate, realize the importance of, again, of meeting our priorities of energy dominance and AI.
Speaker Change: The demand from growth, growth from AI, as well as the low cost of renewable energy is part of all the above.
Speaker Change: Super-helpful, and then appreciate the commentary on the limited impact from Terrif and can you just remind us like what is your exposure on the storage side, like standalone and also solar plus storage projects?
Speaker Change: So, on standalone, it's very, very minimal on solar plus storage.
Speaker Change: Certainly most of what we do in either utility scale solar or residential solar does involve some component of storage
But again, as I alluded to in the prepared remarks.
Speaker Change: The partners we have there have generally already reported and I think have expressed a very high degree of confidence in their ability to procure ongoing storage equipment. Thank you very much.
Speaker Change: and to also amplify something I said in the prepared remarks.
Speaker Change: Most of what we'll invest in in the next 12 to 18 months is already constructed or nearly already constructed and so this issue even if it became more challenging would have a substantial period before it would impact folks like us. [inaudible]
Super helpful. Thank you, guys.
Thank you.
Thank you.
Speaker Change: Thank you. The next question comes from Hips Mandloi from his own securities. He's to see if it's your questions Maheep.
Speaker Change: Hey, thanks for the questions and apologies if this was something between calls here on the tax credit transferability. Any thoughts on that? Like if that is removed?
Speaker Change: to set impact your overall fun of projects available in the market here under the area.
Speaker Change: This is Susan again, thanks for the question. I think there are a couple of things one is um
Speaker Change: The tax market certainly includes both traditional tax equity and transfer abilities expanded that market, but to begin with the safe harboring projects.
I'm not going for this year, but the year is going forward. [inaudible]
A lot of the...
A lot of the pipeline is already insulated from whatever...
from whatever may happen with changes in the tax bill.
Speaker Change: But again, that's viewed as an important component of the value of the energy tax credits and building out more clean energy projects across the associations, utilities and other groups.
Speaker Change: Yeah, and I would also mention there's broad support for transferability by utilities, corporates. It's really worked very well, and I think that broad support will go a long way.
Speaker Change: Frank, no, I think the concern is also how would the JCT even attribute any cost savings from removing that, but I guess that's a different question.
Speaker Change: And separately, just on the financing, could you just help us understand once you lock in.
drop down yields,
Speaker Change: Do you lock in the cost of capital at the same time or...
Speaker Change: Or do you use the liquid at your hand to kind of manage that? I'm standing on Sunday.
Speaker Change: If trades are volatile, then how do you manage that for the, it's a project you're dropping in the next quarter or two? Thanks.
Thank you. Thank you.
Speaker Change: Yeah, hi, this is Chuck. I assume you're referring to assets originated in this CCH1 with that question.
Speaker Change: Or any assets in general like where you haven't logged in the interest rates and great change before you go and log in Okay, I understand yeah, so when we're funding assets we typically
Speaker Change: Initially, use our revolver and available liquidity to fund those investments and we...
Speaker Change: We have some hedging products to lock in the interest rate that we're paying on that, so we're not really wearing interest rate risk once we fund some of those.
Speaker Change: Investments. And for longer term takeout of the short term facility, we also have some hedging products that we have, where we hedge the long term takeout as well.
Thank you for watching.
Appreciate the colour. Thanks.
Thank you.
Speaker Change: Thank you. The next question comes from Jordan Levy from Duke's Securities. He's basically the Duke's Securities.
Speaker Change: Hi, all. It's Senator Oliver Jordan here. Thanks for taking the questions. We just just start. Could you just give a little bit more color around the potential wind opportunities you mentioned you're seeing in the pipeline now? I would assume those are onshore opportunities given the turn policy environment and then just what, you know, kind of the timeline you see for those. Thank you very much.
Speaker Change: Sure, thanks for the question. I can confirm that they are all onshore and that there's nothing in our pipeline that is offshore.
Speaker Change: The type of projects that we look at in wind are very consistent with the projects that we've done in the past and frankly very consistent with solar projects as well, simply a different technology. The technology.
Um...
Speaker Change: One of the reasons that we did call that out is because wind has been in the news and wind has not been in our close transactions more recently. We did want to note.
Speaker Change: for investors that we are starting to see more wind assets available and continuing to move forward. But in terms of the uniqueness, I would consider the revenue streams and breast profile to be very consistent with what we've seen in the past.
Speaker Change: to understand, thanks, thanks for that. And then just a quick one looking at FTN within CCH1. It looks like it's a pretty decent piece of the mix right now. I guess is that primarily being driven by RNG at this stage? And have you expect that level of mix to kind of hold up the CCH1 develops?
Speaker Change: Yes, that is primarily renewable natural gas at this point, and I would just think of the CCH-1
Speaker Change: Balance Sheet Profile, so to speak, to be very consistent with Hassee. So we've constructed CCH1, so look a lot like Hassee from an asset diversification perspective. So as we grow our RNG business, CCH1's RNG percentage should be consistent.
Speaker Change: Okay, thank you. The next question comes from Jeff Osborne from TD Cohen. Please proceed with your questions, Dev.
Speaker Change: Great. Thank you. I just had one Jeff Lipson on CCH1, actually. I guess just given, maybe I'm I know you've texted, but given it had one in the name, I was assuming instead of making it longer and bigger, you would just create CCH2 and maybe extract more value for yourself.
Speaker Change: So maybe you could just enlighten me, was there any conversation about creating a new vehicle that maybe had different terms and conditions as opposed to extending the existing one and making it larger?
Jeff Lipson: So, good question, Jeff. I think the way to think about that is the existing CCH-1.
Jeff Lipson: is working particularly well, I think both parties are very pleased with it. I think the notion of putting debt on CCH1, which is an objective of both HSI and KKR,
Jeff Lipson: and growing it to something like two and a half to three billion. [inaudible]
Jeff Lipson: without additional equity contributions from the partners, but rather through debt? [inaudible]
Jeff Lipson: was just a very prudent way to continue forward and allow this vehicle to exist in terms of an investment period through next year. And so there might be a CCH2 someday, but I think at the current moment this was a very prudent way to attack.
the notion of increasing the capacity of CCH1.
[inaudible]
Jeff Lipson: Got it. And I think I know the answer to this question, but just to reiterate that there's another company in the storage space reporting the night that lowered guidance for this calendar year and so
Speaker Change: in light of the tariffs, and so is there a way of talking about your pipeline or funnel as it relates to what percentage of the behind the meter, front of the meter?
Speaker Change: Assets that retired batteries that, you know, typically people don't buy batteries a year in advance, just given they degrade and prices historically have gone down to the end of the day.
Speaker Change: And so, as intrigued by your comment, that, you know, you're still locked and loaded for the next 12-18 months.
Speaker Change: I think even for solar projects with batteries potentially being delayed. So, is there a way of fleshing that out for investors? Thank you very much.
Speaker Change: You know, I think the, again, the status of the projects that comprise our pipeline.
Speaker Change: is such that equipment has generally been secured, identified, safe harbor, and these issues.
Speaker Change: that you are raising our real issues, but very unlikely to impact our pipeline, and therefore very unlikely to impact our volumes in the next 12 to 18 months. I think there'll be issues in that post-pipeline period, which I talked about in the prepare remarks, but I do think our pipeline...
Reflex
Speaker Change: a stage of construction and development in which these issues are not a large risk.
Raise your ear. That's all I have. Thank you.
Thank you
Speaker Change: Thank you. Ladies and gentlemen, just one final reminder. If you would like to ask a question, please press star and then one. If you would like to ask a question, please press star and then one. We will pause to see if we have any further questions before we conclude.
Speaker Change: Thank you. There are no further questions at this time and this does conclude today's teleconference. Thank you very much for joining us today and you may now disconnect your lines.
Speaker Change: John Hurley, John Hurley, John Hurley, John Hurley