Clearway Energy, Inc.

ladies and gentlemen your conference will begin momentarily once again ladies and gentlemen please stand by your conference call will begin momentarily thank you for your patience Thank you. Thank you. Thank you. Thank you. Good day and thank you for standing by. Welcome to the Clearway Energy, Inc. First Quarter 2022 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. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your host today, Chris Sotos, President and CEO of Clearway Energy, Inc. Please go ahead.

Good morning. Let me first thank you for taking the time to join today's call. Joining me this morning is Akhil Marsh, Director of Investor Relations, Chad Plotkin, our Chief Financial Officer, and Craig Cornelius, President and CEO of Clearway Energy Group. Craig will be available for the Q&A portion of our presentations. 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 RCC 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. Turning to page four, first quarter results, which on a seasonal basis is the smallest contributor for the full year within our sensitivity range with CAFTI of negative 2 million for the quarter, which is historically our latest quarter for CAFTI generation due to the timing of debt payments and low renewable generation. Florida also increased its dividend by 2% to 0.3536 per share or 1.414 on an annualized basis thereby keeping us on track to deliver the upper end of our range in dividend growth objectives for the year. Importantly, our sale of the thermal business closed on May 1st with $1.35 billion of expected net proceeds, which after accounting for $600 million of previously committed growth investments, leaves Clearway with $750 million in capital available to be allocated. As a result of the thermal sale, we are revising our CAFTE guidance for 2022 to $365 million. Clearways Proforma CAFTI outlook remains on track, with less than $56 million of previously announced committed investments to fund, and with CODs on track for 2022 and 2023 as previously planned. When completed, these renewable assets will put Clearways Proforma CAFTI at $385 million, or $1.90 per share, with $750 million of unallocated capital remaining to be deployed. In working with our Clearway Group colleagues, we continue to advance the development projects that we have announced previously. I want to take a moment to address some of the concerns out in the market generally regarding supply chain challenges and other risks. The broader economy here in our country is, of course, grappling with dislocations in supply and increasing the cost for labor, commodities, and freight. Our electric power industry is no different. Uncertainties in the policy environment for renewable power certainly add to the dynamics that businesses like ours have to address. But amidst those pressures, we look at the business we have here in Fairway Energy, Inc., as one that is very well insulated from those complexities, leaving us very confident in our ability to fulfill the upper range of our long-term DPS goals strategy of 5% to 8% through 2026. But clearly, enterprise as a whole has the benefit during these times of having tremendous scale, diversification, and financial flexibility, which together put our integrated enterprise in a sweet spot generally, and especially in market conditions like these. We see this in the fact that Clearway Group has a pipeline that is large enough and diversified enough that can provide Clearway Energy Inc. with capital investment opportunities that will hold up across various market and policy scenarios. And because of its ownership interest in 85 million shares of CLIN, when Clearway Group builds projects, their goal is first how to meet the capital deployment needs we have while balancing providing our shareholders with strong capital accretion. This allows the entire enterprise, during volatile periods such as this, to flex the system to assure that C1 is able to invest at its targeted capital deployment levels and also its targeted returns. As well, Solar Group's development platform and its parentage in GIP are also large enough to command prioritization with suppliers and other stakeholders when complex situations arise. They bring to the procurement work a deep understanding of policy and global reach, which has led to supply chain strategies that are proving relatively resilient right now. And very importantly, the capital investment requirements we need to meet to drive our dividend per share growth requirements at Clearway Energy Inc. are substantial, but not so great that our sponsor can't be surgical about the choices it makes on supply chain. That is serving us well today, as our sponsor has been able to establish supply chains and project plans that are both policy resilient and redundant in their ability to enable our meeting the goals that we set for capital deployment. As a result of this, I'm pleased to announce an increase in the amount of capital we expect to deploy relative to Clearway Group's development projects to at least $300 million and an approximate 8.5% CAFTI yield. These development projects provide a strong start to the allocation of excess capital, giving Clearway Energy, Inc. confidence that it can achieve or beat the 215 CAFTI per share outlook when the $750 million in proceeds from the thermal sale are completely deployed. Turning to page five. Let me spend some time reemphasizing Clearway Group's approach to development and how the scale supports C1 as a whole. On the left side of the page, you can get a better view of Clearway Group's development scale. With over 22 gigawatts of development projects, an increase of three gigawatts since last quarter, it is diversified among wind, solar, and batteries. with 6.7 gigawatts of late-stage development. While execution of this pipeline will benefit from rational policy decision-making on trade and could be accelerated through enactment of clean energy tax credits that are currently being advanced through Congress, the pipeline is robust and can enable growth for Clearway Energy Inc. across a spectrum of policy scenarios. Those of you who have been longer-term investors in Clearway, it is important to note that Clearway Group's pipeline is five times larger than at the time of GIP's investments. To elaborate further, Facts and circumstances make us confident that we are positioned to deploy the $56 million in committed capital we have planned for investment into Millie Alley 1, Iowa, and Daggett Solar during 2022 and 2023 because of their status in construction and because the supply chain is being used to fulfill the projects. First and foremost, With respect to the projects being constructed in Hawaii, those projects received their panel supply prior to the commencement of the investigation and are now advancing into commissioning and will be completed this year, all without being subject to the risk of duties arising out of the Commerce Department's inquiry. And second, with respect to Daggett, the project makes use of a supply chain designed to enable use of US-made polysilicon processing that polysilicon into wafers, cells, and modules, with each step occurring outside of China. The scope of the anti-circumvention petition did not target a supply chain of this configuration, a fact affirmed in a memo issued earlier this week on May 2nd by the Commerce Department, in which it said that the modules made with wafers produced outside of China were not subject to the inquiries. While the CODs for Daggett's two phases have been extended by six months into 2023, The extension enabled the establishment of the supply chain, which we're pleased to be able to utilize. Moving to the right side of the slide and looking ahead to the next wave of growth we are planning with our sponsor, we believe should prove similarly resilient. The community solar funds that we now hold an option to invest in are fully operational or being constructed with solar modules already in the country today. And across the range of subsequent projects that CLOE group has planned for Texas Food Expansion, expansion of our portfolio in KISO, WEC, and PJM, is advancing projects that make use of both wind and solar technologies, providing diversification against policy risk, and also has secured redundant module supplies for producers whose manufacturing footprint includes supply chain options that are outside of the scope of the Commerce Department's investigation as is presently defined. As noted, these investments will have a weird average contract tenor of 18 years and will total at least $300 million of capital deployment and an average 8.5% CAFTE and approximate 8.5% CAFTE yield. We are working with Clearway Group to arrange succession of financial closings for these drop-downs over the forthcoming months, with the majority of those planned for the next six months. Importantly, the range of projects and flexibility on capital structures They can deploy. It reinforces our confidence that $300 million capital deployment goal can be met. And if the right policy choices on trade are ultimately made by the administration, and we are able to see new clean energy tax credits enacted, we would anticipate the ability to deploy substantially more capital into this family of projects with a corresponding increase in the CAF data that they will generate over time. In summary, FOA Group's development scale and flexibility provides CLIN with transparent and core growth strategy driving CAFTI per share growth into the future, and we are optimistic about what the outlook holds for seedland shareholders. Turning to page six. Page six updates our progress to the 215 of CAFTI per share as we deploy the 750 million of excess cash proceeds. Given the increase from 250 million to at least 300 million that we foresee in our latest potential drop-downs from Clearway Group, we now see that we have line of sight to 26 million of additional CAFTI versus 21 million of CAFI that we presented last quarter, or $2.04 of CAFI per share when allocated, with still $450 million of proceeds remaining. Over the next several quarters, we look forward to increasing the deployment of capital and achieving or exceeding the 215 by this time next year. With that, I will turn it over to Chad. Chad?

Thank you, Chris. And turning to slide eight. Today, Clearway is reporting first quarter adjusted EBITDA of $260 million in cash available for distribution, or CAFI, of negative $2 million, an amount within the company's expected quarterly sensitivity range. During the quarter, the company's conventional segment performed in line with expectations. For renewables, the utility-scale solar portfolio performed well, as overall conditions led to production 6% over expectations. However, this was offset by more challenging operational conditions at our wind portfolio, which impacted results during the quarter. Overall, while first quarter CAPD results were at the lower end of the company's target quarterly sensitivity range, we note that due to the seasonality of our portfolio, the first quarter is generally a small contributor to full-year results. As previously discussed, due to the original uncertainty of when the thermal transaction would close, 2022 CAPD guidance was originally established as if CWIN owned the thermal business for the full year. With the thermal sale now complete, we are updating our 2022 CAPTI guidance to $365 million, which no longer factors in the expected contribution from the thermal business beginning in May of this year. As a reminder, 22 CAPD guidance continues to assume the achievement of full-year P50 renewable performance and does not factor in the full contribution from existing committed growth investments, which informs the expected $385 million in pro forma CAPD that Chris referenced earlier. For further information as it relates to the seasonality expectations of the portfolio and the timing of expected CAPD realization from our growth investments, please refer to the appendix section of today's presentation. Turning to the balance sheet, adhering to our long-term credit metrics while maintaining flexibility and how we fund growth continues to be core to our overall business strategy. As discussed on our previous quarterly calls, due to the timing of when we expected to receive the net proceeds from the thermal sale relative to when we needed to finance committed growth investments, we require temporary financing to bridge the company's capital needs. Now with the thermal sale complete, we have fully repaid the outstanding $640 million in short-term borrowings as of the end of the first quarter, which included the $305 million under the revolver and the $335 million bridge loan used to fund the acquisition of the remaining interest in the Utah solar portfolio. With these repayments, The company's pro forma credit metrics are now back in line with long-term targets. There are no cash borrowings under the revolver, and the company has virtually no interest rate exposure as 99% of our consolidated long-term debt is fixed with the earliest corporate maturity in 2028. With the strength of our balance sheet and the excess $750 million in proceeds from the thermal sale, CWIN now has unprecedented flexibility to execute on its long-term objectives and as significant growth can be achieved without requiring capital market access while also maintaining our balance sheet targets. Now I'll turn the call back to Chris for closing remarks.