Pattern Energy Reports First Quarter 2016 Financial Results

- $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.

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@patternenergy.com


Investor Relations

Ross Marshall

416-526-1563

ross.marshall@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


 

Logo: http://photos.prnewswire.com/prnh/20150421/199964LOGO

 

SOURCE Pattern Energy Group Inc.


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