Greetings, and welcome to HASI's Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Aaron Chew, Senior Vice President of Investor Relations.

Thank you, operator, and good afternoon to everyone joining us today for HASI's Fourth Quarter 2025 Conference Call. Earlier this afternoon, HASI distributed the press release reporting our fourth quarter 2025 results, a copy of which is available on our website, along with the slide presentation we will be referring to today. This conference call is being webcast live on the Investor Relations page of our website, where a replay will be available later today. Some of the comments made on this call are forward-looking statements, which are subject to risks and uncertainties described in the Risk Factors section of the company's Form 10-K and other filings with the SEC. Actual results may differ materially from those stated. Today's discussion also includes some non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is available in our earnings release and presentation. Joining us on the call today are Jeff Lipson, the company's President and CEO; as well as Chuck Melko, our Chief Financial Officer. Also available for Q&A are Susan Nickey, our Chief Client Officer; and Marc Pangburn, our Chief Revenue and Strategy Officer. To kick things off, I will turn it over to our President and CEO, Jeff Lipson. Jeff?

Thank you, Aaron, and welcome to our fourth quarter and full year 2025 call. We are very pleased and proud to report that 2025 was an outstanding year for HASI with meaningful progress in all aspects of our business and a particularly strong finish in the fourth quarter, with a higher volume of transactions closed than in any previous full year. The level of client development activity remains elevated and the demand for project-level capital is extremely strong, creating continued tailwinds for our business, as evidenced by both our 2025 results and our outlook for the next several years. Our climate, clients, asset strategy continues to thrive. As we execute on closing attractive climate positive investments, with programmatic clients supported by project cash flows from high-quality off takers. Turning to Slide 3. Not only was 2025 the strongest year of results we have ever recorded on virtually every metric used to monitor and assess our performance, but the underlying fundamentals of the business have been enhanced in establishing pathways to future continued success. Notably, nearly every facet of our business is operating at a high level right now, including new investment volumes, returns, profitability and capital efficiency. These higher volumes are supported by a new paradigm of load growth in the United States, rising demand for third-party providers of permanent capital and HASI's competitive advantage. We closed $4.3 billion in new transactions in 2025, 87% more than 2024. And our pipeline has continued to grow from more than $5.5 billion at the end of Q1 to more than $6.5 billion at the end of 2025. Not only have our investment volumes scaled meaningfully larger, we are also increasing returns on these investments. For the second year in a row, yield on new investments has exceeded 10.5%, meanwhile, our bond spreads…

Thank you, Jeff. Turning to Slide 12. As previously highlighted, we have experienced meaningful growth in our transaction closings, and our results in 2025 are a good indication of our ability to convert incremental closings to attractive returns. Our business model continued to deliver a 10% adjusted EPS growth rate up to $2.70 per share in 2025. We have been successful at building our recurring earnings that serve as a solid foundation for our future earnings growth, with adjusted recurring net investment income of $362 million, an increase of 25% from the prior year. Our fees and income earned for managing assets in CCH1 and securitization trusts increased to $49 million in 2025, growth of 32% from the prior year. In addition, our securitization business continued to deliver with gain on sale contributing $65 million to our adjusted earnings. Our adjusted ROE is beginning to reflect the growth achieved in our profitability, as we have been able to maintain the recent increase in yields while also growing fees from CCH1. As a result, our adjusted ROE rose 70 basis points from 2024 to 13.4% in 2025. With our recent junior subordinated note offering, we expect to further increase our profitability on each share of equity issued and to meaningfully reduce the reliance on new equity issuance to achieve our growth targets. Our GAAP results were impacted by volatility that can typically occur in calculations of HLBV relative to our true economic returns in any given period. And also, as a reminder, the GAAP-based net investment income does not include the earnings from our equity method investments, which are a growing portion of our portfolio. On to Slide 13. The foundation of our recurring earnings and growth in adjusted EPS and ROE is our managed assets, which grew 18% to $16.1…

Thanks, Chuck. Turning to Slide 16. We display our sustainability and impact highlights, noting our cumulative carbon count and water count numbers reflect the significant impact of our investment strategy. In particular, I want to highlight that 2025 was not only the first year that the avoided annual CO2 emissions estimated from our new investments exceeded 1 million metric tons, but that it rose to a record 1.7 million metric tons in 2025, increasing the total annual CO2 emissions avoided from all of our investments to date to 10 million. Now let's conclude on Slide 17. 2025 was in many regards, the strongest year of operational and financial results in our history. Investment volumes nearly doubled, return on equity increased significantly and is well positioned for future growth. Our diverse capital platform is working as designed for maximum efficiency and minimal cost and our 3-year guidance reflects an expectation of future meaningful growth and profitability. I would also note we have made significant investments in our own platform, particularly in talent and technology that have positioned the business for further scale as we now exceed $16 billion in managed assets. These platform investments in our own infrastructure have created the foundation for additional expected growth. In closing, I would like to thank our talented team. In particular, I would like to recognize and thank Steve Chuslo for his outstanding 18-year tenure as our Chief Legal Officer, during which time he made an outsized contribution to HASI's success and our culture. As previously disclosed, Steve will be transitioning to a strategic adviser role in April. Thank you. Operator, please open the line for questions.

[Operator Instructions] And our first question we'll hear from Chris Dendrinos with RBC.

Congratulations on the strong quarter and a strong year. I guess maybe starting out here on the 2028 outlook, and you've highlighted that basically, you all are outperforming historical levels basically on all the metrics here. So what gets you to grow above a 10% CAGR? And it seems like maybe you're on pace to do that. So just kind of walk us through the guidepost here that we should be measuring you against to maybe outperform that over time?

Sure. Chris, thanks for the questions. And again, this business, we're very proud of the fact that over a 10-year period, we've had a 10% CAGR in our adjusted EPS. And I think the resiliency and the consistency of the business is quite admirable. The other thing we've really focused on is management credibility as it relates to guidance. So I think -- I don't think -- I know we've hit guidance every guidance that we've put out. So that's very important to us as well, so we maintain that credibility. So the $350 million to $360 million is our guidance. As with any guidance, there are pathways to beat it. And in our case, there would be things like more volume, better yield on the investments, lower debt costs than we've otherwise modeled would be the primary ones. There are also maybe discrete events like some strong monetization at some point, and other scenarios in which we'd beat guidance. But again, we're very focused on being intellectually honest with the Street and our management credibility. And so $350 million to $360 million is our guidance at this point.

Got it. And then maybe just on the immediate kind of near term. I noticed it didn't look like you all provided any kind of outlook for 2026 specifically. Could you provide any kind of color how should we be thinking about this year?

Sure. So I think we have been consistent over the last several years in putting out 3-year guidance and not necessarily speaking to the first 2 years. The primary reason for that is the lumpiness of the gain on sale business, it makes forecasting shorter periods, a little bit more difficult. But what I would say is there's nothing about 2026 that we call out either negatively or positively as related to the trend. And I would ask Chuck to see if he wants to add anything to that.

I think, Chris, the one thing that I think we did put in a slide, just looking forward to 2026, given the success that we've had in our volume closings in '25 specifically with SunZia driving us up to $4.3 billion of transaction closings while we are expecting meaningful growth and are seeing it come through in our pipeline, raising our pipeline of $6.5 billion from $6 billion that we reported last quarter. Given the SunZia transaction and the size of that, we wouldn't, at this time, necessarily expect to be at $4.3 billion transactions again, will be higher than historical closings, but don't expect a $4.3 billion number necessarily.

Our next question, we will hear from Davis Sunderland with Baird.

Can you hear me okay?

Yes. Thanks, Davis.

I apologize for any background noise. First of all, let me congratulate you and say thank you for the time and outstanding results in Q4 and 2025. My questions are actually somewhat of an extension from Chris'. I wanted to go back to just the change in the guidance strategy and the messaging here. And I wondered if the switch to a point guide or a range of point guidance for '28, is it all related to you guys having maybe increased confidence or increased visibility or maybe tied to deal sizes getting larger? Or just any other thoughts you could provide on the why now as to guiding in that particular way?

Sure. Thank you for your kind words, Davis. And I would say the primary reason that we switched to nominal EPS guidance from EPS growth rate. Even though everyone can do the math is very simply, it allows us in subsequent quarters to perhaps be a little more precise in adjusting that guidance. So what you've seen from us over the last several years just to have a guidance number out there, and then to affirm it quarter after quarter because we were generally still in that range. And then, of course, we did meet that expectation. Here, we may have a little more flexibility to adjust those pennies a little bit here or there, to allow disclosure of a little more precision as to where we're headed. So that's the primary objective here.

And maybe just a second question about investments and any other large deals that may be in the pipeline such as SunZia that may blur the average, if you will, just how we think about the normalized run rate for a full year going forward? If there's been a structural change in the business closer to $3 billion or certainly not run rate in Q4 and in all the future quarters. But any thoughts on just how we contextualize that into your pipeline.

Sure. I'm going to -- I'll say there's no structural change in the business, larger investment opportunities to materialize from time to time. And I'll let Marc perhaps talk a little bit more about our pipeline.

Sure. I think Jeff covered the primary point that when we look at our pipeline, it is highly consistent with the transactions that we have been closing recently, both in terms of risk profile and yield. There's no SunZia type project to call out in the pipeline. But that being said, even if there was, we likely wouldn't tell you until after it closed. And then the only -- you brought up project sizes, we are seeing project sizes increase. And that is, I'd say, due to 2 primary items. One is, of course, just these larger grid-connected complexes that are getting built. But then also whether it's grid connected or behind the meter the storage attachment rate going up quite significantly and the focus on storage driving more capital deployment opportunities as well.

And our next question, we will hear from Noah Kaye with Oppenheimer.

All right. And good afternoon, everyone. Maybe to get at this from a slightly different angle, so the pipeline was $5.5 billion or greater than that this time last year, now $6.5 billion, so a little under 20% growth. I guess, do you feel like that is proportional to the growth in the TAM in the different sort of sandboxes that the company is going to participate in. Really, the spirit of this is -- have you been able to take some share? Or do you see some ability through platform investments and partnerships to take a greater share of the pie?

Thanks, Noah, for the question. I would say that's a difficult question to answer with precision in our markets. There's not necessarily great data on things like market share. But in general, I think directionally, the answer is yes. We do feel like we have increased our market share. We do feel like there's been some pullback from certain players who have been capital providers. And we've been able to absorb a little bit more. We feel our penetration with our own clients has improved. And therefore, we probably have increased market share, although there's not a strong way to prove it. And I would also make that comment without necessarily precision. So when you see our pipeline go up 20%, I wouldn't claim our market share has improved by necessarily 20%. But I would say directionally, we have increased our market share.

Yes. And the related question is really about leverage. As was alluded to earlier, you do have some increase in individual project sizes. You also spoke before about ongoing investments in kind of capacity within the organization. Just wondering how the capital efficiency versus individual project size versus just pure operating leverage plays into driving the incremental ROE going higher and the ROE targets for fiscal '28. If the question makes sense, basically trying to do some attribution here on what drives the inflection?

So maybe I'll start and if Chuck wants to add anything. I would say the building blocks are on Slide 9 in our deck. And you can see that it's not -- our equity efficiency is not entirely taking on more leverage. A big chunk of that equity efficiency is KKR's equity capital. So it's not entirely a play on leverage. But I think the proportional improvement of the dollars of investments we can close with each dollar of equity is displayed there. So hopefully, that somewhat answers your question. Those are really the building blocks of how we get there.

Yes. I'm sorry -- clear. I was talking about like debt leverage. I was talking about like operating leverage in terms of -- you grow your headcount, you grow your organizational capacity, but are you growing revenues and profit on those revenues faster than you're growing the organization, that's the question.

Yes. Okay. I'm sorry. I answered a different question. So the answer to that question is also, yes. We have been growing our revenues faster than we've been growing our expenses, and we are highly focused on improving our operating leverage. I did talk about towards the end of the call, making significant investments in talent and technology, and we're doing that. And we think they certainly will pay long-term dividends to the company, and we've made some of those investments already. We'll continue to make those investments in 2026. But on a trend basis, we are and have been and will continue to grow revenues faster than expenses.

Moving on, we'll hear from Brian Lee with Goldman Sachs.

A couple of big picture ones. Just -- if I look at the slides, you've consistently had a really good presence in the residential solar market. It looks like it's expected to grow here into '26. So first question would just be around you alluded to the traditional PPA lease product and you guys having good exposure there. Does this prepaid lease product that seems to be trying to make its way into the market to maybe offset some of the volume loss from the cash loan customer market over the past few years. What does that do for you guys in terms of financing opportunity or returns? Or are you going to be involved there? Just maybe give us a sense of what that has in terms of implications for your resi solar business model?

Sure. Thanks, Brian. And I'm going to ask Marc to answer that specific question. But as a preamble, I would reinforce what a success story resi solar has been for us as a long-term mezz debt provider with several partners over many years. Our SunStrong joint venture that's worked out very well in our most recent transaction that I talked about in the prepared remarks, with Sunrun, I think, it's been a real success story in resi solar, and we expect it to continue to be an important component of our business. To answer your specific question around the prepaid lease product, I'm going to ask Marc to answer that.

Brian, we've seen over the past 10 years or so that we've been in resi, some prepaid leases. But as it relates to your current -- the comment on the current trend, we haven't seen any transactions using the prepaid lease structure to evaluate right now. But we'd certainly look at it [indiscernible] the more traditional lease and TPO products.

Okay. Fair enough. I appreciate that color. And then maybe just 1 kind of related, I guess, there was some recent news that maybe there is some tightness in tax equity markets. I mean, I guess, we've been kind of hearing that over the course of the past few quarters. But I guess, the recent attribution was around renewables financing, having maybe a little bit of tightness tied to policy uncertainty, whether that's foreign entity of concern or other issues that haven't been finalized in terms of guidance, in this case, treasury guidance. Does that have any implications for you guys? Are you seeing that? Is that actually an opportunity maybe, but just wondering if that's something that is impacting the marketplace as you see it and what it means for HASI?

Sure. So what we've seen is the deployment of transferability structures to be more frequently used. And I think that's in part due to some simplicity, but also could be driven by of the tax equity items, which I think you've attributed it correctly to FEOC and some of the desire for clarity. I don't think it's more than that, though. It's really just the market looking for clarity. And in the interim, the transferability structures have been deployed quite frequently. And I think a good example of that is actually the 2 transactions that we highlighted with Sunrun and Pattern where you use the transferability structure.

And next, we'll move to Maheep Mandloi with Mizuho.

So just on the treasury guidance, I think, it probably came out half an hour ago here. But it's another question on that, but just like high level as you think through 2028, any thoughts on how FEOC kind of impacts your portfolio here or the projects you'll be building over the next 3 years?

Sure. Thanks, Maheep. We are aware, guidance was issued literally while we're sitting in this room. So clearly, we haven't read it. But to answer that question a little more generally on FEOC, I'm going to ask Susan to speak to that.

Yes. Thanks. The good news is that getting -- starting to get guidance out on FEOC in any of the guidance that continues to remain is important and helpful to give clarity around the rules. I think in the interim, as we think we've talked about over the last few quarters, our clients have generally safe harbored under the prior guidance before that was effective through December of last year for several years ahead of their pipeline of projects. So the current guidance is really more -- is obviously focused on 2026, incremental safe harboring or started construction, but isn't really impactful for our current pipeline and most of what our clients had already planned for.

Got it. I appreciate that. And then maybe a different question on some of these older vintage renewal projects which you might have under your portfolio. We keep hearing from some of the developers that they seem -- or some of these projects are up for renegotiations. As that happens, how does that kind of impact your earnings power? Or how should we think about that impact either the GAAP income or the adjusted net income or EPS for you guys?

Sure. So I'm going to let one or more of my colleagues jump in on that. But I would start out by saying that we have seen a fair amount of PPA renegotiation in several of our projects recently, and we work closely with our sponsors on those renegotiations and given where PPA prices are now, those have been positive renegotiations as it relates to the long-term cash flows we expect from those projects. And where that shows up for us on a non-GAAP basis is in portfolio yield, which is the summation of all the individual yields and all the individual projects. And so when there's a new PPA, that's a new fact, and we would rerun the yield on a project. Let me ask if anyone -- okay, I'm getting a lot of head nodding that, that was a sufficient answer. So hopefully, that answers your question. No one has anything to add to that.

And just trying to understand it, it feels like the capital needs for renegotiations were pretty low, right? So is that -- and just anything like does that accelerate your EPS growth beyond '28 or think about this 10% CAGR here, especially with more of your negotiations happening.

We lost the beginning of that question, but I think you asked to these PPA renegotiations potentially result in higher EPS than our guidance in '28. Was that really the question?

Yes, yes. And it seems like these are pretty less capital intensive, right, like the higher yield from these renegotiations. So just curious how that accelerates the EPS CAGR here...

Well, sure. So I think our EPS guidance includes our best information at the moment and our best forecast as it relates to future energy prices and future PPA renewals. And so as part of our forecasting process and is included in these guidance numbers -- to the extent things trend better than that, that is an upside to the guidance. And I talked earlier to Chris' question around upside to guidance. But yes, that's another one if on many of the underlying projects PPAs are negotiated at a higher level than we've already put in our forecast.

Got it. Appreciate that.

[Operator Instructions] Next, we'll move on to Praneeth Satish with Wells Fargo.

So clearly, there's a lot of capital flowing into data center development power infrastructure with your investments starting to become larger. Just wondering if you have any updated views on how you're approaching or would consider approaching data center financing I guess, what's your appetite to invest there? And to the extent that you've looked at, I guess, how do the opportunities in that segment compare to your other investment opportunities on a risk-adjusted basis?

So I would say a couple of things. One is we are indirectly obviously very involved in data centers in that it is the data center is driving so much of this demand that we keep talking about that in turn is driving development. So many of our projects are derivative of that demand, and therefore, we're already indirectly in the data center business. In terms of being more directly in the data center business, what I would say is really not too much different than we said last quarter, which is we've had conversations around the data center ecosystem with developers and other power providers to data centers. We're determining if there's a role for us, if there's a piece of business there that makes sense, and we don't really have anything to report just yet on that, but it's an area that we continue to evaluate what our role may be.

Got it. And just going to your payout ratio and kind of the long-term guidance here. So payout ratio moves below 50% by 2028. And potentially 40% by 2030. I guess in the context of that, how should we think about your long-term dividend framework? Does that kind of create some flexibility for potentially a faster pace of growth, dividend growth in the outer years? Or is there kind of a preference to take the payout ratio even lower over time?

I think it's more the latter. We're not going to comment past 2030 where the dividend may go. That's already, I think, several years into the future. But I think the long-term trend of starting out as a REIT and with 100% payout ratio. And by, call it, 17 years later, having that payout ratio down to 40% or less is a reflection of the evolution of our business and the notion that we believe the business is more valuable and can grow faster if we recycle more capital. And we're doing that in a way where we're still increasing the dividend every year, which you've seen us do, but we can increase it a little bit each year and reduce the payout ratio because we do have such strong earnings growth. So I'm not going to comment past 2030, but I think this trend is very clear, as to how we think about the dividend and why we think this is the optimal way to run the business.

Our next question, we'll hear from Jeff Osborne with TD Cowen.

A couple of questions on my side. I was wondering more financial oriented but the -- I think you had a step-up in receivables outside of CCH1. Marc, I was wondering if you could just touch on what drove the higher investment income. And this is a level we expect to continue from here?

Actually, I'm going to ask Chuck to respond to that. Thanks, Jeff.

Jeff, yes, so as you likely know and understand many of investments that we make are now going through CCH1, but there are various assets that we may close that are directly onto our balance sheet that could show up as receivables. If they're in through CCH1, they come through as equity method investment of course. But we did have an investment that we put directly on our balance sheet and the yield that we're earning on that is consistent with our new asset yields.

And just as a follow-up, is this like a level you expect to continue with the expansion of CCH1 in '26 of the recent expansion? Like how should we think about the mix between CCH1 and the legacy HASI?

I think you'll see more growth in the CCH1 and equity method investments than you will on the receivables.

Got it. Okay. And then along that line, I think you had a cash flow benefit from EMI, equity method investments this quarter? Is that along the same lines that you were just answering or is there something else that drove that from a timing perspective?

Yes, it's a couple of things. It is along those lines that we are getting cash distributions out of CCH1. But overall, with our portfolio, we are seeing an uptick in operating cash distributions that we're receiving. But we are also within our equity investments, we do from time to time have certain activities that occur where we get distributions such as refinancings that might occur within the portfolios. So yes, we are seeing growth in our equity method cash collections. That is a combination of an uptick in operating cash, but also CCH1-related.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.