Pattern Energy Reports First Quarter 2019 Financial Results
SAN FRANCISCO, May 10, 2019 /PRNewswire/ -- Pattern Energy Group Inc. (the "Company" or "Pattern Energy") (NASDAQ & TSX: PEGI) today announced its financial results for the 2019 first quarter.
Highlights
(Figures reported below are for the first quarter of fiscal 2019, unless otherwise noted)
-- Proportional gigawatt hours ("GWh") sold of 2,116 GWh, down 1%
-- Net loss of $46 million
-- Cash available for distribution ("CAFD") of $53 million, up 23% and on
track to meet full year guidance((1))
-- Adjusted EBITDA of $98 million, down 6%
-- Revenue of $135 million, up 21%
-- Declared a second quarter dividend of $0.4220 per Class A common share
or $1.688 on an annualized basis, subsequent to the end of the period,
unchanged from the previous quarter's dividend
-- Increased Pattern Energy's total capital invested in Pattern Development
to $190 million by fulfilling capital calls since January 1, 2019
-- Added 400 megawatts ("MW") of new wind projects to the identified right
of first offer ("ROFO") list, consisting of three projects in New Mexico
with contracted sales to purchasers in the California market
"We continue to demonstrate a strong ability to manage the business for the wind variability experienced. We are on track for our 2019 full year guidance target with our effective capital management and growth strategy, despite wind resource levels that were below the long-term average in the Eastern United States," said Mike Garland, CEO of Pattern Energy. "We are executing our strategy to grow our CAFD per share through 2020 without the requirement to issue new common equity. The actions we are taking are meant to ensure that we can maintain our dividend, drive down our payout ratio and fund the acquisition of identified ROFO projects. We have expanded our identified ROFO list to 1.3 GW with new projects in New Mexico during the quarter. Our investment in Pattern Development remains on track to deliver meaningful growth beyond 2019."
(1) The forward looking measure of 2019 full year cash available for distribution (CAFD) is a non-GAAP measure that cannot be reconciled to net income as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking mark-to-market changes in derivatives and proportionate share of earnings from unconsolidated investments to arrive at net income and which are subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Metrics, of Pattern Energy's 2019 Quarterly Report on Form 10-Q for the period ended March 31, 2019.
Financial and Operating Results
Pattern Energy sold 2,115,855 megawatt hours ("MWh") of electricity on a proportional basis in the first quarter of 2019, compared to 2,135,715 MWh sold in the same period last year. The 1% decrease in the quarterly period was primarily due to volume decreases as a result of divestitures in 2018 and unfavorable wind conditions partially offset by volume increases due to acquisitions in 2018 and less curtailment and congestion in the first quarter of 2019.
Net loss was $46 million in the first quarter of 2019, compared to a net loss of $13 million for the same period last year. The increase of $33 million in net loss in the quarterly period was primarily attributable to a $24 million increase in net loss at the operating business segment, mainly due to losses at existing projects, divestitures in 2018, derivative losses and a $10 million increase in the share of net loss at the development investment segment, which included impairment expense and increased cost of development including legal, professional and related party administrative expense.
Adjusted EBITDA decreased 6% to $98 million for the first quarter of 2019, compared to $104 million for the same period last year. The $6 million decrease in the quarterly period was primarily due to decreases of $13 million due to divestitures in 2018 and $10 million due to losses at our development investment segment. These decreases in Adjusted EBITDA were partially offset by increases of $16 million from new projects acquired in 2018 and $2 million from projects fully operational in both periods.
Cash available for distribution increased 23% to $53 million for the first quarter of 2019, compared to $43 million for the same period last year. The $10 million increase in the quarterly period was primarily due to increases of $9 million from projects fully operational in both periods and $7 million from new projects acquired in 2018, partially offset by a decrease of $6 million due to divestitures in 2018.
2019 Financial Guidance
Pattern Energy is re-confirming its targeted annual cash available for distribution((1)) for 2019 within a range of $160 million to $190 million. For the full year 2020, Pattern Energy expects annual cash available for distribution((1)) in a range of $185 million to $225 million.
(1) The forward looking measures of 2019 and 2020 full year cash available for distribution (CAFD) are non-GAAP measures that cannot be reconciled to net income as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking mark-to-market changes in derivatives and proportionate share of earnings from unconsolidated investments to arrive at net income and which are subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Metrics, of Pattern Energy's 2019 Quarterly Report on Form 10-Q for the period ended March 31, 2019.
Quarterly Dividend
Pattern Energy declared a dividend for the second quarter 2019, payable on July 31, 2019, to holders of record on June 28, 2019 in the amount of $0.4220 per Class A common share, which represents $1.688 on an annualized basis. The amount of the second quarter 2019 dividend is unchanged from the first quarter 2019 dividend.
Acquisition Pipeline
Pattern Development (formerly referred to as Pattern Energy Group 2 LP or Pattern Development 2.0) and Pattern Energy Group LP (formerly referred to as Pattern Development 1.0) have a pipeline of development projects totaling more than 10 gigawatts ("GW"). Pattern Energy has a ROFO on the pipeline of acquisition opportunities from these two companies. The identified ROFO list stands at 1.3 GW of total capacity and represents a portion of the pipeline of development projects, which are subject to Pattern Energy's ROFO. Since its IPO, Pattern Energy has purchased, or agreed to purchase, more than 1.6 GW from Pattern Energy Group LP and Pattern Development and in aggregate grown the identified ROFO list from 746 MW to more than 2 GW.
Pattern Energy has removed the 80 MW Crazy Mountain Wind project, located in Sweet Grass County, Montana, from its identified ROFO list due to the likelihood that the project will not continue as a result of a court order which has currently halted further development at the project.
Below is a summary of the identified ROFO projects that Pattern Energy has the right to purchase from Pattern Development and Pattern Energy Group LP in connection with its respective purchase rights:
Capacity (MW)
Identified
Status
Location
Construction
Commercial Contract Rated (3)
Pattern
ROFO Projects Start (1) Operations (2) Type Development
Companies
Owned (4)
---
Pattern Energy Group LP
Belle River
Operational
Ontario 2016 2017
PPA 100 43
North Kent
Operational
Ontario 2017 2018
PPA 100 35
Henvey Inlet
In construction
Ontario 2017 2019
PPA 300 150
Pattern Development
---
Grady
In construction
New Mexico 2018 2019
PPA 220 188
Sumita
Late stage development
Japan 2020 2022
PPA 100 55
Ishikari
Late stage development
Japan 2020 2022
PPA 112 112
Corona Wind Project(s)
Late stage development
New Mexico 2020 2021
PPA 400 340
1,332 923
(1) Represents year of actual or
anticipated commencement of
construction.
(2) Represents year of actual or
anticipated commencement of commercial
operations.
(3) Rated capacity represents the maximum
electricity generating capacity of a
project in MW. As a result of weather
and other conditions, a project will
not operate at its rated capacity at
all times and the amount of
electricity generated may be less than
its rated capacity. The amount of
electricity generated may vary based
on a variety of factors.
(4) Pattern Development Companies-Owned
capacity represents the maximum, or
rated, electricity generating capacity
of the project in MW multiplied by
Pattern Energy Group LP's or Pattern
Development's percentage ownership
interest in the distributable cash
flow of the project.
Pattern Energy Group Inc.
Consolidated Statements of Operations
(In millions of U.S. dollars, except share data)
(Unaudited)
Three months ended March 31,
2019 2018
---
Revenue:
Electricity sales $
123 $
102
Other revenue 12 10
Total revenue 135 112
Cost of revenue:
Project expense 40 35
Transmission costs 6 7
Depreciation,
amortization and
accretion 83 55
Total cost of revenue 129 97
Gross profit 6 15
Operating expenses:
General and
administrative 11 11
Related party general
and administrative 4 4
Total operating expenses 15 15
Operating income (loss) (9)
Other income (expense):
Interest expense (26) (25)
Gain on derivatives 1 6
Earnings (loss) in
unconsolidated
investments, net (6) 18
Net loss on transactions - (1)
Other expense, net (2) (4)
Total other expense (33) (6)
Net loss before income
tax (42) (6)
Income tax provision 4 7
Net loss (46) (13)
Net loss attributable to
noncontrolling interest (16) (149)
Net income (loss)
attributable to Pattern
Energy $
(30) $
136
Weighted-average number of common
shares outstanding
Basic 97,568,427 97,428,388
Diluted 97,568,427 105,564,491
Net income (loss) per share attributable
to Pattern Energy
Basic $
(0.31) $
1.39
Diluted $
(0.31) $
1.32
Adjusted EBITDA and Cash Available for Distribution Non-GAAP Reconciliations
The following tables present a reconciliation of Adjusted EBITDA and cash available for distribution to net loss, the most directly comparable GAAP financial measure, for the
periods indicated (unaudited and in millions):
Three months ended March 31,
2019 2018
Net loss $
(46) $
(13)
Plus:
Interest expense, net of interest income 25 25
Income tax provision 4 7
Depreciation, amortization and accretion 89 63
EBITDA $
72 $
82
Unrealized loss on derivatives 5 5
Other 1
Plus, proportionate share from unconsolidated investments:
Interest expense, net of interest income 6 9
Depreciation, amortization and accretion 6 9
(Gain) loss on derivatives 8 (1)
Adjusted EBITDA $
98 $
104
Plus:
Distributions from unconsolidated investments 14 20
Release of restricted cash 2
Stock-based compensation 1 1
Less:
Unconsolidated investment earnings and proportionate shares for EBITDA (15) (38)
Interest expense, less non-cash items and interest income (23) (23)
Income taxes (1)
Distributions to noncontrolling interests (11) (9)
Principal payments paid from operating cash flows (10) (14)
Cash available for distribution $
53 $
43
Weighted-average number of common shares outstanding
Basic 97,568,427 97,428,388
Cash available for distribution per share
Basic $
0.54 $
0.44
Pattern Energy Group Inc.
Consolidated Balance Sheets
(In millions of U.S. dollars, except share and par value data)
(Unaudited)
March 31, December 31,
2019 2018
---
Assets
Current assets:
Cash and cash equivalents $
93 $
101
Restricted cash - 4
Counterparty collateral 6 6
Trade receivables 74 50
Derivative assets, current 7 14
Prepaid expenses 13 18
Deferred financing costs, current,
net of accumulated amortization
of $3 and $3 as of March 31, 2019
and December 31, 2018,
respectively 2 2
Other current assets 27 16
Total current assets 222 211
Restricted cash 15 18
Major construction advances 86 84
Construction in progress 277 259
Property, plant and equipment, net 4,052 4,119
Unconsolidated investments 257 270
Derivative assets 7 9
Deferred financing costs 8 8
Net deferred tax assets 7 5
Intangible assets, net 215 219
Goodwill 58 58
Other assets 108 34
Total assets $
5,312 $
5,294
Liabilities and equity
Current liabilities:
Accounts payable and other accrued
liabilities $
83 $
67
Accrued construction costs 13 27
Counterparty collateral liability 6 6
Accrued interest 7 14
Dividends payable 42 42
Derivative liabilities, current 3 2
Revolving credit facility, current 234 198
Current portion of long-term
debt, net 59 56
Asset retirement obligation,
current 24 24
Contingent liabilities, current 7 31
Other current liabilities 23 11
Total current liabilities 501 478
Revolving credit facility 24 25
Long-term debt, net 2,045 2,004
Derivative liabilities 45 31
Net deferred tax liabilities 118 117
Intangible liabilities, net 47 56
Contingent liabilities 142 142
Asset retirement obligations 187 185
Other long-term liabilities 132 71
Contract liability 27 26
Total liabilities 3,268 3,135
Commitments and contingencies
Equity:
Class A common stock, $0.01 par
value per share: 500,000,000
shares authorized; 98,251,544 and
98,051,629 shares outstanding as
of March 31, 2019 and December
31, 2018, respectively 1 1
Additional paid-in capital 1,090 1,130
Accumulated loss (57) (27)
Accumulated other comprehensive
loss (73) (52)
Treasury stock, at cost; 247,995
and 223,040 shares of Class A
common stock as of March 31, 2019
and December 31, 2018,
respectively (5) (5)
Total equity before noncontrolling
interest 956 1,047
Noncontrolling interest 1,088 1,112
Total equity 2,044 2,159
Total liabilities and equity $
5,312 $
5,294
Pattern Energy Group Inc.
Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
Three months ended March 31,
2019 2018
---
Operating activities
Net loss $
(46) $
(13)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation,
amortization and
accretion 90 62
Loss on derivatives 5 4
Stock-based
compensation 1 1
Deferred taxes 3 7
(Earnings) losses in
unconsolidated
investments, net 6 (18)
Distributions from
unconsolidated
investments 7 14
Changes in operating assets and
liabilities:
Counterparty collateral
asset 12
Trade receivables (23) (6)
Other current assets (6) 2
Other assets (non-
current) (11) (1)
Accounts payable and
other accrued
liabilities 15 (19)
Counterparty collateral
liability (12)
Other current
liabilities (31) (9)
Other long-term
liabilities (2) 4
Net cash provided by
operating activities 8 28
Investing activities
Cash paid for
acquisitions and
investments, net of
cash and restricted
cash acquired (7) (193)
Capital expenditures (40) (61)
Distributions from
unconsolidated
investments 7
Other assets (17)
Net cash used in
investing activities (40) (271)
Financing activities
Dividends paid (42) (41)
Capital contributions -
noncontrolling interest 5
Capital distributions -
noncontrolling interest (11) (9)
Payment for financing
fees (6)
Proceeds from short-
term debt 75 283
Repayment of short-term
debt (41) (35)
Proceeds from long-term
debt and other 45 113
Repayment of long-term
debt and other (8) (19)
Payment for termination
of designated
derivatives (3)
Other financing
activities (1)
Net cash provided by
financing activities 19 286
Effect of exchange rate
changes on cash, cash
equivalents and
restricted cash (2) (1)
Net change in cash, cash
equivalents and
restricted cash (15) 42
Cash, cash equivalents
and restricted cash at
beginning of period 123 138
Cash, cash equivalents
and restricted cash at
end of period $
108 $
180
Supplemental disclosures
Cash payments for income
taxes $
14
$
Cash payments for
interest expense $
29 $
33
Schedule of non-cash activities
Change in property,
plant and equipment $
10 $
122
Conference Call and Webcast
Pattern Energy will host a conference call and webcast to discuss these results at 10:30 a.m. Eastern Time on Friday, May 10, 2019. Mike Garland, CEO, and Esben Pedersen, CFO, will co-chair the call. Participants should call (888) 231-8191 or (647) 427-7450 and ask an operator for the Pattern Energy earnings call. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To access the replay, please dial (855) 859-2056 or (416) 849-0833 and enter access code 4078346. The replay recording will be available until 11:59 p.m. Eastern Time, May 31, 2019.
A live webcast of the conference call with a presentation that accompanies the call will be also available on the events page in the invest section of Pattern Energy's website at www.patternenergy.com. An archived webcast will be available for one year.
About Pattern Energy
Pattern Energy Group Inc. (Pattern Energy) is an independent power company listed on the Nasdaq Global Select Market and Toronto Stock Exchange. Pattern Energy has a portfolio of 24 renewable energy projects with an operating capacity of approximately 4 GW in the United States, Canada and Japan that use proven, best-in-class technology. Pattern Energy's wind and solar power facilities generate stable long-term cash flows in attractive markets and provide a solid foundation for the continued growth of the business. For more information, visit www.patternenergy.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of Canadian securities laws, including statements regarding the ability to achieve the 2019 full year guidance target and grow CAFD per share through 2020 without the requirement to issue new common equity; the ability to maintain the dividend, drive down the payout ratio, and fund the acquisition of identified ROFO projects; and the ability of the investment in Pattern Development to deliver meaningful growth beyond 2019. These forward-looking statements represent the Company's expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to differ materially from the results discussed in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Company's annual report on Form 10-K and any quarterly reports on Form 10-Q. The risk factors and other factors noted therein could cause actual events or the Company's actual results to differ materially from those contained in any forward-looking statement.
Contacts:
Media Relations
Investor Relations
Matt Dallas
Ross Marshall
917-363-1333
416-526-1563
matt.dallas@patternenergy.com
ross.marshall@loderockadvisors.com
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SOURCE Pattern Energy Group Inc.
