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Pattern Energy Reports First Quarter 2016 Financial Results

By Pattern Energy Operations LP
May 9th, 2016
PR Newswire

- $41.0 million in Q1 2016 CAFD on track for FY 2016 target -

- Declares increased dividend of $0.39 per Class A common share for Q2 2016 -

San Francisco, May 9, 2016 /CNW/ -- Pattern Energy Group Inc. (the "Company" or "Pattern Energy") (NASDAQ: PEGI) (TSX: PEG) today announced its financial results for the 2016 first quarter.

pattern_logo.jpg

Highlights

(Comparisons made between fiscal Q1 2016 and fiscal Q1 2015 results, unless otherwise noted)

  • Cash available for distribution (CAFD) of $41.0 million, up 340%, on track to meet full year guidance
  • Adjusted EBITDA of $78.1 million, up 67%
  • Proportional GWh sold of 1,801 GWh, up 92%
  • Revenue of $87.6 million, up 35%
  • Declared a second quarter dividend of $0.39 per Class A common share or $1.56 on an annualized basis, subsequent to the end of the period, representing a 2.4% increase over the previous quarter's dividend
  • All 16 existing assets, representing 2,282 MW of owned capacity, are operational with no new capital required to be raised for existing ownership interest levels

"Our fleet continues to operate at a high turbine availability across all 16 operating projects. Delivering $41.0 million in CAFD is an excellent result for the first quarter. It keeps us on track to achieve our 2016 CAFD target and enabled us to increase our dividend for the ninth straight quarter," said Mike Garland, President and CEO of Pattern Energy. "Our proven, successful relationship with Pattern Development continues to provide us with a strong growth outlook including 1.3 GW of identified ROFO assets and a growing pipeline of development stage assets. Pattern Development has also provided us more flexibility when we drop down future projects. Their development pipeline includes two solar projects that have commenced operations in Japan since March."

Financial Results

Pattern Energy sold 1,801,034 MWh of electricity on a proportional basis in the first quarter of 2016 compared to 935,981 MWh sold in the same period last year. The increase was primarily attributable to projects which were acquired in May 2015 or became commercially operable since the third quarter of 2015. Specifically, it includes an increase in volume of 763,424 MWh from controlling interest in consolidated MWh; and an increase in volume of 101,629 MWh from unconsolidated investments due primarily to the acquisition of K2 in June 2015. As expected, El Niño conditions continued into early 2016 which resulted in lower wind speeds and lower production than the Company's long-term average forecast.

Adjusted EBITDA was $78.1 million for the first quarter of 2016 compared to $46.7 million for the same period last prior year, an increase of $31.3 million, or approximately 67.1%. The increase in Adjusted EBITDA for the first quarter as compared to the same period in the prior year was primarily attributable to projects which commenced commercial operations or were acquired since May 2015. Reconciliations of adjusted EBITDA to net loss determined in accordance with GAAP for the quarterly periods are shown below.

Net loss was $29.0 million in the first quarter of 2016, compared to $22.1 million in the same period last year. The change was primarily attributable to projects which were acquired in May 2015 or became commercially operable since the third quarter of 2015. Also contributing to the change were increases in other expense items related to interest expense and losses on undesignated derivatives, net. These changes were partially offset by increases in earnings (losses) in unconsolidated investments, net primarily due to the acquisition of K2 in 2015.

Cash available for distribution was $41.0 million for the first quarter of 2016 as compared to $9.3 million for the same period in the prior year. This $31.7 million increase in cash available for distribution was due to additional revenues of $31.3 million (excluding unrealized loss on energy derivative and amortization of power purchase agreements) primarily from projects which commenced commercial operations or were acquired during 2015. Pattern Energy also received an increase of $14.1 million in cash distributions from its unconsolidated investments when compared to the same period in the prior year due to full operation at each of its unconsolidated investments in 2016. These increases were partially offset by increases in project expenses of $7.0 million and operating expenses of $3.4 million, primarily from projects which commenced commercial operations or were acquired during 2015, as well as, increased interest payments of $3.1 million and distributions to noncontrolling interests of $3.2 million. Reconciliations of cash available for distribution to net cash provided by operating activities determined in accordance with GAAP for the quarterly periods are shown below.

2016 Financial Guidance

Pattern Energy reaffirms its targeted annual cash available for distribution for 2016 in a range of $125 million to $145 million, representing an increase of 46% at the midpoint of the range, compared to cash available for distribution in 2015.(1)

Quarterly Dividend

Pattern Energy declared an increased dividend for the second quarter 2016, payable on July 29, 2016, to holders of record on June 30, 2016 in the amount of $0.39 per Class A common share, which represents $1.56 on an annualized basis. This is a 2.4% increase from the first quarter 2016 dividend of $0.381.

Acquisition Pipeline

Pattern Energy has the Right of First Offer (ROFO) on a pipeline of acquisition opportunities from Pattern Development. The identified ROFO list stands at 1,298 MW of total owned capacity. This list of identified ROFO projects represents a portion of Pattern Development's 5,900 MW pipeline of development projects, all of which are subject to Pattern Energy's ROFO.

Since its IPO, Pattern Energy has purchased 832 MW from Pattern Development and in aggregate grown the identified ROFO list from 746 MW to a total of 2,130 MW. The table below sets forth the current list of identified ROFO projects:

Asset

 

Location

 

Owned MW

 

Status

Armow

 

Ontario

 

90

 

Operational

Kanagi Solar

 

Japan

 

6

 

Operational

Futtsu Solar

 

Japan

 

19

 

Operational

Meikle

 

British Columbia

 

180

 

In construction

Conejo Solar

 

Chile

 

84

 

In construction

Belle River

 

Ontario

 

50

 

Securing final permits

Broadview projects

 

New Mexico

 

259

 

Late stage development

Grady

 

New Mexico

 

176

 

Late stage development

Henvey Inlet

 

Ontario

 

150

 

Late stage development

North Kent

 

Ontario

 

43

 

Late stage development

Mont Sainte-Marguerite

 

Québec

 

147

 

Late stage development

Ohorayama

 

Japan

 

31

 

Late stage development

Tsugaru

 

Japan

 

63

 

Late stage development

Total

     

1,298

   
   

(1) The forward looking measure of cash available for distribution for 2016 is a non-GAAP measure that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort. 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 Metrics, of Pattern Energy's 2016 Quarterly Report on Form 10-Q for the period ended March 31, 2016.

 

Cash Available for Distribution and Adjusted EBITDA Non-GAAP Reconciliations

The following tables reconcile non-GAAP net cash provided by operating activities to cash available for distribution and net loss to adjusted EBITDA, respectively, for the periods presented (in thousands):

 

Three Months Ended March 31,

 

2016

 

2015

Net cash provided by operating activities

$

14,721

   

$

16,239

 

Changes in operating assets and liabilities

18,967

   

(4,657)

 

Network upgrade reimbursement

   

618

 

Release of restricted cash to fund project and general and administrative costs

590

   

 

Operations and maintenance capital expenditures

(230)

   

(38)

 

Transaction costs for acquisitions

13

   

420

 

Distributions from unconsolidated investments

19,814

   

6,076

 

Other

   

(144)

 

Less:

     

Distributions to noncontrolling interests

(3,917)

   

(748)

 

Principal payments paid from operating cash flows

(8,943)

   

(8,435)

 

Cash available for distribution

$

41,015

   

$

9,331

 

 

 

Three Months Ended March 31,

 

2016

 

2015

Net loss

$

(29,048)

   

$

(22,059)

 

Plus:

     

Interest expense, net of interest income

20,315

   

17,699

 

Tax provision (benefit)

1,298

   

(746)

 

Depreciation, amortization and accretion

45,384

   

29,056

 

EBITDA

$

37,949

   

$

23,950

 

Unrealized loss (gain) on energy derivative (1)

4,825

   

(2,972)

 

Loss on undesignated derivatives, net

13,631

   

3,400

 

Net (gain) loss on transactions

(33)

   

1,284

 

Adjustments from unconsolidated investments

(1,712)

   

 

Plus, proportionate share from unconsolidated investments:

     

Interest expense, net of interest income

7,219

   

5,438

 

Depreciation, amortization and accretion

6,293

   

4,509

 

Loss on undesignated derivatives, net

$

9,916

   

$

11,134

 

Adjusted EBITDA

$

78,088

   

$

46,743

 
   

(1)

Amount is included in electricity sales on the consolidated statements of operations.

 

Conference Call and Webcast

Pattern Energy will host a conference call and webcast, complete with slide presentation, to discuss these results at 10:30 a.m. Eastern Time on Monday, May 9, 2016. Mike Garland, President and CEO, and Mike Lyon, 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 95851150. The replay recording will be available until 11:59 p.m. Eastern Time, May 23, 2016.

A live webcast of the conference call will be also available on the events page in the investor section of Pattern's website at www.patternenergy.com. An archived webcast will be available for one year.

About Pattern Energy

Pattern Energy Group Inc. is an independent power company listed on The NASDAQ Global Select Market and Toronto Stock Exchange. Pattern Energy has a portfolio of 16 operating wind power facilities with a total owned interest of 2,282 MW in the United States, Canada and Chile that use proven, best-in-class technology. Pattern Energy's wind 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 not require new capital to be raised for existing ownership levels, the ability to achieve the 2016 CAFD target, and the ability for the relationship with Pattern Development to provide the Company with a strong growth outlook and flexibility when the Company drops down projects. 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

Matt Dallas

917-363-1333

matt.dallas(at)patternenergy.com

 

Investor Relations

Ross Marshall

416-526-1563

ross.marshall(at)loderockadvisors.com

 

Pattern Energy Group Inc.

Consolidated Balance Sheets

(In thousands of U.S. Dollars, except share data)

(Unaudited)

 

March 31,

 

December 31,

 

2016

 

2015

Assets

     

Current assets:

     

Cash and cash equivalents

$

90,624

   

$

94,808

 

Restricted cash

10,282

   

14,609

 

Funds deposited by counterparty

61,177

   

 

Trade receivables

42,341

   

45,292

 

Related party receivable

674

   

734

 

Reimbursable interconnection costs

   

38

 

Derivative assets, current

22,028

   

24,338

 

Prepaid expenses

13,173

   

14,498

 

Other current assets

5,457

   

6,891

 

Deferred financing costs, current, net of accumulated amortization of $5,775 and $5,192 as of March 31, 2016 and December 31, 2015, respectively

2,156

   

2,121

 

Total current assets

247,912

   

203,329

 

Restricted cash

16,835

   

36,875

 

Property, plant and equipment, net of accumulated depreciation of $455,523 and $409,161 as of March 31, 2016 and December 31, 2015, respectively

3,264,632

   

3,294,620

 

Unconsolidated investments

99,996

   

116,473

 

Derivative assets

37,865

   

44,014

 

Deferred financing costs

4,106

   

4,572

 

Net deferred tax assets

10,159

   

6,804

 

Finite-lived intangible assets, net of accumulated amortization of $6,046 and $4,357 as of March 31, 2016 and December 31, 2015, respectively

95,945

   

97,722

 

Other assets

26,007

   

25,183

 

Total assets

$

3,803,457

   

$

3,829,592

 
 

Liabilities and equity

     

Current liabilities:

     

Accounts payable and other accrued liabilities

$

19,747

   

$

42,776

 

Accrued construction costs

4,854

   

23,565

 

Counterparty deposit liability

61,177

   

 

Related party payable

262

   

1,646

 

Accrued interest

2,859

   

9,035

 

Dividends payable

28,869

   

28,022

 

Derivative liabilities, current

16,364

   

14,343

 

Revolving credit facility

355,000

   

355,000

 

Current portion of long-term debt, net of financing costs of $3,677 and $3,671 as of March 31, 2016 and December 31, 2015, respectively

45,551

   

44,144

 

Other current liabilities

2,340

   

2,156

 

Total current liabilities

537,023

   

520,687

 

Long-term debt, net of financing costs of $21,905 and $22,632 as of March 31, 2016 and December 31, 2015, respectively

1,174,833

   

1,174,380

 

Convertible senior notes, net of financing costs of $4,727 and $5,014 as of March 31, 2016 and December 31, 2015, respectively

198,733

   

197,362

 

Derivative liabilities

56,154

   

28,659

 

Net deferred tax liabilities

22,695

   

22,183

 

Finite-lived intangible liability, net of accumulated amortization of $3,035 and $2,168 as of March 31, 2016 and December 31, 2015, respectively

57,265

   

58,132

 

Other long-term liabilities

54,891

   

52,427

 

Total liabilities

2,101,594

   

2,053,830

 

Commitments and contingencies

     

Equity:

     

Class A common stock, $0.01 par value per share: 500,000,000 shares authorized; 74,930,970 and 74,644,141 shares outstanding as of March 31, 2016 and December 31, 2015, respectively

750

   

747

 

Additional paid-in capital

955,455

   

982,814

 

Accumulated loss

(100,829)

   

(77,159)

 

Accumulated other comprehensive loss

(85,619)

   

(73,325)

 

Treasury stock, at cost; 66,376 and 65,301 shares of Class A common stock as of March 31, 2016 and December 31, 2015, respectively

(1,596)

   

(1,577)

 

Total equity before noncontrolling interest

768,161

   

831,500

 

Noncontrolling interest

933,702

   

944,262

 

Total equity

1,701,863

   

1,775,762

 

Total liabilities and equity

$

3,803,457

   

$

3,829,592

 
       

 

Pattern Energy Group Inc.

Consolidated Statements of Operations

(In thousands of U.S. dollars, except per share data)

(Unaudited)

   
 

Three months ended March 31,

 

2016

 

2015

Revenue:

     

Electricity sales

$

85,663

   

$

64,125

 

Related party revenue

1,215

   

803

 

Other revenue

761

   

(62)

 

Total revenue

87,639

   

64,866

 

Cost of revenue:

     

Project expense

32,246

   

25,246

 

Depreciation and accretion

43,411

   

29,056

 

Total cost of revenue

75,657

   

54,302

 

Gross profit

11,982

   

10,564

 

Operating expenses:

     

General and administrative

9,569

   

6,221

 

Related party general and administrative

1,897

   

1,808

 

Total operating expenses

11,466

   

8,029

 

Operating income

516

   

2,535

 

Other income (expense):

     

Interest expense

(21,061)

   

(17,918)

 

Loss on undesignated derivatives, net

(13,631)

   

(3,400)

 

Earnings (losses) in unconsolidated investments, net

3,830

   

(3,082)

 

Related party income

1,007

   

668

 

Net gain (loss) on transactions

33

   

(1,284)

 

Other income (expense), net

1,556

   

(324)

 

Total other expense

(28,266)

   

(25,340)

 

Net loss before income tax

(27,750)

   

(22,805)

 

Tax provision (benefit)

1,298

   

(746)

 

Net loss

(29,048)

   

(22,059)

 

Net loss attributable to noncontrolling interest

(5,378)

   

(2,160)

 

Net loss attributable to Pattern Energy

$

(23,670)

   

$

(19,899)

 
       

Weighted average number of shares:

     

Class A common stock - Basic and diluted

74,437,998

   

65,892,005

 

Loss per share

     

Class A common stock:

     

Basic and diluted loss per share

$

(0.32)

   

$

(0.30)

 

Dividends declared per Class A common share

$

0.38

   

$

0.34

 

 

Pattern Energy Group Inc.

Consolidated Statements of Cash Flows

(In thousands of U.S. dollars)

(Unaudited)

   
 

Three months ended March 31,

 

2016

 

2015

Operating activities

     

Net loss

$

(29,048)

   

$

(22,059)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

     

Depreciation and accretion

43,411

   

29,056

 

Amortization of financing costs

1,746

   

1,743

 

Amortization of debt discount/premium, net

1,032

   

 

Amortization of power purchase agreements, net

753

   

 

Loss (gain) on derivatives, net

17,757

   

(531)

 

Stock-based compensation

1,195

   

815

 

Deferred taxes

1,143

   

(878)

 

(Earnings) losses in unconsolidated investments, net of distributions received

(3,517)

   

3,082

 

Other noncash transactions

(784)

   

354

 

  Changes in operating assets and liabilities:

     

  Funds deposited by counterparty

(61,177)

   

 

  Trade receivables

3,215

   

288

 

  Prepaid expenses

1,360

   

5,089

 

  Other current assets

1,022

   

118

 

  Other assets (non-current)

(236)

   

(80)

 

  Accounts payable and other accrued liabilities

(18,671)

   

(688)

 

  Counterparty deposit liability

61,177

   

 

  Related party receivable/payable

(1,292)

   

565

 

  Accrued interest

(6,235)

   

(2,374)

 

  Other current liabilities

166

   

593

 

  Long-term liabilities

1,704

   

1,146

 

Net cash provided by operating activities

14,721

   

16,239

 

Investing activities

     

Decrease in restricted cash

20,088

   

21,042

 

Increase in restricted cash

(51)

   

(5,055)

 

Capital expenditures

(24,084)

   

(63,956)

 

Distribution from unconsolidated investments

19,814

   

6,076

 

Reimbursable interconnection receivable

38

   

623

 

Other investing activities

(163)

   

 

Net cash provided by (used in) investing activities

15,642

   

(41,270)

 

Financing activities

     

Proceeds from public offering, net of issuance costs

$

   

$

196,923

 

Repurchase of shares for employee tax withholding

(19)

   

(281)

 

Dividends paid

(27,711)

   

(15,578)

 

Capital distributions - noncontrolling interest

(3,917)

   

(748)

 

Decrease in restricted cash

16,735

   

8,763

 

Increase in restricted cash

(12,405)

   

(12,062)

 

Refund of deposit for letters of credit

   

3,425

 

Proceeds from revolving credit facility

20,000

   

 

Repayment of revolving credit facility

(20,000)

   

(50,000)

 

Proceeds from construction loans

   

47,595

 

Repayment of long-term debt

(8,943)

   

(8,435)

 

Other financing activities

(124)

   

(4)

 

Net cash (used in) provided by financing activities

(36,384)

   

169,598

 

Effect of exchange rate changes on cash and cash equivalents

1,837

   

(2,893)

 

Net change in cash and cash equivalents

(4,184)

   

141,674

 

Cash and cash equivalents at beginning of period

94,808

   

101,656

 

Cash and cash equivalents at end of period

$

90,624

   

$

243,330

 

Supplemental disclosures

     

Cash payments for income taxes

$

97

   

$

18

 

Cash payments for interest expense, net of capitalized interest

24,204

   

18,442

 

Schedule of non-cash activities

     

Change in fair value of designated interest rate swaps

$

(17,795)

   

$

(7,266)

 

Change in property, plant and equipment

11,599

   

(23,061)

 

Amortization of deferred financing costs—included as construction in progress

   

2,515

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pattern-energy-reports-first-quarter-2016-financial-results-300264825.html

SOURCE: Pattern Energy Group Inc.

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