Atlantica Sustainable Infrastructure plc:

Atlantica Reports Third Quarter 2020 Financial Results

• Net profit attributable to the Company for the nine-month period of 2020 was $61.2 million, compared with $60.8 million in the same period of 2019.
• Adjusted EBITDA including unconsolidated affiliates¹ was $621.0 million for the nine-month period of 2020, representing a 5.6% decrease compared with the same period in 2019.
• Cash available for distribution ("CAFD”) increased by 13.6% to $52.0 million in the third quarter of 2020 compared with the third quarter of 2019 and by 6.4% to $149.2 million in the first nine months of 2020 compared with the first nine months of 2019.
• Additionally, the Company generated approximately $216 million in one-off cash through non-recourse refinancings in the first 9 months of 2020, which is being used to finance growth.
• Quarterly dividend of $0.42 per share declared by the Board of Directors.
• Closing of the previously announced Solana tax equity investor buy-out.
• Continued delivery on accretive growth strategy with a new asset acquisition², a district heating asset in Calgary, Canada.

November 6, 2020 – Atlantica Sustainable Infrastructure plc (NASDAQ: AY) ("Atlantica” or the "Company”), the sustainable infrastructure company that owns a diversified portfolio of contracted assets in the energy and environment sectors, reported today its financial results for the nine-month period ended September 30, 2020.

Revenue for the first nine months of 2020 reached $768.7 million, compared with $798.2 million during the same period of 2019. Adjusted EBITDA including unconsolidated affiliates was $621.0 million for the nine-month period of 2020, compared with $658.1 million during the same period of 2019. The decrease in revenue and Adjusted EBITDA including unconsolidated affiliates was mostly due to lower solar resource in Spain and lower production in Kaxu as a result of an unscheduled outage in the first quarter of 2020. Revenue increased in solar assets in North America due to better performance of the Mojave asset, partly offsetting lower solar radiation in the third quarter of 2020 caused by smoke from the California wildfires.

CAFD in the third quarter of 2020 increased by 13.6% compared with the same period in 2019, driving CAFD generation in the first nine months of 2020 to $149.2 million. This represents a 6.4% increase compared with $140.2 million in the same period of 2019.

Additionally, in the first nine months of 2020 the Company generated approximately $216 million in one-off cash, net of transaction costs, reserves and cancelation of interest rate swaps through three non-recourse project debt refinancings, proving its ability to continue unlocking value in the existing portfolio. These funds are being used by Atlantica to finance its growth plan.

Highlights

Key Performance Indicators

Segment Results

During the first nine months of 2020, renewable assets operating performance was as follows:

• Production in the U.S. solar portfolio increased by 1.1% compared to the same period of the previous year due to better performance of the Mojave asset, partly offsetting lower solar radiation in the third quarter of 2020 caused by smoke from the California wildfires.
• Production in Spain decreased compared to the same period in 2019 due to lower solar radiation in the first half of 2020.
• In South Africa, production decreased mainly due to an unscheduled outage in the first quarter of 2020, which affected electrical equipment. Damage and business interruption costs were covered by insurance, after customary deductibles and the plant is currently producing at full capacity.
• Finally, production from wind assets increased by 5.5% compared with the same period in 2019, as a result of good wind resources along with stable performance of the assets.

Atlantica’s assets with revenue based on availability continue to deliver solid performance with high availability levels in ACT, transmission lines and water assets.

Liquidity and Debt

As of September 30, 2020, cash at Atlantica’s corporate level was $186.7 million, compared with $66.0 million as of December 31, 2019. Additionally, as of September 30, 2020, the Company had $425.0 million available under its Revolving Credit Facility and therefore a total corporate liquidity of $611.7 million, compared with $407.0 million as of December 31, 2019.

As of September 30, 2020, net project debt⁹ was $4.68 billion, compared with $4.36 billion as of December 31, 2019, while net corporate debt¹⁰ was $773.0 million, compared with $657.8 million as of December 31, 2019. The net corporate debt / CAFD pre-corporate debt service ratio¹¹ was 3.3x as of September 30, 2020.

Dividend

On November 4, 2020, the Board of Directors of Atlantica approved a dividend of $0.42 per share. This dividend is expected to be paid on December 15, 2020 to shareholders of record as of November 30, 2020.

Accretive Growth Strategy

      1.    Solana Tax Equity Investment Acquisition Closed

On August 17, the Company closed the acquisition of Liberty’s equity interest in Solana, as expected. Liberty was the tax equity investor in the Solana asset. Total equity investment is expected to be approximately $290 million, $272 million of which has already been paid.

       2.    New Asset Acquisition: Calgary District Heating

Atlantica announced that it has signed an agreement to acquire "Calgary District Heating” (Calgary District Energy Centre), a 55 MWt¹² district heating asset in Canada. The investment totals approximately $20 million in equity value.

Calgary District Heating, which has been in operation since 2010, has demonstrated solid operating performance and represents the first investment in this sector for the Company. It provides heating services to a diverse range of government, institutional and commercial customers in Calgary, with high credit quality (41% of contracted load have an A+ rating or higher and the rest is unrated).

The asset has availability-based revenues with Inflation indexation and 20 years of average weighted contract life. Contracted capacity and volume payments represent approximately 80% of the total revenue. The asset is an essential infrastructure with high barriers to entry, has no commodity risk and benefits from growth opportunities. Atlantica has signed a purchase agreement and closing is subject to customary conditions precedent and regulatory approvals.

"We are thrilled to announce our first investment in district heating, a sector which is a key solution for cities and countries to reduce emissions, and with very attractive growth prospects.”, said Santiago Seage, CEO of Atlantica. "Calgary District Heating fits perfectly in our portfolio, increases our presence in North America and reaffirms our goal to transition towards a more sustainable world”.

      3.    Strong pipeline of investment opportunities

In 2020, Atlantica has invested or reached agreements to invest approximately $322 million. The Company’s accretive growth strategy is supported by significant potential equity investment opportunities identified in the short and mid-term in the regions and sectors where it has presence. Given the pipeline of identified opportunities, Atlantica continues to target potential equity growth investments of $200 million to $300 million per annum.

2020 Guidance

Atlantica expects to close the year 2020 with a CAFD in the range of the guidance provided in February 2020, which is between $200 million and $225 million.

The Company expects to achieve an Adjusted EBITDA including unconsolidated affiliates slightly below the low end of its guidance, which was $820 million, mainly due to the delay in the closing of the acquisition of PTS.

Details of the Results Presentation Conference

Atlantica’s CEO, Santiago Seage and CFO, Francisco Martinez-Davis, will hold a conference call and a webcast on Friday November 6, 2020, at 8:30 am (New York time).

In order to access the conference call participants should dial: + 1 631-510-7495 (US), +44 (0) 844 571 8892 (UK) or +1-866-992-6802 (Canada), followed by the confirmation code 2979154 for all phone numbers. Atlantica advises participants to access the conference call at least 20 minutes in advance.

Additionally, the senior management team will hold virtual meetings with investors on November 9, 10 and 11, 2020, at the 2020 EEI Virtual Financial Conference and on November 18 and 19, 2020, at the Midstream and Energy Infrastructure Conference organized by RBC Capital Markets. In order to schedule a meeting with Atlantica at the EEI Financial Conference, please send an email to ir@atlantica.com. Please be advised that slots are limited and will be filled on a first come first served basis.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this press release including, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we operate or are seeking to operate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward-looking statements by terminology such as "aim," "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "guidance," "intend," "is likely to," "may," "plan," "potential," "predict," "projected," "should" or "will" or the negative of such terms or other similar expressions or terminology.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements speak only as of the date of this press release and are not guarantees of future performance and are based on numerous assumptions. Our actual results of operations, financial condition and the development of events may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements. Except as required by law, we do not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Investors should read the section entitled "Item 3D. Key Information—Risk Factors" and the description of our segments and business sectors in the section entitled "Item 4B. Information on the Company—Business Overview", each in our annual report for the fiscal year ended December 31, 2019 filed on Form 20-F, for a more complete discussion of the risks and factors that could affect us.

Forward-looking statements include, but are not limited to, statements relating to: expected amounts, payments and closing timelines for investments; business synergies from investments; equity investment and project growth strategy; accretive investment opportunities; strategic business alternatives to ensure optimal company value; estimated returns and cash available for distribution ("CAFD”) estimates, including from project debt financing and refinancing; net corporate leverage based on CAFD estimates; debt refinancing; ESG initiative improvement; the quality of our long-term contracts; self-amortizing project debt structure and related debt reduction; the use of non-GAAP measures as a useful predicting tool for investors; the possibility to extend asset life; cost improvements from corporate debt and project debt refinancing; the impact of COVID-19 and the ongoing economic crisis; dividends; and various other factors, including those factors discussed under "Item 1.A—"Risk Factors” in our Quarterly Report for the nine-month period ended September 30, 2020 furnished on Form 6-K on the date hereof and "Item 3.D—Risk Factors” and "Item 5.A—Operating Results” in our Annual Report for the fiscal year ended December 31, 2019 filed on Form 20-F.

The CAFD, Adjusted EBITDA including unconsolidated affiliates and other guidance in this press release are estimates as of November 6, 2020. These estimates are based on assumptions believed to be reasonable as of the date Atlantica published this press release. Atlantica disclaims any current intention to update such guidance, except as required by law.

Non-GAAP Financial Measures

This press release also includes certain non-GAAP financial measures, including Adjusted EBITDA including unconsolidated affiliates, Adjusted EBITDA including unconsolidated affiliates as a percentage of revenues (margin) and CAFD. Non-GAAP financial measures are not measurements of our performance or liquidity under IFRS as issued by IASB and should not be considered alternatives to operating profit or profit for the period or any other performance measures derived in accordance with IFRS as issued by the IASB or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. Please refer to the appendix of this press release for a reconciliation of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with IFRS. Also, please refer to the following paragraphs in this section for an explanation of the reasons why management believes the use of non-GAAP financial measures (including CAFD and Adjusted EBITDA including unconsolidated affiliates) in this press release provides useful information to investors.

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-GAAP financial measures may not be comparable to other similarly titled measures employed by other companies and they may have limitations as analytical tools. These measures may not be fit for isolated consideration or as a substitute for analysis of our operating results as reported under IFRS as issued by the IASB. Non-GAAP financial measures and ratios are not measurements of our performance or liquidity under IFRS as issued by the IASB. Thus, they should not be considered as alternatives to operating profit, profit for the period, any other performance measures derived in accordance with IFRS as issued by the IASB, any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. Some of the limitations of these non-GAAP measures are:

• they do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
• they do not reflect changes in, or cash requirements for, our working capital needs;
• they may not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments, on our debts;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future and Adjusted EBITDA and CAFD do not reflect any cash requirements that would be required for such replacements;
• some of the exceptional items that we eliminate in calculating Adjusted EBITDA reflect cash payments that were made, or will be made in the future; and
• the fact that other companies in our industry may calculate Adjusted EBITDA and CAFD differently than we do, which limits their usefulness as comparative measures.

We define Adjusted EBITDA including unconsolidated affiliates as profit/(loss) for the period attributable to the Company, after adding back loss/(profit) attributable to non-controlling interest from continued operations, income tax, share of profit/(loss) of associates carried under the equity method, finance expense net, depreciation, amortization and impairment charges. CAFD is calculated as cash distributions received by the Company from its subsidiaries minus all cash expenses of the Company, including debt service and general and administrative expenses.

Our management believes Adjusted EBITDA including unconsolidated affiliates and CAFD are useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.

Our management believes CAFD is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors and is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of our ability to make quarterly distributions. In addition, CAFD is used by our management team for determining future acquisitions and managing our growth. Adjusted EBITDA and CAFD are widely used by other companies in the same industry.

Our management uses Adjusted EBITDA and CAFD as measures of operating performance to assist in comparing performance from period to period on a consistent basis. They also readily view operating trends as a measure for planning and forecasting overall expectations, for evaluating actual results against such expectations, and for communicating with our board of directors, shareholders, creditors, analysts and investors concerning our financial performance.

In our discussion of operating results, we have included foreign exchange impacts in our revenue and Adjusted EBITDA including unconsolidated affiliates by providing constant currency growth. The constant currency presentation is not a measure recognized under IFRS and excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations. We calculate constant currency amounts by converting our current period local currency revenue and Adjusted EBITDA using the prior period foreign currency average exchange rates and comparing these adjusted amounts to our prior period reported results. This calculation may differ from similarly titled measures used by others and, accordingly, the constant currency presentation is not meant to substitute for recorded amounts presented in conformity with IFRS as issued by the IASB nor should such amounts be considered in isolation.

Consolidated Statements of Operations
(Amounts in thousands of U.S. dollars)

Consolidated Statement of Financial Position
(Amounts in thousands of U.S. dollars)

Consolidated Cash Flow Statements
(Amounts in thousands of U.S. dollars)

Reconciliation of Adjusted EBITDA including unconsolidated affiliates to Profit for the period attributable to the company

Reconciliation of Adjusted EBITDA including unconsolidated affiliates to net cash provided by operating activities

Reconciliation of Cash Available For Distribution to Profit for the period attributable to the Company

About Atlantica

Atlantica Sustainable Infrastructure plc is a sustainable infrastructure company that owns a diversified portfolio of contracted renewable energy, efficient natural gas, electric transmission and water assets in North & South America, and certain markets in EMEA (www.atlantica.com). 

¹ Adjusted EBITDA including unconsolidated affiliates includes our share in EBITDA of unconsolidated affiliates (see reconciliation on page 15).

² Purchase Agreement signed, closing subject to customary conditions precedent and regulatory approvals.

³ Represents total installed capacity in assets owned at the end of the period, regardless of our percentage of ownership in each of the assets.

⁴ Includes curtailment in wind assets for which we receive compensation.

⁵ Includes 43MW corresponding to our 30% share of Monterrey since August 2, 2019.

⁶ GWh produced include 30% production from Monterrey since August 2019. Major maintenance overhaul held in ACT in Q1 and Q2 2019, as scheduled, which reduced production and electric availability as per contract.

⁷ Electric availability refers to operational MW over contracted MW

⁸ Availability refers to actual availability divided by contracted availability.

 ⁹  Net project debt is calculated as long-term project debt plus short-term project debt minus cash and cash equivalents at the consolidated project level.

¹⁰ Net corporate debt is calculated as long-term corporate debt plus short-term corporate debt minus cash and cash equivalents at Atlantica’s corporate level.

¹¹ Net corporate leverage is calculated as corporate net debt divided by midpoint 2020 CAFD guidance before corporate debt service. CAFD pre-corporate debt service is calculated as CAFD plus corporate debt interest paid by Atlantica.

¹² District Energy Centre capacity of 55 Megawatts of thermal energy. Additionally, its associated Combined Heat and Power Unit has a capacity of 3.0 Megawatts of thermal energy and 3.3 Megawatts of electric energy.