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Pattern Energy Reports Fourth Quarter and Year End 2017 Financial Results

By Pattern Energy Operations LP
March 1st, 2018
PR Newswire

- Declares dividend of $0.422 per Class A common share for first quarter 2018 -

San Francisco, March 1, 2018 /CNW/ -- Pattern Energy Group Inc. (the "Company" or "Pattern Energy") (NASDAQ and TSX: PEGI) today announced its financial results for the 2017 fourth quarter and year.

pattern_logo.jpg

Highlights

(Comparisons made between fiscal 2017 and fiscal 2016 results, unless otherwise noted)

  • Proportional gigawatt hours ("GWh") sold of 7,787 GWh, up 14%
  • Net cash provided by operating activities of $218 million, up 33%
  • Cash available for distribution ("CAFD") of $145.8 million, up 10%
  • Net loss of $82.4 million
  • Adjusted EBITDA of $343.7 million, up 13%
  • Revenue of $411.3 million, up 16%
  • Declared a first quarter dividend of $0.422 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
  • Agreed to acquire 206 MW of owned capacity in five Japanese projects which represents the Company's entry into one of the most robust renewables markets in the world, subsequent to the end of the period
  • Returned the Santa Isabel project in Puerto Rico to operation at a limited capacity, after reconnection to the grid by the Puerto Rico Electric Authority ("PREPA"), in February 2018
  • Raised $58.6 million in capital through asset rotation with the completion of the sale of a 49% interest of the Class B membership interest in the 182 MW Panhandle 2 project to Public Sector Pension Investment Board ("PSP Investments")
  • Invested $27 million in Pattern Energy Group 2 LP's ("Pattern Development 2.0") announced acquisition of the majority interest in Green Power Investments ("GPI") and the Japanese development pipeline from Pattern Energy Group LP ("Pattern Development 1.0"), subsequent to the end of the period
  • Completed an equity offering of approximately $215 million in gross proceeds

"We met our targeted CAFD range for the year, however the result was not as strong as we had anticipated primarily due to unexpected curtailments from one-time transmission repairs in Texas and Arizona, as well as weaker than expected wind resources at the very end of the year. We increased our portfolio to nearly three gigawatts, with the additions of Broadview, Meikle and the Japanese portfolio since the beginning of 2017," said Mike Garland, President and CEO of Pattern Energy. "We paid for these acquisitions from available liquidity. Our investment in the development business strengthened the platform and improved alignment across the business providing greater flexibility. We continue to have many opportunities for growth; however, we intend to be disciplined in our approach toward new capital given the recent volatility in the capital markets and we intend to pursue alternatives for owning and managing quality projects. The capital we captured from the sale of a minority interest in the Panhandle 2 project in December is just one example of the alternatives we can consider to fund future growth."

Financial Results

Pattern Energy sold 2,123,628 MWh of electricity on a proportional basis in the fourth quarter of 2017 compared to 1,817,651 MWh sold for the same period in 2016. Pattern Energy sold 7,787,411 MWh of electricity on a proportional basis for the year ended December 31, 2017 (the "full year 2017"), compared to 6,806,272 MWh sold in 2016. The increase for the quarterly period was primarily due to the commencement of commercial operations of the Broadview projects in April 2017 and the acquisition of Meikle in the third quarter of 2017. Production for the quarter was 9% below the long-term average forecast for the quarter. The increase in the annual period was primarily attributable to a 748,277 MWh increase in volume from controlling interest in consolidated MWh due to the acquisitions of the Broadview and Meikle projects and a 232,862 MWh increase in volume from unconsolidated investments due to the acquisition of Armow in October 2016.

Net cash provided by operating activities was $58.3 million for the fourth quarter of 2017 compared to $56.3 million for the same period in 2016, an increase of $2.0 million or 3.5%. The increase was primarily due to increased revenues of $26.1 million (excluding the unrealized loss on energy derivative and amortization of PPAs) primarily related to projects which were acquired in 2017. These increases in operating cash flow were partially offset by an increase of $9.5 million in transmission and project expense, an increase of $5.3 million in interest payments, a decrease of $3.8 million in distributions from unconsolidated investments and other changes to working capital as a result of the timing of receipts of payments and disbursements.

Net cash provided by operating activities was $217.6 million for the full year 2017 compared to $163.7 million for 2016, an increase of $53.9 million, or 33.0%. The increase was primarily due to higher revenues of $49.0 million (excluding the unrealized loss on energy derivative and amortization of PPAs) primarily from projects which were acquired in 2017, and an increase of $38.9 million in distributions from unconsolidated investments. These increases were partially offset by an increase of $21.2 million in transmission and project expense, an increase of $16.3 million in interest payments, an increase of $7.0 million in operating expenses and other changes to working capital as a result of the timing of receipts of payments and disbursements.

Cash available for distribution was $41.9 million for the fourth quarter of 2017 compared to $36.2 million for the same period in 2016. The $5.7 million increase in cash available for distribution was due to increases of $26.1 million in revenues (excluding the unrealized loss on energy derivative and amortization of PPAs) primarily from projects which were acquired during 2017 and $7.2 million in available cash previously restricted to fund project costs. These increases were partially offset by increased interest expense of $11.4 million (excluding amortization of financing costs and debt discount/premium) primarily due to the issuance of the unsecured notes in January 2017 and debt associated with acquisitions, increased transmission costs of $7.1 million, decreased network upgrade reimbursements of $4.5 million and decreased distributions from unconsolidated investments of $3.3 million, as well as, $2.1 million in increased principal payments on project-level debt, as compared to amounts from the same period in the prior year.

Cash available for distribution was $145.8 million for the full year 2017 compared to $133.0 million for 2016. Based on dividends paid during 2017, Pattern Energy's dividend payout ratio was 100% of 2017 cash available for distribution. The $12.8 million increase in cash available for distribution was due to additional revenues of $49.0 million (excluding the unrealized loss on energy derivative and amortization of PPAs) primarily from projects which were acquired or commenced commercial operations during 2017. In addition, we received $10.6 million in additional cash distributions from our unconsolidated investments, an incremental $6.6 million in available cash previously restricted to fund project costs and an additional $4.5 million in network upgrade reimbursements primarily related to the Broadview projects as compared to amounts received during the same period in the prior year. These increases were partially offset by increased interest expense of $23.0 million primarily due to the issuance of the unsecured notes in January 2017 and debt associated with our acquisitions, increased transmission costs and project expense totaling $21.2 million, increased operating expenses of $7.0 million, increased principal payments on project-level debt of $3.6 million and increased distributions to noncontrolling interests of $2.4 million. Reconciliations of cash available for distribution to net cash provided by operating activities determined in accordance with GAAP for both the quarterly and annual periods are shown below.

Net loss was $21.9 million in the fourth quarter of 2017, compared to net income of $3.4 million for the same period in 2016. The increase in net loss for the quarterly period was primarily due to a $34.3 million increase in other expense primarily related to increases in interest expense, early extinguishment of debt, losses on derivatives due to unfavorable impacts from foreign currency exchange rates and the termination of interest rate swaps and a $19.8 million increase in cost of revenues primarily related to 2017 acquisitions. The increase in net loss was partially offset by increased revenues of $29.7 million primarily related to 2017 acquisitions.

Net loss was $82.4 million for the full year 2017 compared to $52.3 million for 2016. The increase in net loss for the annual period was primarily due to a $45.3 million increase in cost of revenues primarily due to 2017 acquisitions, a $32.0 million increase in other expense primarily related to increases in interest expense, early extinguishment of debt, losses on derivatives due to unfavorable impacts from foreign currency exchange rates and the termination of interest rate swaps, a $7.0 million increase in operating expense and a $3.1 million increase in the tax provision. The increase in net loss was partially offset by increased revenues of $57.3 million.

Adjusted EBITDA was $98.9 million for the fourth quarter of 2017 compared to $85.1 million for the same period in 2016. Adjusted EBITDA for the full year 2017 was $343.7 million compared to $304.2 million for 2016. The $13.8 million increase in Adjusted EBITDA for the quarterly period was primarily attributable to an increase of $26.1 million in revenues (excluding unrealized loss on energy derivative and amortization of PPAs) primarily from projects acquired during 2017, partially offset by an increase of $9.5 million in transmission cost and project expense, as well as a $2.3 million decrease in the proportionate share of Adjusted EBITDA from unconsolidated investments. The $39.5 million increase in the annual period was primarily due to a $49.0 million increase in revenue (excluding unrealized loss on the energy derivative and amortization of PPAs) attributable to projects which were acquired or commenced commercial operations in 2017 and a $20.9 million increase in our proportionate share of Adjusted EBITDA from unconsolidated investments partially offset by a $21.2 million increase in transmission and project expense, a $7.0 million increase in operating expenses and a $1.0 million increase in transaction costs. Reconciliations of Adjusted EBITDA to net loss determined in accordance with GAAP for both the quarterly and annual periods are shown below.

2018 Financial Guidance

For the full year 2018, Pattern Energy expects annual cash available for distribution* in a range of $151 million to $181 million, representing an increase of 14% at the midpoint of the range, compared to cash available for distribution in 2017.

(*)

 

The forward looking measure of 2018 full year cash available for distribution (CAFD) is a non-GAAP measures that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Metrics, of Pattern Energy's 2017 Annual Report on Form 10-K for the period ended December 31, 2017.

Quarterly Dividend

Pattern Energy declared a dividend for the first quarter 2018, payable on April 30, 2018, to holders of record on March 30, 2018, in the amount of $0.422 per Class A common share, which represents $1.688 on an annualized basis. The amount of the first quarter 2018 dividend is unchanged from the fourth quarter 2017 dividend.

Construction Pipeline

The table below outlines the projects that Pattern Energy has agreed to acquire, which are currently in construction, the capacity owned and the projects' anticipated commencement date for commercial operation.

               

MW

Project

 

Location

 

Construction
Start

 

Commercial
Operations (1)

 

Rated (2)

 

Owned

Mont Sainte-Marguerite

 

Quebec

 

2017

 

2018

 

143

   

73

Ohorayama

 

Japan

 

2016

 

2018

 

33

   

33

Tsugaru

 

Japan

 

2018

 

2020

 

122

   

122

   

(1)

Represents year of actual or anticipated commencement of commercial operations.

   

(2)

Rated capacity represents the maximum electricity generating capacity of a project in MW. As a result of wind and other conditions, a project or a turbine may not operate at its rated capacity at all times and the amount of electricity generated will be less than its rated capacity. The amount of electricity generated may vary based on a variety of factors.

Acquisitions

Subsequent to the end of the period, Pattern Energy agreed to acquire 206 MW of owned interest in five projects in operation or under construction located in Japan from Pattern Development 1.0 and GPI. Pattern Energy agreed to acquire two operating solar projects (Futtsu and Kanagi), one operating wind project (Otsuki) and two under construction wind projects (Ohorayama and Tsugaru), each of which possess a 20-year power purchase agreement with attractive pricing from a top tier, creditworthy off-taker.

Pattern Energy agreed to acquire the 84 MW portfolio of Futtsu, Kanagi, Otsuki and Ohorayama for a cash purchase price of $131.5 million, which represents approximately a 10.5x multiple of the five-year average CAFD*.

Pattern Energy agreed to acquire the 122 MW Tsugaru project at the start of construction, once fully financed on a non-recourse basis, for a total cash consideration of $194.0 million, which represents a 9.0x multiple of the five-year average CAFD* starting with the first full year of operations in 2021.

(*)

 

This forward looking measure of five-year average annual purchase price multiple of cash available for distribution (CAFD) contribution from the Japan  projects 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 primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Metrics, of Pattern Energy's 2017 Annual Report on Form 10-K for the period ended December 31, 2017.

Acquisition Pipeline

Pattern Development 1.0 and Pattern Development 2.0 (together, the Pattern Development Companies) have a pipeline of development projects totaling more than 10 GW. Pattern Energy has a Right of First Offer ("ROFO") on the pipeline of acquisition opportunities from the Pattern Development Companies. The identified ROFO list stands at 935 MW of owned capacity and represents a portion of the pipeline of development projects of the Pattern Development Companies, which are subject to Pattern Energy's ROFO. Since its IPO, Pattern Energy has purchased, or agreed to purchase, 1,564 MW from Pattern Development 1.0 and in aggregate grown the identified ROFO list from 746 MW to more than 2 GW.

Below is a summary of the identified ROFO projects that Pattern Energy expects to acquire from the Pattern Development Companies in connection with Pattern Energy's project purchase rights:

                       

Capacity (MW)

 

 

 

Identified
ROFO Projects

 

Status

 

Location

 

Construction
Start (1)

 

Commercial
Operations (2)

 

Contract
Type

 

Rated (3)

 

Pattern
Development
Companies
Owned (4)

Pattern Development 1.0 Projects

                       

Conejo Solar(5)

 

Operational

 

Chile

 

2015

 

2016

 

PPA

 

104

 

104

Belle River

 

Operational

 

Ontario

 

2016

 

2017

 

PPA

 

100

 

43

El Cabo

 

Operational

 

New Mexico

 

2016

 

2017

 

PPA

 

298

 

125

North Kent

 

Operational

 

Ontario

 

2017

 

2018

 

PPA

 

100

 

35

Henvey Inlet

 

In construction

 

Ontario

 

2017

 

2019

 

PPA

 

300

 

150

Pattern Development 2.0 Projects

                       

Stillwater Big Sky

 

Late stage development

 

Montana

 

2017

 

2018

 

PPA

 

79

 

67

Crazy Mountain

 

Late stage development

 

Montana

 

2017

 

2019

 

PPA

 

80

 

68

Grady

 

Late stage development

 

New Mexico

 

2018

 

2019

 

PPA

 

220

 

188

Sumita

 

Late stage development

 

Japan

 

2019

 

2021

 

PPA

 

100

 

55

Ishikari

 

Late stage development

 

Japan

 

2019

 

2022

 

PPA

 

100

 

100

                       

1481

 

935

   

(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)

Owned capacity represents the maximum, or rated, electricity generating capacity of the project in MW multiplied by either Pattern Development 1.0's or Pattern Development 2.0's percentage ownership interest in the distributable cash flow of the project.

   

(5)

From time to time, we conduct strategic reviews of our markets. We have been conducting a strategic review of the market, growth, and opportunities in Chile. In the event we believe we can utilize funds that have already been invested in Chile or funds that might otherwise be invested in Chile in a more productive manner elsewhere that could generate a higher return on investment, we may decide to exit Chile for other opportunities with greater potential. In addition, Pattern Development 1.0 is also concurrently exploring strategic alternatives for its assets in Chile .

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 December 31,

 

For the year ended December 31,

 

2017

 

2016

 

2017

 

2016

Net cash provided by operating activities (1)

$

58,283

   

$

56,293

   

$

217,613

   

$

163,664

 

Changes in operating assets and liabilities

(9,093)

   

(11,800)

   

(31,568)

   

(11,000)

 

Network upgrade reimbursement

346

   

4,821

   

9,282

   

4,821

 

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

7,239

   

50

   

7,239

   

640

 

Operations and maintenance capital expenditures

(266)

   

(138)

   

(783)

   

(1,017)

 

Distributions from unconsolidated investments

2,147

   

1,632

   

13,358

   

41,698

 

Other

208

   

(172)

   

2,182

   

(302)

 

Less:

               

Distributions to noncontrolling interests

(6,549)

   

(6,125)

   

(20,250)

   

(17,896)

 

Principal payments paid from operating cash flows

(10,367)

   

(8,312)

   

(51,278)

   

(47,634)

 

Cash available for distribution

$

41,948

   

$

36,249

   

$

145,795

   

$

132,974

 

 

 

Three months ended December 31,

 

For the year ended December 31,

 

2017

 

2016

 

2017

 

2016

Net income (loss)

$

(21,889)

   

$

3,445

   

$

(82,410)

   

$

(52,299)

 

Plus:

             

Interest expense, net of interest income

27,678

   

15,692

   

100,687

   

76,598

 

Tax provision

6,257

   

4,641

   

11,734

   

8,679

 

Depreciation, amortization and accretion

58,863

   

47,028

   

215,492

   

184,002

 

EBITDA

70,909

   

70,806

   

245,503

   

216,980

 

Unrealized loss on energy derivative (1)

3,911

   

7,797

   

14,045

   

22,767

 

(Gain) loss on derivatives

(1,900)

   

(14,361)

   

9,787

   

3,324

 

Early extinguishment of debt

8,643

   

   

8,643

   

 

Other

(1,585)

   

(27)

   

   

326

 

Adjustments from unconsolidated investments (2)

   

18,914

   

   

(659)

 

Plus, proportionate share from unconsolidated investments:

             

Interest expense, net of interest income

10,132

   

9,325

   

39,240

   

32,103

 

Depreciation, amortization and accretion

8,921

   

8,139

   

35,311

   

27,763

 

(Gain) loss on derivatives

(133)

   

(15,463)

   

(8,829)

   

1,552

 

Adjusted EBITDA

$

98,898

   

$

85,130

   

$

343,700

   

$

304,156

 
   

(1)

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

   

(2)

Adjustments from unconsolidated investments for the three months ended December 31, 2016, consists of $4.9 million gains on distributions from unconsolidated investments and $(23.8) million of suspended equity earnings. Adjustments for the year ended December 31, 2016, consists of $19.9 million gains on distributions from unconsolidated investments and $(19.2) million of suspended equity earnings.

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 Thursday, March 1, 2018. 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 7391418. The replay recording will be available until 11:59 p.m. Eastern Time, March 22, 2018.

A live webcast of the conference call will be also available on the events page in the investor 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 25 wind and solar power facilities, including six it has agreed to acquire, with a total owned interest of 2,942 MW in the United States, Canada, Japan 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 grow CAFD and to achieve the 2018 CAFD estimate, the ability to consummate the acquisitions of the projects the Company has agreed to acquire and the timing thereof, the Company's ability to pursue alternatives for owning and managing assets, the ability to be disciplined in its approach to new capital, that the investment in the development business strengthened the platform and improved alignment, the measures of five-year average annual purchase price of the acquisitions to CAFD, and the anticipated date for commercial operations of the projects under construction. 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 and par value data)

 

December 31,

 

2017

 

2016

Assets

     

Current assets:

     

Cash and cash equivalents

$

116,753

   

$

83,932

 

Restricted cash

9,065

   

11,793

 

Funds deposited by counterparty

29,780

   

43,635

 

Trade receivables

54,900

   

37,510

 

Derivative assets, current

19,445

   

17,578

 

Prepaid expenses

17,847

   

13,803

 

Other current assets

21,105

   

7,350

 

Deferred financing costs, current, net of accumulated amortization of $2,580 and $9,350 as of December 31, 2017 and December 31, 2016, respectively

1,415

   

2,456

 

Total current assets

270,310

   

218,057

 

Restricted cash

12,162

   

13,646

 

Property, plant and equipment, net

3,965,121

   

3,135,162

 

Unconsolidated investments

311,223

   

233,294

 

Derivative assets

9,628

   

26,712

 

Deferred financing costs

7,784

   

4,052

 

Net deferred tax assets

6,349

   

5,559

 

Finite-lived intangible assets, net

136,048

   

91,895

 

Other assets

22,906

   

24,390

 

Total assets

$

4,741,531

   

$

3,752,767

 

Liabilities and equity

     

Current liabilities:

     

Accounts payable and other accrued liabilities

$

53,615

   

$

31,305

 

Accrued construction costs

1,369

   

1,098

 

Counterparty deposit liability

29,780

   

43,635

 

Accrued interest

16,460

   

9,545

 

Dividends payable

41,387

   

35,960

 

Derivative liabilities, current

8,409

   

11,918

 

Revolving credit facility

   

180,000

 

Current portion of long-term debt, net

51,996

   

48,716

 

Other current liabilities

14,018

   

4,698

 

Total current liabilities

217,034

   

366,875

 

Long-term debt, net

1,878,735

   

1,334,956

 

Derivative liabilities

20,972

   

24,521

 

Net deferred tax liabilities

56,491

   

31,759

 

Finite-lived intangible liability, net

51,194

   

54,663

 

Contingent liabilities

62,398

   

576

 

Other long-term liabilities

106,565

   

60,673

 

Total liabilities

2,393,389

   

1,874,023

 

Commitments and contingencies

     

Equity:

     

Class A common stock, $0.01 par value per share: 500,000,000 shares authorized; 97,860,048 and 87,410,687 shares outstanding as of December 31, 2017 and December 31, 2016, respectively

980

   

875

 

Additional paid-in capital

1,234,846

   

1,145,760

 

Accumulated loss

(112,175)

   

(94,270)

 

Accumulated other comprehensive loss

(25,691)

   

(62,367)

 

Treasury stock, at cost; 157,812 and 110,964 shares of Class A common stock as of December 31, 2017 and December 31, 2016, respectively

(3,511)

   

(2,500)

 

Total equity before noncontrolling interest

1,094,449

   

987,498

 

Noncontrolling interest

1,253,693

   

891,246

 

Total equity

2,348,142

   

1,878,744

 

Total liabilities and equity

$

4,741,531

   

$

3,752,767

 

 

Pattern Energy Group Inc.
Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)

       
 

Three months ended December 31,

 

For the year ended December 31,

 

2017

   

2016

   

2017

   

2016

 

Revenue:

             

Electricity sales

$

107,911

   

$

79,048

   

$

401,888

   

$

346,000

 

Other revenue

2,810

   

2,013

   

9,456

   

8,052

 

Total revenue

110,721

   

81,061

   

411,344

   

354,052

 

Cost of revenue:

             

Project expense

34,124

   

31,717

   

130,561

   

128,428

 

Transmission costs

7,259

   

146

   

19,472

   

424

 

Depreciation and accretion

54,007

   

43,708

   

198,644

   

174,490

 

Total cost of revenue

95,390

   

75,571

   

348,677

   

303,342

 

Gross profit

15,331

   

5,490

   

62,667

   

50,710

 

Operating expenses:

             

General and administrative

6,614

   

8,074

   

38,583

   

35,499

 

Related party general and administrative

3,236

   

2,519

   

13,825

   

9,900

 

Total operating expenses

9,850

   

10,593

   

52,408

   

45,399

 

Operating income (loss)

5,481

   

(5,103)

   

10,259

   

5,311

 

Other income (expense):

             

Interest expense

(27,688)

   

(15,870)

   

(102,229)

   

(78,004)

 

Gain (loss) on derivatives

1,900

   

14,361

   

(9,787)

   

(3,324)

 

Earnings in unconsolidated investments, net

13,868

   

14,437

   

41,299

   

30,192

 

Early extinguishment of debt

(8,643)

   

   

(8,643)

   

 

Net income (loss) on transactions

263

   

27

   

(1,322)

   

(326)

 

Other income (expense), net

(813)

   

234

   

(253)

   

2,531

 

Total other income (expense)

(21,113)

   

13,189

   

(80,935)

   

(48,931)

 

Net income (loss) before income tax

(15,632)

   

8,086

   

(70,676)

   

(43,620)

 

Tax provision

6,257

   

4,641

   

11,734

   

8,679

 

Net income (loss)

(21,889)

   

3,445

   

(82,410)

   

(52,299)

 

Net loss attributable to noncontrolling interest

(13,939)

   

(10,350)

   

(64,505)

   

(35,188)

 

Net income (loss) attributable to Pattern Energy

$

(7,950)

   

$

13,795

   

$

(17,905)

   

$

(17,111)

 
               

Weighted average number of common shares outstanding

             

Basic and diluted

95,149,200

   

87,007,714

   

89,179,343

   

79,382,388

 

Loss per share attributable to Pattern Energy

             

Basic and diluted

$

(0.08)

   

$

0.16

   

(0.20)

   

(0.22)

 

Dividends declared per Class A common share

$

0.42

   

$

0.41

   

$

1.67

   

$

1.58

 

 

Pattern Energy Group Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)

       
 

Three months ended December 31,

 

For the year ended December 31,

 

2017

   

2016

   

2017

   

2016

 

Operating activities

             

Net income (loss)

$

(21,889)

   

$

3,445

   

$

(82,410)

   

$

(52,299)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

             

Depreciation and accretion

54,007

   

43,708

   

198,644

   

174,490

 

Amortization of financing costs

1,992

   

1,726

   

7,871

   

6,968

 

Amortization of debt discount/premium, net

1,204

   

1,079

   

4,583

   

4,226

 

Amortization of power purchase agreements, net

1,074

   

771

   

3,509

   

3,049

 

(Gain) loss on derivatives

(1,626)

   

(7,518)

   

16,243

   

22,239

 

Stock-based compensation

1,237

   

1,029

   

5,322

   

5,391

 

Deferred taxes

5,879

   

4,566

   

15,012

   

8,247

 

Intraperiod tax allocation

87

   

   

(3,569)

   

 

Earnings in unconsolidated investments, net

(13,868)

   

(14,437)

   

(41,299)

   

(30,192)

 

Distribution from unconsolidated investments

10,837

   

14,638

   

53,930

   

15,015

 

Early extinguishment of debt

8,643

   

   

8,643

   

 

Other reconciling items

1,613

   

(4,514)

   

(434)

   

(4,470)

 

Changes in operating assets and liabilities:

             

  Funds deposited by counterparty

3,750

   

3,008

   

13,855

   

(43,635)

 

  Trade receivables

(7,481)

   

1,718

   

(10,342)

   

7,796

 

  Prepaid expenses

529

   

1,714

   

(2,658)

   

709

 

  Other current assets

(1,731)

   

(591)

   

(11,521)

   

(4,300)

 

  Other assets (non-current)

(480)

   

514

   

1,977

   

1,379

 

  Accounts payable and other accrued liabilities

1,254

   

112

   

17,643

   

(2,546)

 

  Counterparty deposit liability

(3,750)

   

(3,008)

   

(13,855)

   

43,635

 

  Accrued interest

9,434

   

6,475

   

5,550

   

458

 

  Other current liabilities

530

   

65

   

8,570

   

876

 

  Long-term liabilities

6,653

   

1,676

   

21,222

   

6,628

 

  Contingent liabilities

80

   

117

   

822

   

 

  Derivatives

305

   

   

305

   

 

Net cash provided by operating activities

58,283

   

56,293

   

217,613

   

163,664

 
               

Investing activities

             

Cash paid for acquisitions, net of cash and restricted cash acquired

$

   

$

(131,754)

   

$

(227,840)

   

$

(135,778)

 

Capital expenditures

518

   

(1,347)

   

(43,777)

   

(32,901)

 

Distribution from unconsolidated investments

2,147

   

1,632

   

13,358

   

41,698

 

Other assets

390

   

1,077

   

7,997

   

2,696

 

Investment in Pattern Development 2.0

(7,324)

   

   

(68,813)

   

 

Other investing activities

(3)

   

167

   

(3)

   

31

 

Net cash used in investing activities

(4,272)

   

(130,225)

   

(319,078)

   

(124,254)

 
               

Financing activities

             

Proceeds from public offering, net of issuance costs

214,659

   

(285)

   

237,090

   

286,298

 

Dividends paid

(37,264)

   

(35,048)

   

(145,207)

   

(120,207)

 

Capital distributions - noncontrolling interest

(6,549)

   

(6,125)

   

(20,250)

   

(17,896)

 

Payment for financing fees

(8,123)

   

(408)

   

(15,886)

   

(542)

 

Proceeds from revolving credit facility

10,000

   

155,000

   

333,000

   

175,000

 

Repayment of revolving credit facility

(263,000)

   

(10,000)

   

(513,000)

   

(350,000)

 

Proceeds from long-term debt

289,340

   

(8,312)

   

693,735

   

 

Repayment of long-term debt

(290,865)

   

   

(482,974)

   

(47,634)

 

Payment for termination of designated derivatives

316

   

   

(14,056)

   

 

Disposition of controlling interest, net

57,846

   

   

57,846

   

 

Other financing activities

(1,927)

   

(1,048)

   

(5,639)

   

(1,682)

 

Net cash provided by (used in) financing activities

(35,567)

   

93,774

   

124,659

   

(76,663)

 
                       

Effect of exchange rate changes on cash, cash equivalents and restricted cash

1,463

   

(1,418)

   

5,415

   

332

 

Net change in cash, cash equivalents and restricted cash

19,907

   

18,424

   

28,609

   

(36,921)

 

Cash, cash equivalents and restricted cash at beginning of period

118,073

   

90,947

   

109,371

   

146,292

 

Cash, cash equivalents and restricted cash at end of period

$

137,980

   

$

109,371

   

$

137,980

   

$

109,371

 

Supplemental disclosures

             

Cash payments for income taxes

$

   

$

142

   

$

335

   

$

375

 

Cash payments for interest expense

$

15,830

   

$

10,494

   

$

85,930

   

$

69,666

 

Schedule of non-cash activities

             

Change in property, plant and equipment

$

2,071

   

$

430

   

$

2,071

   

$

540

 

Change in additional paid-in capital

$

(2,003)

   

$

   

$

(2,003)

   

$

 

 

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SOURCE: Pattern Energy Group Inc.

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