Earnings call transcript Q2 2023

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Operator

Good day and thank you for standing by. Welcome to the Clearway Energy, Inc.

Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator

the now President to like would conference and to Sotos, I Chris hand over today your CEO. host

Chris Sotos

morning. Good

Clearway taking Let time me you second for first to call. thank join Energy Inc.'s quarter the

Akil morning the presentation. Cornelius, and Craig Craig Director of and will our Q&A sponsor. CEO our of be Joining Sarah is Investor CFO; for Rubenstein, portion me of Marsh, this Group, available and President Relations; Clearway Energy

note quickly that that discussion Before be we to begin, are assumptions like forward-looking contain on reasonable date. which we today's statements, this I will to as based of believe

results may today's risk in as Actual Harbor the materially. differ factors in the filings. Safe as SEC well review presentation, our Please

financial In addition, we will refer non-GAAP measures. to and both GAAP

financial reconciliations directly and regarding For to refer today's non-GAAP information GAAP comparable presentation. our most to please measures, the measures

had four. weather from first Turning geographies. most and Clearway resource of as historical conditions renewable to a deviate substantially the across year soft page averages half

Clearway quarter, of the second wind CAFD company's history. the in quarterly lowest generated production For the with million $XXX

results accounts range As weather our to renewable impacts $XXX balance year, the to of range full updating million, and to reducing are of our $XXX potential which we outcomes ahead and year half of a we first guidance the and resources look reflects a for in on load.

mild in for of our upper or resource to the relatively plan its is dividend keeping month, achieve we of by Clearway dividend of the and for the are enabled quarter $X.XXXX prudent in have results on June. financial announcing the and growth in on management, to stabilized XXXX basis weak given X% per materially in All objectives our an California share Nonetheless, target $X.XXXX XXXX. renewable increase on are range July cautious through weather annualized third

on our and long-term asset its Clearway continues CAFD and Despite base. challenges, growth focus our

million for Cedar at a X% to $XX and Energy as CAFD In CAFD we recently million a Clearway well Wind for yield terms of than Group, Creek XX% storage committed as $XXX approximately acquire drop-downs from Central greater Rosamond yield.

our are $XXX raising we million. outlook such, from As million forma pro to $XXX CAFD

In our late expected grown COD four X.X projects trajectory, to including growth has in our terms sponsor's gigawatts, years. XX of stage the over reach gigawatts of continued next pipeline

We commitments continue commitment toward to have drop-down an Nova, binding capital will XX the on Texas work of of remainder $XX which with million. estimated Solar

Working $XXX with drop-down of capital on million Clearway commitments. that Group begins XX deployment our of

our these year. farm than subsequent form yield in year-end We first a XXXX at have anticipated from balance the on wind and completion of with the a assets over a target our are XX offer assets offers the received Dans greater drop-down sponsor a Mountain, of CAFD X%

With goals. with the of targeted to contribution consistent contribution provide our CAFD those a assets

additional recent keenly aware capital, we of around from growth volatility Clearway, excess of we Here $X.XX target. generation the are and I fund volatile cash at capacity leverage capital undrawn sight per is to unused which cash long-term flow an through that our want share a our of line months. Clearway to benefits also revolver, fund reiterate enough market to point underpin key have this period. drop-downs

in positioned with the a execute through Clearway combined internal XXXX. growth share the beyond with profile, to In range per growth to CAFD very it's so plan upper $X.XX strong continues liquidity summary, the well DPS its rate grow

recent an five our slide to to of capital overview Turning provide commitments.

XX-year project investment page of Wind, for left review by megawatt On utility. an XXX PPA a the busbar underpinned a side Cedar Creek grade the Idaho

commercial XXXX. the project yield produce approximate first operations for This of CAFD XX of CAFD half achieved should million X.X% for an annually when targeted

the is with Central co-located project Solar On Storage the Battery page, Rosamond the Rosamond facility. right of our side Central

XX% XXX CAFD our over gross achieved wind invest to-date. continued new approximately require to class megawatts solar, expected first commercial of with This in and the operation $XX a of yield CWEN is to asset into half of with represents in committing project storage when This diversification or million beyond an XXXX. capital owning

continue with in these six commitments. targets update our invest summary, objectives two to advance our our Cedar achieve the excess Slide our and Creek. announced In high to growth capital thermal and we proceeds path about an quality with provides investments growth Rosamond

Nova our future and Our capital pro to million in Texas XX% offered approximately XXX now Dans offered investment $XXX Mountain drop-down the increases of outlook of Clearway from for commitments XX million this of commitment. remaining recently in represents the with forma CAFD anticipated Group, which targeted Solar

current to our market year the challenges track $X.XX and versus and volatility Clearway the beyond. share execution of continued on half first due remains per capital in Despite poor regarding resources CAFD goal renewable ongoing

Now it over Sarah? I'll Sarah. turn to

Sarah Rubenstein

$XXX page Chris. results, quarter for of second million. and for the of Thanks, of million On adjusted eight, EBITDA an of provide cash available overview we QX including $XXX distribution XXXX

that These million low in an Alta reduction projects. production decrease to including disclosed the quarter expectations to for historically million approximately resulted results of $XX previously $XX the wind compared second a reflect revenue, approximately as

Results normal at in Marsh June, of expectations. initial generated energy merchant May Creek segment milder whose quarter in The tolling lower-than-expected than agreements temperatures. conventional and the the respectively, Walnut facilities margin and internal were Landing ended also below because

a capacity its CAFD, growth long-term There objectives. to needs ratings. growth metrics with target Despite positioned for outlook in no per of of per the be credit sheet, the share pro balance line challenges to with and company CAFD external sight intact, continues result the equity impacting $X.XX share per remains and meet forma share line in large dividend for strong first half CAFD well revolver

guidance first irradiance lower-than-normal walk XXXX resulted Starting rainfall due million which range. our reflected Moving of $XXX revised page our the in lower above-average XXXX from guidance previous solar a to full revenues. provide California, solar to the We in of year from left, nine. to CAFD quarter

increased maintenance First costs compared and outages revenue reflected facilities extended quarter XXXX results capacity the that to conventional also expectations. at reduced

wind decrease quarter of expectations across compared to yielding million facilities As with approximately the wind portfolio. all reflected revenue with along in noted, the in Alta $XX at material second shortfall previously generation historical a a production, low underperformance facilities

the conventional addition, of temperatures. $XXX to CAFD half margin due than The XXXX down results merchant a first a range million. lower-than-expected energy full impact to year normal to led In $XXX revision to guidance generated XXXX of to milder the million of facilities

renewable the more long-term may have observed July range that the production have of given of far. not guidance trend PXX normal the thus normal possibility for while volatile experienced revised median XXXX in the view renewable We altered balance for wind XXXX the we month trends resource production estimates, than reflects our lower and resource of more

also merchant conventional margin months. from range sensitivity a at summer the guidance The remaining reflects the energy facilities for

weather increased margin conventional during prices as the as such impact temperatures at company as gas facilities. predict well generation cannot July, of the While how other the and may availability energy of factors, the month sources other

the guidance revised timing growth the investments, including reflects range CODs. Finally, expected committed project estimated of

closing with And to that, I'll turn remarks. back for it Chris

Chris Sotos

Thank you, Sarah.

guidance first page potential in Turning CAFD million. unable of the to challenging original the be achieve and year to back Due volatility the half to our $XXX XX. the of of year half we'll

and of control the our upper dividend our Clearway in track long-term short the While remain on within and weather, seriously to take us term. of very both objective. forecasting this enterprise these we to and improving support range all X% challenges, long the the results Despite continuing X% do focus on we not

negative on As long-term grow through XX% discussed of cash the is continue ratio dividend that in despite payout XX% flows precisely long-term rationale volatility. its manage years, XXXX like undue previous to stress for so our based weather to financial short-term without to of can years periods Clearway

Clearway Battery first remaining with batch investments on Dans Storage from and and our work addition, offer drop-down the to in continues Central next commitments for Creek our drop-downs through Cedar In Rosamond Wind the of October with offers Mountain. XXXX

share that to completed expect XXXX. first all line of drop-downs for $X.XX commitments our of by half We underpin the per sight have CAFD

Beyond CAFD resource quarter, in Cedro performance. the was continued of to per we continue Repowering and as fleet on that operational our discussed Hill our the extension contracts projects adequacy $X.XX last add the improvement of such California share,

has thus the in markets. XXXX difficult capital been Clearway, a conclusion, for resources renewable year in far the In and volatility weakness given

the Energy that to compounding leads about impact about While these game, headwinds been always appreciation. us dividend time has over currently, price stock our Clearway long

and provide growth to this are disciplined of intact, growth foundations sector spent still Inc. for approach. capital Energy, long-term growth key of capital sponsorship Clearway a strong The opportunities significant development infrastructure, investment and America's

its long term. XXth year demonstrated of existence, celebrates Clearway and As these the withstand ability has to challenges growth in of been our

open lines please. questions, for Operator, the

Operator

Instructions] [Operator Our with from you. first comes Thank Julien Bank Dumoulin-Smith America. of question

proceed. may You

Julien Dumoulin-Smith

morning, continuing the first Thanks I a Hey, How for of of today here past sort the little year. you in it. will, the tense lot across more appreciate about part terms portfolio quarter? challenges if talk about the the time. trends obviously, of generation? third through talking a of the half bit Chris, team. Can much mark-to-market, you through good you're so are renewable

Chris Sotos

Sure.

think for mentioned my comments, July was as track I plan. on in I

we a CAFD as whole. deviation for portfolio see So didn't significant on the a basis a

think it's I August So early days.

in get was July but want to You month a there, track. full on

the hoping weakness first has we're So half saw that we in the year of abated. the

Julien Dumoulin-Smith

reaffirming that Yes. multiples in transforming here. do have the At in. takes contemplating to today plan. pass terms the as see will. multiples How the of you a and bit there's here you terms in alluded you more time, acquisition financing if market that in speak clearly, versus then stabilized point, And impacting you multiples tense the the the described market see or transfer plan the the plan transaction of to in and backdrop, I same to in it. you of acquisitions multiples. Got obviously and challenges. come capital you I can what terms today, were or your puts mean acquisition But little

Chris Sotos

volatility XX-year weeks saying, has up given, shown they've of a lot phrase you how the on I look think what it. really you're I shifted differently of depending past may two much in Julien at kind the think, is don't treasury

terms acquisition, my for so we in And that from what which hasn't the the of have similar looking to a we multiples were very changed much. really are at lot perspective, drop-downs, of

don't for seeing ago think through I X of versus, maybe if know currently treasury a what XX, XX, to XXX, X, that's real transferred terms price environment weeks I XX-year as in call expectations we're seller about date. a think, us, I it,

in much impacted M&A environment treasury have is that to saying, if the So it's see way sticky translates current multiples. I think a don't this it how we'll of and but period, us to long-winded

Julien Dumoulin-Smith

here issues and in your despite that them. They're multiples, being wider might of If you quarter headline the in into read more point trends, right? some perhaps lower transactions specific portfolios discrete necessarily I as embedded that right. the hear seeing be those to indicative But Right. the is otherwise at wouldn't you

Chris Sotos

there's volatility market treasury can Correct. I you the new of past extrapolate terms three of in levels. think the upon capitulation M&A don't based weeks in

Julien Dumoulin-Smith

on specifically, you lastly second or mind, of through action if you right, balance transactions the in points here, Right I then don't more data super but if quick, the just hear continue the quarter just and backdrop on the to love California, across commercial would I and if forward your prices, come accrue here about you're back to at not extending higher outlook strategy thinking too. quarter-over-quarter. your Again, very out then how curve robust ultimately higher, here, to

Chris Sotos

Sure.

different to Julien. of questions unpack it. couple a So try I'll here,

I of are the strong think point, your to in very some still forwards California.

times as price all profitability. we're determining are and achieved assets peaking run in when occurs, I think peak assumptions exactly the familiar what critical it However, with

week cool back So relatively supposed a right that's middle end environment of or California of kind next heat week. now to in have next up of you

we're in it's much event think of I week more in next really where current. time at, run So and saying on probably terms they're

was then the of and July for gave, assets. while for So of well us, tough It's some came kind I plan. other the especially nature was days. days It in on just really peaking comments

we're think that year, dependent the again, -- and highly of weather. I we once to not on where pretty severity anything the feel I good don't for know. it's dependent remainder of highly weather, So But about highly the It's duration at. on

in conducted getting results RFP pricing, as as anticipate those and we've about any year, In the on in RA we second utilities the terms bid We call. quarter. the part longer of the announce over the by November term, the talked of

Julien Dumoulin-Smith

Understood.

okay running in California Assets here?

Chris Sotos

Yes.

Julien Dumoulin-Smith

Excellent. Thank you luck. Wonderful. guys. Good

Operator

Thank you. One moment for questions.

Jarvi with Mark question next from comes CIBC. Our

You may proceed.

Mark Jarvi

everyone. Thanks. morning, Good

So just assets. back last on California commentary to the the coming

all is guidance for changes margins within energy Just about any at XXXX? guidance, your the back when half the around in now you think expectations you're there

Chris Sotos

number. of Not in terms baseline the

kind of about cooler However, it does help were talked of inform range appear. the the weather I of to some that

So does. to in it inform answer really estimate, pinpoint our it Yes, of question, your doesn't the range? change but helping terms

Mark Jarvi

of, swings range think the you range Is of some sort what's wind, about obviously but assets, you in like conventional million or range is range? same guess, than think think What year? this the assets. more in narrower you terms that those you've $XX in when then of the terms And for specifically CAFD the there's do variability I it the that is given brings particular of in the terms expectations of balance of the sort the broad of renewable

Chris Sotos

within I of renewable would that offset where or It's given. in the would would would the you're range say as wind kind going. it be if a the gas fleet, that's though assets deviation not

not than the The be conventional range. that. to it's the within on So as would wider deviation is though deviation that tend

Mark Jarvi

stocks X.X% what the on performs just a terms Got offer at where X% X.X%. think CAFD range than the in at then of lower it. Mountain And bit here trading Dans I

about terms at? think bring to price, buying back over would anything there's if CAFD up share And that relative plan that what to your funding you could with do you currency So Dan of transaction your stock yield the around Mountain. in optimize own be how time

Chris Sotos

I'll A that. Sure. of there. try different couple unpack to questions

we end first talked these think those the put XX, for the reasons X.X% sometimes drop-down XX is for for about we being approximately part a basis I big up average about Dans about point fleet. and one on when X.X, we weighted entire in drop-down talked

are of be Rosamond those the are those going of Some X.X% XX%. at to BESS like some below

greater, mean that's X.X%, is going as I every when a So or be point it -- portfolio to the X.X% key we think the is asset each doesn't whole. say

Some being being some bit little lower, a higher.

we So it's I'd with overall. how consistent things view say

Second, mean, basis. with contracted pretty is basically, attractive asset I the a XX-year

So but market. once again, is XX longer is strong today's better, pretty in

to in that, the -- and GCN think front subject me your that we like, view or to point around acquisitions we can stock overall, order doesn't as and something again surprise to and keep we negatively. a I bit. number and at. like that's find to, the to our long broaden tend tenor focus stock tend were on we kind and think say, diligence that that's it in diversify of continue those because as so portfolio, it's To sponsor, to then And buybacks going look that the helps better it time, if it like, walk adding our still you the a and from of to out drop-downs be duration drop-downs solely on PPA PPA buybacks. accretive let's would stop investment, form the doing of Through in also

actually, acquisitions think Dans well for of So Cedar dropdowns done with dilution. accretive talked duration kind on an see I basis Rosamond with as hopefully PPA and the you that to we just we being as Creek about, that versus continue the talked about drop-downs just Mountain,

Mark Jarvi

at given view do and increase Okay. you stick about to the But the stocks makes is, rewarded sense, for conditions, and X% now talked do then foreseeable Or long-term and growth. That the start the if you're the for the market the coming you've And the dividend take obviously, just in noting increase, you Chris. to to equity $X.XX end? at plan X% get future? trading just dividend not the being lower you're with moderate down drive

Chris Sotos

Sure.

settles recent handle of the of think conditions, things. of as I has phenomenon, out inform kind to at. four I response all questions, talked need I where some in market answer been think couple see moving subject your think by the earlier to about the driven a has to weakness would pretty I treasury kind we of stock. in I a This One, which

up a in purposes stabilize. the conversation, part of is than do of to isn't versus million the left is difference of that's X% six significant terms to where say, one with a of eight in $XXX growing, significant let's lower number So of at come right? me, two, for kind sheet, Part cash that's deviation the eight $X on CAFD. balance every million CAFD, treasuries

It's basically not cash lot is growth we to sheet $X about more like. were saying, assets paradigm difference invest balance in X% in with on a the shift have in a million. So well, a which

do think envelope. be never right? anymore, I just changes we're that the growth do not X%, be if right growth comfortable end for But we with can with -- that's of again. To long-term think I But X.X% that, about question still I the to comfortable if, equity upon, based see really for range and dividend to in the the high be but we we're rate. will example, our cash moderating end that look and in it, third, the in it X% terms kind a dividends available don't uses a clear, driving future significant think of think your in of value dividend our just pushing investment. currently, the is everybody I the of market And valued range. value rate deviation how think in that the is I see it's high take be retained So I which at kind I the now, the case for clear, around of doesn't We're to then holders.

I where kind bit, think tenure need a at. settle and we we'll down just of to see we're this then

Mark Jarvi

leave there. time I'll Okay. for All Thanks today. the right. it

Operator

moment you. Thank questions. One for

Storozynski comes question Seaport next Partners. with Research from Our Angie

may proceed. You

Angie Storozynski

morning. Good

on question gas one the So plant.

and output from the you how So for the these it comment could saw on of what tolls? under dispatch assets we differs assets the versus the

Chris Sotos

say versus Obviously, they're based the a differently signals. their market identified, taking that entities what really upon portfolios us difference just can them Angie. can't ran there's tolling I really probably be in seeing

around data, maybe a months will obviously, because three I really bit say and two it's full fleet. full and only we've little not also difficult the So of also got

question. to basis comparison, know don't there's good Angie, fair to really for that be I your if So a

Angie Storozynski

changing Okay. expectation. CAFD share I And topics per the on then understand.

at looking where I'm maturities bonds holdco your trade. currently So and these debt

further how incremental So absorb there expense and I refinancing plan that XXXX the But -- mean some that know to in are them interest that of is out. and per a projection. share CAFD I from

Chris Sotos

Sure.

your yielding a correctly I XXXX. And point. at those corporate of sense to to that continue grow have obviously gives make to It's end, I to the nine, the are think back buy if period portfolio. Angie, at things deal those time mentioned some in and cap though, bonds think you time, question, strong again, because in pretty they the I XXXX XXXX, if that while, us that

got bit X) time to and of So way now me, I we've to a) those a for the to between manage portfolio. think then, one grow continue

is, obviously, are Third other very two the XXXX dated long and with XXXX.

answers So that your question. hopefully

Angie Storozynski

Yeah. Thank you.

Operator

you. Thank

Oppenheimer. Our with next Kaye question comes from Noah

You may proceed.

Noah Kaye

for the thanks Hey, taking question.

just of mean of guide. your maybe midpoint I bit little math a following So the here clean-up questions. prior revised

in got plus the in potential back then XQ way to about right the CAFD clear. very for think lower there's 'XX, 'XX energy. it Is -- is slightly lower that that You've XQ the the X half. numbers midpoint another at deck million And the basically

so -- Okay,

Chris Sotos

would half into taking the some put bit the Once first is downside the we questions. Noah, the just of it, to The account other results, of given the think again, year. kind way I skewed a range half the I of first

July. that year half seen the Fortunately, weather of in the we in haven't first persisted patterns the

a So we're go. but hoping yes in long continues, way to the trend July

Noah Kaye

existing this of of long-term this view actually, that mean would pro weather low anything us long-term your of these portfolios there as you're to historically your So and pro of the because CAFD your the forma about? changing patterns about and of not a certainly change at those changing implied. on underpins of quarter first the generally assumptions. you conservative EBITDA that right to You company hard some not have bit climate or at little what some is how Obviously, concerned production. testing side talked I be the But being And be just the -- investing but you assessment guess look is for to point? basically, of view wind forma CAFD. half. just reversion a talk wonder So about portfolio additions, kind your portfolio increased then those on, not view

Chris Sotos

Part update in is we'll typically November. Sure. any long-term assumptions one

So see all we just though to adjustments occurring. as not be at clear, it's don't any

Just comprehensively kind quarter. every simply, of in years, do and which we which account the the November, previous that contracts done the into like. merchant RA don't in of cost takes PXXs, increases, any extension curves to We we've revisions do and that

the done of if for comprehensively Alta, is year, is we oscillate one November typically on look the two they part view in data, bring question, down. production this do back long-term indices, with Part So think, historical where around really I our everything at is, your XXX. you long-term else exception to us

and XXX You actually XX XX have -- kind of your up. showing beg and pardon XX

oscillation So better, some see of kind that year, pick you do around your XXX worse. some

it's continuing really about get I refining So and think us, that. to longer-term for data

that a like leverage. kind require generate is, reason So there is to right? don't It don't models XX%, ratio, a in about would that. to There's use me are way get we was doesn't kind when maximize question just anything. reason payout right? this do dividend minimize There's them, we question. to of I And we for in necessarily we move year ratio to easy of growth, of think a growth the data dividend that's wrong, As maximize terms no, demonstrate the payout our I enough think, and to not Alta

XX-year all argue were years To -- view my terms given of pay in happen, to that off in weaknesses book. from to actually a see interest period I'm cash making was perspective, conventional. this these it wrong, Don't with amortize terms able manage in think and some would things still generate the a to to I midpoint, the yeah, obviously. and but of the a to we project corporate once going not while $XXX the of shows able it's higher, all But of year, million going positive, and actually not we we robustness weakness fleet or to at that me, debt, multiple in to point, of PXX year these run try I the a it in think are wish parts being get PX basically over the that. that deal despite going I are system of weakness to

Noah Kaye

that. one could. question, if last And Appreciate I

Rosamond, with storage high-quality see to of you kind place the elements in of how you revenue you of do us IOU. stand-alone in hopefully, think with I invest RA walk in agreement Just stand-alone assume projects. you desirable What just additional the to investability need about have the attributes market. a XX-year visibility need some But through long-term storage.

Chris Sotos

Sure.

I think mitigate if like you're that's probably trying energy open, to pricing. in saying parts to are where merchant positions for purely our unless with basis invest or on in tough stand-alone scarcity book a us storage fits we're capacity and where it of other

of invest. likelihood I So in what's to the a the that's merchant place of storage were our to think with its hey, if you that CWEN going XXX% not that's is kind probable from view not integrated one we're say, investing of step a rest portfolio,

significant, side think, little because Secondly, nascent of a that economics used I significant from the term I perspective, is capacity majority the the storage from of think, things. we bit asset an are like

can don't say, That as would a want don't we on as bit But to that the need contracting capacity energy, things. we a little mitigate side through on, of too that bet we're be to So let's long really trying any. merchant we lot positive. not

we're question. either, -- take it XX% merchant on going of if the terms economics that's our not need bet from to do it's view, dispatch, portion a kind that you So kind of not in of merchant but your of

Noah Kaye

That's Yeah. Thank helpful. you. very

Operator

turn for I'd like you. call any the Thank back now Chris over closing Sotos to to remarks.

Chris Sotos

you. this Once again, during Thank difficult I everyone's year. appreciate patience

the looks said, have care. working to the you saw I But We continues. your Take it for we half. And like some thank first I of we're it think in through. July reversed support. hope all trends

Operator

participating. This Thank concludes conference you today's for you. call. Thank

You disconnect. may now

Clearway Energy (CWEN.A) 8 Aug 232023 Q2 Earnings call transcript