• Adjusted Earnings Per Share (EPS): Increased by 10% to $2.45 in 2024.
• Adjusted Net Investment Income (NII): Grew 22% to $264 million.
• Gain on Sale, Fees, and Securitization Income: Totaled $118 million, up 30% for 2024.
• New Transactions Closed: $2.3 billion in 2024, including $1.1 billion in Q4.
• Portfolio Yield: Increased to 8.3% from 7.9% in the prior year.
• Managed Assets: Totaled $13.7 billion, an 11% increase year-over-year.
• Liquidity: Greater than $1.5 billion at year-end.
• Dividend Increase: Raised to $0.42 per share.
• Pipeline: Greater than $5.5 billion, with 48% behind the meter, 27% FTN, and 25% grid connected.
• Weighted Average Yield on New Investments: Exceeded 10.5% in 2024.
• Debt-to-Equity Ratio: Maintained within the 1.5 to 2x target range at 1.8x.

• Warning! GuruFocus has detected 5 Warning Signs with HASI.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HA Sustainable Infrastructure Capital Inc (NYSE:HASI) achieved a 10% increase in adjusted earnings per share in 2024.
• The company closed $2.3 billion in new transactions, including $1.1 billion in the fourth quarter alone.
• HASI extended its adjusted EPS guidance of 8% to 10% annual growth through 2027.
• The company increased its dividend to $0.42 per share, aiming for a 50% payout ratio by 2030.
• HASI's portfolio yield increased to 8.3% in 2024, up from 7.9% the previous year, reflecting successful pricing adjustments in response to interest rate changes.

Negative Points

• There is uncertainty related to federal policy changes, which could impact the clean energy sector.
• The company faces potential risks from policy-driven uncertainty, which may cause stress in end markets and extend project timelines.
• HASI's gain on sale in 2024 was outsized due to asset rotation, which may not be replicable in future years.
• The company is expanding into new asset classes and international markets, which could introduce new risks and challenges.
• HASI's reliance on capital markets may increase as it aims to reduce its payout ratio to 50% by 2030.

Q & A Highlights

Q: Can you talk about the timing and risk-adjusted returns for new opportunities mentioned on slide 14? A: Marc Pangburn, CFO: Some opportunities are near-term and tangible, while others are further out. Near-term opportunities are similar to current infrastructure assets with long-term cash flows, allowing us to price similarly. Pricing will adjust as risk changes.

Q: Does the expansion into new markets change your goal of reducing reliance on public capital markets? A: Jeffrey Lipson, CEO: The funding strategy for new asset classes will remain consistent with historical methods, assuming a consistent risk profile. This expansion does not imply more or less capital raising.

Q: What discussions are you having with KKR or others about similar partnerships? A: Jeffrey Lipson, CEO: It's premature to discuss new partnerships. We expect co-investment strategies to be a permanent part of our capital structure, but nothing specific is planned after CCH1.

Q: How do you view the potential impact of reduced tax credits on your investment opportunities? A: Marc Pangburn, CFO: Reduced tax equity could create a gap in the capital stack, increasing cash equity opportunities for us. This could lead to higher PPA rates and more monetization opportunities.

Q: How do you leverage existing relationships to enter new growth areas? A: Marc Pangburn, CFO: We focus on expanding into all business lines of existing clients. For example, our first R&D investment was with Ameresco, a long-standing client. We will continue to focus on acquiring and retaining clients while exploring new asset classes.

Q: Can you discuss the international opportunity relative to the US pipeline? A: Marc Pangburn, CFO: International opportunities are currently a small portion of our business. We will proceed cautiously and focus on existing clients for international expansion, keeping the majority of our pipeline US-focused.

Q: How does the volatility in D3 RIN prices affect your RNG investments? A: Jeffrey Lipson, CEO: RIN prices are a factor in our underwriting, but as senior debt holders, we are well protected from cash flow risks associated with RIN pricing.

Q: What is the outlook for transaction volumes in 2025? A: Jeffrey Lipson, CEO: We expect flat to slight increases in transaction volumes, with potential to exceed guidance. Any increase would be modest over the $2.3 billion achieved in 2024.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.