Amanda Cimaglia – Investor Relations, Communications Jeffrey Eckel – Chairman, President & Chief Executive Officer Brendan Herron - Chief Financial Officer & Executive Vice President.

Philip Shen – ROTH Capital Partners LLC Joel Houck – Wells Fargo Securities LLC Aditya Satghare – FBR Capital Markets & Co. Tyler Charles Frank – Robert W. Baird & Co., Inc. (Private Wealth Management).

Good afternoon and welcome to Hannon Armstrong’s Conference Call on its Q1 2015 Financial Results. Management will be utilizing a slide presentation for this call, which is available now for download on their Investor Relations page at investors.hannonarmstrong.com.

Today’s call is being recorded and we have allocated one hour for prepared remarks and Q&A. All participants will be in a listen-only mode. [Operator Instructions] At this time, I would like to turn the conference call over to Amanda Cimaglia, Manager, Investor Relations for the company..

Thank you, operator. Good afternoon, everyone. By now you should have received a copy of the earnings release for the company’s 2015 first quarter results. On the call today, we have Jeffrey Eckel, our President and CEO; and Brendan Herron, our CFO.

As a reminder, a replay of this call will be available later today on the Investor Relations page of our website.

Before we begin, I would like to remind you that some of the comments made on today’s call are forward-looking statements and within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended.

The company claims the protections of the Safe Harbor for forward-looking statements contained in such sections. The forward-looking statements made in this call are subject to the risks and uncertainties described in the risk factor section of the company’s Form 10-K and other filings with the SEC.

Actual results may differ materially from those described during the call. In addition, all forward-looking statements are made as of today and the company does not take any responsibility to update any forward-looking statements based on new circumstances or revised expectations.

With that, I’d like to turn the call over to Jeff, who will begin on slide three.

Jeff?.

Thank you, Amanda, and good afternoon. We’re announcing core earnings of $0.27 per share or $7.4 million for the quarter above our quarterly dividend of $0.26, which when annualized is approximately 5.5% dividend yield. Volume year-to-date is up more than 25% over this time last year.

As most of you know, we raised an additional $81 million in a primary offering last week, and enjoyed strong institutional and retail support for the transaction for which we are grateful. We reaffirm our annual earnings growth guidance in the 14% to 16% range for both 2015 and 2016.

Turning to page four, we show how our high quality pipeline of efficiency, wind and solar transactions will continue to drive growth in the business. Our 2015 pipeline remains at more than $2 billion, representing over 150 discrete investment opportunities.

To reiterate prior calls, we do not expect close to $1 billion in new business in 2015, but the depth and diversity of the pipeline gives us a terrific opportunity to continuing to build an attractive diversified balance sheet.

If we simply maintain our market share in the markets we’re already in, we estimate our pipeline is in excess of an additional $4 billion of investible assets, in over 300 transactions in 2016 and 2017, bringing the total addressable market to over $6 billion of potential investments through 2017.

With an average transaction size in our 2015 pipeline of approximately $15 million, we have a large number of diversified assets, which when added to the approximately 80 assets currently on our balance sheet gives us a broad base to sustain our dividend.

We believe we will achieve our 14% to 16% annual growth rate for core earnings per share for 2015 and 2016 through a mix of balance sheet growth, increasing financial leverage, margin expansion, and as importantly as those three factors together, the operating leverage from our internally managed business.

Being internally managed, with no fees going to related third parties, 100% of the enterprise value drops down to the shareholders. Turning to page 5, chart on the left conveys the approximate size of our three primary markets, efficiency, wind and solar.

Efficiency is by most measures the most economic of all the clean energy technologies and will continue to be a primary market for HASI. We see growth in all the efficiency sectors, governmental, industrial and then perhaps the largest efficiency market of all Commercial PACE.

Wind is by far the largest renewable energy market to date, and we see significant opportunities in utility scale wind projects, whether new builds or from the approximately 65 gigawatts of installed capacity in the U.S. Solar continues its rapid rise in both the retail and utility market, and we are investing in both.

The chart on the right shows how HASI complements the industry incumbents.

The efficiency, wind and solar markets often require financing that is compatible with relatively small asset and/or have tenors that are generally longer than many banks are comfortable with, and shorter tenors and smaller transaction sizes than most insurance investors are seeking. This is the opportunity we are addressing in the marketplace.

We’re also seeing additional opportunities to partner with the industry incumbents as well. This flexibility and deal size and tenor is one of our competitive advantages in addition to a lower cost of capital relative to BDC’s private equity and hedge funds.

We are conscious that growth presents new risks and it will take a clear eyed view of the risks and rewards in all three markets to grow our business. Turning to slide 6, we summarize our strategy in three connected activities. It all starts with our clients for whom we originate programmatic investments with a positive greenhouse gas profile.

This means we avoid one-off investments without a plan for replicable execution or those that increase greenhouse gas emissions. Our ability to execute on programmatic transactions is only good as the team we have at HASI.

With an average tenure of over 12 years at Hannon, our clients enjoy a stability in the relationship with us, not offered by many financial service firms.

We believe our ability to aggregate assets with a verifiable greenhouse gas profile will over time allow us to lower our cost of capital by offering investors in our company excellent returns from assets on the right side of the climate issue.

Investors in HASI shares receive an annual sustainability report card in our annual report, detailing the greenhouse gas reduction per $1,000 of investment. Investors in our sustainable yield bonds have a similar GHG metric on each issuance that will provide transparency beyond that contained in the Green Bond Principles.

In the world increasingly defined by carbon, we believe this disclosure will lead to better risk adjusted returns for investors and a lower cost of capital for HASI.

When we put these three activities together, we are able to serve our clients even better, as we provide the financing necessary to achieve the rapid adoption of the clean energy technologies they’re selling. Now, I’ll turn it over to Brendan to detail our financial performance..

Thanks Jeff. Turning to the Q1 results, we generated $13.7 million of core investment revenue, a 100% increase from Q1 of last year. The core investment income increase is due to an increase in the size of our balance sheet to approximately $1 billion at the end of Q1 from just under $600 million at the same time last year.

The increase in core investment revenue was partially offset by higher interest expense as we increased our leverage to 2:1 from 1.5:1 at the same time last year. And we ended the quarter with 39% of our non-matched funded debt at fixed rates. We also realized fee income of $3.1 million in the quarter.

Our core total revenue, net of investment interest expense was $10.7 million in Q4, an increase from $5.7 million in the same quarter last year. Other expenses core increased slightly to $3.3 million from $2.3 million last year, due to additional head count and expenses related to the growth of the business.

We remain very efficient as total head count is approximately 30 people. Core earnings rose to $7.4 million compared to $3.4 million in the same quarter last year. Core EPS grew 35% over Q1 2014 to $0.27 per share.

During the offering, we announced we had closed $167 million through April 27, 2015, as compared to $132 million in the same period last year. As we have discussed, originations in our business are lumpy and any one quarter does not make a trend.

On a look-forward basis at March 31, 2015, our average portfolio yield is approximately 6.1% with energy efficiency yielding approximately 4.5% and renewable energy yielding approximately 6.8%. A couple of things to note.

A quick update on the wind equity investment; included in the core earnings is $2.8 million of earnings from the wind equity investment. The project is tracking to our model and in the quarter, we collected $6.3 million in cash from the investment. Secondly, Jeffery affirmed our 14% to 16% earnings growth guidance over the $0.93 core EPS in 2014.

In preparing this guidance, we include the impact of dilution from planned equity raises. As you can imagine, depending on the timing of the raise, the dilution can have an impact of $0.01 to $0.02 in the quarter with the raise. As we put the capital to work, we overcome that dilution.

Turing to page eight, one of the things that make our business unique, is our focus on a diversified portfolio of high credit quality assets. Our debt and real estate portfolio continues to be 98% investment grade rated at March 31, 2015.

This consists of 46% of our assets on government obligors and 52% commercial transactions, with only 2% of our assets or $15 million not considered investment grade. Given the nature of the wind equity investment, we do not include the equity investment in this analysis.

As Jeff mentioned, our portfolio is widely diversified with over 80 projects and an average outstanding balance of approximately $10 million per project. Turning to page nine 9. We want to focus on the strength of our balance sheet. Our assets are approximately $1 billion, with an average portfolio yield of 6.1% in the diversified portfolio.

Assets fell slightly in Q1, as we had several repayments as well as the return on capital from the wind project. On the debt side, we remain at approximately 40% of our non-matched funded debt at fixed rate and have achieved our 2:1 leverage target.

Given continued low short-term rates, we are continuing to focus on accreting our fixed rate debt to be 50% to 70%, and over time move our leverage towards the 2.5:1 target. I will now turn it back to Jeff, who’ll wrap up the presentation..

Thanks, Brendan. Turning to page 10, chart on the left supports our belief that the HASI dividend yield is attractive relative to other investment options.

In addition to having a higher yield on the alternatives shown here, we point out that we had none of the exposure to oil than many MLPs have, and none of the asset concentration risk of infrastructure funds.

We compare favorably to utilities in both yield and growth, and when compared to yield cos, we believe our growth story is inclusive of their growth story, and that many need the kind of capital we provide, and we are more diversified given our exposure to efficiency markets.

To close, we were pleased with our recent capital raise and we use that capital to execute on our investment proposition, deliver an attractive dividend yield from long-term cash flows, grow that dividend from a large, growing, clean energy market, all with a diverse portfolio of high credit quality obligors, which will in total generate an attractive total return for our investors.

Again, it is an honor to work with my colleagues and co-investors at HASI, and I thank them publically for another outstanding quarter. We appreciate you listening to our update, and we’ll now open the call up for a few questions..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Phillip Shen with ROTH Capital. Please proceed, your line is live..

Jeff, Brendan, thank you for taking my questions..

Hi, Phil..

Hey, Phil..

Hey, so I’d like to start off with your renewable energy yields. Our checks with developers yield cos and other buyers of assets suggest there is an incredible level of competition for those assets, especially solar assets, thereby depressing yields.

With that backdrop, it’s remarkable that we’re seeing Hannon steadily improve your renewable energy yields, from 6.2% in Q3 to 6.6% in Q4 and the 6.8% in Q1.

So, the two-part question here, one, can you update us on the competitive dynamics that you face in the parts of the capital stack that you compete in, and two, how do you expect your yields to evolve for the renewable sector as we go through 2015?.

Well, I think Phil, this is Jeff, I think the competition is very heated for the equity in particularly solar assets or fully contracted wind assets. We typically like transactions, where we are more senior in the capital stack. So on the solar, we readily admit the – we’re not really looking for the solar equity ownership position.

We readily admit the solar senior debt and fully contracted well sponsored project is pretty competitive market. So, we have stayed focused on the land business, which continues to be very productive, and because it’s niche, it generally yields little bit more.

On the wind side, working with the tax equity transaction like the JPMorgan, strong upwind transaction, again these are not easy transactions to do. They are not commodity transactions there, fortunately a large volume of them we believe, but we’re certainly earning our yield on those transactions and there again senior in the capital stack.

We don’t defy gravity on yields, but we manage what we can manage and that is to find the niches where we can get paid for doing little bit more work..

Great.

And how do you expect the yields to evolve? You’ve had a steady increase from Q3 last year through to Q1, should we continue to expect an increase, modest actually?.

Yes. I wouldn’t think so. I mean, it is an attractive portfolio return we’re getting on renewable energy. I wouldn’t necessarily say it’s going up from here, and I think without any issues, I think we can maintain it..

Great. One more question from me. Conversely, with the energy efficiency yields, we’ve seen them kind of steadily decrease from 4.8% down to 4.5%.

How do you expect these yields to trend in 2015?.

I would sense that we’re getting close to a bottom; it’s getting hard to price things much lower than this relative to other alternatives. So, we certainly hope it’s reaching the bottom, but these are very long dated, very high credit quality transactions, and that’s just a piece of paper that’s very much in demand by a lot of investors.

So, I think it’s probably priced appropriately in this market..

Can you help us understand what are the key drivers impacting the slight declines?.

I mean, it’s a lot of transactions. Looking at Brendan here..

Yes. I think it’s a combination of base rates having come back down a little bit. They’ve kind of gone up and gone down, the prices of the base rates, and it really depends on transaction mix as to what’s coming in or going out at any one point in time that impacts that trend..

Great. And thank you both. I’ll jump back in queue..

Thanks, Phil..

Our next question comes from Joel Houck with Wells Fargo..

Good afternoon. Regarding the pipeline, it’s been $2 billion plus.

Can you talk a little bit about the geography of that pipeline and has it changed at all in the last quarter or two?.

Geography, yes, we cannot talk about that. It’s a good question. It’s generally national providers you would expect the renewable assets to be more westerly-oriented. The efficiency assets are generally very broadly distributed, particularly those related to the federal government or whatever.

The federal government is and the federal government is of course in all 50 states and territories and countries beyond. But honestly, though, we haven’t looked at it geographically that way. We are definitely oriented towards risk adjusted returns, not so much geography..

And Joel, to your other point I think we’ve said all along we didn’t want to be measured by whether the pipeline was going up or down. What’s important to us is that we focus on having, and this is the point Jeff made in the call, is focus on having a very well diversified high credit quality portfolio.

And I think, as we continue to focus on that and we think we’re well positioned from that perspective. So, we continue to focus on that, but I don’t think we feel it important to start giving a lot more detail on the pipeline beyond that. We obviously did the equity raise expecting to put the capital to work.

So, we’re comfortable with where we are and what opportunities we’re seeing..

Maybe helpful to talk about, obviously, you don’t fund everything in the pipeline, what type of opportunities are you essentially walking away from, whether it’s like a return or too much risk or maybe give us a sense for what you don’t like that’s in the pipeline?.

No, no. Pipeline, we like it..

Yes, I think the things that we aren’t actively pursuing, Jeff talked about a few minutes ago, is we’re not actively pursuing and we don’t want to be an operator project. So, we’re not actively competing against the yield cos on operation of projects and the common equity where you’re an operator. We’re not competing.

We don’t see a lot of opportunity right now in some of the highly structured utility scale solar projects that have become very competitive.

So, as Jeff said, and as we’ve talked all along, our business is focusing on a series of niches and executing programmatic relationships with various vendors, and we continue to do that, and we continue to look at how we can build relationships with various classes of vendors and we think we’ve been very successful with that..

Okay. And one more if I could.

The margin expansion that you referenced in your opening comments, can you give a little color, is that more mix oriented or is it more driven by the fact that your niche opportunities in the pipeline are perhaps better yielding than what is currently in the portfolio or might be running of?.

There is a little bit of that, of some of the stuff from a pipeline is reasonably well priced, but we also over time expect to be able to drive down our cost of debt and now that’s an interesting kind of multiplier..

Part of it..

As is our margin, yes, whether it’s fees or rates..

And just to kind of ground people from way back, it’s not way back but at the IPO time, we talked about a model where our target average yield on the asset side was 5.5%. So, we’re now sitting at 6.1%..

Yes..

So, we think we’ve been very successful at finding niche opportunities that have allowed us to achieve better than expected yielding assets in a difficult environment for those..

All right. Thank you very much, guys, and congratulations on your equity raise..

Thank you..

Thanks Joel..

Our next question comes from Aditya Satghare with FBR Capital Markets..

Thank you. Good afternoon, all..

Hi, Aditya.

How are you?.

Good, good. So, two questions from my side.

Firstly, on your pipeline, how do you think about the impact of any sort of pull-forward effect from the expiration of the – or the potential step down in the ITC in 2017? And then given the recent ruling, we saw on wind projects which qualifies in 2017, what kind of impact would you expect to see on your pipeline? And then sort of a question on that is, does your 14% to 16% core EPS guidance include any sort of pull-forward effect in terms of demand here?.

Let’s talk about the step down. I think there are a number of observers in the solar industry who say, the decrease complexity around solar transactions in 2017 that are not focused on monetizing a 30% ITC will actually make these transactions simpler and take a lot of transaction cost out.

Now, it won’t fully offset the 20% decline in the ITC, but it certainly will benefit you would think on the margin investors like us who are less tax oriented rather than those who are more tax oriented.

So it’s going to get back more to the fundamentals of what’s the cash flow in the projects and that’s going to be good for us since we’re not a tax payer.

I would say overall the solar and wind business, they know this painfully well as to what they have to do to be cost competitive, and both technologies and the supply chains have done a good job of squeezing cost out.

We think we’re one of the cost in that in terms of the cost of capital and we’re trying to help the industry by lowering cost of capital available to them. So, we have factored that in, but those are just more anecdotal thoughts that, to us it does not look like a curtain falls on the clean energy business.

And of course, efficiency is completely unaffected by any of that..

Got it, got it.

Second question, more high level, could you sort of maybe talk about given the environment for acquisitions today, right, what are some of the pockets of operations you see and how should we sort of think about where potential acquisitions could come from?.

I think we’ve talked much about acquisitions. It’s certainly something we look at from time to time, but frankly getting same focus on our clients and executing on the programmatic finance business, that’s where the core business is. If we see something, we would certainly be capable of doing it.

We feel like we showed some ability with AWCC last year, but just acquiring companies to get a lot bigger and faster is probably not our preferred method of going forward..

All right. Thanks, Jeff. Thanks for the update..

Thank you..

[Operator Instructions] Our next question comes from Tyler Frank with Robert Baird..

Hi guys, thanks for taking the question and congratulations on the quarter and the recent raise..

Thanks, Tyler..

I guess can you just give a little bit of clarity around how we should think about – expected, the expected portfolio breakdown going forward? Obviously, with the greater yield on renewable assets, should we think that the portfolio will trend towards holding more renewables, or do you plan to keep sort of a similar breakdown as you have seen?.

Well, I think we’ve shown in our pipeline at least illustratively that it is roughly 50% efficiency, 30% wind, 20% solar, which matches up pretty well with what we’re transacting. One of the nice things in our business is we don’t have to pursue any one piece of business or technology category to match our name.

So, we are going to keep looking in all three markets and others as they come up, but – we definitely like efficiency, because its cash flow oriented. It’s economic without government subsidies, it’s programmatic. If it’s going to get done in almost, it has to be done programmatically, so those are all our kinds of strengths.

I think we’re finding some nice opportunities in wind and solar, and yes I think we’ve got them in the right order..

Great.

And then in terms of just the overall expected deal size, I know that sort of that $15 million to $25 million have historically been the bread and butter, but should we view the wind transaction from last year as more of a one-off, given its large size or should we potentially expect additional transactions sort of in a $100 million plus range going forward?.

I think that the key to think about there and also on the AWCC transaction, both of which were $100 million plus transactions is, in both cases they were actually a portfolio of project. So, the wind project is actually 10 different wind projects underneath it.

So, it gives us some diversity in the operating wind farm, so 10 different locations, 10 different projects, so on and so forth. AWCC had a sizeable number of transactions – individual leases associated with it.

So, I think in those bigger transactions, we still look to try to pick up diversity within what we’re doing and pick up more on a portfolio basis those types of transactions. That being said, we continue to look at lots of opportunities in lots of different areas.

So, we won’t rule anything out, but we do try – we do value and I think we’ve talked about it sometimes in this call, the 80 plus projects we have in the portfolio. So we think it’s valuable to have this diversity and we’ll continue to focus on that.

Tyler, you there?.

There are no further questions at this time. I’d like to turn the call back – the floor back to management for closing comments..

Thanks, Danielle. Thanks for asking great questions, once again. We remain really excited about the opportunity in front of us and look forward to speaking with our investors over the next quarter. Thanks so much..

Thank you. Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..