Attached files
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| 8-K - 8-K - TERRAFORM GLOBAL, INC. | glbl8-k2015annualreportdec.htm |
Exhibit 99.1
TerraForm Global Reports 2015 Financial Results and Files Form 10-K
BETHESDA, Md., Dec. 21, 2016 (GLOBENEWSWIRE) -- TerraForm Global, Inc. (Nasdaq: GLBL) (“TerraForm Global” or the “Company”), a global owner and operator of clean energy power plants, today reported 2015 financial results and filed its Form 10-K for 2015 with the Securities and Exchange Commission. The Form 10-K for 2015 is available on the Investors section of TerraForm Global’s website at www.terraformglobal.com and a printed copy of the report may be requested free of charge by sending a request to investors@terraform.com.
“The TerraForm Global board of directors and management team are pleased to complete this milestone as we continue working to regain regulatory compliance,” said Peter Blackmore, Chairman and Interim CEO of TerraForm Global. “We remain committed to achieving our goals of enhancing TerraForm Global’s operational and financial performance and maximizing value for all shareholders.”
Strategic Alternatives
As announced on September 19, 2016, TerraForm Global is currently exploring strategic alternatives including transactions to secure a new sponsor or for sale of the whole company. Working with SunEdison and its stakeholders, the Company has a well-defined process underway with potential bidders. In January 2017, the Company’s Board of Directors expects to make a recommendation based on what best serves the interests of the Company and all of its shareholders including, if appropriate, recommending a transaction for approval by shareholders.
4Q 2015 Results: Key Metrics
4Q 2015 | |
MW (net economic ownership) at end of period | 854 |
Capacity Factor | 31.1% |
MWh (000s) | 558 |
Adjusted Revenue / MWh | $93 |
Revenue, net ($M) | $51 |
Adjusted Revenue ($M) | $52 |
Net Income / (Loss) ($M) | ($254) |
Adjusted EBITDA ($M) | $40 |
Adjusted EBITDA Margin | 76.7% |
CAFD ($M) | $38 |
Unrestricted Cash at end of period ($M) | $922 |
As previously disclosed in the Company’s current reports on Form 8-K and described more fully in the Form 10-K for 2015, as of December 31, 2015, the Company did not maintain an effective control environment based on certain identified material weaknesses. Notwithstanding such material weaknesses, our management concluded that our consolidated financial statements in the Form 10-K for 2015 present fairly, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity
with generally accepted accounting principles. The audited financial statements for the year ended December 31, 2015 include a going concern explanatory note.
Investor Conference Call
We will host an investor conference call and webcast to discuss our results.
Date: Monday, January 9, 2017
Time: 4:30 pm ET
US Toll-Free #: 1 (855) 835-3565
International #: 1 (440) 996-5665
Code: 52796332
Webcast: http://edge.media-server.com/m/p/igpuf4oo
The webcast will also be available on TerraForm Global's investor relations website: www.terraformglobal.com.
A replay of the webcast will be available for those unable to attend the live webcast.
About TerraForm Global
TerraForm Global is a renewable energy company that is changing how energy is generated, distributed and owned. TerraForm Global creates value for its investors by owning and operating clean energy power plants in high-growth emerging markets. For more information about TerraForm Global, please visit: www.terraformglobal.com.
Safe Harbor Disclosure
This communication 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. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks, and uncertainties and typically include words or variations of words such as “expect,” “anticipate,” “believe,” “intend,” “plan,” “seek,” “estimate,” “predict,” “project,” “goal,” “guidance,” “outlook,” “objective,” “forecast,” “target,” “potential,” “continue,” “would,” “will,” “should,” “could,” or “may” or other comparable terms and phrases. All statements that address operating performance, events, or developments that TerraForm Global expects or anticipates will occur in the future are forward-looking statements. They may include financial metrics such as estimates of expected adjusted EBITDA, cash available for distribution (CAFD), earnings, revenues, capital expenditures, liquidity, capital structure, future growth, financing arrangement and other financial performance items (including future dividends per share), descriptions of management’s plans or objectives for future operations, products, or services, or descriptions of assumptions underlying any of the above. Forward-looking statements are based on TerraForm Global’s current expectations or predictions of future conditions, events, or results and speak only as of the date they are made. Although TerraForm Global believes its respective expectations and assumptions are reasonable, it can give no assurance that these expectations and assumptions will prove to have been correct and actual results may vary materially.
By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, risks related to the SunEdison bankruptcy, including our transition away from reliance on SunEdison for management, corporate and accounting services, employees, critical systems and information technology infrastructure, and the operation, maintenance and asset management of our renewable energy facilities; risks related to events of default and potential events of default arising under our revolving credit facility, the indenture governing our senior notes, and/or project-level financing; risks related to failure to satisfy the requirements of Nasdaq, which could result in the delisting of our common stock; risks related to our exploration and potential execution of strategic alternatives; pending and future litigation; our ability to integrate the projects we acquire from third parties or otherwise realize the anticipated benefits from such acquisitions; the willingness and ability of counterparties to fulfill their obligations under offtake agreements; price fluctuations, termination
provisions and buyout provisions in offtake agreements; our ability to successfully identify, evaluate, and consummate acquisitions; government regulation, including compliance with regulatory and permit requirements and changes in market rules, rates, tariffs, environmental laws and policies affecting renewable energy; operating and financial restrictions under agreements governing indebtedness; the condition of the debt and equity capital markets and our ability to borrow additional funds and access capital markets, as well as our substantial indebtedness and the possibility that we may incur additional indebtedness going forward; our ability to compete against traditional and renewable energy companies; potential conflicts of interests or distraction due to the fact that most of our directors and executive officers are also directors and executive officers of TerraForm Power, Inc.; and hazards customary to the power production industry and power generation operations, such as unusual weather conditions and outages; and our ability to manage our capital expenditures, economic, social and political risks and uncertainties inherent in international operations, including operations in emerging markets and the impact of foreign exchange rate fluctuations, the imposition of currency controls and restrictions on repatriation of earnings and cash, protectionist and other adverse public policies, including local content requirements, import/export tariffs, increased regulations or capital investment requirements, conflicting international business practices that may conflict with other customs or legal requirements to which we are subject, inability to obtain, maintain or enforce intellectual property rights, and being subject to the jurisdiction of courts other than those of the United States, including uncertainty of judicial processes and difficulty enforcing contractual agreements or judgments in foreign legal systems or incurring additional costs to do so. Many of these factors are beyond TerraForm Global’s control.
TerraForm Global disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data, or methods, future events, or other changes, except as required by law. The foregoing list of factors that might cause results to differ materially from those contemplated in the forward-looking statements should be considered in connection with information regarding risks and uncertainties which are described in TerraForm Global’s Form 10-K for the fiscal year ended December 31, 2015, as well as additional factors it may describe from time to time in other filings with the Securities and Exchange Commission. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
Adjusted Revenue
Adjusted Revenue is a supplemental non-GAAP measure used by our management for internal planning purposes, including for certain aspects of our consolidating operating budget. We believe Adjusted Revenue is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance.
Adjusted EBITDA
Adjusted EBITDA is a supplemental non-GAAP financial measure which eliminates the impact on net income of certain unusual or non-recurring items and other factors that we do not consider representative of our core business or future operating performance. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance, including net income. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by non-operating, unusual or non-recurring items.
Cash Available for Distribution (CAFD)
CAFD is a supplemental non-GAAP measure of TerraForm Global's ability to earn and distribute cash to investors. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance, including net income, net cash provided by (used in) operating activities or any other liquidity measure determined in accordance with GAAP, nor is it indicative of funds available to fund our cash needs.
Contacts:
Investors:
Brett Prior
TerraForm Global
investors@terraform.com
Media:
Meaghan Repko / Joseph Sala / Nicholas Leasure
Joele Frank, Wilkinson Brimmer Katcher
media@terraform.com
(212) 355-4449
.Appendix Table A-1: Reg. G: TerraForm Global, Inc. Reconciliation of Net Income (Loss) to Adjusted EBITDA and CAFD
Adjusted EBITDA
We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities. In addition, Adjusted EBITDA is used by our management for internal planning purposes, including for certain aspects of our consolidated operating budget.
We define Adjusted EBITDA as net income (loss) plus depreciation, accretion and amortization, non-cash affiliate general and administrative costs, acquisition related expenses, interest expense, gains (losses) on interest rate swaps, foreign currency gains (losses), income tax (benefit) expense and stock compensation expense, and certain other non-cash charges, unusual, non-operating or non-recurring items and other items that we believe are not representative of our core business or future operating performance. Our definitions and calculations of these items may not necessarily be the same as those used by other companies. Adjusted EBITDA is not a measure of liquidity or profitability and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure determined in accordance with U.S. GAAP.
Cash Available For Distribution (CAFD)
We believe CAFD is not a measure of liquidity or profitability and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure determined in accordance with U.S. GAAP.
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 financial performance. In addition, cash available for distribution is used by our management team for internal planning purposes.
Reconciliation of Cash Provided by Operating Activities to CAFD
We have historically defined “cash available for distribution” or “CAFD” as net cash provided by operating activities of Global LLC as adjusted for certain other cash flow items that we associate with our operations. It is a non-GAAP measure of our ability to generate cash to service our dividends. Cash available for distribution represents net cash provided by (used in) operating activities of Global LLC (i) plus or minus changes in assets and liabilities as reflected on our statement of cash flows, (ii) minus deposits into (or plus withdrawals from) restricted cash accounts required by project financing arrangements to the extent they decrease (or increase) cash provided by operating activities, (iii) minus cash distributions paid to non-controlling interests in our projects, if any, (iv) minus scheduled project-level and other debt service payments and repayments in accordance with the related borrowing arrangements, to the extent they are paid from operating cash flows during a period, (v) minus non-expansionary capital expenditures, if any, to the extent they are paid from operating cash flows during a period, (vi) plus cash contributions from SunEdison pursuant to the Interest Payment Agreement, (vii) plus operating costs and expenses paid by SunEdison pursuant to the Management Services Agreement to the extent such costs or expenses exceed the fee payable by us pursuant to such agreement but otherwise reduce our net cash provided by operating activities and (viii) plus or minus operating items as necessary to present the cash flows we deem representative of our core business operations, with the approval of the audit committee.
Reconciliation of Adjusted EBITDA to CAFD
Effective December 31, 2015, we have changed our method of presenting the reconciliation of Cash Available For Distribution (CAFD) to begin with Adjusted EBITDA (as presented in our reconciliation from Net Income to Adjusted EBITDA), instead of from Cash from Operating Activities. The new method produces the same result for CAFD, is consistent with our view that CAFD is primarily a business performance metric, and presents the reconciliation of CAFD in a format that is easier for investors to understand. In addition, at December 31, 2015 we adopted an updated policy for accounting for restricted cash. This change in accounting policy impact is reflected in our final reconciliation of CAFD as presented below for 2015, and impacts the timing of CAFD realization during the year. The annual impact is generally immaterial. The presentation of CAFD using the Cash From Operations method is provided below to demonstrate the consistency of outcome with the Adjusted EBITDA method, and will be discontinued for reconciliations of financial periods ending after December 31, 2015.
Effective December 31, 2015, we define “cash available for distribution” or “CAFD” as adjusted EBITDA of Global LLC as adjusted for certain cash flow items that we associate with our operations. Cash available for distribution represents adjusted EBITDA (i) minus deposits into (or plus withdrawals from) restricted cash accounts required by project financing arrangements to the extent they decrease (or increase) cash provided by operating activities, (ii) minus cash distributions paid to non-controlling interests in our renewable energy facilities, if any, (iii) minus scheduled project-level and other debt service payments and repayments in accordance with the related borrowing arrangements, to the extent they are paid from operating cash flows during a period, (iv) minus non-expansionary capital expenditures, if any, to the extent they are paid from operating cash flows during a period, (v) plus or minus operating items as necessary to present the cash flows we deem representative of our core business operations, with the approval of the audit committee.
The following table presents a reconciliation of net loss to Adjusted EBITDA to CAFD:
(In thousands) | Quarter Ended December 31, 2015 | |
Net loss | $(254,196) | |
Interest expense, net | 23,061 | |
Income tax expense (benefit) | 4,426 | |
Depreciation, accretion and amortization expense (a) | 16,449 | |
General and administrative expense - affiliate (b) | 5,767 | |
Non-cash stock-based compensation | 1,523 | |
Acquisition, formation and related cost (c) | 10,846 | |
Provision for contingent loss on deposit for acquisitions (d) | 231,000 | |
Loss (gain) on foreign currency exchange, net (e) | 7,286 | |
Loss (gain) on extinguishment of debt, net | 528 | |
Other net loss (income) | (4,434) | |
Other non-operating expenses (f) | (2,537) | |
Adjusted EBITDA | 39,718 | |
Interest payment | (7,278) | |
Scheduled project level and other debt service and repayments | (1,243) | |
Cash distributions to non-controlling interests | (3,513) | |
Non-expansionary capital expenditures | (689) | |
Change in restricted cash (g) | (10,499) | |
Settlement gain/(loss) on foreign currency exchange related to operations | 3,000 | |
Other (h) | 18,493 | |
Cash available for distribution (CAFD) | $37,989 | |
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(a) | Includes $0.5 million reduction within operating revenues, net due to net amortization of favorable and unfavorable rate revenue contracts for the three months ended December 31, 2015. |
(b) | In conjunction with the closing of the IPO in August 5, 2015, we entered into the MSA with SunEdison, pursuant to which SunEdison agreed to provide or arrange for other service providers to provide management and administrative services to us. No cash consideration was paid to SunEdison for these services for the quarter ended December 31, |
2015 and amount of general and administrative expense-affiliate in excess of the fees paid to SunEdison is treated as an addback in the reconciliation of net income (loss) to Adjusted EBITDA. In addition, non-operating items and other items incurred directly by TerraForm Global that we do not consider indicative of our core business operations will be treated as an addback in the reconciliation of net income (loss) to Adjusted EBITDA. The Company’s normal operating general and administrative expenses, not paid by SunEdison, are not added back in the reconciliation of net income (loss) to Adjusted EBITDA.
(c) | Represents transaction related costs, including affiliate acquisition costs, associated with the acquisitions completed during the year ended December 31, 2015 since such costs are considered to be paid for with financing sources. Additionally, includes formation and offering related fees and expenses and Formation and offering related fees and expenses - affiliate reflected in the consolidated statement of operations. These fees consist of professional fees for legal, tax, and accounting services related to our IPO. |
(d) | On November 20, 2015, the Company and SunEdison Holdings Corporation entered into an Equity Interest Purchase and Sale Agreement pursuant to which the Company agreed to acquire from SunEdison Holdings Corporation a portfolio of 17 solar energy projects in India with an aggregate nameplate capacity of 425 MW (the “425 MW India Projects”). This agreement was subsequently amended and restated on December 1, 2015. Pursuant to the Amended and Restated Equity Interest Purchase and Sale Agreement (the “India PSA”), the Company paid $231.0 million in cash to SunEdison Holdings Corporation in exchange for the 425 MW India Projects, which projects would be transferred to the Company upon satisfaction of certain conditions precedent. The $231.0 million paid by the Company in accordance with the India PSA is reported as a deposit for acquisitions on the Company’s consolidated balance sheet as of December 31, 2015. The Company determined that the deposit for acquisition of the 425 MW India Projects was not realizable as of December 31, 2015 and recorded a provision for contingent loss of the full $231.0 million in the consolidated balance sheet as of December 31, 2015. The Company also recorded a corresponding charge in the consolidated statement of operations for the year ended December 31, 2015. |
(e) | Includes settled and unsettled gains and losses on foreign currency hedges related to operating and investing activities. The net loss relates primarily to losses on foreign currency hedges of certain planned acquisitions, and is partially offset by gains on foreign currency hedges associated with operations. |
(f) | Other charges and or non-operating items that we believe are not representative of our core business or future operating performance. |
(g) | Net change in restricted cash excludes impact of any foreign currency appreciation or depreciation during the period from 3Q 2015 and 4Q 2015. |
(h) | Items include economic ownership in certain acquired operating assets, which accrued to TerraForm Global, Inc. prior to each acquisition close date. Includes $10.7M related to our acquisition of wind plants from FERSA for the period January 1, 2015 to December 31, 2015 and $5.9M related to our acquisition of wind plants from Renova for the period May 1, 2015 to September 18, 2015. |
Appendix Table A-2: Reg. G: TerraForm Global, Inc. Reconciliation of Net Cash Provided by Operating Activities to CAFD
The following table presents a reconciliation of net cash provided by operating activities to CAFD:
(In thousands) | Quarter Ended December 31, 2015 | ||
Net cash provided by operating activities | $22,786 | ||
Changes in operating assets and liabilities | (64,096) | ||
Change in restricted cash (a) | (10,499) | ||
Cash distributions to non-controlling interests | (3,513) | ||
Scheduled project level and other debt service and repayments | (1,243) | ||
Non-expansionary capital expenditures | (689) | ||
Other items: | |||
General and administrative expense - affiliate (b) | 5,767 | ||
Acquisitions, formation and related costs (c) | 10,846 | ||
Change in accrued interest | 23,646 | ||
Economic ownership adjustment (d) | 16,647 | ||
Settlement on foreign currency exchange related to acquisition (e) | 35,896 | ||
Other items | 2,440 | ||
Sub-total other items | 95,242 | ||
Cash available for distribution | $37,989 | ||
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(a) | Net change in restricted cash excludes impact of any foreign currency appreciation or depreciation during the period from 3Q 2015 and 4Q 2015. |
(b) | In conjunction with the closing of the IPO in August 5, 2015, we entered into the MSA with SunEdison, pursuant to which SunEdison agreed to provide or arrange for other service providers to provide management and administrative services to us. No cash consideration was paid to SunEdison for these services for the quarter ended December 31, 2015 and amount of general and administrative expense-affiliate in excess of the fees paid to SunEdison is treated as an addback in the reconciliation of net income (loss) to Adjusted EBITDA. In addition, non-operating items and other items incurred directly by TerraForm Global that we do not consider indicative of our core business operations will be treated as an addback in the reconciliation of net income (loss) to Adjusted EBITDA. The Company’s normal operating general and administrative expenses, not paid by SunEdison, are not added back in the reconciliation of net income (loss) to Adjusted EBITDA. |
(c) | Represents transaction related costs, including affiliate acquisition costs, associated with the acquisitions completed during the year ended December 31, 2015 since such costs are considered to be paid for with financing sources. Additionally, includes formation and offering related fees and expenses and Formation and offering related fees and expenses - affiliate reflected in the consolidated statement of operations. These fees consist of professional fees for legal, tax, and accounting services related to our IPO. |
(d) | Items include economic ownership in certain acquired operating assets, which accrued to TerraForm Global, Inc. prior to each acquisition close date. Includes $10.7M related to our acquisition of wind plants from FERSA for the period January 1, 2015 to December 31, 2015 and $5.9M related to our acquisition of wind plants from Renova for the period May 1, 2015 to September 18, 2015. |
(e) | Represents settled portion of foreign exchange contracts related to the purchase price on acquisitions. |
Appendix Table A-3: Reg. G: TerraForm Global, Inc. Reconciliation of Operating Revenues to Adjusted Revenue
Adjusted Revenue
We define Adjusted Revenue as operating revenues, net adjusted for non-cash items including unrealized gain/loss on derivatives, amortization of favorable and unfavorable revenue contracts and other non-cash items. We believe Adjusted Revenue is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance. Adjusted Revenue is a non-GAAP measure used by our management for internal planning purposes, including for certain aspects of our consolidating operating budget.
The following table presents a reconciliation of Operating revenues, net to Adjusted Revenue:
(In thousands) | Quarter Ended December 31, 2015 | ||
Adjustments to reconcile Operating revenues, net to adjusted revenue | |||
Operating revenues, net | $51,256 | ||
Amortization of favorable and unfavorable rate revenue contracts, net (a) | 507 | ||
Adjusted revenue | $51,763 | ||
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(a) | Represents net amortization of favorable and unfavorable rate revenue contracts included within operating revenues, net |