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Atlantica Yield Reports First Quarter 2017 Financial Results

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Net loss for the quarter attributable to the Company of $11.8 million compared to $26.0 million loss in the first quarter of 2016

 

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Further Adjusted EBITDA including unconsolidated affiliates1 increased by 7% to $165.0 million in the first quarter of 2017 compared with $154.9 million in the same quarter of 2016

 

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Excellent cash available for distribution (“CAFD”)2 of $60.9 million in the quarter compared to $18.7 million in the first quarter of 2016

 

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Quarterly dividend of $0.25 per share declared by the Board of Directors

 

May 15, 2017 – Atlantica Yield plc (“ABY”), the sustainable total return company that owns a diversified portfolio of contracted assets in the energy and environment sectors, reported solid financial results for the three-month period ended March 31, 2017.  Further Adjusted EBITDA including unconsolidated affiliates¹ amounted to $165.0 million representing a 7% increase compared to the same quarter in 2016 despite lower than expected solar radiation in the Southwest of the United States.  Further Adjusted EBITDA margin improved to 83.3% from 75% as compared to the first quarter of 2016.

 

Net cash provided by operating activities amounted to $86.4 million, in line with $84.5 million in the first quarter of 2016. Cash Available for Distribution (“CAFD”) generation was excellent in the first quarter, reaching $60.9 million ($18.7 million on the first quarter of 2016).

 

 

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Highlights

 

Key Performance Indicators

 

 

 

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Segment Results

 

 

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During the three-month period ended March 31, 2017, revenue amounted to $198.1 million representing a 4% decrease in comparison with the revenue generated in the first quarter of 2016.  The decrease was due, in part to translation differences driven by the depreciation of Euro against US dollar, with no impact on cash generation since we hedge the net cash we receive from our euro denominated-assets. The decrease was also due to the lower production at Kaxu, our solar plant in South Africa which experienced technical problems at the end of 2016. In our wind assets, which represent a very small portion of the portfolio, we continue to see low wind resource.

 

The rest of the assets have performed ahead or in line with expectations. As such, revenues and production generated by our solar assets in the United States in the first quarter of 2017 increased as compared to the first quarter of 2016, despite lower levels of solar radiation in California and Arizona. In Spain, our solar plants continued to deliver solid results, with higher levels of production and revenues compared with the first quarter of 2016.

Our availability-based assets continue to deliver solid performance.  ACT, our cogeneration plant in Mexico, has maintained its strong levels of availability, production and cash generation. Finally, our transmission and water assets delivered very stable levels of revenue and Further Adjusted EBITDA.

Events During the First Quarter

In February 2017, we successfully refinanced part of our corporate debt by signing a note facility (the “Note Issuance Facility “) with a group of funds managed by Westbourne Capital, an Australian infrastructure investor for a total amount of €275 million (approximately $293 million).  With this new financing, we evenly staggered the maturity of the new notes in a manner than each of the three notes of approximately €92 million matures in 2022, 2023 and 2024.  We have fixed the interest rate to 5.5% via an interest rate swap.  The Note Issuance Facility provides a natural hedge for the cash distributions we receive from our assets in Spain.

In addition, in the first quarter of 2017, we completed the acquisition of a 12.5% stake in a 114-mile transmission line which will connect California and Arizona. The asset will receive a FERC regulated rate of return, and is currently under development, with COD expected in 2020. We expect our total investment to be up to $10 million in the coming three years and we have a right to acquire an additional 12.5% interest in the asset.

 

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Finally, in March 2017, we have obtained a waiver in Kaxu which waives any past potential cross-default with Abengoa in the project finance agreement and allows reduction of ownership by Abengoa below the 35% threshold.

Liquidity and Debt

Our total liquidity as of March 31, 2017 represents $673.7 million and consists of $589.4 million of consolidated cash and cash equivalents, of which $102.0 million was available at the Atlantica corporate level and $84.3 million of cash classified as short-term financial investments at the project level. If we adjust cash for the sale of Abengoa’s New Money 1 Tradable Notes⁹ closed in early April for $44.9 million, total liquidity amounts to $718.6 million, of which $146.9 million was available at the corporate level.

 

As of March 31, 2017, net project debt amounted to $4,922.9 million and net corporate debt amounted to $565.9 million.  The net corporate debt / CAFD pre-corporate debt service ratio¹⁰ improved to 2.6x compared to 2.7x as of December 31, 2016 and is significantly below our stated target of 3x.

Net project debt is calculated as long-term project debt plus short-term project debt minus cash and cash equivalents at the project level. Net corporate debt is calculated as long-term corporate debt plus short-term corporate debt minus cash and cash equivalents at Atlantica Yield corporate level.

 

On May 12, 2017, Standard & Poors upgraded Atlantica Yield to BB- with Stable Outlook. Senior secured debt rating was raised to BB+. With this, S&P acknowledges the progress we have achieved on the separation from Abengoa, obtaining a majority of the waivers for cross-default and change of ownership provisions contained in certain of our project financing agreements. S&P also values positively the refinancing of our corporate debt mentioned above, with maturities extended until 2024.

 

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⁹ As part of its restructuring plan, Abengoa has issued New Money 1 Tradable Notes which are super-senior debt securities asset-backed by a ring-fenced structure consisting of the shares Abengoa owns in us and A3T, a cogeneration plant in Mexico.  We participated in the New Money 1 Tradable Notes in order to elevate to senior the status the debt securities Abengoa gave us as a part of the ACBH investment agreement.  We sold our New Money 1 Tradable Notes in early April.

 

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Dividend

On May 12, 2017, our Board of Directors approved a dividend of $0.25 per share. This dividend is expected to be paid on or about June 15, 2017 to shareholders of record as of May 31, 2017. The Board has decided to remain prudent this quarter and we expect to increase dividends as the last remaining waivers and forbearances are secured.

Details of the Results Presentation Conference

Atlantica Yield’s CEO, Santiago Seage, and its CFO, Francisco Martinez-Davis, will hold a conference call today, May 15, at 4:30 pm EST.

In order to access the conference call participants should dial:  +1 866 388 1927 (US) / +44 (0) 207 750 9908 (UK).  A live webcast of the conference call will be available on Atlantica Yield's website. Please visit the website at least 15 minutes earlier in order to register for the live webcast and download any necessary audio software.

Additionally, Atlantica Yield’s management is in Boston and New York this week to meet with investors.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this press release, including, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we operate or are seeking to operate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “is likely to,” “may,” “plan,” “potential,” “predict,” “projected,” “should” or “will” or the negative of such terms or other similar expressions or terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements speak only as of the date of this press release and are not guarantees of future performance and are based on numerous assumptions. Our actual results of operations, financial condition and the development of events may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements.

 

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Atlantica Yield undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

Non-GAAP Financial Measures

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS as issued by the IASB. Non-GAAP financial measures and ratios are not measurements of our performance or liquidity under IFRS as issued by the IASB and should not be considered as alternatives to operating profit or profit for the year or any other performance measures derived in accordance with IFRS as issued by the IASB or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities.

We define Further Adjusted EBITDA including unconsolidated affiliates as profit/(loss) for the period attributable to the Company, after adding back loss/(profit) attributable to non-controlling interest from continued operations, income tax, share of profit/(loss) of associates carried under the equity method, finance expense net, depreciation, amortization and impairment charges, and dividends received from the preferred equity investment in ACBH.

Our management believes Further Adjusted EBITDA including unconsolidated affiliates is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. This measure is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Further Adjusted EBITDA including unconsolidated affiliates is also used by management as a measure of liquidity.

 

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Our management uses Further Adjusted EBITDA including unconsolidated affiliates as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, shareholders, creditors, analysts and investors concerning our financial performance.

We define Cash Available For Distribution as cash distributions received by the Company from its subsidiaries minus all cash expenses of the Company, including debt service and general and administrative expenses. Management believes cash available for distribution is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors.

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 our ability to make quarterly distributions. In addition, cash available for distribution is used by our management team for determining future acquisitions and managing our growth.

 

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Consolidated Statements of Operations

(Amounts in thousands of U.S. dollars)

 

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Consolidated Statement of Financial Position

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Consolidated Cash Flow Statements

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Reconciliation of Further Adjusted EBITDA including unconsolidated affiliates to Profit/(loss) for the period attributable to the company

 

Reconciliation of Further Adjusted EBITDA including unconsolidated affiliates to net cash provided by operating activities

 

 

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Cash Available For Distribution Reconciliation (Historical)

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¹¹ CAFD includes $14.9 million proceeds of ATN2 refinancing in the first quarter of 2016 and $6.8 million and $21.2 million of ACBH dividend compensation in the third and fourth quarter of 2016 respectivelly.

 

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About Atlantica Yield

 

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