Clearway Energy(US:CWEN)2025-02-24 22:52Part I Business Clearway Energy, Inc. is a leading US clean energy infrastructure investor with 11.8 GW gross capacity, securing most revenues through long-term contracts and pursuing growth via acquisitions - The company is one of the largest owners of clean energy assets in the U.S., with a portfolio of approximately 11.8 GW gross capacity, including 9 GW of wind, solar, and BESS, and 2.8 GW of dispatchable generation. In 2024, 96% of its total generation was from renewable energy and storage assets18 - The majority of revenues are derived from long-term contracts, with the Renewables segment's offtake agreements having a weighted average remaining duration of approximately 12 years as of December 31, 20241828 - The company's primary business strategy is to own assets with predictable, long-term cash flows to support dividend growth, focusing on contracted renewable and dispatchable generation, growing through acquisitions, and maintaining sound financial practices222324 Committed Investments as of December 31, 2024 | Asset | Technology | Gross Capacity (MW) | State | Estimated COD | | :--- | :--- | :--- | :--- | :--- | | Daggett 1 | BESS | 114 | CA | 1H25 | | Honeycomb Portfolio | BESS | 320 | UT | 1H26 | | Luna Valley | Solar | 200 | CA | 2H25 | | Pine Forest | Solar/BESS | 500 | TX | 2H25 | | Rosamond South I | Solar/BESS | 257 | CA | 2H25 | | Tuolumne | Wind | 137 | WA | N/A | Segment Financial Summary (Year ended December 31, 2024) | (In millions) | Flexible Generation | Renewables | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $342 | $1,029 | $— | $1,371 | | Net income (loss) | $64 | $31 | $(158) | $(63) | | Total assets | $1,933 | $12,236 | $160 | $14,329 | - The company has a concentrated customer base, with its two largest customers, Southern California Edison (SCE) and Pacific Gas and Electric (PG&E), representing approximately 24% and 17% of consolidated revenue, respectively, for the year ended December 31, 202450 Risk Factors The company faces business, sponsor relationship, regulatory, common stock, and taxation risks, including reliance on external financing, counterparty credit, operational hazards, and potential changes in government incentives or tax laws - Business Risks: The company's ability to grow is limited by its policy of distributing a significant amount of cash available for distribution (CAFD), making it reliant on external financing. It faces risks from counterparties defaulting on offtake agreements, operational hazards at its facilities, and unfavorable weather conditions impacting renewable energy production606670 - Relationship Risks: As a "controlled company," CEG (owned by GIP and TotalEnergies) exercises substantial influence, controls the board, and provides essential operational services through a master services agreement. The company is highly dependent on CEG for its operations and future acquisition pipeline61109120 - Regulatory Risks: The business is subject to extensive governmental regulation, including environmental laws. Changes in government incentives that support renewable power, such as Production Tax Credits (PTCs) and Investment Tax Credits (ITCs), could negatively impact the company's growth strategy62126133 - Common Stock Risks: The ability to pay future dividends is not guaranteed and depends on cash generated from operations, which can fluctuate. As a holding company, its ability to pay dividends is dependent on distributions from its subsidiary, Clearway Energy LLC63137141 - Taxation Risks: The company's ability to use its Net Operating Losses (NOLs) to offset future taxable income may be limited by factors such as an "ownership change" under Section 382 of the Code. Changes in tax laws could also adversely affect financial results64151155 Unresolved Staff Comments The company has no unresolved staff comments from the U.S. Securities and Exchange Commission - There are no unresolved staff comments168 Cybersecurity Cybersecurity risk management follows the NIST framework with Board oversight, and as of February 24, 2025, no material cybersecurity incidents were identified - The company's cybersecurity risk management is integrated into its broader risk framework and follows the National Institute of Standards and Technology (NIST) Cybersecurity Framework170 - The Board of Directors has oversight of cybersecurity risks and receives briefings at least annually from the Vice President of Information Technology and the Director of Cybersecurity174175 - As of February 24, 2025, the company was not aware of any cybersecurity threats or incidents that are reasonably likely to materially affect the company173 Properties The company's diversified portfolio of operating facilities as of December 31, 2024, totals 9,143 MW net capacity across various clean energy technologies Portfolio Net Capacity by Segment (as of Dec 31, 2024) | Segment | Rated MW (Gross) | Net MW (Owned) | | :--- | :--- | :--- | | Flexible Generation | 2,774 | 2,584 | | Utility Scale Solar | 3,740 | 2,166 | | Utility Scale BESS | 689 | 256 | | Distributed Solar | 330 | 330 | | Wind | 4,306 | 3,807 | | Total | 11,839 | 9,143 | Legal Proceedings The company reports no material legal proceedings - There are no material legal proceedings to report189 Mine Safety Disclosures This section is not applicable to the company - Not applicable190 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A and C common stocks trade on the NYSE, with a recent quarterly dividend declaration and performance tracked against market indices - The company's Class A and Class C common stock are listed on the NYSE under symbols CWEN.A and CWEN, respectively193 - On February 17, 2025, the company declared a quarterly dividend of $0.4312 per share on its Class A and Class C common stock194 Stock Performance Comparison (Cumulative Total Return) | | Dec 31, 2019 | Dec 31, 2020 | Dec 31, 2021 | Dec 31, 2022 | Dec 31, 2023 | Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Clearway Energy, Inc. Class A | $100.00 | $161.69 | $191.82 | $179.10 | $162.51 | $166.07 | | Clearway Energy, Inc. Class C | $100.00 | $167.04 | $196.83 | $181.30 | $165.11 | $166.54 | | S&P 500 | $100.00 | $118.40 | $152.39 | $124.79 | $157.59 | $197.02 | | UTY (Philadelphia Utility Sector Index) | $100.00 | $102.72 | $121.46 | $122.25 | $111.05 | $134.24 | Management's Discussion and Analysis of Financial Condition and Results of Operations In 2024, operating revenues increased by $57 million to $1.371 billion due to acquisitions, but a net loss of $63 million was reported, while liquidity remained strong at $1.33 billion Executive Summary The executive summary details 2024 corporate activities, including the acquisition of the 137 MW Tuolumne wind facility, multiple sponsor 'drop down' transactions, and new Resource Adequacy agreements - The company entered into a binding agreement to acquire the 137 MW Tuolumne operating wind facility for approximately $219 million, with an expected corporate capital commitment of $70-$75 million205 - Multiple 'drop down' transactions were executed with sponsor CEG, including agreements to acquire interests in the Honeycomb BESS Portfolio (320 MW), Dan's Mountain wind facility (55 MW), Pine Forest solar/BESS (500 MW), Luna Valley solar (200 MW), and Rosamond South I solar/BESS (257 MW)207208 - New Resource Adequacy (RA) agreements were signed for the El Segundo, Walnut Creek, and Marsh Landing facilities, securing capacity contracts for future years208 Consolidated Results of Operations In 2024, operating revenues increased by $57 million to $1.371 billion due to acquisitions, but a net loss of $63 million was reported, impacted by higher operating costs and negative hedge adjustments Year-over-Year Financial Performance | (In millions) | 2024 | 2023 | | :--- | :--- | :--- | | Total operating revenues | $1,371 | $1,314 | | Operating Income | $196 | $263 | | Net (Loss) Income | $(63) | $(14) | | Net Income Attributable to Clearway Energy, Inc. | $88 | $79 | - The $57 million increase in operating revenue was primarily driven by $138 million from new solar and BESS acquisitions and $50 million from higher wind production, offset by a $74 million decrease in Flexible Generation revenue and a $68 million negative change in mark-to-market hedges213 - Operations and maintenance expense increased by $32 million, and depreciation, amortization, and accretion increased by $101 million in 2024, primarily due to recent solar and BESS acquisitions215216 - The company recorded an income tax expense of $30 million on a pretax loss of $33 million in 2024, resulting in an effective tax rate of (90.9)%, largely due to the impact of HLBV accounting on noncontrolling interests219220 Liquidity and Capital Resources As of December 31, 2024, total liquidity was $1.33 billion, deemed adequate for debt service, capital expenditures, and dividends, despite a decrease from the prior year Liquidity Position | (In millions) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total cash, cash equivalents and restricted cash | $733 | $1,051 | | Revolving credit facility availability | $597 | $454 | | Total liquidity | $1,330 | $1,505 | Corporate Credit Ratings (as of Dec 31, 2024) | Agency | Rating | | :--- | :--- | | S&P | BB | | Moody's | Ba2 | - Total debt principal payments due within one year (2025) amount to $555 million237502 - The company used approximately $287 million for capital expenditures in 2024, primarily for growth projects in the Renewables segment239 2024 Dividends per Share | Quarter | Dividend per Share | | :--- | :--- | | First Quarter 2024 | $0.4033 | | Second Quarter 2024 | $0.4102 | | Third Quarter 2024 | $0.4171 | | Fourth Quarter 2024 | $0.4240 | Quantitative and Qualitative Disclosures About Market Risk The company manages market risks including commodity price, interest rate, liquidity, and credit, with sensitivity analyses showing potential impacts on derivatives and interest expense - The company is exposed to commodity price risk, interest rate risk, liquidity risk, and credit risk282 - A hypothetical $0.50 per MWh change in power prices would cause an approximately $6 million change to the net value of the company's long-term power commodity derivative contracts284 - A 1% change in interest rates would result in an approximately $2 million change in interest expense on a rolling twelve-month basis288 Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2024, 2023, and 2022, including income, balance sheet, cash flow, and equity statements with notes Consolidated Statements of Income In 2024, total operating revenues were $1.371 billion, resulting in a net loss of $63 million, with $88 million attributable to Clearway Energy, Inc Key Income Statement Data (in millions) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total operating revenues | $1,371 | $1,314 | $1,190 | | Operating Income | $196 | $263 | $1,470 | | Net (Loss) Income | $(63) | $(14) | $1,060 | | Net Income Attributable to Clearway Energy, Inc. | $88 | $79 | $582 | Consolidated Balance Sheets As of December 31, 2024, total assets were $14.33 billion, total liabilities $8.77 billion, and total stockholders' equity $5.56 billion Key Balance Sheet Data (in millions) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $1,067 | $1,560 | | Property, plant and equipment, net | $9,944 | $9,526 | | Total Assets | $14,329 | $14,701 | | Total current liabilities | $718 | $906 | | Long-term debt | $6,750 | $7,479 | | Total Liabilities | $8,765 | $9,706 | | Total Stockholders' Equity | $5,564 | $4,994 | Consolidated Statements of Cash Flows In 2024, net cash from operations was $770 million, while investing activities used $725 million and financing activities used $363 million Key Cash Flow Data (in millions) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $770 | $702 | $787 | | Net cash (used in) provided by investing activities | $(725) | $(523) | $1,065 | | Net cash used in financing activities | $(363) | $(124) | $(1,510) | | Net (Decrease) Increase in Cash | $(318) | $55 | $342 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure In May 2024, the company changed its independent registered public accounting firm from Ernst & Young LLP to PricewaterhouseCoopers LLP - The company changed its independent registered public accounting firm in May 2024, dismissing Ernst & Young LLP and appointing PricewaterhouseCoopers LLP for the 2024 fiscal year audit293 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2024, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024294 - No changes in internal control over financial reporting occurred during the quarter ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, internal controls295 Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q4 2024 - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended December 31, 2024300 Part III Information about Directors, Executive Officers and Corporate Governance This section details biographical information for directors and executive officers, including sponsor-affiliated and independent directors, and highlights the company's Code of Business Conduct and Ethics - The Board of Directors includes representatives from its sponsors, GIP (Jonathan Bram, Nathaniel Anschuetz, Bruce MacLennan) and TotalEnergies (Emmanuel Barrois, Olivier Jouny, Marc-Antoine Pignon), along with independent directors302303305309310312 - Craig Cornelius has served as President and Chief Executive Officer since July 2024. Sarah Rubenstein is the Executive Vice President and Chief Financial Officer313314 - The company has adopted a Code of Business Conduct and Ethics, which is available on its website316 Executive Compensation Executive compensation information is incorporated by reference from the company's 2025 Definitive Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement318 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details securities authorized for issuance under equity compensation plans, with other information incorporated by reference from the 2025 Proxy Statement - As of the reporting date, there are 2,786,041 securities remaining available for future issuance under equity compensation plans approved by security holders319 Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Definitive Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement320 Principal Accounting Fees and Services Principal accounting fees and services information is incorporated by reference from the company's 2025 Definitive Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement321 Part IV Exhibits, Financial Statement Schedules This section lists financial statements, schedules, and exhibits for the Form 10-K, including consolidated financials and reports from independent accounting firms - This section includes the consolidated financial statements for the years ended December 31, 2024, 2023, and 2022324 - The report includes opinions on the financial statements and internal control over financial reporting from PricewaterhouseCoopers LLP for the 2024 fiscal year328329 - The report includes an opinion on the financial statements from Ernst & Young LLP for the fiscal years 2023 and 2022347 Form 10-K Summary The company indicates there is no Form 10-K summary - None576