Signed binding agreements to acquire and invest in a portfolio of renewable energy projectsMaintaining safe and reliable operations through COVID-19 pandemic; Currently do not foresee any material impact to its financial conditionReiterating 2020 financial guidanceDeclared quarterly dividend of $0.21 per share in second quarter 2020PRINCETON, N.J., May 07, 2020 (GLOBE NEWSWIRE) — Clearway Energy, Inc. (NYSE: CWEN, CWEN.A) today reported first quarter 2020 financial results, including a Net Loss of $107 million, Adjusted EBITDA of $225 million, Cash from Operating Activities of $84 million, and Cash Available for Distribution (CAFD) of $8 million, which includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy.“With the recently announced signing of the drop-down transactions with our sponsor, Clearway continues to position itself for long term dividend growth which we would intend to normalize upon the resolution of the PG&E bankruptcy,” said Christopher Sotos, Clearway Energy, Inc.’s President and Chief Executive Officer. “While the COVID-19 pandemic has impacted the economy, our employees and operating partners have continued to manage Clearway’s assets safely despite these conditions. The Company’s operational results during the quarter were unaffected by the current events and we do not currently foresee any material impact to the Company’s financial condition as a result of the pandemic.”Adjusted EBITDA and Cash Available for Distribution used in this press release are non-GAAP measures and are explained in greater detail under “Non-GAAP Financial Information” below.Overview of Financial and Operating ResultsSegment ResultsTable 1: Net (Loss)/IncomeTable 2: Adjusted EBITDATable 3: Cash from Operating Activities and Cash Available for Distribution (CAFD)For the first quarter of 2020, the Company reported a Net Loss of $107 million, Adjusted EBITDA of $225 million, Cash from Operating Activities of $84 million, and CAFD of $8 million, which includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy. Net Loss increased versus the first quarter of 2019 primarily due to the non-cash change in the fair value of interest rate swaps. First quarter Adjusted EBITDA results were higher than 2019 primarily due to the acquisition of Carlsbad and improved renewable energy conditions versus last year. In the first quarter, CAFD results were higher than 2019 primarily due to higher Adjusted EBITDA and the timing of corporate interest payments due to the issuance of the 2028 Senior Notes and redemption of the 2024 Senior Notes.COVID-19 UpdateDue to the COVID-19 pandemic, the Company has implemented measures and developed corporate and regional response plans to protect its employees and to maintain safe and reliable operations at its facilities. Based on its experience year to date, the Company does not currently anticipate any material impact to its financial conditions resulting from the pandemic.Operational PerformanceTable 4: Selected Operating ResultsIn the first quarter of 2020, availability at the Conventional segment was in line with the first quarter of 2019. Generation in the Renewables segment during the first quarter was within the Company’s expected range and 16% higher than the first quarter of 2019 due to favorable solar and wind conditions across the portfolio.Liquidity and Capital ResourcesTable 5: LiquidityTotal liquidity as of March 31, 2020 was $633 million, which was $209 million lower than as of December 31, 2019. After taking into account the approximately $10.3 million in proceeds raised through the Company’s ATM program, this reduction was primarily due to the closing of growth investments and the redemption of the remaining balance of the 2024 Senior Notes in January 2020.The Company’s liquidity includes $270 million of restricted cash balances as of March 31, 2020. Restricted cash consists primarily of funds to satisfy the requirements of certain debt arrangements and funds held within the Company’s projects that are restricted in their use. As of March 31, 2020, these restricted funds were comprised of $111 million designated to fund operating expenses, approximately $35 million designated for current debt service payments, and $46 million of reserves for debt service, performance obligations and other items including capital expenditures. The remaining $78 million is held in distribution accounts. The Company estimates that as of March 31, 2020 there was approximately $148 million of excess restricted cash at consolidated and unconsolidated subsidiaries affected by the PG&E bankruptcy that would be available to be distributed to the Company upon the resolution of the PG&E bankruptcy.Potential future sources of liquidity include excess operating cash flow, the existing ATM program, of which approximately $26 million remained available as of March 31, 2020, availability under the revolving credit facility, asset dispositions, and, subject to market conditions, new corporate financings.PG&E Bankruptcy UpdateAs of May 7, 2020, the Company’s contracts with PG&E have operated in the normal course and the Company currently expects these contracts to continue as such. However, unless such lenders for the related project-level debt otherwise agree, distributions to the Company from these projects may not be made during the pendency of the bankruptcy. These restrictions, therefore, have resulted in the Company accumulating less unrestricted cash and thus decreased the Company’s corporate liquidity and cash available for shareholder dividends and growth investments. The Company has entered into forbearance agreements for certain project-level financing arrangements and continues to seek similar agreements with the lenders for other project-level financing arrangements affected by the PG&E bankruptcy. PG&E has filed a chapter 11 plan of reorganization, as amended, that provides for PG&E to assume all of its contracts with the Company. The Company continues to assess the potential future impacts of the PG&E bankruptcy as events occur.Growth InvestmentsBinding Agreements to Acquire and Invest in a Portfolio of Renewable Energy ProjectsOn April 20th, 2020 the Company announced it had entered into binding agreements with Clearway Group (CEG) that enable the Company to acquire and invest in a portfolio of renewable energy projects. The following projects were included in the drop-down:Rattlesnake Wind: The Company signed agreements to acquire Rattlesnake Flat, LLC, which owns the Rattlesnake Wind Project, a 144 net MW wind facility located in Adams County, WA. The project has a 20-year power purchase agreement with Avista.Remaining Interest in Repowering 1.0: The Company signed an agreement to acquire CEG’s remaining interest in Repowering Partnership II LLC (Repowering 1.0), which would give the Company sole ownership of the Partnership. Repowering 1.0 includes the 161 MW Wildorado and 122 MW Elbow Creek wind projects which were previously repowered.Pinnacle Wind Repowering: The Company, through an indirect subsidiary, agreed to enter into a new partnership with CEG to repower the Pinnacle Wind Project, a 55 net MW wind facility located in Mineral County, WV. In order to facilitate the repowering, the Company will contribute its interests in the Pinnacle Wind Project to the partnership. The existing Pinnacle Wind power purchase agreements will continue to run through 2031.The agreements commit the Company to invest, at closing, an estimated $241 million in corporate capital, subject to closing adjustments. The investment at commercial operations excludes, subject to closing adjustments, an additional $27 million payment in 2031 at the Pinnacle Wind Repowering Partnership. The transactions are expected to have a five-year average annual asset CAFD of approximately $23 million prior to corporate financing costs.The funding of the transactions will occur upon each project achieving its requisite closing conditions including commercial operations, of which the Company currently expects the remaining interest in Repowering 1.0 to close in the second quarter of 2020 and Rattlesnake Wind by the end of 2020. Commercial operations for the Pinnacle Wind Repowering Partnership will now most likely occur in 2021.Business Renewables Investment Partnerships with Clearway GroupDuring the first quarter of 2020, the Company invested approximately $7 million in the business renewables investment partnerships with Clearway Group, bringing total capital invested to $263 million in these investment partnerships. As of March 31, 2020, through the existing partnership agreements, the Company owns approximately 277 MW of business renewables (C&I) and community solar capacity with a weighted average contract life of approximately 19 years.Financing UpdateClass C Common Stock ATM ProgramDuring the first quarter of 2020, the Company raised gross proceeds of approximately $10.3 million through the sale of 478,384 shares of Class C common stock under the ATM program at a weighted average price of $21.42 per share.Repurchase of 2024 NotesOn December 13, 2019, the Company repurchased an aggregate principal amount of $412 million or 82.4%, of the 2024
Senior Notes that were validly tendered as part of the previously announced cash tender offer. Under the terms of the tender offer, holders of the 2024 Notes that validly tendered and accepted at or prior to the expiration time received a total cash consideration of $1,030.00 per $1,000 principal amount of 2024 Notes, plus accrued and unpaid interest. Concurrently with the launch of the tender offer, the Company exercised its right to optionally redeem any 2024 Senior Notes not validly tendered and purchased in the tender offer, pursuant to the terms of the indenture governing the 2024 Senior Notes. This redemption of the remaining $88 million of outstanding 2024 Senior Notes occurred on January 3, 2020. Holders of the 2024 Notes not validly tendered and purchased in the tender offer received a total cash consideration of $1,026.88 per $1,000 principal amount plus accrued and unpaid interest.Quarterly DividendOn April 30, 2020, Clearway Energy, Inc.’s Board of Directors declared a quarterly dividend on Class A and Class C common stock of $0.21 per share payable on June 15, 2020, to stockholders of record as of June 1, 2020. The Company will continue to assess the level of the dividend pending developments in the PG&E bankruptcy, including the Company’s ability to receive project distributions.SeasonalityClearway Energy, Inc.’s quarterly operating results are impacted by seasonal factors, as well as weather variability which can impact renewable energy resource and volumetric sales of steam and chilled water at the Thermal segment. Most of the Company’s revenues are generated from the months of May through September, as contracted pricing and renewable resources are at their highest levels in the Company’s portfolio. Factors driving the fluctuation in Net Income, Adjusted EBITDA, Cash from Operating Activities, and CAFD include the following:Higher summer capacity prices from conventional assets;Higher solar insolation during the summer months;Higher wind resources during the spring and summer months;Debt service payments which are made either quarterly or semi-annually;Timing of maintenance capital expenditures and the impact of both unforced and forced outages; andReceipt of distributions from or generated by unconsolidated affiliates including those impacted by the PG&E bankruptcy.The Company takes into consideration the timing of these factors to ensure sufficient funds are available for distributions and operating activities on a quarterly basis.2020 Financial GuidanceThe Company is reaffirming its 2020 full year CAFD guidance of $310 million. This financial guidance assumes that all CAFD related to the projects impacted by the PG&E bankruptcy is realized in 2020. Financial guidance for 2020 also continues to be based on median renewable energy production estimates for the full year.Earnings Conference CallOn May 7, 2020, Clearway Energy, Inc. will host a conference call at 8:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to Clearway Energy, Inc.’s website at http://www.clearwayenergy.com and clicking on “Presentations & Webcasts” under “Investor Relations.”About Clearway Energy, Inc.Clearway Energy, Inc. is a leading publicly-traded energy infrastructure investor focused on modern, sustainable and long-term contracted assets across North America. Clearway Energy’s environmentally-sound asset portfolio includes over 7,000 megawatts of wind, solar and natural gas-fired power generation facilities, as well as district energy systems. Through this diversified and contracted portfolio, Clearway Energy endeavors to provide its investors with stable and growing dividend income. Clearway Energy’s Class C and Class A common stock are traded on the New York Stock Exchange under the symbols CWEN and CWEN.A, respectively. Clearway Energy, Inc. is sponsored by its controlling investor Global Infrastructure Partners III (GIP), an independent infrastructure fund manager that invests in infrastructure and businesses in both OECD and select emerging market countries, through GIP’s portfolio company, Clearway Energy Group.Safe Harbor DisclosureThis news release 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. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, and typically can be identified by the use of words such as “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “outlook,” “believe” and similar terms. Such forward-looking statements include, but are not limited to, statements regarding impacts related to the COVID-19 pandemic, impacts related to the PG&E bankruptcy, the benefits of the relationship with Global Infrastructure Partners III (GIP) and GIP’s expertise, the Company’s future relationship and arrangements with GIP and Clearway Energy Group, as well as the Company’s Net Income, Adjusted EBITDA, Cash from Operating Activities, Cash Available for Distribution, the Company’s future revenues, income, indebtedness, capital structure, strategy, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.Although Clearway Energy, Inc. believes that the expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, impacts related to the COVID-19 pandemic, impacts related to the PG&E bankruptcy, general economic conditions, hazards customary in the power industry, weather conditions, including wind and solar performance, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulations, the condition of capital markets generally, the Company’s ability to access capital markets, cyber terrorism and inadequate cybersecurity, the ability to engage in successful acquisitions activity, unanticipated outages at its generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions (including receipt of third party consents and regulatory approvals), the Company’s ability to enter into new contracts as existing contracts expire, risk relating to the Company’s relationships with GIP and Clearway Energy Group, the Company’s ability to acquire assets from GIP, Clearway Energy Group or third parties, the Company’s ability to close drop down transactions, and the Company’s ability to maintain and grow its quarterly dividends. Furthermore, any dividends are subject to available capital, market conditions, and compliance with associated laws and regulations.Clearway Energy, Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Adjusted EBITDA and Cash Available for Distribution are estimates as of today’s date, May 7, 2020, and are based on assumptions believed to be reasonable as of this date. Clearway Energy, Inc. expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause Clearway Energy, Inc.’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect Clearway Energy, Inc.’s future results included in Clearway Energy, Inc.’s filings with the Securities and Exchange Commission at www.sec.gov. In addition, Clearway Energy, Inc. makes available free of charge at www.clearwayenergy.com, copies of materials it files with, or furnishes to, the Securities Exchange Commission.Contacts:
CLEARWAY ENERGY, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
CLEARWAY ENERGY, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(Unaudited)
CLEARWAY ENERGY, INC.CONSOLIDATED BALANCE SHEETS
CLEARWAY ENERGY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
CLEARWAY ENERGY, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYFor the Three Months Ended March 31, 2020(Unaudited)For the Three Months Ended March 31, 2019(Unaudited)
Appendix Table A-1: Three Months Ended March 31, 2020, Segment Adjusted EBITDA Reconciliation
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):Appendix Table A-2: Three Months Ended March 31, 2019, Segment Adjusted EBITDA Reconciliation
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):
Appendix Table A-3: Cash Available for Distribution Reconciliation
The following table summarizes the calculation of Cash Available for Distribution and provides a reconciliation to Cash from Operating Activities:Appendix Table A-4: Three Months Ended March 31, 2020, Sources and Uses of Liquidity
The following table summarizes the sources and uses of liquidity in 2020:Appendix Table A-5: Adjusted EBITDA and Cash Available for Distribution GuidanceAppendix Table A-6: Growth Investments 5 Year Average CAFDNon-GAAP Financial InformationEBITDA and Adjusted EBITDAEBITDA, Adjusted EBITDA, and Cash Available for Distribution (CAFD) are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of non-GAAP financial measures should not be construed as an inference that Clearway Energy’s future results will be unaffected by unusual or non-recurring items.EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because Clearway Energy considers it an important supplemental measure of its performance and believes debt and equity holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;EBITDA does not reflect changes in, or cash requirements for, working capital needs;EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; andOther companies in this industry may calculate EBITDA differently than Clearway Energy does, limiting its usefulness as a comparative measure.Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of Clearway Energy’s business. Clearway Energy compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.Adjusted EBITDA is presented as a further supplemental measure of operating performance. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, non-cash equity compensation expense, asset write offs and impairments; and factors which we do not consider indicative of future operating performance such as transition and integration related costs. The reader is encouraged to evaluate each adjustment and the reasons Clearway Energy considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future Clearway Energy may incur expenses similar to the adjustments in this news release.Management believes Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. This measure is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.Additionally, Management believes that investors commonly adjust EBITDA information to eliminate the effect of restructuring and other expenses, which vary widely from company to company and impair comparability. As we define it, Adjusted EBITDA represents EBITDA adjusted for the effects of impairment losses, gains or losses on sales, non-cash equity compensation expense, dispositions or retirements of assets, any mark-to-market gains or losses from accounting for derivatives, adjustments to exclude gains or losses on the repurchase, modification or extinguishment of debt, and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. We adjust for these items in our Adjusted EBITDA as our management believes that these items would distort their ability to efficiently view and assess our core operating trends.In summary, our management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, shareholders, creditors, analysts and investors concerning our financial performance.Cash Available for DistributionCash Available for Distribution (CAFD) is a non-GAAP financial measure. We define CAFD as Adjusted EBITDA plus cash distributions/return of investment from unconsolidated affiliates, adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy, cash receipts from notes receivable, cash distributions from noncontrolling interests, less cash distributions to noncontrolling interests, maintenance capital expenditures, pro-rata adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness, Walnut Creek investment payments, changes in prepaid and accrued capacity payments, and adjusted for development expenses. Management believes CAFD is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors.We believe CAFD is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of our ability to make quarterly distributions. In addition, CAFD is used by our management team for determining future acquisitions and managing our growth. The GAAP measure most directly comparable to CAFD is cash provided by operating activities.However, CAFD has limitations as an analytical tool because it does not include changes in operating assets and liabilities and excludes the effect of certain other cash flow items, all of which could have a material effect on our financial condition and results from operations. CAFD is a non GAAP measure and should not be considered an alternative to cash provided by operating activities or any other performance or liquidity measure determined in accordance with GAAP, nor is it indicative of funds available to fund our cash needs. In addition, our calculations of CAFD are not necessarily comparable to CAFD as calculated by other companies. Investors should not rely on these measures as a substitute for any GAAP measure, including cash provided by operating activities.
Includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcyExcludes unconsolidated projectsGeneration sold excludes MWh that are reimbursable for economic curtailmentPrimarily relates to Thermal Development Expenses2020 excludes $152 million of contributions relating to funding of Repowering 1.0 Partnership; 2019 excludes $18 million of contributions related to funding of Oahu tax equity partnership;Net of allocated insurance proceeds2020 excludes $260 million for the repayment of construction financing in connection with the Repowering 1.0 Partnership and $90 million total consideration for the redemption of Corporate Notes; 2019 excludes $220 million for the redemption of Corporate NotesDistribution from unconsolidated affiliates can be classified as Return of Investment on Unconsolidated Affiliates when actuals are reported. This is below cash from operating activitiesPrimarily relates to Thermal Development ExpensesIncludes tax equity proceeds and distributions to tax equity partners
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