TerraForm Power, Inc. Reports Third Quarter 2015 Financial Results
TerraForm Power Q3 2015 Results Presentation
- Generated Cash Available for Distribution (“CAFD”) of
$71 million , up 9% over previous quarter - Increases 3Q dividend to
$0.35 per share ($1.40 annualized), up 4% over previous quarter - Solid operational performance - supported by geographically diversified 1.9 GW fleet
- Executed
UK portfolio project refinancing in November, resulting in net proceeds of$160 million
“We are pleased to announce strong 3Q results while raising our dividend” said
3Q Financial Results
3Q Dividend Increase
TerraForm Power’s Board of Directors has declared a third quarter dividend for TerraForm Power’s Class A common stock of
3Q Drop Downs from
During the third quarter,
Liquidity for Growth
As of
Subsequent Events:
On
“The U.K. project financing demonstrates the Company’s access to financing markets at an attractive cost of capital and ability to continue funding the growth of our business. We remain focused on further strengthening the Company’s liquidity position and maintaining the quality of our balance sheet” said
Conference Call Details
Date: | Monday, November 9, 2015 | |
Time: | 4:30pm ET | |
Dial-in Information: | Toll-Free Dial-In: | +1 (844) 464-3938 |
International Dial-In: | +1 (765) 507-2638 | |
Webcast link: | http://edge.media-server.com/m/p/twd3hge5/lan/en |
The presentation materials for the call and an archived recording of the call will be available following the call on the events page of the investor section of
About
Safe Harbor Disclosure
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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,” “goal,” “guidance,” “outlook,” “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, our ability to integrate the projects we acquire from third parties or otherwise realize the anticipated benefits from such acquisitions; the failure of counterparties to fulfill their obligations under offtake agreements; price fluctuations, termination provisions and buyout provisions in offtake agreements; delays or unexpected costs during the completion of projects under construction; our ability to successfully identify, evaluate, and consummate acquisitions from
Adjusted Revenue
We define Adjusted Revenue as operating revenues, net adjusted for non-cash items including unrealized gain/loss on derivatives, amortization of favorable and unfavorable revenue contracts and other non-cash items. We believe Adjusted Revenue is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance. Adjusted Revenue is a non-GAAP measure used by our management for internal planning purposes, including for certain aspects of our consolidating operating budget.
Adjusted EBITDA
Adjusted EBITDA is a supplemental non-GAAP financial measure which eliminates the impact on net income of certain unusual or non-recurring items and other factors that we do not consider indicative of future operating performance. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance, including net income. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Cash Available for Distribution (CAFD)
CAFD is a supplemental non-GAAP measure of
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating revenues, net | $ | 163,291 | $ | 53,566 | $ | 363,852 | $ | 84,336 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of operations | 15,201 | 4,224 | 50,430 | 6,114 | |||||||||||
Cost of operations - affiliate | 6,840 | 2,814 | 14,657 | 4,031 | |||||||||||
General and administrative | 7,518 | 2,984 | 21,087 | 3,767 | |||||||||||
General and administrative - affiliate | 14,636 | 5,051 | 39,411 | 8,783 | |||||||||||
Acquisition and related costs | 11,294 | 1,302 | 31,680 | 2,537 | |||||||||||
Acquisition and related costs - affiliate | — | 2,826 | 1,040 | 2,826 | |||||||||||
Formation and offering related fees and expenses | — | 536 | — | 3,399 | |||||||||||
Depreciation, accretion and amortization | 43,667 | 13,245 | 113,694 | 21,632 | |||||||||||
Total operating costs and expenses | 99,156 | 32,982 | 271,999 | 53,089 | |||||||||||
Operating income | 64,135 | 20,584 | 91,853 | 31,247 | |||||||||||
Other expenses: | |||||||||||||||
Interest expense, net | 48,786 | 22,906 | 121,602 | 54,552 | |||||||||||
(Gain) loss on extinguishment of debt, net | — | (9,580 | ) | 8,652 | (7,635 | ) | |||||||||
Loss on foreign currency exchange, net | 9,825 | 6,240 | 9,755 | 6,914 | |||||||||||
Other, net | 1,433 | 80 | 1,110 | 582 | |||||||||||
Total other expenses, net | 60,044 | 19,646 | 141,119 | 54,413 | |||||||||||
Income (loss) before income tax expense (benefit) | 4,091 | 938 | (49,266 | ) | (23,166 | ) | |||||||||
Income tax expense (benefit) | 1,673 | 2,806 | 2,842 | (4,069 | ) | ||||||||||
Net income (loss) | 2,418 | (1,868 | ) | (52,108 | ) | (19,097 | ) | ||||||||
Less: Pre-acquisition net (loss) income of projects acquired from SunEdison | (2,743 | ) | (347 | ) | 7,892 | (1,059 | ) | ||||||||
Less: Predecessor income (loss) prior to IPO on July 23, 2014 | — | 6,270 | — | (10,357 | ) | ||||||||||
Net income (loss) subsequent to IPO and excluding pre-acquisition net (loss) income of projects acquired from SunEdison | 5,161 | (7,791 | ) | (60,000 | ) | (7,681 | ) | ||||||||
Less: Net income attributable to redeemable non-controlling interests | 6,949 | — | 8,576 | — | |||||||||||
Less: Net loss attributable to non-controlling interests | (968 | ) | (3,777 | ) | (46,440 | ) | (3,667 | ) | |||||||
Net loss attributable to Class A common stockholders | $ | (820 | ) | $ | (4,014 | ) | $ | (22,136 | ) | $ | (4,014 | ) | |||
Weighted average number of shares: | |||||||||||||||
Class A common stock - Basic and diluted | 77,522 | 27,066 | 61,777 | 27,066 | |||||||||||
Loss per share: | |||||||||||||||
Class A common stock - Basic and diluted | $ | (0.03 | ) | $ | (0.15 | ) | $ | (0.39 | ) | $ | (0.15 | ) |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
ASSETS | September 30, 2015 | December 31, 2014 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 635,821 | $ | 468,554 | |||
Restricted cash, including consolidated variable interest entities of $41,976 and $39,898 in 2015 and 2014, respectively | 90,181 | 70,545 | |||||
Accounts receivable, including consolidated variable interest entities of $48,754 and $16,921 in 2015 and 2014, respectively | 117,713 | 32,036 | |||||
Prepaid expenses and other current assets | 47,627 | 22,637 | |||||
Total current assets | 891,342 | 593,772 | |||||
Renewable energy facilities, net, including consolidated variable interest entities of $1,821,857 and $1,466,223 in 2015 and 2014, respectively | 3,981,751 | 2,646,860 | |||||
Intangible assets, net, including consolidated variable interest entities of $256,285 and $259,004 in 2015 and 2014, respectively | 515,755 | 361,673 | |||||
Deferred financing costs, net | 56,655 | 42,741 | |||||
Deferred income taxes | — | 4,606 | |||||
Other assets | 89,009 | 29,419 | |||||
Total assets | $ | 5,534,512 | $ | 3,679,071 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY | September 30, 2015 | December 31, 2014 | |||||
Current liabilities: | |||||||
Current portion of long-term debt and financing lease obligations, including consolidated variable interest entities of $84,001 and $20,907 in 2015 and 2014, respectively | $ | 115,203 | $ | 100,488 | |||
Accounts payable, accrued expenses and other current liabilities, including consolidated variable interest entities of $23,465 and $27,284 in 2015 and 2014, respectively | 129,139 | 83,437 | |||||
Deferred revenue | 13,827 | 24,264 | |||||
Due to SunEdison, net | 14,522 | 193,080 | |||||
Total current liabilities | 272,691 | 401,269 | |||||
Other liabilities: | |||||||
Long-term debt and financing lease obligations, less current portion, including consolidated variable interest entities of $612,032 and $620,853 in 2015 and 2014, respectively | 2,431,182 | 1,599,277 | |||||
Deferred revenue, including consolidated variable interest entities of $67,756 and $51,943 in 2015 and 2014, respectively | 76,273 | 52,214 | |||||
Deferred income taxes, including consolidated variable interest entities of $38,125 and $3,012 in 2015 and 2014, respectively | 39,106 | 7,877 | |||||
Asset retirement obligations, including consolidated variable interest entities of $51,067 and $32,181 in 2015 and 2014, respectively | 153,651 | 78,175 | |||||
Other long-term liabilities | 23,905 | — | |||||
Total liabilities | 2,996,808 | 2,138,812 | |||||
Redeemable non-controlling interests | 44,292 | 24,338 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding in 2015 and 2014 | — | — | |||||
Class A common stock, $0.01 par value per share, 850,000,000 shares authorized, 80,029,737 and 42,217,984 issued and outstanding in 2015 and 2014, respectively. | 776 | 387 | |||||
Class B common stock, $0.01 par value per share, 140,000,000 shares authorized, 60,364,154 and 64,526,654 issued and outstanding in 2015 and 2014, respectively. | 604 | 645 | |||||
Class B1 common stock, $0.01 par value per share, 260,000,000 shares authorized, zero and 5,840,000 issued and outstanding in 2015 and 2014, respectively. | — | 58 | |||||
Additional paid-in capital | 1,260,616 | 497,556 | |||||
Accumulated deficit | (39,861 | ) | (25,617 | ) | |||
Accumulated other comprehensive loss | (2,949 | ) | (1,637 | ) | |||
Total TerraForm Power, Inc. stockholders' equity | 1,219,186 | 471,392 | |||||
Non-controlling interests | 1,274,226 | 1,044,529 | |||||
Total non-controlling interests and stockholders' equity | 2,493,412 | 1,515,921 | |||||
Total liabilities, non-controlling interests and stockholders' equity | $ | 5,534,512 | $ | 3,679,071 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (52,108 | ) | $ | (19,097 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Stock compensation expense | 10,030 | 1,567 | |||||
Depreciation, accretion and amortization | 113,694 | 21,632 | |||||
Amortization of favorable and unfavorable revenue contracts | 1,599 | 3,558 | |||||
Amortization of deferred financing costs and debt discounts | 25,307 | 16,842 | |||||
Recognition of deferred revenue | (5,403 | ) | (192 | ) | |||
Loss (gain) on extinguishment of debt, net | 8,652 | (16,315 | ) | ||||
Unrealized gain on derivatives, net | (855 | ) | — | ||||
Unrealized loss on foreign currency exchange | 11,269 | 5,037 | |||||
Deferred taxes | 2,769 | (4,068 | ) | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (62,152 | ) | (32,958 | ) | |||
Prepaid expenses and other current assets | 6,807 | (12,948 | ) | ||||
Accounts payable, accrued interest, and other current liabilities | 20,604 | 28,402 | |||||
Deferred revenue | 19,025 | 37,473 | |||||
Due to SunEdison, net | (196 | ) | (8,579 | ) | |||
Other, net | 6,214 | 6,424 | |||||
Net cash provided by operating activities | 105,256 | 26,778 | |||||
Cash flows from investing activities: | |||||||
Cash paid to third parties for renewable energy facility construction | (426,682 | ) | (766,836 | ) | |||
Other investments | (10,000 | ) | — | ||||
Acquisitions of renewable energy facilities from third parties, net of cash acquired | (1,004,403 | ) | (355,536 | ) | |||
Due to SunEdison, net | (14,872 | ) | — | ||||
Change in restricted cash | (23,262 | ) | — | ||||
Net cash used in investing activities | $ | (1,479,219 | ) | $ | (1,122,372 | ) |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(CONTINUED)
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of Class A common stock | $ | 921,610 | $ | 433,621 | |||
Change in restricted cash for principal debt service | — | 28,630 | |||||
Proceeds from Senior Notes due 2023 | 945,962 | — | |||||
Proceeds from Senior Notes due 2025 | 300,000 | — | |||||
Proceeds from term loan | — | 300,000 | |||||
Proceeds from bridge loan | — | 400,000 | |||||
Repayment of bridge loan | — | (400,000 | ) | ||||
Repayment of term loan | (573,500 | ) | — | ||||
Proceeds from Revolver | 235,000 | — | |||||
Repayment of Revolver | (235,000 | ) | — | ||||
Borrowings of project-level long-term debt | 276,915 | 198,337 | |||||
Principal payments on project-level long-term debt | (148,764 | ) | (117,051 | ) | |||
Due to SunEdison, net | (147,370 | ) | 146,246 | ||||
Contributions from non-controlling interests | 82,876 | 6,312 | |||||
Distributions to non-controlling interests | (21,637 | ) | (151 | ) | |||
Repurchase of non-controlling interest | (54,694 | ) | — | ||||
Distributions to SunEdison and affiliates | (51,777 | ) | — | ||||
Net SunEdison investment | 123,196 | 401,132 | |||||
Payment of dividends | (60,707 | ) | — | ||||
Debt prepayment premium | (6,412 | ) | — | ||||
Payment of deferred financing costs | (43,088 | ) | (42,821 | ) | |||
Net cash provided by financing activities | 1,542,610 | 1,354,255 | |||||
Net increase in cash and cash equivalents | 168,647 | 258,661 | |||||
Effect of exchange rate changes on cash and cash equivalents | (1,380 | ) | (342 | ) | |||
Cash and cash equivalents at beginning of period | 468,554 | 1,044 | |||||
Cash and cash equivalents at end of period | $ | 635,821 | $ | 259,363 |
Appendix Table A-1: Reg. G:
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Adjusted EBITDA
We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities. In addition, Adjusted EBITDA is used by our management for internal planning purposes, including for certain aspects of our consolidated operating budget.
We define Adjusted EBITDA as net income plus interest expense, net; income taxes; depreciation, accretion and amortization; stock-based compensation; and 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. Our definitions and calculations of these items may not necessarily be the same as those used by other companies. Adjusted EBITDA is not a measure of liquidity or profitability and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure determined in accordance with U.S. GAAP.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income (loss) | $ | 2,418 | $ | (1,868 | ) | $ | (52,108 | ) | $ | (19,097 | ) | |||||
Interest expense, net (a) | 48,786 | 22,906 | 121,602 | 54,552 | ||||||||||||
Income tax expense (benefit) | 1,673 | 2,806 | 2,842 | (4,069 | ) | |||||||||||
Depreciation, accretion and amortization (b) | 40,243 | 16,032 | 115,293 | 25,190 | ||||||||||||
General and administrative - affiliate (c) | 13,636 | 5,051 | 36,887 | 8,783 | ||||||||||||
Stock-based compensation | 2,556 | 1,240 | 10,030 | 1,567 | ||||||||||||
Acquisition and related costs, including affiliate (d) | 11,294 | 4,128 | 32,720 | 5,363 | ||||||||||||
Formation and offering related fees and expenses (e) | — | 536 | — | 3,399 | ||||||||||||
Unrealized gain on derivatives, net (f) | (2,669 | ) | — | (855 | ) | — | ||||||||||
(Gain) loss on extinguishment of debt, net (g) | — | (9,580 | ) | 8,652 | (7,635 | ) | ||||||||||
Non-recurring facility-level non-controlling interest member transaction fees (h) | — | — | 2,753 | — | ||||||||||||
Loss on foreign currency exchange, net (i) | 9,825 | 6,240 | 9,755 | 6,914 | ||||||||||||
Other non-cash operating revenues | (4,262 | ) | (345 | ) | (4,262 | ) | (345 | ) | ||||||||
Other non-operating expenses | 2,342 | 59 | 2,342 | 59 | ||||||||||||
Adjusted EBITDA | $ | 125,842 | $ | 47,205 | $ | 285,651 | $ | 74,681 |
—————
(a) In connection with the Amended Interest Payment Agreement between us and
(b) Includes a
(c) Represents the non-cash allocation of
(d) Represents transaction related costs, including affiliate acquisition costs, associated with the acquisitions completed during the three and nine months ended September 30, 2015 and 2014.
(e) Represents non-recurring professional fees for legal, tax and accounting services incurred in connection with the IPO.
(f) Represents the change in the fair value of commodity contracts not designated as hedges.
(g) We recognized a net loss on extinguishment of debt of
(h) Represents non-recurring plant-level professional fees attributable to tax equity transactions entered into during the nine months ended
(i) We incurred a net loss on foreign currency exchange of
Appendix Table A-2: Reg. G:
Reconciliation of Cash flows from operating activities to CAFD
Cash Available for Distribution
We believe cash available for distribution is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance. In addition, cash available for distribution is used by our management team for internal planning purposes.
We define “cash available for distribution” or “CAFD” as net cash provided by operating activities of
The following table presents a reconciliation of cash flows from operating activities to CAFD for the periods presented:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Adjustments to reconcile net cash provided by operating activities to cash available for distribution: | ||||||||||||||||
Net cash provided by operating activities | $ | 69,956 | $ | 14,542 | $ | 105,256 | $ | 26,778 | ||||||||
Changes in assets and liabilities | (4,864 | ) | (4,778 | ) | 9,698 | (17,814 | ) | |||||||||
Deposits into/withdrawals from restricted cash accounts | (20,648 | ) | (4,873 | ) | (10,345 | ) | (148 | ) | ||||||||
Cash distributions to non-controlling interests | (5,367 | ) | (572 | ) | (17,686 | ) | (572 | ) | ||||||||
Scheduled project-level and other debt service and repayments | (6,505 | ) | (3,849 | ) | (18,404 | ) | (8,251 | ) | ||||||||
Contributions received pursuant to agreements with SunEdison | 5,677 | 1,523 | 15,143 | 7,161 | ||||||||||||
Non-expansionary capital expenditures | (4,468 | ) | — | (9,764 | ) | — | ||||||||||
Other: | ||||||||||||||||
Acquisition and related costs, including affiliates | 11,294 | 4,128 | 32,720 | 5,363 | ||||||||||||
Formation and offering related fees and expenses, including affiliates | — | 536 | — | 3,399 | ||||||||||||
Change in accrued interest (a) | 10,871 | 18,645 | 11,771 | 25,727 | ||||||||||||
General and administrative - affiliate (b) | 13,636 | 5,051 | 36,887 | 8,783 | ||||||||||||
Non-recurring facility-level non-controlling interest member transaction fees | — | — | 2,753 | — | ||||||||||||
Economic ownership adjustment (c) | — | — | 13,590 | — | ||||||||||||
Other | 1,279 | (26 | ) | 3,375 | (1,584 | ) | ||||||||||
Estimated cash available for distribution | $ | 70,861 | $ | 30,327 | $ | 174,994 | $ | 48,842 |
—————
(a) The three months ended
(b) Represents the non-cash allocation of
(c) Represents economic ownership of certain acquired operating assets which accrued to us prior to the acquisition close date.
Appendix Table A-3: Reg. G: TerraForm Power, Inc.
Reconciliation of Operating Revenues to Adjusted Revenue
Adjusted Revenue
We define Adjusted Revenue as operating revenues, net adjusted for non-cash items including unrealized gain/loss on derivatives, amortization of favorable and unfavorable revenue contracts and other non-cash items. We believe Adjusted Revenue is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance. Adjusted Revenue is a non-GAAP measure used by our management for internal planning purposes, including for certain aspects of our consolidating operating budget.
The following table presents a reconciliation of Operating revenues, net to Adjusted Revenue:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Adjustments to reconcile Operating revenues, net to adjusted revenue | ||||||||||||||||
Operating revenues, net | $ | 163,291 | $ | 53,566 | $ | 363,852 | $ | 84,336 | ||||||||
Unrealized gain on derivatives, net (a) | (2,669 | ) | — | (855 | ) | — | ||||||||||
Amortization of favorable and unfavorable revenue contracts (b) | (3,424 | ) | 2,787 | 1,599 | 3,558 | |||||||||||
Other non-cash | (4,262 | ) | (345 | ) | (4,906 | ) | (345 | ) | ||||||||
Adjusted revenue | $ | 152,936 | $ | 56,008 | $ | 359,690 | $ | 87,549 |
———
(a) Represents the change in the fair value of commodity contracts not designated as hedges.
(b) Represents net amortization of favorable and unfavorable revenue contracts included within operating revenues.
Media:Anne Granfield , Finsbury anne.granfield@finsbury.com +1 (646) 805-2033 Investors/Analysts:Brett Prior bprior@terraform.com +1 (650) 889-8628