Altus power, inc. announces first quarter 2023 financial results
Stamford, conn.--(business wire)--altus power, inc. (nyse: amps) (“altus power” or the “company”), the premier independent commercial-scale clean electrification company, today announced its financial results for the first quarter of 2023. “we are seeing an increased construction cadence as our engineering and construction teams overcome elongated permitting and interconnection timelines; we're pleased to welcome these new assets and the customers they serve into our portfolio," commented lars norell, co-ceo of altus power. "at the same time, our origination team is progressing new customer relationships through contracting and assets that will serve those customers are now approaching construction." "we have successfully integrated new customer relationships from our recent acquisitions," added gregg felton, co-ceo of altus power. "it's rewarding to see our new customers embrace the altus power brand and express interest in expanding our relationship. as we grow our customer base and market presence, we anticipate an increasing flow of development opportunities." first quarter financial results operating revenues during the first quarter of 2023 totaled $29.4 million, compared to $19.2 million during the same period of 2022, an increase of 53%. the increase is primarily due to the increased number of solar energy facilities as a result of acquisitions and facilities placed in service during the past twelve months. first quarter 2023 gaap net income totaled $3.8 million, compared to $60.1 million for the same period last year. the decrease was primarily driven by the non-cash gain from remeasurement of alignment shares. adjusted ebitda* during the first quarter of 2023 was $16.0 million, compared to $8.8 million for the first quarter of 2022, a 83% 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 which was driven by an increase in personnel. balance sheet and liquidity altus power ended the first quarter of 2023 with $84.2 million in cash, cash equivalents, and restricted cash, and $868.3 million of total debt. the company's current growth plan calls for capital from borrowings under our existing debt facilities, third party tax equity investors, cash from our balance sheet and cash from operations. 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 note 20, "stock-based compensation," to our consolidated financial statements included in our report on form 10-k for the year ended december 31, 2022. fair value remeasurement of contingent consideration. in connection with the solar acquisition (as defined in note 11, “fair value measurements,” to our consolidated financial statements included in our report on form 10-k for the year ended december 31, 2022), 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 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) the risk that pending acquisitions may not close in the anticipated timeframe or at all due to a closing condition not being met; (2) failure to obtain required consents or regulatory approvals in a timely manner or otherwise; (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 ability of altus power to retain customers and maintain and expand relationships with business partners, suppliers and customers; (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 first 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 premier independent commercial-scale clean electrification company 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 march 31, 2023 2022 operating revenues, net $ 29,378 $ 19,199 operating expenses cost of operations (exclusive of depreciation and amortization shown separately below) 5,976 4,064 general and administrative 7,362 6,384 depreciation, amortization and accretion expense 11,376 6,822 acquisition and entity formation costs 1,491 294 loss on fair value remeasurement of contingent consideration 50 169 stock-based compensation 2,872 1,305 total operating expenses $ 29,127 $ 19,038 operating income 251 161 other (income) expense change in fair value of redeemable warrant liability — (18,458 ) change in fair value of alignment shares liability (17,018 ) (46,346 ) other expense, net 90 15 interest expense, net 12,446 4,938 total other income $ (4,482 ) $ (59,851 ) income before income tax (expense) benefit $ 4,733 $ 60,012 income tax (expense) benefit (888 ) 123 net income $ 3,845 $ 60,135 net loss attributable to noncontrolling interests and redeemable noncontrolling interests (1,772 ) (284 ) net income attributable to altus power, inc. $ 5,617 $ 60,419 net income per share attributable to common stockholders basic $ 0.04 $ 0.39 diluted $ 0.03 $ 0.39 weighted average shares used to compute net income per share attributable to common stockholders basic 158,621,674 152,662,512 diluted 161,003,402 153,586,538 altus power, inc. condensed consolidated balance sheets (unaudited) (in thousands, except share and per share data) as of march 31, 2023 as of december 31, 2022 assets current assets: cash and cash equivalents $ 69,450 $ 193,016 current portion of restricted cash 3,376 2,404 accounts receivable, net 16,116 13,443 other current assets 4,440 6,206 total current assets 93,382 215,069 restricted cash, noncurrent portion 11,355 3,978 property, plant and equipment, net 1,371,674 1,005,147 intangible assets, net 47,770 47,627 operating lease asset 122,719 94,463 derivative assets 2,184 3,953 other assets 8,277 6,651 total assets $ 1,657,361 $ 1,376,888 liabilities, redeemable noncontrolling interests, and stockholders' equity current liabilities: accounts payable $ 5,568 $ 2,740 construction payable 19,720 9,038 interest payable 5,640 4,436 purchase price payable, current 14,454 12,077 due to related parties 213 112 current portion of long-term debt 32,549 29,959 operating lease liability, current 3,704 3,339 contract liability, current 4,223 2,590 other current liabilities 10,210 3,937 total current liabilities 96,281 68,228 alignment shares liability 49,116 66,145 long-term debt, net of unamortized debt issuance costs and current portion 835,729 634,603 intangible liabilities, net 15,461 12,411 purchase price payable, noncurrent 7,287 6,940 asset retirement obligations 13,512 9,575 operating lease liability, noncurrent 129,609 94,819 contract liability, noncurrent 7,036 5,397 deferred tax liabilities, net 11,329 11,011 other long-term liabilities 1,805 4,700 total liabilities $ 1,167,165 $ 913,829 commitments and contingent liabilities redeemable noncontrolling interests 24,343 18,133 stockholders' equity common stock $0.0001 par value; 988,591,250 shares authorized as of march 31, 2023, and december 31, 2022; 158,989,953 and 158,904,401 shares issued and outstanding as of march 31, 2023, and december 31, 2022 16 16 additional paid-in capital 474,202 470,004 accumulated deficit (40,302 ) (45,919 ) accumulated other comprehensive loss (762 ) — total stockholders' equity $ 433,154 $ 424,101 noncontrolling interests 32,699 20,825 total equity $ 465,853 $ 444,926 total liabilities, redeemable noncontrolling interests, and stockholders' equity $ 1,657,361 $ 1,376,888 altus power, inc. condensed consolidated statements of cash flows (unaudited) (in thousands) three months ended march 31, 2023 2022 cash flows from operating activities net income $ 3,845 $ 60,135 adjustments to reconcile net income to net cash from operating activities: depreciation, amortization and accretion 11,376 6,822 non-cash lease expense 112 — deferred tax expense (benefit) 888 (130 ) amortization of debt discount and financing costs 753 711 change in fair value of redeemable warrant liability — (18,458 ) change in fair value of alignment shares liability (17,018 ) (46,346 ) remeasurement of contingent consideration 50 169 stock-based compensation 2,813 1,305 other 138 283 changes in assets and liabilities, excluding the effect of acquisitions accounts receivable 1,685 724 due to related parties 101 — derivative assets 1,769 (901 ) other assets 1,206 769 accounts payable 2,828 (1,197 ) interest payable 1,204 (99 ) contract liability 152 — other liabilities 2,323 (288 ) net cash provided by operating activities 14,225 3,499 cash flows used for investing activities capital expenditures (24,844 ) (6,571 ) payments to acquire businesses, net of cash and restricted cash acquired (288,241 ) — payments to acquire renewable energy facilities from third parties, net of cash and restricted cash acquired (6,350 ) — net cash used for investing activities (319,435 ) (6,571 ) cash flows used for financing activities proceeds from issuance of long-term debt 204,687 — repayment of long-term debt (7,724 ) (3,411 ) payment of debt issuance costs (1,976 ) (29 ) payment of deferred purchase price payable (4,531 ) — payment of equity issuance costs — (712 ) contributions from noncontrolling interests 1,737 — redemption of redeemable noncontrolling interests (1,098 ) — distributions to noncontrolling interests (1,102 ) (568 ) net cash provided by (used for) financing activities 189,993 (4,720 ) net decrease in cash, cash equivalents, and restricted cash (115,217 ) (7,792 ) cash, cash equivalents, and restricted cash, beginning of period 199,398 330,321 cash, cash equivalents, and restricted cash, end of period $ 84,181 $ 322,529 three months ended march 31, 2023 2022 supplemental cash flow disclosure cash paid for interest $ 6,509 $ 4,935 non-cash investing and financing activities asset retirement obligations $ 3,847 $ — debt assumed through acquisitions 8,100 — noncontrolling interest assumed through acquisitions 13,296 — redeemable noncontrolling interest assumed through acquisitions 8,100 — acquisitions of property and equipment included in construction payable 10,872 — acquisitions of property, plant and equipment included in other current liabilities — 1,066 conversion of alignment shares into common stock 11 — deferred purchase price payable 7,069 — non-gaap financial reconciliation reconciliation of gaap reported net income to non-gaap adjusted ebitda: three months ended march 31, 2023 2022 (in thousands) reconciliation of net income to adjusted ebitda: net income $ 3,845 $ 60,135 income tax expense (benefit) 888 (123 ) interest expense, net 12,446 4,938 depreciation, amortization and accretion expense 11,376 6,822 stock-based compensation 2,872 1,305 acquisition and entity formation costs 1,491 294 loss on fair value remeasurement of contingent consideration 50 169 change in fair value of redeemable warrant liability — (18,458 ) change in fair value of alignment shares liability (17,018 ) (46,346 ) other expense, net 90 15 adjusted ebitda $ 16,040 $ 8,751 reconciliation of non-gaap adjusted ebitda margin: three months ended march 31, 2023 2022 (in thousands) reconciliation of adjusted ebitda margin: adjusted ebitda $ 16,040 $ 8,751 operating revenues, net 29,378 19,199 adjusted ebitda margin 55 % 46 %
