Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8‑K 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 2019

CLEARWAY ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 
(State or other jurisdiction of incorporation)
001‑36002 
(Commission File Number)
46-1777204  
(IRS Employer Identification No.)
300 Carnegie Center, Suite 300, Princeton, New Jersey 08540 
(Address of principal executive offices, including zip code)
(609) 608‑1525 
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)
[ ] Pre‑commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))
[ ] Pre‑commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))
Securities registered pursuant to Section 12(b) of the Act:


Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, par value $0.01
CWEN.A
New York Stock Exchange
Class C Common Stock, par value $0.01
CWEN
New York Stock Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]







Item 2.02    Results of Operations and Financial Condition

On August 6, 2019, Clearway Energy, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2019.  A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K and is hereby incorporated by reference.

Item 9.01     Financial Statements and Exhibits
(d)
Exhibits
Exhibit
Number
 

Document
99.1
 




2





SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    

 
Clearway Energy, Inc.
 
(Registrant)
 
 
 
By:
/s/ Kevin P. Malcarney
 
 
Kevin P. Malcarney
 
 
General Counsel and Corporate Secretary
 
 
 
Dated: August 6, 2019
 
 


 



3

Document
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13043614&doc=3                                     


Clearway Energy, Inc. Reports Second Quarter 2019 Financial Results

Enhancing long term growth potential with the addition of 354 MW to the ROFO pipeline
Announced equity commitments to repower two wind projects totaling 283 MW
Advanced committed growth investments for Hawaii Solar Phase I and the DG Investment Partnerships
Revising 2019 CAFD guidance due to first half 2019 renewable energy conditions and the CVSR outage
Declared quarterly dividend of $0.20 per share in third quarter 2019


PRINCETON, NJ August 6, 2019 — Clearway Energy, Inc. (NYSE: CWEN, CWEN.A) today reported second quarter 2019 financial results, including a Net Loss of $36 million, Adjusted EBITDA of $278 million, Cash from Operating Activities of $89 million, and Cash Available for Distribution (CAFD) of $68 million, which includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy.

"Despite the Company’s current year financial outlook having been impacted by challenging renewable resource conditions in the first half of the year and the June outage at the CVSR facility, the prospects for long term growth at Clearway Energy remain clear as GIP’s sponsorship continues to provide new accretive investment opportunities,” said Christopher Sotos, Clearway Energy, Inc.’s President and Chief Executive Officer. “With today’s announced expansion of the ROFO pipeline by 354 MW, the recently announced equity commitments to the Repowering Partnership with Clearway Group to repower 283 MW of wind projects, and the ongoing investment in the Company’s existing growth commitments, the Company is able to incrementally grow during the pendency of the PG&E bankruptcy while also positioning itself for long term CAFD per share growth."

Overview of Financial and Operating Results

Segment Results

Table 1: Net (Loss)/Income
($ millions)
 
Three Months Ended
 
Six Months Ended
Segment
 
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Conventional
 
32

 
41

 
56

 
68

Renewables
 
(20
)
 
84

 
(76
)
 
76

Thermal
 
(15
)
 
6

 
(10
)
 
14

Corporate 
 
(33
)
 
(35
)
 
(53
)
 
(62
)
Net (Loss)/Income
 
(36
)
 
96

 
(83
)
 
96


Table 2: Adjusted EBITDA
($ millions)
 
Three Months Ended
 
Six Months Ended
Segment
 
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Conventional
 
76

 
78

 
145

 
144

Renewables
 
191

 
217

 
302

 
329

Thermal
 
16

 
14

 
32

 
30

Corporate 
 
(5
)
 
(5
)
 
(10
)
 
(10
)
Adjusted EBITDA
 
278

 
304

 
469

 
493



1



Table 3: Cash from Operating Activities and Cash Available for Distribution (CAFD)
 
 
Three Months Ended
 
Six Months Ended
($ millions)
 
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Cash from Operating Activities
 
89

 
116

 
150

 
181

Cash Available for Distribution (CAFD)1
 
68

 
98

 
55

 
94


For the second quarter of 2019, the Company reported a Net Loss of $36 million, Adjusted EBITDA of $278 million, Cash from Operating Activities of $89 million, and CAFD of $68 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 Income was lower than the second quarter of 2018 due to non-cash changes in the fair value of interest rate swaps, a non-cash asset impairment charge in the Thermal segment, weaker renewable energy conditions, and the June outage at the CVSR facility. Adjusted EBITDA results were lower than 2018 primarily due to weaker renewable energy conditions and the CVSR outage, but partially offset by the contribution of growth investments. In the second quarter, CAFD results were lower than 2018 primarily due to lower Adjusted EBITDA and the expiration of network upgrade reimbursements.

Operational Performance

Table 4: Selected Operating Results
(MWh and MWht in thousands)
 
Three Months Ended
 
Six Months Ended
 
 
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Equivalent Availability Factor (Conventional)2
 
92.1
%
 
97.6
%
 
87.5
%
 
90.7
%
Renewables Generation Sold (MWh)3
 
1,948

 
2,308

 
3,397

 
3,924

Thermal Generation Sold (MWh/MWht)
 
513

 
471

 
1,171

 
1,097


In the second quarter of 2019, availability at the Conventional segment was in line with operational targets but lower than second quarter of 2018 due to the timing of spring outages. Generation in the Renewables segment during the quarter was below median expectations and 16% lower than the second quarter of 2018 due to weak solar and wind conditions across the portfolio and the impact from the previously disclosed outage in June at the Company's CVSR facility.

On June 5, 2019 a fire occurred at the CVSR facility impacting approximately 1,200 acres of property. While the fire did not impact solar arrays, damage occurred to associated infrastructure including distribution poles and cabling. The facility was restored to full operations on July 1, 2019. The full year cash impact of the fire is estimated to be approximately $9 million, which assumes insurance recovery for associated repair work by the end of the year.
Liquidity and Capital Resources

Table 5: Liquidity
($ millions)
 
6/30/19
 
3/31/19
 
12/31/18
Cash and Cash Equivalents:
 
 
 
 
 
 
Clearway Energy, Inc. and Clearway Energy LLC, excluding subsidiaries
 
$
7

 
$
37

 
$
298

Subsidiaries
 
86

 
80

 
109

Restricted Cash:
 
 
 
 
 
 
Operating accounts
 
60

 
57

 
84

Reserves, including debt service, distributions, performance obligations and other reserves
 
143

 
124

 
92

Total Cash
 
$
296

 
$
298

 
$
583

Revolving credit facility availability
 
$
450

 
$
454

 
$
454

Total Liquidity
 
$
746

 
$
752

 
$
1,037

1 Includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy
2 Excludes unconsolidated projects
3 Generation sold excludes MWh that are reimbursable for economic curtailment

2




Total liquidity as of June 30, 2019 was $746 million, $291 million lower than as of December 31, 2018. This reduction was primarily due to the repayment, with cash on hand, of $220 million in outstanding 2019 Convertible Notes, $19 million for the buyout of the Wind TE HoldCo tax equity partnership in January 2019, and $27 million for growth investments, including Duquesne, Mylan, Hawaii Solar Phase I, and ongoing contributions to the DG Investment Partnerships. Borrowing capacity under the revolving credit facility was reduced by $4 million due to the issuance of corporate letters of credit.

The Company's liquidity includes $203 million of restricted cash balances as of June 30, 2019. 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 June 30, 2019, these restricted funds were comprised of $60 million designated to fund operating expenses, approximately $45 million designated for current debt service payments, and $42 million of reserves for debt service, performance obligations and other items including capital expenditures. The remaining $56 million is held in distribution accounts, of which $36 million related to subsidiaries affected by the PG&E bankruptcy.

Potential future sources of liquidity include excess operating cash flow, the existing ATM program, of which $36 million remained available as of August 6, 2019, availability under the revolving credit facility, and, subject to market conditions, new corporate financings.

PG&E Bankruptcy Update

As of August 5, 2019, 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 the remaining project-level financing arrangements affected by the PG&E bankruptcy. The Company continues to assess the potential future impacts of the PG&E bankruptcy filing as events occur.

Clearway Group ROFO Pipeline

Additions to the Pipeline

On August 1, 2019, the Company entered into a Second Amendment to the Right of First Offer Agreement with Clearway Group.  The following projects were added to the Company's ROFO pipeline:

Asset
 
Project Type
 
Net Capacity (MW)
 
State
 
Expected COD
Rattlesnake
 
Utility Wind
 
144
 
WA
 
2020
Black Rock
 
Utility Wind
 
110
 
WV
 
2021
Wildflower
 
Utility Solar
 
100
 
MS
 
2021
Repowering 2.0
 
Repowering
 
TBD
 
TBD
 
TBD

Drop Down Offer

On June 18, 2019, Clearway Group offered the Company the opportunity to purchase 100% of CEG's interests in Mesquite Star Pledgor LLC, which owns the Mesquite Star wind project, a 419 MW utility scale wind facility expected to reach COD in 2020. On August 1, 2019, Clearway Group and the Company agreed to extend the negotiation period for the Mesquite Star project. The acquisition is subject to negotiation and approval by the Company's Independent Directors.


Growth Investments

Equity Commitments in Repowering 1.0 Partnership


3



On June 17, 2019 through an indirect subsidiary, the Company entered into binding equity commitment agreements in the previously announced partnership with Clearway Group to enable the repowering of two of its existing wind assets, Wildorado and Elbow Creek, which total a combined 283 MW. As part of the transaction, a subsidiary of the Company entered into a financing agreement for construction debt of $219 million. The construction financing was in part used to reduce outstanding principal at the existing Viento project financing through the removal of Wildorado from the Viento collateral package. In connection with the completion of this financing, and after taking into account the reduction in debt service in 2019 resulting from the partial repayment of the Viento financing, the Company committed to invest an estimated $111 million4 in net corporate capital to fund the repowering of the wind facilities, subject to closing adjustments. The transaction is expected to contribute incremental asset CAFD on an average annual basis of approximately $12 million beginning in 20205, which reflects the improved operational profile of the projects and the impact from the new tax equity capital structure employed at the partnership.

Hawaii Solar Phase I ROFO Acquisition Update
During the second quarter of 2019, the Company made an incremental corporate capital contribution of $2 million toward the previously disclosed Hawaii Solar Phase I ROFO Acquisition. In aggregate, the Hawaii Solar Phase I ROFO Acquisition totals approximately 80 MW of utility-scale solar projects located in Kawailoa and Oahu, Hawaii and is being purchased from Clearway Group for a total cash consideration of approximately $29 million (of which $23 million remains to be funded as of June 30, 2019) plus the assumption of non-recourse debt of $169 million anticipated at transaction close. The purchase price for the Hawaii Solar Phase I projects will be funded with existing liquidity and the transaction is expected to contribute CAFD on an average annual basis of approximately $2.6 million6 beginning in 2020. The projects are expected to be completed in the fourth quarter of 2019.
 
DG Investment Partnerships with Clearway Group

During the second quarter of 2019, the Company invested approximately $6 million in the DG investment partnerships with Clearway Group, bringing total capital invested to $252 million7 in these investment partnerships. As of June 30, 2019, through the existing partnership agreements, the Company owns approximately 253 MW8 of distributed and community solar capacity with a weighted average contract life by CAFD of approximately 19 years.

Financing Update

Viento Repayment
On June 14, 2019, and in connection with the Repowering 1.0 Partnership, proceeds from the construction debt were utilized to repay $109 million for the outstanding balance, including accrued interest, under the Viento non-recourse project financing.

South Trent Wind Refinancing
On June 14, 2019, the Company, through South Trent Wind LLC, refinanced $49 million of non-recourse debt due 2020 by issuing $46 million of new non-recourse financing due 2028 at an interest rate of LIBOR plus 1.350%. In conjunction with the
refinancing, the Company invested $3 million of additional cash into the project, net of fees and financing costs.

Quarterly Dividend

On August 1, 2019, Clearway Energy, Inc.’s Board of Directors declared a quarterly dividend on Class A and Class C common stock of $0.20 per share payable on September 17, 2019, to stockholders of record as of September 3, 2019. 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 unrestricted project distributions.
 
Seasonality

4 Subject to closing adjustments; Per terms of the partnership agreement, the Company’s asset level CAFD yield will be no lower than 11% at closing on a 5-year average basis
5 CAFD average over the 5-year period from 2020-2024 and is based on the currently estimated net corporate capital commitment
6 5 Year Average over the period 2020-2024
7 Excludes $26 million for 14 MW of residential solar leases acquired outside of partnerships
8 Based on cash to be distributed; excludes 14 MW of residential solar leases acquired outside of partnership

4



Clearway Energy, Inc.’s quarterly operating results are impacted by seasonal factors, as well as variability in renewable energy resources. 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; and
Receipt of distributions from or generated by unconsolidated affiliates 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.

2019 Financial Guidance

The Company is reducing its 2019 full year CAFD guidance to $250 million to account for the previously disclosed impact of the CVSR outage in June and year to date renewable resource performance. This financial guidance assumes that all CAFD related to the projects impacted by the PG&E Bankruptcy is realized in 2019 and Mylan and Hawaii Solar Phase I achieve target commercial operational dates. Financial guidance for 2019 also continues to be based on median renewable energy production estimates for the remainder of the year.

Earnings Conference Call

On August 6, 2019, 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 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 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 resulting from 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 relating 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

5



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 successfully transition services previously provided by NRG, 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, August 6, 2019, 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 SEC.
# # #
Contacts:

Investors:                Media:
Akil Marsh                Zadie Oleksiw
investor.relations@clearwayenergy.com    media@clearwayenergy.com        
609-608-1500                202-836-5754 
    

    


6



CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
(In millions, except per share amounts)
2019
 
2018
 
2019
 
2018
Operating Revenues
 
 
 
 
 
 
 
Total operating revenues
$
284

 
$
307

 
$
501

 
$
532

Operating Costs and Expenses
 
 
 
 
 
 
 
Cost of operations
79

 
74

 
163

 
163

Depreciation and amortization
89

 
82

 
173

 
163

Impairment losses
19

 

 
19

 

General and administrative
7

 
6

 
13

 
11

Transaction and integration costs
1

 
1

 
2

 
2

Development costs
2

 

 
3

 

Total operating costs and expenses
197

 
163

 
373

 
339

Operating Income
87

 
144

 
128

 
193

Other Income (Expense)
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
11

 
29

 
14

 
33

Other income, net
1

 
1

 
4

 
2

Loss on debt extinguishment
(1
)
 

 
(1
)
 

Interest expense
(130
)
 
(71
)
 
(231
)
 
(126
)
Total other expense, net
(119
)
 
(41
)
 
(214
)
 
(91
)
(Loss) Income Before Income Taxes
(32
)
 
103

 
(86
)
 
102

Income tax expense (benefit)
4

 
7

 
(3
)
 
6

Net (Loss) Income
(36
)
 
96

 
(83
)
 
96

Less: Pre-acquisition net income of Drop Down Assets

 

 

 
4

Net Loss (Income) Excluding Pre-acquisition Net Income of Drop Down Assets
(36
)
 
96

 
(83
)
 
92

Less: (Loss) Income attributable to noncontrolling interests
(12
)
 
17

 
(39
)
 
(3
)
Net (Loss) Income Attributable to Clearway Energy, Inc.
$
(24
)
 
$
79

 
$
(44
)
 
$
95

(Losses) Earnings Per Share Attributable to Clearway Energy, Inc. Class A and Class C Common Stockholders
 
 
 
 
 
 
 
Weighted average number of Class A common shares outstanding - basic
35

 
35

 
35

 
35

Weighted average number of Class A common shares outstanding - diluted
35

 
49

 
35

 
49

Weighted average number of Class C common shares outstanding - basic
73

 
67

 
73

 
66

Weighted average number of Class C common shares outstanding - diluted
73

 
78

 
73

 
77

(Losses) Earnings per Weighted Average Class A and Class C Common Share - Basic
$
(0.22
)
 
$
0.77

 
$
(0.41
)
 
$
0.94

(Losses) Earnings per Weighted Average Class A Common Share - Diluted
(0.22
)
 
0.61

 
(0.41
)
 
0.80

(Losses) Earnings per Weighted Average Class C Common Share - Diluted
(0.22
)
 
0.7

 
(0.41
)
 
0.89

Dividends Per Class A Common Share
0.20

 
0.31

 
0.40

 
0.607

Dividends Per Class C Common Share
$
0.20

 
$
0.31

 
$
0.40

 
$
0.607



7



CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
(In millions)
2019
 
2018
 
2019
 
2018
Net (Loss) Income
$
(36
)
 
$
96

 
$
(83
)
 
$
96

Other Comprehensive (Loss) Gain
 
 
 
 
 
 
 
Unrealized gain on derivatives, net of income tax benefit of $0, $0, $0 and ($3)
5

 
7

 
3

 
24

Other comprehensive gain
5

 
7

 
3

 
24

Comprehensive (Loss) Income
(31
)
 
103

 
(80
)
 
120

Less: Pre-acquisition net income of Drop Down Assets

 

 

 
4

Less: Comprehensive (loss) income attributable to noncontrolling interests
(10
)
 
21

 
(38
)
 
10

Comprehensive (Loss) Income Attributable to Clearway Energy, Inc.
$
(21
)
 
$
82

 
$
(42
)
 
$
106



8



CLEARWAY ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except shares)
June 30, 2019
 
December 31, 2018
ASSETS
(unaudited)
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
93

 
$
407

Restricted cash
203

 
176

Accounts receivable — trade
126

 
104

Accounts receivable — affiliate
1

 

Inventory
49

 
40

Prepayments and other current assets
26

 
29

Total current assets
498

 
756

Property, plant and equipment, net
5,602

 
5,245

Other Assets
 
 
 
Equity investments in affiliates
1,165

 
1,172

Intangible assets, net
1,121

 
1,156

Derivative instruments

 
8

Deferred income taxes
62

 
57

Right of use assets, net
183

 

Other non-current assets
100

 
106

Total other assets
2,631

 
2,499

Total Assets
$
8,731

 
$
8,500

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities
 

 
 

Current portion of long-term debt
$
1,914

 
$
535

Accounts payable — trade
62

 
45

Accounts payable — affiliate
53

 
19

Derivative instruments
13

 
4

Accrued interest expense
43

 
44

Accrued expenses and other current liabilities
42

 
57

Total current liabilities
2,127

 
704

Other Liabilities
 
 
 
Long-term debt
4,192

 
5,447

Derivative instruments
66

 
17

Long-term lease liabilities
186

 

Other non-current liabilities
106

 
108

Total non-current liabilities
4,550

 
5,572

Total Liabilities
6,677

 
6,276

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); 193,402,886 shares issued and outstanding (Class A 34,599,645, Class B 42,738,750, Class C 73,325,741, Class D 42,738,750) at June 30, 2019 and 193,251,396 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 73,187,646, Class D 42,738,750) at December 31, 2018
1

 
1

Additional paid-in capital
1,852

 
1,897

Accumulated deficit
(105
)
 
(58
)
Accumulated other comprehensive loss
(16
)
 
(18
)
Noncontrolling interest
322

 
402

Total Stockholders' Equity
2,054

 
2,224

Total Liabilities and Stockholders' Equity
$
8,731

 
$
8,500



9



CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six months ended June 30,
 
2019
 
2018
 
(In millions)
Cash Flows from Operating Activities
 
 
 
Net (loss) income
$
(83
)
 
$
96

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Equity in earnings of unconsolidated affiliates
(14
)
 
(33
)
Distributions from unconsolidated affiliates
22

 
32

Depreciation and amortization
173

 
163

Right of use asset amortization
3

 

Amortization of financing costs and debt discounts
7

 
13

Amortization of intangibles and out-of-market contracts
35

 
35

Adjustment for debt extinguishment
1

 

Impairment losses
19

 

Changes in deferred income taxes
(3
)
 
6

Changes in derivative instruments
70

 
(32
)
Loss (gain) on disposal of asset components
7

 
(1
)
Changes in prepaid and accrued liabilities for tolling agreements
(60
)
 
(62
)
Changes in other working capital
(27
)
 
(36
)
Net Cash Provided by Operating Activities
150

 
181

Cash Flows from Investing Activities
 
 
 
Acquisitions
(100
)
 
(11
)
Partnership interests acquisition
(6
)
 

Acquisition of the Drop Down Assets

 
(126
)
Buyout of Wind TE Holdco noncontrolling interest
(19
)
 

Capital expenditures
(96
)
 
(45
)
Cash receipts from notes receivable

 
7

Return of investment from unconsolidated affiliates
17

 
18

Investments in unconsolidated affiliates
(9
)
 
(16
)
Other
2

 
7

Net Cash Used in Investing Activities
(211
)
 
(166
)
Cash Flows from Financing Activities
 
 
 
Net distributions from noncontrolling interests
(11
)
 
94

Proceeds from the issuance of common stock

 
75

Payments of dividends and distributions
(77
)
 
(113
)
Payments of debt issuance costs
(15
)
 
(5
)
Proceeds from the revolving credit facility
22

 
35

Payments for the revolving credit facility
(22
)
 
(90
)
Proceeds from the issuance of long-term debt
493

 
227

Payments for long-term debt
(616
)
 
(285
)
Net Cash Used in Financing Activities
(226
)
 
(62
)
Net Decrease in Cash, Cash Equivalents and Restricted Cash
(287
)
 
(47
)
Cash, Cash Equivalents and Restricted Cash at beginning of period
583

 
316

Cash, Cash Equivalents and Restricted Cash at end of period
$
296

 
$
269



10



CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 2019
(Unaudited)
(In millions)
Preferred Stock
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interest
 
Total
Stockholders'
Equity
Balances at December 31, 2018
$

 
$
1

 
$
1,897

 
$
(58
)
 
$
(18
)
 
$
402

 
$
2,224

Net loss

 

 

 
(20
)
 

 
(27
)
 
(47
)
Unrealized loss on derivatives, net of tax

 

 

 

 
(1
)
 
(1
)
 
(2
)
Buyout of Wind TE Holdco noncontrolling interest

 

 
(5
)
 

 

 
(14
)
 
(19
)
Capital contributions from tax equity investors, net of distributions, cash

 

 

 

 

 
19

 
19

Contributions from CEG for Oahu Partnership, non-cash

 

 

 

 

 
12

 
12

Cumulative effect from change in accounting principle

 

 

 
(2
)
 

 
(1
)
 
(3
)
Common stock dividends and distributions

 

 
(22
)
 

 

 
(17
)
 
(39
)
Balances at March 31, 2019
$

 
$
1

 
$
1,870

 
$
(80
)
 
$
(19
)
 
$
373

 
$
2,145

Net loss

 

 

 
(24
)
 

 
(12
)
 
(36
)
Unrealized loss on derivatives, net of tax

 

 

 

 
3

 
2

 
5

Distributions from non-controlling interests, net of capital contributions, cash

 

 

 

 

 
(30
)
 
(30
)
Contributions from CEG for Kawailoa, Repowering Partnerships, non-cash

 

 

 

 

 
6

 
6

Stock-based compensation

 

 
1

 
(1
)
 

 

 

Non-cash adjustment for change in tax basis of assets

 

 
2

 

 

 

 
2

Common stock dividends and distributions

 

 
(21
)
 

 

 
(17
)
 
(38
)
Balances at June 30, 2019

 
$
1

 
$
1,852

 
$
(105
)
 
$
(16
)
 
$
322

 
$
2,054



11


CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 2018
(Unaudited)
(In millions)
Preferred Stock

Common Stock

Additional
Paid-In
Capital

Accumulated Deficit

Accumulated
Other
Comprehensive Loss

Noncontrolling
Interest

Total
Stockholders'
Equity
Balances at December 31, 2017
$


$
1


$
1,843


$
(69
)

$
(28
)

$
412


$
2,159

Net income (loss)






16




(20
)

(4
)
Pre-acquisition net income of Buckthorn Solar Drop Down Asset










4


4

Unrealized gain on derivatives, net of tax








8


9


17

Payment for the Buckthorn Solar Drop Down Asset










(42
)

(42
)
Capital contributions from tax equity investors, net of distributions, cash










30


30

Distributions and return of capital to NRG, net of contributions, cash










4


4

Proceeds from the issuance of Class C common stock




10








10

Non-cash adjustment for change in tax basis of property, plant and equipment




3








3

Common stock dividends and distributions




(29
)





(26
)

(55
)
Balances at March 31, 2018
$


$
1


$
1,827


$
(53
)

$
(20
)

$
371


$
2,126

Net income (loss)






79




17


96

Pre-acquisition net income of Buckthorn Solar Drop Down Asset













Unrealized gain on derivatives, net of tax








3


4


7

Capital contributions from tax equity investors, net of distributions, cash










79


79

Distributions and return of capital to NRG, net of contributions, cash










(15
)

(15
)
Distributions and return of capital to NRG, net of contributions, non-cash













Stock-based compensation




1








1

Proceeds from the issuance of Class C common stock




65








65

Non-cash adjustment for change in tax basis of property, plant and equipment




(2
)





2



Equity component of tendered 2020 Convertible Notes and 2019 Convertible Notes













Common stock dividends and distributions




(32
)





(26
)

(58
)
Balances at June 30, 2018
$


$
1


$
1,859


$
26


$
(17
)

$
419


$
2,288



12



Appendix Table A-1: Three Months Ended June 30, 2019, Segment Adjusted EBITDA Reconciliation
The 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
 
$
32

 
$
(20
)
 
$
(15
)
 
$
(33
)
 
$
(36
)
Plus:
 
 
 
 
 
 
 
 
 
 
Income Tax Expense
 

 

 

 
4

 
4

Interest Expense, net
 
16

 
88

 
4

 
22

 
130

Depreciation, Amortization, and ARO
 
25

 
59

 
7

 

 
91

Contract Amortization
 
2

 
15

 

 

 
17

Impairment Losses
 

 

 
19

 

 
19

Loss on Debt Extinguishment
 

 
1

 

 

 
1

Acquisition-related transaction and integration costs
 

 

 

 
1

 
1

Other non-recurring charges
 
(2
)
 
2

 
1

 

 
1

Adjustments to reflect CWEN’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates
 
3

 
46

 

 

 
49

Non-Cash Equity Compensation
 

 

 

 
1

 
1

Adjusted EBITDA
 
$
76

 
$
191

 
$
16

 
$
(5
)
 
$
278


Appendix Table A-2: Three Months Ended June 30, 2018, Segment Adjusted EBITDA Reconciliation
The 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)
 
$
41

 
$
84

 
$
6

 
$
(35
)
 
$
96

Plus:
 
 
 
 
 
 
 
 
 
 
Income Tax Expense
 

 

 

 
7

 
7

Interest Expense, net
 
12

 
34

 
2

 
21

 
69

Depreciation, Amortization, and ARO
 
24

 
54

 
6

 

 
84

Contract Amortization
 
2

 
16

 

 

 
18

Acquisition-related transaction and integration costs
 

 

 

 
1

 
1

Other non-recurring charges
 
(4
)
 

 

 

 
(4
)
Adjustments to reflect CWEN’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates
 
3

 
29

 

 

 
32

Non-Cash Equity Compensation
 

 

 

 
1

 
1

Adjusted EBITDA
 
$
78

 
$
217

 
$
14

 
$
(5
)
 
$
304



13




Appendix Table A-3: Six Months Ended June 30, 2019, Segment Adjusted EBITDA Reconciliation
The 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
 
$
56

 
$
(76
)
 
$
(10
)
 
$
(53
)
 
$
(83
)
Plus:
 
 
 
 
 
 
 
 
 
 
Income Tax Benefit
 

 

 

 
(3
)
 
(3
)
Interest Expense, net
 
31

 
147

 
8

 
42


228

Depreciation, Amortization, and ARO
 
50

 
113

 
13

 

 
176

Contract Amortization
 
3

 
30

 
1

 

 
34

Impairment Losses
 

 

 
19

 

 
19

Loss on Debt Extinguishment
 

 
1

 

 

 
1

Mark to Market (MtM) Losses on Economic Hedges
 

 
7

 

 

 
7

Transaction and Integration costs
 

 

 

 
2

 
2

Other Non-recurring Charges
 
(2
)
 
2

 
1

 
1

 
2

Adjustments to reflect CWEN’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates
 
7

 
78

 

 

 
85

Non-Cash Equity Compensation
 

 

 

 
1

 
1

Adjusted EBITDA
 
$
145

 
$
302

 
$
32

 
$
(10
)
 
$
469


Appendix Table A-4: Six Months Ended June 30, 2018, Segment Adjusted EBITDA Reconciliation
The 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)
 
$
68

 
$
76

 
$
14

 
$
(62
)
 
$
96

Plus:
 
 
 
 
 
 
 
 
 
 
Income Tax Expense
 

 

 

 
6

 
6

Interest Expense, net
 
19

 
58

 
4

 
43

 
124

Depreciation, Amortization, and ARO
 
50

 
104

 
11

 

 
165

Contract Amortization
 
3

 
31

 
1

 

 
35

Transaction and Integration costs
 

 

 

 
2

 
2

Other Non-recurring Charges
 
(3
)
 
1

 

 

 
(2
)
Adjustments to reflect CWEN’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates
 
7

 
59

 

 

 
66

Non-Cash Equity Compensation
 

 

 

 
1

 
1

Adjusted EBITDA
 
$
144

 
$
329

 
$
30

 
$
(10
)
 
$
493



14




Appendix Table A-5: 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:
 
Three Months Ended
 
Six Months Ended
($ in millions)
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Adjusted EBITDA
$
278

 
$
304

 
$
469

 
$
493

Cash interest paid
(80
)
 
(71
)
 
(153
)
 
(146
)
Changes in prepaid and accrued liabilities for tolling agreements
(25
)
 
(26
)
 
(60
)
 
(62
)
Adjustment to reflect Walnut Creek investment payments

 
(1
)
 
(5
)
 
(1
)
Pro-rata Adjusted EBITDA from unconsolidated affiliates
(63
)
 
(61
)
 
(101
)
 
(99
)
Distributions from unconsolidated affiliates
11

 
19

 
22

 
32

Changes in working capital and other
(32
)
 
(48
)
 
(22
)
 
(36
)
Cash from Operating Activities
89

 
116

 
150

 
181

Changes in working capital and other
32

 
48

 
22

 
36

Development Expenses9
2




3



Return of investment from unconsolidated affiliates
3

 
4

 
17

 
18

Net contributions (to)/from non-controlling interest10
(2
)
 
(2
)
 

 
9

Maintenance capital expenditures11
(2
)
 
(9
)
 
(6
)
 
(16
)
Principal amortization of indebtedness12
(62
)
 
(62
)
 
(146
)
 
(141
)
Cash receipts from notes receivable13

 
3

 

 
7

Adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy
8

 

 
15

 

Cash Available for Distribution
$
68

 
$
98

 
$
55

 
$
94


9 Primarily relates to Thermal Development Expenses
10 Excludes $18 million of contributions in 2019 related to funding of Oahu tax equity partnership; Excludes $80 million in 2Q18 and $99 million of contributions in 2018 related to funding Buckthorn Solar tax equity partnership
11 Net of allocated insurance proceeds
12 Excludes $220 million in 2019 for Convertible Notes, $101 million repaid at Viento in connection with the Repowering Partnership, $22 million for revolver repayments, and $3 million for the refinancing of South Trent
13 Represents reimbursement of network upgrades

15




Appendix Table A-6: Six Months Ended June 30, 2019, Sources and Uses of Liquidity
The following table summarizes the sources and uses of liquidity in 2019:
 
 
Six Months Ended
($ in millions)
 
6/30/19
Sources:
 
 
Proceeds from the issuance of long-term debt
 
493

Net cash provided by operating activities
 
150

Net contributions from noncontrolling interests
 
(11
)
Return of investment from unconsolidated affiliates
 
17

 
 
 
Uses:
 
 
Payments for long-term debt
 
(616
)
Capital expenditures
 
(96
)
Payment of dividends and distributions
 
(77
)
Buyout of Wind TE Holdco noncontrolling interest
 
(19
)
Payments of debt issuance costs
 
(15
)
Investments in unconsolidated affiliates
 
(9
)
Acquisitions
 
(100
)
Other net cash outflows

 
(4
)
 
 
 
 
 
 
Change in total cash, cash equivalents, and restricted cash
 
$
(287
)


16



Appendix Table A-7: Adjusted EBITDA and Cash Available for Distribution Guidance
($ in millions)
 
Original 2019 Full Year Guidance
Revised 2019 Full Year Guidance
Net Income
 
165

20

Income Tax Expense
 
30

3

Interest Expense, net
 
315

380

Depreciation, Amortization, and ARO Expense
 
395

405

Acquisition related transaction and integration costs
 
5

5

Other Non-Cash Charges
 

27

Adjustment to reflect CWEN share of Adjusted EBITDA in unconsolidated affiliates
 
85

130

Adjusted EBITDA
 
995

970

Cash interest paid
 
(300
)
(302
)
Changes in prepaid and accrued liabilities for tolling agreements
 
4

4

Adjustment to reflect Walnut Creek investment payments
 
(1
)
(5
)
Pro-rata Adjusted EBITDA from unconsolidated affiliates
 
(215
)
(205
)
Cash distributions from unconsolidated affiliates14
 
130

125

Cash from Operating Activities
 
613

587

Development Expense15
 
4

4

Net contributions to non-controlling interest16
 
(4
)
(6
)
Maintenance capital expenditures
 
(30
)
(30
)
Principal amortization of indebtedness17
 
(313
)
(305
)
Cash Available for Distribution
 
270

250

Add Back: Principal amortization of indebtedness
 
313

305

Adjusted Cash from Operations
 
583

$
555



14 Distribution from unconsolidated affiliates can be classified as Return of Investment on Unconsolidated Affiliates when actuals are reported. This is below cash from operating activities
15 Primarily relates to Thermal Development Expenses
16 Includes tax equity proceeds and distributions to tax equity partners
17 Excludes $220 million in 2019 for Convertible Notes, $101 million repaid at Viento in connection with the Repowering Partnership, $22 million for revolver repayments, and $3 million for the refinancing of South Trent

17




Appendix Table A-8: Hawaii Solar Phase I and Repowering 1.0 5 Year Average CAFD

($ in millions)
 
Hawaii Solar Phase I
5 Year Ave. - 2020-2024
Repowering 1.0
5 Year Ave. - 2020-2024
Net Income
 
$
7.2

$
4

Interest Expense, net
 
7.4

(4
)
Depreciation, Amortization, and ARO Expense
 
10.2


Adjusted EBITDA
 
24.8


Cash interest paid
 
(7.4
)
4

Cash from Operating Activities
 
17.4

4

Net distributions to non-controlling interest
 
(9.7
)
(7
)
Maintenance capital expenditures
 

3

Principal amortization of indebtedness
 
(5.1
)
12

Estimated Cash Available for Distribution
 
2.6

12


18





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 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; and
Other 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 Distribution (CAFD) is 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.

19




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.



20