Hannon Armstrong Q1 2024 Earnings Report
Key Takeaways
Hannon Armstrong Sustainable Infrastructure Capital, Inc. announced its Q1 2024 results, featuring a strategic partnership with KKR to invest $2 billion in sustainable infrastructure assets. The company reported GAAP diluted EPS of $0.98 and Adjusted EPS of $0.68. The portfolio increased by 36% to $6.4 billion, and managed assets grew by 24% to $12.9 billion.
Announced a $2 billion strategic partnership with KKR through CarbonCount Holdings 1 LLC.
Increased capacity and extended maturities of revolving line of credit and commercial paper programs.
Portfolio increased 36% year-over-year to $6.4 billion.
Adjusted Net Investment Income increased by 37% year-over-year to $64.3 million.
Hannon Armstrong
Hannon Armstrong
Forward Guidance
The Company expects that annual adjusted earnings per share will grow at a compounded annual rate of 8% to 10% from 2024 to 2026, relative to the 2023 baseline of $2.23 per share, which is equivalent to a 2026 midpoint of $2.89 per share. The Company also expects distributions of annual dividends per share from 2024 to 2026 to be set at a payout ratio of 60-70% of annual adjusted earnings per share.
Positive Outlook
- Yield on its existing portfolio
- Yield on incremental portfolio investments, inclusive of the Company’s existing pipeline
- Volume and profitability of transactions
- Amount, timing, and costs of debt and equity capital to fund new investments
- Changes in costs and expenses reflective of the Company’s forecasted operations
Challenges Ahead
- General interest rate and market environment
- Distributions are subject to approval by the Company’s Board of Directors on a quarterly basis.
- Forecasting a comparable GAAP financial measure, such as net income, would require that the Company apply the HLBV method to these investments.
- The Company would be required to make various assumptions related to expected changes in the net asset value of the various entities and how such changes would be allocated under HLBV.
- GAAP HLBV earnings over a period of time are very sensitive to these assumptions especially in regard to when a partnership transaction flips and thus the liquidation scenarios change materially.