- Closed March drop down acquisition
of 311 net MWs of utility-scale solar from NRG Energy, Inc. (NYSE:
NRG)
- Updating 2017 Guidance following the
close of the March drop down acquisition
- Received offer from NRG for the
remaining 25% interest in NRG Wind TE Holdco
- Announcing 3.8% quarterly dividend
increase to $0.27 per share in the second quarter 2017
NRG Yield, Inc. (NYSE:NYLD, NYLD.A) today reported first quarter
2017 financial results including a Net Loss of $1 million, Adjusted
EBITDA of $184 million, Cash from Operating Activities of $61
million, and Cash Available for Distribution (CAFD) of $0.
“The Company continues to execute on its growth strategy with
the closing of the most recent drop down from NRG and the expansion
of the ROFO pipeline with the Buckthorn Solar and Hawaii Solar
assets," said Christopher Sotos, NRG Yield's President and Chief
Executive Officer. "The Company has begun the diligence process for
the next drop down offer from NRG, the remaining 25% interest in
NRG Wind TE Holdco, to continue its growth trajectory.”
Overview of Financial and Operating Results
Segment Results
Table 1: Net (Loss)/Income1
($ millions)
Three Months Ended Segment
3/31/17 3/31/16 Conventional 20 28 Renewables
(2 ) (12 ) Thermal 6 8 Corporate (25 ) (22 )
Net (Loss)/
Income (1 ) 2
Table 2: Adjusted EBITDA2
($ millions)
Three Months Ended Segment
3/31/17 3/31/16 Conventional 62 70 Renewables
111 115 Thermal 15 16 Corporate (4 ) (3 )
Adjusted EBITDA
184 198
Table 3: Cash from Operating Activities and Cash Available
for Distribution (CAFD)
Three Months Ended ($ millions)
3/31/17
3/31/16 Cash from Operating Activities 61 89 Cash Available
for Distribution (CAFD) 0 45
For the first quarter of 2017, NRG Yield reported net loss of $1
million, Adjusted EBITDA of $184 million, Cash from Operating
Activities of $61 million, and CAFD of $0. First quarter net loss
and Adjusted EBITDA results in the Conventional segment were lower
than 2016 primarily due to the forced outage on Units 5 and 6 at
the El Segundo Energy Center. Results in the Renewables segment
were lower than 2016 due to lower solar and wind resource primarily
in California, which led to decreased production which was
partially offset by the acquisition of the Utah utility scale solar
assets. CAFD results were lower than 2016 due to the Adjusted
EBITDA impacts referenced above and additional debt service from
various project level financing arrangements and corporate debt
raised during 2016 which in part provided excess capital for growth
investments in 2017. This was partially offset by the timing of
maintenance capital expenditures from the first quarter of 2017
being shifted to later in the year.
Operational Performance
Table 4: Selected Operating Results
(MWh and MWht in thousands)
Three Months Ended
3/31/17 3/31/16 Equivalent Availability Factor
(Conventional) 83.7 % 86.8 % Renewables Generation Sold (MWh) 1,662
1,778
Thermal Generation Sold (MWht)3
578 593
In the first quarter of 2017, primarily due to the outage at El
Segundo, the Conventional segment experienced lower equivalent
availability than the first quarter of 2016. Additionally,
generation in the Renewables segment was below expectations and 7%
lower than the first quarter of 2016 due to reduced solar and wind
resources primarily in California, with similar conditions
extending into April.
As previously disclosed, after an extended outage that began in
January, both Units 5 and 6 at the El Segundo Energy Center
returned to service on February 24, 2017, with an original
estimated financial impact of approximately $12 million in 2017
prior to recovery of warranty or insurance coverage. During the
first quarter of 2017, the Company reached an agreement in
principle with the original equipment manufacturer on a warranty
claim and expects its financial exposure to now be limited to
approximately $5 million.
On April 18, 2017, Unit 1 at Walnut Creek went into forced
outage due to a mechanical failure of a high pressure turbine
compressor part that caused downstream damage in the Unit. Unit 1
returned to service on April 30, 2017. The estimated financial
impact is approximately $8 million before the recovery of insurance
proceeds, a significant portion of which the Company believes is
recoverable by year end.
Liquidity and Capital Resources
Table 5: Liquidity4
($ millions)
3/31/17 12/31/16 Cash and
Cash Equivalents 213 322 Restricted Cash 106 165
Total
Cash 319 487 Revolver Availability 431 435
Total Liquidity 750 922
Total liquidity as of March 31, 2017 was $750 million, a
decrease of $172 million from December 31, 2016. This reflects
a decrease in total cash of $168 million5 which factored in the use
of $131 million for the drop down acquisition completed on March
27, 2017 and dividend payments made during the first quarter.
Potential future sources of liquidity include the $150 million
at-the-market (ATM) program, of which $143 million remains
available at the end of March 2017. During March 2017, the Company
issued 424,027 shares of Class C common stock under the ATM program
raising proceeds of approximately $7 million.
Growth Investments
Closed the March 2017 Drop Down Assets Transaction with NRG
Energy
On March 27, 2017, the Company acquired ownership interests in
the Agua Caliente and Utah utility-scale solar projects from NRG
for total cash consideration of $131 million6, plus assumed
non-recourse project debt of approximately $463 million7. Details
of the projects include:
- A 16% interest (approximately 31% of
NRG's 51% interest) in the Agua Caliente solar farm representing
ownership of approximately 46 net MW of capacity. Agua Caliente is
located in Yuma County, AZ and sells power subject to a 25-year PPA
with Pacific Gas and Electric, with 22 years remaining on that
contract.
- Interests in seven utility-scale solar
farms located in Utah representing 265 net MW of capacity (based on
a 50% interest in cash to be distributed). These assets achieved
commercial operations in the fall of 2016 and sell power subject to
20-year PPAs with PacifiCorp, a subsidiary of Berkshire
Hathaway.
The purchase price for the March 2017 Drop Down Assets was
funded with cash on hand and is expected to increase CAFD on an
annual basis by approximately $13.3 million8.
Drop Down Offer from NRG Energy
NRG Yield received an offer from NRG with respect to the
remaining 25% interest in NRG Wind TE Holdco, an 814 net MW
portfolio of twelve wind projects. The Company currently owns a 75%
interest in the portfolio which it acquired in 2015. The
acquisition is subject to negotiation and the approval by NRG
Yield's independent directors.
Investment Partnerships with NRG Energy
During the first quarter of 2017, NRG Yield invested $3 million
in the distributed solar investment partnerships, entirely in
business renewables, with NRG. Following these contributions, NRG
Yield has invested $173 million in the partnerships (including $16
million since the third quarter of 2016) and co-owns approximately
151 MW9 of distributed solar capacity with a weighted average
contract life of approximately 20 years as of March 31, 2017.
Quarterly Dividend Updates
On April 25, 2017, NRG Yield’s Board of Directors declared
a quarterly dividend on Class A and Class C common stock of $0.27
per share ($1.08 per share annualized) payable on June 15, 2017, to
stockholders of record as of June 1, 2017. This equates to a 3.8%
increase over the prior quarter.
Seasonality
NRG Yield’s quarterly operating results are impacted by seasonal
factors as well as variability in renewable energy resource. The
majority of NRG Yield’s revenues are generated from the months of
May through September, as contracted pricing and renewable
resources are at their highest levels in the Company’s core
markets. The factors driving the fluctuation in Net Income,
Adjusted EBITDA, Cash from Operating Activities, and CAFD include
the following:
- Higher summer capacity prices from
conventional assets;
- Higher solar insolation during the
summer months;
- Higher wind resources during the spring
months;
- Debt service payments which are made
either quarterly or semi-annually; and
- Timing of maintenance capital
expenditures
The Company takes into consideration the timing of these factors
to ensure sufficient funds are available for distribution on a
quarterly basis.
Updating 2017 Financial Guidance
As a result of the acquisition of the March 2017 Drop Down
Assets, NRG Yield is updating its full year 2017 financial
guidance10. The Company is also incorporating the impact from
additional investments made in the distributed generation
partnerships with NRG since the third quarter of 2016, the revised
estimate for the outage at El Segundo Energy Center and other
year-to-date operational changes. The Company is excluding the
financial impact of the Walnut Creek Unit 1 outage referenced above
given the likely recovery of a substantial portion of the outage
cost through insurance proceeds. Financial guidance continues to be
based on median renewable energy production estimates.
Updated Prior 2017 2017 Full
Full Year Year ($ millions)
Guidance
Guidance Net Income 110 140 Adjusted EBITDA 865 920 Cash
from Operating Activities 548 557 Cash Available for Distribution
(CAFD) 255 255
NRG Yield is targeting dividend per share growth of 15% annually
on each of its Class A and Class C common stock through 2018.
Earnings Conference Call
On May 2, 2017, NRG Yield will host a conference call at 9:15
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 NRG Yield’s
website at http://www.nrgyield.com and clicking on “Presentations
& Webcasts.”
About NRG Yield
NRG Yield owns a diversified portfolio of contracted renewable
and conventional generation and thermal infrastructure assets in
the United States, including fossil fuel, solar and wind power
generation facilities that provide the capacity to support more
than two million American homes and businesses. Our thermal
infrastructure assets provide steam, hot water and/or chilled
water, and in some instances electricity, to commercial businesses,
universities, hospitals and governmental units in multiple
locations. NRG Yield’s Class C and Class A common stock are traded
on the New York Stock Exchange under the symbols NYLD and NYLD.A,
respectively. Visit www.nrgyield.com for more information.
Safe Harbor Disclosure
This 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 include our Net Income, Adjusted EBITDA, Cash from
Operating Activities, cash available for distribution, expected
earnings, future growth and financial performance, and typically
can be identified by the use of words such as “expect,” “estimate,”
“anticipate,” “forecast,” “plan,” “believe” and similar terms.
Although NRG Yield, 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 herein include, among others, 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 regulation, the
condition of capital markets generally, our ability to access
capital markets, cyber terrorism and inadequate cyber security, the
ability to engage in successful mergers and acquisitions activity,
unanticipated outages at our generation facilities, adverse results
in current and future litigation, failure to identify or
successfully execute acquisitions, our ability to enter into new
contracts as existing contracts expire, our ability to acquire
assets from NRG Energy, Inc. or third parties, our ability to
maintain or create successful partnering relationships with NRG
Energy and other third parties, our ability to close Drop Down
transactions, and our ability to maintain and grow our quarterly
dividends. Furthermore, any dividends are subject to available
capital, market conditions, and compliance with associated laws and
regulations.
NRG Yield, 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 2, 2017, and
are based on assumptions believed to be reasonable as of this date.
NRG Yield expressly disclaims any current intention to update such
guidance. The foregoing review of factors that could cause NRG
Yield’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 NRG Yield’s future results
included in NRG Yield’s filings with the Securities and Exchange
Commission at www.sec.gov. In addition, NRG Yield makes available
free of charge at www.nrgyield.com, copies of materials it files
with, or furnish to, the SEC.
1 In accordance with GAAP, 2016 results have been recast to
include the California Valley Solar Ranch (CVSR) Drop Down Asset
and the March 2017 Drop Down Assets as if the combinations had been
in effect from the beginning of the financial statement period
2 In accordance with GAAP, 2016 results have been recast to
include the CVSR Drop Down Asset and the March 2017 Drop Down
Assets as if the combinations had been in effect from the beginning
of the financial statement period
3 Also includes Thermal MWh sold
4 In accordance with GAAP, 2016 results have been recast to
include the March 2017 Drop Down Assets as if the combinations had
been in effect from the beginning of the financial statement
period
5 See Appendix A-4 for Three Months Ended March 31, 2017.
Sources and Uses of Cash and Cash Equivalents detail
6 Includes $1 million of working capital payments made as of
March 31, 2017
7 Approximately $328 million on balance sheet and $135 million
pro-rata share of unconsolidated debt
8 CAFD average over the 5-year period from 2018-2022
9 Based on cash to be distributed; includes 14 MW of residential
solar leases acquired outside of partnership
10 In accordance with GAAP, Adjusted EBITDA results include the
full year impact of the March 2017 Drop Down Assets as if the
combinations had been in effect from the beginning of the financial
statement period, but CAFD includes April through December
estimates only
NRG YIELD, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) Three months
ended March 31,
(In millions,
except per share amounts)
2017 2016 Operating Revenues Total
operating revenues $ 218 $ 234
Operating Costs and
Expenses Cost of operations 84 85 Depreciation and amortization
75 74 General and administrative 4 3 Acquisition-related
transaction and integration costs 1 — Total operating
costs and expenses 164 162
Operating Income 54
72
Other Income (Expense) Equity in earnings
of unconsolidated affiliates 19 4 Other income, net 1 — Interest
expense (76 ) (74 ) Total other expense, net (56 ) (70 )
(Loss)
Income Before Income Taxes (2 ) 2 Income tax benefit (1 ) —
Net (Loss) Income (1 ) 2 Less: Pre-acquisition net
income of Drop Down Assets 12 —
Net (Loss) Income
Excluding Pre-acquisition Net Income of Drop Down Assets (13 )
2 Less: Net loss attributable to noncontrolling interests (10 ) (3
)
Net (Loss) Income Attributable to NRG Yield, Inc. $ (3 ) $
5
(Loss) Earnings Per Share Attributable
to NRG Yield, Inc. Class A and Class C Common
Stockholders
Weighted average number of Class A common shares outstanding -
basic and diluted 35 35 Weighted average number of Class C common
shares outstanding - basic and diluted 63 63
(Loss) Earnings per
Weighted Average Class A and Class C Common Share - Basic and
Diluted $ (0.03 ) $ 0.05
Dividends Per Class A Common
Share 0.26 0.225
Dividends Per Class C Common
Share $ 0.26 $ 0.225
NRG YIELD,
INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS) (Unaudited) Three months ended
March 31,
(In
millions)
2017 2016 Net (Loss) Income $ (1 ) $ 2
Other Comprehensive Income (Loss), net of tax Unrealized
gain (loss) on derivatives, net of income tax (expense) benefit of
($1) and $9 6 (41 ) Other comprehensive income (loss) 6
(41 )
Comprehensive Income (Loss) 5 (39 ) Less:
Pre-acquisition net income of Drop Down Assets 12 — Less:
Comprehensive loss attributable to noncontrolling interests (7 )
(27 )
Comprehensive Loss Attributable to NRG Yield, Inc. $ —
$ (12 )
NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions,
except shares)
March 31, 2017 December 31, 2016 ASSETS
Current Assets Cash and cash equivalents $ 213 $ 322
Restricted cash 106 165 Accounts receivable — trade 82 92 Inventory
40 39 Derivative instruments 1 2 Notes receivable 15 16 Prepayments
and other current assets 19 20 Total current assets
476 656
Property, plant and equipment, net 5,390 5,460
Other Assets Equity investments in affiliates 1,154 1,152
Notes receivable 10 14 Intangible assets, net 1,268 1,286
Derivative instruments 2 1 Deferred income taxes 214 216 Other
non-current assets 66 51 Total other assets 2,714
2,720
Total Assets $ 8,580 $ 8,836
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities Current portion of long-term debt $ 296 $ 291
Accounts payable — trade 26 23 Accounts payable — affiliate 50 40
Derivative instruments 28 32 Accrued expenses and other current
liabilities 55 86 Total current liabilities 455
472
Other Liabilities Long-term debt 5,662
5,696 Accounts payable — affiliate 6 9 Derivative instruments 40 44
Other non-current liabilities 79 76 Total non-current
liabilities 5,787 5,825
Total Liabilities
6,242 6,297
Commitments and Contingencies
Stockholders' Equity Preferred stock, $0.01 par value;
10,000,000 shares authorized; none issued — —
Class A, Class B, Class C and Class D
common stock, $0.01 par value; 3,000,000,000
shares authorized (Class A 500,000,000,
Class B 500,000,000, Class C 1,000,000,000,
Class D 1,000,000,000); 183,277,581 shares
issued and outstanding (Class A 34,586,250,
Class B 42,738,750, Class C 63,213,831,
Class D 42,738,750) at March 31, 2017 and
182,848,000 shares issued and outstanding
(Class A 34,586,250, Class B 42,738,750,
Class C 62,784,250, Class D 42,738,750) at
December 31, 2016
1 1 Additional paid-in capital 1,859 1,879 Retained earnings (5 )
(2 ) Accumulated other comprehensive loss (25 ) (28 )
Noncontrolling interest 508 689
Total
Stockholders' Equity 2,338 2,539
Total
Liabilities and Stockholders' Equity $ 8,580 $ 8,836
NRG YIELD, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended March 31, 2017 2016
(In millions) Cash Flows from Operating Activities
Net (loss) income $ (1 ) $ 2 Adjustments to reconcile net income to
net cash provided by operating activities: Equity in earnings of
unconsolidated affiliates (19 ) (4 ) Distributions from
unconsolidated affiliates 13 7 Depreciation and amortization 75 74
Amortization of financing costs and debt discounts 5 5 Amortization
of intangibles and out-of-market contracts 17 23 Changes in
deferred income taxes (1 ) — Changes in derivative instruments (3 )
3 Loss on disposal of asset components 3 — Changes in prepaid and
accrued liabilities for tolling agreements (36 ) (37 ) Changes in
other working capital 8 16
Net Cash Provided by
Operating Activities 61 89
Cash Flows from
Investing Activities Acquisition of Drop Down Assets (131 ) —
Capital expenditures (4 ) (7 ) Decrease in restricted cash 59 23
Cash receipts from notes receivable 4 4 Return of investment from
unconsolidated affiliates 16 8 Investments in unconsolidated
affiliates (7 ) (51 ) Other — 2
Net Cash Used in
Investing Activities (63 ) (21 )
Cash Flows from Financing
Activities Net contributions from noncontrolling interests 14
10 Net distributions and return of capital to NRG prior to the
acquisition of Drop Down Assets (38 ) (11 ) Proceeds from the
issuance of common stock 7 — Payments of dividends and
distributions (53 ) (45 ) Payments of debt issuance costs (3 ) —
Proceeds from the revolving credit facility — 50 Payments for the
revolving credit facility — (40 ) Proceeds from the issuance of
long-term debt 41 — Payments for long-term debt (75 ) (67 )
Net
Cash Used in Financing Activities (107 ) (103 )
Net Decrease
in Cash and Cash Equivalents (109 ) (35 )
Cash and Cash
Equivalents at Beginning of Period 322 111
Cash and Cash Equivalents at End of Period $ 213 $ 76
Appendix Table A-1: Three Months Ended March 31, 2017,
Segment Adjusted EBITDA ReconciliationThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to Net Income/(Loss):
($ in millions)
Conventional Renewables
Thermal Corporate Total Net
(Loss)/Income 20 (2 ) 6 (25 ) (1 ) Plus: Income
Tax Benefit — — — (1 ) (1 ) Interest Expense, net 12 40 3 21 76
Depreciation and Amortization 24 46 5 — 75 ARO Expense — 1 — — 1
Contract Amortization 1 15 1 — 17 Acquisition-related transaction
and integration costs — — — 1 1 Other non-recurring charges 2 1 — —
3
Adjustments to reflect NRG Yield’s
pro-rata
share of Adjusted EBITDA
from Unconsolidated Affiliates 3 10 — —
13
Adjusted EBITDA 62 111
15 (4 ) 184
Appendix Table A-2: Three Months Ended March 31, 2016,
Segment Adjusted EBITDA ReconciliationThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to Net Income/(Loss):
($ in millions)
Conventional
Renewables Thermal
Corporate Total Net Income/(Loss) 28
(12 ) 8 (22 ) 2 Plus: Interest Expense,
net 11 42 2 19 74 Depreciation and Amortization 20 49 5 — 74 ARO
Expense — 1 — — 1 Contract Amortization 7 15 1 — 23
Adjustments to reflect NRG Yield’s
pro-rata
share of Adjusted EBITDA from
Unconsolidated Affiliates
4 20 — — 24
Adjusted EBITDA
70 115 16 (3
) 198
Appendix Table A-3: Cash Available for Distribution
ReconciliationThe following table summarizes the calculation of
Cash Available for Distribution and provides a reconciliation to
Cash from Operating Activities:
Three Months Ended ($ in millions)
3/31/17
3/31/16 Adjusted EBITDA 184
198 Cash interest paid (79 ) (63 ) Changes in prepaid
and accrued liabilities for tolling agreements (36 ) (37 ) Pro-rata
Adjusted EBITDA from unconsolidated affiliates (33 ) (27 )
Distributions from unconsolidated affiliates 13 7 All other changes
in working capital 12 11
Cash from Operating
Activities 61 89 All other changes
in working capital (12 ) (11 ) Return of investment from
unconsolidated affiliates 16 8 Net contributions from
non-controlling interest 9 5 Maintenance Capital expenditures (4 )
(6 ) Principal amortization of indebtedness (75 ) (67 )
Cash receipts from notes receivable11
4 4
Cash Available for Distribution (Recast)
(1 ) 22
Adjustment to reflect NYLD's CAFD pre drop
down acquisition12,13
1 23
Cash Available for Distribution —
45
Appendix Table A-4: Three Months Ended March 31, 2017,
Sources and Uses of LiquidityThe following table summarizes the
sources and uses of liquidity in the first three months of
2017:
Three Months Ended ($ in millions)
3/31/17 Sources: Net Cash Provided by Operating
Activities 61 Proceeds from the issuance of long-term debt 41 Other
net cash inflows 36 Return of investment from unconsolidated
affiliates 16 Proceeds from the issuance of common stock 7
Uses: Acquisition of Drop Down Assets (131 ) Payments
for long-term debt (75 ) Payment of dividends to shareholders and
distributions to NRG (53 ) Investments in unconsolidated affiliates
(7 ) Capital expenditures (4 )
Change in cash and
cash equivalents ( 109 ) Change in restricted
cash ( 59 ) Change in total cash (
168 )
Appendix Table A-5: Adjusted EBITDA and Cash Available for
Distribution Guidance
Updated
Prior 2017
2017
Full Year Full Year ($ in millions)
Guidance
Guidance Net Income 110 140
Income Tax Expense 20 25 Interest Expense, net 310 290
Depreciation, Amortization, and Accretion Expense 355 381 Other
non-recurring charges — 4 Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates 70 80
Adjusted EBITDA 865 920 Cash
interest paid (280 ) (295 ) Changes in prepaid and accrued
liabilities for tolling agreements (4 ) (4 ) Pro-rata Adjusted
EBITDA from unconsolidated affiliates (108 ) (175 ) Cash
distributions from unconsolidated affiliates 75 111
Cash from Operating Activities 548 557
Net contributions from non-controlling interest 1 1
Maintenance capital expenditures (27 ) (29 ) Principal amortization
of indebtedness (283 ) (291 )
Cash receipts from notes receivable14
16 16
Cash Available for Distribution (Recast)
255 254
Adjustment to reflect NYLD's CAFD pre drop
down acquisition15
— 1
Cash Available for Distribution 255
255
Appendix Table A-6: Adjusted EBITDA and Cash Available for
Distribution Drop Downs
March 2017 Drop Down
Assets -
5 Year Average
($ in millions)
from 2018-2022
Net Income 2.3 Interest Expense,
net 16 Adjustment to reflect NRG share of Adjusted EBITDA in
unconsolidated affiliates 34
Adjusted
EBITDA 52.3 Cash interest paid (16
) Pro-rata Adjusted EBITDA from unconsolidated affiliates (52 )
Cash distributions from unconsolidated affiliates 44
Cash from Operating Activities
28.3 Principal amortization of indebtedness
(15 )
Estimated Cash Available for Distribution
13.3
11 Reimbursement of network upgrades
12 Adjustment to Q1 2017 to reflect debt service paid by the
Utah solar assets prior to ownership by NRG Yield
13 Adjustment to Q1 2017 reflect the cash distribution from the
CVSR project to NRG Yield while it was an unconsolidated equity
investment in Q1 2016
14 Reimbursement of network upgrades
15 Adjustment to reflect debt service paid by the Utah solar
assets prior to ownership by NRG Yield
EBITDA and Adjusted EBITDA 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 Adjusted EBITDA should not be
construed as an inference that NRG Yield’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 NRG Yield 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; and
- Other companies in this industry may
calculate EBITDA differently than NRG Yield 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 NRG Yield’s business. NRG Yield 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, asset write offs and
impairments; and factors which we do not consider indicative of
future operating performance. The reader is encouraged to evaluate
each adjustment and the reasons NRG Yield 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 NRG Yield 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, dispositions or retirements of assets, any
mark-to-market gains or losses from accounting for derivatives,
adjustments to exclude the Adjusted EBITDA related to the
non-controlling interest, 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 Distribution (CAFD) is adjusted EBITDA plus
cash distributions from unconsolidated affiliates, cash receipts
from notes receivable, 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, and changes in
prepaid and accrued capacity payments. Management believes cash
available for distribution is a relevant supplemental measure of
the Company’s ability to earn and distribute cash returns to
investors.
We believe cash available for distribution 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, cash available for distribution is used
by our management team for determining future acquisitions and
managing our growth. The GAAP measure most directly comparable to
cash available for distribution is cash from operating
activities.
However, cash available for distribution 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. Cash available for
distribution is a non GAAP measure and should not be considered an
alternative to cash from 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 cash available for
distribution are not necessarily comparable to cash available for
distribution as calculated by other companies. Investors should not
rely on these measures as a substitute for any GAAP measure,
including cash from operating activities.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170502005816/en/
NRG Yield, Inc.Media:Marijke Shugrue,
609-524-5262orInvestors:Kevin L. Cole, CFA,
609-524-4526orLindsey Puchyr, 609-524-4527
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