TerraForm Power, Inc. (Nasdaq:TERP) (“TerraForm Power”), a global
owner and operator of clean energy power plants, today reported
first quarter 2016 financial results and filed its Form 10-Q for
the quarterly period ended March 31, 2016 with the Securities and
Exchange Commission. The Form 10-Q is available on the Investors
section of TerraForm Power’s website at www.terraformpower.com.
“In addition to TerraForm Power’s 2015 financial
results released yesterday, the reporting of our first quarter 2016
results further demonstrates progress toward regaining regulatory
compliance. We plan to complete the remaining 2016 filings and
regain full compliance by March 2017," said Peter Blackmore,
Chairman and Interim CEO of TerraForm Power. “Moving forward, our
Board and management team remain committed to operational
excellence and will continue to take steps that best position the
company for success and maximum value creation.”
1Q 2016 Results: Key Metrics
|
1Q 2016 |
1Q 2015 |
% change YoY |
MW (net) in operation at end of period |
|
2,977 |
|
|
1,675 |
|
|
78 |
% |
Capacity Factor |
|
30.9 |
% |
|
20.8 |
% |
+1,010 bps |
MWh (000s) |
|
2,072 |
|
|
602 |
|
|
244 |
% |
Adj. Revenue / MWh |
$ |
78 |
|
$ |
124 |
|
|
-37 |
% |
|
|
|
|
Revenue, net ($M) |
$ |
154 |
|
$ |
71 |
|
|
118 |
% |
Adj. Revenue ($M) |
$ |
162 |
|
$ |
75 |
|
|
116 |
% |
Net Income / (Loss) ($M) |
$ |
(34 |
) |
$ |
(84 |
) |
|
- |
|
Adj. EBITDA ($M) |
$ |
120 |
|
$ |
52 |
|
|
130 |
% |
Adj. EBITDA margin |
|
74.5 |
% |
|
69.8 |
% |
+460 bps |
|
|
|
|
Cash flows from operations ($M) |
$ |
35 |
|
$ |
(11 |
) |
|
- |
|
|
|
|
|
Unrestricted Cash ($M) at end of period |
$ |
603 |
|
$ |
153 |
|
|
293 |
% |
Investor Conference Call
The previously announced investor conference call
to be held on December 15, 2016 will also cover the 1Q 2016
results.
About TerraForm Power
TerraForm Power is a renewable energy company that
is changing how energy is generated, distributed and owned.
TerraForm Power creates value for its investors by owning and
operating clean energy power plants. For more information about
TerraForm Power, please visit: www.terraformpower.com.
Safe Harbor Disclosure
This communication contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts. These
statements involve estimates, expectations, projections, goals,
assumptions, known and unknown risks, and uncertainties and
typically include words or variations of words such as “expect,”
“anticipate,” “believe,” “intend,” “plan,” “seek,” “estimate,”
“predict,” “project,” “goal,” “guidance,” “outlook,” “objective,”
“forecast,” “target,” “potential,” “continue,” “would,” “will,”
“should,” “could,” or “may” or other comparable terms and phrases.
All statements that address operating performance, events, or
developments that TerraForm Power expects or anticipates will occur
in the future are forward-looking statements. They may include
estimates of cash available for distribution (CAFD), earnings,
revenues, capital expenditures, liquidity, capital structure,
future growth, and other financial performance items (including
future dividends per share), descriptions of management’s plans or
objectives for future operations, products, or services, or
descriptions of assumptions underlying any of the above.
Forward-looking statements provide TerraForm Power’s current
expectations or predictions of future conditions, events, or
results and speak only as of the date they are made. Although
TerraForm Power believes its expectations and assumptions are
reasonable, it can give no assurance that these expectations and
assumptions will prove to have been correct and actual results may
vary materially.
By their nature, forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those suggested by the forward-looking
statements. Factors that might cause such differences include, but
are not limited to, risks related to the SunEdison Bankruptcy,
including our transition away from reliance on SunEdison for
management, corporate and accounting services, employees, critical
systems and information technology infrastructure, and the
operation, maintenance and asset management of our renewable energy
facilities; risks related to events of default and potential events
of default arising under our revolving credit facility, the
indentures governing our senior notes, and/or project-level
financing; risks related to failure to satisfy the requirements of
Nasdaq, which could result in the delisting of our common stock;
risks related to our exploration and potential execution of
strategic alternatives; pending and future litigation; our ability
to integrate the projects we acquire from third parties or
otherwise realize the anticipated benefits from such acquisitions;
the willingness and ability of counterparties to fulfill their
obligations under offtake agreements; price fluctuations,
termination provisions and buyout provisions in offtake agreements;
our ability to successfully identify, evaluate, and consummate
acquisitions; government regulation, including compliance with
regulatory and permit requirements and changes in market rules,
rates, tariffs, environmental laws and policies affecting renewable
energy; operating and financial restrictions under agreements
governing indebtedness; the condition of the debt and equity
capital markets and our ability to borrow additional funds and
access capital markets, as well as our substantial indebtedness and
the possibility that we may incur additional indebtedness going
forward; our ability to compete against traditional and renewable
energy companies; potential conflicts of interests or distraction
due to the fact that most of our directors and executive officers
are also directors and executive officers of TerraForm Global,
Inc.; and hazards customary to the power production industry and
power generation operations, such as unusual weather conditions and
outages. Furthermore, any dividends are subject to available
capital, market conditions, and compliance with associated laws and
regulations. Many of these factors are beyond TerraForm Power’s
control.
TerraForm Power disclaims any obligation to
publicly update or revise any forward-looking statement to reflect
changes in underlying assumptions, factors, or expectations, new
information, data, or methods, future events, or other changes,
except as required by law. The foregoing list of factors that might
cause results to differ materially from those contemplated in the
forward-looking statements should be considered in connection with
information regarding risks and uncertainties which are described
in TerraForm Power’s Form 10-K for the fiscal year ended December
31, 2015, as well as additional factors it may describe from time
to time in other filings with the Securities and Exchange
Commission. You should understand that it is not possible to
predict or identify all such factors and, consequently, you should
not consider any such list to be a complete set of all potential
risks or uncertainties.
Adjusted Revenue
Adjusted Revenue is a supplemental non-GAAP measure
used by our management for internal planning purposes, including
for certain aspects of our consolidating operating budget. We
believe Adjusted Revenue is useful to investors in evaluating our
operating performance because securities analysts and other
interested parties use such calculations as a measure of financial
performance.
Adjusted EBITDA
Adjusted EBITDA is a supplemental non-GAAP
financial measure which eliminates the impact on net income of
certain unusual or non-recurring items and other factors that we do
not consider representative of our core business or future
operating performance. This measurement is not recognized in
accordance with GAAP and should not be viewed as an alternative to
GAAP measures of performance, including net income. The
presentation of Adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by
non-operating, unusual or non-recurring items.
TERRAFORM POWER, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data) |
|
|
Three Months Ended March 31, |
|
2016 |
|
2015 |
Operating revenues,
net |
$ |
153,917 |
|
|
$ |
70,515 |
|
Operating costs and
expenses: |
|
|
|
Cost of operations |
30,196 |
|
|
16,820 |
|
Cost of operations - affiliate |
6,846 |
|
|
3,643 |
|
General and administrative
expenses |
17,183 |
|
|
9,939 |
|
General and administrative expenses
- affiliate |
5,437 |
|
|
6,027 |
|
Acquisition and related costs |
2,743 |
|
|
13,722 |
|
Acquisition and related costs -
affiliate |
— |
|
|
436 |
|
Depreciation, accretion and
amortization expense |
59,007 |
|
|
31,891 |
|
Total operating costs and
expenses |
121,412 |
|
|
82,478 |
|
Operating income
(loss) |
32,505 |
|
|
(11,963 |
) |
Other expenses: |
|
|
|
Interest expense, net |
68,994 |
|
|
36,855 |
|
Loss on extinguishment of debt,
net |
— |
|
|
20,038 |
|
(Gain) loss on foreign currency
exchange, net |
(4,493 |
) |
|
14,369 |
|
Loss on receivables -
affiliate |
845 |
|
|
— |
|
Other expenses, net |
567 |
|
|
480 |
|
Total other expenses, net |
65,913 |
|
|
71,742 |
|
Loss before income tax
expense (benefit) |
(33,408 |
) |
|
(83,705 |
) |
Income tax expense
(benefit) |
97 |
|
|
(45 |
) |
Net loss |
(33,505 |
) |
|
(83,660 |
) |
Less: Net income (loss)
attributable to redeemable non-controlling interests |
2,545 |
|
|
(169 |
) |
Less: Net loss
attributable to non-controlling interests |
(35,569 |
) |
|
(55,375 |
) |
Net loss attributable
to Class A common stockholders |
$ |
(481 |
) |
|
$ |
(28,116 |
) |
|
|
|
|
Weighted
average number of shares: |
|
|
|
Class A common stock - Basic
and diluted |
87,833 |
|
|
49,694 |
|
Loss per
share: |
|
|
|
Class A common stock - Basic
and diluted |
$ |
(0.01 |
) |
|
$ |
(0.57 |
) |
TERRAFORM POWER, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In thousands, except share and per share
data) |
|
Assets |
March 31, 2016 |
|
December 31, 2015 |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
603,461 |
|
|
$ |
626,595 |
|
Restricted cash |
117,366 |
|
|
152,586 |
|
Accounts receivable |
111,312 |
|
|
103,811 |
|
Prepaid expenses and other current
assets |
59,221 |
|
|
53,769 |
|
Assets held for sale |
55,725 |
|
|
— |
|
Total current assets |
947,085 |
|
|
936,761 |
|
Renewable energy
facilities, net |
5,208,372 |
|
|
5,834,234 |
|
Intangible assets,
net |
1,237,190 |
|
|
1,246,164 |
|
Goodwill |
55,874 |
|
|
55,874 |
|
Deferred financing
costs, net |
9,595 |
|
|
10,181 |
|
Other assets |
104,162 |
|
|
120,343 |
|
Restricted cash |
20,071 |
|
|
13,852 |
|
Non-current assets held
for sale |
617,204 |
|
|
— |
|
Total assets |
$ |
8,199,553 |
|
|
$ |
8,217,409 |
|
LIABILITIES,
NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Current portion of long-term debt
and financing lease obligations |
$ |
1,575,383 |
|
|
$ |
2,037,919 |
|
Accounts payable, accrued expenses
and other current liabilities |
165,257 |
|
|
153,046 |
|
Deferred revenue |
18,081 |
|
|
15,460 |
|
Due to SunEdison, net |
28,695 |
|
|
26,598 |
|
Liabilities related to assets held
for sale |
451,262 |
|
|
— |
|
Total current liabilities |
2,238,678 |
|
|
2,233,023 |
|
Long-term debt and financing lease
obligations, less current portion |
2,531,470 |
|
|
2,524,730 |
|
Deferred revenue less current
portion |
64,913 |
|
|
70,492 |
|
Deferred income taxes |
26,692 |
|
|
26,630 |
|
Asset retirement obligations |
177,199 |
|
|
215,146 |
|
Other long-term liabilities |
29,921 |
|
|
31,408 |
|
Non-current liabilities related to
assets held for sale |
44,563 |
|
|
— |
|
Total liabilities |
5,113,436 |
|
|
5,101,429 |
|
Redeemable
non-controlling interests |
177,744 |
|
|
175,711 |
|
Stockholders'
equity: |
|
|
|
Class A common stock |
909 |
|
|
784 |
|
Class B common stock |
482 |
|
|
604 |
|
Additional paid-in capital |
1,459,923 |
|
|
1,267,484 |
|
Accumulated deficit |
(105,074 |
) |
|
(104,593 |
) |
Accumulated other comprehensive
income (loss) |
6,186 |
|
|
22,900 |
|
Treasury stock |
(2,620 |
) |
|
(2,436 |
) |
Total TerraForm Power, Inc.
stockholders' equity |
1,359,806 |
|
|
1,184,743 |
|
Non-controlling interests |
1,548,567 |
|
|
1,755,526 |
|
Total non-controlling interests and
stockholders' equity |
2,908,373 |
|
|
2,940,269 |
|
Total liabilities, non-controlling
interests and stockholders' equity |
$ |
8,199,553 |
|
|
$ |
8,217,409 |
|
TERRAFORM POWER, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands) |
|
|
Three Months Ended March 31, |
2016 |
|
2015 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(33,505 |
) |
|
$ |
(83,660 |
) |
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities: |
|
|
|
Stock-based compensation
expense |
1,023 |
|
|
5,144 |
|
Depreciation, accretion and
amortization expense |
59,007 |
|
|
31,891 |
|
Amortization of favorable and
unfavorable rate revenue contracts, net |
10,503 |
|
|
(336 |
) |
Amortization of deferred financing
costs and debt discounts |
8,754 |
|
|
7,709 |
|
Recognition of deferred
revenue |
(2,322 |
) |
|
(73 |
) |
Loss on extinguishment of debt,
net |
— |
|
|
20,038 |
|
Unrealized (gain) loss on
derivatives, net |
(352 |
) |
|
4,302 |
|
Unrealized (gain) loss on foreign
currency exchange, net |
(3,166 |
) |
|
14,369 |
|
Loss on receivables -
affiliate |
845 |
|
|
— |
|
Deferred taxes |
62 |
|
|
— |
|
Other, net |
552 |
|
|
551 |
|
Changes in assets and
liabilities: |
|
|
|
Accounts receivable |
(14,495 |
) |
|
(20,985 |
) |
Prepaid expenses and other current
assets |
(2,552 |
) |
|
4,420 |
|
Accounts payable, accrued expenses
and other current liabilities |
7,366 |
|
|
417 |
|
Deferred revenue |
(636 |
) |
|
6,658 |
|
Due to SunEdison, net |
— |
|
|
(390 |
) |
Restricted cash from operating
activities |
— |
|
|
(664 |
) |
Other, net |
4,190 |
|
|
— |
|
Net cash provided by (used in)
operating activities |
35,274 |
|
|
(10,609 |
) |
Cash flows from
investing activities: |
|
|
|
Cash paid to third parties for
renewable energy facility construction |
(31,711 |
) |
|
(182,365 |
) |
Other investments |
— |
|
|
(10,000 |
) |
Acquisitions of renewable energy
facilities from third parties, net of cash acquired |
(4,064 |
) |
|
(997,968 |
) |
Due to SunEdison, net |
— |
|
|
(15,079 |
) |
Change in restricted cash |
5,638 |
|
|
(2,050 |
) |
Net cash used in investing
activities |
$ |
(30,137 |
) |
|
$ |
(1,207,462 |
) |
TERRAFORM POWER, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(In
thousands)(CONTINUED) |
|
|
Three Months Ended March 31, |
2016 |
|
2015 |
Cash flows from
financing activities: |
|
|
|
Proceeds from issuance of Class A
common stock |
$ |
— |
|
|
$ |
342,192 |
|
Proceeds from Senior Notes due
2023 |
— |
|
|
793,712 |
|
Repayment of term loan |
— |
|
|
(573,500 |
) |
Borrowings of non-recourse
long-term debt |
— |
|
|
336,438 |
|
Principal payments on non-recourse
long-term debt |
(29,712 |
) |
|
(15,894 |
) |
Due to SunEdison, net |
(11,614 |
) |
|
93,516 |
|
Contributions from non-controlling
interests |
15,612 |
|
|
10,497 |
|
Distributions to non-controlling
interests |
(6,172 |
) |
|
(12,884 |
) |
Repurchase of non-controlling
interest |
— |
|
|
(54,694 |
) |
Distributions to SunEdison |
— |
|
|
(16,659 |
) |
Net SunEdison investment |
29,747 |
|
|
53,020 |
|
Payment of dividends |
— |
|
|
(15,125 |
) |
Debt prepayment premium |
— |
|
|
(6,429 |
) |
Debt financing fees |
(4,500 |
) |
|
(30,667 |
) |
Net cash (used in) provided by
financing activities |
(6,639 |
) |
|
903,523 |
|
Net decrease in cash and cash
equivalents |
(1,502 |
) |
|
(314,548 |
) |
Reclassification of
cash and cash equivalents to assets held for sale |
(21,697 |
) |
|
— |
|
Effect of exchange rate
changes on cash and cash equivalents |
65 |
|
|
(583 |
) |
Cash and cash
equivalents at beginning of period |
626,595 |
|
|
468,554 |
|
Cash and cash
equivalents at end of period |
$ |
603,461 |
|
|
$ |
153,423 |
|
Appendix Table A-1: Reg. G: TerraForm
Power, Inc.
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
Adjusted
EBITDA
We believe Adjusted EBITDA is useful to investors in evaluating our
operating performance because securities analysts and other
interested parties use such calculations as a measure of financial
performance and debt service capabilities. In addition, Adjusted
EBITDA is used by our management for internal planning purposes,
including for certain aspects of our consolidated operating
budget.
We define Adjusted EBITDA as net income (loss) plus
depreciation, accretion and amortization, non-cash affiliate
general and administrative costs, acquisition related expenses,
interest expense, gains (losses) on interest rate swaps, foreign
currency gains (losses), income tax (benefit) expense and stock
compensation expense, and certain other non-cash charges, unusual,
non-operating or non-recurring items and other items that we
believe are not representative of our core business or future
operating performance. Our definitions and calculations of
these items may not necessarily be the same as those used by other
companies. Adjusted EBITDA is not a measure of liquidity or
profitability and should not be considered as an alternative to net
income, operating income, net cash provided by operating activities
or any other measure determined in accordance with U.S. GAAP.
The following table presents a reconciliation of
net loss to Adjusted EBITDA:
|
Three Months Ended March 31, |
(In thousands) |
|
2016 |
|
|
|
2015 |
|
Net loss |
$ |
(33,505 |
) |
|
$ |
(83,660 |
) |
Interest expense, net |
|
68,994 |
|
|
|
36,855 |
|
Income tax benefit |
|
97 |
|
|
|
(45 |
) |
Depreciation, accretion and
amortization expense (a) |
|
69,510 |
|
|
|
31,555 |
|
General and administrative expenses
- affiliate (b) |
|
15,997 |
|
|
|
6,850 |
|
Stock-based compensation
expense |
|
1,023 |
|
|
|
5,144 |
|
Acquisition and related costs,
including affiliate (c) |
|
2,743 |
|
|
|
14,158 |
|
Unrealized loss on derivatives, net
(d) |
|
(352 |
) |
|
|
4,302 |
|
Loss (gain) on extinguishment of
debt, net (e) |
– |
|
|
20,038 |
|
Facility-level non-controlling
interest member transaction fees (f) |
– |
|
|
2,753 |
|
Loss (gain) on foreign currency
exchange, net (g) |
|
(3,166 |
) |
|
|
14,369 |
|
Other non-cash operating revenues
(h) |
|
(2,322 |
) |
|
– |
Loss on receivables – affiliate
(i) |
|
845 |
|
|
|
Other non-operating expenses
(j) |
|
567 |
|
|
– |
Adjusted EBITDA |
$ |
120,431 |
|
|
$ |
52,319 |
|
a) Includes an $8.9 million and a $336
reduction within operating revenues, net due to net amortization of
favorable and unfavorable rate revenue contracts for the three
months ended March 31, 2016 and March 31, 2015, respectively.b)
In conjunction with the closing of the IPO in July 2014, we
entered into the MSA with SunEdison, pursuant to which SunEdison
agreed to provide or arrange for other service providers to provide
management and administrative services to us. Cash consideration of
$0.7 million was paid to SunEdison for these services for the
quarter ended March 31, 2015, and the amount of general and
administrative expense-affiliate in excess of the fees paid to
SunEdison is treated as an addback in the reconciliation of net
income (loss) to Adjusted EBITDA. In addition, non-operating items
and other items incurred directly by TerraForm Power that we do not
consider indicative of our core business operations will be treated
as an addback in the reconciliation of net income (loss) to
Adjusted EBITDA. The Company’s normal operating general and
administrative expenses, not paid by SunEdison, are not added back
in the reconciliation of net income (loss) to Adjusted EBITDA. For
the quarter ended March 31, 2016, Terraform Power directly paid
suppliers for normal operating general and administrative expenses
of $2.3 million, and made no payments to SunEdison.c)
Represents transaction related costs, including affiliate
acquisition costs, associated with the acquisitions completed
during the three months ended March 31, 2016 and March 31, 2015.d)
Represents the change in the fair value of commodity
contracts not designated as hedges.e) We recognized a net
loss on extinguishment of debt of $20.0 million for the three
months ended March 31, 2015 due primarily to the early termination
of the Term Loan and its related interest rate swap, the exchange
of the previous revolver to the Revolver and prepayment of premium
paid in conjunction with the payoff of First Wind indebtedness at
the acquisition date.f) Represents professional fees for
legal, tax, and accounting services related to entering into
certain tax equity financing arrangements and are not deemed
representative of our core business operations.g) We incurred
a net gain of $5.1 million and a net loss of $14.4 million on
foreign currency exchange for the three months ended March 31, 2016
and March 31, 2015, respectively, due primarily to unrealized
gains/losses on the re-measurement of intercompany loans which are
denominated in British pounds.h) Primarily represents
deferred revenue recognized related to the upfront sale of
investment tax credits to non-controlling interest members.i)
Represents a bad debt reserve recorded during the period
related to outstanding receivables from debtors in the SunEdison
bankruptcy.j) Represents certain other non-cash charges or
unusual or non-recurring items that we believe are not
representative of our core business or future operating
performance.
Appendix Table A-2: Reg. G: TerraForm
Power, Inc.
Reconciliation of Operating Revenues to
Adjusted Revenue
Adjusted Revenue
We define Adjusted Revenue as operating revenues,
net adjusted for non-cash items including unrealized gain/loss on
derivatives, amortization of favorable and unfavorable revenue
contracts and other non-cash items. We believe Adjusted Revenue is
useful to investors in evaluating our operating performance because
securities analysts and other interested parties use such
calculations as a measure of financial performance. Adjusted
Revenue is a non-GAAP measure used by our management for internal
planning purposes, including for certain aspects of our
consolidating operating budget.
The following table presents a reconciliation of
Operating revenues, net to Adjusted Revenue:
|
Three Months Ended March 31, |
(In thousands) |
|
2016 |
|
|
|
2015 |
|
Adjustments to reconcile Operating
revenues, net to adjusted revenue |
|
|
|
Operating revenues, net |
$ |
153,917 |
|
|
$ |
70,515 |
|
Unrealized gain on derivatives, net
(a) |
|
(352 |
) |
|
|
4,302 |
|
Amortization of favorable and
unfavorable rate revenue contracts, net (b) |
|
10,503 |
|
|
|
(336 |
) |
Other non-cash (c) |
|
(2,322 |
) |
|
|
421 |
|
Adjusted revenue |
$ |
161,746 |
|
|
$ |
74,902 |
|
(a) Represents the change in the fair value
of commodity contracts not designated as hedges.(b)
Represents net amortization of favorable and unfavorable rate
revenue contracts included within operating revenues, net.(c)
Primarily represents deferred revenue recognized for the
three months ended March 31, 2016 related to the upfront sale of
investment tax credits to non-controlling interest members.
Investors:
Brett Prior
TerraForm Power
investors@terraform.com
Media:
Meaghan Repko / Joseph Sala / Nicholas Leasure
Joele Frank, Wilkinson Brimmer Katcher
media@terraform.com
(212) 355-4449
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