PRINCETON, N.J.--(BUSINESS WIRE)--Clearway Energy, Inc. (NYSE: CWEN, CWEN.A) today reported full year 2018 financial results including Net Income of $54 million, Adjusted EBITDA of $983 million, Cash from Operating Activities of $498 million, and Cash Available for Distribution (CAFD) of $291 million.

“In 2018, Clearway Energy began a new era under sponsorship by GIP, raised $754 million in new capital for growth and balance sheet management, closed on $94 million of accretive transactions, and met financial expectations despite weak renewable energy conditions in the fourth quarter." said Christopher Sotos, Clearway Energy, Inc.’s President and Chief Executive Officer. “As we move forward into 2019, we are confident that our recently announced modified capital allocation approach will allow us to prudently navigate the impacts on the Company caused by the Pacific Gas and Electric bankruptcy. Additionally, and under GIP's stewardship, Clearway Group's continued investment in its development pipeline will over time lead to additional projects placed into the Company's Right of First Offer pipeline. The addition of Hawaii Solar Phase II to the ROFO pipeline, as well as the backstop of the Carlsbad purchase, were the most recent examples of our strong partnership with Clearway Group and GIP.”

For the fourth quarter of 2018, the Company reported a Net Loss of $91 million, Adjusted EBITDA of $200 million, Cash from Operating Activities of $102 million, and CAFD of $41 million. Adjusted EBITDA results were lower than 2017 primarily due to outages at the Conventional segment and weaker renewable energy conditions versus fourth quarter 2017. This was partially offset by the contribution from growth investments made during 2018 and lower corporate costs. In the fourth quarter, CAFD results were lower than 2017 primarily due to lower Adjusted EBITDA, additional maintenance capex in 2018, the timing of insurance proceeds, and the roll off of network upgrade reimbursements.

For the full year of 2018, the Company reported Net Income of $54 million, Adjusted EBITDA of $983 million, Cash from Operating Activities of $498 million, and CAFD of $291 million. Adjusted EBITDA results were higher than 2017 primarily due to growth investments made in 2018 and higher wind production for the full year relative to 2017. For the full year, CAFD results were higher than 2017 primarily due to the growth in Adjusted EBITDA, lower principal amortization at Thermal due to the refinancing of the Series C notes, and the full year impact of growth from the November 2017 Drop Down Assets2.

In the fourth quarter of 2018, availability at the Conventional segment was lower than the fourth quarter of 2017 due to a forced outage event at Walnut Creek's Unit 2. The amendment to the comprehensive service agreement executed in 2017 with the original equipment manufacturer provided for a portion of cost recovery on this outage.

Additionally, generation in the renewables segment was significantly below median expectations and 1% lower than the fourth quarter of 2017 primarily due to weak wind conditions. This was partially offset by the addition of Buckthorn Solar which closed in April 2018.

Liquidity and Capital Resources

Total liquidity as of December 31, 2018, was $1,037 million, $355 million higher relative to December 31, 2017. This increase was primarily driven by higher total cash balances of $267 million primarily from the issuance of the 2025 Senior Notes partially offset by the tendered 2019 and 2020 convertible notes from the Fundamental Change Tender Offer. Borrowing capacity under the revolving credit facility also increased by $88 million due the repayment of outstanding balances and lower letter of credit postings.

The Company's liquidity includes $176 million of restricted cash balances as of December 31, 2018. 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 December 31, 2018, these restricted funds were comprised of $84 million designated to fund operating expenses, approximately $26 million designated for current debt service payments, and $32 million of reserves for debt service, performance obligations and other items including capital expenditures. The remaining $34 million is held in distribution accounts, of which $31 million related to subsidiaries affected by the PG&E bankruptcy.

In the first quarter of 2019 the Company used approximately $239 million of cash to repay the remaining $220 million of 2019 Convertible notes at maturity and for $19 million buy out of the Wind TE HoldCo tax equity partnership as described below.

Potential future sources of liquidity include excess operating cash flow, the existing $150 million ATM program, of which $36 million remained available as of February 28, 2019, availability under the revolving credit facility, and, subject to market conditions, new corporate financings.

PG&E Bankruptcy Update

On January 29, 2019, Pacific Gas and Electric Company filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company either owns or invests in 1,200 net MW of electric generation projects with long-term supply or capacity contracts with PG&E. As of December 31, 2018, the Company’s balance sheet included approximately $1.4 billion of non-recourse debt associated with these projects. Additionally, these projects represent approximately $90 million3 of potential exposure to 2019 project level CAFD. The PG&E bankruptcy filing has triggered defaults under the power purchase agreements with PG&E and related project level financing agreements. While the Company is actively working with project level lenders on forbearance agreements, 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, although the Company currently expects these projects to otherwise operate in the normal course of business. These restrictions, therefore, could result in the Company accumulating less unrestricted cash and thus decrease the Company’s corporate liquidity and cash available for shareholder dividends and growth investments.

As of February 27, 2019, PG&E has neither assumed, rejected, or sought to renegotiate contracts.

Growth Investments

Carlsbad Energy Center: Exercised the Backstop with GIP

The Company exercised the equity backstop with GIP for the acquisition of the Carlsbad Energy Center. On February 27, 2019, after considering final purchase price adjustments, GIP acquired Carlsbad from NRG for $387 million, excluding working capital. Pursuant to the terms previously agreed by and between the Company and GIP, the Company maintains the option for a period of eighteen (18) months to acquire Carlsbad from GIP at the same terms and conditions previously negotiated with NRG. Should the Company not acquire Carlsbad during such eighteen months, Carlsbad will become a Clearway Group ROFO Asset.

Interest in Agua Caliente: Forgoing the Drop Down Offer from NRG Energy, Inc.

On November 1, 2018, NRG offered the Company the opportunity to acquire Agua Caliente Borrower 1 LLC, which owns a 35% interest in Agua Caliente, a 290 MW utility-scale solar project located in Dateland, Arizona with PG&E as the project’s customer. The Company has elected to forgo the acquisition. The Company continues to own a 16% interest in the project through Agua Caliente Borrower 2 LLC.

Update to the ROFO Pipeline with Clearway Group

On February 14, 2019, the Company entered into a First Amendment to the Right of First Offer Agreement with Clearway Group to add Hawaii Solar Phase II, the first addition to the ROFO pipeline since the closing of the GIP Transaction. Hawaii Solar Phase II consists of two solar and storage projects located in Oahu, Hawaii with a combined capacity of 75MW. The Mililani I Solar project, located in the Mililani Agricultural Park, is sized at 39 MW and will include battery storage capability. The Waiawa Solar Power project, located in the Waiawa region, is sized at 36 MW and will also include battery storage capability. Subject to approval by the Hawaii Public Utilities Commission (PUC) both projects will sell power to Hawaii Electric under 20-year PPAs. The expected commercial operation date for these projects is currently estimated in 2021.

Repowering Partnership with Clearway Group

On September 11, 2018, the Company entered into a repowering partnership with Clearway Group for 283 MW of wind assets (Wildorado and Elbow Creek). To facilitate this new partnership, the Company agreed to buy out the existing Wind TE Holdco tax equity partner for $19 million, subject to purchase price adjustments. In January 2019, the Company completed the transaction with the tax equity partner for $19 million. The Company expects to provide further updates with respect to the Repowering Partnership during 2019.

Corporate Liability Management Update

In October 2018 the Company issued $600 million of 2025 Senior Notes. A portion of these proceeds was used to fund the repurchase of $352 million of the 2019 and 2020 Convertible Notes tendered as part of the Fundamental Change Tender Offer.

In the first quarter of 2019 the Company repaid the remaining $220 million of 2019 Convertible Notes at maturity with cash on hand. Other than the remaining $45 million of 2020 Convertible Notes due in June 2020, the Company has no outstanding corporate maturities due until 2024.

Quarterly Dividend

On February 12, 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 March 15, 2019, to stockholders of record as of March 1, 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

Clearway Energy, Inc.’s quarterly operating results are impacted by seasonal factors, as well as variability in renewable energy resources. The majority 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; and
• Timing of maintenance capital expenditures and the impact of both unforced and forced outages.

The Company takes into consideration the timing of these factors to ensure sufficient funds are available for distribution and operating activities on a quarterly basis.

2019 Financial Guidance

As previously updated on February 14, 2019, the Company's 2019 CAFD guidance is $270 million. This financial guidance reflects no additional corporate level financing and assumes that all CAFD related to the projects impacted by the PG&E Bankruptcy is realized in 2019. Financial guidance for 2019 continues to be based on median renewable energy production estimates.

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 (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.