Atlantica Sustainable Infrastructure plc(AY) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1: Financial Statements Presents unaudited Q3 2023 interim financial statements, reporting a $46.1 million profit, a significant improvement Consolidated Condensed Statements of Financial Position Total assets decreased to $8.86 billion as of September 30, 2023, with equity and liabilities also declining Key Balance Sheet Figures (in thousands of U.S. dollars) | Metric | As of September 30, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $8,861,643 | $9,100,911 | | Total Non-Current Assets | $7,778,588 | $8,069,183 | | Total Current Assets | $1,083,055 | $1,031,728 | | Total Equity | $1,692,813 | $1,789,047 | | Total Liabilities | $7,168,830 | $7,311,864 | | Total Non-Current Liabilities | $6,549,781 | $6,792,862 | | Total Current Liabilities | $619,049 | $519,002 | Consolidated Condensed Income Statements Reported a $48.9 million profit for the nine months ended September 30, 2023, a significant turnaround with stable revenue Income Statement Highlights (in thousands of U.S. dollars, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Revenue | $858,583 | $858,405 | | Operating Profit | $291,502 | $219,005 | | Profit for the period | $48,896 | $1,805 | | Profit/(loss) attributable to the Company | $46,050 | ($9,473) | | Basic earnings per share | $0.40 | ($0.08) | | Diluted earnings per share | $0.40 | ($0.09) | Consolidated Condensed Cash Flow Statements Net cash from operations decreased to $333.8 million, while cash used in investing declined and financing increased Cash Flow Summary (in thousands of U.S. dollars) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $333,822 | $515,726 | | Net cash used in investing activities | ($24,566) | ($48,066) | | Net cash used in financing activities | ($309,948) | ($263,118) | | Net (decrease)/increase in cash | ($692) | $204,542 | | Cash and cash equivalents at end of period | $594,616 | $781,575 | Notes to the Financial Statements Details business activities, accounting policies, and risk management, including segment performance, O&M internalization, and Chilean asset defaults - In March 2023, the company transitioned O&M services for its Spanish assets to an internal subsidiary. It now self-performs O&M for assets representing approximately 72% of its 2022 consolidated revenue[40] - Three new assets reached Commercial Operation Date (COD) in Q1 2023: Albisu (10 MW PV, Uruguay), La Tolua (20 MW PV, Colombia), and Tierra Linda (10 MW PV, Colombia)[40][41] - Due to low electricity prices in Chile, Chile PV 1 defaulted on its debt service reserve account requirement as of September 30, 2023, resulting in its $49 million project debt being reclassified as current. Subsequently, in October 2023, Chile PV 2 also defaulted on its debt service payment[48][172] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses stable revenue and a significant profit increase to $46.1 million, driven by non-recurring impairment and cost efficiencies Overview, Recent Investments, and Developments Atlantica operates 44 sustainable infrastructure assets, pursuing growth through a 2.1 GW renewables and 6.0 GWh storage pipeline - The company's portfolio consists of 44 operating assets, including 2,161 MW of renewable energy capacity, with a weighted average remaining contract life of approximately 13 years[175] - A strategic review process was initiated by the board of directors on February 21, 2023, to explore alternatives for maximizing shareholder value[193] - The company is developing a pipeline of approximately 2.1 GW of renewable energy and 6.0 GWh of storage, with 37% of projects in advanced development or expected to be ready-to-build in 2023-2024[176] Results of Operations Revenue remained flat at $858.6 million, while operating profit rose 33.1% to $291.5 million, leading to a $46.1 million profit Key Results of Operations (in millions of U.S. dollars) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $858.6 | $858.4 | 0.0% | | Operating Profit | $291.5 | $219.0 | 33.1% | | Financial expense, net | ($237.9) | ($224.9) | (5.8)% | | Profit for the period attributable to the company | $46.1 | ($9.5) | 585.3% | - The 17.0% decrease in 'Depreciation, amortization, and impairment charges' was mainly due to a $41.2 million impairment loss recorded at Solana in 2022 that was not repeated in 2023[248] - Employee benefit expenses increased 29.4% to $76.1 million, while O&M expenses decreased, reflecting the internalization of O&M services at assets in Spain and Kaxu[247][252] Segment Reporting North America and South America revenue grew 4.6% and 14.5%, while EMEA revenue decreased 7.9% due to lower prices Revenue by Geography (in millions of U.S. dollars) | Geography | 9M 2023 | 9M 2022 | % Change | | :--- | :--- | :--- | :--- | | North America | $338.7 | $323.7 | +4.6% | | South America | $140.3 | $122.5 | +14.5% | | EMEA | $379.6 | $412.2 | -7.9% | Adjusted EBITDA by Geography (in millions of U.S. dollars) | Geography | 9M 2023 | 9M 2022 | % Change | | :--- | :--- | :--- | :--- | | North America | $260.7 | $258.1 | +1.0% | | South America | $112.1 | $95.1 | +17.9% | | EMEA | $254.5 | $277.4 | -8.3% | Liquidity and Capital Resources Maintained strong corporate liquidity of $441.1 million, with total corporate debt at $1.05 billion and project debt at $4.41 billion Corporate Liquidity Position (in millions of U.S. dollars) | Component | As of Sep 30, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Cash at Corporate Level | $48.0 | $60.8 | | Revolving Credit Facility Availability | $393.1 | $385.1 | | Total Corporate Liquidity | $441.1 | $445.9 | - The company declared and/or paid quarterly dividends of $0.445 per share throughout 2023[332] - In June 2023, the company extended the maturity of its Green Project Finance for the Solaben assets from April 2025 to December 2028[323] Item 3: Quantitative and Qualitative Disclosures about Market Risk Manages foreign exchange, interest rate, credit, liquidity, and electricity price risks, with 93% of debt fixed or hedged - The company hedges 100% of its euro-denominated net cash flow exposure for the next 12 months and 75% for the subsequent 12 months on a rolling basis[346] - Approximately 93% of the company's consolidated debt has a fixed interest rate or is hedged to mitigate interest rate volatility[212] - Exposure to merchant electricity prices is minimal, representing less than 2% of the portfolio based on 2022 Adjusted EBITDA[214][350] PART II – OTHER INFORMATION Item 1: Legal Proceedings Reports a potential $35 million exposure from an insurance claim and lawsuits related to the 2021 Texas winter storm - The company has a maximum theoretical exposure of approximately $35 million related to an insurance company claim in Mexico[351] - A subsidiary, Post Oak Wind, LLC (part of the Vento II portfolio), is a defendant in several lawsuits concerning the February 2021 winter storm in Texas[352] Item 1A: Risk Factors No new risk factors are reported in this section for the period - None[353] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - None[353] Item 3: Defaults upon Senior Securities The company reports no defaults upon its senior securities - None[355]