Pattern Energy Group Inc. announced its financial results for the fourth quarter and full year of 2014.
Highlights
(Comparisons made between fiscal 2014 and fiscal 2013 results, unless otherwise noted)
- Cash available for distribution (CAFD) of $62.1 million, up 46%
- Adjusted EBITDA of $198.1 million, up 40%
- Proportional GWh sold of 2,915 GWh, up 65%
- Revenue of $265.5 million, up 32%
- Declared a first quarter dividend of $0.342 per Class A common share or $1.368 on an annualized basis, subsequent to the end of the period, representing a 2% increase over the previous quarter’s dividend
- Acquired Panhandle 2 and Logan’s Gap from Pattern Development, expanding its portfolio to 1,636 MW in owned capacity and 12 wind projects
- Initiated commercial operations at two projects; Panhandle 2, with an owned capacity of 147 MW, and Grand Renewable, with an owned capacity of 67 MW
- Added three new projects to the identified Right of First Offer (ROFO) list for a total of 977 MW owned capacity; Henvey Inlet and, subsequent to the end of the period, Amazon Web Services Wind Farm (Fowler Ridge) and Mont Sainte-Marguerite
- Pattern Development acquired a majority stake in Tokyo-based Green Power Investment Corporation (GPI), subsequent to the end of the period, which has more than 1,000 MW in near and longer term wind and solar projects in development and Pattern Development’s interest in GPI’s projects is subject to Pattern Energy’s ROFO
- Pattern Development signed a joint venture agreement with CEMEX Energia, a subsidiary of CEMX S.A.B., subsequent to the end of the period, to develop renewable energy projects throughout Mexico and Pattern Development’s interest in the joint venture’s projects is subject to Pattern Energy’s ROFO
- Completed a $351 million follow-on primary and secondary equity offering, subsequent to the end of the period.
“The $62.1 million in cash available for distribution we reported for 2014 exceeds the target we outlined during the IPO. This positive momentum reflects the continuous growth we have demonstrated in our portfolio, which now stands at 1,636 MW in owned capacity – up 57% since the IPO – as well as in our identified ROFO list, which has grown by 781 MW in owned capacity – an increase of 105% since the IPO,” said Mike Garland, President and CEO of Pattern Energy. “At the same time, Pattern Development is also expanding our reach by entering new markets, like Japan and Mexico through its relationships with GPI and CEMEX, and contracting with new power buyers, like Walmart and Amazon. Our high-quality operating portfolio and the clear path for growth from our ROFO list underpin our stable and growing cash flow.”
Financial Results
Pattern Energy sold 888,577 MWh of electricity on a proportional basis in the fourth quarter of 2014 compared to 440,623 MWh sold in the same period in 2013. Pattern Energy sold 2,914,810 MWh of electricity on a proportional basis for the full year 2014 compared to 1,771,772 MWh sold in 2013. The increases were primarily attributable to the commencement of commercial operations at South Kent, El Arrayan, Panhandle 1 and Panhandle 2 at various times during the year and the twelve-month figure also reflects an increase in production from an additional 42 MW at Ocotillo for the full year of 2014.
Net loss was $16.0 million in the fourth quarter of 2014 compared to $19.4 million in the same period last year. Net loss was $40.0 million for the full year 2014 compared to net income of $10.1 million in 2013. The change in the full year results was due primarily to unrealized losses on interest rate and energy derivatives (including the Company’s proportion of the unrealized losses at its unconsolidated investments) which increased by $54.1 million for the year.
Adjusted EBITDA was $57.7 million for the fourth quarter of 2014 compared to $29.4 million in the same period last year. Adjusted EBITDA was $198.1 million for the full year 2014 compared to $141.8 million in 2013. A reconciliation of Adjusted EBITDA to net (loss) income determined in accordance with GAAP is shown below.
Cash available for distribution was $17.3 million in the fourth quarter of 2014 compared to $5.6 million in the same period last year. Cash available for distribution was $62.1 million for the full year 2014 compared to $42.6 million in 2013. The $11.7 million and $19.5 million increases, in the respective periods, were primarily the result of higher revenue primarily attributable to the commencement of commercial operations at both the El Arrayan and Panhandle 1 projects in June 2014 and a distribution from unconsolidated investments, as well as, increased production at Ocotillo which impacted the full year period. A reconciliation of cash available for distribution to net cash provided by operating activities determined in accordance with GAAP is shown below.
Quarterly Dividend
Pattern Energy declared an increased dividend for the first quarter 2015, payable on April 30, 2015, to holders of record on March 31, 2015, in the amount of $0.342 per Class A share, which represents $1.368 on an annualized basis. This is a 2% increase from the fourth quarter 2014 dividend of $0.335.
Construction Pipeline
Two projects completed construction and reached their commercial operation date on schedule during the fourth quarter of 2014. Pattern Energy acquired 147 MW of the 182 MW Panhandle 2 project at the time of commercial operation in November as agreed upon with Pattern Development. Pattern Energy also owns a 67 MW interest in the 149 MW Grand Renewable project which reached commercial operation in December.
Pattern Energy currently has one project in construction as detailed below.
Asset |
Location |
Owned MW |
Commercial Operation |
Logan’s Gap |
Texas |
164 |
Q4 2015 |
Acquisition Pipeline
Pattern Energy has the Right of First Offer (ROFO) on a pipeline of acquisition opportunities from Pattern Development. In addition, Pattern Energy may seek to acquire assets from third parties.
Since the beginning of the fourth quarter, Pattern Energy announced the addition of three new projects to its list of identified ROFO projects from Pattern Development, consisting of 150 MW of the 300 MW Henvey Inlet Wind project in November, 116 MW of the 150 MW Amazon Web Services Wind project (Fowler Ridge) in January and the 147 MW Mont Sainte Marguerite Wind project in February. With these new additions, the identified ROFO list now consists of nine projects with a rated capacity of 1,719 MW and a total owned capacity of 977 MW.
The Henvey Inlet Wind project, to be built in Parry Sound County, Ontario, is a 50/50 joint venture partnership between Pattern Development and Nigig Power Corporation, which is wholly owned by Henvey Inlet First Nation. The Project has a 20-year power purchase agreement (PPA) with the Independent Electricity System Operator (IESO), formerly known as Ontario Power Authority, for 100% of its expected production. Pattern Development expects to arrange both construction and long-term debt financing for Henvey Inlet in 2016. Upon completion, it will be the largest First Nation wind project in Ontario.
The Amazon Web Services Wind Farm (Fowler Ridge), which is located in Benton County, Indiana, has a 13-year PPA to supply Amazon Web Services, an Amazon.com company, with electricity. Pattern Development currently owns 100% of the 150 MW project and it is anticipated that Pattern Energy will acquire 116 MW of owned interest, with tax equity investors acquiring the balance. Pattern Development expects to begin construction of the Amazon Web Services Wind Farm (Fowler Ridge) project in April and anticipates reaching commercial operation in late 2015 or early 2016.
The Mont Sainte-Marguerite Wind project, which is located approximately 50 kilometers south of Quebec City in the Chaudiere-Appalaches region, has entered into a 25-year power PPA with Hydro-Quebec. Pattern Development currently owns 100% of the 147 MW project and it is anticipated that Pattern Energy will acquire the full owned interest in the project. Pattern Development expects to begin construction of the project in the third quarter of 2016 and anticipates reaching commercial operation in December 2017.
The list of identified ROFO projects represents a portion of Pattern Development’s 4,500 MW pipeline of development projects, all of which are subject to Pattern Energy’s ROFO. The
4,500 MW include Pattern Development’s interests in both its recently acquired majority stake in Tokyo-based GPI and its recently announced joint venture with CEMEX Energia in Mexico. GPI has up to 1,000 MW of near and longer term wind and solar projects in development. The joint venture between Pattern Development and CEMEX Energia has a goal of developing 1,000 MW of wind and solar generation in Mexico over the next five years where recent reforms set a mandate of 35% of generation to come from clean resources by 2024.
The table below sets forth the current list of identified ROFO projects:
Asset |
Location |
Owned MW |
Commercial Operations |
Gulf Wind |
Texas |
76 |
Operational |
K2 |
Ontario |
90 |
2015 (In construction) |
Armow |
Ontario |
90 |
2015 (In construction) |
Meikle |
British Columbia |
185 |
2016 (Ready for financing) |
Conejo Solar |
Chile |
73 |
2016 (Ready for financing) |
Belle River |
Ontario |
50 |
2017 (Securing final permits) |
Henvey Inlet |
Ontario |
150 |
2017 (Late-stage development) |
Amazon (Fowler Ridge) |
Indiana |
116 |
2015 / 2016 (Ready for financing) |
Mont Sainte-Marguerite |
Quebec |
147 |
2017 / 2018 (Late-stage development) |
Total |
977 |
Adjusted EBITDA and Cash Available for Distribution Reconciliations
The following tables reconcile net (loss) income to Adjusted EBITDA and net cash provided by operating activities to cash available for distribution, respectively, for the periods presented (in thousands):
Three Months Ended December 31, |
For the Year Ended December 31, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Net (loss) income |
$(15,986) |
$(19,376) |
$(39,999) |
$10,072 |
||||
Plus: |
||||||||
Interest expense, net of interest income |
19,044 |
15,186 |
66,729 |
61,118 |
||||
Tax provision |
4,641 |
11,347 |
3,136 |
4,546 |
||||
Depreciation and accretion |
31,941 |
21,422 |
104,417 |
83,180 |
||||
EBITDA |
$39,640 |
$28,579 |
$134,283 |
$158,916 |
||||
Unrealized (gain) loss on energy derivative |
(7,265) |
6,050 |
3,878 |
11,272 |
||||
Unrealized loss (gain) on derivatives |
5,069 |
(4,692) |
11,668 |
(15,601) |
||||
Interest rate derivative settlements |
993 |
1,040 |
4,075 |
2,099 |
||||
Net loss (gain) on transactions |
626 |
1,205 |
(13,843) |
(5,995) |
||||
Plus, proportionate share from equity accounted investments: |
||||||||
Interest expense, net of interest income |
4,884 |
228 |
14,081 |
267 |
||||
Tax (benefit) provision |
– |
(88) |
102 |
(172) |
||||
Depreciation and accretion |
4,697 |
6 |
13,720 |
20 |
||||
Unrealized loss (gain) on interest rate and currency derivatives |
9,080 |
(2,985) |
30,126 |
(9,076) |
||||
Realized loss on interest rate and currency derivatives |
– |
74 |
22 |
39 |
||||
Adjusted EBITDA |
$57,724 |
$29,417 |
$198,112 |
$141,769 |
||||
Three Months Ended December 31, |
For the Year Ended December 31, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Net cash provided by operating activities |
$26,548 |
$9,756 |
$110,448 |
$78,152 |
||||
Changes in current operating assets and liabilities |
(1,282) |
5,233 |
(9,002) |
8,237 |
||||
Network upgrade reimbursement |
– |
618 |
2,472 |
1,854 |
||||
Use of operating cash to fund maintenance and debt reserves |
– |
– |
– |
– |
||||
Release of restricted cash to fund general and administrative costs |
13 |
318 |
223 |
318 |
||||
Operations and maintenance capital expenditures |
(133) |
(388) |
(267) |
(819) |
||||
Transaction costs for acquisitions |
602 |
– |
1,730 |
– |
||||
Distributions from unconsolidated investment |
3,187 |
– |
7,891 |
– |
||||
Less: |
||||||||
Distributions to noncontrolling interests |
(630) |
(866) |
(2,100) |
(2,292) |
||||
Principal payments paid from operating cash flows |
(11,001) |
(9,041) |
(49,246) |
(42,829) |
||||
Cash available for distribution |
$17,304 |
$5,630 |
$62,149 |
$42,621 |
Pattern Energy Group, Inc.
http://patternenergy.com
Filed Under: Financing, News, Uncategorized