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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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46-1347456
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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|
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1906 Towne Centre Blvd
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Suite 370
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21401
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Annapolis,
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Maryland
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.01 par value per share
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HASI
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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•
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negative impacts from continued spread of COVID-19, including on the U.S. or global economy or on our business, financial position or results of operations;
|
•
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our expected returns and performance of our investments;
|
•
|
the state of government legislation, regulation and policies that support or enhance the economic feasibility of projects that reduce carbon emissions or increase resilience to climate change, which we refer to as climate change solutions, including energy efficiency and renewable energy projects and the general market demands for such projects;
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•
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market trends in our industry, energy markets, commodity prices, interest rates, the debt and lending markets or the general economy;
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•
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our business and investment strategy;
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•
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availability of opportunities to invest in climate change solutions including energy efficiency and renewable energy projects and our ability to complete potential new opportunities in our pipeline;
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•
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our relationships with originators, investors, market intermediaries and professional advisers;
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•
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competition from other providers of capital;
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•
|
our or any other company’s projected operating results;
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•
|
actions and initiatives of the federal, state and local governments and changes to federal, state and local government policies, regulations, tax laws and rates and the execution and impact of these actions, initiatives and policies;
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•
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the state of the U.S. economy generally or in specific geographic regions, states or municipalities, and economic trends;
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•
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our ability to obtain and maintain financing arrangements on favorable terms, including securitizations;
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•
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general volatility of the securities markets in which we participate;
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•
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the credit quality of our assets;
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•
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changes in the value of our assets, our portfolio of assets and our investment and underwriting process;
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•
|
the impact of weather conditions, natural disasters, accidents or equipment failures or other events that disrupt the operation of our investments or negatively impact the value our assets;
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•
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rates of default or decreased recovery rates on our assets;
|
•
|
interest rate and maturity mismatches between our assets and any borrowings used to fund such assets;
|
•
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changes in interest rates and the market value of our assets and target assets;
|
•
|
changes in commodity prices, including continued low natural gas prices;
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•
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effects of hedging instruments on our assets or liabilities;
|
•
|
the degree to which our hedging strategies may or may not protect us from risks, such as interest rate volatility;
|
•
|
impact of and changes in accounting guidance;
|
•
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our ability to maintain our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes;
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•
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our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the “1940 Act”);
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•
|
availability of and our ability to attract and retain qualified personnel;
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•
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estimates relating to our ability to generate sufficient cash in the future to operate our business and to make distributions to our stockholders; and
|
•
|
our understanding of our competition.
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Page
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|
||
Item 1.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
March 31, 2020 (unaudited)
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
173,025
|
|
|
$
|
6,208
|
|
Equity method investments
|
581,930
|
|
|
498,631
|
|
||
Government receivables
|
259,085
|
|
|
263,175
|
|
||
Commercial receivables, net of allowance of $26 million and $8 million, respectively
|
873,397
|
|
|
896,432
|
|
||
Real estate
|
361,493
|
|
|
362,265
|
|
||
Investments
|
63,167
|
|
|
74,530
|
|
||
Securitization assets
|
121,929
|
|
|
123,979
|
|
||
Other assets
|
90,461
|
|
|
162,054
|
|
||
Total Assets
|
$
|
2,524,487
|
|
|
$
|
2,387,274
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable, accrued expenses and other
|
$
|
48,672
|
|
|
$
|
54,351
|
|
Credit facilities
|
153,074
|
|
|
31,199
|
|
||
Non-recourse debt (secured by assets of $802 million and $921 million, respectively)
|
633,328
|
|
|
700,225
|
|
||
Senior unsecured notes
|
504,724
|
|
|
512,153
|
|
||
Convertible notes
|
148,134
|
|
|
149,434
|
|
||
Total Liabilities
|
1,487,932
|
|
|
1,447,362
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock, par value $0.01 per share, 50,000,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share, 450,000,000 shares authorized, 71,325,089 and 66,338,120 shares issued and outstanding, respectively
|
713
|
|
|
663
|
|
||
Additional paid in capital
|
1,206,225
|
|
|
1,102,303
|
|
||
Accumulated deficit
|
(185,789
|
)
|
|
(169,786
|
)
|
||
Accumulated other comprehensive income (loss)
|
11,076
|
|
|
3,300
|
|
||
Non-controlling interest
|
4,330
|
|
|
3,432
|
|
||
Total Stockholders’ Equity
|
1,036,555
|
|
|
939,912
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
2,524,487
|
|
|
$
|
2,387,274
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
|
|
|
||||
Interest income
|
$
|
23,889
|
|
|
$
|
17,654
|
|
Rental income
|
6,470
|
|
|
6,476
|
|
||
Gain on sale of receivables and investments
|
4,905
|
|
|
6,839
|
|
||
Fee income
|
5,570
|
|
|
2,174
|
|
||
Total revenue
|
40,834
|
|
|
33,143
|
|
||
Expenses
|
|
|
|
||||
Interest expense
|
18,135
|
|
|
15,430
|
|
||
Provision for loss on receivables
|
648
|
|
|
—
|
|
||
Compensation and benefits
|
8,897
|
|
|
7,439
|
|
||
General and administrative
|
3,409
|
|
|
3,342
|
|
||
Total expenses
|
31,089
|
|
|
26,211
|
|
||
Income before equity method investments
|
9,745
|
|
|
6,932
|
|
||
Income (loss) from equity method investments
|
16,588
|
|
|
4,506
|
|
||
Income (loss) before income taxes
|
26,333
|
|
|
11,438
|
|
||
Income tax (expense) benefit
|
(1,923
|
)
|
|
2,270
|
|
||
Net income (loss)
|
$
|
24,410
|
|
|
$
|
13,708
|
|
Net income (loss) attributable to non-controlling interest holders
|
102
|
|
|
61
|
|
||
Net income (loss) attributable to controlling stockholders
|
$
|
24,308
|
|
|
$
|
13,647
|
|
Basic earnings (loss) per common share
|
$
|
0.36
|
|
|
$
|
0.22
|
|
Diluted earnings (loss) per common share
|
$
|
0.35
|
|
|
$
|
0.21
|
|
Weighted average common shares outstanding—basic
|
67,172,104
|
|
|
61,748,906
|
|
||
Weighted average common shares outstanding—diluted
|
73,140,922
|
|
|
62,365,271
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net income (loss)
|
$
|
24,410
|
|
|
$
|
13,708
|
|
Unrealized gain (loss) on available-for-sale securities, net of tax benefit (provision) of ($0.5) million in 2020 and ($0.3) million in 2019
|
7,454
|
|
|
1,999
|
|
||
Unrealized gain (loss) on interest rate swaps, net of tax benefit (provision) of ($0.1) million in 2020 and $0.0 million in 2019
|
358
|
|
|
(684
|
)
|
||
Comprehensive income (loss)
|
32,222
|
|
|
15,023
|
|
||
Less: Comprehensive income (loss) attributable to non-controlling interest holders
|
137
|
|
|
69
|
|
||
Comprehensive income (loss) attributable to controlling stockholders
|
$
|
32,085
|
|
|
$
|
14,954
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Non-controlling interests
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2019
|
66,338
|
|
|
$
|
663
|
|
|
$
|
1,102,303
|
|
|
$
|
(169,786
|
)
|
|
$
|
3,300
|
|
|
$
|
3,432
|
|
|
$
|
939,912
|
|
Net income (loss)
|
|
|
|
|
|
|
24,308
|
|
|
|
|
102
|
|
|
24,410
|
|
||||||||||
Adoption of ASU 2016-13, net of tax effect
|
|
|
|
|
|
|
(14,031
|
)
|
|
|
|
(74
|
)
|
|
(14,105
|
)
|
||||||||||
Unrealized gain (loss) on available-for-sale securities
|
|
|
|
|
|
|
|
|
7,420
|
|
|
34
|
|
|
7,454
|
|
||||||||||
Unrealized gain (loss) on interest rate swaps
|
|
|
|
|
|
|
|
|
356
|
|
|
2
|
|
|
358
|
|
||||||||||
Issued shares of common stock
|
4,506
|
|
|
45
|
|
|
115,314
|
|
|
|
|
|
|
|
|
115,359
|
|
|||||||||
Equity-based compensation
|
|
|
|
|
4,581
|
|
|
|
|
|
|
939
|
|
|
5,520
|
|
||||||||||
Issuance (repurchase) of vested equity-based compensation shares
|
481
|
|
|
5
|
|
|
(15,973
|
)
|
|
|
|
|
|
|
|
(15,968
|
)
|
|||||||||
Dividends and distributions
|
|
|
|
|
|
|
(26,280
|
)
|
|
|
|
(105
|
)
|
|
(26,385
|
)
|
||||||||||
Balance at March 31, 2020
|
71,325
|
|
|
$
|
713
|
|
|
$
|
1,206,225
|
|
|
$
|
(185,789
|
)
|
|
$
|
11,076
|
|
|
$
|
4,330
|
|
|
$
|
1,036,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2018
|
60,510
|
|
|
$
|
605
|
|
|
$
|
965,384
|
|
|
$
|
(163,205
|
)
|
|
$
|
(1,684
|
)
|
|
$
|
3,423
|
|
|
$
|
804,523
|
|
Net income (loss)
|
|
|
|
|
|
|
13,647
|
|
|
|
|
61
|
|
|
13,708
|
|
||||||||||
Unrealized gain (loss) on available-for-sale securities
|
|
|
|
|
|
|
|
|
1,990
|
|
|
9
|
|
|
1,999
|
|
||||||||||
Unrealized gain (loss) on interest rate swaps
|
|
|
|
|
|
|
|
|
(681
|
)
|
|
(3
|
)
|
|
(684
|
)
|
||||||||||
Issued shares of common stock
|
2,068
|
|
|
21
|
|
|
46,791
|
|
|
|
|
|
|
|
|
46,812
|
|
|||||||||
Equity-based compensation
|
|
|
|
|
3,596
|
|
|
|
|
|
|
17
|
|
|
3,613
|
|
||||||||||
Issuance (repurchase) of vested equity-based compensation shares
|
298
|
|
|
3
|
|
|
(6,425
|
)
|
|
|
|
|
|
|
|
(6,422
|
)
|
|||||||||
Dividends and distributions
|
|
|
|
|
|
|
(21,395
|
)
|
|
|
|
(93
|
)
|
|
(21,488
|
)
|
||||||||||
Balance at March 31, 2019
|
62,876
|
|
|
$
|
629
|
|
|
$
|
1,009,346
|
|
|
$
|
(170,953
|
)
|
|
$
|
(375
|
)
|
|
$
|
3,414
|
|
|
$
|
842,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
24,410
|
|
|
$
|
13,708
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Provision for loss on receivables
|
648
|
|
|
—
|
|
||
Depreciation and amortization
|
895
|
|
|
1,136
|
|
||
Amortization of deferred financing costs
|
2,096
|
|
|
1,673
|
|
||
Equity-based compensation
|
3,548
|
|
|
3,578
|
|
||
Equity method investments
|
8,914
|
|
|
2,024
|
|
||
Non-cash gain on securitization
|
(14,302
|
)
|
|
(6,610
|
)
|
||
Gain on sale of receivables and investments
|
9,397
|
|
|
—
|
|
||
Changes in accounts payable and accrued expenses
|
(11,291
|
)
|
|
(9,285
|
)
|
||
Other
|
(12,660
|
)
|
|
(2,771
|
)
|
||
Net cash provided by (used in) operating activities
|
11,655
|
|
|
3,453
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Equity method investments
|
(140,877
|
)
|
|
(10,448
|
)
|
||
Equity method investment distributions received
|
50,143
|
|
|
20,530
|
|
||
Purchases of and investments in receivables
|
(29,671
|
)
|
|
(22,430
|
)
|
||
Principal collections from receivables
|
38,276
|
|
|
21,345
|
|
||
Proceeds from sales of receivables
|
8,035
|
|
|
26,919
|
|
||
Purchases of investments
|
(15,937
|
)
|
|
(6,809
|
)
|
||
Principal collections from investments
|
1,048
|
|
|
1,325
|
|
||
Proceeds from sales of investments and securitization assets
|
42,920
|
|
|
—
|
|
||
Funding of escrow accounts
|
(712
|
)
|
|
(11,869
|
)
|
||
Withdrawal from escrow accounts
|
1,273
|
|
|
7,945
|
|
||
Other
|
35
|
|
|
69
|
|
||
Net cash provided by (used in) investing activities
|
(45,467
|
)
|
|
26,577
|
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from credit facilities
|
126,000
|
|
|
26,500
|
|
||
Principal payments on credit facilities
|
(4,347
|
)
|
|
(1,925
|
)
|
||
Proceeds from issuance of non-recourse debt
|
15,938
|
|
|
13,923
|
|
||
Principal payments on non-recourse debt
|
(83,488
|
)
|
|
(35,180
|
)
|
||
Net proceeds of common stock issuances
|
114,760
|
|
|
46,388
|
|
||
Payments of dividends and distributions
|
(24,363
|
)
|
|
(20,518
|
)
|
||
Withholdings on employee share vesting
|
(15,968
|
)
|
|
(6,422
|
)
|
||
Other
|
(990
|
)
|
|
(6,008
|
)
|
||
Net cash provided by (used in) financing activities
|
127,542
|
|
|
16,758
|
|
||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
93,730
|
|
|
46,788
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
106,586
|
|
|
59,353
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
200,316
|
|
|
$
|
106,141
|
|
Interest paid
|
$
|
25,436
|
|
|
$
|
14,882
|
|
Non-cash changes in residual assets (investing activity)
|
(14,302
|
)
|
|
(6,636
|
)
|
1.
|
The Company
|
•
|
Equity investments in either preferred or common structures in unconsolidated entities;
|
•
|
Government and commercial receivables, such as loans for renewable energy and energy efficiency projects;
|
•
|
Real estate, such as land or other assets leased for use by sustainable infrastructure projects typically under long-term leases; and
|
•
|
Investments in debt securities of renewable energy or energy efficiency projects.
|
•
|
Level 2 — Observable prices that are based on inputs not quoted on active markets but corroborated by market data.
|
•
|
Level 3 — Unobservable inputs are used when little or no market data is available.
|
|
As of March 31, 2020
|
||||||||
|
Fair Value
|
|
Carrying
Value |
|
Level
|
||||
|
(in millions)
|
|
|
||||||
Assets
|
|
|
|
|
|
||||
Government receivables
|
$
|
283
|
|
|
$
|
259
|
|
|
Level 3
|
Commercial receivables
|
879
|
|
|
873
|
|
|
Level 3
|
||
Investments (1)
|
63
|
|
|
63
|
|
|
Level 3
|
||
Securitization residual assets (2)
|
118
|
|
|
118
|
|
|
Level 3
|
||
Liabilities
|
|
|
|
|
|
||||
Credit facilities (3)
|
$
|
153
|
|
|
$
|
153
|
|
|
Level 3
|
Non-recourse debt (3)
|
677
|
|
|
648
|
|
|
Level 3
|
||
Senior unsecured notes (3)
|
491
|
|
|
513
|
|
|
Level 2
|
||
Convertible notes (3)
|
145
|
|
|
151
|
|
|
Level 2
|
(1)
|
The amortized cost of our investments as of March 31, 2020, was $59 million.
|
(2)
|
Included in securitization assets on the consolidated balance sheet. This amount excludes securitization servicing assets, which are carried at amortized cost.
|
(3)
|
Fair value and carrying value exclude unamortized debt issuance costs.
|
|
As of December 31, 2019
|
||||||||
|
Fair Value
|
|
Carrying
Value |
|
Level
|
||||
|
(in millions)
|
|
|
||||||
Assets
|
|
|
|
|
|
||||
Government receivables
|
$
|
278
|
|
|
$
|
263
|
|
|
Level 3
|
Commercial receivables
|
906
|
|
|
896
|
|
|
Level 3
|
||
Investments (1)
|
75
|
|
|
75
|
|
|
Level 3
|
||
Securitization residual assets (2)
|
122
|
|
|
122
|
|
|
Level 3
|
||
Liabilities
|
|
|
|
|
|
||||
Credit facilities (3)
|
$
|
31
|
|
|
$
|
31
|
|
|
Level 3
|
Non-recourse debt (3)
|
739
|
|
|
716
|
|
|
Level 3
|
||
Senior unsecured notes
|
540
|
|
|
520
|
|
|
Level 2
|
||
Convertible notes (3)
|
185
|
|
|
152
|
|
|
Level 2
|
(2)
|
Included in securitization assets on the consolidated balance sheet. This amount excludes securitization servicing assets, which are carried at amortized cost.
|
|
For the three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Balance, beginning of period
|
$
|
75
|
|
|
$
|
170
|
|
Purchases of investments
|
16
|
|
|
7
|
|
||
Payments on investments
|
(1
|
)
|
|
(1
|
)
|
||
Sale of investments
|
(33
|
)
|
|
—
|
|
||
Realized gains on investments recorded in gain on sale of receivables and investments
|
3
|
|
|
—
|
|
||
Unrealized gains (losses) on investments recorded in OCI
|
3
|
|
|
2
|
|
||
Balance, end of period
|
$
|
63
|
|
|
$
|
178
|
|
|
Estimated Fair Value
|
|
Unrealized Losses (1)
|
||||||||||||
|
Securities with a loss shorter than 12 months
|
|
Securities with a loss longer than 12 months
|
|
Securities with a loss shorter than 12 months
|
|
Securities with a loss longer than 12 months
|
||||||||
|
(in millions)
|
||||||||||||||
March 31, 2020
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
December 31, 2019
|
25
|
|
|
8
|
|
|
0.4
|
|
|
0.7
|
|
|
For the three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Balance, beginning of period
|
$
|
122
|
|
|
$
|
71
|
|
Accretion of securitization residual assets
|
1
|
|
|
1
|
|
||
Additions to securitization residual assets
|
12
|
|
|
6
|
|
||
Collections of securitization residual assets
|
(1
|
)
|
|
(1
|
)
|
||
Sales of securitization residual assets
|
(21
|
)
|
|
—
|
|
||
Unrealized gains (losses) on securitization residual assets recorded in AOCI
|
5
|
|
|
—
|
|
||
Balance, end of period
|
$
|
118
|
|
|
$
|
77
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Cash deposits
|
$
|
173
|
|
|
$
|
6
|
|
Restricted cash deposits (included in other assets)
|
27
|
|
|
101
|
|
||
Total cash deposits
|
$
|
200
|
|
|
$
|
107
|
|
Amount of cash deposits in excess of amounts federally insured
|
$
|
199
|
|
|
$
|
105
|
|
4.
|
Non-Controlling Interest
|
5.
|
Securitization of Financial Assets
|
|
As of and for the three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Gains on securitizations
|
$
|
5
|
|
|
$
|
7
|
|
Cost of financial assets securitized
|
48
|
|
|
302
|
|
||
Proceeds from securitizations
|
53
|
|
|
309
|
|
||
Residual and servicing assets
|
122
|
|
|
78
|
|
||
Cash received from residual and servicing assets
|
1
|
|
|
1
|
|
6.
|
Our Portfolio
|
|
Portfolio Performance
|
|
|
|
|
||||||||||||||||||||||
|
1 (1)
|
|
2 (2)
|
|
3 (3)
|
|
Total
|
||||||||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||
Receivable vintage
|
Government
|
|
Commercial
|
|
Government
|
|
Commercial
|
|
Government
|
|
Commercial
|
|
|
||||||||||||||
2020
|
$
|
—
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61
|
|
2019
|
2
|
|
|
447
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
449
|
|
|||||||
2018
|
—
|
|
|
268
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
268
|
|
|||||||
2017
|
39
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|||||||
2016
|
70
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|||||||
2015
|
92
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93
|
|
|||||||
Prior to 2015
|
56
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
112
|
|
|||||||
Total receivables
|
259
|
|
|
891
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
1,158
|
|
|||||||
Less: Allowance for loss on receivables
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(26
|
)
|
|||||||
Net receivables (4)
|
259
|
|
|
873
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,132
|
|
|||||||
Investments
|
35
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||||
Real estate
|
—
|
|
|
361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
361
|
|
|||||||
Equity method investments (5)
|
—
|
|
|
559
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
582
|
|
|||||||
Total
|
$
|
294
|
|
|
$
|
1,821
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,138
|
|
Percent of Portfolio
|
14
|
%
|
|
85
|
%
|
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
100
|
%
|
|||||||
Average remaining balance (6)
|
$
|
7
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
12
|
|
(1)
|
This category includes our assets where based on our credit criteria and performance to date we believe that our risk of not receiving our invested capital remains low.
|
(2)
|
This category includes our assets where based on our credit criteria and performance to date we believe there is a moderate level of risk to not receiving some or all of our invested capital.
|
(3)
|
This category includes our assets where based on our credit criteria and performance to date, we believe there is substantial doubt regarding our ability to recover some or all of our invested capital. Included in this category are two commercial receivables with a combined total carrying value of approximately $8 million as of March 31, 2020 which we consider impaired and have held on non-accrual status since 2017. We recorded an allowance for the entire asset amounts as described in our 2019 Form 10-K. We expect to continue to pursue our legal claims with regards to these assets.
|
(4)
|
Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets
|
(5)
|
Some of the individual projects included in portfolios that make up our equity method investments have government off-takers. As they are part of large portfolios, they are not classified separately.
|
(6)
|
Average remaining balance is calculated gross of allowance for loss on receivables and excludes approximately 130 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $47 million.
|
|
March 31, 2020
|
|
January 1, 2020
|
||||||||||||
|
Carrying Value
|
|
Allowance
|
|
Carrying Value
|
|
Allowance
|
||||||||
|
(in millions)
|
||||||||||||||
Government (1)
|
$
|
259
|
|
|
$
|
—
|
|
|
$
|
270
|
|
|
$
|
—
|
|
Commercial (2)
|
899
|
|
|
26
|
|
|
892
|
|
|
25
|
|
||||
Total
|
$
|
1,158
|
|
|
$
|
26
|
|
|
$
|
1,162
|
|
|
$
|
25
|
|
(1)
|
As of March 31, 2020, our government receivables include $150 million of U.S. federal government transactions and $109 million of transactions where the ultimate obligors are state or local governments.
|
(2)
|
This category of assets includes $453 million of mezzanine loans made on a non-recourse basis to special purpose subsidiaries of residential solar companies which are secured by residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries. Approximately $367 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $25 million. This total also includes $88 million of lease agreements where we hold legal title to the underlying real estate which are treated under GAAP as receivables since they were deemed to be failed sale/leaseback transactions as described in Note 2.
|
|
Government
|
|
Commercial
|
||||
|
(in millions)
|
||||||
Beginning Balance - January 1, 2020
|
$
|
—
|
|
|
$
|
25
|
|
Provision for loss on receivables
|
—
|
|
|
1
|
|
||
Ending balance - March 31, 2020
|
$
|
—
|
|
|
$
|
26
|
|
|
Total
|
|
Less than 1
year |
|
1-5 years
|
|
5-10 years
|
|
More than 10
years |
||||||||||
|
(dollars in millions)
|
||||||||||||||||||
Maturities by period (excluding allowance)
|
$
|
1,158
|
|
|
$
|
5
|
|
|
$
|
168
|
|
|
$
|
308
|
|
|
$
|
677
|
|
Weighted average yield by period
|
8.0
|
%
|
|
7.6
|
%
|
|
7.0
|
%
|
|
8.9
|
%
|
|
7.6
|
%
|
|
Total
|
|
Less than 1
year |
|
1-5 years
|
|
5-10 years
|
|
More than 10
years |
||||||||||
|
(dollars in millions)
|
||||||||||||||||||
Maturities by period
|
$
|
63
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63
|
|
Weighted average yield by period
|
4.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.3
|
%
|
|
March 31,
2020 |
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Real estate
|
|
|
|
||||
Land
|
$
|
269
|
|
|
$
|
269
|
|
Lease intangibles
|
104
|
|
|
104
|
|
||
Accumulated amortization of lease intangibles
|
(12
|
)
|
|
(11
|
)
|
||
Real estate
|
$
|
361
|
|
|
$
|
362
|
|
|
Future Amortization Expense
|
|
Minimum Rental Income Payments
|
||||
|
(in millions)
|
||||||
From April 1, 2020 to December 31, 2020
|
$
|
2
|
|
|
$
|
17
|
|
2021
|
3
|
|
|
22
|
|
||
2022
|
3
|
|
|
22
|
|
||
2023
|
3
|
|
|
23
|
|
||
2024
|
3
|
|
|
24
|
|
||
2025
|
3
|
|
|
24
|
|
||
Thereafter
|
76
|
|
|
741
|
|
||
Total
|
$
|
93
|
|
|
$
|
873
|
|
Investment Date
|
|
Investee
|
|
Carrying Value
|
||
|
|
|
|
(in millions)
|
||
March 2020
|
|
University of Iowa Energy Collaborative Holdings LLC
|
|
$
|
115
|
|
Various
|
|
2007 Vento I, LLC
|
|
79
|
|
|
December 2015
|
|
Buckeye Wind Energy Class B Holdings, LLC
|
|
70
|
|
|
Various
|
|
Vivint Solar Asset 1 Class B, LLC
|
|
61
|
|
|
Various
|
|
Vivint Solar Asset 2 Class B, LLC
|
|
49
|
|
|
October 2016
|
|
Invenergy Gunsight Mountain Holdings, LLC
|
|
36
|
|
|
December 2018
|
|
3D Engie, LLC
|
|
30
|
|
|
Various
|
|
2019 K102 Investor LLC
|
|
29
|
|
|
Various
|
|
Other investees
|
|
113
|
|
|
|
|
Total equity method investments
|
|
$
|
582
|
|
7.
|
Credit facilities
|
|
Rep-Based
Facility |
|
Approval-Based Facility
|
||||
|
(dollars in millions)
|
||||||
Outstanding balance
|
$
|
11
|
|
|
$
|
142
|
|
Value of collateral pledged to credit facility
|
30
|
|
|
203
|
|
||
Weighted average short-term borrowing rate
|
2.4
|
%
|
|
2.9
|
%
|
|
Future minimum maturities
|
||
|
(in millions)
|
||
April 1, 2020 to December 31, 2020
|
$
|
—
|
|
2021
|
8
|
|
|
2022
|
8
|
|
|
2023
|
15
|
|
|
Total
|
$
|
31
|
|
8.
|
Long-term Debt
|
|
Outstanding Balance
as of |
|
|
|
|
|
|
|
Anticipated
Balance at Maturity |
|
Carrying Value of Assets Pledged as of
|
|
|
|||||||||||||||
|
March 31, 2020
|
|
December 31, 2019
|
|
Interest
Rate |
|
|
|
Maturity Date
|
|
|
March 31,
2020 |
|
December 31, 2019
|
|
Description
of Assets Pledged |
||||||||||||
|
(dollars in millions)
|
|
|
|||||||||||||||||||||||||
HASI Sustainable Yield Bond 2015-1A
|
$
|
84
|
|
|
$
|
85
|
|
|
4.28%
|
|
|
|
October 2034
|
|
$
|
—
|
|
|
$
|
134
|
|
|
$
|
126
|
|
|
Receivables, real estate and real estate intangibles
|
|
HASI Sustainable Yield Bond 2015-1B Note
|
13
|
|
|
13
|
|
|
5.41%
|
|
|
|
October 2034
|
|
—
|
|
|
134
|
|
|
126
|
|
|
Class B Bond of HASI Sustainable Yield Bond 2015-1
|
||||||
2017 Credit
Agreement (1)
|
—
|
|
|
61
|
|
|
4.12%
|
|
|
|
January 2023
|
|
—
|
|
|
—
|
|
|
120
|
|
|
Equity interests in Strong Upwind Holdings I, II, III, and IV LLC, and Northern Frontier, LLC
|
||||||
HASI SYB Loan Agreement 2015-2
|
25
|
|
|
28
|
|
|
5.51%
|
|
(2)
|
|
December 2023
|
|
—
|
|
|
70
|
|
|
73
|
|
|
Equity interest in Buckeye Wind Energy Class B Holdings LLC, related interest rate swap
|
||||||
HASI SYB Trust 2016-2
|
73
|
|
|
72
|
|
|
4.35%
|
|
|
|
April 2037
|
|
—
|
|
|
76
|
|
|
76
|
|
|
Receivables
|
||||||
HASI ECON 101 Trust
|
129
|
|
|
129
|
|
|
3.57%
|
|
|
|
May 2041
|
|
—
|
|
|
136
|
|
|
135
|
|
|
Receivables and investments
|
||||||
HASI SYB Trust 2017-1
|
154
|
|
|
155
|
|
|
3.86%
|
|
|
|
March 2042
|
|
—
|
|
|
206
|
|
|
206
|
|
|
Receivables, real estate and real estate intangibles
|
||||||
Lannie Mae Series 2019-01
|
96
|
|
|
96
|
|
|
3.68%
|
|
|
53,690
|
|
January 2047
|
|
|
|
106
|
|
|
106
|
|
|
Receivables, real estate and real estate intangibles
|
||||||
Other non-recourse
debt (3)
|
74
|
|
|
77
|
|
|
3.15% - 7.23%
|
|
|
|
2022 to 2032
|
|
18
|
|
|
74
|
|
|
77
|
|
|
Receivables
|
||||||
Debt issuance costs
|
(15
|
)
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Non-recourse debt (4)
|
$
|
633
|
|
|
$
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This loan was prepaid in January 2020.
|
(2)
|
Interest rate represents the current period’s LIBOR based rate plus the spread. We have hedged the LIBOR rate exposure for the HASI SYB Loan Agreement 2015-2 using interest rate swaps fixed at 2.55%.
|
(3)
|
Other non-recourse debt consists of various debt agreements used to finance certain of our receivables for their term. Debt service payment requirements, in a majority of cases, are equal to or less than the cash flows received from the underlying receivables.
|
(4)
|
The total collateral pledged against our non-recourse debt was $802 million and $921 million as of March 31, 2020 and December 31, 2019, respectively. In addition, $27 million and $23 million of our restricted cash balance was pledged as collateral to various non-recourse loans as of March 31, 2020 and December 31, 2019, respectively.
|
|
Future minimum maturities
|
||
|
(in millions)
|
||
April 1, 2020 to December 31, 2020
|
$
|
23
|
|
2021
|
25
|
|
|
2022
|
27
|
|
|
2023
|
54
|
|
|
2024
|
34
|
|
|
2025
|
31
|
|
|
Thereafter
|
454
|
|
|
Total minimum maturities
|
$
|
648
|
|
Deferred financing costs, net
|
(15
|
)
|
|
Total non-recourse debt
|
$
|
633
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Principal
|
$
|
500
|
|
|
$
|
500
|
|
Accrued interest
|
6
|
|
|
13
|
|
||
Unamortized premium
|
7
|
|
|
7
|
|
||
Less: Unamortized financing costs
|
(8
|
)
|
|
(8
|
)
|
||
Carrying value of 2024 Notes
|
$
|
505
|
|
|
$
|
512
|
|
|
March 31,
2020 |
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Principal
|
$
|
150
|
|
|
$
|
150
|
|
Accrued interest
|
1
|
|
|
2
|
|
||
Less: Unamortized financing costs
|
(3
|
)
|
|
(3
|
)
|
||
Carrying value of convertible notes
|
$
|
148
|
|
|
$
|
149
|
|
9.
|
Commitments and Contingencies
|
Announced Date
|
|
Record Date
|
|
Pay Date
|
|
Amount per
share |
||
2/21/2019
|
|
4/3/2019
|
|
|
4/11/2019
|
|
0.335
|
|
6/6/2019
|
|
7/5/2019
|
|
|
7/12/2019
|
|
0.335
|
|
9/12/2019
|
|
10/3/2019
|
|
|
10/10/2019
|
|
0.335
|
|
12/13/2019
|
|
12/26/2019
|
(1)
|
|
1/10/2020
|
|
0.335
|
|
2/20/2020
|
|
4/2/2020
|
|
|
4/10/2020
|
|
0.340
|
|
(1)
|
This dividend was treated as a distribution in 2020 for tax purposes.
|
Date
|
|
Common Stock Offerings
|
|
Shares Issued
|
|
Price Per Share
|
|
Net Proceeds (2)
|
|||||
|
|
|
|
(amounts in millions, except per share amounts)
|
|||||||||
1/3/2019
|
(1)
|
Public Offering
|
|
0.465
|
|
|
21.60
|
|
|
(3)
|
|
9
|
|
1/23/2019 to 3/21/2019
|
|
ATM
|
|
1.603
|
|
|
23.39
|
|
|
(4)
|
|
37
|
|
5/7/2019 to 6/7/2019
|
|
ATM
|
|
1.926
|
|
|
26.33
|
|
|
(4)
|
|
50
|
|
12/12/2019
|
|
ATM
|
|
1.405
|
|
|
30.00
|
|
|
(4)
|
|
42
|
|
2/27/2020 to 3/27/2020
|
|
ATM
|
|
4.500
|
|
|
25.84
|
|
|
(4)
|
|
115
|
|
(1)
|
These are shares issued in connection with the exercise of the underwriters’ option to purchase additional shares.
|
(2)
|
Net proceeds from the offerings are shown after deducting underwriting discounts, commissions and other offering costs.
|
(3)
|
Represents the price per share at which the underwriters in our public offerings purchased our shares.
|
(4)
|
Represents the average price per share at which investors in our ATM offerings purchased our shares.
|
|
Restricted Shares of Common Stock
|
|
Weighted Average Grant Date Fair Value
|
|
Value
|
|||||
|
|
|
(per share)
|
|
(in millions)
|
|||||
Ending Balance — December 31, 2018
|
1,386,756
|
|
|
$
|
19.00
|
|
|
$
|
26.4
|
|
Granted
|
150,493
|
|
|
23.99
|
|
|
3.6
|
|
||
Vested
|
(781,218
|
)
|
|
18.91
|
|
|
(14.8
|
)
|
||
Forfeited
|
(5,789
|
)
|
|
20.62
|
|
|
(0.1
|
)
|
||
Ending Balance — December 31, 2019
|
750,242
|
|
|
$
|
20.08
|
|
|
$
|
15.1
|
|
Granted
|
189,541
|
|
|
33.01
|
|
|
6.2
|
|
||
Vested
|
(480,213
|
)
|
|
18.57
|
|
|
(8.9
|
)
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — March 31, 2020
|
459,570
|
|
|
$
|
27.00
|
|
|
$
|
12.4
|
|
|
Restricted Stock Units (1)
|
|
Weighted Average Grant Date Fair Value
|
|
Value
|
|||||
|
|
|
(per share)
|
|
(in millions)
|
|||||
Ending Balance — December 31, 2018
|
393,148
|
|
|
$
|
19.55
|
|
|
$
|
7.7
|
|
Granted
|
46,586
|
|
|
25.10
|
|
|
1.2
|
|
||
Vested
|
(1,380
|
)
|
|
21.68
|
|
|
—
|
|
||
Forfeited
|
(2,776
|
)
|
|
22.23
|
|
|
(0.1
|
)
|
||
Ending Balance — December 31, 2019
|
435,578
|
|
|
$
|
20.12
|
|
|
$
|
8.8
|
|
Granted
|
23,342
|
|
|
27.18
|
|
|
0.6
|
|
||
Incremental performance shares granted
|
216,932
|
|
|
18.99
|
|
|
4.1
|
|
||
Vested
|
(433,864
|
)
|
|
18.99
|
|
|
(8.2
|
)
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — March 31, 2020
|
241,988
|
|
|
$
|
21.81
|
|
|
$
|
5.3
|
|
(1)
|
As discussed in Note 2, restricted stock units with market-based vesting conditions can vest between 0% and 200% subject to both the absolute performance of the Company's common stock as well as relative performance compared to a group of peers. The incremental performance shares granted relate to the vesting of an award at the 200% level.
|
|
LTIP Units (1)
|
|
Weighted Average Grant Date Fair Value
|
|
Value
|
|||||
|
|
|
(per share)
|
|
(in millions)
|
|||||
Ending Balance — December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Granted
|
209,330
|
|
|
25.84
|
|
|
5.4
|
|
||
Vested
|
(8,020
|
)
|
|
25.82
|
|
|
(0.2
|
)
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — December 31, 2019
|
201,310
|
|
|
$
|
25.84
|
|
|
$
|
5.2
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Vested
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — March 31, 2020
|
201,310
|
|
|
$
|
25.84
|
|
|
$
|
5.2
|
|
(1)
|
See Note 4 for information on the vesting of LTIP Units.
|
|
LTIP Units (1)
|
|
Weighted Average Grant Date Fair Value
|
|
Value
|
|||||
|
|
|
(per share)
|
|
(in millions)
|
|||||
Ending Balance — December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Granted
|
180,500
|
|
|
26.70
|
|
|
4.8
|
|
||
Vested
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — December 31, 2019
|
180,500
|
|
|
$
|
26.70
|
|
|
$
|
4.8
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Vested
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Ending Balance — March 31, 2020
|
180,500
|
|
|
$
|
26.70
|
|
|
$
|
4.8
|
|
(1)
|
See Note 4 for information on the vesting of LTIP Units. LTIP Units with market-based vesting conditions can vest between 0% and 200% subject to both the absolute performance of the Company's common stock as well as relative performance compared to a group of peers.
|
|
Three Months Ended March 31,
|
||||||
Numerator:
|
2020
|
|
2019
|
||||
|
(in millions, except share and per share data)
|
||||||
Net income (loss) attributable to controlling stockholders and participating securities
|
$
|
24.3
|
|
|
$
|
13.6
|
|
Less: Dividends on participating securities
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Undistributed earnings attributable to participating securities
|
—
|
|
|
—
|
|
||
Net income (loss) attributable to controlling stockholders — basic
|
24.0
|
|
|
13.3
|
|
||
Add: Interest expense associated with convertible debt
|
1.8
|
|
|
—
|
|
||
Net income (loss) attributable to controlling stockholders — dilutive
|
$
|
25.8
|
|
|
$
|
13.3
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted-average number of common shares — basic
|
67,172,104
|
|
|
61,748,906
|
|
||
Weighted-average number of common shares — diluted
|
73,140,922
|
|
|
62,365,271
|
|
||
Basic earnings per common share
|
$
|
0.36
|
|
|
$
|
0.22
|
|
Diluted earnings per common share
|
$
|
0.35
|
|
|
$
|
0.21
|
|
|
|
|
|
||||
Securities being allocated a portion of earnings:
|
|
|
|
||||
Weighted-average number of OP units
|
281,903
|
|
|
281,289
|
|
||
Participating securities:
|
|
|
|
||||
Unvested restricted common stock and unvested LTIP Units with time-based vesting conditions outstanding at period end
|
660,880
|
|
|
983,655
|
|
||
Potentially dilutive securities as of period end:
|
|
|
|
||||
Unvested restricted common stock and unvested LTIP Units with time-based vesting conditions
|
660,880
|
|
|
983,655
|
|
||
Restricted stock units
|
241,988
|
|
|
437,640
|
|
||
LTIP Units with market-based vesting conditions
|
180,500
|
|
|
—
|
|
||
Potential shares of common stock related to convertible notes
|
5,510,499
|
|
|
5,506,605
|
|
|
SunStrong Capital Holdings, LLC
|
|
Vivint Solar Asset 2 Class B, LLC
|
|
Other Investments (1)
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance Sheet
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2019
|
|||||||||||||||
Current assets
|
$
|
213
|
|
|
$
|
46
|
|
|
$
|
210
|
|
|
$
|
469
|
|
Total assets
|
1,330
|
|
|
183
|
|
|
2,604
|
|
|
4,117
|
|
||||
Current liabilities
|
143
|
|
|
1
|
|
|
162
|
|
|
306
|
|
||||
Total liabilities
|
1,008
|
|
|
81
|
|
|
764
|
|
|
1,853
|
|
||||
Members' equity
|
322
|
|
|
102
|
|
|
1,840
|
|
|
2,264
|
|
||||
As of December 31, 2018
|
|||||||||||||||
Current assets
|
103
|
|
|
—
|
|
|
97
|
|
|
200
|
|
||||
Total assets
|
972
|
|
|
—
|
|
|
2,164
|
|
|
3,136
|
|
||||
Current liabilities
|
85
|
|
|
—
|
|
|
52
|
|
|
137
|
|
||||
Total liabilities
|
745
|
|
|
—
|
|
|
314
|
|
|
1,059
|
|
||||
Members' equity
|
226
|
|
|
—
|
|
|
1,851
|
|
|
2,077
|
|
||||
Income Statement
|
|
|
|
|
|
|
|
||||||||
For the twelve months ended December 31, 2019
|
|||||||||||||||
Revenue
|
102
|
|
|
2
|
|
|
153
|
|
|
257
|
|
||||
Income from continuing operations
|
(16
|
)
|
|
(1
|
)
|
|
(47
|
)
|
|
(64
|
)
|
||||
Net income
|
(16
|
)
|
|
(1
|
)
|
|
(47
|
)
|
|
(64
|
)
|
||||
For the twelve months ended December 31, 2018
|
|||||||||||||||
Revenue
|
25
|
|
|
—
|
|
|
151
|
|
|
176
|
|
||||
Income from continuing operations
|
(18
|
)
|
|
—
|
|
|
(24
|
)
|
|
(42
|
)
|
||||
Net income
|
(18
|
)
|
|
—
|
|
|
(24
|
)
|
|
(42
|
)
|
•
|
Behind-The-Meter ("BTM"): distributed building or facility projects, which reduce energy usage or cost through the use of solar generation and energy storage or energy efficiency improvements including heating, ventilation and air conditioning systems (“HVAC”), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems;
|
•
|
Grid Connected ("GC"): projects that deploy cleaner energy sources, such as solar and wind to generate power where the off-taker or counterparty is part of the wholesale electric power grid; and
|
•
|
Sustainable Infrastructure: upgraded transmission and distribution systems, water and storm water infrastructure, and other projects that improve water or energy efficiency, increase resiliency, positively impact the environment or more efficiently use natural resources.
|
•
|
Equity investments in either preferred or common structures in unconsolidated entities;
|
•
|
Government and commercial receivables or securities, such as loans for renewable energy and energy efficiency projects; and
|
•
|
Real estate, such as land or other assets leased for use by sustainable infrastructure projects typically under long-term leases.
|
•
|
Equity investments in either preferred or common structures in unconsolidated entities;
|
•
|
Government and commercial receivables, such as loans for renewable energy and energy efficiency projects;
|
•
|
Real estate, such as land or other assets leased for use by sustainable infrastructure projects typically under long-term leases; and
|
•
|
Investments in debt securities of renewable energy or energy efficiency projects.
|
|
Balance
|
|
Maturity
|
||
|
(in millions)
|
|
|
||
Fixed-rate receivables, interest rates less than 5.00% per annum
|
$
|
239
|
|
|
2020 to 2045
|
Fixed-rate receivables, interest rates from 5.00% to 6.50% per annum
|
102
|
|
|
2020 to 2056
|
|
Fixed-rate receivables, interest rates greater than 6.50% per annum
|
817
|
|
|
2020 to 2069
|
|
Receivables
|
1,158
|
|
|
|
|
Allowance for loss on receivables
|
(26
|
)
|
|
|
|
Receivables, net of allowance
|
1,132
|
|
|
|
|
Fixed-rate investments, interest rates less than 5.00% per annum
|
43
|
|
|
2035 to 2038
|
|
Fixed-rate investments, interest rates from 5.00% to 6.50% per annum
|
20
|
|
|
2030 to 2051
|
|
Total receivables and investments
|
$
|
1,195
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(dollars in millions)
|
||||||
Interest income, receivables
|
$
|
23
|
|
|
$
|
16
|
|
Average monthly balance of receivables
|
1,150
|
|
|
904
|
|
||
Average interest rate of receivables
|
7.9
|
%
|
|
6.9
|
%
|
||
Interest income, investments
|
1
|
|
|
2
|
|
||
Average monthly balance of investments
|
73
|
|
|
172
|
|
||
Average interest rate of investments
|
4.4
|
%
|
|
4.4
|
%
|
||
Rental income
|
6
|
|
|
6
|
|
||
Average monthly balance of real estate
|
362
|
|
|
365
|
|
||
Average yield on real estate
|
7.2
|
%
|
|
7.1
|
%
|
||
Average monthly balance of receivables, investments, and real estate
|
1,585
|
|
|
1,441
|
|
||
Average yield from receivables, investments, and real estate
|
7.6
|
%
|
|
6.6
|
%
|
||
Interest expense (1)
|
16
|
|
|
13
|
|
||
Average monthly balance of debt (1)
|
1,314
|
|
|
1,137
|
|
||
Average interest rate of debt (1)
|
4.9
|
%
|
|
4.5
|
%
|
||
Average interest spread (1)
|
2.7
|
%
|
|
2.1
|
%
|
||
Net investment margin (1)
|
3.5
|
%
|
|
3.1
|
%
|
(1)
|
Excludes amounts related to the non-recourse debt used to finance the equity method investments because our earnings from these assets are not included in total revenue.
|
|
Payment due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-5
years
|
|
5-10
years
|
|
More than
10 years
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Receivables
|
$
|
1,132
|
|
|
$
|
93
|
|
|
$
|
188
|
|
|
$
|
272
|
|
|
$
|
579
|
|
Investments
|
63
|
|
|
5
|
|
|
4
|
|
|
12
|
|
|
42
|
|
•
|
the anticipated maturity dates of our receivables and investments and the weighted average yield for each range of maturities as of March 31, 2020,
|
•
|
the term of our leases and a schedule of our future minimum rental income under our land lease agreements as of March 31, 2020,
|
•
|
the Performance Ratings of our Portfolio, and
|
•
|
the receivables on non-accrual status.
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Interest income
|
$
|
24
|
|
|
$
|
18
|
|
|
$
|
6
|
|
|
33
|
%
|
Rental income
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
%
|
|||
Gain on sale of receivables and investments
|
5
|
|
|
7
|
|
|
(2
|
)
|
|
(29
|
)%
|
|||
Fee income
|
6
|
|
|
2
|
|
|
4
|
|
|
200
|
%
|
|||
Total revenue
|
41
|
|
|
33
|
|
|
8
|
|
|
24
|
%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
18
|
|
|
15
|
|
|
3
|
|
|
20
|
%
|
|||
Provision for loss on receivables
|
1
|
|
|
—
|
|
|
1
|
|
|
NM
|
|
|||
Compensation and benefits
|
9
|
|
|
8
|
|
|
1
|
|
|
13
|
%
|
|||
General and administrative
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
%
|
|||
Total expenses
|
31
|
|
|
26
|
|
|
5
|
|
|
19
|
%
|
|||
Income before equity method investments
|
10
|
|
|
7
|
|
|
3
|
|
|
43
|
%
|
|||
Income (loss) from equity method investments
|
16
|
|
|
5
|
|
|
11
|
|
|
220
|
%
|
|||
Income (loss) before income taxes
|
26
|
|
|
12
|
|
|
14
|
|
|
117
|
%
|
|||
Income tax (expense) benefit
|
(2
|
)
|
|
2
|
|
|
(4
|
)
|
|
(200
|
)%
|
|||
Net income (loss)
|
$
|
24
|
|
|
$
|
14
|
|
|
$
|
10
|
|
|
71
|
%
|
•
|
Net income increased by $10 million primarily due an increase in equity method investments of $11 million. An increase of $8 million in total revenue was offset by $5 million increase in total expenses and a $4 million increase in income tax (expense) benefit. These results do not reflect the non-GAAP core earnings adjustment applied to our equity method investments, which is discussed in the non-GAAP financial measures section below.
|
•
|
Total revenue increased by $8 million due to a $6 million increase in interest income resulting from higher yielding assets in the portfolio and a higher average balance. There was a $2 million increase in gain on sale and fee income primarily from additional advisory fees.
|
•
|
Interest expense increased by $3 million primarily due to higher average outstanding borrowings and higher cost of debt. We recorded a $1 million provision for loss on receivables in the current quarter primarily due to the impact of the COVID-19 pandemic on the expected cash flows of certain of our investments.
|
•
|
Compensation and benefit expense increased by $1 million as a result of an increase in our employee headcount.
|
•
|
Income from equity method investments increased by $11 million, primarily due to the realization of tax attributes by our co-investors which increased our HLBV allocation of earnings.
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Income under GAAP
|
$
|
17
|
|
|
$
|
5
|
|
|
|
|
|
||||
Core earnings
|
$
|
16
|
|
|
$
|
10
|
|
Return of capital
|
60
|
|
|
17
|
|
||
Cash collected
|
76
|
|
|
27
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2020
|
|
2019
|
||||||||||||
|
$
|
|
Per
Share
|
|
$
|
|
Per
Share
|
||||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||||
Net income (loss) attributable to controlling stockholders (1)
|
$
|
24,308
|
|
|
$
|
0.35
|
|
|
$
|
13,647
|
|
|
$
|
0.21
|
|
Core earnings adjustments:
|
|
|
|
|
|
|
|
||||||||
Reverse GAAP (income) loss from equity method investments
|
(16,588
|
)
|
|
|
|
(4,506
|
)
|
|
|
||||||
Add back core equity method investments earnings
|
16,085
|
|
|
|
|
9,604
|
|
|
|
||||||
Non-cash equity-based compensation charges
|
3,548
|
|
|
|
|
3,578
|
|
|
|
||||||
Amortization of intangibles
|
822
|
|
|
|
|
816
|
|
|
|
||||||
Non-cash provision (benefit) for income taxes
|
1,923
|
|
|
|
|
(2,266
|
)
|
|
|
||||||
Current year earnings attributable to non-controlling interest
|
102
|
|
|
|
|
61
|
|
|
|
||||||
Core earnings (Including Topic 326 provision) (2)
|
$
|
30,200
|
|
|
$
|
0.43
|
|
|
$
|
20,934
|
|
|
$
|
0.33
|
|
Add back provision for loss on receivables under Topic 326 (3)
|
648
|
|
|
|
|
—
|
|
|
|
||||||
Core earnings (pre-Topic 326 provision) (2)
|
$
|
30,848
|
|
|
$
|
0.44
|
|
|
$
|
20,934
|
|
|
$
|
0.33
|
|
(1)
|
This is the GAAP diluted earnings per share and is the most comparable GAAP measure to our core earnings per share.
|
(2)
|
Core earnings per share are based on 69,597,038 shares and for the three months ended March 31, 2020 and 63,706,102 shares for the three months ended March 31, 2019, which represents the weighted average number of fully-diluted shares outstanding including our restricted stock awards, restricted stock units, long-term incentive plan units, and the non-controlling interest in our Operating Partnership. We include any potential common stock issuance in this calculation related to our convertible notes using the treasury stock method and any potential common stock issuances related to share based compensation units in the amount we believe is reasonably certain to vest.
|
(3)
|
As discussed above, to provide a comparable metric to prior year metrics we are adding back the provision for loss on receivables recognized under Topic 326 in the year of adoption.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Interest income
|
$
|
23,889
|
|
|
$
|
17,654
|
|
Rental income
|
6,470
|
|
|
6,476
|
|
||
GAAP investment revenue
|
30,359
|
|
|
24,130
|
|
||
Interest expense
|
18,135
|
|
|
15,430
|
|
||
GAAP net investment income
|
12,224
|
|
|
8,700
|
|
||
Core equity method earnings adjustment
|
16,085
|
|
|
9,604
|
|
||
Amortization of real estate intangibles
|
772
|
|
|
766
|
|
||
Core net investment income
|
$
|
29,081
|
|
|
$
|
19,070
|
|
|
As of
|
||||||
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(dollars in millions)
|
||||||
Equity method investments
|
$
|
582
|
|
|
$
|
499
|
|
Government receivables
|
259
|
|
|
263
|
|
||
Commercial receivables, net of allowance
|
873
|
|
|
896
|
|
||
Real estate
|
361
|
|
|
362
|
|
||
Investments
|
63
|
|
|
75
|
|
||
Assets held in securitization trusts
|
4,077
|
|
|
4,101
|
|
||
Managed Assets
|
$
|
6,215
|
|
|
$
|
6,196
|
|
Losses on receivables as a percentage of assets under management (1)
|
0.0
|
%
|
|
0.0
|
%
|
(1)
|
Losses include either receivables written off or specifically identified as where we have substantial doubt on our ability to recover our investment
|
|
March 31, 2020
|
|
% of Total
|
|
December 31, 2019
|
|
% of Total
|
||||||
|
(dollars in millions)
|
|
|
|
(dollars in millions)
|
|
|
||||||
Floating-rate borrowings
|
$
|
153
|
|
|
11
|
%
|
|
$
|
33
|
|
|
2
|
%
|
Fixed-rate debt
|
1,286
|
|
|
89
|
%
|
|
1,360
|
|
|
98
|
%
|
||
Total debt (1)
|
$
|
1,439
|
|
|
100
|
%
|
|
$
|
1,393
|
|
|
100
|
%
|
Equity
|
$
|
1,037
|
|
|
|
|
$
|
940
|
|
|
|
||
Leverage
|
1.4 to 1
|
|
|
|
|
1.5 to 1
|
|
|
|
(1)
|
Floating-rate borrowings include borrowings under our floating-rate credit facilities, and approximately $2 million of non-recourse debt with floating rate exposure as of December 31, 2019. Fixed-rate debt also includes the present notional value of non-recourse debt that is hedged using interest rate swaps. Debt excludes securitizations that are not consolidated on our balance sheet.
|
•
|
interrupted service and availability of personnel, including our executive officers and other employees that are part of our management team and an inability to recruit, attract and retain skilled personnel-to the extent our management or personnel are impacted by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work, our business and operating results may be negatively impacted;
|
•
|
difficulty accessing debt and equity capital on attractive terms, or at all, and severe disruption or instability in the global financial markets or deteriorations in credit and financing conditions may affect our ability or the ability of our sustainable infrastructure projects and our ultimate off-taker or project users to make regular payments of principal, interest or project revenue (e.g., due to unemployment, underemployment, or reduced income or revenues) or to access savings or capital necessary to fund business operations or replace or renew maturing liabilities on a timely basis, and may adversely affect the valuation of financial assets and liabilities, any of which could result in the inability to make payments under our borrowing facilities or notes, affect our or our projects’ ability to meet liquidity, net worth, and leverage covenants under borrowing facilities or have a material adverse effect on the value of investments we hold or on our business, financial condition, results of operations and cash flows;
|
•
|
temporary or lasting changes involving the status, practices and procedures of our or our projects or our projects’ sponsors’ operations, including with respect to new originations of investments - to the extent we elect or are required to limit or be more selective in making new originations of investments, we may strain our relationships with business partners, customers and counterparties, breach actual or perceived obligations to them, and be subject to litigation and claims from such partners, customers and counterparties, any of which could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows; moreover, some of our ultimate off-taker or project users’ operations, or our operations, the sustainable infrastructure markets or projects and our ultimate off-taker or project users have not been able to and others may not be able to function effectively because of, among other factors, disruptions in the normal operation of sustainable infrastructure markets or projects, any inability to access short-term or long-term financing, a disruption in the market for securitization transactions, or the inability to access these markets or execute securitization transactions due to negative impacts to our, our projects or our ultimate off-taker or project users financial condition or operating capabilities resulting from the COVID-19 pandemic; any or all of these impacts could result in reduced net investment income and cashflow, as well as an impairment of our investments which reductions and impairments could be material;
|
•
|
to the extent ultimate off-taker or other project users that have been negatively impacted by the COVID-19 pandemic do not timely remit payments of principal, interest or other payments (whether due to an inability to make such payments, an unwillingness to make such payments, or a waiver of the requirement to make such payments on a timely basis or at all, including under the terms of any applicable forbearance, modification, or maturity extension agreement or program (which forbearance, waiver, or maturity extension may be available as a result of a government-sponsored or -imposed program or under any such agreement or program we or our project sponsors may otherwise offer)), then the value of our investments will likely be impaired, potentially materially; moreover, to the extent any such pandemic impacts local, regional or national economic conditions, the value of a sustainable infrastructure project is likely to decline, which would likely negatively impact the value of our investments, potentially materially;
|
•
|
some of our sustainable infrastructure projects are being constructed and others are subject to ongoing maintenance; planned construction or maintenance of some of these projects have not been able to proceed on a timely basis or at all and others may be similarly affected as a result of being negatively impacted by the COVID-19 pandemic, including due to operating disruptions or government mandated moratoriums on construction, development or redevelopment or the inability to source the necessary construction personnel, equipment or parts; all of the foregoing factors would likely negatively impact the value of our investments, potentially materially;
|
•
|
the inability of our project sponsors to operate in affected areas, including the bankruptcy of one or more project sponsors or their suppliers, or inability of our internal resources to effectively manage our investments in certain of their activities or perform certain administration functions;
|
•
|
the inability of other third-party vendors we rely on to conduct our business to operate effectively and continue to support our business and operations, including vendors that provide IT services, legal and accounting services, or other operational support services;
|
•
|
the inability of our or our investments’ counterparties to make or satisfy the conditions, covenants or representations and warranties in agreements they have entered into with us or our counterparties; and
|
•
|
our ability to ensure operational continuity in the event our business continuity plan is not effective or ineffectually implemented or deployed during a disruption.
|
Period
|
|
Total number of shares purchased
|
|
Average price
per share
|
|
Total number of shares purchased as part of publicly announced plans or programs
|
|
Maximum
number of
shares that
may yet be
purchased
under the
plans or programs
|
||
February 1 - February 29, 2020
|
|
165,090
|
|
|
38.13
|
|
|
N/A
|
|
N/A
|
March 1 - March 31, 2020
|
|
267,653
|
|
|
36.14
|
|
|
N/A
|
|
N/A
|
Exhibit
number
|
|
Exhibit description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.SCH*
|
|
Inline XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB*
|
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101. PRE*
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
104
|
|
Cover Page Interactive Data File Included as Exhibit 101 (embedded within the Inline XBRL document)
|
|
|
|
|
|
|
|
|
|
|
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
(Registrant)
|
|
|
|
||
Date: May 11, 2020
|
|
|
|
/s/ Jeffrey W. Eckel
|
|
|
|
|
Jeffrey W. Eckel
|
|
|
|
|
Chairman, Chief Executive Officer and President
|
|
|
|
||
Date: May 11, 2020
|
|
|
|
/s/ Charles W. Melko
|
|
|
|
|
Charles W. Melko
|
|
|
|
|
Chief Accounting Officer and Senior Vice President
|
1.
|
Term. The Company hereby agrees to employ the Employee, and the Employee hereby agrees to work for the Company, on the terms and conditions hereinafter set forth. The term of this Agreement commenced as of March 1, 2019 and terminates on a date specified by the Company or the Employee in a notice given, at will, with or without Cause (as defined below), by either party to the other not less than 30 days prior to such date, unless such term is sooner terminated as herein provided.
|
2.
|
Duties. The Employee agrees to be employed by the Company in such capacities as the Company may from time to time direct, it being the intent of the parties that the Employee will serve in the capacity of Executive Vice President, Chief Financial Officer and Treasurer, and as such, the Employee shall faithfully perform for the Company the duties of such office and shall have such responsibilities as are customary for an Executive Vice President and Chief Financial Officer employed by a public company of similar size and nature. The Employee shall report directly to the Chief Executive Officer of the Company. During the term of this Agreement, the Employee will devote his full time and exclusive attention during normal business hours to, and use his best efforts to advance, the business and welfare of the Company, its affiliates, subsidiaries and successors in interest. During the term of his employment with the Company, the Employee shall not engage in any other employment activities for any third party for any direct or indirect remuneration without the prior written consent of the Company. It is acknowledged hereunder that Employee currently serves as a Director of Congressional Bank for which he receives compensation, and such service has been approved by the Company.
|
3.
|
Compensation. For all services provided by the Employee, the Company shall compensate Employee in such amounts and upon such terms as the parties may agree from time to time. The initial Base Salary and Annual Bonus amounts set forth in Exhibit A attached hereto are made a part of this Agreement. The Compensation Committee of the Board (the “Compensation Committee”) shall review the Employee’s Base Salary and Annual Bonus in good faith on an annual basis and may provide for increases or decreases thereto, and shall set the criteria for earning such Annual Bonus, as it may in its sole discretion deem appropriate.
|
4.
|
Other Benefits. During the term of employment with the Company, the Employee will be eligible to participate in fringe benefit programs that the Company generally makes available to its employees, including medical and dental insurance and life insurance; provided that nothing herein shall be construed as restricting the Company’s right to unilaterally modify or terminate any of such programs at any time with or without notice. Without limiting the generality of this Section 4, the Employee shall be entitled to paid vacation of 20 business days per year (to be taken at reasonable times in accordance with the Company’s policies).
|
5.
|
Equity Awards. The Employee will be eligible to receive an award of limited partner profit interests (“LTIP Units”) under the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan (the "Equity Incentive Plan") and an appropriate LTIP Unit award agreement when grants of LTIP Units are otherwise made by the Company to similarly situated executives of the Company. In the event that the Company terminates the Employee’s employment with the Company other than for Cause within 60 days before or 90 days after a Change in Control (as defined in the Equity Incentive Plan), all of the Employee’s (a) LTIP Units, (b) shares of restricted stock and (c) other stock-based compensation that were granted under the Equity Incentive Plan or any successor plan (together "Equity Interests"), in each case, that vest on the basis of time and that are outstanding at the time of such termination, shall become fully vested and nonforfeitable. The effect, if any, of termination of employment before or after a Change in Control on an Equity Interest that vests based on the achievement of performance targets will be set forth in the applicable award agreement under which such Equity Interest was granted.
|
6.
|
Death or Disability. If the Employee dies or if there is a good faith determination by the Board that the Employee has become physically or mentally incapable of performing the Employee’s duties under this Agreement and such disability has disabled the Employee for a cumulative period of 180 days within any 12-month period (a "Disability"), the Employee’s employment with the Company will automatically terminate and all obligations of the Company hereunder will terminate as of the end of the month in which such event occurs. Upon a termination by reason of death or Disability pursuant to Section 6, (a) all of the Employee's Equity Interests that are outstanding at the time of such termination shall become fully vested and nonforfeitable and (b) the Company shall pay to the Employee (or his estate, as applicable) at the time that the Annual Bonus would otherwise be paid in accordance with Section 3 hereof (i) in the event of a termination by reason of the Employee's death, a pro rata (based on the number of days employed up to the effective date of termination in the applicable fiscal year) target Annual Bonus for the fiscal year in which the Employee's termination occurs, or (ii) in the event of a termination by reason of the Employee's Disability, the target Annual Bonus for the fiscal year in which the Employee’s termination occurs, in either case of (i) or (ii), calculated based on actual results for such fiscal year.
|
7.
|
Certain Terminations of Employment.
|
(a)
|
In the event that (i) the Company terminates the Employee’s employment with the Company for Cause, (ii) the Employee terminates the Employee’s employment with the Company for any reason or (iii) the Employee’s employment with the Company is terminated by reason of death or Disability pursuant to Section 6, the Company shall pay to the Employee (or the Employee’s estate or beneficiaries), in a lump sum payment within 30 days following the effective date the Employee’s termination of employment, an amount equal to the Base Salary, Annual Bonus and other benefits earned and accrued under this Agreement but not yet paid prior to the effective date of termination (collectively, the “Accrued Benefits”).
|
(b)
|
In the event that the Company terminates the Employee’s employment with the Company for reasons other than for Cause or the Employee terminates the Employee’s employment for Good Reason, the Company shall pay to the Employee severance compensation in a lump sum payment within 30 days following the effective date the Employee’s termination of employment in an amount equal to (i) the Accrued Benefits, (ii) the then-current monthly Base Salary payable under paragraph 3 hereof, as of the date of termination, for the eighteen (18) months following the date of termination, and (iii) 150% of the Employee’s average Annual Bonus payable under paragraph 3 hereof actually received in respect of the three fiscal years (or such fewer number of fiscal years with respect to which the Employee received an Annual Bonus) immediately prior to the year of termination.
|
(c)
|
In the event that the Company terminates the Employee’s employment with the Company for reasons other than for Cause or the Employee terminates the Employee's employment for Good Reason, the Company shall provide, for the period beginning on the date of the termination of the Employee's employment with the Company and ending on the earlier of (x) eighteen (18) months following the Employee's termination employment and (y) the date on which the Employee's coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, terminates as provided by law (and the Employee shall notify the Company of any subsequent employment through which he is provided medical coverage), Company-paid medical coverage at the same rates as in effect prior to the date of termination of Employee's employment (so long as applicable law and regulations permit such Company payment without imposition of a tax or penalty on the Company or other plan participants or otherwise adversely affecting the Company, the applicable plan or other participants in the plan), or, at the Company's option, the cash amount necessary to obtain equivalent coverage.
|
(d)
|
For purposes of this Agreement, “Cause” shall mean, the Employee’s: (i) commission of, and indictment for or formal admission to, a felony involving moral turpitude, deceit, dishonesty or fraud (but excluding traffic violations); (ii) willful and material misconduct or gross misconduct in connection with the performance of the Employee’s duties, including, without limitation, embezzlement or the misappropriation of funds or property of the Company; (iii) failure to adhere to lawful directions of the Chief Executive Officer, to adhere to the Company’s policies and practices, or as required in Section 2 hereof, to devote substantially all of the Employee’s business time and efforts to the Company, which failure continues for a period of 30 business days after written demand for corrective action is delivered by the Company; or (iv) material breach of the terms and provisions of this Agreement and the failure to cure such breach within 10 days following written notice from the Company specifying such breach.
|
(e)
|
For purposes of this Agreement, “Good Reason” shall mean, following a Change in Control (as defined in the Equity Incentive Plan), any of the following, unless consented to by the Executive: (i) any change in job title or diminution in the Employee’s roles and responsibilities from those set forth in this Agreement (including, without limitation, the assignment of duties materially inconsistent with Employee’s position) that cause a reduction in the Employee’s Annual Salary or Annual Bonus potential; (ii) a reduction in the Employee’s Annual Salary or Annual Bonus potential; (iii) a relocation of the Company’s headquarters outside a 30 mile radius of Annapolis, MD or moving of the Employee’s office or place of performance from the Company’s headquarters; or (iv) a breach by the Company of this Agreement or any other agreement between the Employee and the Company.
|
(f)
|
Notwithstanding any other provision of this Agreement, the Company shall not be required to provide the payments and benefits provided for under Sections 7(b) and (c) unless the Employee executes and delivers to the Company a waiver and release substantially in the form attached hereto as Exhibit B and such waiver and release becomes effective and irrevocable within 21 days following the date of termination.
|
(g)
|
In the event that any payment or benefit made or provided to the Employee under this Agreement (the “Payment”), either alone or together with any other “parachute payments” as defined in Section 280G(b)(2) of the Internal Revenue Code (the "Code") (such other parachute payments, “Section 280G Payments”), would constitute a parachute payment, the Payment shall be reduced to the largest amount as will result in no portion of the Payment or Section 280G Payments being subject to the excise tax imposed by Section 4999 of the Code (the “Reduced Payment”), provided however, no reduction to the Payment shall occur if the Payment plus Section 280G Payments, less any excise tax which would be imposed on such Payment and Section 280G Payments pursuant to Section 4999 of the Code, would be greater than the Reduced Payment plus Section 280G Payments. If a reduction of Section 280G Payments is necessary, the payments shall be reduced in the following order: (i) cash payments that are treated in full as a parachute payment; (ii) equity-based payments and accelerations of payments that are treated in full as a parachute payment; (iii) cash payments that are treated in part as a parachute payment; (iv) equity-based payments and accelerations of payments that are treated in part as a parachute payment; and (v) other non-cash forms of benefits. Within any such category of payments and benefits (that is, (i), (ii), (iii), (iv) or (v)), a reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are “deferred compensation.” To the extent any such payment is to be made over time (e.g., in installments), the payments shall be reduced in reverse chronological order.
|
8.
|
Company Policies. The Employee acknowledges and agrees that he will carefully review each of the policies set forth in the Company Policy Handbook provided to the Employee and will acknowledge his review and acceptance of such policies and the obligations required of the Employee by signing the applicable signature blocks therein and returning the executed version to the Office of the General Counsel. Employee likewise acknowledges and agrees to abide by any revision or addition to the Company policies as may be issued by the Company from time to time throughout the term of employment.
|
9.
|
Restrictive Covenants.
|
(a)
|
Covenants. The Employee acknowledges that (i) the principal business of the Company (which expressly includes for purposes of this Section 9 (and any related enforcement provisions hereof), its successors and assigns) is to provide debt and equity financing for sustainable infrastructure projects that increase energy efficiency, provide cleaner energy sources, positively impact the environment and make more efficient use of natural resources (such businesses, and any and all other businesses in which, at the time of the Employee's termination, the Company is actively and regularly engaged or actively pursuing, herein being collectively referred to as the "Business"); (ii) the Company is one of the limited number of persons who have developed such a business; (iii) the Company's Business is national in scope; (iv) the Employee's work for the Company has given and will continue to give him access to the confidential affairs and proprietary information of the Company; (v) the covenants and agreements of the Employee contained in this Section 9 are essential to the business and goodwill of the Company; and (vi) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 9. Accordingly, the Employee covenants and agrees that:
|
(i)
|
By and in consideration of the salary and benefits to be provided by the Company hereunder, including the severance arrangements set forth herein, and further in consideration of the Employee's exposure to the proprietary information of the Company, the Employee covenants and agrees that, during the period commencing on the date hereof and ending eighteen (18) months following the date upon which the Employee shall cease to be an employee of the Company and its affiliates (the "Restricted Period"), the Employee shall not in the Restricted Territory (as defined below), directly or indirectly, whether as an owner, partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity, (A) engage in the Business (other than for the Company or its affiliates) or otherwise compete with the Company or its subsidiaries in the Business or (B) render to a person, corporation, partnership or other entity engaged in the Business the same services that the Employee renders to the Company; provided, however, that, notwithstanding the foregoing, (1) the Employee may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (x) such securities are listed on any national securities exchange, (y) the Employee is not a controlling person of, or a member of a group which controls, such entity, and (z) the Employee does not, directly or indirectly, own 5% or more of any class of securities of such entity; and (2) the Employee may continue to serve on any board of directors on which the Employee was serving as of the date of the Employee's termination of employment; and (3) the Employee may be employed by or provide services for a company (a "Conglomerate") with multiple lines of businesses, including a line of business competitive with the Company, so long as the following conditions are satisfied: (w) the Conglomerate derives less than ten percent (10%) of its total annual revenue from the line of business that is competitive with the Company (the "Competitive Division"), (x) the Employee is employed by or provides services to a line of business of Conglomerate that is not competitive with the Company; and (y) the Employee does not perform services for the Competitive Division; and (z) the Employee (A) provides the Company with advance notice of such employment or service and (B) informs the Conglomerate in writing of its obligations under this Section 9.
|
(ii)
|
For purposes of this Agreement, the "Restricted Territory" shall mean any (A) state in the United States and (B) foreign country or jurisdiction, in the case of clause (A) or (B), in which the Company (x) is actively conducting the Business during the Term or (y) has initiated a plan adopted by the Board to conduct the Business in the two years following the Term.
|
(iii)
|
During and after the Term, the Employee shall keep secret and retain in strictest confidence, and shall not use for the Employee’s benefit or the benefit of others, except in connection with the business and affairs of the Company and its affiliates, all non-public confidential matters relating to the Company's Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Employee heretofore or hereafter directly or indirectly from the Company or any of its affiliates (the "Confidential Company Information"), and shall not disclose such Confidential Company Information to anyone outside of the Company except in the course of the Employee’s duties or with the CEO's express written consent. Confidential Company Information does not include information which is at the time of receipt or thereafter becomes publicly known through no wrongful act of the Employee or is received from a third party not under an obligation to keep such information confidential and without breach of this Agreement or which is independently developed or obtained by the Employee on the Employee's own time without reliance upon any confidential information of the Company or use of any Company resources. Notwithstanding anything in this agreement to the contrary, the Employee may disclose Confidential Company Information where the Employee is required to do so by law, regulation, court order, subpoena, summons or other valid legal process; provided, that the Employee, so long as legally permitted to do so, first (A) promptly notifies the Company, (B) uses commercially reasonable efforts to consult with the Company with respect to and in advance of the disclosure thereof, and (C) reasonably cooperates with the Company to narrow the scope of the disclosure required to be made, in each case, solely at the Company’s expense.
|
(iv)
|
During the Restricted Period, the Employee shall not, without the Company's prior written consent, directly or indirectly, solicit or encourage to leave the employment or other service of the Company or any of its subsidiaries, any person or entity who is or was during the 6-month period preceding the Employee’s termination of employment, an employee, agent or independent contractor of the Company or any of its subsidiaries. During the Restricted Period, the Employee shall not, whether for the Employee’s own account or for the account of any other person, firm, corporation or other business organization, solicit for a competing business or intentionally interfere with the Company's or any of its subsidiaries’ relationship with, or endeavor to entice away from the Company for a competing business, any person who is or was during the 6-month period preceding the Employee's termination of employment, a customer, client, agent, or independent contractor of the Company or any of its subsidiaries. For purposes hereof, "customer" and "client," as such terms relate to government customers, mean the program office to which the Company is or was providing any goods or services as of the date hereof or during the one-year period prior to the date hereof.
|
(v)
|
All memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof), whether visually perceptible, machine-readable or otherwise, made, produced or compiled by the Employee or made available to the Employee containing Confidential Company Information (A) shall at all times be the property of the Company (and, as applicable, any affiliates) and shall be delivered to the Company at any time upon its request, and (B) upon the Employee's termination of employment, shall be promptly returned to the Company. This section shall not apply to materials that the Employee possessed prior to the Employee’s business relationship with the Company, to the Employee's personal effects and documents, and to materials prepared by the Employee for the purposes of seeking legal or other professional advice.
|
(vi)
|
At no time during the Employee's employment by the Company or at any time thereafter shall the Employee or any representative of the Company publish any statement or make any statement under circumstances reasonably likely to become public that is critical of the other party, or in any way otherwise be materially injurious to the Business or reputation of the other party, unless otherwise required by applicable law or regulation or by judicial order.
|
(b)
|
Rights and Remedies upon Breach.
|
(i)
|
The parties hereto acknowledge and agree that any breach of any of the provisions of Section 9 or any subparts thereof (individually or collectively, the "Restrictive Covenants") may result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if either party breaches, or threatens to commit a breach of, any of the provisions of Section 9 or any subpart thereof, the other party and its affiliates, in addition to, and not in lieu of, any other rights and remedies available to the other party and its affiliates under law or in equity (including, without limitation, the recovery of damages), shall have the right and remedy to seek to have the Restrictive Covenants or other obligations herein specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to seek an entry of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, whether or not then continuing, of such covenants.
|
(ii)
|
The Employee agrees that the provisions of Section 9 of this Agreement and each subsection thereof are reasonably necessary for the protection of the Company’s legitimate business interests and if enforced, will not prevent the Employee from obtaining gainful employment should the Employee’s employment with the Company end. The Employee agrees that in any action seeking specific performance or other equitable relief, the Employee will not assert or contend that any of the provisions of this Section 9 are unreasonable or otherwise unenforceable as drafted. The existence of any claim or cause of action by the Employee, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants.
|
(c)
|
The provisions of this Paragraph 9 will survive any termination of this Agreement.
|
10.
|
Notices. All notices and other communications required or permitted under this Agreement shall be in writing, served personally on, or mailed by registered or certified United States mail to, in the case of notices to the Employee, to the Employee’s residence set forth in the employment records of the Company and in the case of notices to the Company, to the Company’s principal executive office to the attention of the General Counsel.
|
11.
|
Section 409A.
|
(a)
|
To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code, and this Agreement shall be construed and applied in a manner consistent with this intent. If the consideration and revocation period set forth in Section 7(f) hereof spans two taxable years, payments will be made in the second taxable year.
|
(b)
|
Any payment or benefit due upon a termination of employment that represents a "deferral of compensation" within the meaning of Section 409A shall commence to be paid or provided to Employee thirty-one (31) days following a "separation from service" as defined in Treas. Reg. Section 1.409A-1(h), unless earlier commencement is otherwise permitted by Section 409A, provided that Employee executes within 30 days following "separation from service" a general release of claims in a form and substance satisfactory to the Company and its legal counsel. Each payment made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. Amounts payable under this Agreement shall be deemed not to be a "deferral of compensation" subject to Section 409A to the extent provided in the exceptions in Treasury Regulation Section 1.409A-1(b)(4) ("short-term deferrals") and (b)(9) ("separation pay plans," including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Sections 1.409A-1 through A-6.
|
(c)
|
Notwithstanding anything in this Agreement to the contrary, the following special rule shall apply, if and to the extent required by Section 409A, in the event that (i) Employee is deemed to be a "specified employee" within the meaning of Section 409A(a)(2)(B)(i), (ii) amounts or benefits under this Agreement or any other program, plan or arrangement of the Company or a controlled group affiliate thereof are due or payable on account of "separation from service" within the meaning of Treasury Regulations Section 1.409A-1(h), and (iii) Employee is employed by a public company or a controlled group affiliate thereof: no payments hereunder that are "deferred compensation" subject to Section 409A shall be made to Employee prior to the date that is six (6) months after the date of separation from service or, if earlier, the date of death; following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest permissible payment date.
|
(d)
|
Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Employee's "separation from service" occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Employee's "separation from service" occurs. To the extent any indemnification payment, expense reimbursement or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such indemnification payment or expenses eligible for reimbursement or the provision of any in-kind benefit in one calendar year shall not affect the indemnification payment or provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any lifetime or other aggregate limitation applicable to medical expenses), and in no event shall any indemnification payment or expenses be reimbursed after the last day of the calendar year following the calendar year in which Employee incurred such indemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
|
12.
|
Entire Agreement. This Agreement contains the entire understanding between the parties and supersedes any prior written or oral agreements between them. There are no representations, warranties, covenants, agreements or understandings oral or written, between the parties relating to the employment of the Employee which are not fully expressed herein. This Agreement shall not be modified or waived except by written instrument and signed by the parties.
|
13.
|
Severability. The provisions of this Agreement shall be deemed severable, and if any part of any provision is held by any court of competent jurisdiction to be illegal, void, invalid or unenforceable in whole or in part as to any party, such provision may be changed, consistent with the intent of the parties hereto, to the extent reasonably necessary to make such provision, as so changed, legal, valid, binding and enforceable. If such provision cannot be changed consistent with the intent of the parties hereto to make it legal, valid, biding and enforceable, then such provision shall be stricken from this Agreement, and the remaining provisions of this Agreement shall not be affected or impaired but shall remain in full force and effect.
|
14.
|
Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties and their respective executors, administrators, personal representatives, heirs, legatees, devises, assigns and successors in interest.
|
15.
|
Governing Law. This Agreement has been entered into in, and shall be construed and enforced in accordance with, the laws of the State of Maryland, without giving effect to the principles of conflicts of law thereof.
|
16.
|
Counterparts; Effectiveness. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement will become effective when the Company receives a counterpart hereof executed by the Employee and the Company.
|
1.
|
General Releases and Waivers of Claims.
|
(a)
|
Executive's Release of Company. In consideration of the payments and benefits provided to the Executive under Section 7 of the Employment Agreement and after consultation with counsel, the Executive (or the Executive’s estate, as applicable) hereby irrevocably and unconditionally releases and forever discharges the Company and its past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, any of its or their successors and assigns, assets, employee benefit plans or funds, and any of its or their respective past, present and/or future directors, officers, fiduciaries, agents, trustees, administrators, managers, supervisors, stockholders, employees and assigns, whether acting on behalf of the Company or in their individual capacities (collectively, "Company Parties") from any and all claims, actions, causes of action, rights, judgments, obligations, damages, demands, accountings or liabilities of whatever kind or character (collectively, "Claims"), including, without limitation, any Claims under any federal, state, local or foreign law, that the Executive (or the Executive’s estate, as applicable) may have, or in the future may possess, arising out of the Executive's employment relationship with and service as an employee, officer or director of the Company, and the termination of such relationship or service; provided, however, that the Executive (or the Executive’s estate, as applicable) does not release, discharge or waive (A) any rights to payments and benefits provided under the Employment Agreement, (B) any right the Executive (or the Executive’s estate, as applicable) may have to enforce this Agreement, the Award Agreements or the Employment Agreement, (C) the Executive’s rights under the Indemnification Agreement and rights to indemnification and advancement of expenses in accordance with the Company’s certificate of incorporation, bylaws or other corporate governance document, or any applicable insurance policy, (D) any claims for benefits under any employee benefit or pension plan of the Company Parties subject to the terms and conditions of such plan and applicable law including, without limitation, any such claims under the Employee Retirement Income Security Act of 1974, or (E) any right or claim that the Executive (or the Executive’s estate, as applicable) may have to obtain contributions as permitted by applicable law in an action in which both the Executive on the one hand or any Company Party on the other hand are held jointly liable.
|
(b)
|
Executive's Specific Release of ADEA Claims. In further consideration of the payments and benefits provided to the Executive under Section 7 of the Employment Agreement, the Executive hereby unconditionally release and forever discharge the Company Parties from any and all Claims that the Executive may have as of the date the Executive signs this Agreement arising under the Federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder ("ADEA"). By signing this Agreement, the Executive hereby acknowledges and confirms the following: (i) the Executive was advised by the Company in connection with the Executive’s termination to consult with an attorney of the Executive’s choice prior to signing this Agreement and to have such attorney explain to the Executive the terms of this Agreement, including, without limitation, the terms relating to the Executive’s release of claims arising under ADEA, and the Executive has been given the opportunity to do so; (ii) the Executive was given a period of not fewer than 21 days to consider the terms of this Agreement and to consult with an attorney of the Executive’s choosing with respect thereto; and (iii) the Executive knowingly and voluntarily accepts the terms of this Agreement. The Executive also understands that the Executive has seven days following the date on which the Executive signs this Agreement within which to revoke the release contained in this paragraph, by providing the Company a written notice of the Executive’s revocation of the release and waiver contained in this paragraph.
|
(c)
|
No Assignment. The Executive (or the Executive’s estate, as applicable) represents and warrants that the Executive (or the Executive’s estate, as applicable) has not assigned any of the Claims being released under this Agreement.
|
2.
|
Waiver of Relief. The Executive (or the Executive’s estate, as applicable) acknowledges and agrees that by virtue of the foregoing, the Executive (or the Executive’s estate, as applicable) has waived any relief available to him/it (including without limitation, monetary damages and equitable relief, and reinstatement) under any of the Claims waived in paragraph 1. Therefore the Executive (or the Executive’s estate, as applicable) agrees that he/it will not accept any award or settlement from any source or proceeding (including but not limited to any proceeding brought by any other person or by any government agency) with respect to any Claim or right waived in this Agreement. Nothing in this Agreement shall be construed to prevent the Executive (or the Executive’s estate, as applicable) from cooperating with or participating in an investigation conducted by, any governmental agency, to the extent required or permitted by law.
|
3.
|
Severability Clause. In the event any provision or part of this Agreement is found to be invalid or unenforceable, only that particular provision or part so found, and not the entire Agreement, will be inoperative.
|
4.
|
Non-admission. Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of the Company or any other Company Party or the Executive.
|
5.
|
Governing Law. All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of Maryland applicable to contracts executed in and to be performed in that State.
|
6.
|
Notices. All notices or communications hereunder shall be made in accordance with Section 10 of the Employment Agreement.
|
750284-4-10533-v0.11
|
750284-4-10533-v0.11
|
750284-4-10533-v0.11
|
1.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
2.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
3.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
4.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 11, 2020
|
By:
|
/s/ Jeffrey W. Eckel
|
|
Name:
Title:
|
Jeffrey W. Eckel
Chairman, Chief Executive Officer and President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 11, 2020
|
By:
|
/s/ Jeffrey A. Lipson
|
|
|
Name:
Title
|
Jeffrey A. Lipson
Chief Financial Officer and Executive Vice President
|
1.
|
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 11, 2020
|
By:
|
/s/ Jeffrey W. Eckel
|
|
Name:
Title:
|
Jeffrey W. Eckel
Chairman, Chief Executive Officer and President
|
1.
|
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 11, 2020
|
By:
|
/s/ Jeffrey A. Lipson
|
|
Name:
Title:
|
Jeffrey A. Lipson
Chief Financial Officer and Executive Vice President
|