Atlantica Sustainable Infrastructure plc(AY) - 2024 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated interim financial statements for the nine-month periods ended September 30, 2024 and 2023, including key financial positions, profit or loss, and cash flows, with 23 detailed notes Consolidated Statement of Financial Position (Abridged) | Metric | As of Sep 30, 2024 (in thousands USD) | As of Dec 31, 2023 (in thousands USD) | | :--- | :--- | :--- | | Total Assets | 8,590,434 | 8,714,333 | | Total Non-current assets | 7,553,776 | 7,732,151 | | Total Current assets | 1,036,658 | 982,182 | | Total Equity and Liabilities | 8,590,434 | 8,714,333 | | Total Equity | 1,444,791 | 1,588,809 | | Total Liabilities | 7,145,643 | 7,125,524 | Consolidated Statement of Profit or Loss (Abridged) | Metric | Nine Months Ended Sep 30, 2024 (in thousands USD) | Nine Months Ended Sep 30, 2023 (in thousands USD) | | :--- | :--- | :--- | | Revenue | 918,744 | 858,583 | | Operating Profit | 307,665 | 291,502 | | Profit for the period | 39,158 | 48,896 | | Profit attributable to the Company | 32,676 | 46,050 | | Basic Earnings Per Share (USD) | 0.28 | 0.40 | | Diluted Earnings Per Share (USD) | 0.28 | 0.40 | Consolidated Statement of Cash Flows (Abridged) | Metric | Nine Months Ended Sep 30, 2024 (in thousands USD) | Nine Months Ended Sep 30, 2023 (in thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | 311,808 | 333,822 | | Net cash used in investing activities | (135,581) | (24,566) | | Net cash used in financing activities | (192,193) | (309,948) | | Net decrease in cash and cash equivalents | (15,966) | (692) | Note 1: Nature of the Business This note details the company's sustainable infrastructure operations, recent asset acquisitions, and the pending $22 per share acquisition by Energy Capital Partners, alongside a debt default on Chile PV 2 - A definitive agreement was signed on May 27, 2024, for Bidco, controlled by Energy Capital Partners, to acquire 100% of Atlantica for $22 per share. The transaction is expected to close on December 12, 2024, after which Atlantica will become a private company[39][40] - In March 2024, the company acquired two wind assets in the UK (UK Wind 1 & 2) with a combined capacity of 32 MW for approximately $66 million[42] - In April 2024, the company acquired the Imperial project, a 100 MW PV + storage project in California, from Algonquin. The total investment is expected to be between $320 million and $340 million[43] - The project debt of Chile PV 2 is under an event of default as of September 30, 2024, due to low electricity prices in Chile. The $23 million debt has been classified as current[56] Note 4: Financial Information by Segment This note details financial performance by geography and business sector, showing North America and EMEA as top contributors and renewable energy as the dominant sector Revenue and Adjusted EBITDA by Geography (Nine Months Ended Sep 30) | Geography | Revenue 2024 (M USD) | Revenue 2023 (M USD) | Adj. EBITDA 2024 (M USD) | Adj. EBITDA 2023 (M USD) | | :--- | :--- | :--- | :--- | :--- | | North America | 372.1 | 338.7 | 279.7 | 260.7 | | South America | 140.8 | 140.3 | 108.4 | 112.0 | | EMEA | 405.8 | 379.6 | 269.4 | 254.5 | | Total | 918.7 | 858.6 | 657.5 | 627.3 | Revenue and Adjusted EBITDA by Business Sector (Nine Months Ended Sep 30) | Business Sector | Revenue 2024 (M USD) | Revenue 2023 (M USD) | Adj. EBITDA 2024 (M USD) | Adj. EBITDA 2023 (M USD) | | :--- | :--- | :--- | :--- | :--- | | Renewable energy | 675.7 | 640.1 | 476.9 | 460.4 | | Efficient natural gas & heat | 107.3 | 85.0 | 79.5 | 66.5 | | Transmission lines | 92.7 | 91.8 | 74.6 | 73.3 | | Water | 43.0 | 41.7 | 26.5 | 27.1 | | Total | 918.7 | 858.6 | 657.5 | 627.3 | Note 14: Equity This note details equity changes, highlighting Algonquin's 42.2% stake and the payment of three quarterly dividends totaling approximately $155.1 million - Algonquin Power & Utilities Corp. is the largest shareholder, owning 42.2% of the company's shares as of September 30, 2024[134] Dividends Paid to Company Shareholders in 2024 | Declaration Date | Payment Date | Dividend per Share (USD) | Total Amount (M USD) | | :--- | :--- | :--- | :--- | | Feb 29, 2024 | Mar 22, 2024 | $0.445 | $51.7 | | May 7, 2024 | Jun 14, 2024 | $0.445 | $51.7 | | Jul 31, 2024 | Sep 16, 2024 | $0.445 | $51.7 | Note 15: Corporate Debt This note outlines the corporate debt structure, totaling $1.205 billion as of September 30, 2024, and notes potential change of control triggers from the pending Bidco acquisition Corporate Debt Breakdown | Metric | As of Sep 30, 2024 (in thousands USD) | As of Dec 31, 2023 (in thousands USD) | | :--- | :--- | :--- | | Non-current | 1,002,727 | 1,050,816 | | Current | 201,889 | 34,022 | | Total Corporate Debt | 1,204,616 | 1,084,838 | - As of September 30, 2024, $115 million was drawn from the $450 million Revolving Credit Facility, with $301 million available[146] - The pending acquisition by Bidco may trigger change of control provisions, which could require offers to repurchase certain notes and would constitute an event of default under the Revolving Credit Facility without lender consent[155] Note 16: Project Debt This note details non-recourse project debt, totaling $4.248 billion as of September 30, 2024, and highlights the ongoing default of Chile PV 2's $23 million debt Project Debt Breakdown | Metric | As of Sep 30, 2024 (in thousands USD) | As of Dec 31, 2023 (in thousands USD) | | :--- | :--- | :--- | | Non-current | 3,852,892 | 3,931,873 | | Current | 395,451 | 387,387 | | Total Project Debt | 4,248,343 | 4,319,260 | - Due to low electricity prices in Chile, the project debt of Chile PV 2 ($23 million) is under an event of default and has been classified as current. The default for Chile PV 1 was waived as part of a restructuring[162] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial results, highlighting 7.0% revenue growth to $918.7 million and 4.8% Adjusted EBITDA growth to $657.5 million, alongside liquidity and capital resources Recent Developments and Investments This section highlights the pending ECP acquisition, asset divestitures, new operational assets in Colombia and Peru, and significant new investments including Imperial solar+storage and UK wind farms - The acquisition by Bidco (controlled by Energy Capital Partners) is pending court sanction on December 10, 2024, with closing expected two business days later[199] - The company sold its interest in the Monterrey asset for $41.2 million plus a potential earn-out and its interest in AYES Canada (Amherst Island) for $2 million[200][201] Assets Under Construction | Asset | Type | Location | Capacity (gross) | Expected COD | Expected Investment ($ million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Coso Batteries 1 | Battery Storage | California, US | 100 MWh | 2025 | 40-50 | | Coso Batteries 2 | Battery Storage | California, US | 80 MWh | 2025 | 35-45 | | Chile PMGD | Solar PV | Chile | 53 MW | 2024-2025 | 33 | | Chile PV 3 Expansion | Battery Storage | Chile | 142 MWh | 2024 | 14-15 | | ATS Expansion 1 | Transmission Line | Peru | n.a. (substation) | 2025 | 31 | | Apulo 1 | Solar PV | Colombia | 10 MW | 2024 | 5.5 | | Caparacena | Solar PV | Spain | 22 MW | 2026 | 10-12 | Results of Operations Analysis (Nine Months 2024 vs 2023) Revenue increased 7.0% to $918.7 million and operating profit rose 5.6% to $307.7 million, but profit attributable to the company decreased 29.1% to $32.7 million due to higher income tax Consolidated Results of Operations (Nine Months Ended Sep 30) | Metric (in millions USD) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | 918.7 | 858.6 | 7.0% | | Operating profit | 307.7 | 291.5 | 5.6% | | Financial expense, net | (254.7) | (237.9) | 7.1% | | Profit before income tax | 68.1 | 60.5 | 12.6% | | Income tax | (28.9) | (11.6) | 149.1% | | Profit for the period attributable to the company | 32.7 | 46.1 | (29.1)% | - Revenue in Spain increased mostly due to a higher reversal of the accounting provision related to the electricity price adjustment mechanism[275] - Depreciation, amortization and impairment charges increased by 4.8%, mainly due to an impairment of $11.4 million recorded in the Chile PMGD project[280] - Other operating expenses increased 22.7%, driven by higher O&M costs at ACT and Kaxu, reinstatement of an electricity sales tax in Spain, and $5.7 million in transaction costs related to the Bidco acquisition[282][283] Liquidity and Capital Resources Corporate liquidity totaled $320.3 million as of September 30, 2024, comprising $19.0 million cash and $301.3 million RCF availability, with management deeming it adequate despite a recent BB- credit rating downgrade Corporate Liquidity Position (in millions USD) | Component | As of Sep 30, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents at corporate level | 19.0 | 33.0 | | Revolving Credit Facility availability | 301.3 | 378.1 | | Total Corporate Liquidity | 320.3 | 411.1 | - On November 14, 2024, the Board of Directors approved a dividend of $0.2225 per share, expected to be paid on December 12, 2024[368] - In connection with the proposed acquisition by Bidco, S&P and Fitch downgraded Atlantica's corporate rating to BB- based on the proposed new capital structure[329] Quantitative and Qualitative Disclosures about Market Risk This section details market risks including foreign exchange, interest rate, credit, liquidity, and electricity price, and outlines mitigation strategies such as hedging and diversification - Foreign Exchange Risk: The company hedges 100% of its net euro and British pound exposure for the next 12 months and 75% for the following 12 months on a rolling basis using currency options[386] - Interest Rate Risk: Approximately 91% of consolidated debt has fixed rates or is hedged. A hypothetical 25 basis point rise in EURIBOR and SOFR would result in a net loss of $0.9 million in the income statement[388] - Credit Risk: Key counterparty risks include Eskom in South Africa (guaranteed by the government) and Pemex in Mexico, where collection delays have been experienced. Risk is managed through diversification and proactive client dialogue[390] - Electricity Price Risk: Exposure is limited, with merchant assets representing less than 2% of Adjusted EBITDA. However, low prices in Chile have caused a debt default for the Chile PV 2 project[391] Controls and Procedures This section is explicitly stated as not applicable for the current filing - This section is not applicable for this Form 6-K filing[394] PART II – OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings, including a $35 million insurance claim and lawsuits related to the 2021 Texas winter storm, with no material adverse effect expected - The company has a maximum theoretical exposure of approximately $35 million related to an insurance company claim covering certain former Abengoa obligations in Mexico[394] - A project company, Post Oak Wind, LLC (owner of Lone Star II), is a defendant among over 230 generators in lawsuits related to the February 2021 winter storm in Texas[395] Risk Factors This section states no new or updated risk factors are presented, directing readers to the Annual Report for comprehensive details - No new risk factors are presented in this report[398] Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered equity sales, use of proceeds from registered securities, or issuer equity purchases during the period - No unregistered sales of equity securities or related activities are reported for the period[399][400][401] Defaults upon Senior Securities This section indicates that no defaults upon senior securities have occurred - No defaults upon senior securities are reported[402] Mine Safety Disclosures This section is explicitly stated as not applicable to the company's business - This section is not applicable to the company's business[404] Other Information This section indicates that no other information is provided - No other information is provided in this section[405] Exhibits This section indicates that no exhibits are filed with this report - No exhibits are filed with this report[406]