Second Quarter Financial Highlights
- Second quarter 2023 revenues of $46.5 million
- GAAP net income of $3.4 million for second quarter 2023
- Adjusted EBITDA* of $30.6 million for second quarter 2023
- Adjusted EBITDA margin* of 66% for second quarter 2023
Recent Business Highlights
- Executed exclusive agreement with High Street Logistics to
deploy solar across its portfolio of 144 logistics facilities
- During August, completed acquisition of a 10 MW solar array
combined with 15 MWh of energy storage serving a large grocery
chain and Community Solar customers in Holliston, MA
- Completed acquisition from Apollo of 4.4 MW portfolio including
new customer relationships with HP Inc. and Keysight
Technologies
- Completed Hawaii’s first large-scale Community Solar array of
approximately 5 MW serving the local community
- Remain on track to complete construction of 75 MW during
2023
- Total installed portfolio of ~698 MW at quarter-end
- Trailing twelve-month generation of over 630,000 megawatt
hours, avoiding in excess of 440,000 metric tons of CO2 equivalent
on behalf of our clients1
Altus Power, Inc. (NYSE: AMPS) (“Altus Power,” “we,” “us,”
“our,” or the “Company”), the leading commercial-scale provider of
clean electric power, today announced its financial results for the
second quarter of 2023.
“The second quarter was the best in company history in terms of
revenue and adjusted EBITDA and thanks to our increasing
construction output and our continued success in acquiring assets,
we are now the largest owner of commercial solar arrays in the
country,” said Lars Norell, Co-CEO of Altus Power. “These important
milestones, combined with our use of Community Solar initiatives to
maximize our asset sizes, enhance our customer reach as we continue
our profitable growth in this expanding market.”
“At a time when others in our industry are having difficulty
accessing capital, our thoughtful balance sheet construction
including our strategic partnership with Blackstone Structured
Finance affords us the ability to execute on our robust pipeline of
opportunity,” said Gregg Felton, CO-CEO of Altus Power. “Our strong
first half of 2023 positions us well to continue expanding our
footprint as we work to achieve our goal of delivering the benefits
of clean, electric power coast-to-coast.”
Second Quarter Financial Results
Operating revenues during the second quarter of 2023 totaled
$46.5 million, compared to $24.8 million during the same period of
2022, an increase of 88%. The increase is primarily due to a
greater number of solar energy facilities in operation as a result
of construction completions as well as acquisitions during the past
twelve months.
Second quarter 2023 GAAP net income totaled $3.4 million,
compared to $21.6 million for the same period last year. The
decrease was primarily driven by changes in the non-cash
remeasurement of alignment shares.
Adjusted EBITDA* during the second quarter of 2023 was $30.6
million, compared to $13.9 million for the second quarter of 2022,
a 120% increase. The year-over-year growth in adjusted EBITDA* was
primarily the result of increased revenue from additional solar
energy facilities, partially offset by an increase in our general
and administrative expenses associated with an increase in
personnel.
2023 Guidance
Altus Power reaffirmed 2023 adjusted EBITDA* in the range of
$97-103 million, representing 70% growth over 2022 at the midpoint.
The Company also continues to expect 2023 adjusted EBITDA margin*
to be in the mid-to-high fifty percent range.
Use of Non-GAAP Financial Information
*Denotes non-GAAP financial measure. We present our operating
results in accordance with accounting principles generally accepted
in the U.S. (“GAAP”). We believe certain financial measures, such
as adjusted EBITDA and adjusted EBITDA margin provide users of our
financial statements with supplemental information that may be
useful in evaluating our business. The presentation of non-GAAP
financial information is not intended to be considered in isolation
or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP.
We define adjusted EBITDA as net income (loss) plus net interest
expense, depreciation, amortization and accretion expense, income
tax expense, acquisition and entity formation costs, non-cash
compensation expense, and excluding the effect of certain
non-recurring items we do not consider to be indicative of our
ongoing operating performance such as, but not limited to, gain on
fair value remeasurement of contingent consideration, gain on
disposal of property, plant and equipment, change in fair value of
redeemable warrant liability, change in fair value of alignment
shares, loss on extinguishment of debt, and other miscellaneous
items of other income and expenses. See below for explanations of
each of these components.
We define adjusted EBITDA margin as adjusted EBITDA divided by
operating revenues.
Adjusted EBITDA and adjusted EBITDA margin are non-GAAP
financial measures that we use to measure our performance. We
believe that investors and analysts also use adjusted EBITDA in
evaluating our operating performance. This measurement is not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. The GAAP measure most
directly comparable to adjusted EBITDA is net income and to
adjusted EBITDA margin is net income over operating revenues. The
presentation of adjusted EBITDA and adjusted EBITDA margin should
not be construed to suggest that our future results will be
unaffected by non-cash or non-recurring items. In addition, our
calculation of adjusted EBITDA and adjusted EBITDA margin are not
necessarily comparable to adjusted EBITDA as calculated by other
companies and investors and analysts should read carefully the
components of our calculations of these non-GAAP financial
measures.
We believe adjusted EBITDA is useful to management, investors
and analysts in providing a measure of core financial performance
adjusted to allow for comparisons of results of operations across
reporting periods on a consistent basis. These adjustments are
intended to exclude items that are not indicative of the ongoing
operating performance of the business. Adjusted EBITDA is also used
by our management for internal planning purposes, including our
consolidated operating budget, and by our board of directors in
setting performance-based compensation targets. Adjusted EBITDA
should not be considered an alternative to but viewed in
conjunction with GAAP results, as we believe it provides a more
complete understanding of ongoing business performance and trends
than GAAP measures alone. Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our results as reported under
GAAP.
In addition to adjusted EBITDA, we may also refer to exit
portfolio annualized rate, or exit PAR, which is a non-GAAP
measure. Exit PAR reflects the estimated annual adjusted EBITDA
potential of our operating asset base at the end of the year and
assumes customary weather, production, expenses and other economic
and market conditions. We believe this metric can be helpful to
assess our portfolio asset base in operation at the beginning of an
annual period, e.g. if we were to receive the benefit of assets
added for a full year even if they were added during a partial
year. This figure is only an estimate and is based on a number of
assumptions by Altus Power's management that may or may not be
realized.
Altus Power does not provide GAAP financial measures on a
forward-looking basis because the Company is unable to predict with
reasonable certainty and without unreasonable effort, items such as
acquisition and entity formation costs, gain on fair value
remeasurement of contingent consideration, change in fair value of
redeemable warrant liability, change in fair value of alignment
shares. These items are uncertain, depend on various factors, and
could be material to Altus Power’s results computed in accordance
with GAAP.
Adjusted EBITDA Definitions
Interest Expense, Net. Interest expense, net represents
interest on our borrowings under our various debt facilities,
amortization of debt discounts and deferred financing costs, and
unrealized gains and losses on interest rate swaps.
Depreciation, Amortization and Accretion Expense.
Depreciation expense represents depreciation on solar energy
systems that have been placed in service. Depreciation expense is
computed using the straight-line composite method over the
estimated useful lives of assets. Leasehold improvements are
depreciated over the shorter of the estimated useful lives or the
remaining term of the lease. Amortization includes third party
costs necessary to enter into site lease agreements, third party
costs necessary to acquire PPA and NMCA customers and favorable and
unfavorable rate revenues contracts. Third party costs necessary to
enter into site lease agreements are amortized using the
straight-line method ratably over 15-30 years based upon the term
of the individual site leases. Third party costs necessary to
acquire PPAs and NMCA customers are amortized using the
straight-line method ratably over 15-25 years based upon the term
of the customer contract. Estimated fair value allocated to the
favorable and unfavorable rate PPAs and REC agreements are
amortized using the straight-line method over the remaining
non-cancelable terms of the respective agreements. Accretion
expense includes over time increase of asset retirement obligations
associated with solar energy facilities.
Income Tax (Expense) Benefit. We account for income taxes
under ASC 740, Income Taxes. As such, we determine deferred tax
assets and liabilities based on temporary differences resulting
from the different treatment of items for tax and financial
reporting purposes. We measure deferred tax assets and liabilities
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse.
Additionally, we must assess the likelihood that deferred tax
assets will be recovered as deductions from future taxable income.
We have a partial valuation allowance on our deferred state tax
assets because we believe it is more likely than not that a portion
of our deferred state tax assets will not be realized. We evaluate
the recoverability of our deferred tax assets on a quarterly
basis.
Acquisition and Entity Formation Costs. Acquisition and
entity formation costs represent costs incurred to acquire
businesses and form new legal entities. Such costs primarily
consist of professional fees for banking, legal, accounting and
appraisal services.
Stock-Based Compensation Expense. Stock-based
compensation expense is recognized for awards granted under the
Legacy Incentive Plans and Omnibus Incentive Plan, as defined in
our 2022 Annual Report on Form 10K, Note 20, "Stock-Based
Compensation," to our consolidated financial statements.
Fair Value Remeasurement of Contingent Consideration. In
connection with the Solar Acquisition (as defined in our 2022
Annual Report on Form 10K, Note 11, “Fair Value Measurements,” to
our consolidated financial statements) contingent consideration of
up to an aggregate of $3.1 million may be payable upon achieving
certain market power rates by the acquired solar energy facilities.
The Company estimated the fair value of the contingent
consideration for future earnout payments using a Monte Carlo
simulation model. Significant assumptions used in the measurement
include market power rates during the 36-month period, and the
risk-adjusted discount rate associated with the business.
Change in Fair Value of Redeemable Warrant Liability. In
connection with the Merger, the Company assumed a redeemable
warrant liability composed of publicly listed warrants (the
"Redeemable Warrants") and warrants issued to CBRE Acquisition
Sponsor, LLC in the private placement (the "Private Placement
Warrants"). Redeemable Warrant Liability was remeasured through the
Redemption Date, and the resulting loss was included in the
consolidated statements of operations.
Change in Fair Value of Alignment Shares Liability.
Alignment Shares represent Class B common stock of the Company
which were issued in connection with the business combination (the
"Merger"). Class B common stock, par value $0.0001 per share
("Alignment Shares") are accounted for as liability-classified
derivatives, which were remeasured as of December 31, 2022, and the
resulting gain was included in the consolidated statements of
operations. The Company estimates the fair value of outstanding
Alignment Shares using a Monte Carlo simulation valuation model
utilizing a distribution of potential outcomes based on a set of
underlying assumptions such as stock price, volatility, and
risk-free interest rates.
Other (Income) Expense, Net. Other income and expenses
primarily represent interest income, state grants, and other
miscellaneous items.
Forward-Looking Statements
This press release contains forward-looking statements.
Forward-looking statements may be identified by the use of words
such as "aims," "believes," "expects," "intends," "aims", "may,"
“could,” "will," "should," "plans," “projects,” “forecasts,”
“seeks,” “anticipates,” “goal,” “objective,” “target,” “estimate,”
“future,” “outlook,” "strategy," “vision,” or variations of such
words or similar terminology that predict or indicate future events
or trends or that are not statements of historical matters. These
statements, which involve risks and uncertainties, relate to
analyses and other information that are based on forecasts of
future results and estimates of amounts not yet determinable and
may also relate to Altus Power’s future prospects, developments and
business strategies. These statements are based on Altus Power’s
management’s current expectations and beliefs, as well as a number
of assumptions concerning future events.
Such forward-looking statements are subject to known and unknown
risks, uncertainties, assumptions and other important factors, many
of which are outside Altus Power’s control, that could cause actual
results to differ materially from the results discussed in the
forward-looking statements. These risks, uncertainties, assumptions
and other important factors include, but are not limited to: (1)
failure to obtain required consents or regulatory approvals in a
timely manner or otherwise; (2) the ability of Altus Power to
retain customers and maintain and expand relationships with
business partners, suppliers and customers; (3) the ability of
Altus Power to successfully integrate the acquisition of solar
assets into its business and generate profit from their operations;
(4) the risk that pending acquisitions may not close in the
anticipated timeframe or at all due to a closing condition not
being met (5) the risk of litigation and/or regulatory actions
related to the proposed acquisition of solar assets; and (6) the
possibility that Altus Power may be adversely affected by other
economic, business, regulatory, credit risk and/or competitive
factors.
Additional factors that could cause actual results to differ
materially from those expressed or implied in forward-looking
statements can be found under the heading “Risk Factors” in Altus
Power’s Form 10-K filed with the Securities and Exchange Commission
on March 30th, 2023, as well as the other information we file with
the Securities and Exchange Commission. New risks and uncertainties
arise from time to time, and it is impossible for us to predict
these events or how they may affect us. You are cautioned not to
place undue reliance upon any forward-looking statements, which
speak only as of the date made and the information and assumptions
underlying such statement as we know it and on the date such
statement was made, and Altus Power undertakes no obligation to
update or revise the forward-looking statements, whether as a
result of new information, changes in expectations, future events
or otherwise.
This press release is not intended to be all-inclusive or to
contain all the information that a person may desire in considering
an investment in Altus Power and is not intended to form the basis
of an investment decision in Altus Power. All subsequent written
and oral forward-looking statements concerning Altus Power or other
matters and attributable to Altus Power or any person acting on its
behalf are expressly qualified in their entirety by the cautionary
statements above.
Conference Call Information
The Altus Power management team will host a conference call to
discuss its second quarter 2023 financial results later this
morning at 8:30 a.m. Eastern Time. The call can be accessed via a
live webcast accessible on the Events & Presentations page in
the Investor Relations section of Altus Power's website at
https://investors.altuspower.com/events-and-presentations/default.aspx.
An archive of the webcast will be available after the call on the
Investor Relations section of Altus Power's website as well.
About Altus Power, Inc.
Altus Power, based in Stamford, Connecticut, is the leading
commercial-scale provider of clean electric power serving
commercial, industrial, public sector and Community Solar customers
with end-to-end solutions. Altus Power originates, develops, owns
and operates locally-sited solar generation, energy storage and
charging infrastructure across the nation. Visit www.altuspower.com
to learn more.
__________________________ 1 Conversion from megawatt hours
according to EPA AVERT Calculator
Altus Power, Inc.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except share
and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating revenues, net
$
46,513
$
24,762
$
75,891
$
43,961
Operating expenses
Cost of operations (exclusive of
depreciation and amortization shown separately below)
7,581
4,290
13,557
8,354
General and administrative
8,291
6,558
15,653
12,942
Depreciation, amortization and accretion
expense
12,959
6,863
24,335
13,685
Acquisition and entity formation costs
1,369
52
2,860
346
Loss (gain) on fair value remeasurement of
contingent consideration
50
(1,140
)
100
(971
)
Stock-based compensation
4,256
2,657
7,128
3,962
Total operating expenses
$
34,506
$
19,280
$
63,633
$
38,318
Operating income
12,007
5,482
12,258
5,643
Other (income) expense
Change in fair value of redeemable warrant
liability
—
(4,659
)
—
(23,117
)
Change in fair value of Alignment Shares
liability
(2,805
)
(16,705
)
(19,823
)
(63,051
)
Other expense (income), net
1,789
(608
)
1,879
(593
)
Interest expense, net
8,524
5,173
20,970
10,111
Total other expense (income)
$
7,508
$
(16,799
)
$
3,026
$
(76,650
)
Income before income tax expense
$
4,499
$
22,281
$
9,232
$
82,293
Income tax expense
(1,129
)
(707
)
(2,017
)
(584
)
Net income
$
3,370
$
21,574
$
7,215
$
81,709
Net loss attributable to noncontrolling
interests and redeemable noncontrolling interests
(3,455
)
(2,541
)
(5,227
)
(2,825
)
Net income attributable to Altus Power,
Inc.
$
6,825
$
24,115
$
12,442
$
84,534
Net income per share attributable to
common stockholders
Basic
$
0.04
$
0.16
$
0.08
$
0.55
Diluted
$
0.04
$
0.16
$
0.08
$
0.55
Weighted average shares used to compute
net income per share attributable to common stockholders
Basic
158,719,684
153,310,068
158,670,950
152,988,078
Diluted
158,978,275
153,954,843
160,747,045
153,771,992
Altus Power, Inc.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(In thousands, except share
and per share data)
As of June 30, 2023
As of December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
69,114
$
193,016
Current portion of restricted cash
3,700
2,404
Accounts receivable, net
27,041
13,443
Other current assets
6,451
6,206
Total current assets
106,306
215,069
Restricted cash, noncurrent portion
11,321
3,978
Property, plant and equipment, net
1,405,497
1,005,147
Intangible assets, net
47,429
47,627
Operating lease asset
151,653
94,463
Derivative assets
5,134
3,953
Other assets
8,047
6,651
Total assets
$
1,735,387
$
1,376,888
Liabilities, redeemable noncontrolling
interests, and stockholders' equity
Current liabilities:
Accounts payable
$
5,664
$
2,740
Construction payable
14,972
9,038
Interest payable
7,473
4,436
Purchase price payable, current
22,400
12,077
Due to related parties
153
112
Current portion of long-term debt, net
32,071
29,959
Operating lease liability, current
3,568
3,339
Contract liability, current
3,807
2,590
Other current liabilities
7,322
3,937
Total current liabilities
97,430
68,228
Alignment shares liability
46,311
66,145
Long-term debt, net of unamortized debt
issuance costs and current portion
878,465
634,603
Intangible liabilities, net
14,631
12,411
Purchase price payable, noncurrent
—
6,940
Asset retirement obligations
13,931
9,575
Operating lease liability, noncurrent
157,876
94,819
Contract liability, noncurrent
6,518
5,397
Deferred tax liabilities, net
13,581
11,011
Other long-term liabilities
3,526
4,700
Total liabilities
$
1,232,269
$
913,829
Commitments and contingent liabilities
Redeemable noncontrolling interests
20,667
18,133
Stockholders' equity
Common stock $0.0001 par value;
988,591,250 shares authorized as of June 30, 2023, and December 31,
2022; 158,989,953 and 158,904,401 shares issued and outstanding as
of June 30, 2023, and December 31, 2022
16
16
Additional paid-in capital
478,458
470,004
Accumulated deficit
(33,477
)
(45,919
)
Accumulated other comprehensive loss
3,008
—
Total stockholders' equity
$
448,005
$
424,101
Noncontrolling interests
34,446
20,825
Total equity
$
482,451
$
444,926
Total liabilities, redeemable
noncontrolling interests, and stockholders' equity
$
1,735,387
$
1,376,888
Altus Power, Inc.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
Six months ended June
30,
2023
2022
Cash flows from operating
activities
Net income
$
7,215
$
81,709
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation, amortization and
accretion
24,335
13,685
Non-cash lease expense
499
—
Deferred tax expense
2,011
550
Amortization of debt discount and
financing costs
1,683
1,428
Change in fair value of redeemable warrant
liability
—
(23,117
)
Change in fair value of Alignment Shares
liability
(19,823
)
(63,051
)
Remeasurement of contingent
consideration
100
(971
)
Stock-based compensation
7,069
3,962
Other
1,350
(189
)
Changes in assets and liabilities,
excluding the effect of acquisitions
Accounts receivable
(9,597
)
(3,940
)
Due to related parties
41
—
Derivative assets
2,676
(1,777
)
Other assets
1,607
2,712
Accounts payable
2,924
(722
)
Interest payable
3,037
(78
)
Contract liability
243
—
Other liabilities
121
1,668
Net cash provided by operating
activities
25,491
11,869
Cash flows used for investing
activities
Capital expenditures
(61,982
)
(23,338
)
Payments to acquire businesses, net of
cash and restricted cash acquired
(288,903
)
—
Payments to acquire renewable energy
facilities from third parties, net of cash and restricted cash
acquired
(22,433
)
(11,572
)
Net cash used for investing activities
(373,318
)
(34,910
)
Cash flows used for financing
activities
Proceeds from issuance of long-term
debt
269,850
—
Repayment of long-term debt
(31,068
)
(8,120
)
Payment of debt issuance costs
(2,548
)
(42
)
Payment of deferred purchase price
payable
(4,531
)
—
Payment of equity issuance costs
—
(744
)
Payment of contingent consideration
—
(45
)
Contributions from noncontrolling
interests
6,274
2,151
Redemption of redeemable noncontrolling
interests
(3,224
)
—
Distributions to noncontrolling
interests
(2,189
)
(1,148
)
Net cash provided by (used for) financing
activities
232,564
(7,948
)
Net decrease in cash, cash equivalents,
and restricted cash
(115,263
)
(30,989
)
Cash, cash equivalents, and restricted
cash, beginning of period
199,398
330,321
Cash, cash equivalents, and restricted
cash, end of period
$
84,135
$
299,332
Six months ended June
30,
2023
2022
Supplemental cash flow
disclosure
Cash paid for interest
$
15,299
$
9,804
Cash paid for taxes
—
39
Non-cash investing and financing
activities
Asset retirement obligations
$
3,943
$
96
Debt assumed through acquisitions
7,883
—
Noncontrolling interest assumed through
acquisitions
13,500
—
Redeemable noncontrolling interest assumed
through acquisitions
8,100
—
Acquisitions of property and equipment
included in construction payable
6,125
—
Acquisitions of property, plant and
equipment included in other current liabilities
—
1,334
Conversion of Alignment Shares into common
stock
11
15
Deferred purchase price payable
7,606
—
Construction loan conversion
—
(4,186
)
Term loan conversion
—
4,186
Exchange of warrants into common stock
—
7,303
Non-GAAP Financial Reconciliation
Reconciliation of GAAP reported Net Income to non-GAAP adjusted
EBITDA:
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Reconciliation of Net income to
Adjusted EBITDA:
Net income
$
3,370
$
21,574
$
7,215
$
81,709
Income tax expense
1,129
707
2,017
584
Interest expense, net
8,524
5,173
20,970
10,111
Depreciation, amortization and accretion
expense
12,959
6,863
24,335
13,685
Stock-based compensation
4,256
2,657
7,128
3,962
Acquisition and entity formation costs
1,369
52
2,860
346
Loss (gain) on fair value remeasurement of
contingent consideration
50
(1,140
)
100
(971
)
Change in fair value of redeemable warrant
liability
—
(4,659
)
—
(23,117
)
Change in fair value of Alignment Shares
liability
(2,805
)
(16,705
)
(19,823
)
(63,051
)
Other expense (income), net
1,789
(608
)
1,879
(593
)
Adjusted EBITDA
$
30,641
$
13,914
$
46,681
$
22,665
Reconciliation of non-GAAP adjusted EBITDA margin:
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Reconciliation of Adjusted EBITDA
margin:
Adjusted EBITDA
$
30,641
$
13,914
$
46,681
$
22,665
Operating revenues, net
46,513
24,762
75,891
43,961
Adjusted EBITDA margin
66
%
56
%
62
%
52
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814712969/en/
Altus Power for Investor or Media Inquiries: Chris
Shelton, Head of Investor Relations
InvestorRelations@altuspower.com
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