Good morning and welcome to the Altus Power Fourth Quarter 2021 Conference Call. As a reminder, today's call is being recorded and participants are in a listen-only mode. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Chris Shelton, Head of Investor Relations..

Good morning and welcome to Altus Power's fourth quarter 2021 earnings call. Before we start, I would first like to express my excitement to be seated in my new role here at Altus facing the analyst and investor community. I look forward to working with each and every one of you in the near future.

Speaking on today's call are Lars Norell, Founder and Co-Chief Executive Officer of Altus Power; and Dustin Weber, Chief Financial Officer. In addition, Founder and Co-Chief Executive Officer, Gregg Felton will be joining us for Q&A.

Last night, we issued results in a press release that can be found on our website, www.altuspower.com in the Investors section. As a reminder, our comments on this call may contain forward-looking statements.

These statements are subject to various risks and uncertainties, and may include expectations and assumptions for the company's future operations and financial performance. Actual results could differ materially from those predicted in the forward-looking statements.

Altus Power assumes no obligation to update these statements in the future or if circumstances change. For more information, please refer to the risks, uncertainties and other factors discussed in our SEC filings.

Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in last night's press release can be found in the company's Form 10-K filed last night with the SEC and other documents filed by the company from time to time.

During this call, we will also refer to certain non-GAAP financial measures including adjusted EBITDA and adjusted EBITDA margin.

More detailed information about these measures and a reconciliation from GAAP net income to adjusted EBITDA is contained on the press release issued yesterday, which is available on the Investors section of our website and was furnished on Form 8-K with the SEC.

And with that, I'm pleased to turn the call over to Lars Norell, Co-Chief Executive Officer of Altus Power.

Lars?.

Thanks, Chris. We're very excited to speak with all of you for our first earnings call. Today, we're going to begin the process of communicating the uniqueness of our culture, and how it makes us a leader in this market, the advantage that our strategic partners bring to us in a significant market opportunity that lies ahead.

I'd like to start by acknowledging our amazing team here at Altus. Gregg, Tony and I have been building this company together for over a decade, and we have created a business with skilled and accomplished senior leaders in an incredible and highly motivated team that we believe is the most effective group of individuals in our industry.

The culture and DNA of Altus is to be in the office, be present and be working together, creating value as a collaborative team, whether on our desk in Stamford, Connecticut, or at our construction sites across the country, from Honolulu, Hawaii in the West to Frederick, Maryland, in the East.

Every day, we are also operating our solar and storage assets serving clients with solar power and energy storage in 18 states across the country. Altus Power today is a product of the hard work, ability to overcome obstacles and the sheer talent of every single person on our team.

We are also delighted to have recently welcomed a number of key personnel who will help drive our progress into the future as a public company. I want to thank every one of our team members for their part in building Altus into the industry leader and their help in delivering value to our clients and stakeholders. This state of our company is strong.

One of the themes that you will hear us repeat is our firm belief that we have created the most efficient platform in this space, evidenced by the fact that we've been cash flow generative, EBITDA positive since 2017. We are pleased to report that our results in 2021 continued to build on that track record.

With adjusted 2021 EBITDA of $41 million and an EBITDA margin of 57%, we delivered results above our earlier expectations, which were for $38 million of adjusted EBITDA and a margin of 51%, which Dustin Weber, our CFO who's with me here, will cover in more detail in a moment.

Staying with the description of our platform, let me provide some insights into what we do every day. Firstly, on the origination and deal structuring desk where the team is present and working together, we seek out respond to and engage with large enterprises for the purpose of executing long-term contracts, often 20 years or longer.

These contracts allow Altus to place large solar arrays on rooftops and in parking lots, and also provide battery storage systems next to buildings, with Altus owning and operating those assets for the duration of the contract.

Second, once the contract is executed, the process moves over to the design and engineering desk, that designs the solar arrays and battery storage systems works on securing interconnection approvals from utilities across the country, and building permits from local building departments.

The skilled professionals that designed and engineered these systems are Altus employees on our desk and present in our office. Third, working immediately next to the design and engineering team is our construction team, which oversees the placement and fulfillment of purchase orders for components and materials.

The hiring and supervision of prime and sub-contractors for roof mounted solar, parking canopy solar, ground mount solar, battery storage systems, and electric vehicle chargers.

Fourth and finally, once the construction team has completed the process of moving an asset into commercial operation, our customer team and our energy optimization team located in our office and across the country where our assets are takeover.

These teams ensure to continuous an optimal system operation and accurate delivery of solar energy and energy storage benefits and the correct billing for both of those. In summary, everyone on the Altus team has an important role to play. And everyone at this company is key to the outcomes that we drive for our clients.

While we are very pleased with the pace and growth of our activities in the first segment mentioned, namely client engagement and origination of client contracts.

And while our servicing and energy optimization and delivery of solar power and energy storage benefits have been largely unaffected by the current headwinds, COVID lockdowns, Omicron related out of office policies, supply chain delays and component shortages that have become worse than we had previously foreseen have slowed down our utility interconnection processes, hampered our local building department interaction and pushed out the timing of our actual construction schedules.

In our 12-year operating history at Altus we have not seen this combination of challenges to our pre-construction and construction schedules before, and while we suspect that they will eventually ease, we, like other market participants are frustrated that it's taken longer than normal to begin delivering solar power, energy savings and energy storage benefits to our customers.

At the same time, the customer demand has never been stronger.

The last few months of increasing utility rates, harder to predict future utility price increases, a quest among customers for resiliency and energy security and underlying all of this the steadfast commitment among large enterprises for decarbonization, all serve to drive increased customer demand in a growing market for the industrial strength solution and end-to-end delivery of decarbonization, clean power and savings that Altus represents.

We continue to believe that the commercial and industrial sector, or the C&I market for short, represents the most attractive seconder within the broad secular shift towards clean electrification, with a very sizeable total addressable market or TAM.

A significant part of that TAM are the master real estate portfolios owned by being developed by and being managed by our partners at Blackstone and CBRE. In the case of Blackstone, their public commitment to decarbonization and desire to have their investing activities create public benefits.

And importantly, their partnership with Altus to deliver on those goals translate into a very direct and attractive flow of opportunities for all this.

Evidencing that flow, together with Blackstone, we announced in November the 35 megawatts plus win in New Jersey's community solar program, and customer contract in solar plus storage assets in Maryland, in California, in buildings and potential customer contracts in other states, also sourced from Blackstone are part of our pipeline.

This type of sustained flow of opportunities is one of the things that we love about the business model that we have at Altus. It comes from a partner who moves with speed. It comes at scale and with efficiency, and importantly, it constitutes a program instead of just a singular project.

Our other strategic partner is newer to Altus, but as the largest real estate services company in the world, CBRE has already proven itself to be more impactful and in less time than we could have imagined. CBRE represents several things to Altus and we imagine the relationship will further expand over time.

But for right now, three important aspects stand out to us. First, the efficient and low-cost flow of customers for solar plus storage. As an early example of that flow, Altus is happy to announce this morning that we have contracted with CBRE Investment management for up to 20 megawatts of community solar in an initial phase in the state of Maryland.

CBRE investment management on behalf of its tenants and investors is committed to decarbonizing its real estate portfolio and also providing underserved communities with clean power in states with Altus as possible.

Maryland is a good example where we are providing that opportunity in a win-win-win manner, which benefits CBRE's investors, the broader community and Altus and its stakeholders.

In another significant program that we are announcing this morning, Trammell Crow Company, the nation's largest developer is partnering with Altus to have 300 megawatts of solar to the industrial and commercial portfolio it has in development and construction for scheduled completion in the next few years.

This is a major announcement by the country's largest developer to add clean electrification to their assets. They're leading by example, by turning their commitment to decarbonize into action for the benefit of their investors, tenants and other stakeholders. And they've chosen to partner with Altus to make that happen.

The second area where we have early engagement with our strategic partner relates to CBRE's construction capabilities. We'll come back to this topic over time, but our goal for the partnership with CBRE is clear.

We are creating the first nationwide clean electrification construction platform with end-to-end services and coverage and with a footprint that we think will be very difficult for anyone else in the market to replicate. And the process to create this platform is well underway.

Third, and something we will also provide more details on going forward is our collaboration with CBRE that will combine their power consumption data in our solar power and weather data.

We are translating these data streams into a carbon scorecard for real estate that will serve building owners with carbon reporting and function as a business-to-business origination engine.

We're also building a business to consumer digital platform and app basically, which will provide an improved experience for community solar customers with respect to onboarding, bill paying and additional electrification services.

These efforts have begun, and they reflect the strength and potential of our partnership in our intent to build sustainable, competitive advantages that will be unique to Altus, our customers and our stakeholders.

Looking out over the next several quarters, our plan is to focus our team's efforts on allocating time and attention to our two distinct sources of growth, the flow of our new customer engagement and contracting that comes from our channel partners and from our partners of Blackstone and CBRE.

And second, the growth that our customer team has begun the efforts to build from deepening and extending the relationships we already have with our existing long-term customers.

We will do this while we also acknowledge and seek to mitigate the near-term delays in pre-construction and construction of our customer sited assets that we had previously expected to enter commercial operation during this calendar year.

That mitigation will take many forms, one of which is to create strategic partnerships with equipment vendors, to secure preferred allocation of scarce components, and others to make use when possible of the CBRE fusion program, which we are now a part that seeks to alleviate global supply chain issues by grouping orders from participants to create greater volume and thus preferred treatment from equipment makers.

Another important part of our platform, which has served us and our stakeholders well, is the discipline with which we underwrite and analyze operational assets that are available for sale to Altus and which make up a part of our pipeline.

During the last calendar year, we expected to acquire a portfolio of operating assets that would have added to EBITDA immediately. Ultimately, we opted not to consummate this particular transaction, given the valuation thought by the seller. Moving finally to the topic of our outlook for 2022.

Based on the conversation we've had so far today, and given the current market conditions, we are initiating guidance for this year's EBITDA in the range of $57 million to $63 million, targeting close to 50% growth over last year's numbers at the midpoint We further expect to sustain EBITDA margins in the mid 50% going forward.

While this guidance is lower than our previous estimates, it is not indicative of a change to our overall growth prospect, because it reflects an extension of our pre-construction and construction timelines, and revise portfolio acquisition expectations, which are inherently lumpier.

Our strength in customer engagement means our growth pipeline has increased to over 1,000 megawatts from over 900 megawatts in our last update. This updated number now excludes client engagements and assets that we've either turned into operation and added to our portfolio or that we have stopped pursuing.

But it includes some of the early engagements with CBRE since the closing of our merger in December.

In summary, and before handing it over to Dustin, I hope my description of what our team does every day will serve to guide you on how our platform operates, how our sector is benefiting from a number of tailwinds and how the strength and motivations of our partners at CBRE and Blackstone add to our story, and how their relentless focus on cash flow generation and profitable growth is a source of pride to us at Altus Power.

With that, I'll hand the call over to our CFO, Dustin Weber, who will discuss our 2021 results further.

Dustin?.

Thanks, Lars, and welcome to everyone on the call. I look forward to helping get you all up to speed on the Altus story and what makes us truly unique over the coming quarters. Let me begin by covering some highlights of our 2021 financial results. For full year 2021, we generated total revenues of $71.8 million, a solid increase of 59% over 2020.

This revenue increase was driven by the growth of our portfolio from 240 megawatts to 362 megawatts over the course of the year. Moving to GAAP net income for 2021, we earned $13 million compared to a net loss of $1.9 million for the full year 2020. This increase was largely driven by a one-time $12.8 million gain from the monetization of an asset.

Turning to profitability, we are pleased to report adjusted EBITDA for 2021 of $41 million, an increase of 60% over full year 2020. This be against an estimate of $38 million not only reflects the expansion of our solar portfolio, but underscores our commitment to managing operating expenses.

The result was our adjusted EBITDA margin for 2021 was 57%, an increase from 56% in 2020. I'd like to emphasize that we believe our margins in the mid 50s range are sustainable over the long run, even as we scale our business because of our efficient and low-cost customer acquisition in a constant eye towards controlling our overall costs.

Focusing on our balance sheet, we exited the year with total unrestricted cash of $326 million. This includes $293 million of net cash proceeds from the closing of our business combination in December of last year.

Total debt at year-end was $546 million, the majority of which is made up of outstanding borrowings under our Blackstone senior term loan facility, with an attractive fixed rate of 3.51% long maturity and designed to efficiently upsize to meet our growth plans.

We believe this facility arms us with some of the most efficient and lowest cost capital in the commercial industrial space, and is a key differentiator for Altus. In addition to our Blackstone term loan, we also have financing available through our construction to term loan facility.

This facility has $200 million of committed capacity and carries an attractive floating rate which currently sits around 2.7%. The primary use of this facility is to support our projects under construction. But it also includes the option to convert outstanding borrowings into a term loan upon commercial operation.

To summarize the financial position of the company is strong. Our large cash balance, flexible debt facilities and high margin cash flows position us well to achieve our goals of driving efficient use of our capital in delivering profitable growth over the long-term. With that, I'll turn it back to Lars for a few closing remarks..

Thanks, Dustin, and thanks Chris, and thanks everyone for letting us begin the process of explaining how we've built Altus to drive customer value. How our strategic partners bring real strength and differentiation, and how this market is poised for significant growth. We're now happy to take your questions.

[Operator Instructions] Thank you. And our first question comes from the line of Justin Clare with ROTH Capital Partners. Please proceed with your questions..

Hi, good morning..

Good morning..

Hey, Justin..

Hey. So, I guess first off here in Q4, I believe you had 50 megawatts approximately under construction. And I was just wondering, you mentioned some of the reasons for the delays here.

But for those 50 megawatts, could you maybe give a little bit more detail as to what's causing the delay? And then how long could these projects be delayed until they're completed? Are these anticipated to be operating in Q1? Or what's the timing that you're expecting?.

Justin, this is Lars. I'll take that question. So, our pipeline, again, for everyone is made up of assets and construction, like Justin, you just asked about in permitting, development, contracting and client engagement, et cetera.

The near-term portion of our pipeline, which are the assets that are actually in construction, in normal times, take something depending a little bit on how far developed they were when Altus acquired the assets or if they were developed in house, takes somewhere between 6 to 9 months to move through construction and then turn into operation.

Based on the most recent updates on our construction desk, that timing is more like 12 to 15 months, although they have told us that they're starting to see some light at the end of the tunnel with respect to delays. But that magnitude of delay is what we've been dealing with for the last quarter or two..

Okay. And then I wonder if you could just expand on a little bit more as to the reasons for the delays. Is it primarily permitting an interconnection? Or are you also seeing issues in the supply chain? We've heard there could be challenges in procuring modules, potentially other equipment that could be delayed.

But what do you see is kind of -- what are all the factors that are involved in in that timeline extending?.

Sure. As we said in the script just a second ago, there are two main sources of these delays or to pushing out to the right of these construction schedules.

The first one is COVID related shutdowns and Omicron issues, which basically have caused our counterparties like permitting departments, interconnection desks at utilities and other stakeholders that we need to communicate with and get sign off from before we can move forward on construction projects, or sometimes in the middle of construction projects.

Because some of these employees and staff have not been in the office, and have not responded to Altus as quickly on the timing that we normally see, their delays in basically us having to wait for them to come back to us with permits. The second is the supply chain that you just mentioned.

Challenges with sourcing of some components, transformers, for example, are what's part of pushing out the timing to the right. We are working hard to mitigate the shortages by ordering equipment earlier by partnering with suppliers for larger purchases and we're making headway on that as well.

But the progress will take some time to show up in the timing. Those are the two main sources of the delays..

Okay, got it.

And then, for 2022, could you share how many megawatts you plan to bring online or what might be required to meet the guidance that you've provided? And then, any sense for the cadence of when projects could be brought online? Could things be more front half weighted, back half weighted? Or is it challenging, given the delays that you're seeing to provide a little bit more color there?.

Sure. This is Gregg, Justin. So, as hopefully you heard we see enormous opportunity in the pipeline, which reflects the various stages Lars alluded to from early-stage development, for example, with our partners at CBRE to construction as well as the opportunities to acquire operating assets.

In terms of 2022, we're guiding investors to the EBITDA range that reflects our growth expectations for the calendar year. Of course, given the macro backdrop, we expect megawatt growth to be weighted to the back half of the year..

Okay, got it. And then I guess shifting gears to CBRE here, you mentioned 300 megawatts of solar projects with Trammell Crow. So, congratulations on that. Is that already in the pipeline here? It sounds like it may not have been added yet. And then do you have -- I'm not sure if I, maybe missed it here.

Do you have PPAs already signed for those projects? What's the timing on when those could be constructed? Is that 12 to 15 months potentially, or what should we be thinking about that?.

Thank you. Thank you, Justin. Yes, we're very excited about it. The Trammell Crow partnership was just announced, and it's not added to our pipeline. But we're happy you asked about it, because it evidences just in exactly the kind of program that we and our partners at CBRE are uniquely positioned to bring forth.

The Trammell Crow Company, one of the largest real estate developers in the country, and with this 300-megawatt initiative, they are leading the way for their industry by turning pledges on decarbonization into action. And they're partnering with Altus to get it done.

We've begun to identify candidate buildings for inclusion in the program out of their in construction and in development assets. And as we always do, we'll move those through the underwriting and documentation process, and then on to the sign interconnection, construction and so forth.

As we expect that this 300-megawatt engagement will roll out over say, 3 to 4 years. But the first buildings have already begun to be processed into our pipeline..

Okay, great. And maybe just one more for me. As you're progressing with your relationship from CBRE, I was wondering if you could speak to maybe just the opportunity set that you see there because, obviously, the 300 megawatts is quite a large portfolio of assets.

But when you look more broadly at the opportunity, how much growth could this support ahead? or could you speak to that opportunity a little bit more?.

Sure. So, in terms of TAM or the total addressable market that we are addressing, as I think we all have seen [indiscernible] come out and say 145 gigawatts is what the C&I market is sized to or should be sized to. And I think all of us think that, that's probably undercounting slightly what's going on.

I was just at the CBRE conference in Phoenix, Arizona and met with the largest corporations basically in the world, who are all CBRE clients. And every single one of them top of mind is sustainability. And how can they move their activities, their manufacturing, their servicing in older buildings to a decarbonized future.

So, the TAM, in terms of how do we connect with this 145 gigawatts of rooftops and parking lots? Well, one answer is through the connectivity that CBRE has with all these customers. And to me, it seems absolutely limitless.

Blackstone is another entity that has effectively gigawatts upon gigawatts of rooftops in the logistical large box retailer space, et cetera. And low single-digit percentages of that, if even fractions of, is currently covered in solar, Justin.

And the entire sort of subset of that building is available for us to partner with Blackstone and CBRE and all their clients on and that's of course, the mission that we're engaged in here every day of the week..

Okay, great. Thanks very much. I will pass it on..

Our next question comes from the line of Ryan Levine Ryan Levine with Citi. Please proceed with your question..

Good morning..

Good morning..

Good morning, Ryan..

I was hoping to start off with the guidance number, trying to unpack that in terms of what's included.

You highlighted the -- what the 50 megawatts seems like now Q2 '22 in service, how much other commercial development megawatts are embedded in that guidance? And then are there any third-party acquisitions that are embedded in that guidance or can you kind of walk through what's the assumptions there versus the pre-spec assumptions?.

Sure. So, this is Gregg, and thanks for the question. So, our pipeline and what's reflected in our pipeline includes a number of different stages. Of course, construction stage as well as operational assets that are, as I think we've articulated in the past, represent a portion of our pipeline as well.

So, in terms of our 2022 path, a combination of assets that are in construction, a combination of assets that are being pursued, as it relates to operating acquisition are both intended to be executed this year.

I think it's important for us to remind the -- everybody the investor base, that there isn't a P&L event, when we actually close the cash flows that our assets produce, begin to be produced once assets are operational. And of course, we own that cash flow stream for a period of 20 or 20 years or longer.

And so, what we're talking about is when is the start date of revenue and cash flow contribution. And again, mix of the construction and smaller operating assets are reflected in our in our numbers..

Is there a decrease in acquisition assumption embedded in your '22 numbers versus the pre-spec or pre-spec [ph] guidance?.

Yes. So as Lars mentioned in his prepared remarks, as the long-term owner and operator of these assets, we have always been disciplined in our underwriting standards.

And the larger portfolios of operating assets that we were pursuing at the very end of last year into early part of this year that would have meaningfully contributed to our cash flows this year, were ultimately available to us at prices that we deemed not in the long-term interest of our shareholders, and so we elected not to close on some of those assets.

And so that's -- the answer to your question is yes, there is a decrease relative to what we had previously expected on the larger portfolio acquisition side..

And Ryan, this is Lars. Just to add to what Gregg just said, we should point out that Altus is a formidable monetization partner for other portfolio companies or solar asset owners.

We can act with speed, we have technical expertise in house to assess and remedy underperforming assets, and we have immediate access to funding in a way that almost no one else that we ever compete with has. And so, you'll see us continue to focus intently on the market for operating asset acquisitions, both large and small.

I think what you're hearing is say as to smaller acquisitions, we have a normal -- sort of a more normal cadence around and are easier for us to predict and the larger portfolio acquisitions are a little lumpier..

Okay. And then in terms of the core kind of organic growth from the existing assets.

Is there any change in the embedded assumptions there? Are you assuming any pickup from the inflation provisions of your non-fixed charge contract?.

Yes. Hey, Ryan, this is Dustin. Just on inflation, so we believe that the inflationary environment that we're experiencing is actually a tailwind to our business. So just to break that down a little bit more, inflation should obviously correlate with higher electricity prices, which is good for us.

And with respect to new projects, inflation may result in higher build costs, but our revenue should also increase in tandem. So, on a net-net basis, we think that that we're positively correlated with inflation..

And one point, this is Gregg. One point I want to make sure everyone remember is, or if they didn't know is aware of is that a majority of our power purchase agreements or contracts are floating rate in nature, meaning they would float up with inflationary pricing for the customer. And so that's an important ingredient.

We are long that inflation upside given the majority of our contracts are floating..

I was trying to get out what in your '22 numbers, how much incremental cash flow or EBITDA you're assuming, due to the -- due inflation expectations today versus several months ago when those were originally provided?.

Yes, Ryan, we're not including any inflation assumptions in our or additional inflation assumptions in our projections..

Okay.

Is there any rules of thumb around correlations between the PPI movement versus your cash flow?.

Yes. Hey, Ryan. It's Chris Shelton. We've got a couple of metrics on that. I mean, some of the or most of the variable rates we have are correlated with the utility rates. So, we don't have a definite forecast for when the utilities will increase rates. But I can -- we can follow-up and maybe talk about that, if you have further questions..

Okay, thanks. And then last question for me, just in terms of the -- if I heard correct in the prepared comments to 20 megawatts of CBRE contracts with the community solar.

When would those come online are willing to start to contribute?.

This is Lars. Those are part of our pipeline. We have begun the process of moving those assets into interconnection and acceptance into the program in Maryland. They are in sort of pre-designed and pre-construction, and they will follow the normal cadence of self-developed deals that we've set out before.

With the caveat that some of the construction related timelines right now are a little extended relative to norm..

Appreciate the color. Thank you..

You're welcome..

[Operator Instructions] The next question is coming from the line of Joseph Osha with Guggenheim. Please proceed with your question..

Good morning, folks..

Good morning..

Hi, Joe..

A couple of questions for you. First, just to drill down a little bit more on some of the challenges you've discussed in terms of executing projects.

Looking more specifically at some of the equipment, I'm wondering if there's anything specific that's particularly challenging storage panels, racking, cables, inverters, whatever, I was wondering if we could get a little color there. And then I do have a couple other questions..

Yes, this is Lars. The recent sense that we have from ordering equipment is that the solar module procurement difficulties that were front and center in the end of last year, maybe in the middle of last year, have started to slowly become a little more normalized in terms of difficulty in procuring, but still availability.

Altus also have solar modules stored or in storage for assets that we're currently constructing and that are in pre-construction. So solar module supply chain difficulties are still something to keep an eye on. And as I think you've seen, we've communicated that we are trying to take control over that part of our supply chain and do so strategically.

The harder equipment is actually transformers at this point. And transformers have an interesting history where every time utilities have a storm, and a bunch of effectively power poles go down, they buy tens of thousands of transformers.

And so, we have in our [indiscernible] memory experience from dealing with transformer purchasing and what you have to do is lean in earlier. And instead of having maybe a 16-to-20-week lead time on transformers, we're now looking more like a 40-week lead time on transformers.

And they call at the end of the project, and so we just have to be very mindful to add that to our sort of expected timing. As it relates to cables, balance of system, steel that goes into racking et cetera, that is what relates back to the thing I just said about seeing some light at the end of the tunnel.

Our procurement officers are noticing that wild field push out, those are no longer impossible to place orders for and there's actually a sense of easening taking place on that side..

Interesting. Interesting.

And storage, anything there? How is that done?.

Absolutely. So, energy storage for the last couple of years has been a tale of two cities to some extent.

Everything that goes into customer sited storage, which is what we build most of the time is either the containment vessel, the cables, the controllers, the medium voltage equipment that ties the storage to the solar and then to the grid and the building on the one hand, and then the actual battery cells on the other.

The containment equipment and all the controllers is possible to right now place orders for and get delivered within a number of weeks. That cells are 9 to 12 months out. But the battery cells were 9 to 12 months out a year ago as well. So, we haven't seen a dramatic shift in the availability of that.

It's just something that you have to be in front of and make sure that you at the beginning of your interconnection study, or building permit process, place orders for the cells so that when you're done with all the permitting in the construction of the solar system, you don't have access to the cells so that you can complete the system..

That makes sense. Thank you. On the second question, you -- I heard you refer earlier to the notion of office as a monetization engine for other people's projects, which I like that idea.

I'm wondering is this portfolio of assets gets bigger? Do you all ever think about going to, say, asset backed markets and maybe pulling some of this cash flow forward? Or is that not part of the plan?.

Yes. No, thank you. It's -- this is Gregg. So, we have used asset backed technology effectively in our senior funding facility, which was designed precisely as you're describing to optimize financing. And so, our current facility as a reminder is investment grade. It was the first commercial and industrial solar facility that was investment grade rated.

And it provides for attractive financing, industry leading financing. We do think that there are opportunities for Altus to optimize that facility further.

And we definitely intend to focus on optimization strategies for our debt financing over time, particularly if you look at residential solar, which has benefited with better financing given the longer history than C&I, we do think that there's room for improvement..

Right. Yes, and that's what I was alluding to. And then sorry for the background noise.

The last question, we're seeing lots of chatter out there from companies like Stem and [indiscernible] about rolling up and dispatching storage assets, and then some interesting dynamic new companies out there like [indiscernible] really kind of smoothing that process of bidding those assets into wholesale markets.

As you build this portfolio of assets, do you think about other opportunities for monetizing them along this path?.

That's a great question. And one of the benefits that Altus have with its incumbency position with our clients and our customer engagements across the country that run 18 to 20 to 25 years. And one of our plans is to help clients monetize exactly that potential stream of revenue.

A solar system on its own, is, of course, something that is a little hard to control, because it tends to generate energy when the sun is shining. And that energy has to sort of be consumed.

But the second you add storage to it and the second you then start adding chillers that the company or client is operating in, you add other sources of load, all of a sudden, you have the potential for a smart grid that you can then bid into various programs, or help the client maximize the value of the solar energy being produced.

All those things you will see us engaged in going forward..

Great. Thank you so much for your perspective..

Thank you..

Thank you. At this time, we've reached the end of the question-and-answer session, and I'll hand the call back to Lars Norell for closing remarks..

On behalf of the team here at Altus, we want to thank you for participating on our first earnings call.

And we look forward to continuing the process of educating everyone about how we generate value from our EBITDA positive and powerful platform, how we're supported by two perfect strategic partners, CBRE and Blackstone, and how we're combining that to create significant growth in a rapidly growing market with a very bright future. Thank you..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..