UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-04321

ALTUS POWER, INC.

(Exact name of registrant as specified in its charter)

Delaware		85-3448396
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2200 Atlantic Street, Sixth Floor
Stamford,	CT	06902
(Address of Principal Executive Offices)		(Zip Code)

(203)-698-0090

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	AMPS	New York Stock Exchange
Warrants to purchase one share of common stock, each at an exercise price of $11.00	AMPS.WS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☒   No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes   ☐     No  ☒

As of July 29, 2022, there were 154,718,268 shares of Class A common stock outstanding and 1,207,500 shares of Class B common stock outstanding.

Table of Contents

Part I - Financial Information
Item 1. Financial Statements	4
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Balance Sheets	5
Condensed Consolidated Statements of Changes in Stockholders' Equity	7
Condensed Consolidated Statements of Cash Flows	9
Notes to Financial Statements	11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	47
Part II - Other Information
Item 1. Legal Proceedings	49
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3. Defaults Upon Senior Securities	49
Item 4. Mine Safety Disclosures	49
Item 5. Other Information	49
Item 6. Exhibits	49
Signatures	51

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Part I. Financial Statements

Item 1. Financial Statements

Altus Power, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating revenues, net	$	24,762	$	17,613	$	43,961	$	30,084
Operating expenses
Cost of operations (exclusive of depreciation and amortization shown separately below)	4,290		3,236		8,354		6,156
General and administrative	6,558		4,220		12,942		7,443
Depreciation, amortization and accretion expense	6,863		4,470		13,685		8,858
Acquisition and entity formation costs	52		85		346		232
Gain on fair value remeasurement of contingent consideration, net	(1,140)		(775)		(971)		(2,050)
Stock-based compensation	2,657		37		3,962		77
Total operating expenses	$	19,280	$	11,273	$	38,318	$	20,716
Operating income	5,482		6,340		5,643		9,368
Other (income) expense
Change in fair value of redeemable warrant liability	(4,659)		—		(23,117)		—
Change in fair value of alignment shares liability	(16,705)		—		(63,051)		—
Other income, net	(608)		(138)		(593)		(249)
Interest expense, net	5,173		4,826		10,111		8,739
Total other (income) expense	$	(16,799)	$	4,688	$	(76,650)	$	8,490
Income before income tax expense	$	22,281	$	1,652	$	82,293	$	878
Income tax expense	(707)		(2,092)		(584)		(1,055)
Net income (loss)	$	21,574	$	(440)	$	81,709	$	(177)
Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests	(2,541)		749		(2,825)		50
Net income (loss) attributable to Altus Power, Inc.	$	24,115	$	(1,189)	$	84,534	$	(227)
Net income (loss) per share attributable to common stockholders
Basic	$	0.16	$	(0.01)	$	0.55	$	—
Diluted	$	0.16	$	(0.01)	$	0.55	$	—
Weighted average shares used to compute net income (loss) per share attributable to common stockholders
Basic	153,310,068		88,741,089		152,988,078		88,741,089
Diluted	153,954,843		88,741,089		153,771,992		88,741,089

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Altus Power, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)

	As of June 30, 2022		As of December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	295,079	$	325,983
Current portion of restricted cash	2,459		2,544
Accounts receivable, net	13,158		9,218
Other current assets	5,748		6,659
Total current assets	316,444		344,404
Restricted cash, noncurrent portion	1,794		1,794
Property, plant and equipment, net	764,884		745,711
Intangible assets, net	19,383		16,702
Other assets	3,547		4,638
Total assets	$	1,106,052	$	1,113,249
Liabilities, redeemable noncontrolling interests, and stockholders' equity
Current liabilities:
Accounts payable	$	2,869	$	3,591
Interest payable	4,383		4,494
Current portion of long-term debt, net	15,726		21,143
Other current liabilities	4,597		3,663
Total current liabilities	27,575		32,891
Redeemable warrant liability	19,476		49,933
Alignment shares liability	64,408		127,474
Long-term debt, net of unamortized debt issuance costs and current portion	522,604		524,837
Intangible liabilities, net	12,844		13,758
Asset retirement obligations	7,689		7,628
Deferred tax liabilities, net	10,153		9,603
Other long-term liabilities	6,480		5,587
Total liabilities	$	671,229	$	771,711
Commitments and contingent liabilities (Note 10)
Redeemable noncontrolling interests	16,103		15,527
Stockholders' equity
Common stock $0.0001 par value; 988,591,250 shares authorized as of June 30, 2022, and December 31, 2021; 154,718,268 and 153,648,830 shares issued and outstanding as of June 30, 2022, and December 31, 2021, respectively	15		15
Preferred stock $0.0001 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of June 30, 2022, and December 31, 2021	—		—
Additional paid-in capital	416,832		406,259
Accumulated deficit	(16,822)		(101,356)
Total stockholders' equity	$	400,025	$	304,918
Noncontrolling interests	18,695		21,093
Total equity	$	418,720	$	326,011
Total liabilities, redeemable noncontrolling interests, and stockholders' equity	$	1,106,052	$	1,113,249

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The following table presents the assets and liabilities of the consolidated variable interest entities (Refer to Note 5).

(In thousands)	As of June 30, 2022		As of December 31, 2021
Assets of consolidated VIEs, included in total assets above:
Cash	$	8,298	$	7,524
Current portion of restricted cash	1,478		1,763
Accounts receivable, net	5,036		2,444
Other current assets	1,381		1,400
Restricted cash, noncurrent portion	1,437		1,122
Property, plant and equipment, net	362,679		363,991
Intangible assets, net	5,729		6,909
Other assets	630		739
Total assets of consolidated VIEs	$	386,668	$	385,892
Liabilities of consolidated VIEs, included in total liabilities above:
Accounts payable	$	460	$	419
Current portion of long-term debt, net	3,015		2,457
Other current liabilities	1,241		776
Long-term debt, net of unamortized debt issuance costs and current portion	33,536		34,022
Intangible liabilities, net	1,800		2,420
Asset retirement obligations	4,039		3,988
Other long-term liabilities	652		548
Total liabilities of consolidated VIEs	$	44,743	$	44,630

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Altus Power, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(unaudited)

(In thousands, except share data)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity		Non Controlling Interests		Total Equity
	Shares	Amount
As of March 31, 2021	89,999,976	$	9	$	202,178	$	(84,589)	$	117,598	$	14,758	$	132,356
Cash contributions from noncontrolling interests	—	—		—		—		—		439		439
Accretion of Series A preferred stock	—	—		539		(539)		—		—		—
Stock-based compensation	—	—		41		—		41		—		41
Accrued dividends and commitment fees on Series A preferred stock	—	—		4,263		(4,263)		—		—		—
Cash distributions to noncontrolling interests	—	—		—		—		—		(345)		(345)
Net loss	—	—		—		(1,189)		(1,189)		(285)		(1,474)
As of June 30, 2021	89,999,976	$	9	$	207,021	$	(90,580)	$	116,450	$	14,567	$	131,017

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity		Non Controlling Interests		Total Equity
	Shares	Amount
As of March 31, 2022	153,648,830	$	15	$	406,867	$	(40,937)	$	365,945	$	20,361	$	386,306
Stock-based compensation	—	—		2,657		—		2,657		—		2,657
Cash distributions to noncontrolling interests	—	—		—		—		—		(336)		(336)
Cash contributions from non-controlling interests	—	—		—		—		—		1,064		1,064
Conversion of alignment shares to class A common stock and exercised warrants	2,021	—		—		—		—		—		—
Exchange of warrants into common stock	1,067,417	—		7,308		—		7,308		—		7,308
Net income (loss)	—	—		—		24,115		24,115		(2,394)		21,721
As of June 30, 2022	154,718,268	$	15	$	416,832	$	(16,822)	$	400,025	$	18,695	$	418,720

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Altus Power, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(unaudited)

(In thousands, except share data)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity (Deficit)		Non Controlling Interests		Total Equity (Deficit)
	Shares	Amount
As of December 31, 2020 (as previously reported)	1,029	$	1	$	2,033	$	(80,802)	$	(78,768)	$	14,016	$	(64,752)
Retroactive application of recapitalization	89,998,947	8		203,739		—		203,747		—		203,747
As of December 31, 2020, effect of reverse acquisition	89,999,976	$	9	$	205,772	$	(80,802)	$	124,979	$	14,016	$	138,995
Cash contributions from noncontrolling interests	—	—		—		—		—		439		439
Accretion of Series A preferred stock	—	—		1,072		(1,072)		—		—		—
Stock-based compensation	—	—		78		—		78		—		78
Accrued dividends and commitment fees on Series A preferred stock	—	—		8,479		(8,479)		—		—		—
Payment of dividends and commitment fees on Series A preferred stock	—	—		(8,380)		—		(8,380)		—		(8,380)
Cash distributions to noncontrolling interests	—	—		—		—		—		(605)		(605)
Accrued distributions to noncontrolling interests	—	—		—				—		(146)		(146)
Net income (loss)	—	—		—		(227)		(227)		863		636
As of June 30, 2021	89,999,976	9		207,021		(90,580)		116,450		14,567		131,017

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity		Non Controlling Interests		Total Equity
	Shares	Amount
As of December 31, 2021	153,648,830	$	15	$	406,259	$	(101,356)	$	304,918	$	21,093	$	326,011
Stock-based compensation	—	—		3,962		—		3,962		—		3,962
Cash distributions to noncontrolling interests	—	—		—		—		—		(666)		(666)
Cash contributions from noncontrolling interests	—	—		—		—		—		1,064		1,064
Equity issuance costs	—	—		(712)		—		(712)		—		(712)
Conversion of alignment shares to Class A Common Stock and exercised warrants	2,021	—		15		—		15		—		15
Exchange of warrants into common stock	1,067,417			7,308		—		7,308		—		7,308
Net income (loss)	—	—		—		84,534		84,534		(2,796)		81,738
As of June 30, 2022	154,718,268	$	15	$	416,832	$	(16,822)	$	400,025	$	18,695	$	418,720

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Altus Power, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)

	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities
Net income (loss)	$	81,709	$	(177)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation, amortization and accretion	13,685		8,858
Unrealized gain on interest rate swaps	(1,777)		(292)
Deferred tax expense	550		1,069
Amortization of debt discount and financing costs	1,428		1,443
Change in fair value of redeemable warrant liability	(23,117)		—
Change in fair value of alignment shares liability	(63,051)		—
Remeasurement of contingent consideration	(971)		(2,050)
Stock-based compensation	3,962		77
Other	(189)		(194)
Changes in assets and liabilities, excluding the effect of acquisitions
Accounts receivable	(3,940)		(3,836)
Other assets	2,712		(4)
Accounts payable	(722)		4,062
Interest payable	(78)		776
Other liabilities	1,668		(247)
Net cash provided by operating activities	11,869		9,485
Cash flows used for investing activities
Capital expenditures	(23,338)		(6,277)
Payments to acquire businesses, net of cash and restricted cash acquired	—		(2,126)
Payments to acquire renewable energy facilities from third parties, net of cash and restricted cash acquired	(11,572)		(4,968)
Net cash used for investing activities	(34,910)		(13,371)
Cash flows used for financing activities
Proceeds from issuance of long-term debt	—		26,391
Repayment of long-term debt	(8,120)		(16,680)
Payment of debt issuance costs	(42)		(596)
Payment of dividends and commitment fees on Series A preferred stock	—		(8,380)
Payment of deferred transaction costs	—		(2,140)
Payment of contingent consideration	(45)		(102)
Payment of equity issuance costs	(744)		—
Contributions from noncontrolling interests	2,151		439
Distributions to noncontrolling interests	(1,148)		(1,102)
Net cash used for financing activities	(7,948)		(2,170)
Net decrease in cash, cash equivalents, and restricted cash	(30,989)		(6,056)
Cash, cash equivalents, and restricted cash, beginning of period	330,321		38,206
Cash, cash equivalents, and restricted cash, end of period	$	299,332	$	32,150

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	Six Months Ended June 30,
	2022		2021
Supplemental cash flow disclosure
Cash paid for interest, net of amounts capitalized	$	9,804	$	6,822
Cash paid for taxes	39		99
Non-cash investing and financing activities
Asset retirement obligations	$	96	$	223
Acquisitions of property and equipment included in other current liabilities	1,334		819
Deferred transaction costs not yet paid	—		2,810
Accrued dividends and commitment fees on Series A preferred stock	—		8,480
Accrued distributions to non-controlling interests	—		145
Construction loan conversion	(4,186)		—
Term loan conversion	4,186		—
Conversion of alignment shares into common stock	15		—
Exchange of warrants into common stock	7,303		—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Altus Power, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

1.General

Company Overview

Altus Power, Inc., a Delaware corporation (the “Company” or "Altus"), headquartered in Stamford, Connecticut, develops, owns, constructs and operates large-scale roof, ground and carport-based photovoltaic solar energy generation and storage systems, for the purpose of producing and selling electricity to credit worthy counterparties, including commercial and industrial, public sector and community solar customers, under long-term contracts. The Solar energy facilities are owned by the Company in project specific limited liability companies (the “Solar Facility Subsidiaries”).

On December 9, 2021 (the "Closing Date"), CBRE Acquisition Holdings, Inc. ("CBAH"), a special purpose acquisition company, consummated the business combination pursuant to the terms of the business combination agreement entered into on July 12, 2021 (the "Business Combination Agreement"), whereby, among other things, CBAH Merger Sub I, Inc. ("First Merger Sub") merged with and into Altus Power, Inc. (f/k/a Altus Power America, Inc.) ("Legacy Altus") with Legacy Altus continuing as the surviving corporation, and immediately thereafter Legacy Altus merged with and into CBAH Merger Sub II, Inc. ("Second Merger Sub") with Second Merger Sub continuing as the surviving entity and as a wholly owned subsidiary of CBAH (together with the merger with the First Merger Sub, the “Merger”). In connection with the closing of the Merger, CBAH changed its name to "Altus Power, Inc." and CBAH Merger Sub II (after merger with Legacy Altus) changed its name to "Altus Power, LLC."

COVID-19

The spike of a novel strain of coronavirus (“COVID-19”) in the first quarter of 2020 caused significant volatility in the U.S. markets that remain ongoing. In response to the COVID-19 pandemic, federal, state, local, and foreign governments put in place, and in the future may again put in place, travel restrictions, quarantines, “stay at home” orders and guidelines, and similar government orders and restrictions, in an attempt to control the spread of the disease. Such restrictions or orders resulted in, and in the future may result in, business closures, work stoppages, slowdowns and delays, among other effects that negatively impacted, and in the future may negatively impact, our operations, as well as the operations of our customers and business partners. In addition, COVID-19 has caused disruptions to the supply chain across the global economy, including within the solar industry, and we are working with our equipment suppliers to minimize disruptions to our operations. Certain suppliers have experienced, and may continue to experience, delays and increased costs related to a variety of factors, including logistical delays and component shortages from upstream vendors. Based on the challenges described above, such as supply chain and logistical delays, such results have had and will continue to have a material adverse effect on our business, operations, financial condition, results of operations, and cash flows.

2.Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company prepares its unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial reporting. The Company’s condensed consolidated financial statements include the results of wholly-owned and partially-owned subsidiaries in which the Company has a controlling interest. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 filed with the Company’s 2021 annual report on Form 10-K on March 24, 2022, and the related notes which provide a more complete discussion of the Company’s accounting policies and certain other information. The information as of December 31, 2021, included in the condensed consolidated balance sheets was derived from the Company’s audited consolidated financial statements. The condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements and reflect all adjustments, including normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the Company’s financial position as of June 30, 2022, and the results of operations and cash flows for the three and six months ended June 30, 2022, and 2021. The results of

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Altus Power, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

operations for the three and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the full year or any other future interim or annual period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

In recording transactions and balances resulting from business operations, the Company uses estimates based on the best information available. Estimates are used for such items as the fair value of net assets acquired in connection with accounting for business combinations, the useful lives of the solar energy facilities, and inputs and assumptions used in the valuation of asset retirement obligations (“AROs”), contingent consideration, and alignment shares.

Segment Information

Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision makers are the co-chief executive officers. Based on the financial information presented to and reviewed by the chief operating decision makers in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined it operates as a single operating segment and has one reportable segment, which includes revenue under power purchase agreements, revenue from net metering credit agreements, solar renewable energy certificate revenue, rental income, performance-based incentives, and other revenue. The Company’s principal operations, revenue and decision-making functions are located in the United States.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents includes all cash balances on deposit with financial institutions and readily marketable securities with original maturity dates of three months or less at the time of acquisition that are denominated in U.S. dollars. Pursuant to the budgeting process, the Company maintains certain cash and cash equivalents on hand for possible equipment replacement related costs.

The Company records cash that is restricted as to withdrawal or use under the terms of certain contractual agreements as restricted cash. Restricted cash is included in current portion of restricted cash and restricted cash, noncurrent portion on the condensed consolidated balance sheets and includes cash held with financial institutions for cash collateralized letters of credit pursuant to various financing and construction agreements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets. Cash, cash equivalents, and restricted cash consist of the following:

	As of June 30, 2022		As of December 31, 2021
Cash and cash equivalents	$	295,079	$	325,983
Current portion of restricted cash	2,459		2,544
Restricted cash, noncurrent portion	1,794		1,794
Total	$	299,332	$	330,321

Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, may exceed Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash balances.

The Company had no customers that accounted for over 10% of total accounts receivable as of June 30, 2022, and no customers that individually accounted for more than 10% of revenue for the three and six months ended June 30, 2022.

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Altus Power, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

The Company had two customers that individually accounted for 16.0% and 11.7% of total accounts receivable as of December 31, 2021. The Company had one customer that individually accounted for 11.6% of total revenue for the three months ended June 30, 2021. The Company had no customers that individually accounted for more than 10% of total revenue for the six months ended June 30, 2021.

Accounting Pronouncements

As a public company, the Company is provided the option to adopt new or revised accounting guidance as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) either (1) within the same periods as those otherwise applicable to public business entities, or (2) within the same time periods as non-public business entities, including early adoption when permissible. The Company expects to elect to adopt new or revised accounting guidance within the same time period as non-public business entities, as indicated below.

Recent Accounting Pronouncements Adopted

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740), which simplifies the accounting for income taxes, primarily by eliminating certain exceptions to ASC 740. This standard is effective for fiscal periods beginning after December 15, 2020. The Company has adopted this standard as of the first quarter of 2021 and did not have a material impact on the condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which primarily changes the lessee’s accounting for operating leases by requiring recognition of lease right-of-use assets and lease liabilities. This standard is effective for annual reporting periods beginning after December 15, 2021. The Company expects to adopt this guidance in fiscal year 2022. The Company is continuing the analysis of the contractual arrangements that may qualify as leases under the new standard and expects the most significant impact will be the recognition of the right-of-use assets and lease liabilities on the consolidated balance sheets.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and has since released various amendments including ASU No. 2019-04. The new standard generally applies to financial assets and requires those assets to be reported at the amount expected to be realized. The ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

3.Revenue and Accounts Receivable

Disaggregation of Revenue

The following table presents the detail of revenues as recorded in the unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue under power purchase agreements	$	6,730	$	4,653	$	10,912	$	7,784
Revenue from net metering credit agreements	7,822		7,155		11,722		10,465
Solar renewable energy certificate revenue	7,975		4,900		17,506		10,099
Rental income	785		539		1,429		760
Performance-based incentives	295		260		654		811
Other revenue	1,155		106		1,738		165
Total	$	24,762	$	17,613	$	43,961	$	30,084

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

Accounts receivable

The following table presents the detail of receivables as recorded in accounts receivable in the unaudited condensed consolidated balance sheets:

	As of June 30, 2022		As of December 31, 2021
Power purchase agreements	$	4,164	$	1,678
Net metering credit agreements	3,154		3,322
Solar renewable energy certificates	4,785		3,789
Rental income	36		350
Performance-based incentives	496		4
Other	523		75
Total	$	13,158	$	9,218

Payment is typically received within 30 days for invoiced revenue as part of power purchase agreements (“PPAs”) and net metering credit agreements (“NMCAs”). Receipt of payment relative to invoice date varies by customer for renewable energy certificates ("RECs"). The Company does not have any other significant contract asset or liability balances related to revenues. As of June 30, 2022, and December 31, 2021, the Company determined that the allowance for uncollectible accounts is $0.4 million and $0.4 million, respectively.

4.Acquisitions

2022 Acquisitions

Stellar NJ Acquisition

On April 1, 2022, the Company acquired a 1.0 MW solar energy facility located in New Jersey (the "Stellar NJ Acquisition") from a third party for a total purchase price of $1.3 million. The transaction was accounted for as an acquisition of assets, whereby the Company acquired $2.3 million of property, plant and equipment and assumed $0.4 million of intangible liabilities and $0.6 million of other liabilities. The intangible liability assumed is associated with an unfavorable rate power purchase agreement and has a weighted average amortization period of 15 years.

Stellar HI 2 Acquisition

On June 10, 2022, the Company acquired a 4.6 MW portfolio of six solar energy facilities located in Hawaii (the "Stellar HI 2 Acquisition") from a third party for a total purchase price of $9.9 million, including $0.2 million of transaction related costs. This transaction was accounted for as an acquisition of assets, whereby the Company acquired $7.3 million of property, plant and equipment and $3.1 million of intangible assets, and assumed $0.5 million of intangible liabilities and $0.1 million of asset retirement obligations.

The Company attributed intangible asset and liability values to favorable and unfavorable rate revenue contracts to sell power generated by the acquired solar energy facilities, as well as a favorable rate lease. The following table summarizes the estimated fair values and the weighted average amortization periods of the acquired intangible assets and assumed intangible liabilities as of the acquisition date:

	Fair Value (thousands)		Weighted Average Amortization Period
Favorable rate revenue contracts	$	2,903	10 years
Site lease acquisition	229		15 years
Unfavorable rate revenue contracts	(464)		14 years

2021 Acquisitions

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

Gridley Acquisition

On January 14, 2021, the Company acquired a portfolio of two solar energy facilities (the “Gridley Acquisition”) located in California with a combined nameplate capacity of 4.3 MW from a third party for a total purchase price of $5.0 million, including $0.1 million of transaction related costs. This transaction was accounted for as an acquisition of assets, whereby the Company acquired $5.3 million of property, plant and equipment and assumed $0.3 million of other liabilities.

5.Variable Interest Entity

The Company consolidates all variable interest entities (“VIEs”) in which it holds a variable interest and is deemed to be the primary beneficiary of the variable interest entity. Generally, a VIE is an entity with at least one of the following conditions: (a) the total equity investment at risk is insufficient to allow the entity to finance its activities without additional subordinated financial support, or (b) the holders of the equity investment at risk, as a group, lack the characteristics of having a controlling financial interest. The primary beneficiary of a VIE is required to consolidate the VIE and to disclose certain information about its significant variable interests in the VIE. The primary beneficiary of a VIE is the entity that has both 1) the power to direct the activities that most significantly impact the entity’s economic performance and 2) the obligations to absorb losses or receive benefits that could potentially be significant to the VIE.

The Company participates in certain partnership arrangements that qualify as VIEs. Consolidated VIEs consist of tax equity financing arrangements and partnerships in which an investor holds a noncontrolling interest and does not have substantive kick-out or participating rights. The Company, through its subsidiaries, is the primary beneficiary of such VIEs, because as the manager, it has the power to direct the day-to-day operating activities of the entity. In addition, the Company is exposed to economics that could potentially be significant to the entity given its ownership interest, therefore, has consolidated the VIEs as of June 30, 2022, and December 31, 2021. No VIEs were deconsolidated during the six months ended June 30, 2022 and 2021.

The obligations of the consolidated VIEs discussed in the following paragraphs are nonrecourse to the Company. In certain instances where the Company establishes a new tax equity structure, the Company is required to provide liquidity in accordance with the contractual agreements. The Company has no requirement to provide liquidity to purchase assets or guarantee performance of the VIEs unless further noted in the following paragraphs. The Company made certain contributions during the six months ended June 30, 2022 and 2021, as determined in the respective operating agreement.

The carrying amounts and classification of the consolidated VIE assets and liabilities included in condensed consolidated balance sheets are as follows:

	As of June 30, 2022		As of December 31, 2021
Current assets	$	16,193	$	13,131
Non-current assets	370,475		372,761
Total assets	$	386,668	$	385,892
Current liabilities	$	4,716	$	3,652
Non-current liabilities	40,027		40,978
Total liabilities	$	44,743	$	44,630

The amounts shown in the table above exclude intercompany balances which are eliminated upon consolidation. All of the assets in the table above are restricted for settlement of the VIE obligations, and all of the liabilities in the table above can only be settled using VIE resources.

The Company has not identified any VIEs during the six months ended June 30, 2022 and 2021, for which the Company determined that it is not the primary beneficiary and thus did not consolidate.

The Company considered qualitative and quantitative factors in determining which VIEs are deemed significant. During each of the six months ended June 30, 2022 and the year ended December 31, 2021, the Company consolidated twenty-five VIEs. No VIEs were deemed significant as of June 30, 2022 and December 31, 2021.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

6.Debt

	As of June 30, 2022		As of December 31, 2021		Interest Type	Weighted average interest rate
Long-term debt
Amended rated term loan	$	493,465	$	499,750	Fixed	3.51	%
Construction loans	—		5,593		Floating	—	%
Term loans	16,520		12,818		Floating	3.31	%
Financing lease obligations	37,643		37,601		Imputed	3.65	%
Total principal due for long-term debt	547,628		555,762
Unamortized discounts and premiums	(118)		(176)
Unamortized deferred financing costs	(9,180)		(9,606)
Less: Current portion of long-term debt	15,726		21,143
Long-term debt, less current portion	$	522,604	$	524,837

Amended Rated Term Loan

As part of the Blackstone Capital Facility, APA Finance, LLC (“APAF”), a wholly owned subsidiary of the Company, entered into a $251.0 million term loan facility with Blackstone Insurance Solutions ("BIS") through a consortium of lenders, which consists of investment grade-rated Class A and Class B notes (the "Rated Term Loan").

On August 25, 2021, APAF entered into an Amended and Restated Credit Agreement with BIS to refinance the Rated Term Loan (hereby referred to as the “Amended Rated Term Loan”). The Amended Rated Term Loan added an additional $135.6 million to the facility, bringing the aggregate facility to $503.0 million. The Amended Rated Term Loan has a weighted average 3.51% annual fixed rate, reduced from the previous weighted average rate of 3.70%, and matures on February 29, 2056 (“Final Maturity Date”).

The Amended Rated Term Loan amortizes at an initial rate of 2.5% of outstanding principal per annum for a period of 8 years at which point the amortization steps up to 4% per annum until September 30, 2031 (“Anticipated Repayment Date”). After the Anticipated Repayment Date, the loan becomes fully-amortizing, and all available cash is used to pay down principal until the Final Maturity Date.

As of June 30, 2022, the outstanding principal balance of the Rated Term Loan was $493.5 million less unamortized debt discount and loan issuance costs totaling $8.0 million. As of December 31, 2021, the outstanding principal balance of the Rated Term Loan was $500.0 million less unamortized debt discount and loan issuance costs totaling $8.4 million.

As of June 30, 2022, the Company was in compliance with all covenants. As of December 31, 2021, the Company was in compliance with all covenants, except the delivery of the APAF audited consolidated financial statements, for which the Company obtained a waiver to extend the financial statement reporting deliverable due date. The Company delivered the audited financial statements on May 25, 2022, before the extended reporting deliverable due date.

Construction Facilities

Construction Loan to Term Loan Facility and Letters of Credit Facilities

On January 10, 2020, APA Construction Finance, LLC (“APACF”) a wholly-owned subsidiary of the Company, entered into a credit agreement with Fifth Third Bank, National Association and Deutsche Bank AG New York Branch to fund the development and construction of future solar facilities (“Construction Loan to Term Loan Facility”). The Construction Loan to Term Loan Facility includes a construction loan commitment of $187.5 million and a letter of credit commitment of $12.5 million, which can be drawn until January 10, 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

The construction loan commitment can convert to a term loan upon commercial operation of a particular solar energy facility. In addition, the Construction Loan to Term Loan Facility accrued a commitment fee at a rate equal to 0.50% per year of the daily unused amount of the commitment. During the three and six months ended June 30, 2022, the Company converted the outstanding construction loan of $5.6 million into the term loan of $4.2 million. As of June 30, 2022, the outstanding principal balances of the construction loan and term loan were zero and $16.2 million, respectively. As of December 31, 2021, the outstanding principal balances of the construction loan and term loan were $5.6 million and $12.3 million, respectively. As of June 30, 2022, and December 31, 2021, the Company had an unused borrowing capacity of $171.3 million. For the three months ended June 30, 2022, and 2021, the Company incurred interest costs associated with outstanding construction loans totaling zero and $0.1 million, respectively. For the six months ended June 30, 2022, and 2021 the Company incurred interest costs associated with outstanding construction loans totaling zero and $0.3 million, respectively. These interest costs were capitalized as part of property, plant and equipment. Also, on October 23, 2020, the Company entered into an additional letters of credit facility with Fifth Third Bank for the total capacity of $10.0 million. The Construction Loan to Term Loan Facility includes various financial and other covenants for APACF and the Company, as guarantor. As of June 30, 2022, and December 31, 2021, the Company was in compliance with all covenants.

As of June 30, 2022, and December 31, 2021, the total letters of credit outstanding with Fifth Third Bank were $10.0 million with an unused capacity of zero. As of June 30, 2022, and December 31, 2021, the total letters of credit outstanding with Deutsche Bank were $0.7 million and $0.6 million, respectively, with an unused capacity of $11.8 million and $11.9 million, respectively. To the extent liabilities are incurred as a result of the activities covered by the letters of credit, such liabilities are included on the accompanying condensed consolidated balance sheets. From time to time, the Company is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies’ statutes and regulations. The Company sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company’s borrowing facility capacity.

Financing Lease Obligations

From time to time, the Company sells equipment to third parties and enters into master lease agreements to lease the equipment back for an agreed-upon term. Due to certain forms of continuous involvement provided by the master lease agreements, sale leaseback accounting is prohibited under ASC 840. Therefore, the Company accounts for these transactions using the financing method by recognizing the sale proceeds as a financing obligation and the assets subject to the sale-leaseback remain on the balance sheet of the Company and are being depreciated. The aggregate proceeds have been recorded as long-term debt within the condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, the Company's recorded financing obligations were $36.5 million, net of $1.1 million of deferred transaction costs. Payments of $0.6 million and zero were made under financing lease obligations for the three months ended June 30, 2022, and 2021, respectively. Payments of $0.8 million and zero were made under financing obligations for the six months ended June 30, 2022 and 2021, respectively. Interest expense, inclusive of the amortization of deferred transaction costs, for the three months ended June 30, 2022, and 2021, was $0.4 million and zero, respectively. Interest expense, inclusive of the amortization of deferred transaction costs, for the six months ended June 30, 2022 and 2021, was $0.7 million and zero, respectively.

The table below shows the minimum lease payments under the financing lease obligations for the years ended:

2022	$	1,493
2023	2,336
2024	2,340
2025	2,353
2026	2,336
Thereafter	14,993
Total	$	25,851

The difference between the outstanding financing lease obligation of $37.6 million and $25.9 million of minimum lease payments, including the residual value guarantee, is due to $13.2 million of investment tax credits claimed by the Lessor, less

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

$2.6 million of the implied interest on financing lease obligation included in minimum lease payments. The remaining difference is due to $1.0 million of interest accrued and a $0.1 million difference between the minimum lease payments and the fair value of financing lease obligations acquired.

7.Fair Value Measurements

The Company measures certain assets and liabilities at fair value, which is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Our fair value measurements use the following hierarchy, which prioritizes valuation inputs based on the extent to which the inputs are observable in the market.

•Level 1 - Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

•Level 2 - Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs are observable in active markets are Level 2 valuation techniques.

•Level 3 - Valuation techniques in which one or more significant inputs are unobservable. Such inputs reflect our estimate of assumptions that market participants would use to price an asset or liability.

The Company holds various financial instruments that are not required to be recorded at fair value. For cash, restricted cash, accounts receivable, accounts payable, and short-term debt, the carrying amounts approximate fair value due to the short maturity of these instruments.

Redeemable Warrant Liability

CBAH sold 10,062,500 warrants as part of the SAILSM (Stakeholder Aligned Initial Listing) securities in the CBAH initial public offering (which traded separately on the NYSE under the symbol “CBAH WS” prior to the Merger, and following the Merger trade under the symbol “AMPS WS”) (such warrants, the "Redeemable Warrants"). The Redeemable Warrants are exercisable for an aggregate of 10,062,500 shares of the Company's Class A common stock, par value $0.0001 per share (the "Class A common stock"), at a purchase price of $11.00 per share. CBAH also issued 7,366,667 warrants to CBRE Acquisition Sponsor, LLC (the “Sponsor”) in a private placement simultaneously with the closing of the CBAH IPO and 2,000,000 warrants to the Sponsor in full settlement of a second amended and restated promissory note with the Sponsor (such warrants, the "Private Placement Warrants"). The Private Placement Warrants are identical to the Redeemable Warrants except that, so long as they are held by the Sponsor, officers or directors or their respective permitted transferees, (i) they will not be redeemable by the Company (except in certain circumstances), (ii) they may be exercised by the holders on a cashless basis, and (iii) they (including the shares of our Class A common stock issuable upon exercise of these warrants) are entitled to registration rights. If the Private Placement Warrants are held by holders other than the Sponsor, officers or directors or their respective permitted transferees, the Private Placement Warrants will become redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Redeemable Warrants. The Private Placement Warrants will be exercisable for an aggregate of 9,366,667 shares of CBAH Class A common stock at a purchase price of $11.00 per share.

Redeemable warrants, including Private Placement Warrants, are not considered to be “indexed to the Company’s own stock.” This provision precludes the Company from classifying the Redeemable warrants, including Private Placement Warrants, in stockholders’ equity. As the Redeemable warrants, including Private Placement Warrants, meet the definition of a derivative, the Company recorded these warrants as liabilities on the condensed consolidated balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations at each reporting date.

On May 31, 2022, and June 15, 2022, the Company entered into separate, privately negotiated warrant exchange agreements (the "Exchange Agreements") with a limited number of holders of the Company's outstanding Redeemable Warrants. Pursuant to the Exchange Agreements, the Company agreed to issue an aggregate of 1,067,417 shares of Class A common stock to the holders of Redeemable Warrants in exchange for the surrender and cancellation of an aggregate of 4,447,555 Redeemable Warrants. The issuance by the Company of the shares of Common Stock in exchange for the surrender and cancellation of the Redeemable Warrants was made in reliance on the exemption from registration in Section 3(a)(9) of the Securities Act. Immediately prior to the exchange, the Redeemable Warrants were remeasured to fair value based on the trading price of the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(Dollar amounts in thousands, except per share data, unless otherwise noted)

exchanged shares of common stock, resulting in a gain on fair value remeasurement of $4.1 million within operating income in the condensed consolidated statements of operations for the six months ended June 30, 2022, and a redeemable warrant liability of $7.3 million, which was then reclassified to additional paid-in capital in the condensed consolidated balance sheet as of June 30, 2022.

As the remaining Redeemable Warrants (other than our Private Placement Warrants) continue to trade separately on the NYSE following the Merger, the Company determines the fair value of the Redeemable Warrants based on the quoted trading price of those warrants. As the inputs are observable and reflect quoted trading price, the overall fair value measurement of the Redeemable Warrants, excluding Private Placement Warrants, is classified as Level 1. The Private Placement Warrants have the same redemption and make-whole provisions as the Redeemable Warrants. Therefore, the fair value of the Private Placement Warrants is equal to the Redeemable Warrants. Private Placement Warrants are considered Level 2 as they are measured at fair value using observable inputs for similar assets in an active market.

	For the six months ended June 30, 2022
	Units	$
Redeemable warrants, beginning balance	19,429,167	$	49,933
Warrants exercised	(10)	—
Exchange of warrants into common stock	(4,447,555)	(7,339)
Forfeiture of fractional warrants	(13)	—
Fair value remeasurement	—	(23,117)
Redeemable warrants, ending balance	14,981,589	$	19,476

Alignment Shares Liability

The Company has 1,207,500 Alignment shares outstanding, all of which are held by the Sponsor, certain former officers of CBAH (such officers, together with the Sponsor, the “Sponsor Parties”) and former CBAH directors. The Alignment shares will automatically convert into shares of Class A common stock based upon the Total Return (as defined in Exhibit 4.4 to our 2021 Annual Report on Form 10-K) on the Class A common stock as of the relevant measurement date over each of the seven fiscal years following the Merger.

Upon the consummation of the Merger, Alignment shares have no continuing service requirement and do not create an unconditional obligation requiring the Company to redeem the instruments by transferring assets. In addition, the shares convert to a variable number of Class A common stock depending on the trading price of the Class A common stock and dividends paid/payable to the holders of Class A common stock. Therefore, the shares do not represent an obligation or a conditional obligation to issue a variable number of shares with a monetary value based on any of the criteria in ASC 480, Distinguishing Liabilities From Equity. The Company determined that the Alignment shares meet the definition of a derivative because they contain (i) an underlying (Class A common stock price), (ii) a notional amount (a fixed number of Class B common stock), (iii) no or minimal initial net investment (the Sponsor paid a de minimis amount which is less than the estimated fair value of the shares), and (iv) net settleable through a conversion of the Alignment shares into Class A shares. As such, the Company concluded that the Alignment shares meet the definition of a derivative, which will be presented at fair value each reporting period, with changes in fair value recorded through earnings.

The Company estimates the fair value of outstanding Alignment shares using a Monte Carlo simulation valuation model utilizing a distribution of potential outcomes based on a set of underlying assumptions such as stock price, volatility, and risk-free interest rate. As volatility of 69% and risk-free interest rate of 3.0% are not observable inputs, the overall fair value measurement of Alignment shares is classified as Level 3. Unobservable inputs can be volatile and a change in those inputs might result in a significantly higher or lower fair value measurement of Alignment shares.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS