Avangrid (AGR) 8-K AVANGRID Reports First Quarter 2018 Earnings Results and Affirms 2018 Earnings Outlook

Results

Presentation /1Q2018

Avangrid, “utility of the future”

Exhibit 99.2

2

Avangrid, “utility of the future”

Legal Notice

Investors@AVANGRID.com

FORWARD LOOKING STATEMENTS

Certain

statements

in

this

presentation

may

relate

to

our

future

business

and

financial

performance

and

future

events

or

developments

involving

us

and

our

subsidiaries

that

are

not

purely

historical

and

may

constitute

“forward-looking

statements”

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995.

Forward-looking

statements

may

be

identified

by

the

use

of

forward-looking

terms

such

as

“may,”

“will,”

“should,”

“would,”

“could,”

“can,”

“expect(s,)”

“believe(s),”

“anticipate(s),”

“intend(s),”

“plan(s),”

“estimate(s),”

“project(s),”“assume(s),”

“guide(s),”

“target(s),”

“forecast(s),”

“are

(is)

confident

that”

and

“seek(s)”

or

the

negative

of

such

terms

or

other

variations

on

such

terms

or

comparable

terminology.

Such

forward

looking

statements

include,

but

are

not

limited

to,

statements

about

our

plans,

objectives

and

intentions,

outlooks

or

expectations

for

earnings,

revenues,

expenses

or

other

future

financial

or

business

performance,

strategies

or

expectations,

or

the

impact

of

legal

or

regulatory

matters

on

our

business,

results

of

operations

or

financial

condition.

Such

statements

are

based

upon

the

current

reasonable

beliefs,

expectations

and

assumptions

of

our

management

and

are

subject

to

significant

risks

and

uncertainties

that

could

cause

actual

outcomes

and

results

to

differ

materially.

Important

factors

that

could

cause

actual

results

to

differ

materially

from

those

indicated

by

such

forward-looking

statements

include,

without

limitation,

the

risks

and

uncertainties

set

forth

under

the

section

entitled

“Risk

Factors”

and

“Management’s

Discussion

and

Analysis

of

Financial

Condition

and

Results

of

Operations”

in

our

Annual

Report

on

Form

10-K

for

the

year

ended

December

31,

2017,

which

is

on

file

with

the

Securities

and

Exchange

Commission

(SEC)

and

available

on

our

investor

relations

website

at

www.Avangrid.com

and

on

the

SEC

website

at

www.sec.gov.

Additional

information

will

also

be

set

forth

in

subsequent

filings

with

the

SEC.

You

should

consider

these

factors

carefully

in

evaluating

for-ward

looking

statements.

Should

one

or

more

of

these

risks

or

uncertainties

materialize,

or

should

any

of

the

underlying

assumptions

prove

incorrect,

actual

results

may

vary

in

material

respects

from

those

expressed

or

implied

by

these

forward-looking

statements.

You

should

not

place

undue

reliance

on

these

forward-looking

statements.

We

do

not

undertake

any

obligation

to

update

or

revise

any

forward-looking

statements

to

reflect

events

or

circumstances

after

the

date

of

this

presentation

whether

as

a

result

of

new

information,

future

events

or

otherwise,

except

as

may

be

required

under

applicable

securities

laws.

About AVANGRID

About

AVANGRID:

AVANGRID,

Inc.

(NYSE:

AGR)

is

a

diversified

energy

and

utility

company

with

approximately

$32

billion

in

assets

and

operations

in

27

states.

The

Company

operates

regulated

utilities

and

electricity

generation

through

two

primary

lines

of

business,

Avangrid

Networks

and

Avangrid

Renewables.

Avangrid

Networks

includes

eight

electric

and

natural

gas

utilities,

serving

3.2

million

customers

in

New

York

and

New

England.

Avangrid

Renewables

owns

and

operates

7.1

gigawatts

of

electricity

capacity,

primarily

through

wind

power,

with

presence

in

22

states

across

the

United

States.

AVANGRID

employs

approximately

6,600

people.

For

more

information,

visit

www.avangrid.com.

3

Avangrid, “utility of the future”

Legal Notice

Use of Non-GAAP Financial Measures

To

supplement

our

consolidated

financial

statements

presented

in

accordance

with

U.S.

GAAP,

AVANGRID

considers

certain

non-GAAP

financial

measures

that

are

not

prepared

in

accordance

with

U.S.

GAAP,

including

adjusted

net

income,

adjusted

EPS,

adjusted

gross

margin

and

adjusted

EBITDA.

The

non-GAAP

financial

measures

we

use

are

specific

to

AVANGRID

and

the

non-GAAP

financial

measures

of

other

companies

may

not

be

calculated

in

the

same

manner.

We

use

these

non-GAAP

financial

measures,

in

addition

to

U.S.

GAAP

measures,

to

establish

operating

budgets

and

operational

goals

to

manage

and

monitor

our

business,

evaluate

our

operating

and

financial

performance

and

to

compare

such

performance

to

prior

periods

and

to

the

performance

of

our

competitors.

We

believe

that

presenting

such

non-GAAP

financial

measures

is

useful

because

such

measures

can

be

used

to

analyze

and

compare

profitability

between

companies

and

industries

because

it

eliminates

the

impact

of

financing

and

certain

non-cash

charges

as

well

as

allow

for

an

evaluation

of

AVANGRID

with

a

focus

on

the

performance

of

its

core

operations.

In

addition,

we

present

non-GAAP

financial

measures

because

we

believe

that

they

and

other

similar

measures

are

widely

used

by

certain

investors,

securities

analysts

and

other

interested

parties

as

supplemental

measures

of

performance.

We

provide

adjusted

net

income,

which

is

adjusted

to

reflect

the

effect

of

mark-to-market

changes

in

the

fair

value

of

derivative

instruments

used

by

AVANGRID

to

economically

hedge

market

price

fluctuations

in

related

underlying

physical

transactions

for

the

purchase

and

sale

of

electricity,

adjustments

for

the

non-core

Gas

Storage

business,

and

the

impairment

of

certain

investments

and

excludes

the

sale

of

certain

equity

investments.

We

define

adjusted

EBITDA

as

net

income

attributable

to

AVANGRID,

adding

back

income

tax

expense,

depreciation,

amortization,

impairment

of

non-current

assets

and

interest

expense,

net

of

capitalization,

and

then

subtracting

other

income

and

earnings

from

equity

method

investments.

We

also

define

adjusted

gross

margin

as

adjusted

EBITDA

adding

back

operations

and

maintenance

and

taxes

other

than

income

taxes

and

then

subtracting

transmission

wheeling.

The

most

directly

comparable

U.S.

GAAP

measure

to

adjusted

EBITDA

and

adjusted

gross

margin

is

net

income.

We

believe

that

presenting

these

non-GAAP

financial

measures

is

useful

in

understanding

and

evaluating

actual

and

projected

financial

performance

and

contribution

of

AVANGRID

core

lines

of

business

and

to

more

fully

compare

and

explain

our

results.

The

most

directly

comparable

U.S.

GAAP

measure

to

adjusted

net

income

is

net

income.

We

also

provide

adjusted

EPS,

which

is

adjusted

net

income

converted

to

an

earnings

per

share

amount.

We

provide

adjusted

net

income

and

adjusted

earnings

per

share,

which

are

adjusted

to

reflect

the

effect

of

mark-to-market

changes

in

the

fair

value

of

derivative

instruments

used

by

AVANGRID

to

economically

hedge

market

price

fluctuations

in

related

underlying

physical

transactions

for

the

purchase

and

sale

of

electricity,

adjustments

for

the

non-core

Gas

Storage

business

including

certain

losses

related

to

its

sale,

and

restructuring

charges

primarily

associated

with

reorganizing

to

better

align

our

people

resources

with

business

demands

and

priorities

as

part

of

the

Forward

2020+

program.

We

define

adjusted

EBITDA

as

net

income

attributable

to

AVANGRID,

adding

back

income

tax

expense,

depreciation,

amortization,

impairment

of

non-current

assets

and

interest

expense,

net

of

capitalization,

and

then

subtracting

other

income

and

earnings

from

equity

method

investments.

We

also

define

adjusted

gross

margin

as

adjusted

EBITDA

adding

back

operations

and

maintenance

and

taxes

other

than

income

taxes

and

then

subtracting

transmission

wheeling.

The

most

directly

comparable

U.S.

GAAP

measure

to

adjusted

EBITDA

and

adjusted

gross

margin

is

net

income.

We

believe

that

presenting

these

non-GAAP

financial

measures

is

useful

in

understanding

and

evaluating

actual

and

projected

financial

performance

and

contribution

of

AVANGRID

core

lines

of

business

and

to

more

fully

compare

and

explain

our

results.

The

most

directly

comparable

U.S.

GAAP

measure

to

adjusted

net

income

is

net

income.

We

also

provide

adjusted

EPS,

which

is

adjusted

net

income

converted

to

an

earnings

per

share

amount.

4

Avangrid, “utility of the future”

1Q 2018

Highlights

James Torgerson

5

Avangrid, “utility of the future”

Highlights

(1)

See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS.

1Q

’18

Adjusted

Net

Income

$243M,

$0.78/share

(1)

1Q ’18 Net Income $244M, $0.79/share

•

Completed the sale of the Gas Trading business on March 1

•

Definitive agreement reached for sale of the Gas Storage business, expected

closing in May

•

~497 MW onshore wind & solar under construction

•

Central Maine Power’s NECEC transmission project selected in MA RFP

•

Vineyard Wind is first offshore bid in MA RFP to file Construction and

Operations Plan (COP) & commence environmental assessment process

•

Submitted bid in CT RFP for 190 MW of offshore wind

IMPLEMENTING OUR STRATEGIC PLAN

EXECUTING ON NEW OPPORTUNITIES

6

Avangrid, “utility of the future”

1Q ’17

1Q ’18

Earnings Results –

1Q ’18 vs. 1Q ’17 & Reconciliation

1Q ’18 Net income reflects Gas Storage, two months of Gas

Trading results & MTM

Amounts may not add due to rounding.

Reconciliation

of 1Q ’18 EPS to

1Q’18 Adjusted EPS

(1)

1Q ’18

EPS

$0.79

Gas Storage & Trading Results

-$0.04

Gas Storage & Trading Loss from

Held for Sale Measurement

+$0.05

Renewables MtM

-$0.01

1Q ’18 Adjusted EPS

$0.78

1Q ’18 vs. 1Q ’17 EPS ($/share)

(1)

See Appendix for reconciliation of adjusted EPS to EPS.

$0.77

$0.79

+2%

7

Avangrid, “utility of the future”

Key drivers include:

•

Multi-year

plans

in

NY

(2)

&

CT

•

Ongoing implementation of best practices & cost management

•

Positive operating performance at Renewables with improved wind resource & ~590 MW new wind &

solar

projects

increasing

production

&

PTCs

(3)

o

Renewables

operating

performance

was

strong

(Adjusted

Gross

Margin

up

11%),

although

positive

discrete tax adjustments in 1Q ’17 reduced the year-over-year comparison

1Q

’18

vs.

1Q

’17

EPS

Adjusted

EPS

($/share)

(1)

Adjusted Earnings Results

1Q ’18 Earnings performance positions us well to achieve our annual

guidance target

(1)

See Appendix for reconciliation of adjusted EPS to EPS & adjusted gross margin to net income.

(2)

1Q ’17 included sharing charge for Rate Year 1 in NY of $10M pre-tax; Rate Year 2 sharing charge expected to be determined in 2Q ’18.

(3)

Renewables net income & adjusted net income includes ~$0.01 related to the implementation of tax reform.

Amounts may not add due to rounding.

1Q ’17 vs. 1Q ’18 Impacts

1Q ’17

Net Income

$0.73

Networks

+$0.09

Renewables

-$0.04

Corporate

$0.00

1Q ’18 Adjusted Net Income

$0.78

+7%

$0.73

$0.78

1Q '17

1Q '18

8

Avangrid, “utility of the future”

•

March

Staff

recommendation

-

net

benefits

to

be

deferred

&

passed

back

to

customers

through current rate case or sur-credit effective October 1, ’18

•

Company proposal to offset storm costs & AMI revenue requirements

Networks Regulatory Updates

2017 Tax Cut & Jobs Act

Reviewing impacts & methodology for ensuring ratepayer benefit

NY

ME

•

Proposing Tax Act savings to offset recovery of October ’17 major storm costs in July 1, ’18

annual true up

CT/MA

•

New England Transmission Owner formula rate will automatically capture benefits (UI &

CMP); FERC opened proceedings & is addressing comments

•

Proceedings in process

FERC

Other

NY

•

AMI

discussions

ongoing

–

anticipate

approval

later

in

’18;

Earnings

Adjustment

Mechanism

discussions impacted by ongoing storm activity, AMI discussions, etc.

•

Planned rate filings for CNG & BGC in 2Q ’18

•

ALJ

recommended

no

change

in

the

ROE

for

Complaint

IV

–

existing

ROE

not

shown

to

be

unjust

&

unreasonable

(1)

•

No progress on Complaint I remand or Complaint II/III

CT/MA

FERC

(1)  10.57% Base ROE; 11.74% maximum.

9

Avangrid, “utility of the future”

NECEC

Key Permits/Approvals/Reviews:

MA PUC Approval of Contracts

ME PUC Certificate of Public Convenience and Necessity

Maine DEP Approval

Presidential Permit

ISO-NE System Impact Study

Army Corps of Engineers Environmental Assessment

FERC Approval of Tariff

•

$950M investment, excluding AFUDC

•

Fixed, levelized

price for 20 years

•

Construction ’19-’22

•

Ongoing contract negotiations with Electric

Distribution Companies in MA

o

Goal of filing with the MA DPU shortly;

approval expected in ’19

•

Remaining Permits/Approvals all filed in

’17

o

Expect to receive all ME approvals by end of

’18 & other approvals by end of ’19

10

Avangrid, “utility of the future”

•

1,600 MW required by legislation

•

Current RFP for up to 800 MW

(Selection Expected in May)

•

Vineyard Wind bid 400 MW & 800 MW

o

Expect COD by ’21

o

Only company to provide direct benefits to Cape Cod

o

O&M center will be located on Martha’s Vineyard

o

First company to apply for COP & to start its

environmental assessment process

Focus on Clean Energy –

Offshore Wind

Offshore wind prospects gaining considerable momentum

CURRENT OPPORTUNITIES

•

Current RFP for renewable energy sources

•

Vineyard Wind bid 190 MW offshore wind

(Selection To Be Announced June ’18)

Vineyard Wind, MA  (~3 GW)

50/50 Partnership with

Copenhagen Infrastructure

Partners (CIP)

Most Mature Offshore Wind

Project in the MA RFP

Kitty Hawk, NC (~2.5 GW)

100% AVANGRID Ownership

AVANGRID OFFSHORE

LEASES

NY

MA

CT

NJ

NC

RI

CT

MA

Additional Offshore Opportunities Upcoming in NY, RI, MA & NJ

11

Avangrid, “utility of the future”

Focus on Clean Energy –

Offshore Wind

AVANGRID is well-positioned for leadership in U.S. offshore market

Significant, Proven U.S. Onshore Renewables

& Transmission Experience

•

Renewables

has

3

rd

largest

installed

capacity

in

U.S.

•

Recent, successful completion of >$1B Transmission

project on-time & on-budget

Significant, Proven Global Offshore

Experience

•

AVANGRID affiliates & Vineyard Wind partner

CIP have significant expertise with offshore wind

o

Deep technical knowledge & engineering experience

o

Well developed supply chain & relationships

o

Experience managing offshore O&M

Strong financing capabilities

•

AVANGRID’s robust balance sheet & CIP’s experience

investing in & financing offshore wind

Local Knowledge

Global Teams

12

Avangrid, “utility of the future”

Executing Opportunities to Achieve our Strategic Goals

Exiting Gas Trading & Storage Businesses

March 1, ’18:  Completed Sale of Gas Trading Business

February 16, ’18:  Definitive agreement reached to sell Gas Storage Business

(Enstor Gas, LLC) to Amphora Gas Storage USA, LLC, an affiliate of ArcLight Capital

Partners, LLC; The transaction is expected to be completed May ’18

Removes volatility related to commodities & trading, eliminates ongoing net losses from

the business

Entered into Contract for 100 MW Klamath Peaking Plant

Renewables entered into a contract with Portland General Electric for 100 MW from its

Klamath Peaking Plant;  Contract term is 5 years, beginning in 2019

Moving Forward with Targeting of Transmission in New Regions

Networks registered to submit Transmission bids into RFPs in the MISO

Continuing to Progress on Execution of Renewables Growth Plans

Highly Likely projects increased by ~100 MW; Secured plus Highly Likely ~1,746 MW

13

Avangrid, “utility of the future”

Highlights

(1)

See Appendix for reconciliation of adjusted EPS to EPS.

Long Term Outlook is on Target to Meet Expectations

•

New wind projects in operation & multi-year rate plans for NYSEG, RGE, UI & SCG

•

Continue to employ Best Practices & achieve cost mitigation

•

Implementing tax reform in all regulatory jurisdictions

•

NECEC transmission project selected in MA RFP

•

Positioned for growth in Offshore wind, with lease ownership & multiple New England

region offshore wind targets & RFPs

•

Gas Trading -

completed March 1; Gas Storage expected to close in May

SOLID EARNINGS PERFORMANCE IN 1Q ’18

WELL-POSITIONED FOR LONG-TERM GROWTH OUTSIDE OF PLAN

COMPLETED SALE OF NON-CORE BUSINESS

Affirming ’18 EPS Outlook: EPS $2.16-$2.46 & Adjusted EPS

(1)

$2.22-$2.50

’18 Guidance is based on Adjusted EPS

14

1Q

Financial

Results

Richard Nicholas

15

Avangrid, “utility of the future”

1Q '17

Networks

Renewables

Corporate

Gas

1Q '18

Results by Business

$0.77

$0.79

$0.09

($0.07)

$0.00

($0.01)

1Q ’18 Earnings are on track with our annual expectations

EPS

Amounts may not add due to rounding.

Results include Gas Storage & two months of the Gas Trading businesses

16

Avangrid, “utility of the future”

1Q '17

Networks

Renewables

Corporate

1Q '18

Results by Business

$0.73

$0.78

$0.09

($0.04)

$0.00

Adjusted EPS

(1)

improves with new rate years & ~590 MW of

new wind & solar COD in ’17

Adjusted EPS

(1)

(1)

See Appendix for reconciliation of adjusted EPS to EPS.

Amounts may not add due to rounding.

Positive operating performance in Networks & Renewables, although

year-over-year Renewables variance was impacted by 1Q ’17 positive

discrete tax adjustments

17

Avangrid, “utility of the future”

1Q

’18

Adjusted

Net

Income

$201M

(1)

1Q ’18

vs. 1Q ’17

+$29M (+$0.09/share)

Distribution

•

NYSEG & RGE –

Year 2 of Rate

Plans

•

UI –

Year 2 of Rate Plan

•

SCG –

Year 1 of Rate Plan

•

Implementation of Best Practices &

Cost Management

•

Year-over-year

sharing

impacts

(2)

+$0.07

Transmission

•

Increase in rate base

+$0.01

Other

+$0.01

Results by Business

(1)

See Appendix for reconciliation of adjusted net income to net income and adjusted EPS to EPS.

(2)

1Q ’17 included sharing charge  for Rate Year 1 in NY of $10M pre-tax; Rate Year 2 sharing charge expected to be determined in 2Q ’18.

(3)

Renewables net income & adjusted net income includes ~$0.01 related to the implementation of tax reform.

(4)

Primarily includes amounts related to cumulative adjustments to state unitary taxes taken in 1Q ’17.

Amounts may not add due to rounding.

1Q ’18 Net income $200M

1Q

’18

Adjusted

Net

Income

$47M

(1)(3)

1Q ’18

vs. 1Q ’17

-$13M (-$0.04/share)

New Wind & Solar -

including PTCs

& Depreciation

+$0.06

Existing Wind

& Solar –

Sales

+$0.01

Existing Wind -

PTCs rolling off

-$0.02

Existing

Wind -

RECs

-$0.02

Tax

&

Other

(4)

-$0.07

1Q ’18 Net income $50M

1Q ’18 Net income ($5M)

1Q

’18

Adjusted

Net

Income

($5M)

(1)

1Q ’18

vs. 1Q ’17

-

$1M ($0.00/share)

Networks

Renewables

Corporate

+17%

-21%

18

Avangrid, “utility of the future”

Avangrid Renewables Metrics

Year-over-year impacts largely reflect the addition of new projects

in ’17

Load Factor

(1)

(1)

Average annual capacity factor based on wind production & capacity.

(2)

Includes PPA, merchant and RECs.

Amounts may not add due to rounding.

1Q ’17

1Q ’18

Wind Production GWh

Wind & Solar Installed Capacity (MW)

Montague

201 MW

Karankawa 286 MW

Wy’East 10 MW

Avg. Price

(2)

($/MWh)

MidCont

South

& Texas

23%

24%

26%

27%

1Q ’18

West

Northeast

+ 15%

-1%

+46%

+23%

+5%

+590

+7%

-2%

5,905

6,495

497

1Q '17

1Q '18

Capacity under

construction

31.5%

33.6%

$48.4

$47.5

1Q ’17

1Q ’18

19

Avangrid, “utility of the future”

Results –

Avangrid Renewables

YTD '17

New

Capacity

Existing

MWhs

Pricing

PTC's

Other

YTD '18

-$2

$249

1Q ’18 Net income $50M & adjusted net income $47M

1Q ’18 Adjusted gross margin

(1)

increases 11% to $249M

$224

+$21

(1)

Adjusted gross margin is a non-GAAP financial measure; see Appendix for reconciliation of adjusted gross margin to net income. Other consists

of

Thermal

&

Power

Trading

results

combined

with

other

wind

activities

(transmission,

contracted

assets,

curtailment

revenues,

utilities

costs,

&

firming and shaping revenues).

Amounts may not add due to rounding.

+$5

Effects on Adjusted Gross Margin ($M)

+$6

-$5

20

Avangrid, “utility of the future”

AVANGRID Financial Strength

Maintaining our strong balance sheet 1Q ’18

$6.1B

Net Debt

Credit Metrics

(1)

Net Debt/Adjusted EBITDA

Net Leverage

(1)

See

Appendix

for

Company

definitions

of

metrics

and

reconciliation

of

adjusted

EBITDA

to

net

income,

funds

from

operations

(FFO)

to

net

income and net debt to debt.

S&P

Moody’s

Fitch

FFO/Debt

Credit Ratings

BBB+

Baa1

BBB+

2.9x

28%

30%

21

Avangrid, “utility of the future”

Affirming 2018 Outlook

(1)

Adjusted EPS excludes the Gas Storage & Trading businesses.  Renewables MTM is not excluded because it cannot be estimated.  See Appendix for

reconciliation of non-GAAP adjusted net income and adjusted EPS to net income. For 2018 management uses adjusted EPS in determining its outlook.

’18 Guidance is Based on:

AVANGRID Adjusted

EPS

(1)

$2.22 -

$2.50

’18

Guidance

is

based

on

adjusted

EPS

(1)

AVANGRID EPS

$2.16 -

$2.46

Sale of Gas Trading on 03/1/18;

Anticipate sale of Gas Storage assets by May ’18

Networks

Renewables

Corporate

$1.78 -

$1.86

$0.55 -

$0.70

($0.15) –

($0.05)

Gas Storage

($0.06) –

($0.03)

Networks

Renewables

Corporate

$1.78 -

$1.86

$0.55 -

$0.70

($0.15) –

($0.05)

•

Sale of Gas Storage Trading business closed in 1Q ’18 & Gas Storage facilities in 2Q ’18

•

~($0.06/share) loss of interest income at Corporate (recapitalization due to Gas Storage sale)

•

Normal wind

•

Earning allowed returns & into the sharing bands at the utilities through the implementation of best

practices & cost management

•

Renewables 590 MW COD in ’17

22

Avangrid, “utility of the future”

Appendix

23

Avangrid, “utility of the future”

Reconciliation AVANGRID 1Q ’18 Adjusted Net Income

AVANGRID

CONS

Networks

Renewables

Corporate

Gas Storage

Net Income (Loss) Attributable to Avangrid, Inc.

244

200

$          

50

$             

(5)

$              

(1)

$                      

Adjustments:

Add:

Mark-to-market

adjustments

-

Renewables

(5)

—

(5)

—

—

Restructuring charges (1)

1

1

—

—

—

Loss from held for sale measurement (2)

5

—

—

—

5

Income tax impact of adjustments (3)

10

(0)

1

—

9

Gas Storage & Transportation adjustment, net of tax (4)

(13)

—

—

—

(13)

Adjusted Net Income

243

$           

201

$           

47

$             

(5)

$              

—

$                      

Add: Net loss attributable to noncontrolling interests

(6)

—

(6)

—

—

Income tax expense (5)

81

63

18

(1)

—

Depreciation and amortization (6)

255

147

108

—

—

Interest expense, net of capitalization (7)

38

24

9

5

—

Less: Other income and (expense)

—

—

—

—

—

Earnings (losses) from equity method investments

2

2

—

—

—

Adjusted EBITDA

608

$           

433

$           

176

$           

(0)

$              

—

$                      

Add: Operations and maintenance (8)

379

316

63

0

—

Taxes other than income taxes

141

130

11

0

—

Adjusted Gross Margin

1,129

$       

880

$          

249

$           

0

$                

—

$                      

(1) Restructuring charges relate to costs resulted from restructuring actions involving targeted voluntary workforce reductions within the Networks segment.

(2)  The amount of loss from measurement of assets and liabilities held for sale of  Gas Storage & Transportation activity.

(3) Income tax impact of adjustments: $1 million from mark-tomarket (MtM) adjustment, $(0.3) million from restructuring charges,

$9 million from loss from held for sale

measurement for the three months ended March 31, 2018.

(4) Removal of the impact from Gas Storage & Transportation activity in the reconciliation of Net Income to adjusted EBITDA and adjusted gross margin. 

Three Months Ended

March 31, 2018

(in millions)

(5) Adjustments have been made for production tax credit adjustments for the amount of $28 million for three months ended March 31, 2018, have been reclassified from revenues to

reflect classification by nature in the three months ended March 31, 2018. After reflecting these by nature classification adjustments the calculated effective income tax rate are

impacted for the period presented under this by nature classification presentation.

(6) Adjustments have been made for the inclusion of vehicle depreciation and bad debt provision within depreciation and amortization from operations and maintenance based on

the by nature classification. Vehicle depreciation was $4 million and bad debt provision was $17 million in Networks, for the

three months ended March 31, 2018. Additionally,

government grants and investment tax credits amortization have been presented within other operating income and not within depreciation and amortization based on the by nature

classification as follows: government grants of $1.0 million in Networks and investment tax credits of $22 million in Renewables, for the three months ended March 31, 2018.

(7) Adjustments have been made for allowance for funds used during construction, debt portion, to reflect these amounts within other income and expenses in Networks for the

periods presented.

(8) Adjustments have been made for regulatory amounts to reflect amounts in revenues based on the by nature classification of

these items for the periods presented.  In addition,

the vehicle depreciation and bad debt provision have been reflected within depreciation and amortization in Networks for the periods presented. 

24

Avangrid, “utility of the future”

Reconciliation AVANGRID 1Q ’17 Adjusted Net Income

AVANGRID

CONS

Networks

Renewables

Corporate

Gas Storage

Net Income (Loss) Attributable to Avangrid, Inc.

239

$          

172

$           

70

$             

(5)

$              

2

$                   

Adjustments:

Mark-to-market

adjustments

-

Renewables

(17)

—

(17)

—

—

Income tax impact of adjustments (1)

6

—

6

—

—

Gas Storage, net of tax (2)

(2)

—

—

—

(2)

Adjusted Net Income

227

$          

172

$           

59

$             

(5)

$              

—

$                 

Add: Income tax expense (3)

96

102

(15)

9

—

Depreciation and amortization (4)

240

139

101

—

—

Interest expense, net of capitalization (5)

36

33

7

(4)

—

Less: Earnings from equity method investments

1

4

(3)

—

—

Adjusted EBITDA

598

$           

443

$           

155

$           

—

$              

—

$                 

Add: Operations and maintenance (6)

382

326

59

(2)

—

Taxes other than income taxes

137

125

11

1

—

Adjusted Gross Margin

1,117

$       

893

$           

224

$           

—

$              

—

$                 

(1) Income tax impact of adjustments: $6 million from mark-to-market adjustment . 

(2) Removal of the impact from Gas Storage & Transportation activity in the reconciliation of Net Income to adjusted EBITDA and adjusted gross margin. 

Three Months Ended

March 31, 2017

(in millions)

(3) Adjustments have been made for Production Tax Credit Adjustments for the amount of $12 million for the three months ended

March 31, 2017, as they have been included in

operating revenues and $14 million for Unfunded Future Income Taxes as amounts have been reclassified from revenues based on the

by nature classification. After reflecting

these by nature classification adjustments the calculated effective income tax rates are impacted for both periods presented under this by nature classification presentation.

(4) Adjustments have been made for the inclusion of vehicle depreciation and bad debt provision within depreciation and amortization from operations and maintenance based

on the by nature classification.  Vehicle Depreciation was $5 million and bad debt provision was $12 million, for the three months ended March 31, 2017.  Additionally,

government grants and investment tax credits amortization have been presented within other operating income and not within depreciation and amortization based on the by

nature classification. Government grants were $1.6 million and investment tax credits were $22 million for the three months ended March 31, 2017.

(5) Adjustments have been made for allowance for funds used during construction, debt portion, to reflect these amounts within other income and expenses.

(6) Adjustments have been made for regulatory amounts to reflect amounts in revenues based on the by nature classification of

these items.  In addition the vehicle depreciation

and bad debt provision have been reflected within depreciation and amortization. 

25

Avangrid, “utility of the future”

Reconciliation AVANGRID 1Q ’18 & 1Q ’17 Adjusted EPS

2018

2017

'18 vs '17

Networks

0.65

$                

0.56

$            

0.09

$         

Renewables

0.16

0.23

(0.07)

Corporate

(0.02)

(0.02)

(0.00)

Gas Storage

(0.00)

0.01

(0.01)

Earnings Per Share

0.79

$                 

0.77

$            

0.02

$         

Adjustments:

Restructuring charges

0.00

-

0.00

Mark-to-market

adjustments

-

Renewables

(0.02)

(0.06)

0.04

Loss from held for sale measurement

0.02

-

0.02

Income tax impact of adjustments*

0.03

0.02

0.02

Gas Storage, net of tax

(0.04)

(0.01)

(0.03)

Adjusted Earnings Per Share

0.78

0.73

$            

0.05

$         

Weighted-avg # of Shares (M):

309.5

309.5

Amounts may not add due to rounding

Adjusted 2018

Adjusted 2017

Adjusted '18

vs

'17

Networks

0.65

$                 

0.56

$            

0.09

$         

Renewables

0.15

0.19

(0.04)

Corporate

(0.02)

(0.02)

(0.00)

Adjusted Earnings Per Share

0.78

$                 

0.73

$            

0.05

$         

Weighted-avg # of Shares (M):

309.5

309.5

Amounts may not add due to rounding

Non-GAAP Adjusted Earnings (Loss) Per Share

Three months ended March 31,

* 2018:

EPS

Income

tax

impact

of

adjustments:

$0.00

from

mark-to

market

adjustment

-

Renewables

and

$(0.00)

from

restructuring charges -

Networks, $0.03 from loss from held for sale measurement.

* 2017:

EPS

Income

tax

impact

of

adjustments:

$0.02

from

mark-to-market

adjustment

-

Renewables.

Three months ended March 31,

Avangrid, Inc.

Reconciliation of Adjusted Non-GAAP Earnings (Loss) Per Share (EPS)

(Unaudited)

26

Avangrid, “utility of the future”

Reconciliation –

AVANGRID Net Debt

The

Net

Debt

quantitative

reconciliation

as

of

March

31,

2018

and

December

31,

2017

is

as

follows

$M

2018

2017

Non-current debt

5,160

$           

5,196

$               

Add: Current portion of debt

214

183

Notes payable (including affiliates)

662

786

Other

notes

payable

-

long-term

38

42

Debt

6,074

6,207

Add: Tax equity financing

arrangements

0

98

Interest accrued

65

57

Less: Cash and cash equivalents

40

41

Net Debt

6,099

$           

6,321

$             

27

Avangrid, “utility of the future”

Reconciliation –

AVANGRID FFO

Adjusted FFO table

The Adjusted Funds from Operations (FFO) quantitative reconciliation as of March 31, 2018 and  December 31, 2017 is as follows

$M

As of

March 31, 2018

December 31, 2017

Net Income Attributable to Avangrid, Inc.

244

381

Adjustments:

Add:

Mark-to-market

adjustments

-

Renewables

(5)

15

Restructuring charges (1)

1

20

Loss from held for sale measurement (2)

5

642

Impact of the Tax Act (3)

—

(328)

Impairment of equity method and other investment (4)

—

49

Income tax impact of adjustments (5)

10

(162)

Gas Storage & Transportation adjustment, net of tax (6)

(13)

64

Adjusted Net Income

243

682

Add: Net (loss) income attributable to noncontrolling interests

(6)

1

Depreciation and amortization

255

1,021

Deferred Income Taxes

71

93

Cash distribution from equity method investments

5

20

Less: Other income and (expense)

—

1

Earnings (losses) from equity method investments

2

5

Adjusted FFO

566

1,811

2017 Adjusted FFO

1,811

3 months Adjusted FFO

566

559

Last 12 months Adjusted FFO

1,818

FFO/Net Debt

29.8%

28.7%

(2)  The amount of loss from measurement of assets and liabilities held for sale of  Gas Storage & Transportation activity.

(4) The amount of other than temporary impairment (OTTI) on equity method investment in 2017 and other investment in 2016

(in millions)

(1) Restructuring charges relate to costs resulted from restructuring actions involving targeted voluntary workforce reductions and related costs in our plan to vacate a lease,

predominantly within the Networks segment.

(3) The amount of the impact from measurement of deferred income tax balances as a result of the Tax Cuts and Jobs Act of 2017, (Tax Act) enacted by

the U.S. federal government on December 22, 2017.

(6) Removal of the impact from Gas Storage & Transportation activity in the reconciliation of Net Income to adjusted EBITDA and adjusted gross margin. 

(5)  Income tax impact of adjustments: 2018 - $1 million from mark-to market (MtM) adjustment, $(0.3) million from restructuring charges,

$9 million  from loss from held for sale measurement; 2017 - $(5) million from mark-to-market adjustment, $(8) million from restructuring

charges, $(13) million from other than temporary impairment on equity method investment, $(179) million from loss from held for sale

measurement and $43 million from adjustment to unitary income taxes at Renewables as a result of expected future sale of Gas.

28

Avangrid, “utility of the future”

AVANGRID Renewables Average Price

PPA prices decrease

Energy prices plus RECs for merchant decrease

(1)

Includes JVs

(2)

Includes RECs & hedges

1Q ’17

1Q ’18

PPA Avg. Price ($/MWh)

1Q ’17

1Q ’18

Merchant

Avg.

Price

(1)

($/MWh)

1Q ’17

1Q ’18

Other

(2)

Energy

Avg. Price

(3)

($/MWh)

(3)  Includes PPA, merchant & RECS

-3%

-7%

-2%

$53.8

$52.0

$21.0

$24.7

$17.6

$11.4

$38.6

$36.1

$48.4

$47.5

29

Avangrid, “utility of the future”

Avangrid Renewables Regional Data

(1)

Average annual capacity factor based on wind production & capacity.

(2)

Includes PPAs, merchant and RECs.

Amounts may not add due to rounding.

Load Factor

(1)

by Area

1Q ’18

vs. 1Q ’17

West

26%

+35.9pp

MidCont

38%

-1.2pp

Northeast

38%

+2.5pp

South/Texas

35%

+0.8pp

Wind Production by

Area (GWh)

1Q ’18

vs. 1Q ’17

West

1,019

+46%

MidCont

1,157

-1%

Northeast

1,070

+5%

South/Texas

1,209

+23%

TOTAL

4,455

+15%

Avg.

Price

(2)

Var%

vs. 1Q’17

West

-1%

-$0.41/MWh

MidCont

+2%

+$0.64/MWh

Northeast

-10%

-$5.70/MWh

South/

Texas

-5%

-$2.05/MWh

30

Avangrid, “utility of the future”

Building

the

Grid

of

the

Future

-

NECEC

Overview:

•

1,200 MW Transmission project delivering hydro-power from Canada

•

$950M investment at CMP (T); Not in Long-Term Outlook

•

Construction ’19-’22

•

Expect Maine permits by end of ’18 & other approvals by end of ’19

•

Strong support from Maine Governor, Legislators, Local Communities (95%) &

Environmentalists

•

100%-owned right of way, with ~2/3 in existing transmission corridor

•

CMP’s proven ability to deliver a commercial-scale transmission project on-schedule &

on-budget

•

Lowest cost solution to deliver Canadian hydro (shortest route, over-head DC line)

o

Largest wholesale energy market savings of ~$3.9B

over 20-year contract

o

Customer savings: $150M annually (MA) & $40M annually (ME)

•

Significant economic benefits, adding jobs & increasing GDP in MA, ME & New

England, & property taxes in ME

•

Provides enough clean electricity for up to 1.5 million homes in New England

Project Benefits:

31

Avangrid, “utility of the future”

Focus on Clean Energy –

Onshore Renewables

Highly Likely projects in Long-Term Outlook (’17-’22) increase

Highly Likely -

Advanced -stage contract negotiations

Likely -

Engineering, site assessments, applications

(1)

See FACTBOOK for additional detail on Secured projects

Secured

-

COD/PPA/Contract

(1)

:

2,744

2,744

Previous

Current

53%

1,446

9%

210

38%

1,088

Secured

Highly

Likely

Likely

TOTAL

53%

1,446

11%

300

36%

998

Secured

Highly

Likely

Likely

TOTAL