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AP

Altus Power, Inc. (AMPS)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue rose 30% year over year to $58.7M and adjusted EBITDA increased 27% to $37.0M; diluted EPS was $0.11, supported by a non-cash gain from remeasurement of Alignment Shares liability .
  • Management reaffirmed FY2024 guidance of $196–$201M revenue and $111–$115M adjusted EBITDA; three-year megawatt growth CAGR target of 20–30% remains intact .
  • Operational scale surpassed 1 GW of operating assets; Q3 generation reached 333,000 MWh and community solar subscribers grew to ~30,000 across nine states, reinforcing portfolio density and demand tailwinds .
  • Strategic review aimed at unlocking shareholder value and enhancing capital access is underway; management will provide updates only upon Board-approved outcomes, creating a potential catalyst .

What Went Well and What Went Wrong

What Went Well

  • Surpassed 1 GW in operating assets nationwide; CEO emphasized local generation near consumption to alleviate grid transmission strain, underscoring strategic positioning and scale .
  • Community Solar momentum: ~30,000 subscribers across nine states and new projects announced in Colorado and Maine; appointment of a new Head of Community Solar to accelerate execution .
  • Financing innovation: structured transfer of investment tax credits generated $23M cash proceeds and supports growth funding alongside revolvers and construction facilities .

What Went Wrong

  • Interconnection delays persist (e.g., Morgan Stanley Westchester site), pushing completions into late 2024/1H25; utilities remain the gating factor by location, impacting timing certainty .
  • Interest expense remained elevated ($21.8M in Q3), tempering operating gains and highlighting cost of capital sensitivity for leveraged asset growth .
  • Non-GAAP drivers impacted GAAP comparability: Q3 net income benefited from a $10.2M non-cash Alignment Shares remeasurement gain, complicating clean year-over-year GAAP EPS signals .

Financial Results

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$45.1 $40.659 $52.460 $58.681
Diluted EPS ($USD)$0.03 $0.05 $0.23 $0.11
Adjusted EBITDA ($USD Millions)$29.060 $19.717 $31.151 $36.966
Adjusted EBITDA Margin (%)64% 48% 59% 63%
Generation (MWh)239,000 210,000 364,000 333,000
KPIQ3 2023Q3 2024
Operating Assets (MW)721 (as of Q3'23) 1,013 (as of Sep 30, 2024)
Community Solar Subscribers (approx.)~25,000 (Q2 run-rate) ~30,000
Contract Mix (% of MW)Variable 54%; Fixed 28%; Fixed+Escalator 18% Variable 54%; Fixed 28%; Fixed+Escalator 18%
Cash Balance ($USD Millions)—$111
Actual vs Consensus (Q3 2024)ActualConsensus (S&P Global)
Revenue ($USD Millions)$58.681 Unavailable via S&P Global (mapping not available)
Diluted EPS ($USD)$0.11 Unavailable via S&P Global (mapping not available)
Adjusted EBITDA ($USD Millions)$36.966 Unavailable via S&P Global (mapping not available)

Notes: S&P Global Wall Street consensus data was unavailable due to missing mapping for AMPS in SPGI/Capital IQ.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$200–$222 (Q1 issue) $196–$201 (Q2 revision; reaffirmed Q3) Lowered (Q2), then Maintained (Q3)
Adjusted EBITDA ($USD Millions)FY 2024$115–$135 (Q1 issue) $111–$115 (Q2 revision; reaffirmed Q3) Lowered (Q2), then Maintained (Q3)
Megawatt CAGR2024–202620–30% (3-year target) 20–30% reaffirmed Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024)Previous Mentions (Q2 2024)Current Period (Q3 2024)Trend
AI/electrification demand tailwindsEmphasized secular demand from AI/EV/crypto; variable PPAs benefit from rising rates Reiterated macro demand tailwinds and portfolio optimization opportunity Reaffirmed leadership in commercial-scale solar amid rising load; local generation to alleviate transmission Stable-positive
Go-to-market strategyPut development pipeline under review; focus on execution certainty Shift to targeted, market-specific approach; CBRE advisory reoriented Early success from targeted approach; new projects (San Bernardino); deepening customer relationships Improving velocity
Community SolarGrowth to 24k+ subscribers; ~290 MW serving CS Deferred CS revenue to H2 due to subscription ramp; 500% customer growth over two years ~30k subscribers; new CS projects in CO/ME; new CS leadership Expanding
Interconnection delaysTiming challenges highlighted; reliance on utility timelines Specific delays (Morgan Stanley site); projects pushed right Delays persist; site still not operational; location-specific utility responsiveness Persistent headwind
Regulatory/IRA—Clarified tax benefit one-time; IRA adders not foundational New administration risk assessed; Altus sees IRA provisions as upside, not risk; no expected material changes Neutral-to-positive
Portfolio optimization/redevelopmentIntroduced optimization of older assets; example in NJ Highlighted self-help via redevelopment; incumbency advantages Continued emphasis on optimization and efficiency gains Building momentum
Financing/capital access$204M cash; Blackstone term funding fixed-rate draw Repaid revolver; $92M cash at Q2 end $111M cash; $23M tax credit proceeds; ample facility capacity Strengthening liquidity

Management Commentary

  • CEO: “Our third quarter performance reflects our market-leading position... as we surpassed 1 GW in operating assets nationwide… generating clean power directly where it’s needed” .
  • CFO: “Given our current revenue run rate, every 1% increase in production corresponds to approximately $2 million in net revenue and cash flow” .
  • CEO on strategy: “A more targeted market-specific approach… reflects the highly localized nature of solar development… early results show this approach is working” .
  • CEO on IRA/election: “We don’t anticipate that the new administration would materially alter the provisions of the IRA most relevant to our business” .

Q&A Highlights

  • Project completions: Majority of the 80 MW under construction expected to be completed by year-end; remainder in 1H25, though late-November additions minimally impact current-year revenue .
  • Guidance cadence: High vs low end driven by in-place portfolio performance and weather; new MW additions after mid-November have limited FY impact .
  • Utility interconnection: Morgan Stanley Westchester site remains delayed; interconnection responsiveness varies by utility/location; robust pipeline mitigates site-specific delays .
  • CBRE partnership: Altus to feature within CBRE’s advisory for tenants seeking lower-cost renewable energy; targeted market approach complements top-down engagement .
  • Capital allocation: Focus on high-IRR commercial-scale sites; community solar underwritten conservatively with potential LMI upside; substantial redevelopment “self-help” opportunity across portfolio .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 revenue, EPS, and EBITDA was unavailable due to missing SPGI/CIQ mapping for AMPS; therefore, beats/misses versus consensus cannot be assessed this quarter [GetEstimates error noted].
  • Implication: Sell-side models may need to reflect Q3 actuals and reaffirmed FY guidance; near-term adjustments likely center on interconnection timing and CS subscription monetization .

Key Takeaways for Investors

  • Scale and density: 1+ GW operating base and 333,000 MWh Q3 generation highlight durable cash-generation; variable-rate PPAs (~54%) provide positive exposure to rising retail rates .
  • Execution pivot working: Targeted, market-specific origination is showing early wins, while a structured team and innovative tax credit transfers ($23M) enhance financing flexibility .
  • Timing, not demand: Interconnection and CS onboarding timing remain primary constraints; underlying demand and state program support (e.g., ME, MD) underpin medium-term growth .
  • FY24 anchored: Reaffirmed revenue ($196–$201M) and adjusted EBITDA ($111–$115M) guide; Q4 weather/production and CS revenue recognition are swing factors .
  • Strategic review catalyst: Potential corporate actions to unlock value and improve capital access could be stock-moving; management will update only upon concrete developments .
  • Portfolio optimization: Redevelopment of older assets and incremental capacity additions present multi-year “self-help” opportunities with existing interconnections .
  • Watch liquidity and cost of capital: Q3 cash $111M with ample facility capacity; interest expense ($21.8M) and rate environment remain important to returns and equity valuation .