cafd-8k_20170126.htm

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2017

 

8point3 Energy Partners LP  

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

1-37447

47-3298142

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

77 Rio Robles

San Jose, California

 

95134

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (408) 240-5500  

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

 


 

Item 2.02. Results of Operations and Financial Condition.

 

On January 26, 2017, 8point3 Energy Partners LP (the “Partnership”) issued a press release reporting the Partnership’s financial and operating results for the fourth quarter and year ended November 30, 2016. A copy of the press release is furnished with this report as Exhibit 99.1 and is incorporated herein by reference.

The information provided in this Item 2.02 and in Exhibit 99.1 shall be deemed “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing, regardless of any general incorporation language in such filing.

 

Item 9.01.            Financial Statements and Exhibits.

(d)Exhibits.

 

Number

 

Description

99.1

 

Press release dated January 26, 2017.

 

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

8POINT3 ENERGY PARTNERS LP

 

 

 

 

 

 

By:

8point3 General Partner, LLC,

 

 

 

its general partner

 

 

 

 

 

 

 

 

Date: January 26, 2017

 

By:

/s/ Jason E. Dymbort

 

 

 

Jason E. Dymbort

 

 

 

General Counsel

 

3


INDEX TO EXHIBITS

 

Number

 

Description

99.1

 

Press release dated January 26, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

cafd-ex991_6.htm

Exhibit 99.1

 

Contacts:

 

Investors

Bob Okunski

408-240-5447

bokunski@8point3energypartners.com

 

Media

Natalie Wymer

408-457-2348

media@8point3energypartners.com

 

8point3 Energy Partners Reports Fourth Quarter 2016 Results

Completed Acquisition of SunPower’s 49 Percent Stake in 102-MW Henrietta Project

Completed Acquisition of First Solar’s 34 Percent Stake in 300-MW Stateline Project on December 1, 2016

Increased Fourth Quarter Distribution by 3.5 percent over Third Quarter Distribution

 

SAN JOSE, Calif., Jan. 26, 2017 – 8point3 Energy Partners LP (NASDAQ:CAFD) today announced financial results for its fourth fiscal quarter ended November 30, 2016.

 

 

Exceeded Q4 2016 revenue, net income and Adjusted EBITDA guidance

 

Completed acquisition of minority stakes in SunPower’s Henrietta and First Solar’s Stateline projects

 

Declared Q4 2016 distribution of $0.2490 per share, an increase of 3.5 percent over the Q3 2016 distribution

 

Forecasts Q1 2017 distribution of $0.2565 per share, an increase of 3.0 percent compared to the Q4 2016 distribution

 

For the fourth quarter of fiscal 2016, 8point3 Energy Partners reported revenue of $14.5 million, net income of $4.2 million, adjusted EBITDA of $18.3 million and cash available for distribution (CAFD) of $20.4 million. The partnership’s fourth quarter 2016 CAFD results do not include approximately $6.0 million in network upgrade reimbursements that were expected to be received in the fourth quarter per the partnership’s existing interconnection agreement with a utility. The reimbursement was received shortly after the partnership’s fiscal year end and will be reflected in the partnership’s CAFD results in the first quarter of 2017.  

 

"We continued to benefit from our high-quality solar portfolio as we met or exceeded most key financial metrics for the quarter while increasing our distribution rate for the sixth quarter in a row,” said Chuck Boynton, 8point3 Energy Partners CEO. “As of the end of November, our portfolio consisted of interests in 642-megawatts (MW) of U.S. solar generating assets including the acquisition of SunPower’s 49 percent minority interest in its 102-MW Henrietta project that we completed during the quarter. Also, we were pleased to close the acquisition of First Solar’s 34 percent minority interest in its 300-MW Stateline project on December 1, 2016 which brings our total portfolio to interests in 942-MW of assets as of today. The Henrietta and Stateline projects are expected to generate approximately $11 million and $32


million in annual cash distributions respectively and both have 20 year contract lives. We are pleased to add these assets to our portfolio as they are in line with our long-term strategic focus of acquiring solar assets with strong, cash flows with investment grade offtakes,” concluded Boynton.  

 

Additionally, the partnership’s sponsors have proposed to remove the 100-MW El Pelicano project and the 179-MW Switch Station project from the right of first offer (ROFO) portfolio as the partnership will likely not acquire these projects during its 2017 fiscal year.  The potential removal of these projects from the ROFO portfolio is subject to the approval of the partnership’s Board of Directors and its Conflicts Committee.

Also, the Board of Directors of the partnership’s general partner declared a cash distribution for its Class A shares of $0.2490 per share for the fourth quarter. The fourth quarter distribution was paid on January 13, 2017 to shareholders of record as of January 3, 2017.

 

"Our solid fourth quarter results reflect the stability and strength of our asset portfolio,” said Bryan Schumaker, 8point3 Energy Partners chief financial officer.  “We achieved key financial goals and feel that with our differentiated model, predictable cash flows from high quality solar assets, committed sponsor support and our recent project acquisitions, we remain well positioned to drive long term sustainable cash flows for our shareholders.”

 

Guidance

The partnership’s first quarter 2017 guidance is as follows: revenue of $9.3 million to $9.8 million, net loss of ($6.4) million to ($5.6)  million, adjusted EBITDA of $11.8 million to $12.6 million, CAFD of $19.8 million to $20.3 million and a distribution of $0.2565 per share, a forecasted increase of 3.0 percent compared to the Q4 2016 distribution.  

The partnership’s fiscal year 2017 guidance is as follows: revenue of $63.3 million to $66.7 million, net income of $27.0 million to $32.6 million, Adjusted EBITDA of $106.5 million to $113.1 million and CAFD of $91.5 million to $101.0 million.  The partnership also expects a distribution growth rate of 12 percent for fiscal year 2017.

 

About 8point3 Energy Partners
8point3 Energy Partners LP (NASDAQ:CAFD) is a growth-oriented limited partnership formed by First Solar, Inc. and SunPower Corporation to own, operate and acquire solar energy generation projects. 8point3 Energy Partners’ primary objective is to generate predictable cash distributions that grow at a sustainable rate. The partnership owns interests in projects in the United States that generate long-term contracted cash flows and serve utility, commercial and residential customers. For more information about 8point3 Energy Partners, please visit: www.8point3energypartners.com.

 

For 8point3 Energy Partners Investors

This press release includes various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially


from those expressed or implied in these statements. Forward-looking statements include, among other things, statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. You can identify our forward-looking statements by words such as “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “goals”, “objectives”, “outlook”, “intend”, “plan”, “predict”, “project”, “risks”, “schedule”, “seek”, “target”, “could”, “may”, “will”, “should” or “would” or other similar expressions that convey the uncertainty of future events or outcomes. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, which could cause future outcomes to differ materially from those set forth in forward-looking statements. In particular, expressed or implied statements concerning the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the partnership and its subsidiaries, including guidance regarding the partnership’s revenue, Adjusted EBITDA, cash available for distribution and distributions, other future actions, conditions or events such as the projected commercial operation dates of projects, future operating results or the ability to generate sales, income or cash flow or to make distributions are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Forward-looking statements speak only as of the date of this press release, January 26, 2017, and we disclaim any obligation to update such statements for any reason, except as required by law. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this paragraph. Many of the factors that will determine these results are beyond our ability to control or predict. These factors include the risk factors described under “Risk Factors” in the partnership’s Transition Report on Form 10-K for the transition period from December 28, 2014 to November 30, 2015, filed with the Securities and Exchange Commission on January 28, 2016. If any of those risks occur, it could cause our actual results to differ materially from those contained in any forward-looking statement. Because of these risks and uncertainties, you should not place undue reliance on any forward-looking statement.

 

Non-GAAP Financial Information

This earnings release includes certain financial measures that are not defined under U.S. generally accepted accounting principles (GAAP), including Adjusted EBITDA and cash available for distribution. Such non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. We reconcile these non-GAAP financial measures to the most directly comparable financial measure prepared in accordance with GAAP in the tables that accompany this release. In the introduction to such reconciliation tables that accompany this release, we disclose the reasons why we believe our use of the non-GAAP financial measures in this release provides useful information. Please read “Non-GAAP Financial Measures” below for further details on our use of non-GAAP financial measures.  


8point3 Energy Partners LP

Consolidated Balance Sheets

(In thousands, except share data)

 

 

November 30,

 

 

November 30,

 

 

 

2016

 

 

2015

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,261

 

 

$

56,781

 

Accounts receivable and short-term financing receivables, net

 

 

5,401

 

 

 

4,289

 

Prepaid and other current assets1

 

 

15,745

 

 

 

8,033

 

Total current assets

 

 

35,407

 

 

 

69,103

 

Property and equipment, net

 

 

720,132

 

 

 

486,942

 

Long-term financing receivables, net

 

 

80,014

 

 

 

83,376

 

Investments in unconsolidated affiliates

 

 

475,078

 

 

 

352,070

 

Other long-term assets

 

 

24,432

 

 

 

26,142

 

Total assets

 

$

1,335,063

 

 

$

1,017,633

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities1

 

$

23,771

 

 

$

2,612

 

Short-term debt and financing obligations

 

 

1,964

 

 

 

1,964

 

Deferred revenue, current portion

 

 

870

 

 

 

489

 

Total current liabilities

 

 

26,605

 

 

 

5,065

 

Long-term debt and financing obligations

 

 

384,436

 

 

 

297,206

 

Deferred revenue, net of current portion

 

 

308

 

 

 

746

 

Deferred tax liabilities

 

 

30,733

 

 

 

12,491

 

Asset retirement obligations

 

 

13,448

 

 

 

9,992

 

Total liabilities

 

 

455,530

 

 

 

325,500

 

Redeemable noncontrolling interests

 

 

17,624

 

 

 

89,747

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Class A shares, 28,072,680 and 20,007,281 issued and outstanding as of

   November 30, 2016 and November 30, 2015, respectively

 

 

249,138

 

 

 

392,748

 

Class B shares, 51,000,000 issued and outstanding as of November 30, 2016

  and November 30, 2015

 

 

 

 

 

 

Accumulated earnings

 

 

22,440

 

 

 

15,580

 

Total shareholders' equity attributable to 8point3 Energy Partners LP

 

 

271,578

 

 

 

408,328

 

Noncontrolling interests

 

 

590,331

 

 

 

194,058

 

Total equity

 

 

861,909

 

 

 

602,386

 

Total liabilities and equity

 

$

1,335,063

 

 

$

1,017,633

 

 

1

The Partnership has related-party balances for transactions made with the Sponsors and tax equity investors. Related-party balances recorded within “Prepaid and other current assets” in the consolidated balance sheets were $0.9 million due from Sponsors as of both November 30, 2016 and November 30, 2015. Related-party balances recorded within “Accounts payable and other current liabilities” in the consolidated balance sheets were $19.7 million and $0.2 million due to Sponsors as of November 30, 2016 and November 30, 2015, respectively, and $1.0 million and zero due to tax equity investors as of November 30, 2016 and November 30, 2015, respectively.  


8point3 Energy Partners LP

Consolidated Statements of Operations

(In thousands, except per share data)

 

 

 

Year Ended

 

 

Eleven Months Ended

 

 

Year Ended

 

 

 

November 30,

 

 

November 30,

 

 

December 28,

 

 

 

2016

 

 

2015

 

 

2014

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues1

 

$

61,198

 

 

$

10,660

 

 

$

9,231

 

Total revenues

 

 

61,198

 

 

 

10,660

 

 

 

9,231

 

Operating costs and expenses1:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of operations

 

 

6,959

 

 

 

2,624

 

 

 

(3,195

)

Cost of operations—SunPower, prior to IPO

 

 

 

 

 

468

 

 

 

937

 

Selling, general and administrative

 

 

7,003

 

 

 

10,702

 

 

 

4,818

 

Depreciation and accretion

 

 

22,792

 

 

 

4,291

 

 

 

2,339

 

Acquisition-related transaction costs

 

 

2,271

 

 

 

212

 

 

 

 

Total operating costs and expenses

 

 

39,025

 

 

 

18,297

 

 

 

4,899

 

Operating income (loss)

 

 

22,173

 

 

 

(7,637

)

 

 

4,332

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

12,081

 

 

 

1,860

 

 

 

5,525

 

Interest income

 

 

(1,203

)

 

 

(1,470

)

 

 

 

Other expense (income)

 

 

(1,518

)

 

 

12,536

 

 

 

 

Total other expense, net

 

 

9,360

 

 

 

12,926

 

 

 

5,525

 

Income (loss) before income taxes

 

 

12,813

 

 

 

(20,563

)

 

 

(1,193

)

Income tax provision

 

 

(18,244

)

 

 

(12,503

)

 

 

(23

)

Equity in earnings of unconsolidated investees

 

 

18,341

 

 

 

9,055

 

 

 

 

Net income (loss)

 

 

12,910

 

 

 

(24,011

)

 

 

(1,216

)

Less: Predecessor loss prior to IPO on June 24, 2015

 

 

 

 

 

(20,095

)

 

 

 

 

Net income (loss) subsequent to IPO

 

 

12,910

 

 

 

(3,916

)

 

 

 

 

Less: Net loss attributable to noncontrolling interests and

   redeemable noncontrolling interests

 

 

(14,191

)

 

 

(22,642

)

 

 

 

 

Net income attributable to 8point3 Energy Partners LP

   Class A shares

 

$

27,101

 

 

$

18,726

 

 

 

 

 

Net income per Class A share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.27

 

 

$

0.94

 

 

 

 

 

Diluted

 

$

1.27

 

 

$

0.94

 

 

 

 

 

Distributions per Class A share:

 

$

0.91

 

 

$

0.16

 

 

 

 

 

Weighted average number of Class A shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

21,420

 

 

 

20,002

 

 

 

 

 

Diluted

 

 

36,920

 

 

 

35,034

 

 

 

 

 

 

1

The Partnership has related-party activities for transactions made with the Sponsors. Related party transactions recorded within “Operating revenues” in the consolidated statement of operations were $5.2 million for the year ended November 30, 2016, $2.3 million for the eleven months ended November 30, 2015, and zero for the year ended December 28, 2014. Related party transactions recorded within “Operating costs and expenses” in the consolidated statement of operations were $7.0 million for the year ended November 30, 2016, $1.4 million for the eleven months ended November 30, 2015, and $0.9 million for the year ended December 28, 2014.

 

 

 

 

 

 

 

 

 

 


8point3 Energy Partners LP

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Year Ended

 

 

Eleven Months Ended

 

 

Year Ended

 

 

 

November 30,

 

 

November 30,

 

 

December 28,

 

 

 

2016

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

12,910

 

 

$

(24,011

)

 

$

(1,216

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

22,880

 

 

 

4,291

 

 

 

2,339

 

Unrealized loss (gain) on interest rate swap

 

 

(1,508

)

 

 

611

 

 

 

 

Interest expense on financing obligation

 

 

 

 

 

1,193

 

 

 

4,838

 

Loss on termination of financing obligation

 

 

 

 

 

6,477

 

 

 

 

Reserve for rebates receivable

 

 

 

 

 

1,338

 

 

 

 

Distributions from unconsolidated investees

 

 

18,075

 

 

 

6,766

 

 

 

 

Equity in earnings of unconsolidated investees

 

 

(18,341

)

 

 

(9,055

)

 

 

 

Deferred income taxes

 

 

18,242

 

 

 

12,491

 

 

 

 

Share-based compensation

 

 

224

 

 

 

112

 

 

 

 

Amortization of debt issuance costs

 

 

626

 

 

 

 

 

 

 

Changes in allowance for doubtful accounts

 

 

370

 

 

 

328

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable and financing receivable, net

 

 

1,481

 

 

 

46

 

 

 

(4,118

)

Cash grants receivable

 

 

 

 

 

146

 

 

 

1,099

 

Rebates receivable

 

 

 

 

 

(121

)

 

 

2,685

 

Solar power systems to be leased under sales type leases

 

 

 

 

 

197

 

 

 

463

 

Prepaid and other current assets

 

 

(1,435

)

 

 

(4,258

)

 

 

 

Deferred revenue

 

 

(59

)

 

 

(118

)

 

 

(819

)

Accounts payable and other current liabilities

 

 

1,171

 

 

 

5,403

 

 

 

(3,470

)

Net cash provided by operating activities

 

 

54,636

 

 

 

1,836

 

 

 

1,801

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used in) purchases of property and equipment

 

 

1,167

 

 

 

(223,688

)

 

 

(58,457

)

Cash paid for acquisitions

 

 

(284,797

)

 

 

 

 

 

 

Receipts of cash grants related to solar energy systems under operating leases

 

 

 

 

 

 

 

 

3,226

 

Distributions from unconsolidated investees

 

 

11,629

 

 

 

4,672

 

 

 

 

Net cash used in investing activities

 

 

(272,001

)

 

 

(219,016

)

 

 

(55,231

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of Class A shares, net of issuance costs

 

 

113,325

 

 

 

393,750

 

 

 

 

Proceeds from issuance of bank loans, net of issuance costs

 

 

86,567

 

 

 

461,192

 

 

 

61,481

 

Proceeds from issuance of promissory note to First Solar

 

 

 

 

 

1,964

 

 

 

 

Repayment of bank loans

 

 

 

 

 

(264,143

)

 

 

 

Capital contributions from SunPower

 

 

9,973

 

 

 

341,694

 

 

 

3,147

 

Capital distributions to SunPower

 

 

 

 

 

(3,163

)

 

 

(11,198

)

Cash distribution to First Solar at IPO

 

 

 

 

 

(283,697

)

 

 

 

Cash distribution to SunPower at IPO

 

 

 

 

 

(371,527

)

 

 

 

Cash distribution to SunPower for the remaining purchase price payments of initial projects

 

 

 

 

 

(202,680

)

 

 

 

Cash distribution to Class A shareholders

 

 

(20,241

)

 

 

(3,146

)

 

 

 

Cash distributions to Sponsors as OpCo unitholders

 

 

(12,271

)

 

 

 

 

 

 

Cash contributions from noncontrolling interests and redeemable noncontrolling

   interests - tax equity investors

 

 

3,671

 

 

 

203,717

 

 

 

 

Cash distributions to noncontrolling interests and redeemable noncontrolling

   interests - tax equity investors

 

 

(6,179

)

 

 

 

 

 

 

Net cash provided by financing activities

 

 

174,845

 

 

 

273,961

 

 

 

53,430

 

Net increase (decrease) in cash and cash equivalents

 

 

(42,520

)

 

 

56,781

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

56,781

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

14,261

 

 

$

56,781

 

 

$

 

Non-cash transactions:

 

 

 

 

 

 

 

 

 

 

 

 

Assignment of financing receivables to a third-party financial institution

 

$

 

 

$

1,279

 

 

$

7,815

 

Property and equipment acquisitions funded by liabilities

 

 

19,538

 

 

 

 

 

 

8,675

 

Property and equipment additions funded by SunPower post-IPO

 

 

 

 

 

50,683

 

 

 

 

Settlement of related party payable by capital contribution from tax equity investor

 

 

46,837

 

 

 

 

 

 

 

Predecessor liabilities assumed by SunPower

 

 

 

 

 

48,588

 

 

 

 

Accrued distributions to noncontrolling interests and redeemable

   noncontrolling interests - tax equity investors

 

 

975

 

 

 

 

 

 

 

Issuance by OpCo of OpCo common units, subordinated units and IDRs for acquisition of

   interests in First Solar Project Entities

 

 

 

 

 

408,820

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest, net of amounts capitalized

 

 

11,525

 

 

 

437

 

 

 

688

 

 



Non-GAAP Financial Measures

Our management uses a variety of financial metrics to analyze our performance. The key financial metrics we evaluate are Adjusted EBITDA and cash available for distribution.

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus interest expense, net of interest income, income tax provision, depreciation, amortization and accretion, including our proportionate share of net interest expense, income taxes and depreciation, amortization and accretion from our unconsolidated affiliates that are accounted for under the equity method, and share-based compensation and transaction costs incurred for our acquisitions of projects; and excluding the effect of certain other non-cash or non-recurring items that we do not consider to be indicative of our ongoing operating performance such as, but not limited to, mark to market adjustments to the fair value of derivatives related to our interest rate hedges. Adjusted EBITDA is a non-U.S. GAAP financial measure. This measurement is not recognized in accordance with U.S. GAAP and should not be viewed as an alternative to U.S. GAAP measures of performance. The U.S. GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and borrowers’ ability to service debt. In addition, Adjusted EBITDA is used by our management for internal planning purposes including certain aspects of our consolidated operating budget and capital expenditures. It is also used by investors to assess the ability of our assets to generate sufficient cash flows to make distributions to our Class A shareholders.

However, Adjusted EBITDA has limitations as an analytical tool because it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments, does not reflect changes in, or cash requirements for, working capital, does not reflect significant interest expense or the cash requirements necessary to service interest or principal payments on our outstanding debt or cash distributions on tax equity, does not reflect payments made or future requirements for income taxes, and excludes the effect of certain other cash flow items, all of which could have a material effect on our financial condition and results of operations. Adjusted EBITDA is a non-U.S. GAAP measure and should not be considered an alternative to net income (loss) or any other performance measure determined in accordance with U.S. GAAP, nor is it indicative of funds available to fund our cash needs. In addition, our calculations of Adjusted EBITDA are not necessarily comparable to EBITDA as calculated by other companies. Investors should not rely on these measures as a substitute for any U.S. GAAP measure, including net income (loss).

Cash Available for Distribution. We use cash available for distribution, which we define as Adjusted EBITDA less equity in earnings of unconsolidated affiliates, cash interest paid, cash income taxes paid, maintenance capital expenditures, cash distributions to noncontrolling interests and principal amortization of indebtedness plus cash distributions from unconsolidated affiliates, indemnity payments and working capital loans from Sponsors, test electricity generation, cash proceeds from sales-type residential leases, state and local rebates and cash proceeds for reimbursable network upgrade costs. Our cash flow is generated from distributions we receive from OpCo each quarter. OpCo’s cash flow is generated primarily from distributions from the Project Entities. As a result, our ability to make distributions to our Class A shareholders depends primarily on the ability of the Project Entities to make cash distributions to OpCo and the ability of OpCo to make cash distributions to its unitholders.

We believe cash available for distribution is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of our ability to make our distribution. In addition, cash available for distribution is used by our management team for determining future acquisitions and managing our growth. The U.S. GAAP measure most directly comparable to cash available for distribution is net income (loss).

However, cash available for distribution has limitations as an analytical tool because it does not capture the level of capital expenditures necessary to maintain the operating performance of our projects, does not include changes in operating assets and liabilities and excludes the effect of certain other cash flow items, all of which could have a material effect on our financial condition and results from operations. Cash available for distribution is a non-U.S. GAAP measure and should not be considered an alternative to net income (loss) or any other performance measure determined in accordance with U.S. GAAP, nor is it indicative of funds available to fund our cash needs. In addition, our calculations of cash available for distribution are not necessarily comparable to cash available for distribution as calculated by other companies. Investors should not rely on these measures as a substitute for any U.S. GAAP measure, including net income (loss).

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA and cash available for distribution for the three months ended November 30, 2016, August 31, 2016, and November 30, 2015, and the year ended November 30, 2016, the eleven months ended November 30, 2015 and the year ended December 28, 2014, respectively:

 


 

8point3 Energy Partners LP

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Cash Available for Distribution (CAFD)

(Unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

Eleven Months Ended

 

 

Year Ended

 

 

 

November 30,

 

 

August 31,

 

 

November 30,

 

 

November 30,

 

 

November 30,

 

 

December 28,

 

(in thousands)

 

2016

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2014

 

Net income (loss)

 

$

4,250

 

 

$

15,874

 

 

$

(8,644

)

 

$

12,910

 

 

$

(24,011

)

 

$

(1,216

)

Add (Less):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

2,664

 

 

 

2,903

 

 

 

(33

)

 

 

10,870

 

 

 

390

 

 

 

5,525

 

Income tax provision

 

 

2,963

 

 

 

5,063

 

 

 

11,796

 

 

 

18,244

 

 

 

12,503

 

 

 

23

 

Depreciation, amortization and accretion

 

 

6,556

 

 

 

6,311

 

 

 

1,917

 

 

 

22,880

 

 

 

4,291

 

 

 

2,339

 

Share-based compensation

 

 

56

 

 

 

56

 

 

 

56

 

 

 

224

 

 

 

112

 

 

 

 

Acquisition-related transaction costs (1)

 

 

10

 

 

 

599

 

 

 

212

 

 

 

2,271

 

 

 

212

 

 

 

 

Selling, general and administrative (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,372

 

 

 

2,334

 

Loss on cash flow hedges related to

  Quinto interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,448

 

 

 

 

Loss on termination of residential

  financing obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,477

 

 

 

 

Unrealized loss (gain) on derivatives (3)

 

 

(972

)

 

 

(285

)

 

 

(159

)

 

 

(1,508

)

 

 

611

 

 

 

 

Add proportionate share from

  equity method investments (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

(375

)

 

 

(54

)

 

 

(144

)

 

 

(524

)

 

 

(165

)

 

 

 

Depreciation, amortization and accretion

 

 

3,142

 

 

 

2,397

 

 

 

3,052

 

 

 

10,825

 

 

 

5,212

 

 

 

 

Adjusted EBITDA

 

$

18,294

 

 

$

32,864

 

 

$

8,053

 

 

$

76,192

 

 

$

17,452

 

 

$

9,005

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates,

  net with (4) above (5)

 

 

(7,604

)

 

 

(10,418

)

 

 

(5,849

)

 

 

(28,642

)

 

 

(14,102

)

 

 

 

Cash interest paid (6)

 

 

(3,000

)

 

 

(3,278

)

 

 

(2,787

)

 

 

(12,176

)

 

 

(4,502

)

 

 

 

Cash income taxes paid

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

Maintenance capital expenditures

 

 

(50

)

 

 

 

 

 

 

 

 

(50

)

 

 

 

 

 

 

Cash distributions to non-controlling interests

 

 

(2,412

)

 

 

(2,826

)

 

 

 

 

 

(6,142

)

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions from unconsolidated affiliates (7)

 

 

14,054

 

 

 

7,018

 

 

 

6,230

 

 

 

30,129

 

 

 

10,902

 

 

 

 

Indemnity payment from Sponsors (8)

 

 

279

 

 

 

64

 

 

 

3,900

 

 

 

10,316

 

 

 

3,900

 

 

 

 

Short-term Note (9)

 

 

 

 

 

 

 

 

1,964

 

 

 

 

 

 

1,964

 

 

 

 

Test electricity generation (10)

 

 

 

 

 

 

 

 

4,020

 

 

 

421

 

 

 

5,576

 

 

 

 

Cash proceeds (usage) from sales-type

  residential leases, net (11)

 

 

649

 

 

 

630

 

 

 

754

 

 

 

2,550

 

 

 

2,730

 

 

 

2,746

 

State and local rebates (12)

 

 

 

 

 

 

 

 

 

 

 

299

 

 

 

 

 

 

 

Cash proceeds for reimbursable network

  upgrade costs (13)

 

 

222

 

 

 

 

 

 

 

 

 

222

 

 

 

 

 

 

 

Cash available for distribution

 

$

20,430

 

 

$

24,054

 

 

$

16,285

 

 

$

73,117

 

 

$

23,920

 

 

$

11,751

 

 

(1)

Represents acquisition-related financial advisory, legal and accounting fees associated with ROFO Project interests purchased and expected to be purchased by us in the future.

(2)

Represents the allocation of the Predecessor’s corporate overhead in selling, general and administrative expenses.

(3)

Represents the changes in fair value of interest rate swaps that were not designated as cash flow hedges.

(4)

Represents our proportionate share of net interest expense, depreciation, amortization and accretion from our unconsolidated affiliates that are accounted for under the equity method.


(5)

Equity in earnings of unconsolidated affiliates represents the earnings from the Solar Gen 2 Project, the North Star Project, the Lost Hills Blackwell Project and the Henrietta Project and is included on our consolidated statements of operations.

(6)

Represents cash interest payments related to our term loan and revolving credit facilities post-IPO. The interest payments for the Quinto Credit Facility on the Predecessor’s combined carve-out financial statements were excluded as they were funded by one of our Sponsors.

(7)

Cash distributions from unconsolidated affiliates represent the cash received by OpCo with respect to its 49% interest in the Solar Gen 2 Project, the North Star Project, the Lost Hills Blackwell Project and the Henrietta Project.

(8)

Represents indemnity payments from the Sponsors owed to OpCo in accordance with the Omnibus Agreement.

(9)

Represents a working capital loan from First Solar.

(10)

Test electricity generation represents the sale of electricity that was generated prior to COD by the Kingbird Project for the year ended November 30, 2016 and by the Quinto Project, the RPU Project, the UC Davis Project and the Macy’s California Project for the eleven months ended November 30, 2015. Solar systems may begin generating electricity prior to COD as a result of the installation and interconnection of individual solar modules, which occurs over time during the construction and commission period. The sale of test electricity generation is accounted for as a reduction in the asset carrying value rather than operating revenue prior to COD, even though it generates cash for the related Project Entity.

(11)

Cash proceeds from sales-type residential leases, net, represent gross rental cash receipts for sales-type leases, less sales-type revenue and lease interest income that is already reflected in net income (loss) during the period. The corresponding revenue for such leases was recognized in the period in which such lease was placed in service, rather than in the period in which the rental payment was received, due to the characterization of these leases under U.S. GAAP.

(12)

State and local rebates represent cash received from state or local governments for owning certain solar power systems. The receipt of state and local rebates is accounted for as a reduction in the asset carrying value rather than operating revenue.

(13)

Cash proceeds from a utility company related to reimbursable network upgrade costs associated with the Kingbird Project.



8point3 Energy Partners LP

FY 2017 Q1 Guidance

Reconciliation of Net Loss to Adjusted EBITDA and Cash Available for Distribution (CAFD)

(in millions)

 

Low

 

 

High

 

Net loss

 

$

(6.4

)

 

$

(5.6

)

Add (Less):

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

5.5

 

 

 

5.5

 

Income tax provision

 

 

(0.1

)

 

 

(0.1

)

Depreciation, amortization and accretion

 

 

6.4

 

 

 

6.4

 

Share-based compensation

 

 

0.1

 

 

 

0.1

 

Add proportionate share from equity method investments (1):

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

6.3