QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) | |||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company |
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Item 6. | ||
• | risks related to weather conditions at our wind and solar assets; |
• | our ability to enter into contracts to sell power on acceptable prices and terms, including as our offtake agreements expire; |
• | government regulation, including compliance with regulatory and permit requirements and changes in tax laws, market rules, rates, tariffs, environmental laws and policies affecting renewable energy; |
• | our ability to compete against traditional utilities and renewable energy companies; |
• | pending and future litigation; |
• | our ability to successfully close the acquisitions of, and integrate the projects that we expect to acquire from, third parties, including our ability to successfully integrate our recently acquired portfolio of distributed generation assets; |
• | our ability to successfully achieve expected synergies and to successfully execute on the funding plan for our recently acquired portfolio of distributed generation assets, including our ability to successfully close any contemplated capital recycling initiatives; |
• | our ability to realize the anticipated benefits from acquisitions; |
• | our ability to close, implement and realize the benefit of our cost and performance enhancement initiatives, including long-term service agreements and our ability to realize the anticipated benefits from such initiatives; |
• | the willingness and ability of counterparties to fulfill their obligations under offtake agreements; |
• | price fluctuations, termination provisions and buyout provisions in offtake agreements; |
• | risks related to the ability of our hedging activities to adequately manage our exposure to commodity and financial risk; |
• | risks related to our operations being located internationally, including our exposure to foreign currency exchange rate fluctuations and political and economic uncertainties; |
• | the regulated rate of return of renewable energy facilities in our Regulated Solar and Wind segment, a reduction of which could have a material negative impact on our results of operations; |
• | 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 in the future; |
• | operating and financial restrictions placed on us and our subsidiaries related to agreements governing indebtedness; |
• | our ability to identify or consummate any future acquisitions, including those identified by Brookfield Asset Management Inc.; |
• | our ability to grow and make acquisitions with cash on hand, which may be limited by our cash distribution policy; |
• | risks related to the effectiveness of our internal control over financial reporting; and |
• | risks related to our relationship with Brookfield Asset Management Inc., including our ability to realize the expected benefits of the sponsorship. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating revenues, net | $ | $ | $ | $ | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of operations | |||||||||||||||
General and administrative expenses | |||||||||||||||
General and administrative expenses - affiliate | |||||||||||||||
Acquisition costs | |||||||||||||||
Acquisition costs - affiliate | |||||||||||||||
Impairment of renewable energy facilities | |||||||||||||||
Depreciation, accretion and amortization expense | |||||||||||||||
Total operating costs and expenses | |||||||||||||||
Operating income | |||||||||||||||
Other expenses (income): | |||||||||||||||
Interest expense, net | |||||||||||||||
Loss (gain) on extinguishment of debt, net | ( | ) | |||||||||||||
Loss (gain) on foreign currency exchange, net | ( | ) | ( | ) | ( | ) | |||||||||
Other (income) expenses, net | ( | ) | ( | ) | |||||||||||
Total other expenses, net | |||||||||||||||
Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income tax expense | |||||||||||||||
Net loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Less: Net (loss) income attributable to redeemable non-controlling interests | ( | ) | ( | ) | |||||||||||
Less: Net (loss) income attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | |||||||||
Net (loss) income attributable to Class A common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||
Weighted average number of shares: | |||||||||||||||
Class A common stock - Basic | |||||||||||||||
Class A common stock - Diluted | |||||||||||||||
(Loss) earnings per share: | |||||||||||||||
Class A common stock - Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||
Distributions declared per share: | |||||||||||||||
Class A common stock | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||
Net unrealized gain (loss) arising during the period | ( | ) | ||||||||||||||
Hedging activities: | ||||||||||||||||
Net unrealized (loss) gain arising during the period | ( | ) | ( | ) | ||||||||||||
Reclassification of net realized loss (gain) into earnings | ( | ) | ( | ) | ( | ) | ||||||||||
Other comprehensive (loss) income, net of tax | ( | ) | ( | ) | ( | ) | ||||||||||
Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Less comprehensive (loss) income attributable to non-controlling interests: | ||||||||||||||||
Net (loss) income attributable to redeemable non-controlling interests | ( | ) | ( | ) | ||||||||||||
Net (loss) income attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
Hedging activities | ( | ) | ( | ) | ||||||||||||
Comprehensive (loss) income attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
Comprehensive (loss) income attributable to Class A common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
September 30, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash, current | |||||||
Accounts receivable, net | |||||||
Derivative assets, current | |||||||
Prepaid expenses and other current assets | |||||||
Due from affiliates | |||||||
Deposit on acquisitions | |||||||
Total current assets | |||||||
Renewable energy facilities, net, including consolidated variable interest entities of $3,238,298 and $3,064,675 in 2019 and 2018, respectively | |||||||
Intangible assets, net, including consolidated variable interest entities of $697,744 and $751,377 in 2019 and 2018, respectively | |||||||
Goodwill | |||||||
Restricted cash | |||||||
Derivative assets | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities, Redeemable Non-controlling Interests and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt, including consolidated variable interest entities of $266,423 and $64,251 in 2019 and 2018, respectively | $ | $ | |||||
Accounts payable, accrued expenses and other current liabilities | |||||||
Due to affiliates | |||||||
Derivative liabilities, current portion | |||||||
Total current liabilities | |||||||
Long-term debt, less current portion, including consolidated variable interest entities of $640,050 and $885,760 in 2019 and 2018, respectively | |||||||
Operating lease obligations, less current portion, including consolidated variable interest entities of $141,683 in 2019 | — | ||||||
Asset retirement obligations, including consolidated variable interest entities of $118,406 and $86,456 in 2019 and 2018, respectively | |||||||
Derivative liabilities | |||||||
Deferred income taxes | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Redeemable non-controlling interests | |||||||
Stockholders’ equity: | |||||||
Class A common stock, $0.01 par value per share, 1,200,000,000 shares authorized, 209,663,018 and 209,642,140 shares issued in 2019 and 2018, respectively | |||||||
Additional paid-in capital | |||||||
Accumulated deficit | ( | ) | ( | ) | |||
Accumulated other comprehensive income | |||||||
Treasury stock, 508,033 and 500,420 shares in 2019 and 2018, respectively | ( | ) | ( | ) | |||
Total TerraForm Power, Inc. stockholders’ equity | |||||||
Non-controlling interests | |||||||
Total stockholders’ equity | |||||||
Total liabilities, redeemable non-controlling interests and stockholders’ equity | $ | $ |
Non-controlling Interests | |||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock Issued | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Common Stock Held in Treasury | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | Capital | Total | |||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||
Cumulative-effect adjustment | — | — | — | ( | ) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
Distributions to Class A common stockholders | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | — | — | ( | ) | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Contributions from non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2018 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock to affiliates | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Distributions to Class A common stockholders | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Other | — | — | ( | ) | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||||||||||
Balance as of June 30, 2018 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
Issuances of Class A common stock to affiliates | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | ( | ) | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||||||||||
Distributions to Class A common stockholders | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Purchase of redeemable non-controlling interests in renewable energy facilities | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ |
Non-controlling Interests | |||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock Issued | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Common Stock Held in Treasury | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | Capital | Total | |||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Distributions to Class A common stockholders | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | — | ( | ) | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Purchase of non-controlling interests in renewable energy facilities | — | — | ( | ) | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Non-cash redemption of redeemable non-controlling interests | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Balance as of March 31, 2019 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Distributions to Class A common stockholders | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | — | ( | ) | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Balance as of June 30, 2019 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | ( | ) | ( | ) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Distributions to Class A common stockholders | — | — | ( | ) | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | — | ( | ) | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
Purchase of redeemable non-controlling interests in renewable energy facilities | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests acquired in business combination | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation, accretion and amortization expense | |||||||
Amortization of favorable and unfavorable rate revenue contracts, net | |||||||
(Reductions) charges to allowance for doubtful accounts, net | ( | ) | |||||
Impairment of renewable energy facilities | |||||||
Amortization of deferred financing costs, debt premiums and discounts, net | |||||||
Unrealized loss (gain) on interest rate swaps | ( | ) | |||||
Unrealized gain on commodity contract derivatives, net | ( | ) | ( | ) | |||
Recognition of deferred revenue | ( | ) | ( | ) | |||
Stock-based compensation expense | |||||||
(Gain) loss on extinguishment of debt, net | ( | ) | |||||
Loss on disposal of renewable energy facilities | |||||||
Gain on foreign currency exchange, net | ( | ) | ( | ) | |||
Deferred taxes | |||||||
Other, net | ( | ) | ( | ) | |||
Changes in assets and liabilities, excluding the effect of acquisitions: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Prepaid expenses and other current assets | |||||||
Accounts payable, accrued expenses and other current liabilities | ( | ) | |||||
Due to affiliates, net | |||||||
Other, net | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Proceeds from energy rebate and reimbursable interconnection costs | |||||||
Proceeds from the settlement of foreign currency contracts, net | |||||||
Payments to acquire businesses, net of cash and restricted cash acquired | ( | ) | ( | ) | |||
Payments to acquire renewable energy facilities from third parties, net of cash and restricted cash acquired | ( | ) | ( | ) | |||
Payment of deposit on acquisitions | ( | ) | |||||
Other investing activities | |||||||
Net cash used in by investing activities | ( | ) | ( | ) |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of Class A common stock to affiliates | |||||||
Proceeds from the Sponsor Line - affiliate | |||||||
Repayment of the Sponsor Line - affiliate | ( | ) | |||||
Proceeds from Bridge Facility | |||||||
Revolver draws | |||||||
Revolver repayments | ( | ) | ( | ) | |||
Term Loan principal payments | ( | ) | ( | ) | |||
Borrowings of non-recourse long-term debt | |||||||
Principal payments and prepayments on non-recourse long-term debt | ( | ) | ( | ) | |||
Debt financing fees paid | ( | ) | ( | ) | |||
Sale of membership interests and contributions from non-controlling interests in renewable energy facilities | |||||||
Purchase of membership interests and distributions to non-controlling interests in renewable energy facilities | ( | ) | ( | ) | |||
Proceeds from affiliates | |||||||
Cash distributions to Class A common stockholders | ( | ) | ( | ) | |||
Recovery of related party short swing profit | |||||||
Net cash provided by financing activities | |||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||
Supplemental Disclosures: | |||||||
Cash paid for interest | $ | $ | |||||
Cash paid for income taxes |
• | The package of practical expedients that permits the Company to retain its existing lease assessment and classification; |
• | The practical expedient that allows the Company to not evaluate existing and expired land easements; |
• | The practical expedient to not separate non-lease components in power purchase agreements (“PPAs”) in which the Company is the lessor in providing energy, capacity, and incentive products for a bundled fixed rate; and |
• | The Company elected not to apply the recognition requirements for short-term operating leases, defined as a term of twelve months or shorter, from the commencement date. |
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||
(In thousands) | Solar | Wind | Regulated Solar and Wind | Total | Solar | Wind | Regulated Solar and Wind | Total | ||||||||||||||||||||||||
PPA rental income | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commodity derivatives | ||||||||||||||||||||||||||||||||
PPA and market energy revenue | ||||||||||||||||||||||||||||||||
Capacity revenue from remuneration programs1 | ||||||||||||||||||||||||||||||||
Amortization of favorable and unfavorable rate revenue contracts, net | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Energy revenue | ||||||||||||||||||||||||||||||||
Incentive revenue | ||||||||||||||||||||||||||||||||
Operating revenues, net | $ | $ | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||
(In thousands) | Solar | Wind | Regulated Solar and Wind | Total | Solar | Wind | Regulated Solar and Wind | Total | ||||||||||||||||||||||||
PPA rental income | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commodity derivatives | ||||||||||||||||||||||||||||||||
PPA and market energy revenue | ||||||||||||||||||||||||||||||||
Capacity revenue from remuneration programs1 | ||||||||||||||||||||||||||||||||
Amortization of favorable and unfavorable rate revenue contracts, net | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Energy revenue | ||||||||||||||||||||||||||||||||
Incentive revenue | ||||||||||||||||||||||||||||||||
Operating revenues, net | $ | $ | $ | $ | $ | $ | $ | $ |
(1) | Represents the remuneration related on the Company’s investments in renewable energy facilities in Spain. |
(In thousands) | As of September 26, 2019 | ||
Renewable energy facilities in service1 | $ | ||
Intangible assets | |||
Accounts receivable | |||
Prepaid expenses and other assets | |||
Total assets acquired | |||
Accounts payable, accrued expenses and other current liabilities | |||
Asset retirement obligations | |||
Operating lease liabilities | |||
Other liabilities | |||
Total liabilities assumed | |||
Non-controlling interests2 | |||
Purchase price, net of cash and restricted cash acquired3 | |||
Deposit on acquisitions | |||
Total cash paid for the WGL Acquisition, net of cash acquired | $ |
(1) | Includes $ |
(2) | The fair value of the non-controlling interests was determined using an income approach representing the best indicator of fair value and was supported by a discounted cash flow technique. |
(3) | The Company acquired cash and cash equivalents of $ |
WGL Acquisition | ||||||
Fair Value (In thousands) | Weighted Average Amortization Period1 | |||||
Favorable rate revenue contracts | $ | |||||
In-place value of market rate revenue contracts | ||||||
Unfavorable rate revenue contracts |
(1) |
Nine Months Ended September 30, | |||||||
(In thousands) | 2019 | 2018 | |||||
Total operating revenues, net | $ | $ | |||||
Net loss | ( | ) |
(In thousands) | As of June 12, 2018, reported at December 31, 2018 | Adjustments | As of June 12, 2018, reported at June 30, 2019 | |||||||||
Renewable energy facilities in service | $ | $ | ( | ) | $ | |||||||
Accounts receivable | — | |||||||||||
Intangible Assets | ( | ) | ||||||||||
Goodwill | ||||||||||||
Other assets | ||||||||||||
Total assets acquired | ( | ) | ||||||||||
Accounts payable, accrued expenses and other current liabilities | ( | ) | ||||||||||
Long-term debt, including current portion | ||||||||||||
Deferred income taxes | ( | ) | ||||||||||
Asset retirement obligations | ( | ) | ||||||||||
Derivative liabilities | — | |||||||||||
Other long-term liabilities | — | |||||||||||
Total liabilities assumed | ( | ) | ||||||||||
Redeemable non-controlling interests | — | |||||||||||
Purchase price, net of cash acquired | $ | $ | — | $ |
(1) | The excess purchase price over the estimated fair value of net assets acquired of $ |
(2) | The fair value of the non-controlling interests was determined using a market approach using a quoted price for the instrument. As discussed above, the Company acquired the remaining shares of Saeta pursuant to a statutory squeeze out procedure under Spanish law, which closed on July 2, 2018. The quoted price for the purchase of the non-controlling interest was the best indicator of fair value and was supported by a discounted cash flow technique. |
(3) | The Company acquired cash and cash equivalents of $ |
(In thousands) | Nine Months Ended September 30, 2018 | ||
Total operating revenues, net | $ | ||
Net loss | ( | ) |
As of June 12, 2018 | ||||||
Fair Value (In thousands) | Weighted Average Amortization Period1 | |||||
Intangible assets - concession and licensing contracts | $ |
(1) | For the purposes of this disclosure, the weighted average amortization period is determined based on a weighting of the individual intangible fair values against the total fair value for each major intangible asset and liability class. |
(In thousands) | September 30, 2019 | December 31, 2018 | ||||||
Cash and cash equivalents | $ | $ | ||||||
Restricted cash - current | ||||||||
Restricted cash - non-current | ||||||||
Cash, cash equivalents and restricted cash shown in the unaudited condensed consolidated statement of cash flows | $ | $ |
(In thousands) | September 30, 2019 | December 31, 2018 | ||||||
Renewable energy facilities in service, at cost1 | $ | $ | ||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
Renewable energy facilities in service, net | ||||||||
Construction in progress - renewable energy facilities | ||||||||
Total renewable energy facilities, net | $ | $ |
(1) | As discussed in Note 2. Summary of Significant Accounting Policies and Note 7. Leases, on January 1, 2019, the Company recognized $ |
(In thousands) | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||
Fixed operating lease cost | $ | $ | ||||||
Variable operating lease cost1 | ||||||||
Total operating lease cost | $ | $ |
(1) | Primarily related to production-based variable inputs and adjustments for inflation. |
(In thousands) | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases1 | $ | $ |
(1) | Right-of-use assets, excluding the effect of acquisitions, obtained in exchange for lease obligations for the nine months ended September 30, 2019, were not material. |
(In thousands, except lease term and discount rate) | As of September 30, 2019 | |||
Operating leases: | ||||
Right-of-use assets | $ | |||
Accounts payable, accrued expenses and other current liabilities | $ | |||
Operating lease obligations, less current portion | ||||
Total operating lease liabilities | $ | |||
Weighted Average Remaining Lease Term: | ||||
Operating leases | ||||
Weighted Average Discount Rate: | ||||
Operating leases |
(In thousands) | ||||
Remainder of 2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total lease payments | ||||
Less: Imputed interest | ( | ) | ||
Total | $ |
(In thousands, except weighted average amortization period) | Weighted Average Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Concession and licensing contracts | $ | $ | ( | ) | $ | |||||||||
Favorable rate revenue contracts | ( | ) | ||||||||||||
In-place value of market rate revenue contracts | ( | ) | ||||||||||||
Total intangible assets, net | $ | $ | ( | ) | $ | |||||||||
Unfavorable rate revenue contracts | $ | $ | ( | ) | $ | |||||||||
Unfavorable rate operations and maintenance contracts | ( | ) | ||||||||||||
Total intangible liabilities, net1 | $ | $ | ( | ) | $ |
(1) | The Company’s intangible liabilities are classified within other long-term liabilities in the unaudited condensed consolidated balance sheets. |
(In thousands, except weighted average amortization period) | Weighted Average Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Concession and licensing contracts | $ | $ | ( | ) | $ | |||||||||
Favorable rate revenue contracts | ( | ) | ||||||||||||
In-place value of market rate revenue contracts | ( | ) | ||||||||||||
Favorable rate land leases1 | ( | ) | ||||||||||||
Total intangible assets, net | $ | $ | ( | ) | $ | |||||||||
Unfavorable rate revenue contracts | $ | $ | ( | ) | $ | |||||||||
Unfavorable rate operations and maintenance contracts | ( | ) | ||||||||||||
Unfavorable rate land lease1 | ( | ) | ||||||||||||
Total intangible liabilities, net2 | $ | $ | ( | ) | $ |
(1) | On January 1, 2019, these amounts were reclassified to right-of-use assets in connection with the adoption of Topic 842. See Note 2. Summary of Significant Accounting Policies and Note 7. Leases for additional details. |
(2) | The Company’s intangible liabilities are classified within other long-term liabilities in the unaudited condensed consolidated balance sheets. |
(In thousands) | September 30, 2019 | December 31, 2018 | |||||
Beginning balance | $ | $ | |||||
Goodwill resulting from business combinations1 | |||||||
Adjustments during the period2 | |||||||
Foreign exchange differences | ( | ) | ( | ) | |||
Ending balance | $ | $ |
(1) | Represents the excess purchase price over the estimated fair value of net assets acquired from Saeta and is primarily attributable to deferred tax liabilities and adjustment to the fair value of certain project long-term debt. See Note 4. Acquisitions for additional details. |
(2) | Represents the adjustments to the goodwill balance arising from the revision of the provisional accounting of Saeta’s purchase price allocation. |
(In thousands) | September 30, 2019 | December 31, 2018 | ||||||
Current assets | $ | $ | ||||||
Non-current assets | ||||||||
Total assets | $ | $ | ||||||
Current liabilities | $ | $ | ||||||
Non-current liabilities | ||||||||
Total liabilities | $ | $ |
(In thousands, except interest rates) | September 30, 2019 | December 31, 2018 | Interest Type | Interest Rate (%)1 | Financing Type | |||||||||
Corporate-level long-term debt2: | ||||||||||||||
Senior Notes due 2023 | $ | $ | Fixed | Senior notes | ||||||||||
Senior Notes due 20253 | Fixed | Senior notes | ||||||||||||
Senior Notes due 2028 | Fixed | Senior notes | ||||||||||||
Revolver4 | Variable | Revolving loan | ||||||||||||
Term Loan3,5 | Variable | Term debt | ||||||||||||
Non-recourse long-term debt: | ||||||||||||||
Permanent financing | Blended7 | 4.558 | Term debt / Senior notes | |||||||||||
Bridge Facility6 | Variable | Term debt | ||||||||||||
Financing obligations | Imputed | 5.858 | Financing lease obligations | |||||||||||
Total principal due for long-term debt and financing obligations | 4.538 | |||||||||||||
Unamortized premiums and discounts, net | ( | ) | ||||||||||||
Deferred financing costs, net | ( | ) | ( | ) | ||||||||||
Less: current portion of long-term debt and financing lease obligations | ( | ) | ( | ) | ||||||||||
Long-term debt and financing obligations, less current portion | $ | $ |
(1) | As of September 30, 2019. |
(2) | Represents the debt issued by TerraForm Power Operating, LLC (“Terra Operating LLC”) and guaranteed by Terra LLC and certain subsidiaries of TerraForm Operating LLC other than non-recourse subsidiaries as defined in the relevant debt agreements (except for certain unencumbered non-recourse subsidiaries). |
(3) | Subsequent to quarter end, on October 16, 2019, Terra Operating LLC issued $ |
(4) | Represents the amounts outstanding under the Terra Operating LLC senior secured revolving credit facility (the “Revolver”). Subsequent to quarter end, on October 8, 2019, the Company entered into an amendment whereby it, among other things, increased the aggregate lending commitment by $ |
(5) | Represents the amounts outstanding under Terra Operating LLC’s senior secured term loan facility (the “Term Loan”). Subsequent to quarter end, on October 16, 2019, the Company redeemed the entire outstanding balance. See Note 21. Subsequent Events for additional details. |
(6) | Represents senior secured term debt issued to fund a portion of the consideration paid for the WGL Acquisition. See below for additional details. |
(7) | Includes fixed and variable rate debt. As of September 30, 2019, |
(8) | Represents the weighted-average interest rate as of September 30, 2019. |
(In thousands) | Remainder of 2019 | 20202 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||||||||
Maturities of long-term debt1 | $ | $ | $ | $ | $ | $ | $ |
(1) | Represents the contractual principal payment due dates for the Company’s long-term debt and does not reflect the reclassification of $ |
(2) | Includes the $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands, except effective tax rate) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Loss before income tax expense | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Income tax expense | ||||||||||||||||
Effective tax rate | ( | )% | ( | )% | ( | )% | ( | )% |
Fair Value of Derivative Instruments1 | ||||||||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Derivatives Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||
(In thousands) | Interest Rate Swaps | Foreign Currency Contracts | Commodity Contracts | Interest Rate Swaps | Foreign Currency Contracts | Commodity Contracts | Gross Derivatives | Counterparty Netting2 | Net Derivatives | |||||||||||||||||||||||||||
As of September 30, 2019 | ||||||||||||||||||||||||||||||||||||
Derivative assets, current | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
Derivative assets | ( | ) | ||||||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
Derivative liabilities, current portion | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
Derivative liabilities | ( | ) | ||||||||||||||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
As of December 31, 2018 | ||||||||||||||||||||||||||||||||||||
Derivative assets, current | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
Derivative assets | ( | ) | ||||||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
Derivative liabilities, current portion | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
Derivative liabilities | ( | ) | ||||||||||||||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ |
(1) | Fair value amounts are shown before the effect of counterparty netting adjustments. |
(2) | Represents the netting of derivative exposures covered by qualifying master netting arrangements. |
Notional Amount as of | ||||||
(In thousands) | September 30, 2019 | December 31, 2018 | ||||
Derivatives designated as hedging instruments: | ||||||
Cash flow hedges: | ||||||
Interest rate swaps (USD) | ||||||
Interest rate swaps (CAD) | ||||||
Commodity contracts (MWhs) | ||||||
Net investment hedges: | ||||||
Foreign currency contracts (CAD) | ||||||
Foreign currency contracts (EUR) | ||||||
Derivatives not designated as hedging instruments: | ||||||
Interest rate swaps (USD) | ||||||
Interest rate swaps (EUR)1 | ||||||
Foreign currency option contracts (EUR)2 | ||||||
Foreign currency forward contracts (EUR)2 | ||||||
Foreign currency contracts (CAD) | ||||||
Commodity contracts (MWhs) |
(1) | Represents the notional amount of the interest rate swaps at Saeta to economically hedge the interest payments on non-recourse debt. The Company did not designate these derivatives as hedging instruments under ASC 815 as of September 30, 2019 and December 31, 2018. |
(2) | Represents the notional amount of foreign currency contracts used to economically hedge a portion of the Company’s foreign exchange risk associated with Euro-denominated intercompany loans. The Company did not designate these derivatives as hedging instruments under ASC 815 as of September 30, 2019 and December 31, 2018. |
Location of Loss (Gain) in the Statements of Operations | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Interest rate swaps | Interest expense, net | $ | $ | $ | $ | ( | ) | |||||||||||
Foreign currency contracts | Loss (gain) on foreign currency exchange, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Commodity contracts | Operating revenues, net | ( | ) | ( | ) | ( | ) |
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
Derivatives in Cash Flow and Net Investment Hedging Relationships | (Loss) Gain Included in the Assessment of Effectiveness Recognized in OCI, net of taxes1 | Gain (Loss) Excluded from the Assessment of Effectiveness Recognized in OCI Using an Amortization Approach | Location of Amount Reclassified from AOCI into Income | Loss (Gain) Included in the Assessment of Effectiveness Reclassified from AOCI into Income2 | Gain Excluded from the Assessment of Effectiveness that is Amortized through Earnings | |||||||||||||||||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Interest rate swaps | $ | ( | ) | $ | $ | $ | Interest expense, net | $ | $ | $ | $ | |||||||||||||||||||||||
Foreign currency contracts | Loss on foreign currency exchange, net | |||||||||||||||||||||||||||||||||
Commodity contracts | ( | ) | Operating revenues, net | ( | ) | ( | ) | |||||||||||||||||||||||||||
Total | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
(1) | Net of $ |
(2) |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
Derivatives in Cash Flow and Net Investment Hedging Relationships | (Loss) Gain Included in the Assessment of Effectiveness Recognized in OCI, net of taxes1 | Gain (Loss) Excluded from the Assessment of Effectiveness Recognized in OCI Using an Amortization Approach | Location of Amount Reclassified from AOCI into Income | Loss (Gain) Included in the Assessment of Effectiveness Reclassified from AOCI into Income2 | (Gain) Excluded from the Assessment of Effectiveness that is Amortized through Earnings | |||||||||||||||||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Interest rate swaps | $ | ( | ) | $ | $ | $ | Interest expense, net | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Foreign currency contracts | (Gain) on foreign currency exchange, net | |||||||||||||||||||||||||||||||||
Commodity contracts | ( | ) | ( | ) | Operating revenues, net | ( | ) | ( | ) | |||||||||||||||||||||||||
Total | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
(1) | Net of $ |
(2) |
As of September 30, 2019 | As of December 31, 2018 | ||||||||||||||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Commodity contracts | |||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||
Total derivative assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||
Total derivative liabilities | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||
Realized and unrealized gains (losses): | |||||||||||||||
Included in other comprehensive (loss) income | ( | ) | ( | ) | ( | ) | |||||||||
Included in operating revenues, net | ( | ) | |||||||||||||
Settlements | ( | ) | |||||||||||||
Ending balance | $ | $ | $ | $ |
(In thousands, except range) | Fair Value as of September 30, 2019 | |||||||||||||||
Transaction Type | Assets | Liabilities | Valuation Technique | Unobservable Inputs as of September 30, 2019 | ||||||||||||
Commodity contracts - power | $ | $ | Option model | Volatilities | ||||||||||||
Range | ||||||||||||||||
Discounted cash flow | Forward price (per MWh) | $ | - | $ |
Significant Unobservable Input | Position | Impact on Fair Value Measurement | ||
Increase (decrease) in forward price | Forward sale | Decrease (increase) | ||
Increase (decrease) in implied volatilities | Purchase option | Increase (decrease) |
As of September 30, 2019 | As of December 31, 2018 | |||||||||||||||
(In thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Long-term debt | $ | $ | $ | $ |
Nine Months Ended September 30, | ||||||
(In thousands) | 2019 | 2018 | ||||
Balance as of January 1 | ||||||
Issuance of Common Stock to affiliates1 | ||||||
Net shares issued under equity incentive plan | ||||||
Balance as of September 30 |
(1) | On June 11, 2018, the Company completed a private placement of |
Number of RSUs Outstanding | Weighted- Average Exercise Price | Aggregate Intrinsic Value (in thousands) | Weighted Average Remaining Contractual Life (in years) | ||||||||||
Balance as of January 1, 2019 | $ | ||||||||||||
Granted | |||||||||||||
Vested | ( | ) | |||||||||||
Forfeited | ( | ) | |||||||||||
Balance as of September 30, 2019 | $ | $ |
Distributions per Share | Declaration Date | Record Date | Payment Date | ||||||
2019: | |||||||||
First Quarter | $ | March 13, 2019 | March 24, 2019 | March 29, 2019 | |||||
Second Quarter | May 8, 2019 | June 3, 2019 | June 17, 2019 | ||||||
Third Quarter | August 8, 2019 | September 3, 2019 | September 17, 2019 | ||||||
2018: | |||||||||
First Quarter | $ | February 6, 2018 | February 28, 2018 | March 30, 2018 | |||||
Second Quarter | April 30, 2018 | June 1, 2018 | June 15, 2018 | ||||||
Third Quarter | August 13, 2018 | September 1, 2018 | September 15, 2018 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands, except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Basic and diluted (loss) earnings per share: | ||||||||||||||||
Net (loss) income attributable to Class A common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
Weighted average basic Class A shares outstanding1 | ||||||||||||||||
Weighted average diluted Class A shares outstanding2 | ||||||||||||||||
Basic and diluted (loss) earnings per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(1) | The weighted-average basic Class A shares outstanding for the nine months ended September 30, 2018 included |
(2) | The computation of diluted earnings per share of the Company’s Common Stock for the nine months ended September 30, 2019 excluded |
• | for each of the first four quarters following the closing date of the Merger contemplated by the Merger Agreement (the “Merger”), a fixed component of $ |
• | for each of the next four quarters, a fixed component of $ |
• | thereafter, a fixed component of $ |
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||
(In thousands) | Solar1 | Wind | Regulated Solar and Wind | Corporate | Total | Solar | Wind | Regulated Solar and Wind | Corporate | Total | ||||||||||||||||||||||||||||||
Operating revenues, net | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Depreciation, accretion and amortization expense | ||||||||||||||||||||||||||||||||||||||||
Other operating costs and expenses | ||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||||||||||||||||
Other non-operating expenses (income), net | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Income tax expense | ( | ) | ||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||
(In thousands) | Solar | Wind | Regulated Solar and Wind1 | Corporate | Total | Solar3 | Wind | Regulated Solar and Wind1 | Corporate | Total | ||||||||||||||||||||||||||||||
Operating revenues, net | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Depreciation, accretion and amortization expense | ||||||||||||||||||||||||||||||||||||||||
Impairment of renewable energy facilities | ||||||||||||||||||||||||||||||||||||||||
Other operating costs and expenses | ||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||||||||||||||||
Other non-operating (income) expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Income tax expense | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||||||||||||||||||
Total assets2,3 | $ | $ |
(1) | The Company’s Regulated Solar and Wind segment and wind operations in Portugal and Uruguay were added in the second quarter of 2018 upon acquiring a controlling interest in Saeta. See Note 4. Acquisitions for additional details. |
(2) | Total assets within the Solar reporting segment as of September 30, 2019 include $ |
(3) | Represents total assets as of September 30, 2019 and December 31, 2018, respectively. |
(In thousands) | Foreign Currency Translation Adjustments | Hedging Activities1 | Accumulated Other Comprehensive Income | |||||||||
Balance as of December 31, 2017 | $ | ( | ) | $ | $ | |||||||
Cumulative-effect adjustment (net of tax expense of $1,579)2 | ( | ) | ( | ) | ||||||||
Other comprehensive (loss) income: | ||||||||||||
Net unrealized (loss) gain arising during the period (net of zero tax impact) | ( | ) | ||||||||||
Reclassification of net realized gain into earnings (net of zero tax impact) | ( | ) | ( | ) | ||||||||
Other comprehensive (loss) income | ( | ) | ( | ) | ||||||||
Accumulated other comprehensive (loss) income | ( | ) | ||||||||||
Less: Other comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ||||||||
Balance as of September 30, 2018 | $ | ( | ) | $ | $ |
(In thousands) | Foreign Currency Translation Adjustments | Hedging Activities1 | Accumulated Other Comprehensive Income | |||||||||
Balance as of December 31, 2018 | $ | ( | ) | $ | $ | |||||||
Other comprehensive (loss) income: | ||||||||||||
Net unrealized gain (loss) arising during the period (net of zero and $2,506 tax benefit, respectively) | ( | ) | ( | ) | ||||||||
Reclassification of net realized gain into earnings (net of zero tax impact) | ( | ) | ( | ) | ||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | ||||||||
Accumulated other comprehensive income | ||||||||||||
Less: Other comprehensive income attributable to non-controlling interests | ||||||||||||
Balance as of September 30, 2019 | $ | $ | $ |
(1) | See Note 12. Derivatives for additional breakout of hedging gains and losses for interest rate swaps and commodity contracts in a cash flow hedge relationship and the foreign currency contracts designated as hedges of net investments in foreign operations. |
(2) | Represents the impact of the adoption of ASU No. 2017-12 as of January 1, 2018. |
Nine Months Ended September 30, | ||||||||
(In thousands) | 2019 | 2018 | ||||||
Balance as of January 1 | $ | $ | ||||||
Cumulative-effect adjustment1 | ( | ) | ||||||
Net loss | ( | ) | ||||||
Distributions | ( | ) | ( | ) | ||||
Repurchases of redeemable non-controlling interests, net2 | ( | ) | ||||||
Non-cash redemption of redeemable non-controlling interests | ||||||||
Balance as of September 30 | $ | $ |
(1) | Represents the effect from the adoption of ASU No. 2014-09 and ASU No. 2016-08 as of January 1, 2018. |
(2) | See below for additional details. |
Description | Facility Type | Nameplate Capacity (MW)1 | Number of Sites | Weighted Average Remaining Duration of PPA (Years)2 | ||||||||
Total Portfolio as of December 31, 2018 | 3,737.7 | 575 | 13 | |||||||||
Acquisition of TEG assets | Solar | 10.6 | 3 | 14 | ||||||||
Acquisition of WGL Portfolio3,4 | Solar | 317.5 | 4,360 | 17 | ||||||||
Total Portfolio as of September 30, 2019 | 4,065.8 | 4,938 | 13 |
(1) | Nameplate capacity represents the maximum generating capacity of a facility as expressed in direct current (“DC”) for all facilities within our Solar reportable segment and alternating current (“AC”) for all facilities within our Wind and Regulated Solar and Wind reportable segments. |
(2) | Represents the weighted-average remaining term of power purchase agreements (“PPAs”) and is calculated as of December 31, 2018 and September 30, 2019, respectively. |
(3) | On September 26, 2019 we acquired an approximately 320 MW distributed generation portfolio in the United States. This portfolio comprised 283 commercial and industrial sites with a total nameplate capacity of 287 MW, 4,068 sites of solar rooftop residential assets with a total nameplate capacity of 21 MW and 9 sites of fuel cells with a total nameplate capacity of 10 MW. |
(4) | In connection with the WGL Acquisition and as required by the purchase agreement, the ownership of Delayed Projects for which the Sellers have not yet received required third party consents or have not completed construction will be transferred to us once such third party consents are received or construction is completed, subject to certain terms and conditions. The Delayed Projects have an aggregate nameplate capacity of 34.8 MW. |
Description | Nameplate Capacity (MW)1 | Number of Sites | Weighted Average Remaining Duration of PPA (Years)2 | ||||||
Distributed Generation: | |||||||||
U.S. Solar3 | 709.5 | 762 | 14 | ||||||
U.S. Residential Rooftops4 | 21.2 | 4,068 | 14 | ||||||
U.S. Fuel Cells3,4 | 10.0 | 9 | 17 | ||||||
Canada Solar | 8.5 | 20 | 14 | ||||||
Total Distributed Generation | 749.2 | 4,859 | 15 | ||||||
Solar Utility: | |||||||||
U.S. | 498.6 | 20 | 18 | ||||||
Canada | 59.4 | 4 | 15 | ||||||
U.K. | 11.1 | 1 | 10 | ||||||
Chile | 101.6 | 1 | 14 | ||||||
Total Solar Utility | 670.7 | 26 | 17 | ||||||
Regulated Solar and Wind: | |||||||||
Spain | 792.4 | 24 | 13 | ||||||
Wind Utility: | |||||||||
U.S. | 1,536.4 | 17 | 10 | ||||||
Canada | 78.0 | 1 | 11 | ||||||
Portugal | 143.8 | 9 | 9 | ||||||
Uruguay | 95.3 | 2 | 18 | ||||||
Total Wind Utility | 1,853.5 | 29 | 11 | ||||||
Total Renewable Energy Facilities | 4,065.8 | 4,938 | 13 |
(1) | Nameplate capacity represents the maximum generating capacity of a facility as expressed in DC for all facilities within our Solar reportable segment and AC for all facilities within our Wind and Regulated Solar and Wind reportable segments. |
(2) | Represents the weighted-average term of remaining PPA and calculated as of September 30, 2019. |
(3) | Includes Delayed Projects with an aggregate nameplate capacity of 34.8 MW. See Note 4. Acquisitions to our unaudited condensed consolidated financial statements. |
(4) | Our residential solar rooftops and fuel cells projects were added to our portfolio on September 26. 2019 as part of the WGL Acquisition. |
Operating Metrics | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
(In GWh) | 2019 | 2018 | 2019 | 2018 | ||||||||
Solar segment | 532 | 528 | 1,448 | 1,468 | ||||||||
Wind segment | 1,048 | 1,051 | 4,076 | 3,891 | ||||||||
Regulated Solar and Wind segment1 | 483 | 488 | 1,388 | 578 | ||||||||
Total | 2,063 | 2,067 | 6,912 | 5,937 |
(1) | Our Regulated Solar and Wind segment was added upon the acquisition of a controlling interest in Saeta that was completed on June 12, 2018. See Note 4. Acquisitions to our unaudited condensed consolidated financial statements for additional details. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating revenues, net | $ | 253,808 | $ | 246,042 | $ | 734,506 | $ | 553,477 | ||||||||
Operating costs and expenses: | ||||||||||||||||
Cost of operations | 75,037 | 59,027 | 207,363 | 146,155 | ||||||||||||
General and administrative expenses | 15,397 | 21,334 | 60,616 | 65,483 | ||||||||||||
General and administrative expenses - affiliate | 7,764 | 3,432 | 19,087 | 10,929 | ||||||||||||
Acquisition costs | 963 | 1,655 | 1,438 | 7,612 | ||||||||||||
Acquisition costs - affiliate | — | 335 | — | 6,965 | ||||||||||||
Impairment of renewable energy facilities | — | — | — | 15,240 | ||||||||||||
Depreciation, accretion and amortization expense | 114,282 | 103,593 | 321,605 | 239,177 | ||||||||||||
Total operating costs and expenses | 213,443 | 189,376 | 610,109 | 491,561 | ||||||||||||
Operating income | 40,365 | 56,666 | 124,397 | 61,916 | ||||||||||||
Other expenses (income): | ||||||||||||||||
Interest expense, net | 89,393 | 72,416 | 246,721 | 176,862 | ||||||||||||
Loss (gain) on extinguishment of debt, net | 1,355 | — | (4,188 | ) | 1,480 | |||||||||||
Loss (gain) on foreign currency exchange, net | 10,975 | (3,070 | ) | (4,217 | ) | (4,257 | ) | |||||||||
Other (income) expenses, net | (557 | ) | 358 | (1,752 | ) | 1,390 | ||||||||||
Total other expenses, net | 101,166 | 69,704 | 236,564 | 175,475 | ||||||||||||
Loss before income tax expense | (60,801 | ) | (13,038 | ) | (112,167 | ) | (113,559 | ) | ||||||||
Income tax expense | 1,512 | 6,013 | 3,030 | 9,417 | ||||||||||||
Net loss | (62,313 | ) | (19,051 | ) | (115,197 | ) | (122,976 | ) | ||||||||
Less: Net (loss) income attributable to redeemable non-controlling interests | (7,341 | ) | 12,443 | (14,241 | ) | 15,101 | ||||||||||
Less: Net (loss) income attributable to non-controlling interests | (135 | ) | 2,096 | (33,897 | ) | (165,946 | ) | |||||||||
Net (loss) income attributable to Class A common stockholders | $ | (54,837 | ) | $ | (33,590 | ) | $ | (67,059 | ) | $ | 27,869 |
Three Months Ended September 30, | ||||||||||||
(In thousands, except for GWh sold) | 2019 | 2018 | Change | |||||||||
Energy: | ||||||||||||
Solar | $ | 81,512 | $ | 79,203 | $ | 2,309 | ||||||
Wind | 52,072 | 53,620 | (1,548 | ) | ||||||||
Regulated Solar and Wind | 83,579 | 79,950 | 3,629 | |||||||||
Incentives, including affiliates: | ||||||||||||
Solar | 20,142 | 15,680 | 4,462 | |||||||||
Wind | 2,435 | 3,343 | (908 | ) | ||||||||
Regulated Solar and Wind | 14,068 | 14,246 | (178 | ) | ||||||||
Total operating revenues, net | $ | 253,808 | $ | 246,042 | $ | 7,766 | ||||||
GWh sold: | 2019 | 2018 | Change | |||||||||
Solar | 532 | 528 | 4 | |||||||||
Wind | 1,048 | 1,051 | (3 | ) | ||||||||
Regulated Solar and Wind | 483 | 488 | (5 | ) | ||||||||
Total GWh sold | 2,063 | 2,067 | (4 | ) |
(In MW) | September 30, 2019 | December 31, 2018 | Change | ||||||
Solar | 1,420 | 1,092 | 328 | ||||||
Wind | 1,854 | 1,854 | — | ||||||
Regulated Solar and Wind | 792 | 792 | — | ||||||
Total nameplate capacity (MW) | 4,066 | 3,738 | 328 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
Cost of operations: | ||||||||||||
Solar | $ | 10,637 | $ | 9,775 | $ | 862 | ||||||
Wind | 37,423 | 27,684 | 9,739 | |||||||||
Regulated Solar and Wind | 26,977 | 21,568 | 5,409 | |||||||||
Total cost of operations | $ | 75,037 | $ | 59,027 | $ | 16,010 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
General and administrative expenses: | ||||||||||||
Solar | $ | (725 | ) | $ | 1,334 | $ | (2,059 | ) | ||||
Wind | 697 | 3,618 | (2,921 | ) | ||||||||
Regulated Solar and Wind | 1,108 | 3,403 | (2,295 | ) | ||||||||
Corporate | 14,317 | 12,979 | 1,338 | |||||||||
Total general and administrative expenses | $ | 15,397 | $ | 21,334 | $ | (5,937 | ) | |||||
General and administrative expenses - affiliate: | ||||||||||||
Corporate | $ | 7,764 | $ | 3,432 | $ | 4,332 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
Corporate-level | $ | 28,798 | $ | 32,425 | $ | (3,627 | ) | |||||
Non-recourse: | ||||||||||||
Solar | 17,302 | 15,992 | 1,310 | |||||||||
Wind | 16,220 | 14,367 | 1,853 | |||||||||
Regulated Solar and Wind | 27,073 | 9,632 | 17,441 | |||||||||
Total interest expense, net | $ | 89,393 | $ | 72,416 | $ | 16,977 |
Nine Months Ended September 30, | |||||||||
(In thousands, except for GWh sold and MW data) | 2019 | 2018 | Change | ||||||
Energy: | |||||||||
Solar | 186,528 | 187,359 | (831 | ) | |||||
Wind | 217,498 | 186,807 | 30,691 | ||||||
Regulated Solar and Wind | 234,629 | 98,236 | 136,393 | ||||||
Incentives, including affiliates: | |||||||||
Solar | 55,065 | 50,568 | 4,497 | ||||||
Wind | 6,484 | 13,261 | (6,777 | ) | |||||
Regulated Solar and Wind | 34,302 | 17,246 | 17,056 | ||||||
Total operating revenues, net | 734,506 | 553,477 | 181,029 | ||||||
GWh sold: | 2019 | 2018 | Change | ||||||
Solar | 1,448 | 1,468 | (20 | ) | |||||
Wind | 4,076 | 3,891 | 185 | ||||||
Regulated Solar and Wind | 1,388 | 578 | 810 | ||||||
Total GWh sold | 6,912 | 5,937 | 975 |
(In MW) | September 30, 2019 | December 31, 2018 | Change | ||||||
Solar | 1,420 | 1,092 | 328 | ||||||
Wind | 1,854 | 1,854 | — | ||||||
Regulated Solar and Wind | 792 | 792 | — | ||||||
Total nameplate capacity (MW) | 4,066 | 3,738 | 328 |
Nine Months Ended September 30, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
Cost of operations: | ||||||||||||
Solar | $ | 38,797 | $ | 36,259 | $ | 2,538 | ||||||
Wind | 107,246 | 83,963 | 23,283 | |||||||||
Regulated Solar and Wind | 61,320 | 25,933 | 35,387 | |||||||||
Total cost of operations | $ | 207,363 | $ | 146,155 | $ | 61,208 |
Nine Months Ended September 30, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
General and administrative expenses: | ||||||||||||
Solar | $ | 2,477 | $ | 3,533 | $ | (1,056 | ) | |||||
Wind | 6,339 | 5,871 | 468 | |||||||||
Regulated Solar and Wind | 5,471 | 4,079 | 1,392 | |||||||||
Corporate | 46,329 | 52,000 | (5,671 | ) | ||||||||
Total general and administrative expenses | $ | 60,616 | $ | 65,483 | $ | (4,867 | ) | |||||
General and administrative expenses - affiliate: | ||||||||||||
Corporate | $ | 19,087 | $ | 10,929 | $ | 8,158 |
Nine Months Ended September 30, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
Corporate-level | $ | 89,316 | $ | 89,353 | $ | (37 | ) | |||||
Non-recourse: | ||||||||||||
Solar | 46,693 | 46,248 | 445 | |||||||||
Wind | 45,173 | 36,382 | 8,791 | |||||||||
Regulated Solar and Wind | 65,539 | 4,879 | 60,660 | |||||||||
Total interest expense, net | $ | 246,721 | $ | 176,862 | $ | 69,859 |
(In thousands) | September 30, 2019 | December 31, 2018 | ||||||
Revolving Credit Facilities1 | $ | 356,000 | $ | 377,000 | ||||
Senior Notes2 | 1,500,000 | 1,500,000 | ||||||
Term Loan3 | 343,875 | 346,500 | ||||||
Non-recourse long-term debt, including current portion4 | 4,094,846 | 3,573,436 | ||||||
Long-term indebtedness, including current portion5 | $ | 6,294,721 | $ | 5,796,936 | ||||
Total stockholders’ equity and redeemable non-controlling interests | 2,488,428 | 2,768,417 | ||||||
Total capitalization | $ | 8,783,149 | $ | 8,565,353 | ||||
Debt to total capitalization | 72 | % | 68 | % |
(1) | Represents the amounts drawn under our Revolver, and does not include the $112.6 million of outstanding project-level letters of credit. Subsequent to quarter end, on October 8, 2019, we entered into an amendment agreement to (i) increase aggregate the lending commitments from up to $600 million to up to $800 million (ii) extend the maturity date by one year to October 5, 2024 and (iii) provide for the ability to further increase the lending commitments by an additional $150 million. |
(2) | Represents corporate senior notes. Subsequent to quarter end, on October 16, 2019, TerraForm Power Operating, LLC issued 700.0 million of 4.75% senior notes due on January 15, 2030 at an offering price of 100% of the principal amount. The proceeds from these notes were used to redeem, in full, our existing Senior Notes due 2025 and Term Loan. |
(3) | Represents senior secured term loan facility. As discussed above, the balance was redeemed in full on October 16, 2019. |
(4) | Represents asset-specific, non-recourse borrowings and financing lease obligations secured against the assets of certain project companies. |
(5) | Represents the total principal due for long-term debt and financing lease obligations, including the current portion, which excludes $34.3 million and $35.1 million of net unamortized debt premiums, discounts and deferred financing costs as of September 30, 2019 and December 31, 2018, respectively. |
(In thousands) | September 30, 2019 | December 31, 2018 | ||||||
Unrestricted corporate cash | $ | 19,383 | $ | 52,506 | ||||
Project-level distributable cash | 31,496 | 18,414 | ||||||
Cash available to corporate | 50,879 | 70,920 | ||||||
Credit facilities: | ||||||||
Committed revolving credit facility1 | 600,000 | 600,000 | ||||||
Drawn portion of revolving credit facilities2 | (356,000 | ) | (377,000 | ) | ||||
Revolving line of credit commitments | (112,554 | ) | (99,487 | ) | ||||
Undrawn portion of Sponsor Line3 | 500,000 | 500,000 | ||||||
Available portion of credit facilities | 631,446 | 623,513 | ||||||
Corporate liquidity | $ | 682,325 | $ | 694,433 | ||||
Other project-level unrestricted cash | 188,418 | 177,604 | ||||||
Project-level restricted cash4 | 104,934 | 144,285 | ||||||
Available capital | $ | 975,677 | $ | 1,016,322 |
(1) | Subsequent to quarter end, on October 8, 2019, we entered into an amendment agreement to (i) increase aggregate lending commitments limit from $600.0 million to $800.0 million, (ii) extend the maturity date by one year to October 5, 2024 and (iii) provide for the ability to further increase the lending commitments by an additional $150.0 million. |
(2) | As of October 31, 2019, we repaid most of the outstanding balance on the Revolver. |
(3) | Represents a $500.0 million secured revolving credit facility we entered into pursuant to a credit agreement (the “Sponsor Line”) with Brookfield and one of its affiliates that may only be used to fund all or a portion of certain funded acquisitions or growth capital expenditures. |
(4) | Represents short-term and long-term restricted cash and includes $2.2 million and $2.3 million of cash trapped at our project-level subsidiaries as of September 30, 2019 and December 31, 2018, respectively, which is presented as current restricted cash as the cash balances were subject to distribution restrictions related to debt defaults that existed as of the date of the balance sheet (see Note 2. Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements for additional details). |
(In thousands) | Remainder of 2019 | 20202 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
Maturities of long-term debt1 | $ | 96,852 | $ | 732,185 | $ | 269,528 | $ | 770,751 | $ | 1,220,271 | $ | 3,205,134 | $ | 6,294,721 |
(1) | Represents the contractual principal payment due dates for our long-term debt and does not reflect the reclassification of $387.8 million of long-term debt to current as a result of debt defaults under certain of our non-recourse financing arrangements. See Note 10. Long-term Debt to our unaudited condensed consolidated financial statements for additional details. |
(2) | Includes the $475.0 million Bridge Facility we entered into on September 25, 2019, which matures on September 23, 2020. We have a one-year extension option and intend to complete a refinancing of the balance on a long-term basis prior to maturity. The balance, net of unamortized deferred financing costs, is included within non-current liabilities in the unaudited condensed consolidated balance sheets. The balance, net of unamortized deferred financing costs, is included within non-current liabilities in the unaudited condensed consolidated balance sheets. See Note 10. Long-term Debt to our unaudited condensed consolidated financial statements for additional details. |
Distributions per Share | Declaration Date | Record Date | Payment Date | ||||||
2019: | |||||||||
First Quarter | $ | 0.2014 | March 13, 2019 | March 24, 2019 | March 29, 2019 | ||||
Second Quarter | $ | 0.2014 | May 8, 2019 | June 3, 2019 | June 17, 2019 | ||||
Third Quarter | $ | 0.2014 | August 8, 2019 | September 3, 2019 | September 17, 2019 | ||||
2018: | |||||||||
First Quarter | $ | 0.1900 | February 6, 2018 | February 28, 2018 | March 30, 2018 | ||||
Second Quarter | $ | 0.1900 | April 30, 2018 | June 1, 2018 | June 15, 2018 | ||||
Third Quarter | $ | 0.1900 | August 13, 2018 | September 1, 2018 | September 15, 2018 |
• | first, to the Company in an amount equal to the Company’s outlays and expenses for such quarter; |
• | second, to holders of Class A units, until an amount has been distributed to such holders of Class A units that would result, after taking account of all taxes payable by the Company in respect of the taxable income attributable to such distribution, in a distribution to holders of shares of Common Stock of $0.93 per share (subject to adjustment for distributions, combinations or subdivisions of shares of Common Stock) if such amount were distributed to all holders of shares of Common Stock; |
• | third, 15% to the holders of the IDRs and 85% to the holders of Class A units until a further amount has been distributed to holders of Class A units in such quarter that would result, after taking account of all taxes payable by the Company in respect of the taxable income attributable to such distribution, in a distribution to holders of shares of Common Stock of an additional $0.12 per share (subject to adjustment for distributions, combinations or subdivisions of shares of Common Stock) if such amount were distributed to all holders of shares of Common Stock; and |
• | thereafter, 75% to holders of Class A units and 25% to holders of the IDRs. |
(In thousands) | Nine Months Ended September 30, | |||||||||||
2019 | 2018 | Change | ||||||||||
Net cash provided by operating activities | $ | 268,203 | $ | 151,027 | $ | 117,176 | ||||||
Net cash used in by investing activities | (730,883 | ) | (874,876 | ) | 143,993 | |||||||
Net cash provided by financing activities | 423,516 | 1,012,807 | (589,291 | ) |
• | We continued to enhance the capabilities of the new consolidation and treasury related financial systems deployed earlier in the year, each expected to increase the efficiency of processing transactions, produce accurate and timely information to address various operational and compliance needs, and reduce our reliance on manual controls and end-user computing spreadsheets; |
• | We have commenced the implementation of an automated account reconciliation and task management financial system; |
• | We completed the implementation of a lease accounting software application, which is expected to produce accurate and timely information following the Company’s adoption of ASC No. 2018-11, Leases (Topic 842); |
• | We continue to enhance the review controls over tax processes and have commenced the implementation of a tax basis system to reduce reliance on manual controls and end-user computing spreadsheets related to year-end tax controls; |
• | We are continuing to enhance revenue controls that have been implemented, including enhanced capabilities of a revenue application to further support invoicing and the sourcing of certain revenue data to reduce the reliance on manual controls; we have also commenced implementation of “smart” automation processes to further reduce reliance on manual controls; and |
• | We began to enhance the review controls over the application of U.S. GAAP and accounting measurements for significant accounts, transactions and related financial statement disclosures by adding incremental resources and providing specialized and technical training to strengthen our skills to support our controllership function. |
• | the inability of the Sellers to obtain certain transfer consents from third parties with respect to certain projects under the Portfolio; |
• | failure to successfully manage relationships with existing Portfolio counterparties; |
• | failure to quickly and effectively leverage the increased scale of the combined company; |
• | the loss of key portfolio employees; and |
• | potential difficulties integrating and harmonizing financial reporting systems and establishing appropriate accounting controls, reporting procedures and regulatory compliance procedures. |
Exhibit Number | Description | |
1.1 | ||
3.1* | ||
4.1 | ||
4.2 | ||
10.1 | ||
10.2 | ||
10.3 | ||
31.1* | ||
31.2* | ||
32** | ||
101 | The following materials from the TerraForm Power, Inc. Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018; (iii) Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018; (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018; and (vi) notes to condensed consolidated financial statements | |
104 | Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101 | |
TERRAFORM POWER, INC. | ||||||
By: | /s/ MICHAEL TEBBUTT | |||||
Name: | Michael Tebbutt | |||||
Title: | Chief Financial Officer (principal financial officer and principal accounting officer) | |||||
Date: | November 12, 2019 |
1 | I have reviewed this quarterly report on Form 10-Q of TerraForm Power, Inc.; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision; to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ JOHN STINEBAUGH |
Name: | John Stinebaugh |
Title: | Chief Executive Officer |
(Principal executive officer) |
1 | I have reviewed this quarterly report on Form 10-Q of TerraForm Power, Inc.; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision; to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ MICHAEL TEBBUTT |
Name: | Michael Tebbutt |
Title: | Chief Financial Officer |
(Principal financial officer) |
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ JOHN STINEBAUGH |
Name: | John Stinebaugh |
Title: | Chief Executive Officer |
(Principal executive officer) |
By: | /s/ MICHAEL TEBBUTT |
Name: | Michael Tebbutt |
Title: | Chief Financial Officer |
(Principal financial officer) |
Related Parties - Brookfield Master Services Agreement (Narrative) (Details) - Affiliated Entity - Brookfield MSA - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | |||||
Base management fee | $ 2,500,000 | $ 2,500,000 | |||
Management fee as related to market capitalization | 0.3125% | ||||
Base management fee maximum, year two | 3,000,000.0 | $ 3,000,000.0 | |||
Base management fee, thereafter | 3,750,000 | $ 3,750,000 | |||
Management fee, share price multiplier (in dollars per share) | $ 9.52 | ||||
Charges within general and administrative expenses - affiliate | 7,500,000 | $ 3,600,000 | $ 18,300,000 | $ 10,500,000 | |
Balance payable | $ 7,500,000 | $ 7,500,000 | $ 4,200,000 |
Fair Value of Financial Instruments - Narrative (Details) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Senior Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Fair value as a percentage of face value | 102.40% | 93.50% |
Senior Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Fair value as a percentage of face value | 104.80% | 89.80% |
Senior Notes due 2028 | ||
Debt Instrument [Line Items] | ||
Fair value as a percentage of face value | 106.10% | 102.50% |
Income Taxes - Narrative (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Income Tax Disclosure [Abstract] | ||||
Statutory tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
Derivatives - Gains and Losses on Derivatives Not Designated As Hedges (Details) - Derivatives not designated as hedging instruments - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Interest expense, net | Interest rate swaps | ||||
Derivative [Line Items] | ||||
Loss (gain) on derivatives | $ 20,911 | $ 4,737 | $ 50,189 | $ (3,252) |
Loss (gain) on foreign currency exchange, net | Foreign currency contracts | ||||
Derivative [Line Items] | ||||
Loss (gain) on derivatives | (19,667) | (4,348) | (39,596) | (16,914) |
Operating revenues, net | Commodity contracts | ||||
Derivative [Line Items] | ||||
Loss (gain) on derivatives | $ 307 | $ (3,880) | $ (13,311) | $ (21,374) |
Stockholders' Equity - Cash Distributions (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||||||
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Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Equity [Abstract] | ||||||||
Distributions per Share (in dollars per share) | $ 0.2014 | $ 0.2014 | $ 0.2014 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.6042 | $ 0.57 |
Renewable Energy Facilities - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 84,100,000 | $ 79,200,000 | $ 240,000,000.0 | $ 194,200,000 |
Impairment charge | $ 0 | $ 0 | $ 0 | 15,240,000 |
REC Sales Agreement | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charge | $ 15,200,000 |
Acquisitions - Acquisition Cost (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Business Acquisition [Line Items] | ||||
Acquisition costs incurred | $ 1,000,000.0 | $ 1,700,000 | $ 1,400,000 | $ 7,600,000 |
Acquisition costs related to affiliates | $ 0 | $ 300,000 | $ 0 | $ 7,000,000.0 |
Cash and Cash Equivalents (Tables) |
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Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total of the same such amounts shown in the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2019:
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Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total of the same such amounts shown in the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2019:
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Variable Interest Entities (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Classification of Consolidated VIE's Assets and Liabilities | The carrying amounts and classification of the consolidated assets and liabilities of the VIEs included in the Company’s unaudited condensed consolidated balance sheets were as follows:
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Intangible Assets, Net and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net and Goodwill | INTANGIBLE ASSETS, NET AND GOODWILL The following table presents the gross carrying amount, accumulated amortization and net book value of intangibles as of September 30, 2019:
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The following table presents the gross carrying amount, accumulated amortization and net book value of intangibles as of December 31, 2018:
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Amortization expense related to concessions and licensing contracts is reflected in the unaudited condensed consolidated statements of operations within depreciation, accretion and amortization expense. During the three and nine months ended September 30, 2019, amortization expense related to concessions and licensing contacts was $16.9 million and $50.1 million, respectively. During the three and nine months ended September 30, 2018, amortization expense related to concessions and licensing contracts was $13.8 million and $16.7 million, respectively. Amortization expense related to favorable rate revenue contracts is reflected in the unaudited condensed consolidated statements of operations as a reduction of operating revenues, net. Amortization related to unfavorable rate revenue contracts is reflected in the unaudited condensed consolidated statements of operations as an increase to operating revenues, net. During the three and nine months ended September 30, 2019, net amortization expense related to favorable and unfavorable rate revenue contracts resulted in a reduction of operating revenues, net of $9.8 million and $28.6 million, respectively, compared to a $9.9 million and $29.5 million reduction of operating revenues, net for the same periods in 2018. Amortization expense related to the in-place value of market rate revenue contracts is reflected in the unaudited condensed consolidated statements of operations within depreciation, accretion and amortization expense. During the three and nine months ended September 30, 2019, amortization expense related to the in-place value of market rate revenue contracts was $6.8 million and $19.7 million, respectively, compared to $4.7 million and $21.6 million for the same periods in the prior year. Goodwill Goodwill represents the excess of the consideration transferred and fair value of the non-controlling interests over the fair values of assets acquired and liabilities assumed from business combinations, and reflects the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill balance is not deductible for income tax purposes. The following table presents the activity of the goodwill balance for the nine months ended September 30, 2019 and the year ended December 31, 2018:
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See Note 4. Acquisitions for discussion of goodwill related to the Saeta acquisition.
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS 2019 Acquisitions (i) WGL Acquisition On September 26, 2019, TerraForm Arcadia Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“TerraForm Arcadia”), completed the acquisition of an approximately 320 megawatt (“MW”) distributed generation portfolio of renewable energy facilities in the United States from subsidiaries of AltaGas Ltd., a Canadian corporation (“AltaGas”), for a purchase price of $720.0 million, plus $15.1 million for working capital. The acquisition was pursuant to a membership interest purchase agreement (the “Purchase Agreement”) dated July 19, 2019, entered into by TerraForm Arcadia, WGL Energy Systems, Inc., a Delaware corporation (“WGL”), and WGSW, Inc., a Delaware corporation (“WGSW”, and together with WGL, the “Sellers”), both subsidiaries of AltaGas (the “WGL Acquisition”). Pursuant to the Purchase Agreement, the ownership of certain projects for which the Sellers have not yet received the required third party consents or have not completed construction (the “Delayed Projects”) will be transferred to the Company once such third party consents are received or construction is completed, subject to certain terms and conditions. The Delayed Projects represent 34.8 MW of the combined nameplate capacity of the acquired renewable energy facilities. The purchase price allocated to the Delayed Projects based on the Purchase Agreement was $114.2 million and is presented as Deposit on acquisitions in the unaudited condensed consolidated balance sheets. In the event that the title to certain Delayed Projects is not transferred to the Company within a certain period of time, the Company is entitled to a full refund of the value of these projects based on the Purchase Agreement. As discussed in Note 21. Subsequent Events, the title to 43 Delayed Projects with a purchase value of approximately $68.8 million and a combined nameplate capacity of 18.0 MW was transferred to the Company on October 31, 2019. The remaining balance of the Delayed Projects as of the date of this Quarterly Report was approximately $45.4 million. The Company funded the purchase price and the related initial costs of the WGL Acquisition with the net proceeds of $475.0 million Bridge Facility and the remainder from draws on the Revolver. See Note 10. Long-Term Debt for definitions and additional details. The Company accounted for the WGL Acquisition under the acquisition method of accounting for business combinations. The final accounting for the WGL Acquisition has not been completed since the evaluation necessary to assess the fair values of acquired assets and assumed liabilities is still in process. The additional information needed by the Company to finalize the measurement of these provisional amounts include the completion of the transfer of the Delayed Projects and the assessment of the incremental borrowing rate for operating leases. The provisional amounts for this business combination are subject to revision until these evaluations are completed. The preliminary allocation of the acquisition-date fair values of assets, liabilities and non-controlling interests pertaining to this business combination as of September 30, 2019 were as follows:
———
The acquired non-financial assets primarily represent an estimate of the fair value of the acquired renewable energy facilities and intangible assets from PPAs using the cost and income approach. Key inputs used to estimate fair value included forecasted power pricing, operational data, asset useful lives and a discount rate factor reflecting current market conditions at the time of the acquisition. These significant inputs are not observable in the market and thus represent Level 3 measurements, as defined in Note 13. Fair Value of Financial Instruments. Refer below for additional disclosures related to the acquired finite-lived intangible assets. Intangibles at Acquisition Date The following table summarizes the estimated fair values and the weighted average amortization periods of the acquired intangible assets and assumed intangible liabilities as of the acquisition date. The Company attributed the intangible asset values to favorable rate revenue contracts and PPAs in-place from renewable energy facilities and the intangible liabilities to unfavorable rate revenue contracts.
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Unaudited Pro Forma Supplementary Data The unaudited pro forma supplementary data presented in the table below gives effect to the WGL Acquisition, as if the transaction had occurred on January 1, 2018. The pro forma net loss includes interest expense related to incremental borrowings used to finance the transaction and adjustments to depreciation, accretion and amortization expense for the valuation of renewable energy facilities and intangible assets, and excludes the impact of acquisition costs disclosed below. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.
(ii) Acquisition of 10.6 MW Distributed Generation Assets During the nine months ended September 30, 2019, the Company acquired three distributed generation facilities located in the U.S. with a combined nameplate capacity of 10.6 MW from third parties for a purchase price of $18.3 million, net of cash acquired. The facilities are contracted under long-term PPAs with municipal offtakers. This transaction was accounted for as an acquisition of assets. As part of this acquisition, the Company is committed to purchase an additional facility with a nameplate capacity of 4.5 MW for a purchase price of $6.0 million, which is expected to be completed in December 2019. 2018 Acquisitions (i) Saeta Acquisition On February 7, 2018, the Company announced that it intended to launch a voluntary tender offer (the “Tender Offer”) to acquire 100% of the outstanding shares of Saeta Yield S.A.U. (“Saeta”), a Spanish renewable power company with then 1,028 MW of wind and solar facilities (approximately 250 MW of solar and 778 MW of wind) located primarily in Spain. The Tender Offer was for €12.20 in cash per share of Saeta. On June 8, 2018, the Company announced that Spain’s National Securities Market Commission confirmed an over 95% acceptance of shares of Saeta in the Tender Offer (the “Tendered Shares”). On June 12, 2018, the Company completed the acquisition of the Tendered Shares for total aggregate consideration of $1.12 billion and the assumption of $1.91 billion of project-level debt. Having acquired 95.28% of the shares of Saeta, the Company then pursued a statutory squeeze out procedure under Spanish law to procure the remaining 4.72% of the shares of Saeta on July 2, 2018 for $54.6 million. The Company funded the $1.12 billion purchase price of the Tendered Shares with $650.0 million of proceeds from a private placement of Common Stock to Orion Holdings and BBHC Orion Holdco L.P. (both affiliates of Brookfield), along with approximately $471.0 million from its existing liquidity, including (i) the proceeds of a $30.0 million draw on its Sponsor Line (as defined in Note 17. Related Parties), (ii) $359.0 million as part of a draw on the Company’s Revolver (as defined in Note 10. Long-term Debt), and (iii) approximately $82.0 million of cash on hand. The Company funded the purchase of the remaining 4.72% non-controlling interest in Saeta using $54.6 million of the total proceeds from an additional draw on the Sponsor Line. The Company accounted for the acquisition of Saeta under the acquisition method of accounting for business combinations. The purchase accounting for the Saeta acquisition, including assignment of goodwill to reporting units, was finalized as of June 30, 2019. The final allocation of the acquisition-date fair values of assets, liabilities and redeemable non-controlling interests pertaining to this business combination as of June 30, 2019, was as follows:
———
The acquired non-financial assets primarily represented the fair value of acquired renewable energy facilities and intangible assets from concession and licensing contracts using the cost and income approach. Key inputs used to estimate fair value included forecasted power pricing, operational data, asset useful lives, and a discount rate factor reflecting current market conditions at the time of the acquisition. These significant inputs were not observable in the market and thus represent Level 3 measurements (as defined in Note 13. Fair Value of Financial Instruments). Refer below for additional disclosures related to the acquired finite-lived intangible assets. The results of operations of Saeta are included in the Company’s consolidated results since the date of acquisition. The operating revenues and net income of Saeta reflected in the unaudited condensed consolidated statements of operations were $113.1 million and $7.6 million, respectively, for the three months ended September 30, 2019, and $318.4 million and $33.7 million, respectively, for the nine months ended September 30, 2019. Unaudited Pro Forma Supplementary Data The unaudited pro forma supplementary data presented in the table below gives effect to the Saeta acquisition, as if the transaction had occurred on January 1, 2018. The pro forma net loss includes interest expense related to incremental borrowings used to finance the transaction and adjustments to depreciation and amortization expense for the valuation of renewable energy facilities and intangible assets. The pro forma net loss for the nine months ended September 30, 2018, excludes the impact of acquisition related costs disclosed below. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.
Intangibles at Acquisition Date The following table summarizes the estimated fair value and weighted average amortization period of the acquired intangible assets as of the acquisition date for Saeta. The Company attributed intangible asset value to concessions and licensing agreements in-place from solar and wind facilities. These intangible assets are amortized on a straight-line basis over the estimated remaining useful lives of the facilities from the Company’s acquisition date.
(ii) Acquisition of 6.1 MW Distributed Generation Portfolio During the nine months ended September 30, 2018, the Company acquired six distributed generation facilities located in the U.S. with a combined nameplate capacity of 6.1 MW from third parties for a purchase price of $4.1 million, net of cash acquired. The facilities are contracted under long-term PPAs with municipal offtakers. This transaction was accounted for as an acquisition of assets. Acquisition Costs Acquisition costs, which primarily consisted of professional fees for banking, legal and accounting services, were $1.0 million for the three months ended September 30, 2019, compared to $1.7 million in the same period in 2018, and $1.4 million for the nine months ended September 30, 2019, compared to $7.6 million in the same period in 2018. Acquisition costs related to affiliates for the three and nine months ended September 30, 2018 were $0.3 million and $7.0 million, respectively, and are reflected within Acquisition costs - affiliates in the unaudited consolidated condensed statements of operations. No acquisition costs related to affiliates were incurred for the three and nine months ended September 30, 2019.
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | DERIVATIVES As part of its risk management strategy, the Company has entered into derivative instruments which include interest rate swaps, foreign currency contracts and commodity contracts to mitigate interest rate, foreign currency and commodity price exposures. If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, Derivatives and Hedging, the Company designates its derivative instruments as either cash flow hedges or net investment hedges. The Company enters into interest rate swap agreements in order to hedge the variability of the expected future cash interest payments. Foreign currency contracts are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities. The objective of these practices is to minimize the impact of foreign currency fluctuations on operating results. The Company also enters into commodity contracts to hedge price variability inherent in energy sales arrangements. The objectives of the commodity contracts are to minimize the impact of variability in spot energy prices and stabilize estimated revenue streams. The Company does not use derivative instruments for trading or speculative purposes. As of September 30, 2019 and December 31, 2018, the fair values of the following derivative instruments were included in the respective balance sheet captions indicated below:
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As of September 30, 2019 and December 31, 2018, the Company had posted letters of credit in the amount of $15.0 million, as collateral related to certain commodity contracts. Certain derivative contracts contain provisions providing the counterparties a lien on specific assets as collateral. There was no cash collateral received or pledged as of September 30, 2019 and December 31, 2018 related to the Company’s derivative transactions. The Company is subject to credit risk related to its derivatives to the extent the hedge counterparties may be unable to meet the terms of the contractual arrangements. The maximum exposure to loss due to credit risk if counterparties fail completely to perform according to the terms of the contracts would generally equal the fair value of derivative assets presented in the above table. The Company seeks to mitigate credit risk by transacting with a group of creditworthy financial institutions and through the use of master netting arrangements. The Company elected to present all derivative assets and liabilities on a net basis on the balance sheet as a right to set-off exists. The Company enters into International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements with its counterparties. An ISDA Master Agreement is an agreement that can govern multiple derivative transactions between two counterparties that typically provides for the net settlement of all, or a specified group, of these derivative transactions through a single payment, and in a single currency, as applicable. A right to set-off typically exists when the Company has a legally enforceable ISDA Master Agreement. No amounts were netted for commodity contracts as of September 30, 2019 or December 31, 2018, as each of the commodity contracts were in a gain position. The following table presents the notional amounts of derivative instruments as of September 30, 2019 and December 31, 2018:
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Gains and losses on derivatives not designated as hedging instruments for the three and nine months ended September 30, 2019 and 2018 consisted of the following:
Gains and losses recognized related to interest rate swaps, foreign currency contracts and commodity derivative contracts designated as hedging instruments for the three and nine months ended September 30, 2019 and 2018 consisted of the following:
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Derivatives Designated as Hedging Instruments Interest Rate Swaps The Company has interest rate swap agreements to hedge certain variable rate non-recourse debt and its Term Loan. These interest rate swaps qualify for hedge accounting and were designated as cash flow hedges. Under the interest rate swap agreements, the Company pays a fixed rate and the counterparties to the agreements pay a variable interest rate. The change in the fair value of the components included in the effectiveness assessment of these derivatives is initially reported in AOCI and subsequently reclassified to earnings in the periods when the hedged transactions affect earnings (the payment of interest). The amounts deferred in AOCI and reclassified into earnings during the three and nine months ended September 30, 2019 and 2018 related to these interest rate swaps are provided in the tables above. The loss expected to be reclassified into earnings over the next twelve months is approximately $5.2 million. The maximum term of outstanding interest rate swaps designated as hedging instruments is 20 years. Foreign Currency Forward Contracts The Company uses foreign currency forward contracts to hedge portions of its net investment positions in certain subsidiaries with Euro (“€”) and Canadian dollar (“C$”) functional currencies and to manage its foreign exchange risk. For instruments that are designated and qualify as hedges of net investment in foreign operations, the effective portion of the net gains or losses attributable to changes in exchange rates are recorded in foreign currency translation adjustments within AOCI. The recognition in earnings of amounts previously recorded in AOCI is limited to circumstances such as complete or substantial liquidation of the net investment in the hedged foreign operation. Cash flows from derivative instruments designated as net investment hedges are classified as investing activities in the unaudited consolidated condensed statements of cash flows. As of September 30, 2019, the total notional amount of foreign currency forward contracts designated as net investment hedges was €200 million and approximately C$94.1 million. The maturity dates of these derivative instruments designated as net investment hedges range from 3 to 18 months. As of December 31, 2018, the total notional amount of foreign currency forward contracts designated as net investment hedges was €320 million and C$81.6 million. The maturity dates of these derivative instruments designated as net investment hedges range from 3 months to 2 years. Commodity Contracts The Company has two long-dated physically delivered commodity contracts that hedge variability in cash flows associated with the sales of power from certain wind renewable energy facilities located in Texas. One of these commodity contract qualifies for hedge accounting and is designated as a cash flow hedge. The change in the fair value of the components included in the effectiveness assessment of this derivative is initially reported in AOCI and subsequently reclassified to earnings in the periods when the hedged transactions affect earnings (the sale of electricity). The amounts deferred in AOCI and reclassified into earnings during the three and nine months ended September 30, 2019 and 2018 related to this commodity contract are provided in the tables above. The gain expected to be reclassified into earnings over the next twelve months is approximately $2.4 million. The maximum term of the outstanding commodity contract designated as a hedging instrument is 8 years. Derivatives Not Designated as Hedging Instruments Interest Rate Swaps The Company has interest rate swap agreements that economically hedge the cash flows for non-recourse debt. These interest rate swaps pay a fixed rate and the counterparties to the agreements pay a variable interest rate. The changes in fair value are recorded in interest expense, net in the unaudited condensed consolidated statements of operations as these derivatives are not accounted for under hedge accounting. Foreign Currency Contracts The Company has foreign currency forward and option contracts that economically hedge its exposure to foreign currency fluctuations. As these hedges are not accounted for under hedge accounting, the changes in fair value are recorded in loss (gain) on foreign currency exchange, net in the unaudited condensed consolidated statements of operations. Commodity Contracts |
Non-controlling Interests |
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Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling Interests | NON-CONTROLLING INTERESTS Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company and are reported as a component of equity in the unaudited condensed consolidated balance sheets. Non-controlling interests in subsidiaries that are redeemable either at the option of the holder or at fixed and determinable prices at certain dates in the future are classified as redeemable non-controlling interests in subsidiaries between liabilities and stockholders’ equity in the unaudited condensed consolidated balance sheets. Redeemable non-controlling interests that are currently redeemable or redeemable after the passage of time are adjusted to their redemption value as changes occur. However, the non-controlling interests balance cannot be less than the estimated redemption value. The following table presents the activity of the redeemable non-controlling interests balance for the nine months ended September 30, 2019 and 2018:
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Repurchases of non-controlling interests During the nine months ended September 30, 2019, the Company purchased the tax equity investors’ interests in certain distributed generation projects in the United States for a combined consideration of $3.9 million, which resulted in increasing the Company’s ownership interest in the related projects to 100%. The difference between the consideration paid and the carrying amounts of the non-controlling interests was recorded as an adjustment to additional paid-in capital within Purchase of (redeemable) non-controlling interests in renewable energy facilities in the unaudited condensed consolidated statement of stockholders’ equity. Non-controlling Interests - Impact of the Tax Cuts and Jobs Act Enactment On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which enacted major changes to the U.S. tax code, including a reduction in the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Since the 21% rate enacted in December 2017 went into effect on January 1, 2018, the hypothetical liquidation at book value (“HLBV”) methodology utilized by the Company to determine the value of its non-controlling interests began to use the new rate on that date. The HLBV method is a point in time estimate that utilizes inputs and assumptions in effect at each balance sheet date based on the liquidation provisions of the respective operating partnership agreements. For the nine months ended September 30, 2018, $151.2 million of the decline in the non-controlling interests balance and a corresponding allocation of net loss attributable to non-controlling interests was driven by this reduction in the tax rate used in the HLBV methodology used by the Company. In the calculation of the carrying values through HLBV, the Company allocated significantly lower amounts to certain non-controlling interests (i.e., tax equity investors) in order to achieve their contracted after-tax rate of return as a result of the reduction of the federal income tax rate from 35% to 21% as specified in the Tax Act.
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Commitments and Contingencies |
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Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Letters of Credit The Company’s customers, vendors and regulatory agencies often require the Company to post letters of credit in order to guarantee performance under certain contracts and agreements. The Company is also required to post letters of credit to secure obligations under various swap agreements and leases and may, from time to time, decide to post letters of credit in lieu of cash deposits in reserve accounts under certain financing arrangements. The amount that can be drawn under some of these letters of credit may be increased from time to time subject to the satisfaction of certain conditions. As of September 30, 2019, the Company had outstanding letters of credit drawn under the Revolver of $112.6 million and outstanding project-level letters of credit of $257.4 million drawn under certain project level financing agreements, compared to $99.5 million and $197.7 million, respectively, as of December 31, 2018. Guarantee Agreements The Company and its subsidiaries have entered into guarantee agreements to certain of their institutional tax equity investors and financing parties in connection with their tax equity financing transactions. These agreements do not guarantee the returns targeted by the tax equity investors or financing parties, but rather support any potential indemnity payments payable under the tax equity agreements, including related to management of tax partnerships and recapture of tax credits or renewable energy grants in connection with transfers of the Company’s direct or indirect ownership interests in the tax partnerships to entities that are not qualified to receive those tax benefits. The Company and its subsidiaries have also provided guarantees in connection with acquisitions of third-party assets or to support project-level contractual obligations, including renewable energy credit sales agreements. The Company and its subsidiaries have also provided other capped or limited contingent guarantees and other support obligations with respect to certain project-level indebtedness. The amounts of the above guarantees often are not explicitly stated and the overall maximum amount of the related obligations cannot be reasonably estimated. Historically, no significant payments have been made with respect to these types of guarantees. The Company believes the probability of payments being demanded under these guarantees is remote and no material amounts have been recognized for the underlying fair value of guarantee obligations. Long-Term Service Agreements On August 10, 2018, the Company executed an 11-year framework agreement with affiliates of General Electric (“GE”) that, among other things, provides for the roll out, subject to receipt of third-party consents, of project level, long-term service agreements (“LTSA”) for turbine O&M, as well as other balance of plant services across the Company’s 1.6 GW North American wind fleet. As of September 30, 2019, 15 of 16 project-level LTSAs were in place. As discussed in Note 21. Subsequent Events, on November 1, 2019, the Company executed a 10-year framework agreement with SMA Solar Technology that, among other things, provides for the roll out, subject to receipt of third-party consents, of project level LTSAs for solar O&M, as well as other balance of plant services across the Company’s North American solar fleet. Legal Proceedings The Company is not a party to any material legal proceedings other than various administrative and regulatory proceedings arising in the ordinary course of the Company’s business or as described below. While the Company cannot predict with certainty the ultimate resolution of such proceedings or other claims asserted against the Company, certain of the claims, if adversely concluded, could result in substantial damages or other relief. Claim relating to First Wind Acquisition On May 27, 2016, D.E. Shaw Composite Holdings, L.L.C. and Madison Dearborn Capital Partners IV, L.P., as the representatives of the sellers (the “First Wind Sellers”) filed an amended complaint for declaratory judgment against TerraForm Power and Terra LLC in the Supreme Court of the State of New York alleging breach of contract with respect to the Purchase and Sale Agreement, dated as of November 17, 2014 (the “FW Purchase Agreement”) between, among others, SunEdison, Inc. (“SunEdison”), TerraForm Power, Terra LLC and the First Wind Sellers. The amended complaint alleges that Terra LLC and SunEdison became jointly obligated to make $231.0 million in earn-out payments in respect of certain development assets SunEdison acquired from the First Wind Sellers under the FW Purchase Agreement, when those payments were purportedly accelerated by SunEdison’s bankruptcy and by the resignations of two SunEdison employees. The amended complaint further alleges that TerraForm Power, as guarantor of certain Terra LLC obligations under the FW Purchase Agreement, is liable for this sum. The defendants filed a motion to dismiss the amended complaint on July 5, 2016, on the ground that, among other things, SunEdison is a necessary party to this action. On February 6, 2018, the court denied the Company’s motion to dismiss after which document discovery began. In April 2019, Terra LLC filed an amended answer to the amended complaint. The Company cannot predict the impact on this litigation of any information that may become available in discovery. Document discovery and disposition are now substantially completed and new pretrial schedule has been agreed between the parties and approved by the court. The Company believes the First Wind Sellers’ allegations are without merit and will contest them vigorously. However, the Company cannot predict with certainty the ultimate resolution of any proceedings brought in connection with such a claim. Whistleblower Complaint by Francisco Perez Gundin On May 18, 2016, the Company’s former Director and Chief Operating Officer, Francisco Perez Gundin (“Mr. Perez”), filed a complaint against the Company, TerraForm Global, Inc. (“TerraForm Global”) and certain individuals, with the United States Department of Labor. The complaint alleged that the defendants engaged in a retaliatory termination of Mr. Perez’s employment after he allegedly voiced concerns to SunEdison’s Board of Directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleged were self-interested and which he alleged SunEdison forced on the Company. He alleged that the Company participated in SunEdison’s retaliatory termination by constructively terminating his position as Chief Operating Officer of the Company in connection with SunEdison’s constructive termination of his employment. He sought lost wages, bonuses, benefits, and other money that he alleged he would have received if he had not been subjected to the allegedly retaliatory termination. The Company’s Position Statement in response to the complaint was filed in October 2016. On February 21, 2017, Mr. Perez filed Gundin v. TerraForm Global, Inc. et al. against TerraForm Power, TerraForm Global and certain individuals as defendants in the United States District Court for the District of Maryland, which was subsequently transferred to the U.S. District Court for the Southern District of New York (“SDNY”). The complaint asserted claims for retaliation, breach of the implied covenant of good faith and fair dealing and promissory estoppel based on the same allegation in Mr. Perez’s Department of Labor complaint. On March 8, 2018, Mr. Perez voluntarily dismissed the federal action without prejudice. On December 27, 2018, the proceeding before the Department of Labor was dismissed, which Mr. Perez appealed on January 25, 2019. On August 27, 2019, pursuant to Mr. Perez’s offer to settle the dispute, a definitive settlement agreement was executed between the Company and Mr. Perez. The settlement with Mr. Perez was paid entirely from insurance proceeds. Whistleblower Complaint by Carlos Domenech Zornoza On May 10, 2016, the Company’s former Director and Chief Executive Officer, Carlos Domenech Zornoza (“Mr. Domenech”), filed a complaint against the Company, TerraForm Global and certain individuals, with the United States Department of Labor. The complaint alleges that the defendants engaged in a retaliatory termination of Mr. Domenech’s employment on November 20, 2015, after he allegedly voiced concerns to SunEdison’s Board of Directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleges were self-interested and which he alleges SunEdison forced on the Company. He alleges that the Company participated in SunEdison’s retaliatory termination by terminating his position as Chief Executive Officer of the Company in connection with SunEdison’s termination of his employment. He seeks lost wages, bonuses, benefits, and other money that he alleges that he would have received if he had not been subjected to the allegedly retaliatory termination. The Company’s Position Statement in response to the complaint was filed in October 2016. On February 21, 2017, Mr. Domenech filed Domenech Zornoza v. TerraForm Global, Inc. et. al against TerraForm Power, TerraForm Global and certain individuals as defendants in the United States District Court for the District of Maryland. The complaint asserted claims for retaliation, breach of the implied covenant of good faith and fair dealing and promissory estoppel based on the same allegations in Mr. Domenech’s Department of Labor complaint. On March 15, 2017, the Company filed notice with the Judicial Panel on Multidistrict Litigation to transfer this action to the SDNY where other cases not involving the Company relating to the SunEdison bankruptcy are being tried. The plaintiff opposed the transfer. However, the transfer was approved by the Judicial Panel on Multidistrict Litigation. On November 6, 2017, TerraForm Power and the other defendants filed a motion to dismiss Mr. Domenech’s complaint, and Mr. Domenech filed a response on December 21, 2017. On March 8, 2018, Mr. Domenech voluntarily dismissed the federal action without prejudice, which would permit the action to be refiled. On August 16, 2018, Mr. Domenech filed a second complaint with the United States District Court for the District of Maryland, with substantially the same allegations. On October 17, 2018, the Company filed notice with the Judicial Panel on Multidistrict Litigation to transfer this action to the SDNY. The Plaintiff opposed the transfer. However, the transfer was approved by the Judicial Panel on Multidistrict Litigation. On March 15, 2019, the Company, TerraForm Global, and several individual defendants filed a joint motion to dismiss Mr. Domenech’s complaint. Mr. Domenech filed a response on April 15, 2019, and the Company, TerraForm Global, and the individual defendants filed a reply on April 25, 2019. The motion to dismiss is pending as of the date of this Quarterly Report. Derivative Class Action On September 19, 2019, lead plaintiff Martin Rosson filed a derivative and class action lawsuit in the Delaware Court of Chancery on behalf of the Company, himself, and other minority stockholders of the Company against Brookfield and certain of its affiliates (including the Company as a nominal defendant). The complaint alleges that the defendant controlling stockholders breached their fiduciary duty to minority stockholders because the Company undertook a private placement of the Company’s stock on terms that the complaint alleges are unfair, instead of pursuing a public offering. The proceeds of the private placement were used to fund the acquisition by the Company of Saeta and had been approved by the Conflicts Committee of the Company’s Board of Directors. The complaint seeks the rescission and invalidation of the private placement and payment to the Company of rescissory damages, among other relief. In a related development, on October 15, 2019, the Company received a demand letter (the “220 Demand”) for the production of books and records pursuant to 8 Del. C. § 220 to allow counsel to a purported shareholder of the Company to investigate potential breaches of fiduciary duty by Brookfield and the Company’s Board of Directors in connection with the funding of the acquisition of Saeta. The Company believes that these claims are without merit. However, the Company cannot predict with certainty the ultimate resolution of any proceedings brought in connection with these claims. Chile Project Arbitration On September 5, 2016, Compañía Minera del Pacífico (“CMP”) submitted demands for arbitration against the subsidiary of the Company that owns its solar project located in Chile and against the latter’s immediate holding company to the Santiago Chamber of Commerce’s Center for Arbitration and Mediation (“CAM”). The demands alleged, among other things, that the Chile project was not built, operated and maintained according to the relevant standards using prudent utility practices as required by the electricity supply agreement (the “Contract for Difference”) between the parties, entitling them to terminate the Contract for Difference. CMP further alleged that it is entitled to damages based on alleged breaches of a call option agreement entered into by the parties. In June 2019, the CAM issued two rulings in which it unanimously rejected the claims made by CMP. CMP indicated that they would not seek to appeal the ruling and the window in which they are permitted to appeal has now closed. Other Matters Two of the Company’s project level subsidiaries are parties to litigation that is seeking to recover alleged underpayments of tax grants under Section 1603 of the American Recovery and Reinvestment Tax Act from the U.S. Department of Treasury (“U.S. Treasury”). These project level subsidiaries filed complaints at the Court of Federal Claims on March 28, 2014. The U.S. Treasury counterclaimed and both claims went to trial in July 2018. In January 2019, the Court of Federal Claims entered judgments against each of the project level subsidiaries for approximately $10.0 million in the aggregate. These judgments are being appealed. The project level subsidiaries expect that losses, if any, arising from these claims would be covered pursuant to an indemnity and, accordingly, the Company recognized a corresponding indemnification asset within prepaid expenses and other current assets in the consolidated balance sheets as of September 30, 2019 and December 31, 2018. Issuance of Shares upon Final Resolution of Certain Litigation Matters Pursuant to the definitive merger and sponsorship agreement (the “Merger Agreement”) entered into with Orion Holdings on March 6, 2017, the Company has agreed to issue additional shares of Common Stock to Orion Holdings for no additional consideration in respect of the Company’s net losses, such as out-of-pocket losses, damages, costs, fees and expenses, in connection with the obtainment of a final resolution of certain specified litigation matters (including the litigation brought by the First Wind Sellers, Mr. Perez and Mr. Domenech described above) within a prescribed period following the final resolution of such matters. The number of additional shares of Common Stock to be issued to Orion Holdings is subject to a pre-determined formula as set forth in the Merger Agreement and is described in greater detail in the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on September 6, 2017. The issuance of additional shares to Orion Holdings would dilute the holdings of the Company’s common stockholders and may negatively affect the value of the Company’s common stock. The settlement with Mr. Perez was paid entirely from insurance proceeds and no shares have been issued to Brookfield in connection with the settlement. As of the date hereof, the Company is unable to predict the quantum of any net losses arising from any of the litigation brought by the First Wind Sellers or Mr. Domenech described above or the number of additional shares, if any, that may be required to be issued to Orion Holdings pursuant to the terms of the Merger Agreement in connection with any final resolution of such matters. Commitment to purchase renewable energy facilities In connection with the acquisition of three distributed generation facilities in the U.S. with a combined nameplate capacity of 10.6 MW, the Company is also committed to purchase an additional facility with a nameplate capacity of 4.5 MW for a purchase price of $6.0 million. This acquisition is expected to be completed in December 2019. See Note 4. Acquisitions for additional details.
|
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the results of wholly-owned and partially-owned subsidiaries in which the Company has a controlling interest with all significant intercompany accounts and transactions eliminated and have been prepared in accordance with the SEC regulations for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. The financial statements should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2019. Interim results are not necessarily indicative of results for a full year or any subsequent interim period. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments consisting of a normal and recurring nature necessary to present fairly the Company’s financial position as of September 30, 2019, results of operations, comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018 and cash flows for the nine months ended September 30, 2019 and 2018. Use of Estimates In preparing the unaudited condensed consolidated financial statements, the Company uses estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements. Such estimates also affect the reported amounts of revenues, expenses and cash flows during the reporting period. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations would be affected. Recently Adopted Accounting Standards - Guidance Adopted in 2019 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which primarily changes the lessee’s accounting for operating leases by requiring the recognition of lease right-of-use assets and lease liabilities. The guidance also eliminates previous real estate specific provisions. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements, which amended the standard to give entities another option to apply the requirements of the standard in the period of adoption (January 1, 2019) or Effective Date Method. The Company adopted the new accounting guidance on January 1, 2019 using a modified retrospective approach reflecting the Effective Date Method of adoption in which the Company continued to apply the guidance in ASC 840, Leases to the comparable periods presented in the year of adoption. The Company made the following elections provided under the standard:
The Company evaluated the impact of Topic 842 as it relates to operating leases for land, buildings and equipment for which it is the lessee and reviewed its existing contracts for embedded leases. The adoption of the new standard resulted in the recognition of right-of-use assets and lease liabilities of approximately $252.7 million and $245.3 million, respectively, as of January 1, 2019 for operating leases, whereas the Company’s accounting for finance leases remained substantially unchanged. See Note 7. Leases for additional details. A significant portion of the Company’s operating revenues are generated from delivering electricity and related products from owned solar and wind renewable energy facilities under PPAs in which the Company is the lessor. Revenue is recognized when electricity is delivered and is accounted for as rental income under the lease standard. The adoption of ASC 842 did not have an impact on the accounting policy for rental income from the Company’s PPAs in which it is the lessor. The Company elected the package of practical expedients available under ASC 842, which did not require the Company to reassess its lease classification from ASC 840. Additionally, the Company elected the practical expedient to not separate lease and non-lease components for lessors. This election allows energy (lease component) and environmental incentives or renewable energy certificates (non-lease components) under bundled PPAs to be accounted as a singular lease unit of account under ASC 842. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU expands the list of United States (“U.S.”) benchmark interest rates permitted in the application of hedge accounting by adding the SOFR as a permissible U.S. benchmark rate. The Company does not have any derivative instruments indexed to SOFR as a benchmark interest rate, accordingly, the adoption of ASU No. 2018-16 as of January 1, 2019 did not have an impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), to provide financial statement users with more useful information about expected credit losses. This ASU changes how entities measure credit losses on financial instruments and the timing of when such losses are recognized. The guidance is effective for fiscal years and interim periods within those years beginning after January 1, 2020, with early adoption permitted for periods beginning after December 15, 2018. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU removes some disclosure requirements, modifies others, and adds some new disclosure requirements. The guidance is effective January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect of the new guidance on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU amends the definition of a hosting arrangement and requires a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in ASC 350-402 to determine which implementation costs to capitalize as assets. Capitalized implementation costs are amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The guidance is effective January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect of the new guidance on its consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this ASU require reporting entities to consider indirect interests held through related parties under common control for determining whether fees paid to decision makers and service provider are variable interests. These indirect interests should be considered on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in U.S. GAAP). The guidance is effective January 1, 2020, with early adoption permitted. Entities are required to apply the amendments in this guidance retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company is currently evaluating the effect of the new guidance on its consolidated financial statements.
|
Variable Interest Entities (Details) - Consolidated Variable Interest Entity, Primary Beneficiary - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | ||
Current assets | $ 134,551 | $ 134,057 |
Non-current assets | 4,032,239 | 3,909,549 |
Total assets | 4,166,790 | 4,043,606 |
Current liabilities | 319,738 | 120,790 |
Non-current liabilities | 949,812 | 1,014,789 |
Total liabilities | $ 1,269,550 | $ 1,135,579 |
Leases - Balance Sheet Information (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Operating leases: | |
Right-of-use assets | $ 269,309 |
Accounts payable, accrued expenses and other current liabilities | 14,980 |
Operating lease obligations, less current portion | 255,507 |
Total operating lease liabilities | $ 270,487 |
Weighted Average Remaining Lease Term: | |
Operating leases | 18 years |
Weighted Average Discount Rate: | |
Operating leases | 4.50% |
Related Parties - Lease (Narrative) (Details) - Brookfield and Affiliates - Relocation Of Corporate Headquarters - Affiliated Entity - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
May 31, 2018 |
|
Related Party Transaction [Line Items] | |||||
Term of lease | 10 years | ||||
Charges within general and administrative expenses - affiliate | $ 0.3 | $ 0.2 | $ 0.7 | $ 0.1 |
Income Taxes - Components of Income Tax Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Loss before income tax expense | $ (60,801) | $ (13,038) | $ (112,167) | $ (113,559) |
Income tax expense | $ 1,512 | $ 6,013 | $ 3,030 | $ 9,417 |
Effective tax rate | (2.50%) | (46.10%) | (2.70%) | (8.30%) |
Subsequent Events - Amendment to the Revolver (Details) - Line of Credit |
Oct. 08, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
lender
|
---|---|---|
Revolving Credit Facility | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 800,000,000.00 | |
Number of new lenders | lender | 3 | |
Revolving Credit Facility | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Increase in borrowing capacity | $ 200,000,000.0 | |
Accordion feature | $ 150,000,000.0 | |
Debt extension term | 1 year | |
Letter of Credit | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 300,000,000.0 | |
Letter of Credit | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Increase in borrowing capacity | $ 50,000,000.0 |
(Loss) Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted (Loss) Earnings Per Share of Class A Common Stock | Basic and diluted (loss) earnings per share of the Company’s Common Stock for the three and nine months ended September 30, 2019 and 2018 was calculated as follows:
———
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Nature of Operations and Organization (Details) - Affiliates of Brookfield |
9 Months Ended | |
---|---|---|
Oct. 08, 2019 |
Sep. 30, 2019 |
|
TerraForm Power | Share Purchase Agreement | ||
Noncontrolling Interest [Line Items] | ||
Percentage of ownership | 65.00% | |
Subsequent Event | ||
Noncontrolling Interest [Line Items] | ||
Percentage of ownership | 61.00% | |
Subsequent Event | TerraForm Power | ||
Noncontrolling Interest [Line Items] | ||
Percentage of ownership | 61.00% |
Subsequent Events - Transfer of Title of Delayed Projects (Details) $ in Thousands |
Oct. 31, 2019
USD ($)
project
MW
|
Nov. 12, 2019
USD ($)
|
Nov. 08, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
MW
|
Sep. 26, 2019
USD ($)
MW
|
Jul. 19, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
---|---|---|---|---|---|---|---|
Subsequent Event [Line Items] | |||||||
Total consideration | $ 114,195 | $ 0 | |||||
WGL Acquisition | |||||||
Subsequent Event [Line Items] | |||||||
Nameplate capacity (MW) | MW | 18.0 | 320 | |||||
Total consideration | $ 114,195 | $ 114,200 | |||||
Subsequent Event | WGL Acquisition | |||||||
Subsequent Event [Line Items] | |||||||
Number of projects transferred to company | project | 43 | ||||||
Release From Escrow | $ 68,800 | ||||||
Nameplate capacity (MW) | MW | 18.0 | ||||||
Total consideration | $ 45,400 | $ 45,400 |
Accumulated Other Comprehensive Income |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHENSIVE INCOME The following tables present the changes in each component of accumulated other comprehensive income (loss), net of tax:
———
(2) Represents the impact of the adoption of ASU No. 2017-12 as of January 1, 2018.
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(Loss) Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Loss) Earnings Per Share | (LOSS) EARNINGS PER SHARE Basic (loss) earnings per share is computed by dividing net (loss) income attributable to Class A common stockholders by the number of weighted average ordinary shares outstanding during the period, which is the average of shares outstanding and assumed to be outstanding, and includes contingently issuable shares as of the date when the contingent condition has been met. Diluted (loss) earnings per share is computed by adjusting basic (loss) income per share for the impact of weighted average dilutive common equivalent shares outstanding during the period, unless the impact is anti-dilutive. Common equivalent shares represent the incremental shares issuable for unvested restricted Common Stock and contingently issuable shares in the period the contingency has been met, for the portion of the period prior to the resolution of such contingent condition. Basic and diluted (loss) earnings per share of the Company’s Common Stock for the three and nine months ended September 30, 2019 and 2018 was calculated as follows:
———
(2) The computation of diluted earnings per share of the Company’s Common Stock for the nine months ended September 30, 2019 excluded 36 thousand of potentially dilutive unvested RSUs, respectively, because the effect would have been anti-dilutive. The computation of diluted loss per share of the Company’s Common Stock for the three months ended September 30, 2018, excludes 103 thousand of potentially dilutive unvested RSUs because the effect would have been anti-dilutive. The computation of diluted earnings per share of the Company’s Common Stock for the nine months ended September 30, 2018, includes 13 thousand of RSUs considered to be dilutive and calculated using the treasury stock method.
|
Nature of Operations and Organization |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Organization | NATURE OF OPERATIONS AND ORGANIZATION TerraForm Power, Inc. (“TerraForm Power” and, together with its subsidiaries, the “Company”) is a holding company and its primary asset is an equity interest in TerraForm Power, LLC (“Terra LLC”). TerraForm Power is the managing member of Terra LLC and operates, controls and consolidates the business affairs of Terra LLC, which through its subsidiaries owns and operates renewable energy facilities that have long-term contractual arrangements to sell the electricity generated by these facilities to third parties. The related green energy certificates, ancillary services and other environmental attributes generated by these facilities are also sold to third parties. The Company is sponsored by Brookfield Asset Management Inc. (“Brookfield”) and its primary business strategy is to acquire operating solar and wind assets in North America and Western Europe. As of September 30, 2019, affiliates of Brookfield held approximately 65% of TerraForm Power’s Class A common stock (“Common Stock”). As discussed in Note 21. Subsequent Events, on October 8, 2019, the Company completed a public offering and a private placement of its Common Stock whereby the combined ownership of affiliates of Brookfield became approximately 61% as of the date of the issuance of this Quarterly Report.
|
Long-term Debt - Aggregate Contractual Payments of Long-term Debt (Details) - USD ($) |
Sep. 30, 2019 |
Sep. 25, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Maturities of long-term debt1 | |||
Remainder of 2019 | $ 96,852,000 | ||
2020 | 732,185,000 | ||
2021 | 269,528,000 | ||
2022 | 770,751,000 | ||
2023 | 1,220,271,000 | ||
Thereafter | 3,205,134,000 | ||
Total | 6,294,721,000 | ||
Defaulted debt, reclassified to current | $ 387,800,000 | $ 186,300,000 | |
Bridge Facility | |||
Maturities of long-term debt1 | |||
Face amount of debt instrument | $ 475,000,000.0 |
Segment Reporting (Details) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
segment
|
Sep. 30, 2018
USD ($)
|
Sep. 26, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Segment Reporting [Abstract] | ||||||
Number of reportable segments | segment | 3 | |||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | $ 253,808,000 | $ 246,042,000 | $ 734,506,000 | $ 553,477,000 | ||
Depreciation, accretion and amortization expense | 114,282,000 | 103,593,000 | 321,605,000 | 239,177,000 | ||
Impairment of renewable energy facilities | 0 | 0 | 0 | 15,240,000 | ||
Other operating costs and expenses | 99,161,000 | 85,783,000 | 288,504,000 | 237,144,000 | ||
Operating income (loss) | 40,365,000 | 56,666,000 | 124,397,000 | 61,916,000 | ||
Interest expense, net | 89,393,000 | 72,416,000 | 246,721,000 | 176,862,000 | ||
Other non-operating expenses (income), net | 11,773,000 | (2,712,000) | (10,157,000) | (1,387,000) | ||
Income tax expense | 1,512,000 | 6,013,000 | 3,030,000 | 9,417,000 | ||
Net income (loss) | (62,313,000) | (19,051,000) | (115,197,000) | (122,976,000) | ||
Balance Sheet | ||||||
Total assets | 9,929,191,000 | 9,929,191,000 | $ 9,330,354,000 | |||
Solar1 | ||||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | 101,654,000 | 94,883,000 | 241,593,000 | 237,927,000 | ||
Wind | ||||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | 54,507,000 | 56,963,000 | 223,982,000 | 200,068,000 | ||
Segments | Solar1 | ||||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | 101,654,000 | 94,883,000 | 241,593,000 | 237,927,000 | ||
Depreciation, accretion and amortization expense | 29,753,000 | 28,299,000 | 84,829,000 | 83,041,000 | ||
Impairment of renewable energy facilities | 0 | 15,240,000 | ||||
Other operating costs and expenses | 9,912,000 | 11,109,000 | 41,274,000 | 39,792,000 | ||
Operating income (loss) | 61,989,000 | 55,475,000 | 115,490,000 | 99,854,000 | ||
Interest expense, net | 17,302,000 | 15,992,000 | 46,693,000 | 46,248,000 | ||
Other non-operating expenses (income), net | 428,000 | 632,000 | (6,391,000) | (1,926,000) | ||
Income tax expense | 3,653,000 | 749,000 | 1,532,000 | 749,000 | ||
Net income (loss) | 40,606,000 | 38,102,000 | 73,656,000 | 54,783,000 | ||
Balance Sheet | ||||||
Total assets | 3,587,474,000 | 3,587,474,000 | 2,762,977,000 | |||
Segments | Wind | ||||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | 54,507,000 | 56,963,000 | 223,982,000 | 200,068,000 | ||
Depreciation, accretion and amortization expense | 49,052,000 | 40,992,000 | 132,694,000 | 113,926,000 | ||
Impairment of renewable energy facilities | 0 | 0 | ||||
Other operating costs and expenses | 38,120,000 | 31,302,000 | 113,585,000 | 89,834,000 | ||
Operating income (loss) | (32,665,000) | (15,331,000) | (22,297,000) | (3,692,000) | ||
Interest expense, net | 16,220,000 | 14,367,000 | 45,173,000 | 36,382,000 | ||
Other non-operating expenses (income), net | (132,000) | (347,000) | (550,000) | 538,000 | ||
Income tax expense | 401,000 | 927,000 | 830,000 | 1,291,000 | ||
Net income (loss) | (49,154,000) | (30,278,000) | (67,750,000) | (41,903,000) | ||
Balance Sheet | ||||||
Total assets | 3,762,649,000 | 3,762,649,000 | 3,733,049,000 | |||
Segments | Regulated Solar and Wind | ||||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | 97,647,000 | 94,196,000 | 268,931,000 | 115,482,000 | ||
Depreciation, accretion and amortization expense | 34,957,000 | 33,954,000 | 102,955,000 | 41,148,000 | ||
Impairment of renewable energy facilities | 0 | 0 | ||||
Other operating costs and expenses | 28,085,000 | 24,971,000 | 66,791,000 | 30,012,000 | ||
Operating income (loss) | 34,605,000 | 35,271,000 | 99,185,000 | 44,322,000 | ||
Interest expense, net | 27,073,000 | 9,632,000 | 65,539,000 | 4,879,000 | ||
Other non-operating expenses (income), net | 599,000 | (727,000) | 449,000 | (617,000) | ||
Income tax expense | (2,543,000) | 2,268,000 | 553,000 | 4,442,000 | ||
Net income (loss) | 9,476,000 | 24,098,000 | 32,644,000 | 35,618,000 | ||
Balance Sheet | ||||||
Total assets | 2,496,186,000 | 2,496,186,000 | 2,748,126,000 | |||
Corporate | ||||||
Segment Reporting Information, Profit (Loss) | ||||||
Operating revenues, net | 0 | 0 | 0 | 0 | ||
Depreciation, accretion and amortization expense | 520,000 | 348,000 | 1,127,000 | 1,062,000 | ||
Impairment of renewable energy facilities | 0 | 0 | ||||
Other operating costs and expenses | 23,044,000 | 18,401,000 | 66,854,000 | 77,506,000 | ||
Operating income (loss) | (23,564,000) | (18,749,000) | (67,981,000) | (78,568,000) | ||
Interest expense, net | 28,798,000 | 32,425,000 | 89,316,000 | 89,353,000 | ||
Other non-operating expenses (income), net | 10,878,000 | (2,270,000) | (3,665,000) | 618,000 | ||
Income tax expense | 1,000 | 2,069,000 | 115,000 | 2,935,000 | ||
Net income (loss) | (63,241,000) | $ (50,973,000) | (153,747,000) | $ (171,474,000) | ||
Balance Sheet | ||||||
Total assets | 82,882,000 | 82,882,000 | $ 86,202,000 | |||
WGL Acquisition | ||||||
Balance Sheet | ||||||
Total assets acquired | $ 693,900,000 | $ 693,900,000 | $ 688,674,000 |
Intangible Assets, Net and Goodwill - Goodwill (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Goodwill [Roll Forward] | ||||
Beginning balance | $ 120,553 | $ 0 | $ 145,616 | $ 120,553 |
Goodwill resulting from business combinations | 0 | 115,381 | ||
Goodwill | 32,283 | 7,726 | ||
Foreign exchange differences | (7,220) | (2,554) | ||
Ending balance | $ 120,553 | $ 0 |
Leases - Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 5,472 | $ 11,487 |
Related Parties - Sponsor Line Agreement (Details) - Revolving Credit Facility - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 16, 2017 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Line of Credit | |||||
Related Party Transaction [Line Items] | |||||
Maximum borrowing capacity | $ 800,000,000.00 | $ 800,000,000.00 | |||
Sponsor Line | |||||
Related Party Transaction [Line Items] | |||||
Interest expense | $ 1,000,000.0 | $ 1,900,000 | $ 3,100,000 | $ 4,100,000 | |
Sponsor Line | Line of Credit | |||||
Related Party Transaction [Line Items] | |||||
Percentage of capital stock | 100.00% | ||||
Sponsor Line | Grand Duchy of Luxembourg | Line of Credit | |||||
Related Party Transaction [Line Items] | |||||
Maximum borrowing capacity | $ 500,000,000.0 | ||||
Debt term | 3 years | ||||
LIBOR | Sponsor Line | Line of Credit | |||||
Related Party Transaction [Line Items] | |||||
Basis spread on variable rate | 3.00% | ||||
LIBOR | Revolver | Line of Credit | |||||
Related Party Transaction [Line Items] | |||||
Standby fee percentage | 0.50% |
Subsequent Events - Fourth Quarter Cash Distribution (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Nov. 06, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Subsequent Event [Line Items] | |||||||||
Dividend declared (in dollars per share) | $ 0.2014 | $ 0.2014 | $ 0.2014 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.6042 | $ 0.57 | |
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Dividend declared (in dollars per share) | $ 0.2014 |
Segment Reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Financial Information of Reportable Segments | The following table reflects summarized financial information regarding the Company’s reportable segments for the three and nine months ended September 30, 2019 and 2018:
———
(3) Represents total assets as of September 30, 2019 and December 31, 2018, respectively.
|
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets | $ 269,309 | |
Lease liabilities | $ 270,487 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets | $ 252,700 | |
Lease liabilities | $ 245,300 |
Stockholders' Equity - Common Stock Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | ||||
---|---|---|---|---|---|
Aug. 03, 2018 |
Jun. 12, 2018 |
Jun. 11, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Common Stock Activity [Roll Forward] | |||||
Balance at beginning of period (in shares) | 209,142,000 | 148,086,000 | |||
Issuance of Common Stock to affiliates (in shares) | 80,084 | 60,975,609 | 0 | 61,056,000 | |
Net shares issued under equity incentive plan (in shares) | 13,000 | 0 | |||
Balance at end of period (in shares) | 209,155,000 | 209,142,000 | |||
Price of shares issued (in dollars per share) | $ 10.66 | ||||
Proceeds from issuance of consideration | $ 650,000 | $ 650,000 | $ 0 | $ 650,000 |
(Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Net (loss) income attributable to Class A common stockholders | $ (54,837) | $ (33,590) | $ (67,059) | $ 27,869 |
Weighted average basic Class A shares outstanding (in shares) | 209,155,000 | 209,142,000 | 209,149,000 | 173,173,000 |
Weighted average diluted Class A shares outstanding (in shares) | 209,155,000 | 209,142,000 | 209,149,000 | 173,186,000 |
Basic and diluted earnings (loss) per share (in dollars per share) | $ (0.26) | $ (0.16) | $ (0.32) | $ 0.16 |
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||
Shares considered to be dilutive (in shares) | 0 | 66,000 | ||
Restricted Stock Units (RSUs) | ||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||
Shares excluded from calculation (in shares) | 103,000 | 36,000 | 13,000 |
Related Parties - New Terra LLC Agreement (Narrative) (Details) - Affiliated Entity - IDRs |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
$ / shares
| |
Related Party Transaction [Line Items] | |
First distribution threshold (in dollars per share) | $ 0.93 |
Second distribution threshold (in dollars per share) | $ 1.05 |
Payments of IDRs | $ | $ 0 |
Fair Value of Financial Instruments - Carrying Amount and Estimated Fair Value of Long-term Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Carrying Amount | $ 6,260,443 | $ 5,761,845 |
Fair Value | $ 6,521,099 | $ 5,789,702 |
Renewable Energy Facilities - Renewable Energy Facilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Property, Plant and Equipment [Line Items] | |||
Total renewable energy facilities, net | $ 6,967,149 | $ 6,470,026 | |
Right-of-use assets | 269,309 | ||
Renewable energy facilities in service, net | |||
Property, Plant and Equipment [Line Items] | |||
Renewable energy facilities, net | 8,037,096 | 7,298,371 | |
Less: accumulated depreciation | (1,080,363) | (833,844) | |
Total renewable energy facilities, net | 6,956,733 | 6,464,527 | |
Construction in progress - renewable energy facilities | |||
Property, Plant and Equipment [Line Items] | |||
Renewable energy facilities, net | $ 10,416 | $ 5,499 | |
Accounting Standards Update 2016-02 | |||
Property, Plant and Equipment [Line Items] | |||
Right-of-use assets | $ 252,700 |
Acquisitions - Unaudited Pro Forma Supplementary Data (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
WGL Acquisition | ||
Business Acquisition [Line Items] | ||
Total operating revenues, net | $ 790,403 | $ 559,523 |
Net loss | $ (71,099) | 31,985 |
Saeta Yield | ||
Business Acquisition [Line Items] | ||
Total operating revenues, net | 740,066 | |
Net loss | $ (108,314) |
Renewable Energy Facilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Renewable Energy Facilities | Renewable energy facilities, net consisted of the following:
———
|
Long-term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Long-term debt consists of the following:
———
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Aggregate Contractual Payments of Long-term Debt | The aggregate contractual principal payments of long-term debt due after September 30, 2019, excluding the amortization of debt discounts, premiums and deferred financing costs, as stated in the financing agreements, are as follows:
———
(2) Includes the $475.0 million Bridge Facility maturing on September 23, 2020. The Company has a one-year extension option and intends, through its subsidiaries, to complete a refinancing of the balance on a long-term basis prior to maturity. The balance, net of unamortized deferred financing costs, is included within non-current liabilities in the unaudited condensed consolidated balance sheets.
|
Income Taxes |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The income tax provision consisted of the following:
The overall effective tax rate for the three and nine months ended September 30, 2019 and 2018 was different than the statutory rate of 21% and was primarily due to the recording of a valuation allowance on certain income tax benefits attributed to the Company, losses allocated to non-controlling interests and the effect of foreign and state taxes. As of September 30, 2019, and December 31, 2018, the Company had not identified any uncertain tax positions for which a liability was required under ASC 740-10. The Company expects to complete its analysis on tax positions related to the WGL Acquisition within the measurement period.
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Leases |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASES The Company has operating leases for renewable energy production facilities, land, office space, transmission lines, vehicles and other operating equipment. Leases with an initial term of twelve months or shorter are not recorded on the balance sheet, but are expensed on a straight-line basis over the lease term. During the three and nine months ended September 30, 2019, the Company did not have any leases with an initial term of less than twelve months. Operating lease right-of-use assets are included within renewable energy facilities, net, whereas right-of-use liabilities are included within accounts payable, accrued expenses and other current liabilities. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company calculated an incremental borrowing rate by leveraging external transactions at comparable entities and internally available information to determine the present value of lease payments. The Company’s leases have remaining lease terms ranging from 5 to 41 years. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term. Although some of the Company’s leases contain lease and non-lease components, the Company applies the practical expedient to account for each lease component and non-lease component as a single lease component. Lease payments include fixed rent and taxes, where applicable, and exclude variable rental payments that include other operating expenses is recognized as incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The following tables outline the different components of operating leases and other terms and conditions of the lease agreements where the Company is the lessee. See Note 10. Long-term Debt for more details. The components of lease expense were as follows:
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Supplemental cash flow information related to the Company’s leases was as follows:
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Supplemental balance sheet information related to the Company’s leases was as follows:
The maturities of the Company’s operating lease liabilities by fiscal year were as follows:
The operating revenues from delivering electricity and the related products from owned solar and wind renewable energy facilities under PPAs in which the Company is the lessor, the majority of which is variable in nature, is recognized when electricity is delivered and is accounted for as rental income under the lease standard. The Company determines if an arrangement is a lease at contract inception, and if so, includes both lease and non-lease components as a single component and accounts for it as a lease. The Company’s PPAs do not contain any residual value guarantees or material restrictive covenants. See Note 3. Revenue for additional details.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE The following table presents the Company’s operating revenues, net and disaggregated by revenue source:
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Contract balances and performance obligations As of September 30, 2019 and December 31, 2018, other liabilities in the unaudited condensed consolidated balance sheets included deferred revenue comprising of $8.5 million and $8.8 million, respectively, which primarily consisted of upfront government incentives, and contract liabilities of $3.2 million and $4.9 million, respectively, related to performance obligations that have not yet been satisfied. These contract liabilities represented advanced customer receipts primarily related to future renewable energy credits (“REC”) deliveries that are recognized into revenue under Topic 606. The amount of revenue recognized during the three and nine months ended September 30, 2019 related to contract liabilities was $0.4 million and $1.7 million, respectively.
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Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands |
3 Months Ended | 9 Months Ended | ||
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Income Statement [Abstract] | ||||
Operating revenues, net | $ 253,808,000 | $ 246,042,000 | $ 734,506,000 | $ 553,477,000 |
Operating costs and expenses: | ||||
Cost of operations | 75,037,000 | 59,027,000 | 207,363,000 | 146,155,000 |
General and administrative expenses | 15,397,000 | 21,334,000 | 60,616,000 | 65,483,000 |
General and administrative expenses - affiliate | 7,764,000 | 3,432,000 | 19,087,000 | 10,929,000 |
Acquisition costs | 963,000 | 1,655,000 | 1,438,000 | 7,612,000 |
Acquisition costs - affiliate | 0 | 335,000 | 0 | 6,965,000 |
Impairment of renewable energy facilities | 0 | 0 | 0 | 15,240,000 |
Depreciation, accretion and amortization expense | 114,282,000 | 103,593,000 | 321,605,000 | 239,177,000 |
Total operating costs and expenses | 213,443,000 | 189,376,000 | 610,109,000 | 491,561,000 |
Operating income (loss) | 40,365,000 | 56,666,000 | 124,397,000 | 61,916,000 |
Other expenses (income): | ||||
Interest expense, net | 89,393,000 | 72,416,000 | 246,721,000 | 176,862,000 |
Loss (gain) on extinguishment of debt, net | 1,355,000 | 0 | (4,188,000) | 1,480,000 |
Loss (gain) on foreign currency exchange, net | 10,975,000 | (3,070,000) | (4,217,000) | (4,257,000) |
Other (income) expenses, net | (557,000) | 358,000 | (1,752,000) | 1,390,000 |
Total other expenses, net | 101,166,000 | 69,704,000 | 236,564,000 | 175,475,000 |
Loss before income tax expense | (60,801,000) | (13,038,000) | (112,167,000) | (113,559,000) |
Income tax expense | 1,512,000 | 6,013,000 | 3,030,000 | 9,417,000 |
Net income (loss) | (62,313,000) | (19,051,000) | (115,197,000) | (122,976,000) |
Less: Net (loss) income attributable to redeemable non-controlling interests | (7,341,000) | 12,443,000 | (14,241,000) | 15,101,000 |
Less: Net (loss) income attributable to non-controlling interests | (135,000) | 2,096,000 | (33,897,000) | (165,946,000) |
Net (loss) income attributable to Class A common stockholders | $ (54,837,000) | $ (33,590,000) | $ (67,059,000) | $ 27,869,000 |
Weighted average number of shares: | ||||
Class A common stock - Basic (in shares) | 209,155 | 209,142 | 209,149 | 173,173 |
Class A common stock - Diluted (in shares) | 209,155 | 209,142 | 209,149 | 173,186 |
(Loss) earnings per share: | ||||
Class A common stock - Basic and diluted (in dollars per share) | $ (0.26) | $ (0.16) | $ (0.32) | $ 0.16 |
Distributions declared per share: | ||||
Class A common stock (in dollars per share) | $ 0.2014 | $ 0.19 | $ 0.6042 | $ 0.57 |
Related Parties |
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Sep. 30, 2019 | |||||||||||||
Related Party Transactions [Abstract] | |||||||||||||
Related Parties | RELATED PARTIES As discussed in Note 1. Nature of Operations and Organization, the Company is a controlled affiliate of Brookfield which held 65% of the voting securities of TerraForm Power’s Common Stock as of September 30, 2019 and December 31, 2018. Subsequent to quarter end, on October 8, 2019, the Company completed a public offering of its Common Stock. Concurrent with the public offering, the Company completed a private placement with affiliates of Brookfield of 2,981,514 shares of Common Stock pursuant to a stock purchase agreement dated October 8, 2019. The combined ownership of affiliates of Brookfield became approximately 61% as of the date of this Quarterly Report. See Note 21. Subsequent Events for additional details. Brookfield Sponsorship Transaction The Company entered into a suite of agreements with Brookfield and/or certain of its affiliates providing for sponsorship arrangements, as are more fully described below. Brookfield Master Services Agreement The Company entered into a master services agreement (the “Brookfield MSA”) with Brookfield and certain affiliates of Brookfield (collectively, the “MSA Providers”) pursuant to which the MSA Providers provide certain management and administrative services to the Company, including the provision of strategic and investment management services. As consideration for the services provided or arranged for by Brookfield and certain of its affiliates pursuant to the Brookfield MSA, the Company pays a base management fee on a quarterly basis that is paid in arrears and calculated as follows:
For purposes of calculating the quarterly payment of the base management fee, the term market capitalization value increase means, for any quarter, the increase in value of the Company’s market capitalization for such quarter, calculated by multiplying the number of outstanding shares of Common Stock as of the last trading day of such quarter by the difference between (x) the volume-weighted average trading price of a share of Common Stock for the trading days in such quarter and (y) $9.52. If the difference between (x) and (y) in the market capitalization value increase calculation for a quarter is a negative number, then the market capitalization value increase is deemed to be zero. Pursuant to the Brookfield MSA, the Company recorded charges of $7.5 million and $18.3 million within general and administrative expenses - affiliate in the consolidated statements of operations for the three and nine months ended September 30, 2019, respectively, compared to $3.6 million and $10.5 million for the same periods in 2018, respectively. The balance payable under the Brookfield MSA was $7.5 million and $4.2 million in the consolidated balance sheets as of September 30, 2019 and December 31, 2018, respectively. Relationship Agreement The Company entered into a relationship agreement (the “Relationship Agreement”) with Brookfield, which governs certain aspects of the relationship between Brookfield and the Company. Pursuant to the Relationship Agreement, Brookfield agrees that the Company will serve as the primary vehicle through which Brookfield and certain of its affiliates will own operating wind and solar assets in North America and Western Europe and that Brookfield will provide, subject to certain terms and conditions, the Company with a right of first offer on certain operating wind and solar assets that are located in such countries and developed by persons sponsored by or under the control of Brookfield. The rights of the Company under the Relationship Agreement are subject to certain exceptions and consent rights set out therein. The Company did not acquire any renewable energy facilities from Brookfield during the nine months ended September 30, 2019 and 2018. Terra LLC Agreement BRE Delaware, Inc. (the “Brookfield IDR Holder”), an indirect, wholly-owned subsidiary of Brookfield, holds all of the outstanding incentive distribution rights (“IDRs”) of Terra LLC. The Company, Brookfield IDR Holder and TerraForm Power Holdings, Inc. are party to the limited liability company agreement of Terra LLC (as amended from time to time, the “Terra LLC Agreement”). Under the Terra LLC Agreement, IDRs are payable when distributions on Common Stock reach a certain threshold. The IDR threshold for a first distribution is $0.93 per share of Common Stock and for a second distribution is $1.05 per share of Common Stock. There were no IDR payments made by the Company pursuant to the Terra LLC Agreement during the nine months ended September 30, 2019 and 2018. Registration Rights Agreement The Company entered into a registration rights agreement (the “Registration Rights Agreement”) on October 16, 2017 with Orion Holdings. On June 11, 2018, Orion Holdings, Brookfield BRP Holdings (Canada) Inc. and the Company entered into a Joinder Agreement pursuant to which Brookfield BRP Holdings (Canada) Inc. became a party to the Registration Rights Agreement. On June 29, 2018, a second Joinder Agreement was entered into among Orion Holdings, Brookfield BRP Holdings (Canada) Inc., BBHC Orion Holdco L.P. and the Company pursuant to which BBHC Orion Holdco L.P. became a party to the Registration Rights Agreement. The Registration Rights Agreement governs the rights and obligations of the parties thereto with respect to the registration for resale of all or a part of the Class A shares held by Orion Holdings, BBHC Orion Holdco L.P and such other affiliates of Brookfield from time to time to the Registrations Rights Agreement. Sponsor Line Agreement On October 16, 2017, the Company entered into a credit agreement (the “Sponsor Line”) with Brookfield and one of its affiliates. The Sponsor Line establishes a $500.0 million secured revolving credit facility and provides for the lenders to commit to make LIBOR loans to the Company during a period not to exceed three years from the effective date of the Sponsor Line (subject to acceleration for certain specified events). The Company may only use the revolving Sponsor Line to fund all or a portion of certain funded acquisitions or growth capital expenditures. The Sponsor Line will terminate, and all obligations thereunder will become payable, no later than October 16, 2022. Borrowings under the Sponsor Line bear interest at a rate per annum equal to a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, in each case plus 3.00% per annum. In addition to paying interest on outstanding principal under the Sponsor Line, the Company is required to pay a standby fee of 0.50% per annum in respect of the unutilized commitments thereunder, payable quarterly in arrears. The Company is permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the Sponsor Line at any time without premium or penalty, other than customary “breakage” costs. TerraForm Power’s obligations under the Sponsor Line are secured by first-priority security interests in substantially all assets of TerraForm Power, including 100% of the capital stock of Terra LLC, in each case subject to certain exclusions set forth in the credit documentation governing the Sponsor Line. Under certain circumstances, the Company may be required to prepay amounts outstanding under the Sponsor Line. Total interest expense recognized on the Sponsor Line for the three and nine months ended September 30, 2019 amounted to $1.0 million and $3.1 million, respectively, compared to $1.9 million and $4.1 million for the same periods in 2018. Governance Agreement In connection with the consummation of the Merger, the Company entered into a governance agreement (the “Governance Agreement”) with Orion Holdings and any controlled affiliate of Brookfield (other than the Company and its controlled affiliates) that by the terms of the Governance Agreement from time to time becomes a party thereto. The Governance Agreement establishes certain rights and obligations of the Company and controlled affiliates of Brookfield that own voting securities of the Company relating to the governance of the Company and the relationship between such affiliates of Brookfield and the Company and its controlled affiliates. On June 11, 2018, Orion Holdings, Brookfield BRP Holdings (Canada) Inc. and the Company entered into a Joinder Agreement pursuant to which Brookfield BRP Holdings (Canada) Inc. became a party to the Governance Agreement. On June 29, 2018, a second Joinder Agreement was entered into among Orion Holdings, Brookfield BRP Holdings (Canada) Inc., BBHC Orion Holdco L.P. and the Company pursuant to which BBHC Orion Holdco L.P. became a party to the Governance Agreement. New York Office Lease & Co-tenancy Agreement In May 2018, in connection with the relocation of the Company’s corporate headquarters to New York City, the Company entered into a lease for office space and related arrangements with affiliates of Brookfield for a ten-year term. The Company recorded $0.3 million and $0.7 million of charges within general and administrative expenses - affiliate in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2019, respectively compared to $0.2 million for the three and nine months ended September 30, 2018. Due from Affiliates The $0.3 million due from affiliates amount reported in the unaudited condensed consolidated balance sheets as of September 30, 2019 primarily represented a receivable for office space rent and related expenses and other charges paid by the Company on behalf of an affiliate of Brookfield under the New York Office Lease and Co-Tenancy Agreement referred to above. During the nine months ended September 30, 2019, the Company collected the $0.2 million receivable that was outstanding at December 31, 2018 from TerraForm Global, a controlled affiliate of Brookfield, for payments made by the Company on its behalf regarding rent for its shared former corporate headquarters, compensation for certain employees that provided services to both companies and certain information technology services. Due to Affiliates The $8.9 million due to affiliates amount reported in the unaudited condensed consolidated balance sheets as of September 30, 2019 represented payables to affiliates of Brookfield of $7.5 million for the Brookfield MSA base management fee for the third quarter of 2019 and $1.4 million payables related to rent, office charges and other services. The $7.0 million due to affiliates amount reported in the consolidated balance sheets as of December 31, 2018 represented payables to affiliates of Brookfield of $4.2 million for the Brookfield MSA quarterly base management fee for the fourth quarter of 2018 and $2.8 million for leasehold improvements, rent, office charges and other services during 2018. During the three and nine months ended September 30, 2019, the Company paid to affiliates of Brookfield $5.9 million and $15.0 million, respectively, for the Brookfield MSA base management fee and $2.1 million and $5.3 million, respectively, representing standby fee interest payable to a Brookfield affiliate under the Sponsor Line and for leasehold improvements, rent, office charges and other services with affiliates of Brookfield. During the three and nine months ended September 30, 2018, the Company paid to affiliates of Brookfield $3.6 million and $10.3 million, respectively for the Brookfield MSA base management fee and $2.4 million and $4.2 million, respectively, representing standby fee and interest payable to a Brookfield affiliate under the Sponsor Line.
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. The Company uses valuation techniques that maximize the use of observable inputs. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. If the inputs into the valuation are not corroborated by market data, in such instances, the valuation for these contracts is established using techniques including the extrapolation from or interpolation between actively traded contracts, as well as the calculation of implied volatilities. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3. The Company regularly evaluates and validates the inputs used to determine the fair value of Level 3 contracts by using pricing services to support the underlying market price of the commodity. The Company uses a discounted cash flow valuation technique to determine the fair value of its derivative assets and liabilities. The primary inputs in the valuation models for commodity contracts are market observable forward commodity curves, risk-free discount rates, volatilities and, to a lesser degree, credit spreads. The primary inputs into the valuation of interest rate swaps and foreign currency contracts are forward interest rates and foreign currency exchange rates and, to a lesser degree, credit spreads. Recurring Fair Value Measurements The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the unaudited condensed consolidated balance sheets:
The Company’s interest rate swaps, foreign currency contracts and financial commodity contracts are considered Level 2, since all significant inputs are corroborated by market observable data. The Company’s long-term physically settled commodity contracts (see Note 12. Derivatives) are considered Level 3 as they contain significant unobservable inputs. There were no transfers in or out of Level 1, Level 2 and Level 3 during the nine months ended September 30, 2019 and 2018. The following table reconciles the changes in the fair value of derivative instruments classified as Level 3 in the fair value hierarchy for the nine months ended September 30, 2019 and 2018:
The significant unobservable inputs used in the valuation of the Company’s commodity contracts classified as Level 3 in the fair value hierarchy as of September 30, 2019 are as follows:
The sensitivity of the Company’s fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:
The Company measures the sensitivity of the fair value of its Level 3 commodity contracts to potential changes in commodity prices using a mark-to-market analysis based on the current forward commodity prices and estimates of the price volatility. An increase in power forward prices will produce a mark-to-market loss, while a decrease in prices will result in a mark-to-market gain. An increase in the estimates of the price volatility will produce a mark-to-market gain, while a decrease in volatility will result in a mark-to-market loss. Fair Value of Debt The carrying amount and estimated fair value of the Company’s long-term debt as of September 30, 2019 and December 31, 2018 was follows:
The fair value of the Company’s long-term debt, except the corporate-level senior notes, was determined using inputs classified as Level 2 and a discounted cash flow approach using market rates for similar debt instruments. The fair value of the corporate-level senior notes is based on market price information which is classified as a Level 1 input. They are measured using the last available trades at the end of each respective period. The fair values of the Senior Notes due 2023, Senior Notes due 2025 and Senior Notes due 2028 were 102.4%, 104.8% and 106.1% of the face value as of September 30, 2019, respectively. The fair values of the Senior Notes due 2023, Senior Notes due 2025 and Senior Notes due 2028 were 93.5%, 89.8% and 102.5% of the face value as of December 31, 2018, respectively. Nonrecurring Fair Value Measurements Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to renewable energy facilities, goodwill and intangibles, which are remeasured when the derived fair value is below the carrying value. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. When the impairment has occurred, the Company measures the required charges and adjusts the carrying value. For discussion about the impairment testing of assets and liabilities not measured at fair value on a recurring basis, see Note 6. Renewable Energy Facilities.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Public Offering and Private Placement of Common Stock On October 8, 2019, the Company completed an underwritten registered public offering of 14,907,573 shares of Common Stock at a price of $16.77 per share (the “Public Offering”), for a total consideration of $250.0 million, not including transaction costs. In connection with the Public Offering, the Company entered into an underwriting agreement, dated October 3, 2019 (the “Underwriting Agreement”), among the Company, Terra LLC and RBC Capital Markets, LLC, as the underwriter (the “Underwriter”). Concurrent with the Public Offering, the Company completed a private placement of 2,981,514 shares of Common Stock at a price of $16.77 per share (the “Private Placement”), to BBHC Orion Holdco L.P., an affiliate of Brookfield (the “Purchaser”), for a total consideration of $50.0 million, not including transaction costs. In connection with the Private Placement, the Company entered into a stock purchase agreement, dated October 8, 2019, with the Purchaser. The Common Stock issued in the Private Placement were not registered with the SEC, in reliance on Section 4(a)(2) of the Securities Act and the acknowledgment of the Purchaser that it is an “accredited investor” within the meaning of Rule 501(a) of Regulation D of the Securities Act or a “qualified institutional buyer” under Rule 144A of the Securities Act. Following the Public Offering and the Private Placement, and as of the date of the issuance of this Quarterly Report, affiliates of Brookfield held approximately 61% of the Company’s Common Stock. The proceeds of the Public Offering and Private Placement were used to pay down the amounts due under the Revolver and for general corporate purposes. Amendment to the Revolver On October 8, 2019, Terra Operating LLC entered into an amendment to the Revolver agreement (the “Upsize Amendment”) whereby (i) the aggregate size of the commitments to make revolving loans (‘‘Revolving Loans’’) under the Revolver was increased by $200.0 million to $800.00 million shared ratably among the existing lenders under the Revolver and three new incoming lenders as of October 8, 2019, (ii) the aggregate size of the letter of credit facility under the Revolver was increased by $50.0 million to $300.0 million and (iii) the accordion feature of the Revolver, which allows for further increases to the commitments to make Revolving Loans, was set at $150.0 million. Additionally, the Upsize Amendment extended the maturity date of the Revolver by one year to October 5, 2024. Private Offering of Corporate Senior Notes On October 16, 2019, Terra Operating LLC issued $700.0 million aggregate principal amount of 4.75% senior notes due on January 15, 2030 (the “Senior Notes due 2030”) in an unregistered offering pursuant to Rule 144A under the Securities Act. The Senior Notes due 2030 were sold at an offering price of 100% of the principal amount. The proceeds from the Senior Notes due 2030 were used (i) to redeem, in full, the Company’s existing Senior Notes due 2025, of which $300.0 million remained outstanding, at a redemption price that included a make-whole premium plus accrued and unpaid interest of $25.5 million, (ii) to redeem, in full, the Company’s Term Loan, of which $343.9 million remained outstanding plus accrued and unpaid interest and $8.8 million for derivative liabilities related to interest rate swaps signed with the hedge counterparties and (iii) pay for the fees and expenses related to the issuance. The remaining proceeds were used for general corporate purposes. Solar LTSA On November 1, 2019, the Company executed a 10-year framework agreement with SMA Solar Technology that, among other things, provides for the roll out, subject to receipt of third-party consents, of project level, long-term service agreements for solar O&M, as well as other balance of plant services across the Company’s North American solar fleet. Transfer of Title of Delayed Projects In connection with the WGL Acquisition, the title to 43 Delayed Projects with a purchase value of approximately $68.8 million and a combined nameplate capacity of 18.0 MW was transferred to the Company on October 31, 2019. The remaining balance of the Delayed Projects as of the date of the issuance of this Quarterly Report was approximately $45.4 million. See Note 4. Acquisitions for additional details. Fourth Quarter Cash Distribution On November 6, 2019, the Company’s Board of Directors declared a cash distribution with respect to Common Stock of $0.2014 per share. The distribution is payable on December 16, 2019 to stockholders of record as of December 2, 2019.
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Subsequent Events - Solar LTSA (Details) |
Nov. 01, 2019 |
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SMA Solar Technology | Solar LTSA | Subsequent Event | |
Long-term Contract for Purchase of Electric Power [Line Items] | |
Long-term service agreement term | 10 years |
Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Outstanding Roll Forward | The following table reflects the changes in the Company’s shares of Common Stock outstanding during the nine months ended September 30, 2019 and 2018:
——— (1) On June 11, 2018, the Company completed a private placement of 60,975,609 shares of the Company’s Common Stock with affiliates of Brookfield at a price of $10.66 per share for a total consideration of $650.0 million. The proceeds of the offering were used to pay a portion of the purchase price of the Tendered Shares of Saeta. On August 3, 2018, the Company issued 80,084 shares of Common Stock to an affiliate of Brookfield in connection with the net losses incurred, such as out-of-pocket losses, damages, costs, fees and expenses, in connection with the obtainment of a final resolution of a certain litigation matter.
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Schedule of Restricted Stock Units | The following table presents information regarding outstanding RSUs as of September 30, 2019 and changes during the nine months ended September 30, 2019:
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Dividends Declared | The following table presents the cash distributions declared and paid on Common Stock during the nine months ended September 30, 2019 and 2018:
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Non-controlling Interests (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity of Redeemable Non-controlling Interests | The following table presents the activity of the redeemable non-controlling interests balance for the nine months ended September 30, 2019 and 2018:
———
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Non-controlling Interests - Redeemable Non-controlling Interests (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Jan. 01, 2019 |
Jan. 01, 2018 |
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Redeemable Non-controlling Interests | ||||||||||
Beginning balance | $ 33,495 | $ 34,660 | $ 33,495 | $ 34,660 | ||||||
Cumulative-effect adjustment | $ 20,106 | |||||||||
Net loss | $ (7,341) | $ 12,443 | (14,241) | 15,101 | ||||||
Distributions | (2,538) | $ (4,866) | $ (5,023) | (6,499) | $ (6,185) | $ (5,204) | (852) | (1,993) | ||
Repurchases of redeemable non-controlling interests, net | (4,753) | 617 | ||||||||
Non-cash redemption of redeemable non-controlling interests | 7,345 | 0 | ||||||||
Ending balance | $ 20,994 | $ 43,900 | $ 20,994 | $ 43,900 | ||||||
Redeemable Noncontrolling Interest | ||||||||||
Redeemable Non-controlling Interests | ||||||||||
Cumulative-effect adjustment | $ 0 | $ (4,485) |
Leases - Maturity of Lease Liabilities (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
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Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 | $ 10,417 |
2020 | 21,280 |
2021 | 21,566 |
2022 | 21,434 |
2023 | 22,073 |
Thereafter | 324,230 |
Total lease payments | 421,000 |
Less: Imputed interest | (150,513) |
Total | $ 270,487 |
Related Parties - Due from Affiliate (Narrative) (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Related Party Transaction [Line Items] | ||
Due from affiliate | $ 265 | $ 196 |
TerraForm Global, Inc. | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Due from affiliate | $ 200 |
Cash and Cash Equivalents - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Non-current restricted cash reclassified | $ 11.2 | $ 11.2 |
Cash and cash equivalents reclassified | 2.2 | 1.4 |
Project Level Subsidiaries | ||
Cash and Cash Equivalents [Line Items] | ||
Cash | $ 188.4 | $ 177.6 |
Leases - Narrative (Details) |
9 Months Ended |
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Sep. 30, 2019 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 5 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 41 years |
Stockholders' Equity - Schedule of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
$ / shares
shares
| |
Number of RSUs Outstanding | |
Beginning balance (in shares) | shares | 103,300 |
Granted (in shares) | shares | 156,550 |
Vested (in shares) | shares | (20,878) |
Forfeited (in shares) | shares | (38,406) |
Ending balance (in shares) | shares | 200,566 |
Weighted- Average Exercise Price | |
Beginning balance (dollars per share) | $ / shares | $ 11.15 |
Granted (in shares) | $ / shares | 12.17 |
Vested (in shares) | $ / shares | 11.15 |
Forfeited (in shares) | $ / shares | 11.65 |
Ending balance (dollars per share) | $ / shares | $ 11.85 |
Aggregate Intrinsic Value (in thousands) | $ | $ 3,861,200 |
Weighted Average Remaining Contractual Life (in years) | 1 year 7 months 6 days |
Fair Value of Financial Instruments - Changes in Fair Value of Derivative Instruments Classified as Level 3 (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Beginning balance | $ 86,079 | $ 81,859 | $ 79,652 | $ 80,268 |
Realized and unrealized gains (losses): | ||||
Included in other comprehensive (loss) income | (6,760) | 418 | (2,605) | (10,090) |
Included in operating revenues, net | (2,295) | 1,324 | 3,793 | 16,873 |
Settlements | 7,555 | 583 | 3,739 | (2,867) |
Ending balance | $ 84,579 | $ 84,184 | $ 84,579 | $ 84,184 |
Related Parties - Additional Information (Narrative) (Details) - shares |
Oct. 08, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Class A common stock | Orion Holdings | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 65.00% | 65.00% | |
Subsequent Event | Affiliates of Brookfield | |||
Related Party Transaction [Line Items] | |||
Percentage of ownership | 61.00% | ||
Private Placement | Subsequent Event | |||
Related Party Transaction [Line Items] | |||
Public offering common stock (in shares) | 2,981,514 |
Variable Interest Entities |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | VARIABLE INTEREST ENTITIES The Company assesses entities for consolidation in accordance with ASC 810. The Company consolidates variable interest entities (“VIEs”) in renewable energy facilities when the Company is determined to be the primary beneficiary. VIEs are entities that lack one or more of the characteristics of a voting interest entity (“VOE”). The Company has a controlling financial interest in a VIE when its variable interest(s) provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The VIEs own and operate renewable energy facilities in order to generate contracted cash flows. The VIEs were funded through a combination of equity contributions from the owners and non-recourse project-level debt. VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity is consolidated. For consolidated VIEs, the Company presented on its consolidated balance sheets, to the extent material, the assets of its consolidated VIEs that can only be used to settle specific obligations of the consolidated VIE, and the liabilities of its consolidated VIEs for which creditors do not have recourse to the Company’s general assets outside of the VIE. The carrying amounts and classification of the consolidated assets and liabilities of the VIEs included in the Company’s unaudited condensed consolidated balance sheets were as follows:
The amounts shown in the table above exclude intercompany balances that were eliminated upon consolidation. All of the assets in the table above are restricted for the settlement of the VIE obligations and all the liabilities in the table above can only be settled by using VIE resources.
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Cash and Cash Equivalents |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | CASH AND CASH EQUIVALENTS Cash and cash equivalents include all cash balances and money market funds with original maturity periods of three months or less when purchased. As of September 30, 2019 and December 31, 2018, cash and cash equivalents included $188.4 million and $177.6 million, respectively, of unrestricted cash held at project-level subsidiaries, which was available for project expenses but not available for corporate use. Restricted Cash Restricted cash consists of cash on deposit in financial institutions that is restricted to satisfy the requirements of certain debt agreements and funds held within certain of the Company’s subsidiaries that are restricted for current debt service payments and other purposes in accordance with the applicable debt agreements. These restrictions include: (i) cash on deposit in collateral accounts, debt service reserve accounts and maintenance reserve accounts; and (ii) cash on deposit in operating accounts but subject to distribution restrictions related to debt defaults existing as of the date of the financial statements. Restricted cash that is not expected to become unrestricted within twelve months from the date of the balance sheet is presented within non-current assets in the consolidated balance sheets. Reconciliation of Cash and Cash Equivalents as Presented in the Unaudited Condensed Consolidated Statement of Cash Flows The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total of the same such amounts shown in the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2019:
As discussed in Note 10. Long-term Debt, the Company was in default under certain of its non-recourse financing agreements as of the date of the issuance of the financial statements for the nine months ended September 30, 2019, and for the year ended December 31, 2018. As a result, the Company reclassified $11.2 million of non-current restricted cash to current as of September 30, 2019 and December 31, 2018, consistent with the corresponding debt classification, as the restrictions that required the cash balances to be classified as non-current restricted cash were driven by the financing agreements. As of September 30, 2019 and December 31, 2018, $2.2 million and $1.4 million, respectively, of cash and cash equivalents was also reclassified to current restricted cash as the cash balances were subject to distribution restrictions related to debt agreements that existed as of the respective balance sheet date.
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