TerraForm Power Reports Fourth Quarter and Full Year 2018 Results
Highlights
-
Invested
$1.2 billion to acquireSaeta Yield , S.A.U. (“Saeta”), a 1,000 MW portfolio of high-quality wind and solar assets located primarily inSpain that established a scale operating platform inEurope -
Invested
~$28 million in organic growth initiatives with an average return on equity of ~19% -
Progressed efforts to execute long term service agreements with
General Electric (“GE”) for North American wind fleet that are expected to lock in annual cost savings of~$20 million and enhance revenues through performance guarantees backed by liquidated damages -
Completed solar performance improvement plan, expected to increase
annual production by ~61 GWh and revenue by
~$11 million -
Issued
$650 million in equity to fund the Saeta acquisition at attractive terms pursuant to backstop arrangement with affiliates ofBrookfield Asset Management -
Raised
~$160 million of non-recourse debt in conjunction with the financing plan for the Saeta acquisition - Achieved upgrade of corporate credit rating from Moody’s to Ba3
-
Repriced
$350 million Term Loan B yielding projected annual savings of approximately$2.5 million -
Declared a Q1 2019 dividend of
$0.2014 per share, an increase of 6% from Q4 2018, and implying$0.8056 per share on an annual basis
“During 2018, we made significant progress building the foundation to
transform
Results
3 Months Ended
12/31/2018 |
3 Months Ended
12/31/2017 |
12 Months Ended
12/31/2018 |
12 Months Ended
12/31/2017 |
||||||||||
Generation (GWh) | 2,214 | 1,852 | 8,088 | 7,167 | |||||||||
Net Loss ($ in millions) | (30) | (142) | (153) | (236) | |||||||||
Earnings (loss) per Share1 | $(0.07) | $(0.31) | $0.07 | $(1.61) | |||||||||
Adjusted EBITDA2 ($ in millions) | 170 | 110 | 590 | 438 | |||||||||
Cash Available for Distribution (“CAFD”)2 ($ in millions) | 27 | 26 | 126 | 88 | |||||||||
per Share1,2 | $0.13 | $0.18 | $0.69 | $0.62 | |||||||||
1 Loss per share is calculated using a weighted average
diluted Class A common stock shares outstanding. CAFD per share is
calculated using a weighted average diluted Class A common stock and
weighted average Class B common stock shares outstanding. For the twelve
months ended
2 Non-GAAP measures. See “Calculation
and Use of Non-GAAP Measures” and “Reconciliation of Non-GAAP Measures”
sections. Amounts in 2017 adjusted for sale of our
Financial Results
While we made much progress, 2018 was a transitional year for
For the full year 2018,
In 2018, North American wind production was 10% below our LTA. Of the
shortfall, 4% can be attributed to poor wind resource, particularly in
Liquidity Update
We continue to progress the execution of the
We also recently launched the refinancing of our wind facility in
Operations
To date, we have signed LTSAs with GE for 10 of 16 projects in our North American wind fleet. In parallel, we have made significant progress obtaining the required lender and tax equity partner consents and are in negotiations with service providers for the early termination of existing service contracts. GE is now fully operating six sites, and we anticipate handing over the remaining sites in the first half of this year.
Beginning in Q3 2018, we solicited proposals for LTSAs for 500 MW of our
Spanish wind fleet. The fleet is comprised of turbines manufactured by
Vestas, GE,
Finally, for our North American and European wind farms, we have
commenced the technical analysis and permitting to implement turbine
optimization technology, including GE’s
Growth Initiatives
During the year, we continued to advance the 160 MW repowering of our
In light of our progress to date, we have accelerated the pace of our
repowering efforts in
During 2018, we invested
Regulatory and Counterparty Update
In
Facing billions of dollars in claims over deadly wildfires in
Announcement of Quarterly Dividend
About
For more information about
Quarterly Earnings Call Details
Investors, analysts and other interested parties can access TerraForm Power’s 2018 Full Year and Fourth Quarter Results as well as the Letter to Shareholders and Supplemental Information on TerraForm Power’s website at www.terraformpower.com.
The conference call can be accessed via webcast on
Safe Harbor Disclosure
This communication contains 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.
Forward-looking statements can be identified by the fact that they do
not relate strictly to historical or current facts. These statements
involve estimates, expectations, projections, goals, assumptions, known
and unknown risks, and uncertainties and typically include words or
variations of words such as “expect,” “anticipate,” “believe,” “intend,”
“plan,” “seek,” “estimate,” “predict,” “project,” ”opportunities,”
“goal,” “guidance,” “outlook,” “initiatives,” “objective,” “forecast,”
“target,” “potential,” “continue,” “would,” “will,” “should,” “could,”
or “may” or other comparable terms and phrases. All statements that
address operating performance, events, or developments that
By their nature, forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from
those suggested by the forward-looking statements. Factors that might
cause such differences include, but are not limited to: risks related to
weather conditions at our wind and solar assets; the willingness and
ability of counterparties to fulfill their obligations under offtake
agreements; price fluctuations, termination provisions and buyout
provisions in offtake agreements; our ability to enter into contracts to
sell power on acceptable prices and terms, including as our offtake
agreements expire; government regulation, including compliance with
regulatory and permit requirements and changes in tax laws, market
rules, rates, tariffs, environmental laws and policies affecting
renewable energy; our ability to compete against traditional utilities
and renewable energy companies; pending and future litigation; our
ability to successfully integrate projects we acquire from third
parties, including Saeta Yield S.A.U., and our ability to realize the
anticipated benefits from such acquisitions; our ability to implement
and realize the benefit of our cost and performance enhancement
initiatives, including the long-term service agreements with an
affiliate of
The Company disclaims any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying assumptions,
factors, or expectations, new information, data, or methods, future
events, or other changes, except as required by law. The foregoing list
of factors that might cause results to differ materially from those
contemplated in the forward-looking statements should be considered in
connection with information regarding risks and uncertainties, which are
described in our most recent Annual Report on Form 10-K and any
subsequent Quarterly Report on Form 10-Q, as well as additional factors
we may describe from time to time in other filings with the
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Operating revenues, net | $ | 213,093 | $ | 135,539 | $ | 766,570 | $ | 610,471 | ||||||||||||
Operating costs and expenses: | ||||||||||||||||||||
Cost of operations | 74,752 | 42,331 | 220,907 | 150,733 | ||||||||||||||||
Cost of operations - affiliate | — | 7,377 | — | 17,601 | ||||||||||||||||
General and administrative expenses | 22,239 | 40,230 | 87,722 | 139,874 | ||||||||||||||||
General and administrative expenses - affiliate | 5,310 | 6,498 | 16,239 | 13,391 | ||||||||||||||||
Acquisition costs | (6,856) | — | 7,721 | — | ||||||||||||||||
Acquisition costs - affiliate | 6,925 | — | 6,925 | — | ||||||||||||||||
Impairment of renewable energy facilities | — | — | 15,240 | 1,429 | ||||||||||||||||
Depreciation, accretion and amortization expense | 102,660 | 60,681 | 341,837 | 246,720 | ||||||||||||||||
Total operating costs and expenses | 205,030 | 157,117 | 696,591 | 569,748 | ||||||||||||||||
Operating income (loss) | 8,063 | (21,578) | 69,979 | 40,723 | ||||||||||||||||
Other expenses (income): | ||||||||||||||||||||
Interest expense, net | 72,349 | 55,254 | 249,211 | 262,003 | ||||||||||||||||
Loss on extinguishment of debt, net | 1,480 | 81,099 | 1,480 | 81,099 | ||||||||||||||||
Gain on sale of renewable energy facilities | — | — | — | (37,116) | ||||||||||||||||
Gain on foreign currency exchange, net | (6,736 | ) | (366 | ) | (10,993 | ) | (6,061 | ) | ||||||||||||
Loss on investments and receivables - affiliate | — | 1,759 | — | 1,759 | ||||||||||||||||
Other income, net | (6,972) | (135 | ) | (4,102) | (5,017 | ) | ||||||||||||||
Total other expenses, net | 60,121 | 137,611 | 235,596 | 296,667 | ||||||||||||||||
Loss before income tax benefit | (52,058 | ) | (159,189 | ) | (165,617 | ) | (255,944 | ) | ||||||||||||
Income tax benefit | (21,707) | (17,385 | ) | (12,290) | (19,641) | |||||||||||||||
Net loss | (30,351 | ) | (141,804 | ) | (153,327 | ) | (236,303 | ) | ||||||||||||
Less: Net (loss) income attributable to redeemable non-controlling interests | (5,893) | (8,668) | 9,209 | 1,596 | ||||||||||||||||
Less: Net loss attributable to non-controlling interests | (8,969) | (20,473 | ) | (174,916 | ) | (77,745 | ) | |||||||||||||
Net income (loss) income attributable to Class A common stockholders | $ | (15,489 | ) | $ | (112,663 | ) | $ | 12,380 | $ | (160,154 | ) | |||||||||
Weighted average number of shares: | ||||||||||||||||||||
Class A common stock – Basic and diluted | 209,142 | 138,401 | 182,239 | 103,866 | ||||||||||||||||
Earnings (Loss) earnings per share: | ||||||||||||||||||||
Class A common stock - Basic and diluted | $ | (0.07 | ) | $ | (0.82 | ) | $ | 0.07 | $ | (1.61 | ) | |||||||||
Dividends declared per share: | ||||||||||||||||||||
Class A common stock | $ | 0.19 | $ | 1.94 | $ | 0.76 | $ | 1.94 | ||||||||||||
CONSOLIDATED
BALANCE SHEETS
(In thousands, except share and per share
data)
As of December 31, | ||||||||||
2018 | 2017 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 248,524 | $ | 128,087 | ||||||
Restricted cash | 27,784 | 54,006 | ||||||||
Accounts receivable, net | 145,161 | 89,680 | ||||||||
Prepaid expenses and other current assets | 79,520 | 65,393 | ||||||||
Due from affiliate | 196 | 4,370 | ||||||||
Total current assets |
501,185 | 341,536 | ||||||||
Renewable energy facilities, net, including consolidated variable interest entities of $3,064,675 and $3,273,848 in 2018 and 2017, respectively | 6,470,026 | 4,801,925 | ||||||||
Intangible assets, net, including consolidated variable interest entities of $751,377 and $823,629 in 2018 and 2017, respectively | 1,996,404 | 1,077,786 | ||||||||
Goodwill | 120,553 | — | ||||||||
Restricted cash | 116,501 | 42,694 | ||||||||
Other assets | 125,685 | 123,080 | ||||||||
Total assets | $ | 9,330,354 | $ | 6,387,021 | ||||||
Liabilities, Redeemable Non-controlling Interests and Stockholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Current portion of long-term debt and financing lease obligations, including consolidated variable interest entities of $64,251 and $84,691 in 2018 and 2017, respectively | $ | 464,332 | $ | 403,488 | ||||||
Accounts payable and accrued expenses, including consolidated variable interest entities of $55,446 and $32,624 in 2018 and 2017, respectively | 177,089 | 85,693 | ||||||||
Other current liabilities | 38,244 | 2,845 | ||||||||
Deferred revenue | 1,626 | 17,859 | ||||||||
Due to affiliates | 6,991 | 3,968 | ||||||||
Total current liabilities | 688,282 | 513,853 | ||||||||
Long-term debt and financing lease obligations, less current portion, including consolidated variable interest entities of $885,760 and $833,388 in 2018 and 2017, respectively | 5,297,513 | 3,195,312 | ||||||||
Deferred revenue, less current portion | 12,090 | 38,074 | ||||||||
Deferred income taxes | 178,849 | 24,972 | ||||||||
Asset retirement obligations, including consolidated variable interest entities of $86,456 and $97,467 in 2018 and 2017, respectively | 212,657 | 154,515 | ||||||||
Other liabilities | 172,546 | 37,923 | ||||||||
Total liabilities | 6,561,937 | 3,964,649 | ||||||||
Redeemable non-controlling interests | 33,495 | 34,660 | ||||||||
Stockholders’ equity: | ||||||||||
Class A common stock, $0.01 par value per share, 1,200,000,000 shares authorized, 209,642,140 and 148,586,447 shares issued in 2018 and 2017, respectively, and 209,141,720 and 148,086,027 shares outstanding in 2018 and 2017, respectively | 2,096 | 1,486 | ||||||||
Additional paid-in capital | 2,391,435 | 1,872,125 | ||||||||
Accumulated deficit | (359,603 | ) | (387,204 | ) | ||||||
Accumulated other comprehensive income | 40,238 | 48,018 | ||||||||
Treasury stock, 500,420 shares in 2018 and 2017 | (6,712 | ) | (6,712 | ) | ||||||
Total TerraForm Power, Inc. stockholders’ equity | 2,067,454 | 1,527,713 | ||||||||
Non-controlling interests | 667,468 | 859,999 | ||||||||
Total stockholders’ equity | 2,734,922 | 2,387,712 | ||||||||
Total liabilities, redeemable non-controlling interests and stockholders' equity | $ | 9,330,354 | $ | 6,387,021 | ||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31, | ||||||||||
2018 | 2017 | |||||||||
Cash flows from operating activities: | ||||||||||
Net loss | $ | (153,327 | ) | $ | (236,303 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||
Depreciation, accretion and amortization expense | 341,837 | 246,720 | ||||||||
Amortization of favorable and unfavorable rate revenue contracts, net | 38,767 | 39,576 | ||||||||
Loss on extinguishment of debt, net | 1,480 | 81,099 | ||||||||
Gain on sale of renewable energy facilities | — | (37,116 | ) | |||||||
Impairment of goodwill | — | — | ||||||||
Impairment of renewable energy facilities | 15,240 | 1,429 | ||||||||
Loss on disposal of property, plant and equipment | 6,231 | 5,828 | ||||||||
Amortization of deferred financing costs and debt discounts | 11,009 | 23,729 | ||||||||
Unrealized (gain) loss on interest rate swaps | (13,116 | ) | 2,425 | |||||||
Loss on note receivable | 4,510 | — | ||||||||
Unrealized loss on commodity contract derivatives, net | 4,497 | 6,847 | ||||||||
Recognition of deferred revenue | (1,320 | ) | (18,238 | ) | ||||||
Stock-based compensation expense | 257 | 16,778 | ||||||||
Unrealized (gain) loss on foreign currency exchange, net | (12,899 | ) | (5,583 | ) | ||||||
Loss on investments and receivables - affiliate | — | 1,759 | ||||||||
Deferred taxes | (14,891 | ) | (19,911 | ) | ||||||
Other, net | — | (1,166 | ) | |||||||
Changes in assets and liabilities, excluding the effect of acquisitions and divestitures: | ||||||||||
Accounts receivable | 12,569 | (2,939 | ) | |||||||
Prepaid expenses and other current assets | (5,512 | ) | 803 | |||||||
Accounts payable, accrued expenses and other current liabilities | (18,976 | ) | (42,736 | ) | ||||||
Due to affiliates, net | 3,023 | 3,968 | ||||||||
Deferred revenue | — | 199 | ||||||||
Other, net | 33,822 | 29 | ||||||||
Net cash provided by operating activities | 253,201 | 67,197 | ||||||||
Cash flows from investing activities: | ||||||||||
Cash paid to third parties for renewable energy facility construction and other capital expenditures | (22,445 | ) | (8,392 | ) | ||||||
Proceeds from insurance reimbursement | 1,543 | — | ||||||||
Proceeds from the settlement of foreign currency contracts | 47,590 | — | ||||||||
Proceeds from sale of renewable energy facilities, net of cash and restricted cash disposed | — | 183,235 | ||||||||
Proceeds from energy state rebate and reimbursable interconnection costs | 8,733 | 25,679 | ||||||||
Other investing activities | — | 5,750 | ||||||||
Acquisitions of renewable energy facilities from third parties, net of cash and restricted cash acquired | (8,315 | ) | — | |||||||
Acquisition of Saeta business, net of cash and restricted cash acquired | (886,104 | ) | — | |||||||
Net cash (used in) provided by investing activities | $ | (858,998 | ) | $ | 206,272 | |||||
Cash flows from financing activities: | ||||||||||
Proceeds from issuance of Class A common stock to affiliates | $ | 650,000 | $ | — | ||||||
Proceeds from the Sponsor Line - affiliate | 86,000 | — | ||||||||
Repayments of the Sponsor Line - affiliate | (86,000 | ) | — | |||||||
Repayment of the Old Senior Notes due 2023 | — | (950,000 | ) | |||||||
Proceeds from the Senior Notes due 2023 | — | 494,985 | ||||||||
Proceeds from the Senior Notes due 2028 | — | 692,979 | ||||||||
Proceeds from Term Loan | — | 344,650 | ||||||||
Term Loan principal repayments | (3,500 | ) | — | |||||||
Old Revolver repayments | — | (552,000 | ) | |||||||
Revolver draws | 679,000 | 265,000 | ||||||||
Revolver repayments | (362,000 | ) | (205,000 | ) | ||||||
Proceeds from borrowings of non-recourse long-term debt | 236,251 | 79,835 | ||||||||
Principal payments and prepayments on non-recourse long-term debt | (259,017 | ) | (569,463 | ) | ||||||
Debt premium prepayment | — | (50,712 | ) | |||||||
Debt financing fees | (9,318 | ) | (29,972 | ) | ||||||
Sale of membership interests and contributions from non-controlling interests in renewable energy facilities | 7,685 | 6,935 | ||||||||
Purchase of membership interests and distributions to non-controlling interests in renewable energy facilities | (29,163 | ) | (31,163 | ) | ||||||
Net SunEdison investment | — | 7,694 | ||||||||
Due to/from affiliates, net | 4,803 | (8,869 | ) | |||||||
Payment of dividends | (135,234 | ) | (285,497 | ) | ||||||
Recovery of related party short swing profit | 2,994 | — | ||||||||
Other financing activities | — | 1,085 | ||||||||
Net cash provided by (used in) financing activities | 782,501 | (789,513 | ) | |||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 176,704 | (516,044 | ) | |||||||
Net change in cash, cash equivalents and restricted cash classified within assets held for sale | — | 54,806 | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,682 | ) | 3,188 | |||||||
Cash, cash equivalents and restricted cash at beginning of period | 224,787 | 682,837 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 392,809 | $ | 224,787 | ||||||
Reconciliation of Non-GAAP Measures
This communication contains references to Adjusted Revenue, Adjusted EBITDA, and cash available for distribution (“CAFD”), which are supplemental Non-GAAP measures that should not be viewed as alternatives to GAAP measures of performance, including revenue, net income (loss), operating income or net cash provided by operating activities. Our definitions and calculation of these Non-GAAP measures may differ from definitions of Adjusted Revenue, Adjusted EBITDA and CAFD or other similarly titled measures used by other companies. We believe that Adjusted Revenue, Adjusted EBITDA and CAFD are useful supplemental measures that may assist investors in assessing the financial performance of the Company. None of these Non-GAAP measures should be considered as the sole measure of our performance, nor should they be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with GAAP, which are available on our website at www.terraform.com, as well as at www.sec.gov. We encourage you to review, and evaluate the basis for, each of the adjustments made to arrive at Adjusted Revenue, Adjusted EBITDA and CAFD.
Calculation of Non-GAAP Measures
We define Adjusted Revenue as operating revenues, net, adjusted for non-cash items, including (i) unrealized gain/loss on derivatives, (ii) amortization of favorable and unfavorable rate revenue contracts, net, and (iii) an adjustment for wholesale market revenues to the extent above or below the regulated price bands.
We define Adjusted EBITDA as net income (loss) plus (i) depreciation, accretion and amortization, (ii) non-cash general and administrative costs, (iii) interest expense, (iv) income tax (benefit) expense, (v) acquisition related expenses, and (vi) certain other non-cash charges, unusual or non-recurring items and other items that we believe are not representative of our core business or future operating performance.
We define “cash available for distribution” or “CAFD” as Adjusted EBITDA (i) minus cash distributions paid to non-controlling interests in our renewable energy facilities, if any, (ii) minus annualized scheduled interest and project level amortization payments in accordance with the related borrowing arrangements, (iii) minus average annual sustaining capital expenditures (based on the long-sustaining capital expenditure plans) which are recurring in nature and used to maintain the reliability and efficiency of our power generating assets over our long-term investment horizon, (iv) plus or minus operating items as necessary to present the cash flows we deem representative of our core business operations.
As compared to the prior year periods, we revised our definition of CAFD
to (i) exclude adjustments related to deposits into and withdrawals from
restricted cash accounts, required by project financing arrangements,
(ii) replace sustaining capital expenditures payment made in the year
with the average annualized long-term sustaining capital expenditures to
maintain reliability and efficiency of our assets, and (iii) annualized
debt service payments. We revised our definition of CAFD as we believe
the revised definition provides a more meaningful measure for investors
to evaluate our financial and operating performance and ability to pay
dividends. For items presented on an annualized basis, we present actual
cash payments as a proxy for an annualized number until the period
commencing
Furthermore, to provide investors with the most appropriate measures to
assess the financial and operating performance of our existing fleet and
the ability to pay dividends in the future, we have excluded results
associated with our
Use of Non-GAAP Measures
We disclose Adjusted Revenue because it presents the component of operating revenue that relates to energy production from our plants, and is, therefore, useful to investors and other stakeholders in evaluating performance of our renewable energy assets and comparing that performance across periods in each case without regard to non-cash revenue items.
We disclose Adjusted EBITDA because we believe it is useful to investors
and other stakeholders as a measure of our financial and operating
performance and debt service capabilities. We believe Adjusted EBITDA
provides an additional tool to investors and securities analysts to
compare our performance across periods without regard to interest
expense, taxes and depreciation and amortization. Adjusted EBITDA has
certain limitations, including that it: (i) does not reflect cash
expenditures or future requirements for capital expenditures or
contractual liabilities or future working capital needs, (ii) does not
reflect the significant interest expenses that we expect to incur or any
income tax payments that we may incur, and (iii) does not reflect
depreciation and amortization and, although these charges are non-cash,
the assets to which they relate may need to be replaced in the future,
and (iv) does not take into account any cash expenditures required to
replace those assets. Adjusted EBITDA also includes adjustments for
goodwill impairment charges, gains and losses on derivatives and foreign
currency swaps, acquisition related costs and items we believe are
infrequent, unusual or non-recurring, including adjustments for general
and administrative expenses we have incurred as a result of the
We disclose CAFD because we believe cash available for distribution is useful to investors and other stakeholders in evaluating our operating performance and as a measure of our ability to pay dividends. CAFD is not a measure of liquidity or profitability, nor is it indicative of the funds needed by us to operate our business. CAFD has certain limitations, such as the fact that CAFD includes all of the adjustments and exclusions made to Adjusted EBITDA described above.
The adjustments made to Adjusted EBITDA and CAFD for infrequent, unusual or non-recurring items and items that we do not believe are representative of our core business involve the application of management judgment, and the presentation of Adjusted EBITDA and CAFD should not be construed to infer that our future results will be unaffected by infrequent, non-operating, unusual or non-recurring items.
In addition, these measures are used by our management for internal planning purposes, including for certain aspects of our consolidated operating budget, as well as evaluating the attractiveness of investments and acquisitions. We believe these Non-GAAP measures are useful as a planning tool because it allows our management to compare performance across periods on a consistent basis in order to more easily view and evaluate operating and performance trends and as a means of forecasting operating and financial performance and comparing actual performance to forecasted expectations. For these reasons, we also believe these Non-GAAP measures are also useful for communicating with investors and other stakeholders.
The following tables present a reconciliation of operating revenues to
Adjusted Revenue and net loss to Adjusted EBITDA and to CAFD and has
been adjusted to exclude asset sales in the
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||
Adjustments to reconcile operating revenues, net to Adjusted Revenue | ||||||||||||
Operating revenues, net | $213 | $136 | $767 | $610 | ||||||||
Unrealized (gain) loss on commodity contract derivatives, net (a) | 8 | 8 | 4 | 7 | ||||||||
Amortization of favorable and unfavorable rate revenue contracts, net (b) | 10 | 10 | 39 | 40 | ||||||||
2017 Incentive revenue recognition recast (n) | - | 9 | - | - | ||||||||
Regulated Solar and Wind price band adjustment (c) | 2 | - | 12 | - | ||||||||
Adjustment for asset sales | - | - | - | (15) | ||||||||
Other items (d) | 2 | (6) | 2 | (16) | ||||||||
Adjusted Revenue | $235 | $157 | $824 | $626 | ||||||||
Direct operating costs (e) | (66) | (47) | (235) | (188) | ||||||||
Settled FX gain (loss) | 1 | - | 1 | - | ||||||||
Adjusted EBITDA | $170 | $110 | $590 | $438 | ||||||||
Non-operating general and administrative expenses (f) | (11) | (29) | (49) | (97) | ||||||||
Stock-based compensation expense | - | (10) | - | (17) | ||||||||
Acquisition and related costs | - | - | (15) | - | ||||||||
Depreciation, accretion and amortization expense (g) | (112) | (71) | (380) | (287) | ||||||||
Impairment charges | - | (1) | (15) | (1) | ||||||||
Loss on extinguishment of debt | 1 | (81) | 1 | (81) | ||||||||
Gain on sale of U.K. renewable energy facilities | - | - | - | 37 | ||||||||
Interest expense, net | (72) | (55) | (249) | (262) | ||||||||
Income tax benefit | 22 | 17 | 12 | 20 | ||||||||
Adjustment for asset sales | - | - | - | 10 | ||||||||
Regulated Solar and Wind price band adjustment (c) | (2) | - | (12) | - | ||||||||
Management Fee (o) | (4) | (3) | (15) | (3) | ||||||||
Other non-cash or non-operating items (h) | (22) | (19) | (21) | 7 | ||||||||
Net loss | ($30) | ($142) | ($153) | ($236) | ||||||||
(in millions) | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||
Reconciliation of Adjusted EBITDA to CAFD | 2018 | 2017 | 2018 | 2017 | ||||||||
Adjusted EBITDA | $170 | $110 | $590 | $438 | ||||||||
Fixed management fee (o) | (3) | (3) | (10) | (3) | ||||||||
Variable management fee (o) | (2) | (1) | (5) | (1) | ||||||||
Adjusted interest expense (i) | (72) | (51) | (256) | (234) | ||||||||
Levelized principal payments (j) | (60) | (24) | (173) | (99) | ||||||||
Cash distributions to non-controlling interests (k) | (6) | (7) | (26) | (30) | ||||||||
Sustaining capital expenditures (l) | (2) | (1) | (8) | (2) | ||||||||
Other (m) | 2 | 3 | 14 | 19 | ||||||||
Cash available for distribution (CAFD) (n) | $27 | $26 | $126 | $88 | ||||||||
a) Represents unrealized (gain) loss on commodity contracts associated with energy derivative contracts that are accounted for at fair value with the changes recorded in operating revenues, net. The amounts added back represent changes in the value of the energy derivative related to future operating periods, and are expected to have little or no net economic impact since the change in value is expected to be largely offset by changes in value of the underlying energy sale in the spot or day-ahead market.
b) Represents net amortization of purchase accounting related to intangibles arising from past business combinations related to favorable and unfavorable rate revenue contracts.
c) Represents Regulated Solar and Wind Price Band Adjustment to Return on Investment Revenue as dictated by market conditions. To the extent that the wholesale market price is greater or less than a price band centered around the market price forecasted by the Spanish regulator during the preceding three years, the difference in revenues assuming average generation accumulates in a tracking account. The Return on Investment is either increased or decreased in order to amortize the balance of the tracking account over the remaining regulatory life of the assets.
d) Primarily represents recognized deferred revenue related to the upfront sale of investment tax credits, insurance compensation for revenue losses, and adjustments for SREC replacements.
e) In the three months ended
f) Pursuant to the historical management services agreement (the
“Management Services Agreement”) with
$ in millions | Q4 2018 | Q4 2017 | YTD 2018 | YTD 2017 | |||||||||
Operating general and administrative expenses in Corporate | $9 | $8 | $29 | $30 | |||||||||
g) Includes reductions (increases) within operating revenues due to net amortization of favorable and unfavorable rate revenue contracts as detailed in the reconciliation of Adjusted Revenue.
h) Represents other non-cash items as detailed in the reconciliation of Adjusted Revenue and associated footnote and certain other items that we believe are not representative of our core business or future operating performance, including but not limited to: loss (gain) on foreign exchange (“FX”), unrealized loss on commodity contracts, loss on investments and receivables with affiliate, loss on disposal of renewable energy facilities, and wind sustaining capital expenditure previously reclassified.
i) Represents project-level and other interest expense and interest income attributed to normal operations. The reconciliation from Interest expense, net as shown on the Consolidated Statements of Operations to adjusted interest expense applicable to CAFD is as follows:
$ in millions | Q4 2018 | Q4 2017 | 2018 | 2017 | |||||||||
Interest expense, net | ($72) | ($55) | ($249) | ($262) | |||||||||
Amortization of deferred financing costs and debt discounts | 3 | 4 | 11 | 24 | |||||||||
Adjustment for asset sales | - | - | - | 8 | |||||||||
Other, primarily fair value changes in interest rate swaps and purchase accounting adjustments due to acquisition | (3) | 1 | (18) | (4) | |||||||||
Adjusted interest expense | ($72) | ($50) | ($256) | ($234) | |||||||||
j) Represents levelized project-level and other principal debt payments to the extent paid from operating cash.
k) Represents cash distributions paid to non-controlling interests in
our renewable energy facilities. The reconciliation from Distributions
to non-controlling interests as shown on the Consolidated Statement of
Cash Flows to Cash distributions to non-controlling interests, net for
the three months ended
$ in millions | Q4 2018 | Q4 2017 | 2018 | 2017 | |||||||||
Distributions to non-controlling interests | ($8) | ($7) | ($29) | ($30) | |||||||||
Buyout of non-controlling interests | 2 | - | 2 | - | |||||||||
Adjustment for non-operating cash distributions | - | - | 1 | - | |||||||||
Cash distributions to non-controlling interests, net | ($6) | ($7) | ($26) | ($30) | |||||||||
l) Represents long-term average sustaining capex starting in 2018 to maintain reliability and efficiency of the assets.
m) Represents other cash flows as determined by management to be representative of normal operations including, but not limited to, wind plant “pay as you go” contributions received from tax equity partners, interconnection upgrade reimbursements, major maintenance reserve releases or (additions), releases or (postings) of collateral held by counterparties of energy market hedges for certain wind plants, and recognized SREC gains that are covered by loan agreements.
n) CAFD in 2017 was recast as follows to present the levelized principal
payments, adjusted interest expense, and incentive revenue recognition
recast to provide period to period comparisons that are consistent and
more easily understood. The 2017 incentive revenue was recast based on
an estimate in the same proportions as the 2018 phasing, which differs
from the actual 2017 phasing due to the adoption of the revenue
recognition standard. In the twelve months ended
$ in millions | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | 2017 | |||||||||||
Cash available for distribution (CAFD) before debt service reported | $104 | $120 | $106 | $91 | $421 | |||||||||||
Levelized principal payments | (25) | (25) | (25) | (24) | (99) | |||||||||||
Adjusted interest expense | (60) | (61) | (63) | (50) | (234) | |||||||||||
Estimated incentive revenue recognition recast | (1) | (9) | 1 | 9 | - | |||||||||||
Cash available for distribution (CAFD), recasted | $18 | $25 | $19 | $26 | $88 | |||||||||||
(o) Represents management fee that is not included in Direct operating costs.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190314005946/en/
Source:
Chad Reed
TerraForm Power
investors@terraform.com