Brookfield Renewable Partners L.P. Limited Partnership Units

Ladies and gentlemen, thank you for standing by, and welcome to the BEP first quarter 2020 results conference call and webcast. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you have a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any additional assistance, you may press star 0 to reach an operator. I would like to hand the call over to Sachin Shah. Please go ahead.

Thank you. Thank you, operator. Good morning, everyone, and thank you for joining us for our first quarter 2020 conference call. Before we begin, I'd like to remind you that a copy of our news release, investor supplement, and letter to unit holders can be found on our website. I also want to remind you that we may be making forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you're encouraged to review our regulatory filings available on CDAR, EDGAR, and on our website. For my remarks today, I'd like to provide an update on our business and position during this period of global disruption and uncertainty. Over the last two decades, Brookfield Renewable has become one of the premier global renewable energy companies. We have over $50 billion of renewable assets, a $16 billion market capitalization, including our recently announced merger with Terraform Power, and a 20-year track record of stable and growing dividends, delivering a 17% compounded annual return to unit holders. As a special advantage in this greening world, our business avoids over 28 million tons of carbon dioxide annually, and this number continues to grow each year. As the world transitions to renewable energy and looks to reduce carbon dioxide consumption, we believe we are one of the entities of scale with the track record and global capabilities to deliver investors a resilient, stable distribution plus meaningful growth through all market cycles. As always, our objective remains the same, to deliver 12% to 15% total returns on a per-unit basis over the long term. We are currently in the midst of an unprecedented global health and financial crisis. Today, I want to emphasize that in spite of the significant market volatility and a potentially deep recession, our operations remain resilient, our earnings are expected to be stable, and our financial position, which allows us to pursue growth is in excellent shape. First off, as it relates to our operations, we are fortunate to benefit from a depth of technical and commercial expertise within the business from our 3,000 colleagues around the world who manage our facilities at the highest standards every day. Their expertise, dedication, and hard work has been critical to our success for many years, but it is times like this where their speed of decision-making, prudent risk management, and ability to be flexible in light of unique working conditions is both deeply evident and tremendously valuable. Our business produces and delivers clean, renewable energy to over 600 customers around the world under long-term power purchase agreements. Over the years, we have focused on ensuring those agreements were both long-term and backed by creditworthy counterparties. Accordingly, the revenue profile of our business is very stable and diversified. More importantly, we believe the demand for renewable energy will continue to grow, perhaps at an even faster pace, as countries look to protect themselves from exogenous risks such as we are experiencing today. From a financial perspective, we continue to capitalize the business, utilizing a strong investment-grade balance sheet and long-duration non-recourse debt. while maintaining high levels of liquidity, over $3 billion currently, as a cushion against unexpected events. This ensures that we maintain a low-risk financial profile. Wyatt will be speaking about this in more detail in his remarks on our financing initiatives. However, in the last two months, we have raised over $1 billion of attractive asset-level and corporate green financings. including a $560 million 10-year asset level financing at one of our hydro facilities in the United States, with an all-in coupon of 4%, and an additional $350 million of 10-year corporate bonds in Canada at approximately 3.5%. We have operated the business this way for many years, always prioritizing financial strength and flexibility. We recognize that this can often get overlooked, as part of investors' risk-reward equation, and particularly during expansionary periods. However, we believe it is critical to our long-term success and, over time, contributes meaningfully to the compounding of our cash flows and the total returns delivered by our units. In spite of the significant market turmoil, we continue to focus on building the business for the future. As you know, we recently agreed to merge our subsidiary, Terraform Power, into Brookfield Renewable on an all-stock basis. The merger will simplify our structure, diversify our holdings, and strengthen our business in North America and Europe, all with continued sponsorship from Brookfield Asset Management. As a reminder, this transaction will increase our public float of shares by approximately $1.5 billion and will facilitate the issuance of Brookfield Renewable Corporation shares, known as BEPC shares. which should help current shareholders who may prefer to hold a C-Corp share and may potentially attract new shareholders. We have also continued to advance our healthy M&A and development pipeline, which remains on track to deliver investment opportunities of $700 million to $800 million of net equity in 2020 in line with our targets. I'll now turn the call over to Wyatt to discuss our operating results and financial position. Wyatt?

Thank you, Sachin, and good morning, everyone. During the quarter, we generated FFO of $217 million, or 70 cents per unit, reflecting solid performance as our operations benefited from strong underlying asset availability and resource and efficiency initiatives. On a normalized basis, our results are up 5% over last year. Our business continues to benefit from our growing and diverse generation portfolios, limited offtake concentration risk, and a strong contract profile. During the quarter, overall generation was slightly ahead of long-term average as we continue to benefit from the diversity of our fleet. Our focus over the last decade has been to diversify the business, which over the long term mitigates exposure to any resource, regional or market disruption, and potential credit events. For example, with over 600 counterparties, we have a diversified, high-quality customer base comprised primarily of public power authorities and utilities that is insulated from single counterparty risk. Our single largest non-government third-party customer represents 2% of generation, providing strong downside protection and safeguarding our cash flows. Our cash flows are also long-duration. with a weighted average remaining contract length of 14 years. Lastly, the portfolio is largely contracted, with 95% of total generation contracted in 2020, meaning our business does not have meaningful exposure to short-term price declines from slowing economic activity or lower power demand. Turning to our segment results, during the first quarter, our hydroelectric segment delivered episode of $222 million. Our solar segment performed particularly well, generating $6 million of FFO in the quarter. Our focus in Latin America continues to be extending the average duration of our power purchase agreements, where power price volatility provides opportunity to enhance and stabilize future revenues. In this regard, we signed 17 contracts in the quarter with high-quality, credit-worthy counterparties for a total of over 300 gigawatt hours per year. As a result, today our contract profile stands at nine and three years in Brazil and Colombia, respectively. In North America, where power prices remain low, we are focused on securing shorter-term contracts at our hydroelectric facilities to ensure we retain upside optionality for when we believe prices will improve. Across our hydroelectric fleet in North America, Starting next year, we have three contracts rolling off for assets that primarily deliver power to markets in the U.S. Northeast. Fortunately, these contracts on a net basis deliver power at prices in the range of the current market. Therefore, on renewal, we expect minimal impact to our overall revenue. Beyond these contracts, we do not have any material PPA maturities in North America until 2029. Next, our wind and solar segments generated a combined $62 million of FFO as we continue to generate stable revenues from these assets and benefit from the diversification of our fleet and highly contracted cash flows with long-duration power purchase agreements. We also continue to execute on opportunistic O&M outsourcing agreements aimed at de-risking our portfolios and, where appropriate, delivering cost savings. We are in the process of implementing four such agreements across our portfolio, all of which provide attractive availability guarantees and a more comprehensive scope than what is currently in place. Our liquidity position remains robust with over $3 billion of total available liquidity. During the quarter, we bolstered our liquidity position by executing on key financing and capital raising initiatives, all while maintaining a low-risk balance sheet. Our balance sheet has a triple B positive investment grade rating, no material maturities over the next five years, an average overall debt duration of 10 years, and 80% of our financings are non-recourse to bet. So far this year, we have executed $1.4 billion of financing across the business, and we continue to advance our green financing initiatives. We further diversified our sources of capital by issuing our inaugural green perpetual preferred units for $200 million at 5.25% in the US market. That's in addition to the $350 million Canadian dollars of 10-year corporate green bonds issued in early April. In aggregate, we will have completed almost 3 billion in green financing initiatives over the last two years. We are also continuing to execute our capital recycling strategy of selling mature, de-risked or non-core assets to lower cost of capital buyers and redeploying the proceeds into higher yielding opportunities. During the quarter, we completed the sale of our solar assets in Thailand that we had acquired through our investment in Terraform Global for proceeds of $94 million, allowing us to realize an over 30% return on our original invested capital. We also have limited exposure to foreign exchange volatility as we employ a disciplined hedging strategy where we hedge developed market exposure and opportunistically hedge our emerging market exposure where cost effective. As a result, 25% of our FFO in 2020 is exposed to foreign currency volatility, meaning an overall 10% move in the currencies of markets we operate in, either developed or emerging, would have an overall 2.5% impact to our FFO. Indeed, during the quarter, when we saw a dramatic strengthening of the U.S. dollar versus all the currencies in which we operate, particularly the Brazilian Rai, the impact on our business was only $9 million of FFO, or less than 4%. Looking forward, we have seen heightened market volatility and unprecedented disruption around the world. But the strategic and operating decisions we have made across our business the last number of years ensures that we are well positioned to withstand short-term economic impacts while continuing to allocate capital and build the business for the future. In light of this, we continue to believe that Brookfield Renewable presents one of the most compelling opportunities for investors to participate in the substantial multi-decade effort to decarbonize global electricity grid and to move to cleaner, renewable sources of energy. As always, we remain focused on delivering on our long-term total return targets of 12 to 15%. Thank you for your continued support and stay safe. That concludes our formal remarks for today's call. Thank you for joining us this morning. With that, I'll pass it back to our operator for questions. Operator?