TerraForm Power reports USD-46m wider net loss for Q1
Wind farm in Indiana. Photo by: David Joyce. License: Creative Commons. Attribution-ShareAlike 2.0 Generic.
TerraForm Power Inc (NASDAQ:TERP) has widened its first-quarter (Q1) net loss by USD 46 million (EUR 42.4m) as the coronavirus-related lockdown affected market power prices in Spain.
The US-based renewable power producer, which has over 4.2 GW of wind and solar assets, posted an attributable net loss of USD 55 million for January-March 2020, compared to USD 8.6 million a year back, even as adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) went up by USD 2 million to USD 180 million. Cash available for distribution (CAFD), in turn, declined to USD 20 million from USD 44 million.
The company explained that its quarterly performance was affected by a 36% year-on-year decrease in market power prices in Spain along with a 6% year-on-year lower wind generation in North America. The reason for the lower Spanish prices is reduced demand resulting from the economic slowdown caused by the COVID-19 pandemic. The power producer expects this factor to be mitigated via the price bands adjustment mechanism defined under the Spanish regulated revenue framework.
TerraForm Power noted that it is well positioned to deal with the impact of the pandemic thanks to the fact that 95% of its revenue is tied to long-term contracts and that more than 90% of its off-takers are either investment grade rated or municipalities with investment grade characteristics. Having most of its assets still in operation mitigates the company’s exposure to supply chain disruptions, it added.
“To date, we have not seen any material degradation in the performance of our assets as a result of the pandemic. However, at a number of our distributed generation solar sites, we experienced temporary inability to access sites due to limitations on non-essential work. In such instances, we worked with local authorities to clarify that these regulations do not apply to our assets, and we now have access to these assets,” the company said in a statement.
Last week, the company’s board of directors declared a quarterly distribution of USD 0.2014 per share to holders of Class A common stock. The payments will be made on June 15, 2020, to stockholders of record as of June 1, 2020.
During the three-month period, TerraForm Power entered into an agreement as part of which Canadian investor Brookfield Renewable Partners LP (NYSE:BEP) will buy the 38% stake it does not already own in the company. This will create a pure-play renewable energy platform with around USD 50 billion worth of assets and expected annual funds from operations totalling USD 1 billion.
On Monday, TerraForm Power reiterated that this transaction is seen to close in the third quarter of the year. A preliminary version of Brookfield Renewable’s F-1 merger proxy was recently filed with the Securities and Exchange Commission (SEC). The TERP shareholders will get the chance to vote on the transaction after the final version of the merger proxy is submitted.