Altus Power Considers Strategic Review to Access Capital

• Altus Power Inc. embarks on a strategic review to bridge the gap between stock price and intrinsic value, while navigating challenges in revenue and growing debt.

Altus Power Inc., a U.S. solar energy provider, has initiated a strategic review to enhance shareholder value and improve capital access. The review, guided by its board and external advisors Moelis & Company LLC and Latham & Watkins, is expected to conclude by mid-2025. Board chair Christine Detrick expressed confidence in exploring alternative ownership structures due to a disconnect between the stock's current price and its perceived intrinsic value.

Despite being on this path, Altus reaffirmed its downward-revised 2024 revenue guidance of $196 million to $201 million and adjusted EBITDA expectations of $111 million to $115 million. The company reported a 13% revenue increase year-over-year for Q2, totaling $52.5 million, while EBITDA rose 2% to $31.2 million. However, its long-term debt grew to $1.18 billion by June, and its shares dropped 4.13% to $3.02.

What strategic changes is Altus Power considering to address shareholder value and financial concerns?

To address shareholder value and enhance financial health, Altus Power is contemplating several strategic changes. These considerations are part of a broader initiative aimed at realigning the company’s direction in response to current market conditions and shareholder expectations. Here are the potential strategic changes being evaluated:

• Alternative Ownership Structures: The company is exploring various ownership configurations that may better reflect its intrinsic value, which might include partnerships, joint ventures, or potential divestitures of non-core assets.
• Capital Structure Optimization: Altus Power is reviewing its capital structure to reduce long-term debt, which grew to $1.18 billion. This may involve refinancing existing debt or issuing new equity to strengthen the balance sheet.
• Focus on Operational Efficiency: The company may implement measures to enhance operational efficiency, potentially through cost-cutting initiatives or operational streamlining to improve EBITDA margins.
• Expansion into New Markets: Assessing opportunities in untapped markets, particularly in renewable energy sectors beyond solar, to diversify revenue streams and mitigate risks associated with market fluctuations.
• Strategic Partnerships and Collaborations: Engaging in strategic partnerships with other renewable energy companies or technology firms to leverage synergies, share resources, and expand capabilities in project development and financing.
• Enhanced Investor Relations Strategy: Developing an aggressive investor relations plan to communicate the company’s long-term strategy and clarify the disconnect between current stock prices and intrinsic value, potentially restoring investor confidence.
• Innovation and Technology Investment: Investing in new technologies or innovative solutions that could improve solar energy generation efficiency or reduce project costs, thus enhancing overall profitability.
• Review of Project Pipeline: Conducting a thorough review of the current project pipeline to prioritize high-return projects and divest from those that may not align with long-term strategic goals.
• Sustainability and ESG Initiatives: Strengthening commitments to sustainability and ESG (Environmental, Social, and Governance) principles that not only align with shareholder values but may also attract socially conscious investors.

These strategic considerations reflect Altus Power’s commitment to addressing shareholder concerns while navigating the challenges of an evolving renewable energy landscape.