Clearway Energy, Inc. — Q1 2021 Form 10-Q
Business context and reporting period. The filing covers the three months ended March 31, 2021, compared with Q1 2020. Clearway owns contracted renewable, conventional-generation and district-energy assets across North America. It reported approximately 6,991 net MW of generation capacity and a weighted-average remaining offtake-contract term of about 13 years, measured by CAFD.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Operating revenue | $237 million | $258 million |
| Operating income (loss) | $(14) million | $52 million |
| Net loss | $(76) million | $(107) million |
| Net income (loss) attributable to Clearway Energy, Inc. | $3 million | $(29) million |
| Basic and diluted EPS attributable to Class A and C shareholders | $0.03 | $(0.26) |
| Net cash provided by operating activities | $47 million | $84 million |
| Net cash used in investing activities | $(314) million | $(17) million |
| Net cash provided by (used in) financing activities | $233 million | $(104) million |
Gross margin was $218 million versus $241 million; management’s non-GAAP Economic Gross Margin was $274 million versus $268 million. The filing does not provide a comparable GAAP operating-margin percentage or Q1 Adjusted EBITDA/CAFD figure in the supplied text.
At March 31, 2021, cash and cash equivalents were $144 million and restricted cash was $287 million. Total liquidity was approximately $831 million, including $400 million of revolving-facility availability; restricted cash is not generally freely available. Gross debt principal was approximately $8.041 billion, compared with $7.043 billion at December 31, 2020. The company reported $25 million drawn on its revolver and $70 million of letters of credit outstanding. It was in compliance with debt covenants.
Material changes and notable transactions
- Revenue declined $21 million year over year, while total operating costs and expenses increased $45 million. Renewable revenue included a $24 million adverse mark-to-market impact from economic hedges.
- Q1 results included about $50 million of revenue reductions, including third-party investor amounts, to settle obligations associated with Texas wind-facility outages during February’s extreme winter weather. Clearway estimated the 2021 cash impact, after third-party investor contributions, at $25–$30 million, with approximately $25 million in Q1.
- Operating cash flow fell $37 million year over year, primarily due to working-capital timing and lower operating income adjusted for non-cash items; higher distributions from unconsolidated affiliates partly offset the decline.
- Clearway acquired an additional 35% of Agua Caliente for $202 million, bringing its ownership to 51% and resulting in consolidation; the project carries $716 million of project-level debt. It also acquired the Rattlesnake wind project interests for $132 million.
- Clearway issued $925 million of 3.75% senior notes due 2031 and repaid the $600 million 2025 notes at a premium. The refinancing contributed to a $42 million debt-extinguishment loss. Interest expense was reported at $45 million versus $167 million in Q1 2020, largely reflecting the change in fair value of interest-rate swaps between periods.
- Renewables generation sold rose to 2.530 million MWh from 1.676 million MWh, partly reflecting acquired/consolidated assets. Conventional equivalent availability declined to 83.2% from 89.0%.
Outlook, risks and contingencies
- Management said liquidity, operating cash flows and revolver availability should be adequate for commitments, debt service, capital spending and dividends. This is management’s assessment, not a guarantee.
- Management estimated 2021 maintenance capital expenditures of $28 million. Pinnacle repowering was expected to reach commercial operation and receive corporate capital funding in the second half of 2021; the company estimated its net corporate investment at about $67 million, subject to adjustments.
- The company said it expected comparable cash dividends to continue under then-current circumstances. It declared a quarterly dividend of $0.329 per Class A and Class C share for payment in June 2021, up from $0.324 paid for Q1.
- COVID-19 had not caused material financial or operational impacts as of the filing, though uncertainty remained. The company identified weather and generation conditions, counterparty performance, power and fuel prices, regulation, access to capital, leverage and its ability to maintain and grow dividends among key risks.
- Material litigation included NPPD disputes concerning the Laredo Ridge and Elkhorn Ridge PPAs, and Georgetown’s claims concerning the Buckthorn Solar PPA. Clearway said it was defending its rights; outcomes and potential costs could not be predicted or reasonably estimated. It also noted evolving environmental rules and litigation, including matters concerning migratory bird protections.
- After quarter-end, Clearway acquired the 264 MW Mt. Storm wind project for approximately $96 million, excluding working-capital adjustments. It also disclosed a May 2021 agreement to sell 100 MW of Marsh Landing resource adequacy beginning in 2023.
Important facts for investors to verify
- The final financial and contractual consequences of the Texas winter-weather events, including whether the estimated $25–$30 million cash impact changes.
- Cash-flow and dividend coverage, especially given lower operating cash flow and the restricted portion of reported cash.
- Debt and refinancing costs, project-level debt obligations, interest-rate exposure and access to available revolving credit.
- Acquisition economics and integration of Agua Caliente, Rattlesnake and Mt. Storm, and funding, timing and returns for Pinnacle repowering.
- Developments in the NPPD and Georgetown litigation, counterparty creditworthiness, and environmental and regulatory changes affecting operations.