Hannon Armstrong Sustainable Infrastructure Capital, Inc.
("Hannon Armstrong," "we," "our" or the "Company") (NYSE: HASI), a
capital provider focused on sustainable infrastructure markets that
address climate change, today reported quarterly results.
Highlights
- Delivered $0.21 GAAP EPS on a fully
diluted basis in the first quarter of 2019, compared to $(0.03) in
the first quarter of 2018
- Delivered $0.33 Core EPS in the first
quarter of 2019, compared to $0.27 in the first quarter of
2018
- Closed $319 million of transactions in
the quarter, compared to $108 million in the same period in
2018
- Total revenue of $33 million, an
increase of 18%, compared to the first quarter of 2018
- Pipeline remains over $2.5 billion
- Fixed-rate debt level of 72% as of
March 31, 2019
- Debt to equity ratio of 1.5 to 1 as of
March 31, 2019
- Confirming previously stated 2018 to
2020 annual Core EPS growth (using 2017 as the baseline) to be
between 2% to 6%
- An estimated 96,000 metric tons of
annual carbon emissions will be offset annually by first quarter
transactions equating to a CarbonCount® score of 0.30 metric tons
per $1,000 invested
- Published our 2018 ESG Report in April
2019
“We are off to good start with first quarter behind-the-meter
investments and a strong, diversified pipeline,” said Jeffrey
Eckel, Hannon Armstrong President & CEO. “We are invested
across approximately ten target markets, continue to diversify our
portfolio with respect to technology, obligor, and geography and
have improved our risk adjusted return from the more than 190
investments since our IPO. The market opportunities for investing
in climate change solutions remains robust across our target
markets,” continued Eckel.
A summary of our results is shown in the tables below:
For the Three Months EndedMarch
31, 2019
For the Three Months EndedMarch
31, 2018
$ in thousands
Per Share(Diluted)
$ in thousands
Per Share(Diluted)
GAAP Net Income $ 13,647 $ 0.21 $ (1,223 ) $ (0.03 ) Core Earnings
(1) 20,934 0.33 14,277 0.27
(1) The difference between GAAP net income and core earnings is
primarily the result of adjusting for a return on capital from our
equity investments in renewable energy projects and adding back
non-cash equity-based compensation. A reconciliation of our GAAP
net income to core earnings is included in this press release.
First Quarter 2019 Financial Results
Revenue grew by approximately $5 million, or 18%, for the three
months ended March 31, 2019, as compared to the same period in
2018. Increases in the quarter were primarily driven by higher
interest and rental income of approximately $4 million due to
higher yielding assets in the Portfolio and higher gain on sale and
fee income of approximately $1 million due to increased
securitization activity. Interest expense was $15 million, a
decrease of approximately $3 million for the three months ended
March 31, 2019, as compared to the same period in 2018 due to
continued optimization of our debt costs with lower leverage and
fixed-rate debt.
Other expenses (compensation and benefits and general and
administrative expenses) increased by $2 million for GAAP for the
three months ended March 31, 2019, as compared to the same
period in 2018 primarily due to an increase in equity-based
compensation resulting from the timing of vesting and higher
Company performance. Income before equity method investments
increased to $7 million in the quarter or by approximately $6
million from the same quarter last year due in large part to the
higher interest and rental income and the lower interest expense
over these two periods. For the three months ended March 31,
2019, we recognized $5 million in income using the hypothetical
liquidation at book value method, or HLBV, for our equity
investments in renewable energy projects, as compared to a $2
million loss in part due to the allocation of investment tax
credits, which increases our allocation of earnings. We also
recognized a $2 million income tax benefit in the current quarter
related to allocations of tax losses from one of our renewable
energy projects. As a result, we recognized GAAP net income of $14
million for the quarter as compared to a $1 million loss in the
same quarter last year.
Core earnings increased by approximately $7 million for the
quarter primarily due to the higher interest from our Portfolio and
the lower interest expense compared to the same quarter last year.
A reconciliation of our GAAP net income to core earnings is
included in this press release.
The calculation of our fixed-rate debt and leverage ratios as of
March 31, 2019 and 2018 are shown in the chart below:
March 31, 2019 % of Total
March 31, 2018 % of Total ($ in millions) ($ in
millions) Floating-rate borrowings (1) $ 345 28 % $ 120 8 %
Fixed-rate debt (2) 900 72 % 1,311 92 %
Total
$ 1,245 100 % $ 1,431 100 %
Leverage
(3) 1.5 to 1 2.3 to 1
(1) Floating-rate borrowings include borrowings under our
floating-rate credit facilities and approximately $62 million and
$50 million of non-recourse debt with floating rate exposure as of
March 31, 2019 and March 31, 2018, respectively.
Approximately $32 million of the March 31, 2019 floating rate
exposure is hedged beginning in the third quarter of 2019.
(2) 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.
(3) Leverage, as measured by our debt-to-equity ratio. This
calculation excludes securitizations that are not consolidated on
our balance sheet (where the collateral is typically financing
receivables with U.S. government obligors).
“As the company continues to mature, we remain focused on
maintaining and enhancing our diversified funding strategy,” said
Chief Financial Officer Jeffrey Lipson. “Optimization of our
capital structure will continue to facilitate growth in the
business as we execute on new opportunities in our target
markets.”
Portfolio
Our Portfolio totaled approximately $1.9 billion as of
March 31, 2019, and included approximately $0.9
billion of behind-the-meter assets, approximately $0.9 billion
of grid-connected assets and approximately $0.1 billion of other
sustainable infrastructure investments. The following is an
analysis of our Portfolio as of March 31, 2019:
Investment Grade Government
(1) Commercial (2)
CommercialNon-InvestmentGrade (3)
Subtotal,Debt and Real Estate
EquityMethod Investments Total
($ in millions) Equity investments in renewable energy projects $ —
$ — $ — $ — $ 437 $ 437 Receivables and investments
569 241 286 1,096 — 1,096 Real estate (4) — 364 —
364 22 386 Total $ 569 $ 605 $
286 $ 1,460 $ 459 $ 1,919 Average remaining
balance (5) $ 11 $ 6 $ 14 $ 9 $ 16 $ 10
(1) Transactions where the ultimate obligor is the U.S. federal
government or state or local governments where the obligors are
rated investment grade (either by an independent rating agency or
based upon our internal credit analysis). This amount includes $382
million of U.S. federal government transactions and $187 million of
transactions where the ultimate obligors are state or local
governments. Transactions may have guaranties of energy savings
from third party service providers, which typically are entities
rated investment grade by an independent rating agency.
(2) Transactions where the projects or the ultimate obligors are
commercial entities that have been rated investment grade (either
by an independent rating agency or based on our internal credit
analysis). Of this total, $9 million of the transactions have been
rated investment grade by an independent rating agency.
(3) Transactions where the projects or the ultimate obligors are
commercial entities that either have ratings below investment grade
(either by an independent rating agency or using our internal
credit analysis) or where the nature of the subordination in the
asset causes it to be considered noninvestment grade. This category
of assets includes $260 million of mezzanine loans made on a
non-recourse basis to special purpose subsidiaries of residential
solar companies where the nature of the subordination causes it to
be considered non-investment grade. These loans are secured by
residential solar assets and we rely on certain limited
indemnities, warranties, and other obligations of the residential
solar companies or their other subsidiaries. This amount also
includes $18 million of transactions where the projects or the
ultimate obligors are commercial entities that have ratings below
investment grade using our internal credit analysis, and $8 million
of loans on non-accrual status.
(4) Includes the real estate and the lease intangible assets
(including those held through equity method investments) from which
we receive scheduled lease payments, typically under long-term
triple net lease agreements.
(5) Excludes approximately 170 transactions each with
outstanding balances that are less than $1 million and that in the
aggregate total $61 million.
Environmental, Social and Governance (ESG) Update
In April 2019, we published our 2018 ESG Report, which showcases
how environmental, social and corporate governance considerations
are embedded in our business strategy, goals, objectives and
corporate culture. Our 2018 ESG Report is further marked by the
articulation of our efforts to implement the Task Force on
Climate-Related Financial Disclosures (TCFD) recommendations. The
recommendations of TCFD focused on four thematic areas that
represent core operational elements, including: (1) governance, (2)
strategy, (3) risk management and (4) metrics and targets. We
believe that our core principles are in substantial alignment with
the goals and objectives contemplated in these TCFD themes and we
address each of them in our management and decision-making
processes as well as in our public disclosures, including in our
most recent Annual Report on Form 10-K, where Hannon Armstrong is
among the first set of public companies to report in accordance
with TCFD. A full version of the ESG Report is available
at www.hannonarmstrong.com/ESG
Guidance
The Company is confirming its previously issued three-year
guidance from 2018 to 2020 with respect to core earnings per share
growth, on a compounded annual basis over the three years, in the
2% to 6% range, equivalent to $1.37 at the midpoint in 2019 and
$1.43 at the midpoint in 2020. This guidance reflects the Company’s
estimates of (i) yield on its existing Portfolio;
(ii) yield on incremental Portfolio investments, inclusive of
the Company’s existing pipeline; (iii) the volume and profitability
of securitization transactions; (iv) amount, timing, and costs
of debt and equity capital to fund new investments;
(v) changes in costs and expenses reflective of the Company’s
forecasted operations, and (vi) the general interest rate and
market environment. All guidance is based on current expectations
of future economic conditions, the regulatory environment, the
dynamics of the markets in which we operate and the judgment of the
Company’s management team. The Company has not provided GAAP
guidance as discussed in the Forward-Looking Statements section of
this press release.
Conference Call and Webcast Information
Hannon Armstrong will host an investor conference call today,
Wednesday, May 1, 2019, at 5:00 pm eastern time. The conference
call can be accessed live over the phone by dialing 1-800-289-0438,
or for international callers, 1-323-794-2423. A replay will be
available two hours after the call and can be accessed by dialing
1-844-512-2921, or for international callers, 1-412-317-6671. The
passcode for the live call and the replay is 8404300. The replay
will be available until May 8, 2019.
A webcast of the conference call will also be available through
the Investor Relations section of our website, at www.hannonarmstrong.com. A copy of this press
release is also available on our website.
About Hannon Armstrong
Hannon Armstrong (NYSE: HASI) focuses on making investments in
climate change solutions by providing capital to the leading
companies in the energy efficiency, renewable energy and other
sustainable infrastructure markets. Our goal is to generate
attractive returns for our stockholders by investing in a
diversified portfolio of investments that generate long-term,
recurring and predictable cash flows from proven commercial
technologies. Based in Annapolis, Maryland, Hannon Armstrong is
proud to be the first U.S. public company solely dedicated to
investments that reduce carbon emissions or increase resilience to
climate change. For more information, please
visit www.hannonarmstrong.com. Follow Hannon Armstrong
on LinkedIn and
Twitter @HannonArmstrong.
Forward-Looking Statements:
Some of the information contained in this press release is
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended that are subject to
risks and uncertainties. For these statements, we claim the
protections of the safe harbor for forward-looking statements
contained in such Sections. These forward-looking statements
include information about possible or assumed future results of our
business, financial condition, liquidity, results of operations,
plans and objectives. When we use the words "believe," "expect,"
"anticipate," "estimate," "plan," "continue," "intend," "should,"
"may" or similar expressions, we intend to identify forward-looking
statements.
Forward-looking statements are subject to significant risks and
uncertainties. Investors are cautioned against placing undue
reliance on such statements. Actual results may differ materially
from those set forth in the forward-looking statements. Factors
that could cause actual results to differ materially from those
described in the forward-looking statements include those discussed
under the caption “Risk Factors” included in our most recent Annual
Report on Form 10-K for the year ended December 31, 2018 as amended
by our Amendment No. 1 to our Annual Report on Form 10-K for
the year ended December 31, 2018 (collectively, our “2018 Form
10-K”) that was filed with the U.S. Securities and Exchange
Commission (the “SEC”), as well as in other periodic reports that
we file with the SEC. Statements regarding the following subjects,
among others, may be forward-looking:
- our expected returns and performance of
our investments;
- the state of government legislation,
regulation and policies that support or enhance the economic
feasibility of sustainable infrastructure projects, including
energy efficiency and renewable energy projects and the general
market demands for such projects;
- market trends in our industry, energy
markets, commodity prices, interest rates, the debt and lending
markets or the general economy;
- our business and investment
strategy;
- availability of opportunities to invest
in projects that reduce carbon emissions or increase resilience to
climate change including energy efficiency and renewable energy
projects and our ability to complete potential new opportunities in
our pipeline;
- our relationships with originators,
investors, market intermediaries and professional advisers;
- competition from other providers of
capital;
- our or any other companies’ projected
operating results;
- 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;
- the state of the U.S. economy generally
or in specific geographic regions, states or municipalities,
economic trends and economic recoveries;
- our ability to obtain and maintain
financing arrangements on favorable terms, including
securitizations;
- general volatility of the securities
markets in which we participate;
- changes in the value of our assets, our
portfolio of assets and our investment and underwriting
process;
- the impact of weather conditions,
natural disasters, accidents or equipment failures or other events
that disrupt the operation of our investments or negatively impact
on the value our assets;
- 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;
- changes in interest rates, including
the flattening of the yield curve, and the market value of our
assets and target assets;
- changes in commodity prices, including
continued low natural gas prices;
- 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 and similar matters;
- our ability to maintain our
qualification as a real estate investment trust for U.S. federal
income tax purposes (a “REIT”);
- our ability to maintain our exemption
from registration under the Investment Company Act of 1940, as
amended (the “1940 Act”);
- availability of and our ability to
attract and retain qualified personnel;
- 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.
Forward-looking statements are based on beliefs, assumptions and
expectations as of the date of this press release. Any forward-
looking statement speaks only as of the date on which it is made.
New risks and uncertainties arise over time, and it is not possible
for us to predict those events or how they may affect us. Except as
required by law, we are not obligated to, and do not intend to,
update or revise any forward-looking statements after the date of
this earnings release, whether as a result of new information,
future events or otherwise.
The Company is confirming its previously issued three-year
guidance with respect to core earnings per share growth, on a
compounded annual basis over the next three years, in the 2% to 6%
range. The confirmed guidance reflects the Company’s estimates of
(i) yield on its existing Portfolio; (ii) yield on
incremental Portfolio investments, inclusive of the Company’s
existing pipeline; (iii) amount, timing, and costs of debt and
equity capital to fund new investments; (iv) changes in costs
and expenses reflective of the Company’s forecasted operations and
(v) the general interest rate and market environment. All
guidance is based on current expectations of future economic
conditions, the regulatory environment, the dynamics of the markets
in which it operates and the judgment of the Company’s management
team.
The Company has not provided GAAP guidance as forecasting a
comparable GAAP financial measure, such as net income, would
require that the Company apply the HLBV method to these
investments. In order to forecast under the HLBV method, the
Company would be required to make various assumptions related to
expected changes in the net asset value of the various entities and
how such changes would be allocated under HLBV. GAAP HLBV earnings
over a period of time are very sensitive to these assumptions
especially in regard to when a partnership transactions flips and
thus the liquidation scenarios change materially. The Company
believes that these assumptions would require unreasonable efforts
to complete and if completed, the wide variation in projected GAAP
earnings based upon a range of scenarios would not be meaningful to
investors. Accordingly, the Company has not included a GAAP
reconciliation table related to any Core Earnings guidance.
Estimated carbon savings are calculated using the estimated
kilowatt hours (“kWh”), gallons of fuel oil, million British
thermal units (“MMBtus”) of natural gas and gallons of water saved
as appropriate, for each project. The energy savings are converted
into an estimate of metric tons of CO2 equivalent emissions based
upon the project’s location and the corresponding emissions factor
data from the U.S. Government and International Energy Agency.
Portfolios of projects are represented on an aggregate basis.
The risks included here are not exhaustive. Our most recent
quarterly report on Form 10‐Q, 2018 Form 10‐K, or other regulatory
filings may include additional factors that could adversely affect
our business and financial performance. Moreover, we operate in a
very competitive and rapidly changing environment. New risk factors
emerge from time to time and it is not possible for management to
predict all such risk factors, nor can it assess the impact of all
such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements. Given these risks and uncertainties, investors should
not place undue reliance on forward-looking statements as a
prediction of actual results.
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
For the Three Months Ended March 31, 2019
2018 Revenue Interest income,
receivables $ 15,520 $ 12,849 Interest income, investments 1,884
1,541 Rental income 6,476 5,941 Gain on sale of receivables and
investments 6,839 6,256 Fee income 2,174 1,321
Total revenue 32,893 27,908 Expenses
Interest expense 15,430 18,711 Compensation and benefits 7,439
5,321 General and administrative 3,092 2,801
Total
expenses 25,961 26,833 Income
before equity method investments 6,932 1,075
Income (loss) from equity method
investments
4,506 (2,285 )
Income (loss) before income taxes
11,438 (1,210 ) Income tax (expense) benefit
2,270 (18 )
Net income (loss) $ 13,708
$ (1,228 ) Net income (loss)
attributable to non-controlling interest holders 61 (5 )
Net income (loss) attributable to controlling stockholders
$ 13,647 $ (1,223 ) Basic
earnings per common share $ 0.22 $ (0.03 ) Diluted earnings
per common share $ 0.21 $ (0.03 ) Weighted average common
shares outstanding—basic 61,748,906 51,710,910 Weighted average
common shares outstanding—diluted 62,365,271 51,710,910
HANNON ARMSTRONG SUSTAINABLE
INFRASTRUCTURE CAPITAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
March 31,2019
December 31,2018
Assets Equity method investments $ 458,916 $ 471,044
Government receivables 463,715 497,464 Commercial receivables
453,828 447,196 Receivables held-for-sale — — Real estate 364,582
365,370 Investments 177,636 169,793 Cash and cash equivalents
62,091 21,418 Other assets 206,102 182,628
Total
Assets $ 2,186,870 $
2,154,913 Liabilities and Stockholders’ Equity
Liabilities: Accounts payable, accrued expenses and other $ 33,266
$ 36,509 Deferred funding obligations 66,350 72,100 Credit facility
283,381 258,592 Non-recourse debt (secured by assets of $1,041
million and $1,105 million, respectively) 814,662 834,738
Convertible notes 147,150 148,451 Total Liabilities
1,344,809 1,350,390 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, 62,875,638 and 60,510,086
shares issued and outstanding, respectively 629 605 Additional paid
in capital 1,009,346 965,384 Accumulated deficit (170,953 )
(163,205 ) Accumulated other comprehensive income (loss) (375 )
(1,684 ) Non-controlling interest 3,414 3,423 Total
Stockholders’ Equity 842,061 804,523
Total
Liabilities and Stockholders’ Equity $ 2,186,870
$ 2,154,913
EXPLANATORY NOTES
Non-GAAP Financial Measures
Core Earnings
We calculate core earnings as GAAP net income (loss) excluding
non-cash equity compensation expense, non-cash provision for credit
losses, amortization of intangibles, any one-time acquisition
related costs or non-cash tax charges and the earnings attributable
to our non-controlling interest of our Operating Partnership. We
also make an adjustment to our equity method investments in the
renewable energy projects as described below. In the future, core
earnings may also exclude one-time events pursuant to changes in
GAAP and certain other non-cash charges as approved by a majority
of our independent directors.
Certain of our equity method investments in renewable energy
projects are structured using typical partnership “flip” structures
where we, along with any other institutional investors, if any,
receive a pre-negotiated preferred return consisting of priority
distributions from the project cash flows, in many cases, along
with tax attributes. Once this preferred return is achieved, the
partnership “flips” and the renewable energy company, which
operates the project, receives more of the cash flows through its
equity interests while we, and any other institutional investors,
retain an ongoing residual interest. We typically negotiate the
purchase prices of our equity investments, which have a finite
expected life, based on our assessment of the expected cash flows
we will receive from these projects discounted back to the net
present value, based on a target investment rate, with the expected
cash flows to be received in the future reflecting both a return on
the capital (at the investment rate) and a return of the capital we
have committed to the project. We use a similar approach in
the underwriting of our receivables.
Under GAAP, we account for these equity method investments
utilizing the HLBV method. Under this method, we recognize income
or loss based on the change in the amount each partner would
receive, typically based on the negotiated profit and loss
allocation, if the assets were liquidated at book value, after
adjusting for any distributions or contributions made during such
quarter. The HLBV allocations of income or loss may be impacted by
the receipt of tax attributes, as tax equity investors are
allocated losses in proportion to the tax benefits received, while
the sponsors of the project are allocated gains of a similar
amount. In addition, the agreed upon allocations of the project’s
cash flows may differ materially from the profit and loss
allocation used for the HLBV calculations.
The cash distributions for our equity method investments are
segregated into a return on and return of capital on our cash flow
statement based on the cumulative income (loss) that has been
allocated using the HLBV method. However, as a result of the
application of the HLBV method, including the impact of tax
allocations, the high levels of depreciation and other non-cash
expenses that are common to renewable energy projects and the
differences between the agreed upon profit and loss and the cash
flow allocations, the distributions and thus the economic returns
(i.e. return on capital) achieved from the investment are often
significantly different from the income or loss that is allocated
to us under the HLBV method. Thus, in calculating core earnings, we
further adjust GAAP net income (loss) to take into account our
calculation of the return on capital (based upon the investment
rate) from our renewable energy equity method investments, as
adjusted to reflect the performance of the project and the cash
distributed. We believe this core equity method investment
adjustment to our GAAP net income (loss) in calculating our core
earnings measure is an important supplement to the HLBV income
allocations determined under GAAP for an investor to understand the
economic performance of these investments.
For the three months ended March 31, 2019, we recognized
income of $5 million under GAAP for our equity investments in
renewable energy projects. We reversed the GAAP income and recorded
$10 million, as discussed above, to reflect our return on capital
from these investments for the three months ended March 31,
2019. This compares to the collected cash distributions from these
equity method investments of approximately $27 million, for the
three months ended March 31, 2019, with the difference between
core earnings and cash collected representing a return of
capital.
We believe that core earnings provides an additional measure of
our core operating performance by eliminating the impact of certain
non-cash expenses and facilitating a comparison of our financial
results to those of other comparable companies with fewer or no
non-cash charges and comparison of our own operating results from
period to period. Our management uses core earnings in this way. We
believe that our investors also use core earnings, or a comparable
supplemental performance measure, to evaluate and compare our
performance to that of our peers, and as such, we believe that the
disclosure of core earnings is useful to our investors.
However, core earnings does not represent cash generated from
operating activities in accordance with GAAP and should not be
considered as an alternative to net income (loss) (determined in
accordance with GAAP), or an indication of our cash flow from
operating activities (determined in accordance with GAAP), or a
measure of our liquidity, or an indication of funds available to
fund our cash needs, including our ability to make cash
distributions. In addition, our methodology for calculating core
earnings may differ from the methodologies employed by other
companies to calculate the same or similar supplemental performance
measures, and accordingly, our reported core earnings may not be
comparable to similar metrics reported by other companies.
Reconciliation of our GAAP Net Income to Core Earnings
We have calculated our core earnings and provided a
reconciliation of our GAAP net income to core earnings for the
three months ended March 31, 2019 and 2018 in the tables below:
For the Three MonthsEnded March
31, 2019
For the Three MonthsEnded March
31, 2018
($ in thousands, except per share data) Per Share Per
Share Net income attributable to controlling stockholders (1) $
13,647 $ 0.21 $ (1,223 ) $ (0.03 ) Core earnings adjustments:
Reverse GAAP income from equity method investments (4,506 ) 2,285
Add back core equity method investments earnings (2) 9,604 10,592
Non-cash equity-based compensation charges (3) 3,578 1,845 Other
core adjustments (4) (1,389 ) 778
Core
earnings (5) 20,934 $ 0.33
14,277 $ 0.27
(1) This is the GAAP diluted earnings per share and is the most
comparable GAAP measure to our core earnings per share.
(2) Reflects adjustment for equity method investments described
above
(3) Reflects adjustment for non-cash equity-based
compensation.
(4) See detail below.
(5) Core earnings per share for the three months ended
March 31, 2019 and March 31, 2018, are based on
63,706,102 shares and 53,549,878 shares outstanding, respectively,
which represents the weighted average number of fully-diluted
shares outstanding including our restricted stock awards and
restricted stock 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.
The table below provides a reconciliation of the Other core
adjustments:
For the Three MonthsEnded March
31,
2019 2018 ($ in thousands) Other core
adjustments Amortization of intangibles (1) $ 816 $ 783 Non-cash
provision (benefit) for income taxes (2,266 ) — Net income
attributable to non-controlling interest 61 (5 )
Other
core adjustments $ (1,389 ) $ 778 (1) Adds back
non-cash amortization of lease and pre-IPO intangibles
The table below provides a reconciliation of the GAAP SG&A
expenses to Core SG&A expenses:
For the Three MonthsEnded March
31,
2019 2018 ($ in thousands) GAAP SG&A
expenses Compensation and benefits $ 7,439 $ 5,321 General and
administrative 3,092 2,801
Total SG&A expenses
(GAAP) $ 10,531 $ 8,122 Core SG&A expenses
adjustments: Non-cash equity-based compensation charge (1) $ (3,578
) $ (1,845 ) Amortization of intangibles (2) (51 ) (51 ) Core
SG&A expenses adjustments (3,629 ) (1,896 )
Core SG&A
expenses $ 6,902 $ 6,226
(1) Reflects add back of non-cash amortization of equity-based
compensation. Outstanding grants related to equity-based
compensation are included in core earnings per share
calculation.
(2) Adds back non-cash amortization of pre-IPO intangibles
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005971/en/
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