Clearway Energy, Inc.

Good morning. Let me first thank you for taking the time to enjoy Clearway Energy's first quarter earnings call. Joining me this morning is Chad Plotkin, our Chief Financial Officer, as well as Craig Cornelius, President and CEO of Clearway Energy Group. Craig will be available for the Q&A portion of our presentation. Before we begin, I'd like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings. In addition, we refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation. Starting at page four. For the first quarter of 2020, we achieved CAFTI of $8 million. in line with our internal expectations and full-year guidance. The PG&E contracts continue to perform as PG&E works through their bankruptcy process, and we're looking forward to their emergence. As we await the resolution of the PG&E process, we are holding our quarterly dividend flat with last quarter at 21 cents per share. Regarding COVID-19, I first want to take a moment to thank all of our employees within the Clearway team for their hard work and focus during this difficult time. While the effects of COVID-19 have been felt across the entire country, I am pleased to say that to date, COVID's effects on Clearway have been minimal, with our employees keeping safe and no material effect to operations or revenues. Given our observations to date and due to the characteristics of the Clearway portfolio, we also currently see no reason for the pandemic to materially impact financial results in the future. Ignoring operational matters that can always affect financial results across our portfolio, Our conventional assets are backed by tolling agreements that are unaffected by an economic slowdown. Exposure in our renewable portfolio is generally around economic curtailment. They may not be reimbursable pursuant to terms of the PPAs. While we have not experienced any economic curtailment to date related to COVID-19, projects subject to unreimbursable economic curtailment represent approximately 2% of full-year CAFTI, a relatively immaterial amount. In the thermal platform, our customer profile remains strong, with some volumetric impacts the steam and chilled water sales experienced in April. This amount is also not viewed as material for the entire enterprise. I would only represent around 2% of full-year CAFTI that persisted every month for the course of a full year. As I discussed earlier, Clearway sees PG&E's emergence from bankruptcy on track for June of 2020. At the end of the first quarter, Clearway had $148 million of cash they would anticipate would be released in the second half of the year as PG&E emerges from bankruptcy. During the quarter, we were able to sign binding agreements on our next drop-down transaction with Clearway Group to invest approximately $241 million of capital. That, when all assets are fully operational, should add approximately $23 million in annual five-year average asset-level CAFTI, garnering a 9.5% asset-level CAFTI yield. C1 is well positioned to fund their capital commitment, given the $148 million of cash restricted in PG&E projects that should be available soon after PG&E's emergence from bankruptcy, as well as our current revolver capacity. As a result of these investments and future capital deployment, Clearway is increasing its pro forma outlook to approximately $1.70 of CAFTE per share, a 5.6% increase from our outlook in February. Turning to page five. I want to discuss the economics of the latest drop-down transaction. As illustrated at the top of the page, these transactions will require approximately $241 million of corporate capital and produce $23 million of asset-level CAFTI on an average five-year basis. In addition to the $241 million, Clearway will also pay an additional $27 million in 2031 to Clearway Group as part of its portfolio financing. Clearway Group, through its strong sponsor support, has agreed to obtain a portion of its compensation 11 years from now, in order to increase accretion for all C1 shareholders, while still preserving for Clearway Energy a strong long-term IRR at P50 results. This portfolio is a strong mix of projects, with a 13-year weighted average contract life and diversification outside of California. This portfolio of wind projects includes the purchase of Clearway Group's residual interest in the Will Dorado and Elbow Creek assets, which are currently fully operational. the currently under-construction 144-megawatt Rattlesnake project with a long-dead 20-year PPA, and a repowering of the 55-megawatt Pinnacle project. The capital required and the associated capital of this portfolio are provided under the assumption that the project will achieve commercial operation in 2020. The Rattlesnake wind project is in active construction and on track without any impacts experienced due to the COVID-19 pandemic to date. The Pinnacle repowering project is construction-ready at this time, but may be delayed to 2021 out of an abundance of caution for site labor and feasible construction schedule considerations. In the event Pinnacle is completed in 2021, the full pro forma CAFTI and CUN five-year CAFTI yield would be materially maintained. As we've done in the past, we provide an update to investors if any material variances of these estimates occur. Page six provides an update to our CAFTI per share growth outlook when factoring in the drop-down investments. Starting with our 2020 guidance of $310 million, our growth outlook was previously at $320 million, or $1.61 of CAFTI per share. After accounting for these investments and illustrative financing, Clearway now sees growth to $1.70 of CAFTI per share, assuming $340 million of pro forma CAFTI. While capital is fungible, as Chad will discuss shortly, for purposes of this calculation, we have shown the equity requirement for these investments could be funded entirely by the $148 million of PG&E-related trap cash with the balance funded by corporate debt well in line with our target credit ratios. This is a great outcome for Clearway, and we want to thank our Clearway Group colleagues for putting together a great transaction. The significant growth in CAFTI per share is a testament to the strength of the overall platform and ability to set the stage for future dividend growth. With that, I'll pass the discussion over to Chad. Chad?

Thank you, Chris. Turning to slide eight. During the first quarter, Clearway Energy's diversified portfolio operated within expectations as reported adjusted EBITDA of $225 million and cash available for distribution, or CAFD, of $8 million were within the company's sensitivity ranges. As Chris mentioned, our employees and operating partners have navigated the COVID-19 pandemic exceptionally well, with our projects continuing to operate both safely and reliably. During the quarter, Clearway did not experience any material impact to its consolidated financial results due to COVID-19. We also do not anticipate future impacts from the pandemic to create a deviation outside of the company's normal full-year sensitivity ranges as provided in the appendix section of today's presentation. Given first quarter results were in line with expectations and the impacts from COVID-19 are not expected to lead to material impacts during the year, Today, we are also reiterating full-year financial guidance of $310 million in cash available for distribution. As a reminder, financial guidance assumes the achievement of full-year P50 median renewable energy production. CAFE guidance also includes the contribution from the projects impacted by the PG&E bankruptcy, including unconsolidated affiliates that have not been able to distribute cash as a result of the technical event of default under the project credit agreements. Despite the volatility in the capital markets during the quarter, we have also continued to focus on our growth objectives, including capital formation requirements for the company's investments. Given our view of the company's prospective liquidity, we are pleased to say that our available resources are sufficient to meet our current committed growth investments, including the $241 million needed for the latest drop-downs First, during the quarter, we enhanced overall liquidity by utilizing the company's ATM program. As noted on the slide, the company raised over $10 million at a weighted average price of $21.42 per share. This represents an approximate 7.3% CAFI yield at current guidance or an accretive level relative to recent growth investments. Next, Because the projects and investments impacted by the PG&E bankruptcy have been subject to project dividend restrictions since the beginning of last year, Clearway has not been able to access the excess cash at these projects. As of the end of the first quarter, we estimate this amount to be approximately $148 million. Assuming this excess cash is allocated to the latest drop-down commitment of $241 million, $93 million of remaining capital is still required. While the company will generate excess cash in normal operations, as noted on the slide, Clearway also has, as of the end of the first quarter, $253 million available under the revolving credit facility, providing temporary financing capacity to meet this remaining capital requirement. With these available resources, Clearway can be patient with accessing the capital markets, and most importantly, we can do so while managing the corporate balance sheet. based on the company's committed growth investments and funding plans. We estimate that our pro forma corporate leverage ratio will continue to be within our ratings target at a 4.0 to 4.5 times range. With that, I will turn the call back to Chris for closing remarks.

Thanks, Chad. Turning to page 10, as we move forward into 2020, COVID-19 is a new challenge that we are all facing, and our number one goal is to keep the employees of Clearway safe and healthy, while maintaining safe and reliable operations. In terms of our financial commitments, we have reiterated our 2020 CAFTI guidance with our first quarter numbers in line with expectations. While also focusing on near-term goals, we are also targeting growth in long-term CAFTI for share with the recent agreement to purchase a portfolio of assets from Clearway Group at attractive terms. Clearway Energy is constantly working with Clearway Group to expand the Rofo pipeline, as well as working with our thermal division to develop additional organic growth in our systems. This, combined with third-party M&A activity, will allow Clearway Energy to continue its dividend growth goals into the future. Finally, we look forward to the normalization of our dividend growth upon resolution of the BG&E bankruptcy expected in the summer of 2020. Thank you. Operator, please open the lines for questions.