Atlantica Sustainable Infrastructure plc(AY) - 2021 Q4 - Annual Report

Executive Summary & 2021 Financial Performance Atlantica Sustainable Infrastructure plc reported significant revenue and cash flow growth in 2021, driven by strong renewable energy production and high asset availability, despite a net loss Overall Financial Highlights Atlantica Sustainable Infrastructure plc reported a significant increase in revenue and cash flow from operations for 2021, with revenue growing by 19.6% year-over-year - Revenue for 2021 increased by 19.6% year-over-year to $1,211.7 million, and by 8.8% on a comparable basis[4][5][6] - Adjusted EBITDA was $824.4 million in 2021, a 3.6% year-over-year increase, or 13.8% on a constant currency basis excluding a non-cash provision related to Spanish electricity prices[4][5] - Net loss attributable to the Company for 2021 was $30.1 million, compared to a net profit of $12.0 million in 2020[4] - Net cash provided by operating activities increased by 15.4% year-over-year to $505.6 million in 2021[4][7] - Cash Available for Distribution (CAFD) increased by 12.4% year-over-year to $225.6 million, with CAFD per share growing by 3.1% to $2.03[4][7] 2021 Financial Highlights (in thousands of U.S. dollars) | Indicator | Year ended 2021 | December 31, 2020 | | :--------------------------------------------- | :-------------- | :------------------ | | Revenue | $1,211,749 | $1,013,260 | | Profit/(loss) for the period attributable to the Company | (30,080) | 11,968 | | Adjusted EBITDA | 824,388 | 796,123 | | Net cash provided by operating activities | 505,623 | 438,221 | | CAFD | 225,547 | 200,691 | Segment and Geographical Performance The renewable energy portfolio experienced substantial growth in 2021, with a 43.5% increase in production driven by new investments and favorable solar conditions in Spain - Renewable energy production increased by 43.5% in 2021 compared to 2020, primarily due to recent investments and better solar radiation in Spain[13] - Efficient natural gas and heat, transmission lines, and water segments maintained very high availability levels, which is key for their revenue generation[14] Key Performance Indicators by Segment (2021 vs 2020) | Segment | Indicator | Year ended Dec 2021 | Dec 31, 2020 | | :--------------------------- | :----------------- | :------------------ | :----------- | | Renewable energy | MW in operation | 2,044 | 1,551 | | | GWh produced | 4,655 | 3,244 | | Efficient natural gas & heat | MW in operation | 398 | 343 | | | GWh produced | 2,292 | 2,574 | | | Availability (%) | 100.6% | 102.1% | | Transmission lines | Miles in operation | 1,166 | 1,166 | | | Availability (%) | 100.0% | 100.0% | | Water | Mft3 in operation | 17.5 | 17.5 | | | Availability (%) | 97.9% | 101.1% | Revenue by Geography (in thousands of U.S. dollars) | Geography | Year ended 2021 | Dec 31, 2020 | | :------------ | :-------------- | :----------- | | North America | $395,775 | $330,921 | | South America | 154,985 | 151,460 | | EMEA | 660,989 | 530,879 | | Total Revenue | $1,211,749 | $1,013,260 | Adjusted EBITDA by Geography (in thousands of U.S. dollars) | Geography | Year ended 2021 | Dec 31, 2020 | | :------------ | :-------------- | :----------- | | North America | $311,803 | $279,365 | | South America | 119,547 | 120,023 | | EMEA | 393,038 | 396,735 | | Total Adjusted EBITDA | $824,388 | $796,123 | Revenue by Business Sector (in thousands of U.S. dollars) | Business Sector | Year ended 2021 | Dec 31, 2020 | | :------------------------- | :-------------- | :----------- | | Renewable energy | $928,525 | $753,089 | | Efficient natural gas & heat | 123,692 | 111,030 | | Transmission lines | 105,680 | 106,042 | | Water | 53,852 | 43,099 | | Total Revenue | $1,211,749 | $1,013,260 | Adjusted EBITDA by Business Sector (in thousands of U.S. dollars) | Business Sector | Year ended 2021 | Dec 31, 2020 | | :------------------------- | :-------------- | :----------- | | Renewable energy | $602,583 | $576,285 | | Efficient natural gas & heat | 99,935 | 101,006 | | Transmission lines | 83,635 | 87,272 | | Water | 38,235 | 31,560 | | Total Adjusted EBITDA | $824,388 | $796,123 | Financial Health & Capital Allocation Atlantica maintained substantial corporate liquidity in 2021 despite decreased cash, with a 3.5x net corporate debt/CAFD ratio, and declared a quarterly dividend Liquidity and Debt As of December 31, 2021, Atlantica's corporate cash decreased significantly compared to the previous year, but the company maintained substantial total corporate liquidity - Corporate cash at year-end 2021 was $88.3 million, down from $335.2 million in 2020[15] - Total corporate liquidity as of December 31, 2021, was $528.3 million, including $440.0 million available under its Revolving Credit Facility[15] - Net project debt decreased to $4.5 billion in 2021 from $4.7 billion in 2020[15] - Net corporate debt increased to $934.8 million in 2021 from $658.5 million in 2020[15] - The net corporate debt / CAFD pre-corporate debt service ratio was 3.5x as of December 31, 2021[15] Dividend Declaration Atlantica's Board of Directors approved a quarterly dividend of $0.44 per share, scheduled for payment in March 2022 - A quarterly dividend of $0.44 per share was approved by the Board of Directors on February 25, 2022[5][16] - The dividend is expected to be paid on March 25, 2022, to shareholders of record as of March 14, 2022[16] Strategic Initiatives & Outlook Atlantica achieved strong ESG recognition and exceeded 2021 growth investment targets, setting ambitious 2022 guidance and a mid-term CAFD per share growth strategy ESG Achievements Atlantica continued to receive international recognition for its strong performance in Environmental, Social, and Governance (ESG) aspects, securing high rankings and distinctions - Ranked 8 in Corporate Knights' Global 100 index and 2 in Power Generation in January 2022[17] - Included within the Top 3 percentile on ESG Risk Rating in the utility industry by Sustainalytics in February 2022[17] - Awarded the Bronze Class distinction in the S&P Global 2022 Sustainability Yearbook in February 2022[17] - Included in the CDP 'A List' for achieving the highest score on environmental transparency and action in relation to climate change in December 2021[17] Growth Investments Atlantica significantly exceeded its annual investment target in 2021, deploying approximately $480 million in growth initiatives - Invested approximately $480 million in growth in 2021, surpassing the $300 million annual target[18] - Closed the acquisition of La Sierpe, a 20 MW solar asset in Colombia, for approximately $23.5 million equity in November 2021[18] - Already closed or earmarked $110-120 million in new equity investments for 2022[5][18] - 2022 investments include a 63-mile transmission line in Chile ($47 million equity), a 2.5 MW PV plant portfolio in Italy (~$4 million equity), and $60-70 million in projects under construction (e.g., Albisu 10 MW PV in Uruguay, La Tolua 20 MW PV and Tierra Linda 10 MW PV in Colombia)[18][19] 2022 Target Guidance Atlantica has initiated its financial guidance for 2022, projecting targeted Adjusted EBITDA and Cash Available for Distribution (CAFD) within specific ranges - 2022 targeted Adjusted EBITDA is in the range of $810 million to $870 million[20] - 2022 targeted CAFD is in the range of $230 million to $250 million[5][20] Mid-Term Growth Strategy Beyond 2022, Atlantica aims to achieve over $300 million in annual equity growth investments through a diversified strategy - Targets potential equity growth investments of more than $300 million per annum[21] - Growth sources include organic growth (escalation factors, portfolio optimization, repowering/hybridization/expansion), development of new assets (early-stage projects with local partners), and third-party acquisitions[21][22] - Extended its mid-term CAFD per share Compound Annual Growth Rate target of between 5% and 8% until 2025[22] Additional Information This section provides details on the conference call, forward-looking statement disclaimers, and explanations of non-GAAP financial measures used in the report Conference Call Details Atlantica's CEO and CFO hosted a conference call and webcast on February 28, 2022, to discuss the financial results, and also scheduled investor meetings - A conference call and webcast were held on Monday, February 28, 2022, at 4:15 pm (New York time)[23] - Senior management planned meetings with investors on March 1-2, 2022, at various global energy and finance conferences[23] Forward-Looking Statements This press release contains forward-looking statements concerning Atlantica's future financial position, operations, strategy, and market developments - The press release includes forward-looking statements regarding future financial position, results of operations, strategy, plans, objectives, goals, targets, and market developments[24] - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those projected[25] - The company disclaims any obligation to update forward-looking statements to reflect events or circumstances after the date of the press release, except as required by law[25] - Investors are advised to read the 'Risk Factors' section in the Annual Report on Form 20-F for a complete discussion of potential risks[26][27] Non-GAAP Financial Measures Explanation The report utilizes non-GAAP financial measures such as Adjusted EBITDA, CAFD, and CAFD per share, which are not IFRS compliant - Non-GAAP financial measures, including Adjusted EBITDA, CAFD, and CAFD per share, are presented but are not IFRS measurements and should not be considered alternatives to IFRS performance or liquidity measures[29][31] - Management uses these non-GAAP measures to evaluate operating performance, compare business performance across periods and companies, assess the ability to distribute cash returns, and for internal planning and forecasting[33][34][35] - Limitations of non-GAAP measures include not reflecting cash expenditures, future capital expenditure requirements, working capital needs, significant interest expense, or asset replacement costs[31] - Adjusted EBITDA is defined as profit/(loss) for the period attributable to the Company, adjusted for non-controlling interest, income tax, finance expense, depreciation, amortization, impairment, and including pro-rata D&A, financial expense, and income tax of unconsolidated affiliates[32] - CAFD is calculated as cash distributions received from subsidiaries minus company cash expenses, including debt service and general and administrative expenses[32] - CAFD per share is calculated by dividing CAFD by the weighted average number of outstanding ordinary shares[32] Consolidated Financial Statements This section presents Atlantica's consolidated statements of operations, financial position, and cash flows for 2021 and 2020, offering a comprehensive financial overview Consolidated Statements of Operations This section presents the detailed consolidated statements of operations for Atlantica Sustainable Infrastructure plc, covering both the three-month and full-year periods ended December 31, 2021, and 2020 Consolidated Statements of Operations (Amounts in thousands of U.S. dollars) | Indicator | For the three-month ended Dec 31, 2021 | For the three-month ended Dec 31, 2020 | For the year ended Dec 31, 2021 | For the year ended Dec 31, 2020 | | :--------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $271,331 | $244,526 | $1,211,749 | $1,013,260 | | Other operating income | 17,073 | 23,623 | 74,670 | 99,525 | | Employee benefit expenses | (19,653) | (17,034) | (78,758) | (54,464) | | Depreciation, amortization, and impairment charges | (104,525) | (106,438) | (439,441) | (408,604) | | Other operating expenses | (93,457) | (79,031) | (414,330) | (276,666) | | Operating profit | $70,769 | $65,646 | $353,890 | $373,051 | | Financial income | 907 | 639 | 2,755 | 7,052 | | Financial expense | (84,270) | (88,947) | (361,270) | (378,386) | | Net exchange differences | (173) | 131 | 1,873 | (1,351) | | Other financial income/(expense), net | (5,934) | (21,722) | 15,750 | 40,875 | | Financial expense, net | $(89,470) | $(109,899) | $(340,892) | $(331,810) | | Share of profit/(loss) of associates carried under the equity method | 8,059 | 2,758 | 12,304 | 510 | | Profit/(loss) before income tax | $(10,642) | $(41,495) | $25,302 | $41,751 | | Income tax expense | 6,170 | 202 | (36,220) | (24,877) | | Profit/(loss) for the period (continued operations) | $(4,472) | $(41,293) | $(10,918) | $16,874 | | (Profit)/loss attributable to non-controlling interests | (7,442) | (7,948) | (19,162) | (4,906) | | Profit/(loss) for the period attributable to the Company | $(11,914) | $(49,241) | $(30,080) | $11,968 | | Weighted average number of ordinary shares outstanding (thousands)- basic | 111,777 | 102,704 | 111,008 | 101,879 | | Weighted average number of ordinary shares (thousands)- diluted | 115,615 | 106,051 | 114,523 | 103,392 | | Basic earnings per share (U.S. dollar per share) | $(0.11) | $(0.48) | $(0.27) | $0.12 | | Diluted earnings per share (U.S. dollar per share) | $(0.10) | $(0.46) | $(0.26) | $0.12 | Consolidated Statement of Financial Position This section provides the consolidated statement of financial position for Atlantica Sustainable Infrastructure plc as of December 31, 2021, and December 31, 2020, detailing the company's assets, equity, and liabilities Consolidated Statement of Financial Position (Amounts in thousands of U.S. dollars) | Indicator | As of December 31, 2021 | As of December 31, 2020 | | :--------------------------------------------- | :---------------------- | :---------------------- | | Assets | | | | Non-current assets | | | | Contracted concessional assets | $8,021,568 | $8,155,418 | | Investments carried under the equity method | 294,581 | 116,614 | | Financial investments | 96,608 | 89,754 | | Deferred tax assets | 172,268 | 152,290 | | Total non-current assets | $8,585,025 | $8,514,076 | | Current assets | | | | Inventories | $29,694 | $23,958 | | Trade and other receivables | 307,143 | 331,735 | | Financial investments | 207,379 | 200,084 | | Cash and cash equivalents | 622,689 | 868,501 | | Total current assets | $1,166,905 | $1,424,278 | | Total assets | $9,751,930 | $9,938,354 | | Equity and liabilities | | | | Share capital | $11,240 | $10,667 | | Share premium | 872,011 | 1,011,743 | | Capital reserves | 1,020,027 | 881,745 | | Other reserves | 171,272 | 96,641 | | Accumulated currency translation differences | (133,450) | (99,925) | | Accumulated deficit | (398,701) | (373,489) | | Non-controlling interest | 206,206 | 213,499 | | Total equity | $1,748,605 | $1,740,881 | | Non-current liabilities | | | | Long-term corporate debt | $995,190 | $970,077 | | Long-term project debt | 4,387,674 | 4,925,268 | | Grants and other liabilities | 1,263,744 | 1,229,767 | | Derivative liabilities | 223,453 | 328,184 | | Deferred tax liabilities | 308,859 | 260,923 | | Total non-current liabilities | $7,178,920 | $7,714,219 | | Current liabilities | | | | Short-term corporate debt | $27,881 | $23,648 | | Short-term project debt | 648,519 | 312,346 | | Trade payables and other current liabilities | 113,907 | 92,557 | | Income and other tax payables | 34,098 | 54,703 | | Total current liabilities | $824,405 | $483,254 | | Total equity and liabilities | $9,751,930 | $9,938,354 | Consolidated Cash Flow Statements This section presents the consolidated cash flow statements for Atlantica Sustainable Infrastructure plc, detailing cash flows from operating, investing, and financing activities for the three-month and full-year periods ended December 31, 2021, and 2020 Consolidated Cash Flow Statements (Amounts in thousands of U.S. dollars) | Indicator | For the three-month ended Dec 31, 2021 | For the three-month ended Dec 31, 2020 | For the year ended Dec 31, 2021 | For the year ended Dec 31, 2020 | | :--------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------ | :------------------------------ | | Profit/(loss) for the period | $(4,473) | $(41,293) | $(10,918) | $16,874 | | Financial expense and non-monetary adjustments | 199,939 | 199,393 | 861,931 | 719,488 | | Profit for the period adjusted by financial expense and nonmonetary adjustments | $195,466 | $158,100 | $851,013 | $736,362 | | Variations in working capital | 1,451 | 101,540 | (3,127) | (10,902) | | Net interest and income tax paid | (133,234) | (124,661) | (342,263) | (287,239) | | Net cash provided by operating activities | $63,683 | $134,978 | $505,623 | $438,221 | | Investment in contracted concessional assets | (14,334) | (5,180) | (24,682) | (1,361) | | Other non-current assets/liabilities | 718 | (14,811) | 1,093 | (29,198) | | Acquisitions of subsidiaries and entities under the equity method | (24,910) | (6,490) | (362,449) | 2,453 | | Dividends received from entities under the equity method | 10,268 | 2,106 | 34,883 | 22,246 | | Net cash provided by/(used in) investing activities | $(28,258) | $(24,375) | $(351,155) | $(5,860) | | Net cash provided by/(used in) financing activities | $(172,198) | $(41,541) | $(380,163) | $(137,340) | | Net increase/(decrease) in cash and cash equivalents | $(136,774) | $69,062 | $(225,695) | $295,021 | | Cash and cash equivalents at beginning of the period | 763,544 | 788,896 | 868,501 | 562,795 | | Translation differences in cash or cash equivalent | (4,083) | 10,543 | (20,117) | 10,685 | | Cash and cash equivalents at end of the period | $622,689 | $868,501 | $622,689 | $868,501 | Reconciliations of Non-GAAP Measures This section provides detailed reconciliations for Adjusted EBITDA, CAFD, CAFD per share, and the 2022 target guidance, linking non-GAAP measures to IFRS results Adjusted EBITDA Reconciliation This section provides detailed reconciliations of Adjusted EBITDA to both the Profit for the period attributable to the company and Net cash provided by operating activities for the three-month and full-year periods ended December 31, 2021, and 2020 Reconciliation of Adjusted EBITDA to Profit for the period attributable to the company (in thousands of U.S. dollars) | Indicator | For the three-month ended Dec 31, 2021 | For the three-month ended Dec 31, 2020 | For the year ended Dec 31, 2021 | For the year ended Dec 31, 2020 | | :--------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------ | :------------------------------ | | Profit/(loss) for the period attributable to the Company | $(11,914) | $(49,241) | $(30,080) | $11,968 | | Profit/(loss) attributable to non-controlling interest | 7,442 | 7,948 | 19,162 | 4,906 | | Income tax expense | (6,170) | (202) | 36,220 | 24,877 | | Depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro rata of our equity ownership) | 6,954 | 254 | 18,753 | 13,958 | | Financial expense, net | 89,470 | 109,899 | 340,892 | 331,810 | | Depreciation, amortization, and impairment charges | 104,525 | 106,438 | 439,441 | 408,604 | | Adjusted EBITDA | $190,307 | $175,096 | $824,388 | $796,123 | Reconciliation of Adjusted EBITDA to net cash provided by operating activities (in thousands of U.S. dollars) | Indicator | For the three-month ended Dec 31, 2021 | For the three-month ended Dec 31, 2020 | For the year ended Dec 31, 2021 | For the year ended Dec 31, 2020 | | :--------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $63,683 | $134,978 | $505,623 | $438,221 | | Net interest and income tax paid | 133,234 | 124,661 | 342,263 | 287,239 | | Variations in working capital | (1,451) | (101,540) | 3,127 | 10,902 | | Other non-monetary items | (20,346) | 14,116 | (55,809) | 43,943 | | Atlantica's pro-rata share of EBITDA from unconsolidated affiliates and other | 15,187 | 2,881 | 29,184 | 15,818 | | Adjusted EBITDA | $190,307 | $175,096 | $824,388 | $796,123 | CAFD Reconciliation This section provides a comprehensive reconciliation of Cash Available For Distribution (CAFD) to the Profit for the period attributable to the Company, outlining the adjustments made for non-monetary items, dividends, interest, and principal amortization for 2021 and 2020 Reconciliation of Cash Available For Distribution to Profit for the period attributable to the Company (in thousands of U.S. dollars) | Indicator | For the three-month ended Dec 31, 2021 | For the three-month ended Dec 31, 2020 | For the year ended Dec 31, 2021 | For the year ended Dec 31, 2020 | | :--------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------ | :------------------------------ | | Profit/(loss) for the period attributable to the Company | $(11,914) | $(49,241) | $(30,080) | $11,968 | | Profit/(loss) attributable to non-controlling interest | 7,442 | 7,948 | 19,162 | 4,906 | | Income tax | (6,170) | (202) | 36,220 | 24,877 | | Depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro rata of our equity ownership) | 6,954 | 254 | 18,753 | 13,958 | | Financial expense, net | 89,470 | 109,899 | 340,892 | 331,810 | | Depreciation, amortization, and impairment charges | 104,525 | 106,438 | 439,441 | 408,604 | | Adjusted EBITDA | $190,307 | $175,096 | $824,388 | $796,123 | | Atlantica's pro-rata share of EBITDA from unconsolidated affiliates | (15,013) | (3,013) | (31,057) | (14,468) | | Non-monetary items | 20,346 | (14,116) | 55,809 | (43,943) | | Non-cash accounting provision for electricity prices in Spain | 24,489 | (5,827) | 77,055 | (22,311) | | Difference between billings and revenue in assets under IFRIC 12 | 11,959 | 12,536 | 38,890 | 43,343 | | Income from U.S. cash grants | (14,678) | (14,717) | (58,711) | (58,868) | | Other non-monetary items | (1,424) | (6,108) | (1,424) | (6,108) | | Dividends from equity method investments | 10,268 | 2,106 | 34,883 | 22,246 | | Interest and income tax paid | (133,234) | (124,661) | (342,263) | (287,239) | | Principal amortization of indebtedness | (158,684) | (151,260) | (318,991) | (260,422) | | Deposits into/ withdrawals from restricted accounts | 27,994 | 27,807 | 27,233 | 87,177 | | Change in non-restricted cash at project level | 115,588 | 34,784 | 2,209 | (78,618) | | Dividends paid to non-controlling interests | (4,807) | (1,950) | (28,134) | (22,944) | | Changes in other assets and liabilities | 4,308 | 106,670 | 1,470 | 2,779 | | Cash Available For Distribution | $57,073 | $51,463 | $225,547 | $200,691 | CAFD per Share Reconciliation This section reconciles the total Cash Available For Distribution (CAFD) to CAFD per share, providing the calculation based on the weighted average number of shares outstanding for the respective periods in 2021 and 2020 Reconciliation of CAFD to CAFD per share (in thousands of U.S. dollars) | Indicator | For the three-month ended 2021 | three-month Dec 31, 2020 | For the twelve-month ended 2021 | twelve-month Dec 31, 2020 | | :--------------------------------------------- | :----------------------------- | :----------------------- | :------------------------------ | :------------------------ | | CAFD (in thousands of U.S. dollars) | $57,073 | $51,463 | $225,547 | $200,691 | | Weighted Number of Shares (basic) for the period (in thousands) | 111,777 | 102,704 | 111,008 | 101,879 | | CAFD per share (in U.S. dollars) | $0.5106 | $0.5011 | $2.0318 | $1.9699 | 2022 Target Guidance Reconciliation This section provides a reconciliation of Atlantica's 2022 target guidance for Adjusted EBITDA to its Cash Available For Distribution (CAFD), detailing the adjustments for unconsolidated affiliates, non-monetary items, and debt-related payments Reconciliation of 2022 Target Guidance for Adjusted EBITDA to CAFD (in millions of U.S. dollars) | Indicator | 2022E | | :--------------------------------------------- | :------------ | | Adjusted EBITDA | 810 – 870 | | Atlantica's pro-rata share of EBITDA from unconsolidated affiliates | (50) – (60) | | Dividends from unconsolidated affiliates | 50 – 60 | | Non-monetary items | 20 – 70 | | Net interest and income tax paid | (320) – (340) | | Principal amortization of indebtedness | (320) – (340) | | Changes in other assets and liabilities and change in available cash at project level | 0 – 30 | | Cash Available For Distribution | 230 - 250 | Company Overview Atlantica Sustainable Infrastructure plc operates a diversified portfolio of contracted renewable energy, storage, and infrastructure assets across three continents About Atlantica Atlantica Sustainable Infrastructure plc is a sustainable infrastructure company that owns and operates a diverse portfolio of contracted assets, including renewable energy, storage, efficient natural gas, transmission lines, and water infrastructure - Atlantica Sustainable Infrastructure plc owns a diversified portfolio of contracted renewable energy, storage, efficient natural gas, transmission lines, and water assets[51] - The company operates in North & South America, and certain markets in EMEA[51]