HA Sustainable Infrastructure Capital Q2 Earnings Call Highlights

Key Points

• Strong second-quarter performance: Adjusted EPS rose 25% year over year to $0.75, while managed assets increased 20% to $17.6 billion and adjusted return on equity exceeded 15% for a second consecutive quarter.
• Guidance and investment activity increased: HASI raised its 2028 adjusted EPS guidance to $3.55–$3.65 and completed $1.7 billion of investments in the first half, keeping it on track for its 2026 target of $2 billion–$3 billion in new balance-sheet or CCH1 transactions.
• Demand and funding remain supportive: The investment pipeline stayed above $6.5 billion, driven by renewable power, storage and related infrastructure demand, while $2.2 billion in liquidity, expanded credit capacity and limited equity issuance supported capital efficiency.

HA Sustainable Infrastructure Capital NYSE: HASI reported second-quarter adjusted earnings per share of $0.75, up 25% from a year earlier, as the company expanded its investment portfolio, generated fee and gain-on-sale income and maintained capital efficiency without issuing shares through its at-the-market program.

President and CEO Jeff Lipson said the company completed more than $1 billion of new investments during the quarter and more than $1.7 billion year to date. Managed assets reached $17.6 billion at quarter-end, a 20% increase from the prior year, while the company’s adjusted return on equity exceeded 15% for the second consecutive quarter.

Based on its first-half performance and outlook for investment activity, fees, portfolio yields and borrowing costs, HASI raised its 2028 adjusted EPS guidance to a range of $3.55 to $3.65, from prior guidance of $3.50 to $3.60. The company reaffirmed its target for adjusted return on equity of more than 17% in 2028.

First-half earnings and investments

Chief Financial Officer Chuck Melko said adjusted EPS totaled $1.52 in the first half of 2026, while adjusted earnings rose 31% year over year to $200 million. Adjusted recurring net investment income increased 27% to $208 million in the first half.

Gain-on-sale revenue reached $39 million, and origination fees and other income rose to $17 million. Melko said HASI expects gain-on-sale revenue for the full year to be similar to the prior-year level.

Closed transactions totaled $1.7 billion in the first half, including $1.4 billion expected to be held on HASI’s balance sheet or through its CCH1 co-investment vehicle. The company said it remains on track to meet its 2026 target of $2 billion to $3 billion in new balance-sheet or CCH1 transactions.

The first-half transactions were diversified and were underwritten at returns above 11%, Melko said, aided in part by the expected return from the company’s NeoGenix investment, which closed in the second quarter.

HASI’s on-balance-sheet portfolio grew 14% year over year to $8.2 billion, while assets held at CCH1 reached $2.9 billion. Melko said the company’s portfolio spans nine asset classes and has recorded an average annual loss rate of less than 10 basis points.

Demand outlook and project activity

Lipson said ongoing demand for electricity capacity remains a central driver of investment activity. He characterized renewable energy as a low-cost and relatively fast-to-market option for meeting growing power demand, citing Lazard’s levelized cost of energy analysis and forecasts for renewable additions to the U.S. grid.

The company’s investment pipeline remained above $6.5 billion after more than $1 billion of second-quarter closings. Lipson cited utility-scale renewable demand, rising retail electricity rates, increased battery attachment rates and renewable natural gas development as factors supporting the pipeline.

During the question-and-answer session, Lipson said HASI had not observed systemic delays among its partners or project pipeline, despite investor concerns about possible delays at large projects and data-center-related development. While individual energy projects can experience schedule changes, he said delays had not been a material theme for the company.

HASI also completed funding in July for its $1.2 billion investment in SunZia, a clean-energy infrastructure project developed and majority owned by Pattern Energy. The company announced the investment last November and described SunZia as the largest clean-energy infrastructure project in the Western Hemisphere to date.

Capital platform and margins

Management emphasized the company’s access to varied funding sources, including CCH1, investment-grade bonds, junior subordinated debt, commercial paper and its revolving credit facility. HASI recently increased the revolver’s capacity to $2.25 billion and extended its maturity to 2031.

Melko said HASI had $2.2 billion of liquidity at the end of the quarter. The company also consolidated its unsecured term loans into a single $400 million loan due in 2029 and said it does not have a senior note maturity until 2030.

The company’s June debt issuance had an effective cost of 5.6%, according to Melko. He said that absent improved debt spreads and the company’s hedging program, the cost would have been about 6.3% because of higher base rates since its February issuance.

Lipson said HASI has offset roughly 300 basis points of higher base rates since 2021 through a comparable increase in investment returns, while its debt spreads have improved by more than 140 basis points over the period. He said those trends have supported margin and return-on-equity expansion.

Management also highlighted reduced equity issuance as a contributor to capital efficiency. HASI recorded no at-the-market issuance in the second quarter and none so far in 2026, although Melko said the company still expects minimal issuance for the full year.

Co-investment vehicle and diversification

Lipson said CCH1 is expected to reach capacity either late this year or, more likely, early next year. HASI is working on a successor vehicle, CCH2, and expects a transition around the time CCH1 reaches capacity. If needed, Lipson said HASI and KKR could increase CCH1’s capacity or the company could retain investments on its own balance sheet.

The company is also seeking to diversify beyond its core wind, solar, storage and renewable natural gas investments. Lipson said transportation investments have grown to more than $325 million cumulatively. HASI also closed its first water infrastructure investment in the third quarter, which Lipson described as an operating wastewater treatment facility with a municipality under contract.

Management said it sees potential opportunities in sustainable agriculture as well. Lipson said new asset classes could provide additional diversification and growth over time, though wind, solar, storage and renewable natural gas are expected to remain the majority of the company’s activity.

About HA Sustainable Infrastructure Capital (NYSE:HASI)

Hannon Armstrong Sustainable Infrastructure Capital, Inc NYSE: HASI is a publicly traded real estate investment trust specializing in financing and investing in climate change solutions. Founded in 1988 and headquartered in Annapolis, Maryland, the company provides debt and equity capital to sustainable infrastructure projects across North America. Its mission is to support energy efficiency, renewable energy generation and resilient infrastructure, helping public and private sector clients reduce carbon emissions and achieve long-term environmental goals.

Hannon Armstrong's core business activities include originating and structuring loans, acquiring debt and equity interests, and managing a diversified portfolio of projects in sectors such as solar energy, wind power, energy storage, green buildings, and sustainable agriculture.

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