Hannon Armstrong Announces Strong 2023 Results and Positive Outlook
GAAP EPS: Reported a significant increase to $1.42 in 2023 from $0.47 in 2022.
Distributable EPS: Grew by 7% year-on-year to $2.23 in 2023.
Portfolio Growth: Expanded by 44% to $6.2 billion, with managed assets growing 26% to $12.3 billion.
Investment Closings: Closed $2.3 billion of investments in 2023, a rise from $1.8 billion in 2022.
Dividend Increase: Raised to $0.415 per share for Q1 2024, marking a 5% increase from the previous quarter.
Guidance: Expects annual distributable EPS to grow at a rate of 8%-10% from 2024 to 2026.
REIT Status: Board approved a plan to revoke REIT election, transitioning to a taxable C-Corporation effective January 1, 2024.
On February 15, 2024, Hannon Armstrong Sustainable Infrastructure Capital Inc (NYSE:HASI) released its 8-K filing, announcing its fourth quarter and full year 2023 results. HASI, a leading investor in climate solutions, focuses on providing debt and equity financing to the energy markets in the United States, with a particular emphasis on energy-efficiency and renewable-energy projects.
The company reported a substantial increase in GAAP EPS to $1.42 for the full year 2023, up from $0.47 in the previous year. Distributable EPS also saw a healthy growth, reaching $2.23, which represents a 7% year-on-year increase. HASI's portfolio expanded significantly by 44% to $6.2 billion, while managed assets grew by 26% to $12.3 billion compared to the end of 2022. The company's investment closings reached a record $2.3 billion in 2023, up from $1.8 billion in the prior year.
These financial achievements are critical for HASI, as they reflect the company's ability to scale its investment in sustainable infrastructure, a key driver in the growing renewable energy sector. The growth in the portfolio and managed assets indicates HASI's successful capital deployment and asset management capabilities, which are vital for a company operating within the Real Estate Investment Trusts (REITs) industry.
Financial Performance and Strategic Developments
HASI's financial results for the year ended December 31, 2023, show a total revenue increase of $80 million, or 33%. Interest and rental income increased by $68 million, or 42%, primarily due to a larger portfolio and a higher average interest rate. The company also reported a GAAP-based Net Investment Income of $58 million in 2023, up from $45 million in 2022, and an increase in Distributable Net Investment Income by 21% year-on-year to $217 million.
In a strategic move, HASI's Board of Directors approved a plan to revoke its REIT election and become a taxable C-Corporation, effective January 1, 2024. This decision is expected to have no material impact on the company's business or operations, with existing net operating losses (NOLs) and other tax attributes allowing HASI to continue operating in a tax-efficient manner.
The company's sustainability and impact highlights include an estimation that more than 760,000 metric tons of carbon emissions will be avoided annually due to transactions closed in 2023. This equates to a CarbonCount score of 0.3 metric tons per $1,000 invested, emphasizing HASI's commitment to environmental stewardship.
Looking Ahead: Guidance and Dividends
HASI has established new guidance, expecting annual distributable earnings per share to grow at a compounded annual rate of 8% - 10% during the years 2024 to 2026 relative to the 2023 baseline of $2.23 per share. The company also anticipates that its dividend per share will be within a payout ratio range of 60% - 70% of distributable earnings per share during the same period.
The company's dividend policy remains robust, with an increase to $0.415 per share for the first quarter of 2024, representing a 5% increase over the dividend declared in the fourth quarter of 2023. This dividend policy reflects HASI's confidence in its financial stability and commitment to providing shareholder value.
Jeffrey A. Lipson, HASI President and CEO, commented on the results, stating, "Driven by a record volume of closed transactions, HASI delivered another excellent year of financial performance in 2023, underscoring the strength and resilience of our non-cyclical and adaptable business model." He further highlighted the company's confidence in its strategy over the next three years.
Our diversified funding platform facilitated record growth in the Portfolio," said Marc T. Pangburn, Chief Financial Officer. "Recent debt raises combined with our liquidity position provide a significant portion of our growth debt capital needs for 2024."
HASI's strong performance in 2023 and its strategic transition to a C-Corporation, coupled with a positive outlook for the coming years, position the company as a resilient player in the sustainable infrastructure investment space. Investors and stakeholders can look forward to continued growth and commitment to sustainability from HASI.
For more detailed information, investors are encouraged to review the full earnings release and financial statements available on the SEC website.
Explore the complete 8-K earnings release (here) from Hannon Armstrong Sustainable Infrastructure Capital Inc for further details.
This article first appeared on GuruFocus.
