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HS

HA Sustainable Infrastructure Capital, Inc. (HASI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 adjusted EPS of $0.64, a slight beat vs S&P Global consensus $0.63; GAAP EPS was $0.44. Total revenue was $96.9M, down 8% year over year due to lower gain on sale income . EPS consensus values retrieved from S&P Global.*
  • Record Q1 originations of ~$706M at >10.5% yields; managed assets rose 12% YoY to $14.5B, with recurring income up 14% YoY to $79M .
  • Funding platform strengthened: revolver increased by $200M to $1.55B; liquidity remained >$1.3B; leverage at 1.9x; fixed-rate debt 95% of total .
  • Guidance reaffirmed: 8–10% CAGR for adjusted EPS through 2027 (midpoint ~$3.15), dividend payout ratio targeted to 55–60% by 2027; Q2 2025 dividend set at $0.42 per share .
  • Stock narrative catalysts: resilience to tariff/IRA headlines, visible pipeline and yields, and capital flexibility via CCH1 (KKR JV) with potential vehicle-level debt to expand capacity .

What Went Well and What Went Wrong

What Went Well

  • Robust origination at high yields: “closing over $700 million of new investments” in Q1 at >10.5% yields; pipeline >$5.5B . CEO: “business activity is robust” and “we are experiencing a historically high volume of incoming requests for capital” .
  • Recurring earnings growth: Adjusted net investment income rose 11% YoY to $72M; securitization asset income contributed to 14% combined recurring income growth to $79M .
  • Strengthened liquidity and funding: revolver increased to ~$1.55B; available liquidity >$1.3B; Moody’s reaffirmed investment-grade in April; hedges locked base rates (~3.5%) for expected 2025 issuance .

What Went Wrong

  • Revenue declined 8% YoY to $96.9M due to lower gain on sale income vs unusually strong Q1 2024 asset rotation; GAAP net income to controlling stockholders fell to $56.6M from $123.0M .
  • Equity method GAAP income fell vs prior year; CFO highlighted lower mark-to-market on PPAs and higher tax expense at an investee, partially offset by tax-credit allocations; this dampened GAAP results despite adjusted metrics .
  • Operating costs rose: compensation and G&A increased ~$5M combined, including accelerated share-based comp under retirement policy; provision for losses increased to ~$3.8M on macro assumption changes .

Financial Results

Income Statement and EPS (chronological: Q3 2024 → Q4 2024 → Q1 2025)

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Thousands)$81,965 $101,298 $96,941
GAAP Net Income to Controlling ($USD Thousands)$(19,616) $70,087 $56,612
GAAP Diluted EPS ($)$(0.17) $0.54 $0.44
Adjusted EPS ($)$0.52 $0.62 $0.64
Net Income Margin (%)(23.9%) (−19,616/81,965) 69.2% (70,087/101,298) 58.4% (56,612/96,941)

Q1 2025 Actual vs S&P Global Consensus

MetricActualConsensusSurprise
Adjusted EPS ($)$0.64 $0.632*+$0.008 (+1.3%)*
GAAP Diluted EPS ($)$0.44 n/an/a
Total Revenue ($USD Millions)$96.94 $39.06*+$57.88 (+148%)*

Values retrieved from S&P Global.* Note: Revenue consensus definitions may differ for specialty finance; comparisons to GAAP total revenue can be non-meaningful in some datasets.*

Segment/Portfolio Composition

Metric ($USD Billions)Q3 2024Q4 2024Q1 2025
Managed Assets$13.1 $13.7 $14.5
Portfolio (Balance Sheet)$6.3 $6.6 ~$7.1
Behind-the-Meter Assets~$3.0 ~$3.1 ~$3.4
Grid-Connected Assets~$2.4 ~$2.6 ~$2.7

KPIs and Funding

KPIQ3 2024Q4 2024Q1 2025
New Investments Closed ($USD Millions)$396 $1,100 (Q4) ~$706
Yield on New Investments (%)~10.5 >10.5 >10.5
Portfolio Yield (%)8.1 8.3 8.3
Weighted Avg Interest Cost (%)5.6 5.6 5.7
Available Liquidity ($USD Billions)~$1.3 >$1.5 >$1.3
Leverage (Debt/Equity)1.8x 1.8x 1.9x
Fixed-Rate Debt (% of Total)100% 100% 95%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS CAGRThrough 20278–10% (extended in Q4 2024; midpoint ~$3.15 in 2027) 8–10% reaffirmed; midpoint ~$3.15 in 2027 Maintained
Dividend Payout RatioBy 202755–60% of adjusted EPS 55–60% reaffirmed Maintained
Quarterly DividendQ2 2025$0.42 (Q1 2025 declared in Feb) $0.42 declared (payable Jul 11, 2025) Maintained
Funding Platform2025Liquidity >$1.5B; IG rating; hedges in place Revolver to ~$1.55B; liquidity >$1.3B; base-rate hedges (~3.5%) Strengthened execution detail

Earnings Call Themes & Trends

TopicQ3 2024 (Prev)Q4 2024 (Prev)Q1 2025 (Current)Trend
Policy/IRA riskEmphasis on secular growth across administrations; hedging interest-rate risk Extended EPS guidance to 2027; industry fundamentals (load growth) drive demand; payout ratio trajectory “Business-as-usual” despite tariffs/IRA headlines; minimal near-term impact due to project status/safe harbor Confidence maintained
Tariffs & Supply ChainNot central in Q3, focus on diversification & hedges Clients insulating pipelines via safe harbor; minimal near-term impact Minimal tariff impact for pipeline; storage exposure limited; stand-alone storage minimal Manageable
Load growth/AIFraming secular electricity demand growth Detailed load growth/AI/electrification tailwinds Continued emphasis; pipeline buoyed by expected load increases Strengthening narrative
CCH1 (KKR JV)Progressing; early assets; disclosures to grow $815M closed; on track for $2B by YE 2025 Considering debt at vehicle; funded balance ~$1B; term extended to 4Q’26 Capacity expansion
RNG/FTNPrimary FTN growth driver; partnerships (Ameresco, Vision RNG) FTN 27% of pipeline; RNG contribution rising RNG meaningful in CCH1 mix; senior debt mitigates RIN price risk Growing segment
Interest-rate hedgingActive hedging; margin resilience IG rating benefits; liquidity >$1.5B; laddered maturities New hedges fix base rate ~3.5%; convert paid off in April via revolver Proactive execution

Management Commentary

  • CEO Jeff Lipson: “We had the most active first quarter of new originations in our history, closing over $700 million… average yield… greater than 10.5%… adjusted earnings per share was $0.64” .
  • CEO on tariffs: “We expect very limited impact from any increased tariffs on our business, particularly in the guidance period” .
  • CFO Chuck Melko: “Our adjusted EPS of $0.64… adjusted net investment income to $72 million… hedges… fixing base rates at an average of 3.5%… great example of the active management of our cost of capital” .
  • CFO: “Available liquidity as of March 31 was $1.3 billion… revolver increased by $200 million… leverage… 1.9x” .
  • Press release highlights: “Guidance for Adjusted EPS growth of 8-10% through 2027 reaffirmed” and “quarterly dividend… $0.42 per share” .

Q&A Highlights

  • CCH1 leverage plan: Vehicle-level debt to expand capacity, with investment-grade-like cost of funds; extension reflects increased capacity, not slower deployment .
  • Equity financing pace: Fewer shares per dollar invested due to payout changes and co-investment strategy; potential CCH1 debt further reduces equity needs .
  • Resi solar dynamics: Record volumes; HASI investing at asset level (mezz loans on pools of leases); SunStrong now a servicing platform .
  • IRA and transferability: Industry expects negotiation and retention of core credits; broad support for transferability among utilities/corporates .
  • Hedging & rates: Revolver initially funds assets; hedging locks short-term and long-term costs, mitigating rate volatility .

Estimates Context

  • Q1 2025 adjusted EPS slightly beat consensus by ~$0.008 (1.3%): actual $0.64 vs $0.632 estimate.* 16 EPS estimates underpin the consensus.*
  • Revenue comparisons to consensus may be definitional for specialty finance; S&P shows $39.06M consensus vs GAAP total revenue $96.94M; treat revenue “beat” cautiously.* 5 revenue estimates underpin the consensus.*
  • EBITDA consensus for Q1 2025: ~$38.28M.* Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Earnings quality: Recurring income and high new-money yields underpin adjusted EPS resilience; minor miss/beat in GAAP components driven by non-cash PPA marks and timing effects .
  • Capital flexibility: Expanded revolver, commercial paper program, and hedging strategy provide timing optionality for refis and preserve margins; IG status reaffirmed and base-rate hedges (~3.5%) in place .
  • Pipeline and originations: Elevated sponsor demand, diversified assets (BTM/grid/RNG), and visible pipeline de-risk next 12–18 months; limited tariff/storage impact on near-term closings .
  • CCH1 optionality: Consideration of vehicle-level debt to scale JV without additional equity; investment period extended to 4Q 2026 to align with larger capacity .
  • Guidance consistency: 8–10% adjusted EPS CAGR through 2027 and payout ratio trajectory to 55–60% maintained; dividend at $0.42 supports total return while retaining capital .
  • Trading stance: Near-term stock moves likely hinge on policy headlines (IRA/tariffs) vs HASI’s continued reaffirmations and pipeline delivery; focus on Q2/Q3 gain-on-sale timing and capital-light fee streams .
  • Medium-term thesis: Structural load growth (AI, electrification, onshoring) plus funding platform and co-investment strategy support sustainable growth and margin preservation across rate regimes .

Citations:

  • Q1 2025 8-K and press release:
  • Q1 2025 earnings call transcript:
  • Q4 2024 8-K/press and call:
  • Q3 2024 8-K and call:
  • Estimates: Values retrieved from S&P Global.*