Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): May 10, 2018
  
PATTERN ENERGY GROUP INC.
(Exact name of registrant as specified in its charter)

Delaware
001-36087
90-0893251
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification Number)
   
Pier 1, Bay 3
San Francisco, CA 94111
(Address and zip code of principal executive offices)
(415) 283-4000
(Registrant’s telephone number, including area code)
Not Applicable
(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 (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).
Emerging growth company o
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. o
 
 
 
 





Item 2.02 Results of Operations and Financial Condition.
On May 10, 2018, we issued a press release announcing our financial results for the first quarter ended March 31, 2018. A copy of our press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
Our press release, included herein, makes reference to non-U.S. GAAP financial measures, which management believes are useful for investors by offering the ability to better evaluate operating performance and to better understand how management evaluates the business. These non-U.S. GAAP financial measures are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by U.S. GAAP. Descriptions of the non-U.S. GAAP financial measures are discussed below.
We define cash available for distribution as net cash provided by operating activities as adjusted for certain other cash flow items that we associate with our operations. Cash available for distribution represents cash provided by operating activities as adjusted to (i) add or subtract changes in operating assets and liabilities, (ii) subtract net deposits into restricted cash accounts, which are required pursuant to the cash reserve requirements of financing agreements, to the extent they are paid from operating cash flows during a period, (iii) subtract cash distributions paid to noncontrolling interests, (iv) subtract scheduled project-level debt repayments in accordance with the related loan amortization schedule, to the extent they are paid from operating cash flows during a period, (v) subtract non-expansionary capital expenditures, to the extent they are paid from operating cash flows during a period, (vi) add cash distributions received from unconsolidated investments (as reported in net cash used in investing activities), to the extent such distributions were derived from operating cash flows and (vii) add or subtract other items as necessary to present the cash flows we deem representative of our core business operations.
We disclose cash available for distribution because management recognizes that it will be used as a supplemental measure by investors and analysts to evaluate our liquidity. However, cash available for distribution has limitations as an analytical tool because it excludes depreciation, amortization and accretion, does not capture the level of capital expenditures necessary to maintain the operating performance of our projects, is not reduced for principal payments on our project indebtedness except to the extent they are paid from operating cash flows during a period, 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. Cash available for distribution is a non-U.S. GAAP measure and should not be considered an alternative to net cash provided by operating activities or any other liquidity measure determined in accordance with U.S. GAAP, nor is it indicative of funds available to fund our cash needs. In addition, our calculation of cash available for distribution is not necessarily comparable to cash available for distribution as calculated by other companies
We define Adjusted EBITDA as net income (loss) before net interest expense, income taxes, and depreciation, amortization and accretion, including our proportionate share of net interest expense, income taxes, and depreciation, amortization and accretion of unconsolidated investments. Adjusted EBITDA also excludes the effect of certain mark-to-market adjustments and infrequent items not related to normal or ongoing operations, such as early payment of debt, realized derivative gain or loss from refinancing transactions, gain or loss related to acquisitions or divestitures, and adjustments from unconsolidated investments. In calculating Adjusted EBITDA, we exclude mark-to-market adjustments to the value of our derivatives because we believe that it is useful for investors to understand, as a supplement to net income (loss) and other traditional measures of operating results, the results of our operations without regard to periodic, and sometimes material, fluctuations in the market value of such assets or liabilities.
Adjustments from unconsolidated investments represent distributions received in excess of the carrying amount of our investment and suspended equity earnings, during periods of suspension of recognition of equity method earnings. We may suspend the recognition of equity method earnings when we receive distributions in excess of the carrying value of our investment. As we are not liable for the obligations of the investee nor otherwise committed to provide financial support, we record gains resulting from such excess distributions in the period the distributions occur. Additionally, when our carrying value in an unconsolidated investment is zero and we are not liable for the obligations of the investee nor otherwise committed to provide financial support, we will not recognize equity in earnings (losses) in other comprehensive income of unconsolidated investments.
We disclose Adjusted EBITDA, which is a non-U.S. GAAP measure, because management believes this metric assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that our management believes are not indicative of our core operating performance. We use Adjusted EBITDA to evaluate our operating performance. You should not consider Adjusted EBITDA as an alternative to net income (loss), determined in accordance with U.S. GAAP.





Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:
Adjusted EBITDA
does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
does not reflect changes in, or cash requirements for, our working capital needs;
does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, or our proportional interest in the interest expense of our unconsolidated investments or the cash requirements necessary to service interest or principal payments on the debt borne by our unconsolidated investments;
does not reflect our income taxes or the cash requirement to pay our taxes; or our proportional interest in income taxes of our unconsolidated investments or the cash requirements necessary to pay the taxes of our unconsolidated investments;
does not reflect depreciation, amortization and accretion which are non-cash charges; or our proportional interest in depreciation, amortization and accretion of our unconsolidated investments. The assets being depreciated, amortized and accreted will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
does not reflect the effect of certain mark-to-market adjustments and non-recurring items or our proportional interest in the mark-to-market adjustments at our unconsolidated investments.
We do not have control, nor have any legal claim to the portion of the unconsolidated investees' revenues and expenses allocable to our joint venture partners. As we do not control, but do exercise significant influence, we account for the unconsolidated investments in accordance with the equity method of accounting. Net earnings (losses) from these investments are reflected within our consolidated statements of operations in "Earnings (loss) in unconsolidated investments, net." Adjustments related to our proportionate share from unconsolidated investments include only our proportionate amounts of interest expense, income taxes, depreciation, amortization and accretion, and mark-to-market adjustments included in "Earnings (loss) in unconsolidated investments, net;" and
Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP.
Item 7.01 Regulation FD Disclosure.
In addition to the earnings press release discussed in Item 2.02 above, on May 10, 2018, we are also providing Operating Metrics: Production Performance for long-term average production ("LTA") compared to actual production, including compensated curtailment for our wind farms for the quarter ended March 31, 2018, such information is furnished herewith as Exhibit 99.2.

The information included in this Current Report on Form 8-K, including the exhibits attached hereto under Items 2.02 and 7.01 is "furnished" and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing. The information included in this Current Report on Form 8-K under this Item 7.01 (including Exhibit 99.2 hereto) will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.







Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
 
Exhibit
Number
Description
99.1
99.2





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Pattern Energy Group Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 10, 2018
 
 
 
 
 
 
PATTERN ENERGY GROUP INC.
 
 
 
 
 
 
By:
/s/ Michael J. Lyon
 
 
 
Name: Michael J. Lyon
 
 
 
Title:   Chief Financial Officer
 
 
 
(Principal Financial Officer)
 



Exhibit


Exhibit 99.1


Pattern Energy Reports First Quarter 2018 Financial Results
- Declares dividend of $0.4220 per Class A common share for second quarter 2018 -

SAN FRANCISCO, California, May 10, 2018 - Pattern Energy Group Inc. (the “Company” or “Pattern Energy”) (NASDAQ & TSX: PEGI) today announced its financial results for the 2018 first quarter.

Highlights
(Figures reported below are for the first quarter of fiscal 2017, unless otherwise noted)
Proportional gigawatt hours ("GWh") sold of 2,127 GWh, up 4%
Net cash provided by operating activities of $27.8 million
Cash available for distribution ("CAFD") of $43.1 million, and on track to meet full year guidance(1) 
Net loss of $12.6 million
Adjusted EBITDA of $104.2 million
Revenue of $111.7 million, up 11%
Declared a second quarter dividend of $0.4220 per Class A common share or $1.688 on an annualized basis, subsequent to the end of the period, unchanged from the previous quarter's dividend
Acquired 206 megawatts ("MW") of owned capacity in five Japanese projects which represents the Company's entry into Japan, one of the most robust renewables markets in the world
Invested $27 million in Pattern Energy Group 2 LP's ("Pattern Development 2.0") acquisition of the majority interest in Green Power Investments ("GPI") and the Japanese development pipeline from Pattern Energy Group LP ("Pattern Development 1.0")
Commenced commercial operations at two projects, the 33 MW Ohorayama Wind power facility in Japan and, subsequent to the end of the period, the 143 MW Mont Sainte-Marguerite Wind power facility in Quebec which Pattern Energy has agreed to acquire with closing expected in the coming weeks
“Our solid performance in Q1 puts us right on track for our targeted CAFD(1) for the year and is the result of our portfolio continuing to operate at the top end of the industry,” said Mike Garland, President and CEO of Pattern Energy. “In addition, we were able to successfully acquire five assets in Japan, one of the best renewable markets in the world, that form a strong platform to grow our business there and to improve the value of the projects over time. The Company is in an excellent position to make further acquisitions without raising any common equity, allowing us to grow our CAFD per share.”
(1) The forward looking measure of 2018 full year cash available for distribution (CAFD) is a non-GAAP measure that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Metrics, of Pattern Energy's 2018 Quarterly Report on Form 10-Q for the period ended March 31, 2018.

Financial and Operating Results
Pattern Energy sold 2,126,662 megawatt hours ("MWh") of electricity on a proportional basis in the first quarter of 2018 compared to 2,038,159 MWh sold in the same period last year. The 4% increase was primarily due to volume increases as a result of acquisitions in 2017 and 2018 and favorable wind at projects in Canada partially offset by unfavorable wind and curtailment primarily at projects in the Texas market and at Santa Isabel. Production for the quarter was 7% below the long-term average forecast for the period.
Net cash provided by operating activities was $27.8 million for the first quarter of 2018 compared to $43.8 million for the same period last year. The $15.9 million decrease was primarily due to a $12.6 million increase in transmission and projects costs primarily due to acquisitions in 2017 and 2018, a $10.0 million increase in interest payments and a $2.9 million decrease in distributions from unconsolidated investments. These decreases in net cash provided by operating activities were partially offset by a $10.8 million increase in revenue.

1



Cash available for distribution was $43.1 million for the first quarter of 2018, compared to $45.1 million for the same period last year. The $2.1 million decrease was primarily due to a $12.6 million increase in transmission and projects costs primarily due to acquisitions in 2017 and 2018, a $3.9 million increase in interest expense (excluding amortization of financing costs and debt discount/premium), a $6.5 million increase in distributions to noncontrolling interests, a $3.5 million increase in principal payments of project-level debt and a $0.9 million decrease in distributions from unconsolidated investments. These decreases in cash available for distribution were partially offset by increases of $20.2 million in revenue (excluding unrealized loss on energy derivative and amortization of PPAs), $2.5 million in release of restricted cash and $4.3 million in cash from other, primarily related to a $3.4 million project reserve funding requirement made in the first quarter 2017.
Net loss was $12.6 million in the first quarter of 2018, compared to a net income of $2.5 million for the same period last year. The change of $15.2 million was primarily attributable to increases of $24.3 million in cost of revenues due to the acquisitions in 2017 and 2018 and $2.0 million in tax provision. This change was partially offset a $10.8 million increase in revenue primarily due to acquisitions in 2017 and 2018 and the settlement of business interruption insurance related to our Santa Isabel project and a decrease of $0.5 million in other expense.
Adjusted EBITDA was $104.2 million for the first quarter of 2018 compared to $98.2 million for the same period last year. The $6.0 million increase in the quarterly period was primarily due to a $20.2 million increase in revenue (excluding unrealized loss on energy derivative and amortization of PPAs) primarily attributable to volume increases as a result of the 2017 and 2018 acquisitions and an insurance settlement for Santa Isabel partially offset by lower electricity sales as a result of changing prices, unfavorable wind and curtailment primarily at projects in the Texas market and at Santa Isabel. This increase was partially offset by increases of $5.5 million in project expenses, $7.1 million in transmission costs and $0.8 million in transaction costs primarily related to the Japan acquisition.
2018 Financial Guidance
Pattern Energy is re-confirming its targeted annual cash available for distribution(2) for 2018 within a range of $151 million to $181 million, representing an increase of 14% compared to cash available for distribution in 2017.
(2) The forward looking measure of 2018 full year cash available for distribution (CAFD) is a non-GAAP measure that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Metrics, of Pattern Energy's 2018 Quarterly Report on Form 10-Q for the period ended March 31, 2018.
Quarterly Dividend
Pattern Energy declared a dividend for the second quarter 2018, payable on July 31, 2018, to holders of record on June 29, 2018 in the amount of $0.4220 per Class A common share, which represents $1.688 on an annualized basis. The amount of the second quarter 2018 dividend is unchanged from the first quarter 2018 dividend.
Project Acquisitions
During the first quarter of 2018, Pattern Energy acquired 206 MW of owned interest in five projects in operation or under construction located in Japan from Pattern Development 1.0 and GPI. The portfolio consists of two operating solar projects (Futtsu and Kanagi), two operating wind projects (Otsuki and Ohorayama, which commenced commercial operation during the quarter) and one wind project under construction (Tsugaru), each of which possess a 20-year power purchase agreement.
Pattern Energy acquired the 84 MW portfolio of Futtsu, Kanagi, Otsuki and Ohorayama for a cash purchase price of $131.5 million(3), which represents approximately a 10.1x multiple of the five-year average CAFD(4).
Pattern Energy acquired the 122 MW Tsugaru project at the start of construction, once fully financed on a non-recourse basis, for a total cash consideration of $194.0 million(3), which represents a 9.3x multiple of the five-year average CAFD(4) starting with the first full year of operations in 2021.
Pattern Energy has agreed to acquire a 51% interest in the 143 MW Mont Sainte-Marguerite project, located in the Chaudière-Appalaches region south of Québec City. The project commenced commercial operations in the first quarter of 2018. The project has a 25-year power purchase agreement with Hydro-Québec, which has an AA-/Aa2 credit rating.
Pattern Energy will acquire its 51% interest in Mont Sainte-Marguerite for a total investment of approximately $40 million(5), which represents approximately a 10x multiple of the five-year average CAFD(4). The acquisition is expected to close in the coming

2



weeks, with the recent the commencement of commercial operations and subject to customary closing conditions. It will be funded at the time of closing using available liquidity.
(3) Based on a Japanese yen to USD exchange rate of ¥110.
(4) The forward looking measure of five-year average annual purchase price multiple of CAFD contribution from each of the five Japanese projects and Mont Sainte-Marguerite project is a non-GAAP measure that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Metrics, of Pattern Energy's 2018 Quarterly Report on Form 10-Q for the period ended March 31, 2018.
(5) Based on a CAD to USD exchange rate of $1.27.
Acquisition Pipeline
Pattern Development 1.0 and Pattern Development 2.0 (together, the Pattern Development Companies) have a pipeline of development projects totaling more than 10 GW. Pattern Energy has a Right of First Offer ("ROFO") on the pipeline of acquisition opportunities from the Pattern Development Companies. The identified ROFO list stands at 935 MW of potential owned capacity and and represents a portion of the pipeline of development projects of the Pattern Development Companies, which are subject to Pattern Energy’s ROFO. Since its IPO, Pattern Energy has purchased, or agreed to purchase, 1,564 MW from Pattern Development 1.0 and in aggregate grown the identified ROFO list from 746 MW to more than 2 GW.
Below is a summary of the identified ROFO projects that Pattern Energy has the right to purchase from the Pattern Development Companies in connection with its respective purchase rights:
 
 
 
 
 
 
 
 
 
 
 
 
Capacity (MW)
Identified
ROFO Projects
 
Status
 
Location
 
Construction
Start
 (1)
 
Commercial
Operations 
(2)
 
Contract
Type
 
Rated (3)
 
Pattern
Development-
Owned
(4)
Pattern Development 1.0 Projects
 
 
 
 
 
 
 
 
 
 
 
 
Conejo Solar(5)
 
Operational
 
Chile
 
2015
 
2016
 
PPA
 
104
 
104
Belle River
 
Operational
 
Ontario
 
2016
 
2017
 
PPA
 
100
 
43
El Cabo
 
Operational
 
New Mexico
 
2016
 
2017
 
PPA
 
298
 
125
North Kent
 
Operational
 
Ontario
 
2017
 
2018
 
PPA
 
100
 
35
Henvey Inlet
 
In construction
 
Ontario
 
2017
 
2019
 
PPA
 
300
 
150
Pattern Development 2.0 Projects
 
 
 
 
 
 
 
 
 
 
 
 
Stillwater Big Sky
 
In construction
 
Montana
 
2017
 
2018
 
PPA
 
79
 
67
Crazy Mountain
 
Late stage development
 
Montana
 
2017
 
2019
 
PPA
 
80
 
68
Grady
 
Late stage development
 
New Mexico
 
2018
 
2019
 
PPA
 
220
 
188
Sumita
 
Late stage development
 
Japan
 
2019
 
2021
 
PPA
 
100
 
55
Ishikari
 
Late stage development
 
Japan
 
2019
 
2022
 
PPA
 
100
 
100
 
 
 
 
 
 
 
 
 
 
 
 
1,481
 
935
(1)
Represents year of actual or anticipated commencement of construction.
(2)
Represents year of actual or anticipated commencement of commercial operations.
(3)
Rated capacity represents the maximum electricity generating capacity of a project in MW. As a result of weather and other conditions, a project or a turbine will not operate at its rated capacity at all times and the amount of electricity generated will be less than its rated capacity. The amount of electricity generated may vary based on a variety of factors.
(4)
Pattern Development-Owned capacity represents the maximum, or rated, electricity generating capacity of the project in MW multiplied by Pattern Development 1.0's or Pattern Development 2.0's percentage ownership interest in the distributable cash flow of the project.
(5)
From time to time, the Company conducts strategic reviews of its markets. The Company has been conducting a strategic review of the market, growth, and opportunities in Chile. In the event the Company believes it can utilize funds that have already been invested in Chile or funds that might otherwise be invested in Chile in a more productive manner elsewhere that could generate a higher return on investment, it may decide to exit Chile for other opportunities with greater potential. In addition, Pattern Development 1.0 is also concurrently exploring strategic alternatives for its assets in Chile.

3



Cash Available for Distribution and Adjusted EBITDA Non-GAAP Reconciliations
The following tables reconcile non-GAAP net cash provided by operating activities to cash available for distribution and net income (loss) to Adjusted EBITDA, respectively, for the periods presented (in thousands):
 
Three months ended March 31,
 
2018
 
2017
Net cash provided by operating activities(1)
$
27,824

 
$
43,752

Changes in operating assets and liabilities
28,576

 
13,423

Network upgrade reimbursement
282

 
317

Release of restricted cash
2,488

 

Operations and maintenance capital expenditures
(261
)
 
(146
)
Distributions from unconsolidated investments(2)
6,281

 
4,205

Other
860

 
(3,432
)
Less:
 
 
 
Distributions to noncontrolling interests
(9,187
)
 
(2,647
)
Principal payments paid from operating cash flows
(13,803
)
 
(10,326
)
Cash available for distribution
$
43,060

 
$
45,146

(1) Included in net cash provided by operating activities for the three months ended March 31, 2017 is the portion of distributions from unconsolidated investments paid from cumulative earnings representing the return on investment.
(2) Distributions from unconsolidated investments includes project cash flow transferred to the project's distribution account in March 2018 and received subsequently in April 2018.
 
Three months ended March 31,
 
2018
 
2017
Net income (loss)
$
(12,620
)
 
$
2,539

Plus:
 
 
 
Interest expense, net of interest income
25,110

 
22,061

Tax provision
6,784

 
4,775

Depreciation, amortization and accretion
62,650

 
47,227

EBITDA
81,924

 
76,602

Unrealized loss on energy derivative (1)
11,047

 
2,358

(Gain) loss on derivatives
(5,660
)
 
648

Other

 
312

Plus, proportionate share from unconsolidated investments:
 
 
 
Interest expense, net of interest income
9,468

 
9,340

Depreciation, amortization and accretion
8,768

 
8,454

(Gain) loss on derivatives
(1,335
)
 
484

Adjusted EBITDA
$
104,212

 
$
98,198

(1)    Amount is included in electricity sales on the consolidated statements of operations.

4



Conference Call and Webcast
Pattern Energy will host a conference call and webcast to discuss these results at 10:30 a.m. Eastern Time on Thursday, May 10, 2018. Mike Garland, President and CEO, and Mike Lyon, CFO, will co-chair the call. Participants should call (888) 231-8191 or (647) 427-7450 and ask an operator for the Pattern Energy earnings call. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To access the replay, please dial (855) 859-2056 or (416) 849-0833 and enter access code 5748379. The replay recording will be available until 11:59 p.m. Eastern Time, May 31, 2018.
A live webcast of the conference call will be also available on the events page in the investor section of Pattern Energy’s website at www.patternenergy.com. An archived webcast will be available for one year.
About Pattern Energy
Pattern Energy Group Inc. (Pattern Energy) is an independent power company listed on the NASDAQ Global Select Market and Toronto Stock Exchange. Pattern Energy has a portfolio of 25 wind and solar power facilities, including one project it has agreed to acquire, with a total owned interest of 2,942 MW in the United States, Canada, Japan and Chile that use proven, best-in-class technology. Pattern Energy’s wind and solar power facilities generate stable long-term cash flows in attractive markets and provide a solid foundation for the continued growth of the business. For more information, visit www.patternenergy.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of Canadian securities laws, including statements regarding the ability to achieve the 2018 cash available for distribution target; the ability to achieve the five year average annual CAFD generated by the Japan projects and Mont Sainte-Marguerite; the ability of the Japan assets to form a strong platform to grow the Company's business and improve the value of the projects; the ability to make further acquisitions without raising any common equity capital; the timing of the consummation of the acquisition of the Mont Sainte-Marguerite project; and the ability of the Company to consummate additional acquisitions from the iROFO list. These forward-looking statements represent the Company’s expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Company's annual report on Form 10-K and any quarterly reports on Form 10-Q. The risk factors and other factors noted therein could cause actual events or the Company's actual results to differ materially from those contained in any forward-looking statement.
# # #

Contacts:
Media Relations
Matt Dallas
917-363-1333
matt.dallas@patternenergy.com
 
Investor Relations
Ross Marshall
416-526-1563
ross.marshall@loderockadvisors.com 
 


5




Pattern Energy Group Inc.
Consolidated Balance Sheets
(In thousands of U.S. Dollars, except share data)
(Unaudited)
 
March 31,
 
December 31,
 
2018
 
2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
162,144

 
$
116,753

Restricted cash
8,698

 
9,065

Funds deposited by counterparty
17,744

 
29,780

Trade receivables
62,895

 
54,900

Derivative assets, current
15,747

 
19,445

Prepaid expenses
17,707

 
17,847

Deferred financing costs, current, net of accumulated amortization of $2,111 and $2,580 as of March 31, 2018 and December 31, 2017, respectively
1,230

 
1,415

Other current assets
28,948

 
21,105

Total current assets
315,113

 
270,310

Restricted cash
9,524

 
12,162

Major equipment advances
38,452

 

Property, plant and equipment, net
4,340,973

 
3,965,121

Unconsolidated investments
347,831

 
311,223

Derivative assets
13,779

 
9,628

Deferred financing costs
8,046

 
7,784

Net deferred tax assets
7,215

 
6,349

Finite-lived intangible assets, net
235,952

 
136,048

Goodwill
60,302

 

Other assets
44,455

 
22,906

Total assets
$
5,421,642

 
$
4,741,531

 
 
 
 

6



Pattern Energy Group Inc.
Consolidated Balance Sheets
(In thousands of U.S. Dollars, except share data)
(Unaudited)
 
March 31,
 
December 31,
 
2018
 
2017
Liabilities and equity
 
 
 
Current liabilities:
 
 
 
Accounts payable and other accrued liabilities
$
39,468

 
$
53,615

Accrued construction costs
2,045

 
1,369

Counterparty deposit liability
17,744

 
29,780

Accrued interest
7,529

 
16,460

Dividends payable
42,041

 
41,387

Derivative liabilities, current
5,685

 
8,409

Revolving credit facility
248,000

 

Current portion of long-term debt, net
61,191

 
51,996

Contingent liabilities, current
21,708

 
2,592

Other current liabilities
15,525

 
11,426

Total current liabilities
460,936

 
217,034

Long-term debt, net
2,128,063

 
1,878,735

Derivative liabilities
28,425

 
20,972

Net deferred tax liabilities
130,257

 
56,491

Finite-lived intangible liability, net
59,579

 
51,194

Contingent liabilities
168,183


62,398

Other long-term liabilities
151,430

 
106,565

Total liabilities
3,126,873

 
2,393,389

Commitments and contingencies
 
 
 
Equity:
 
 
 
Class A common stock, $0.01 par value per share: 500,000,000 shares authorized; 98,096,760 and 97,860,048 shares outstanding as of March 31, 2018 and December 31, 2017, respectively
983

 
980

Additional paid-in capital
1,218,077

 
1,234,846

Accumulated income (loss)

 
(112,175
)
Accumulated other comprehensive loss
(26,810
)
 
(25,691
)
Treasury stock, at cost; 177,909 and 157,812 shares of Class A common stock as of March 31, 2018 and December 31, 2017, respectively
(3,884
)
 
(3,511
)
Total equity before noncontrolling interest
1,188,366

 
1,094,449

Noncontrolling interest
1,106,403

 
1,253,693

Total equity
2,294,769

 
2,348,142

Total liabilities and equity
$
5,421,642

 
$
4,741,531


7



Pattern Energy Group Inc.
Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)
(Unaudited)
 
Three months ended March 31,
 
2018
 
2017
Revenue:
 
 
 
Electricity sales
$
102,147

 
$
98,434

Other revenue
9,512

 
2,399

Total revenue
111,659

 
100,833

Cost of revenue:
 
 
 
Project expense
34,562

 
29,100

Transmission costs
7,190


70

Depreciation, amortization and accretion
55,452


43,740

Total cost of revenue
97,204

 
72,910

Gross profit
14,455

 
27,923

Operating expenses:
 
 
 
General and administrative
10,706

 
11,124

Related party general and administrative
4,068

 
3,426

Total operating expenses
14,774

 
14,550

Operating income (loss)
(319
)
 
13,373

Other expense:
 
 
 
Interest expense
(25,444
)
 
(22,555
)
Gain (loss) on derivatives
5,660

 
(648
)
Earnings in unconsolidated investments, net
18,212

 
16,876

Net loss on transactions
(1,098
)
 
(312
)
Other income (expense), net
(2,847
)
 
580

Total other expense
(5,517
)
 
(6,059
)
Net income (loss) before income tax
(5,836
)
 
7,314

Tax provision
6,784

 
4,775

Net income (loss)
(12,620
)
 
2,539

Net loss attributable to noncontrolling interest
(148,542
)
 
(3,114
)
Net income attributable to Pattern Energy
$
135,922

 
$
5,653

 
 
 
 
Weighted-average number of common shares outstanding
 
 
 
Basic
97,428,388

 
87,062,612

Diluted
105,564,491

 
87,131,280

Earnings per share attributable to Pattern Energy
 
 
 
Class A common stock:
 
 
 
Basic
$
1.39

 
$
0.06

Diluted
$
1.32

 
$
0.06

Dividends declared per Class A common share
$
0.42

 
$
0.41


8



Pattern Energy Group Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)
(Unaudited)

 
Three months ended March 31,
 
2018
 
2017
Operating activities
 
 
 
Net income (loss)
$
(12,620
)
 
$
2,539

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and accretion
55,451

 
43,740

Amortization of financing costs
1,249

 
1,858

Amortization of debt discount/premium, net
1,227

 
1,102

Amortization of power purchase agreements, net
1,422

 
736

Loss on derivatives
3,655

 
2,350

Stock-based compensation
1,051

 
985

Deferred taxes
6,647

 
4,693

Earnings in unconsolidated investments, net
(18,212
)
 
(16,876
)
Distributions from unconsolidated investments
13,548

 
16,487

Other reconciling items
2,982

 
(439
)
Changes in operating assets and liabilities:
 
 
 
Funds deposited by counterparty
12,036

 
1,658

Trade receivables
(5,742
)
 
(8,432
)
Prepaid expenses
2,193

 
946

Other current assets
62

 
(4,083
)
Other assets (non-current)
(1,346
)
 
2,992

Accounts payable and other accrued liabilities
(18,716
)
 
(4,418
)
Counterparty deposit liability
(12,036
)
 
(1,658
)
Accrued interest
(9,144
)
 
(2,725
)
Other current liabilities
72

 
(975
)
Long-term liabilities
3,904

 
3,272

     Contingent liabilities
(87
)
 

Derivatives
228

 

Net cash provided by operating activities
27,824

 
43,752

Investing activities
 
 
 
Cash paid for acquisitions, net of cash and restricted cash acquired
(157,543
)
 
(275
)
Capital expenditures
(61,282
)
 
(1,328
)
Distributions from unconsolidated investments

 
4,205

Other assets
(16,720
)
 
83

Investment in Pattern Development 2.0
(35,156
)
 

Net cash provided by (used in) investing activities
(270,701
)
 
2,685


9



Pattern Energy Group Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)
(Unaudited)

 
Three months ended March 31,
 
2018
 
2017
Financing activities
 
 
 
Dividends paid
(41,358
)
 
(35,522
)
Capital distributions - noncontrolling interest
(9,187
)
 
(2,647
)
Payment for financing fees
(5,448
)
 
(5,025
)
Proceeds from revolving credit facility
283,000

 

Repayment of revolving credit facility
(35,000
)
 
(180,000
)
Proceeds from long-term debt
113,116

 
350,000

Repayment of long-term debt
(19,166
)
 
(10,326
)
Repayment of note payable - related party
(909
)
 

Other financing activities
826

 
(2,003
)
Net cash provided by financing activities
285,874

 
114,477

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(611
)
 

Net change in cash, cash equivalents and restricted cash
42,386

 
160,914

Cash, cash equivalents and restricted cash at beginning of period
137,980

 
109,371

Cash, cash equivalents and restricted cash at end of period
$
180,366

 
$
270,285

Supplemental disclosures
 
 
 
Cash payments for income taxes
$
60

 
$
247

Cash payments for interest expense
$
32,617

 
$
22,607

Business combination:
 
 
 
Assets acquired, net of cash and restricted cash acquired
$
627,241

 
$

Liabilities assumed
352,570

 

Less: Noncontrolling interests
11,113

 

Net assets acquired, net of cash and restricted cash acquired
$
263,558

 
$

Schedule of non-cash activities
 
 
 
Change in property, plant and equipment
$
122,161

 
$
956

Accrual of dividends
$
45

 
$

Accrual of deferred financing costs
$

 
$
1,640



10
Exhibit


Exhibit 99.2
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12243172&doc=4

Operating Metrics: Production Performance, Q1 2018

The table below presents the long term average production (LTA) for wind farms compared to actual production, including compensated curtailment:
Region
 
Q1 2018
 
Actual Results (% of LTA)
 
Wind Index
(% of LTA) 2
 
LTA (GWh)
 
Production (GWh)
 
 
 
 
 
 
Eastern US
 
1,050

 
928

 
88
%
 
97
%
Western U.S.
 
581

 
564

 
97
%
 
100
%
Canada
 
567

 
586

 
103
%
 
103
%
Other
 
95

 
48

 
51
%
 
80
%
Total 1
 
2,293

 
2,126

 
93
%
 
98
%

1 Amounts presented do not include production from projects from our recently completed Japan acquisition.
2 Wind Index is defined as GWh that could have been produced from actual wind, divided by GWh that could have been produced from expected wind.