Azure Power Announces Results for Fiscal Third Quarter 2019
EBENE, Mauritius, Feb. 12, 2019 /PRNewswire/ -- Azure Power Global Limited (NYSE: AZRE), a leading independent solar power producer in India, today announced its consolidated results under United States Generally Accepted Accounting Principles ("GAAP") for the fiscal third quarter ended December 31, 2018.
Fiscal Third Quarter 2019 Period Ended December 31, 2018 Operating Highlights:
-- Operating Megawatts (MW) were 1,169 MW as of December 31, 2018, an
increase of 45% over December 31, 2017.
-- Operating & Committed Megawatts were 3,059 MW as of December 31, 2018,
an increase of 94% over December 31, 2017.
-- Revenue for the quarter was INR 2,430.8 million (US$ 34.9 million), an
increase of 40% over the quarter ended December 31, 2017.
-- Adjusted EBITDA for the quarter was INR 1,837.5 million (US$ 26.4
million), an increase of 50% over the quarter ended December 31, 2017.
Key Operating Metrics
Electricity generation during the nine months ended December 31, 2018 increased by 353 million kWh, or 41%, to 1,208 million kWh compared to the same period in 2017. The increase in electricity generation was principally a result of additional capacity operating during the period.
Total revenue during the nine months ended December 31, 2018 was INR 7,079.0 million (US$ 101.7 million), up by 30% from INR 5,441.6 million during the same period in 2017. The increase in revenue was primarily driven by the commissioning of new projects.
Project cost per megawatt operating (megawatt capacity in DC) consists of costs incurred for one megawatt of new solar power plant during the reporting period. The project cost per megawatt operating for the nine months ended December 31, 2018 decreased by INR 3.2 million (US$ 0.05 million) to INR 44.2 million (US$ 0.64 million). The project cost per megawatt was lower for the nine months ended December 31, 2018 than the comparable period in the prior year due to lower costs on account of a decline in solar module prices and efficiency gains in balance of system costs.
As of December 31, 2018, our operating and committed megawatts increased by 1,479 MW compared to December 31, 2017 to 3,059 MW as a result of winning new projects.
Nominal Contracted Payments
The Company's PPAs create long-term recurring customer payments. Nominal contracted payments equal the sum of the estimated payments that the customer is likely to make, subject to discounts or rebates, over the remaining term of the PPAs. When calculating nominal contracted payments, the Company includes those PPAs for projects that are operating or committed.
The following table sets forth, with respect to our PPAs, the aggregate nominal contracted payments and total estimated energy output as of the reporting dates. These nominal contracted payments have not been discounted to arrive at the present value.
As of December 31,
2017 2018
INR
INR US$
Nominal contracted payments (in thousands) 321,241,800 539,383,478 7,751,990
Total estimated energy output (kilowatt hours
in millions) 70,956 152,618
Nominal contracted payments increased from December 31, 2017 to December 31, 2018 as a result of the Company entering into additional PPAs.
Portfolio Revenue Run-Rate
Portfolio revenue run-rate equals annualized payments from customers extrapolated based on the operating and committed capacity as of the reporting dates. In estimating the portfolio revenue run-rate, the Company multiplies the PPA contract price per kilowatt hour by the estimated annual energy output for all operating and committed solar projects as of the reporting date. The estimated annual energy output of the Company's solar projects is calculated using power generation simulation software and validated by independent engineering firms. The main assumption used in the calculation is the project location, which enables the software to derive the estimated annual energy output from certain meteorological data, including the temperature and solar insolation based on the project location.
The following table sets forth, with respect to the Company's PPAs, the aggregate portfolio revenue run-rate and estimated annual energy output as of the reporting dates. The portfolio revenue run-rate has not been discounted to arrive at the present value.
As of December 31,
2017 2018
INR
INR US$
Portfolio revenue run-rate (in thousands) 14,007,890 23,896,380 343,437
Estimated annual energy output (kilowatt hours in millions) 2,587 6,676
Portfolio revenue run-rate increased by INR 9,888.5 million (US$ 142.1 million) to INR 23,896.4 million (US$ 343.4 million) as of December 31, 2018, as compared to December 31, 2017, due to an increase in operational and committed capacity.
Fiscal Third Quarter 2019 Period ended December 31, 2018 Consolidated Financial Results:
Operating Revenues
Operating revenues during the three months ended December 31, 2018 increased by INR 690.9 million (US$ 9.9 million), or 40%, to INR 2,430.8 million (US$ 34.9 million) compared to the same period in 2017. The increase in revenue for the three months ended December 31, 2018 is on account of projects commissioned by the Company since last year.
Cost of Operations (Exclusive of Depreciation and Amortization)
Cost of operations during the three months ended December 31, 2018 increased by INR 60.6 million (US$ 0.9 million), or 38%, to INR
219.0 million (US$ 3.1 million) compared to the same period in 2017. The increase was primarily due to increase in plant maintenance costs related to newly operational projects. The operating cost per megawatt during the three-month period ended December 31, 2018 was INR 0.19 million, a decrease of INR 0.01 million per megawatt as compared to the same period in 2017.
General and Administrative Expenses
General and administrative expenses during the three months ended December 31, 2018 increased by INR 19.7 million (US$ 0.3 million), or 6%, to INR 374.3 million (US$ 5.4 million) compared to the same period in 2017. The increase in general and administrative expenses was lower than the increase in revenue due to economies of scale of operations.
Depreciation and Amortization
Effective October 1, 2018, the Company extended the estimated useful life of most of its utility scale projects from 25 years to 35 years. This change in accounting estimate was based on the Company's various technical evaluations and tests, through which the Company estimated that its solar modules will continue to generate power for at least 35 years at high efficiency levels.
Depreciation and amortization expenses during the three months ended December 31, 2018 increased by INR 1.0 million, or 0.2%, to INR 476.0 million (US$ 6.8 million) compared to the same period in 2017. There was no significant change in the depreciation and amortization expense as the additional depreciation on new projects commissioned since last year was offset by a decrease in depreciation expense on account of change in useful life.
Interest Expense, Net
Net interest expense during the three months ended December 31, 2018 decreased by INR 14.1 million (US$ 0.2 million), or 1%, to INR 1,115.8 million (US$ 16.0 million) compared to the same period in 2017. Interest expense decreased on account of increase in interest income partly offset by borrowings for new projects during the quarter ended December 31, 2018.
Loss on Foreign Currency Exchange
Foreign exchange loss during the three months ended December 31, 2018 increased by INR 108.7 million (US$ 1.6 million) compared to the same period in 2017 to a loss of INR 17.9 million (US$ 0.3 million). The foreign exchange loss increased primarily on account of realized foreign currency payments.
Income Tax Expense / (Benefit)
Income tax expense increased by INR 213.5 million (US$ 3.1 million) to INR 62.5 million (US$ 0.9 million) during the three months ended December 31, 2018 reflecting an increase in profits during the third quarter of 2019.
Net Profit
The net profit for the quarter ended December 31, 2018 was INR 165.3 million (US$ 2.4 million) as compared to a net loss of INR 136.2 million for the quarter ended December 31, 2017, reflecting an improvement of INR 301.5 million (US$ 4.3 million) as compared to the same period in 2017. The increase was primarily due to an increase in revenue and economies of scale on operating costs achieved during the period.
Cash Flow and Working Capital
Cash generated from operating activities for the nine months ended December 31, 2018 was INR 789.0 million (US$ 11.3 million), an increase of INR 383.5 million (US$ 5.5 million) as compared to the prior comparable period, primarily due to increase in revenue during the period.
Cash used in investing activities for the nine months ended December 31, 2018 was INR 13,114.3 million (US$ 188.5 million) compared to INR 16,303.3 million for the prior comparable period. The cash outflow was primarily due to INR 14,590.9 million (US$ 209.7 million) incurred to purchase Property, Plant and Equipment.
Cash generated from financing activities increased by INR 8,357.4 million (US$ 120.1 million) to INR 25,114.4 million (US$ 360.9 million), primarily on account of the public issuance of equity shares and new debt raised during the period.
Liquidity Position
As of December 31, 2018, the Company had INR 17,451.0 million (US$ 250.8 million) of cash, cash equivalents and current investments. The Company had undrawn project debt commitments of INR 12,404.3 million (US$ 178.3 million) as of December 31, 2018 and a working capital facility of INR 7,238.0 million (US$ 104.0 million).
Adjusted EBITDA
Adjusted EBITDA during the three months ended December 31, 2018 increased by INR 610.6 million (US$ 8.8 million) or 50%, as compared to the same period in 2017 to INR 1,837.5 million (US$ 26.4 million). The increase was primarily due to the increase in revenue and economies of scale on operating costs achieved during the period.
Earnings per share
The earnings per share for the three months ended December 31, 2018 was US$ 0.05, as compared to a loss per share of US$ 0.03 for the prior comparable period.
Guidance for Fiscal Year 2019 and Fiscal Year 2020
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. The Company continues to expect to have 1,300 - 1,400 MWs operational by March 31, 2019 and revenue between US$ 143 - 151 million for fiscal year ending March 31, 2019. We expect revenue for the year ending March 31, 2019 to be closer to the lower end of the range as the exchange rate at the time of issuing initial guidance was at INR 63.83 to US$ 1.00; the depreciation of Indian Rupee from INR 63.83 to INR 69.58 to US$ 1.00, a reduction of INR 5.75 or 9%.
With a robust pipeline and strong execution capabilities, we expect to continue to deliver high growth in the next fiscal year ended March 31, 2020. For fiscal year March 31, 2020, the Company expects to have 1,800 - 1,900 MWs operational. In addition, the Company is guiding to revenues of between INR 12,770 - 13,350 million (US$ 184 - 192 million at the December 31, 2018 exchange rate of INR 69.58 to US$ 1.00) for fiscal year ending March 31, 2020.
Webcast and Conference Call Information
The Company will hold its quarterly conference call to discuss earnings results on Wednesday, February 13, 2019 at 8:30 a.m. US Eastern Time. The conference call can be accessed live by dialing 1-888-317-6003 (in the U.S.) and 1-412-317-6061 (outside the U.S.) and entering the passcode 8625623. Investors may access a live webcast of this conference call by visiting http://investors.azurepower.com/events-and-presentations. For those unable to listen to the live broadcast, a replay will be available approximately two hours after the conclusion of the call. The replay will remain available until Wednesday, February 20, 2019 and can be accessed by dialing 1-877-344-7529 (in the U.S.) and 1-412-317-0088 (outside the U.S.) and entering the replay passcode 10128039. An archived podcast will be available at http://investors.azurepower.com/events-and-presentations following the call.
Exchange Rate
This press release contains translations of certain Indian rupee amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise stated, the translation of Indian rupees into U.S. dollars has been made at INR 69.58 to US$ 1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2018. The Company makes no representation that the Indian rupee or U.S. dollar amounts referred to in this press release could have been converted into U.S. dollars or Indian rupees, as the case may be, at any particular rate or at all.
About Azure Power Global Limited
Azure Power is a leading independent solar power producer in India. Azure Power developed India's first private utility scale solar project in 2009 and has been at the forefront in the sector as a developer, constructor and operator of utility scale, micro-grid and rooftop solar projects since its inception in 2008. With its inhouse engineering, procurement and construction expertise and advanced in-house operations and maintenance capability, Azure Power manages the entire development and operation process, providing low-cost solar power solutions to customers throughout India.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's future financial and operating guidance, operational and financial results such as estimates of nominal contracted payments remaining and portfolio run rate, and the assumptions related to the calculation of the foregoing metrics. The risks and uncertainties that could cause the Company's results to differ materially from those expressed or implied by such forward-looking statements include: the availability of additional financing on acceptable terms; changes in the commercial and retail prices of traditional utility generated electricity; changes in tariffs at which long term PPAs are entered into; changes in policies and regulations including net metering and interconnection limits or caps; the availability of rebates, tax credits and other incentives; the availability of solar panels and other raw materials; its limited operating history, particularly as a new public company; its ability to attract and retain its relationships with third parties, including its solar partners; our ability to meet the covenants in its debt facilities; meteorological conditions and such other risks identified in the registration statements and reports that the Company has filed with the U.S. Securities and Exchange Commission, or SEC, from time to time. Portfolio represents the aggregate megawatts capacity of solar power plants pursuant to PPAs, signed or allotted or where the Company has been cleared as one of the winning bidders or won a reverse auction but has yet to receive a letter of allotment. All forward-looking statements in this press release are based on information available to us as of the date hereof, and the Company assumes no obligation to update these forward-looking statements.
Use of Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. We present Adjusted EBITDA as a supplemental measure of our performance. This measurement is not recognized in accordance with U.S. GAAP and should not be viewed as an alternative to U.S. GAAP measures of performance. 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.
We define Adjusted EBITDA as net loss (income) plus (a) income tax expense, (b) interest expense, net, (c) depreciation and amortization and (d) loss (income) on foreign currency exchange. We believe Adjusted EBITDA is useful to investors in assessing our ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of our operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income or other measures of performance determined in accordance with U.S. GAAP. Moreover, Adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation.
Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company's capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations include:
-- it does not reflect our cash expenditures or future requirements for
capital expenditures or contractual commitments or foreign exchange
gain/loss;
-- it does not reflect changes in, or cash requirements for, working
capital;
-- it does not reflect significant interest expense or the cash
requirements necessary to service interest or principal payments on our
outstanding debt;
-- it does not reflect payments made or future requirements for income
taxes; and
-- although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced or paid
in the future and Adjusted EBITDA does not reflect cash requirements for
such replacements or payments.
Investors are encouraged to evaluate each adjustment and the reasons the Company considers it appropriate for supplemental analysis. For more information, please see the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" at the end of this release.
Investor Relation Contacts:
For investor enquiries, please contact Nathan Judge, CFA at ir@azurepower.com. For media related information, please contact Samitla Subba at pr@azurepower.com.
AZURE POWER GLOBAL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
As of As of
March 31, December 31,
2018 2018 2018
(INR) (INR) (US$)
(Unaudited)
(in thousands)
Assets
Current assets:
Cash and cash equivalents 8,346,526 17,451,023 250,805
Investments in available for sale
securities 1,383,573
Restricted cash 2,406,569 5,487,815 78,871
Accounts receivable, net 2,223,455 2,494,264 35,847
Prepaid expenses and other current assets 1,114,482 1,703,700 24,485
Total current assets 15,474,605 27,136,802 390,008
Restricted cash 329,926 885,575 12,727
Property, plant and equipment, net 56,580,700 70,409,413 1,011,920
Software, net 39,802 45,920 660
Deferred income taxes 1,052,393 1,152,301 16,561
Investments in held-to-maturity
securities 7,041 7,549 108
Other assets 499,653 4,396,596 63,190
Total assets 73,984,120 104,034,156 1,495,174
Liabilities and shareholders' equity
Current liabilities:
Short-term debt 835,000 3,819,148 54,889
Accounts payable 1,521,854 2,286,467 32,861
Current portion of long-term debt 873,883 2,515,949 36,159
Income taxes payable 5,878 11,421 164
Interest payable 1,220,463 468,598 6,735
Deferred revenue 79,192 81,999 1,178
Other liabilities 611,598 973,979 13,998
Total current liabilities 5,147,868 10,157,561 145,984
Long-term debt 52,234,940 63,950,986 919,100
Deferred revenue 1,563,732 1,434,572 20,618
Deferred income taxes 892,138 1,311,173 18,844
Asset retirement obligations 356,649 583,823 8,391
Other liabilities 513,344 252,571 3,630
Total liabilities 60,708,671 77,690,686 1,116,567
Shareholders' equity
Equity shares (US$ 0.000625 par value; 25,996,932 and 40,940,212 shares issued and
outstanding as of
March 31, 2018 and December 31, 2018) 1,076 1,769 25
Additional paid-in capital 19,004,604 32,668,008 469,503
Accumulated deficit (6,593,471) (6,519,630) (93,700)
Accumulated other comprehensive income
(loss) (294,672) (968,125) (13,914)
Total APGL shareholders' equity 12,117,537 25,182,022 361,914
Non-controlling interest 1,157,912 1,161,448 16,693
Total shareholders' equity 13,275,449 26,343,470 378,607
Total liabilities and shareholders' equity 73,984,120 104,034,156 1,495,174
AZURE POWER GLOBAL LIMITED
UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENTS
Three months ended December 31, Nine months ended December 31,
2017 2018 2018 2017 2018 2018
INR INR US$
INR INR US$
(in thousands, except per share data)
Operating revenues:
Sale of power 1,739,850 2,430,776 34,935 5,441,579 7,079,008 101,739
Operating costs and expenses:
Cost of operations
(exclusive of
depreciation and
amortization
shown separately below) 158,384 218,951 3,147 476,597 613,241 8,813
General and administrative 354,542 374,282 5,379 769,224 864,816 12,429
Depreciation and amortization 474,930 475,973 6,841 1,357,667 1,627,108 23,385
Total operating cost and expenses 987,856 1,069,206 15,367 2,603,488 3,105,165 44,627
Operating income 751,994 1,361,570 19,568 2,838,091 3,973,843 57,112
Other expense:
Interest expense, net 1,129,929 1,115,802 16,036 4,334,514 3,446,300 49,530
(Gain)/Loss on
foreign currency
exchange, net (90,825) 17,884 257 (52,566) 458,950 6,596
Total other expenses 1,039,104 1,133,686 16,293 4,281,948 3,905,250 56,126
Profit/(Loss) before income tax (287,110) 227,884 3,275 (1,443,857) 68,593 986
Income tax (expense) /benefit 150,948 (62,545) (899) 274,023 (171,056) (2,458)
Net Profit/(loss) (136,162) 165,339 2,376 (1,169,834) (102,463) (1,472)
Net profit/(loss)
attributable to
non-controlling
interest (69,761) 22,336 321 (203,916) 42,111 605
Net Profit/(loss)
attributable to
APGL (66,401) 143,003 2,055 (965,918) (144,574) (2,077)
Accretion to
redeemable non-
controlling
interest 15,700 - (6,397) -
Net Profit/(loss)
attributable to APGL
equity shareholders (50,701) 143,003 2,055 (972,315) (144,574) (2,077)
Net Profit/(loss)
per share
attributable to
APGL equity
stockholders
Basic / diluted (2) 4 0.05 (37) (5) (0.07)
Shares used in
computing basic and
diluted per share
amounts
Equity shares 25,985,057 39,745,291 25,968,240 30,466,892
AZURE POWER GLOBAL LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended December 31, Nine months ended December 31,
2017 2018 2018 2017 2018 2018
INR
INR US$
INR
INR US$
(in thousands)
Net cash
provided by
operating
activities 177,720 (225,385) (3,239) 405,543 789,008 11,340
Net cash used in
investing activities (9,010,339) (5,565,048) (79,981) (16,303,268) (13,114,270) (188,478)
Net cash
provided by
financing
activities 1,406,012 16,657,130 239,395 16,756,967 25,114,391 360,943
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
The table below sets forth a reconciliation of our income from operations to Adjusted EBITDA for the periods indicated:
Three months ended December 31, Nine months ended December 31,
2017 2018 2018 2017 2018 2018
INR
INR US$ INR
INR US$
(in thousands)
Net Profit /
(Loss) (136,162) 165,339 2,376 (1,169,834) (102,463) (1,472)
Income tax
expense/
(benefit) (150,948) 62,545 899 (274,023) 171,056 2,458
Interest
expense, net 1,129,929 1,115,802 16,036 4,334,514 3,446,300 49,530
Depreciation and
amortization 474,930 475,973 6,841 1,357,667 1,627,108 23,385
Loss on foreign currency
exchange, net (90,825) 17,884 257 (52,566) 458,950 6,596
Adjusted EBITDA 1,226,924 1,837,543 26,409 4,195,758 5,600,951 80,497
Investor Contact
Nathan Judge, CFA
ir@azurepower.com
Investor Relations, Azure Power
Media Contact
Samitla Subba
pr@azurepower.com
+91-11- 4940 9854
Marketing, Azure Power
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SOURCE Azure Power
