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Azure Power Announces Results for Fiscal First Quarter 2018

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Azure Power Global Limited (NYSE:AZRE), ("Azure Power" or "the
Company"), a leading independent solar power producer in India,
today announced its consolidated results under United States Generally
Accepted Accounting Principles (US GAAP) for the fiscal first quarter
2018 period ended June 30, 2017.

This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20170811005545/en/

Azure Power | New York Stock Exchange

Azure Power | New York Stock Exchange

First Quarter 2018 Period Ended June 30, 2017 Operating Highlights:

  • Operating & Committed Megawatts were 1,069 MW, as of June 30, 2017, an
    increase of 11% over June 30, 2016.
  • Revenue for the quarter was 1,877.9 million (US$ 29.1 million), an
    increase of 84% over the quarter ended June 30, 2016.
  • Adjusted EBITDA for the quarter was INR 1,469.3 million (US$ 22.7
    million), an increase of 89% over the quarter ended June 30, 2016.

Key Operating and Financial Metrics:

Electricity generation during the three months ended June 30, 2017
increased by 143.2 million kWh, or 98%, to 290.0 million kWh, compared
to the same period in 2016. The increase in electricity generation was
principally a result of additional capacity operating during the period.

Total revenue during three months ended June 30, 2017 was INR 1,877.9
million (US$ 29.1 million), up 84% from INR 1,021.7 million during the
same period in 2016. The increase in revenue was primarily driven by the
commissioning of new projects.

Project cost per megawatt operating consists of costs incurred for one
megawatt of new solar power plant capacity during the reporting period.
The project cost per megawatt operating for the three months ended June
30, 2017 decreased by INR 0.29 million to INR 57.9 million (US$ 0.9
million), as compared to the same period in 2016. The decline is due to
decreasing solar module prices and the reduction in balance of system
costs.

As of June 30, 2017, our operating and committed megawatts increased by
104 MW to 1,069 MW compared to June 30, 2016 as a result of winning new
projects.

Nominal Contracted Payments

The Company's PPAs create long-term recurring customer payments. Nominal
contracted payments equal the sum of the estimated payments that the
customer is likely to make, subject to discounts or rebates, over the
remaining term of the PPAs. When calculating nominal contracted
payments, the Company includes those PPAs for projects that are
operating or committed.

The following table sets forth, with respect to our PPAs, the aggregate
nominal contracted payments and total estimated energy output as of the
reporting dates. These nominal contracted payments have not been
discounted to arrive at the present value.

        As of June 30,
2016   2017
INR INR   US$
Nominal contracted payments (in thousands) 236,957,263 253,438,388 3,921,981
Total estimated energy output (kilowatt hours in millions) 40,862 44,358
 

Nominal contracted payments increased from June 30, 2016 to June 30,
2017 as a result of the Company entering into additional PPAs. Over
time, the Company has seen falling benchmark tariffs as reported by
Central Electricity Regulatory Commission, in line with the reduction in
solar module prices.

Portfolio Run-Rate

Portfolio run-rate equals annualized payments from customers
extrapolated based on the operating and committed capacity as of the
reporting dates. In estimating the portfolio run-rate, the Company
multiplies the PPA contract price per kilowatt hour by the estimated
annual energy output for all operating and committed solar projects as
of the reporting date. The estimated annual energy output of the
Company's solar projects is calculated using power generation simulation
software and validated by independent engineering firms. The main
assumption used in the calculation is the project location, which
enables the software to derive the estimated annual energy output from
certain meteorological data, including the temperature and solar
insolation based on the project location.

The following table sets forth, with respect to the Company's PPAs, the
aggregate portfolio run-rate and estimated annual energy output as of
the reporting dates. The portfolio run-rate has not been discounted to
arrive at the present value.

          As of June 30,
2016   2017
INR INR   US$
Annual portfolio revenue run-rate (in thousands) 10,001,211 11,005,761 170,315
Estimated annual energy output (kilowatt hours in millions) 1,687 1,921
 

Portfolio run-rate increased by INR 1,004.6 million (US$ 15.5 million)
to INR 11,006 million (US$ 170.3 million) as of June 30, 2017, as
compared to June 30, 2016, due to an increase in operational and
committed capacity.

First Quarter 2018 Period ended June 30, 2017 Consolidated Financial
Results:

Operating Revenue

Operating revenue in the quarter ended June 30, 2017 was INR 1,877.9
million (US$ 29.1 million), an increase of 84% from INR 1,021.7 million
over the same period in 2016. The increase in revenue was driven by the
commissioning of new projects.

Cost of Operations

Cost of operations in the quarter ended June 30, 2017 increased by 101%
to INR 173.5 million (US$ 2.7 million) from INR 86.5 million in the same
period in 2016. The increase was primarily due to plant maintenance cost
for newly commissioned projects and implementation of improved O&M
methods for better plant productivity. This includes INR 8.8 million
(US$ 0.1 million) of non-cash expense, which pertains to amortisation of
lease rent expense.

General and Administrative Expenses

General and administrative expenses during the quarter ended June 30,
2017 increased by INR 78.0 million (US$ 1.2 million), or 50%, to INR
235.1 million (US$ 3.6 million) compared to the same period in 2016. The
increase in general and administrative expenses was lower than the
growth in revenue due to platform of economies of scale. This was
primarily due to an increase in personnel expenses to support the
Company's growth.

Depreciation and Amortization Expenses

Depreciation and amortization expenses during the quarter ended June 30,
2017 increased by INR 184.0 million (US$ 2.8 million), or 78%, to INR
419.7 million (US$ 6.5 million) compared to the same period in 2016. The
principal reason for the increase was capitalization of new projects
during the period from June 30, 2016 to June 30, 2017.

Interest Expense, Net

Net interest expense during the quarter ended June 30, 2017 increased by
INR 172.6 million (US$ 2.7 million), or 26%, to INR 839.6 million (US$
13.0 million) compared to the same period in 2016. Interest expense
increased on account of borrowings for new projects and was partially
offset by higher interest income on investments during the quarter ended
June 30, 2017.

Gain on Foreign Currency Exchange

The Indian rupee depreciated against the U.S. dollar by INR 1.28 to US$
1.00 (1.9%) during the period from March 31, 2016 to June 30, 2016,
while the Indian rupee appreciated against the U.S. dollar by INR 0.1 to
US$ 1.00 (0.2%) during the period from March 31, 2017 to June 30, 2017.
This appreciation during the period from March 31, 2017 to June 30, 2017
resulted in a foreign exchange gain of INR 4.8 million (US$ 0.1
million), which was a INR 145.4 million (US$ 2.3 million) improvement
compared to the same period in 2016.

Income Tax Expense

Income tax expense increased during the quarter ended June 30, 2017 by
INR 41.5 million (US$ 0.6 million) to INR 7.9 million (US$ 0.1 million),
compared to the same period in 2016. The increase in income taxes was
primarily on account of the commissioning of new projects. During the
current quarter, we recorded a deferred income tax expense amounting to
INR 7.9 million (US$ 0.1 million) and there was no cash outflow relating
to income taxes during the period.

The Company adopted ASU 2016-16, Intra-Entity Transfers of Assets Other
Than Inventory, to require the recognition of the income tax effects
from an intra-entity transfer of an asset other than inventory from
April 1, 2017.

Net Loss / Income

Net income for the quarter ended June 30, 2017 was INR 206.9 million
(US$ 3.2 million), as compared to a net loss of INR 231.7 million for
the quarter ended June 30, 2016, an improvement of INR 438.5 million
(US$ 6.8 million) as compared to the same period in 2016. This was
primarily due to an increase in revenue during the quarter ended June
30, 2017.

Cash Flow and Working Capital

Cash generated from operating activities for the three months ended June
30, 2017 was INR 421.4 million (US$ 6.5 million), INR 539.7 million (US$
8.4 million) better than the same period in 2016, primarily due to an
increase in revenue during the three months ended June 30, 2017.

Cash used for investing activities increased by INR 2,207.7 million (US$
34.2 million) during the three months ended June 30, 2017 compared to
the same period in 2016 as purchases of property, plant and equipment
for new projects rose by an additional INR 3,748.1 million (US$ 58.0
million).

During the three months ended June 30, 2017, the Company raised INR
2,460.3 million (US$ 38.1 million) from financing activities.

Liquidity Position

As of June 30, 2017, the Company had INR 7,157.7 million (US$ 110.8
million) of cash, cash equivalents and current investments. The Company
drew down INR 2,803.6 million (US$ 43.4 million) of project debt during
the quarter and had undrawn project debt commitment of INR 15,905.1
million (US$ 246.1 million) as of the end of the quarter.

Adjusted EBITDA

Adjusted EBITDA was INR 1,469.3 million (US$ 22.7 million) for the
quarter ended June 30, 2017, compared to INR 778.1 million in the same
period in 2016. This was primarily due to the increase in revenue during
the period.

Subsequent event

During August, 2017, the Company raised US$500 million in a bond
offering with a coupon of 5.5% that matures in 2022. The proceeds will
be primarily used to repay existing debt and for growth capital. We
expect our liquidity position to improve significantly as a result of
this transaction.

Guidance

The following statements are based on current expectations. These
statements are forward-looking and actual results may differ materially.
The Company continues to expect revenues for fiscal year 2018 ending
March 31, 2018 of US$ 118 – 125 million and that 1,000 – 1,200 MWs will
be operational by March 31, 2018.

Webcast and Conference Call Information

The Company will hold its quarterly conference call to discuss earnings
results on Monday, August 14, 2017 at 8:30 a.m. US Eastern Time. The
conference call can be accessed live by dialling 1-888-317-6003 (in the
U.S.) and 1-412-317-6061 (outside the U.S.) and entering the passcode
9798795. Investors may access a live webcast of this conference call by
visiting http://investors.azurepower.com/events-and-presentations.
For those unable to listen to the live broadcast, a replay will be
available approximately two hours after the conclusion of the call. The
replay will remain available until Monday, August 21, 2017 and can be
accessed by dialling 1-877-344-7529 (in the U.S.) and 1-412-317-0088
(outside the U.S.) and entering the replay passcode 10111294. An
archived podcast will be available at http://investors.azurepower.com/events-and-presentations
following the call.

Exchange Rate

This press release contains translations of certain Indian rupee amounts
into U.S. dollars at specified rates solely for the convenience of the
reader. Unless otherwise stated, the translation of Indian rupees into
U.S. dollars has been made at INR 64.62 to US$ 1.00, which is the noon
buying rate in New York City for cable transfer in non-U.S. currencies
as certified for customs purposes by the Federal Reserve Bank of New
York on June 30, 2017. The Company makes no representation that the
Indian rupee or U.S. dollar amounts referred to in this press release
could have been converted into U.S. dollars or Indian rupees, as the
case may be, at any particular rate or at all.

About Azure Power Global Limited

Azure Power is one of the leaders in the Indian solar industry. Azure
Power developed India's first private utility scale solar project in
2009 and has been at the forefront in the sector as a developer,
constructor and operator of utility scale, micro-grid and rooftop solar
projects since its inception in 2008. With its in-house engineering,
procurement and construction expertise and advanced in-house operations
and maintenance capability, Azure Power manages the entire development
and operation process, providing low-cost solar power solutions to
customers throughout India.

Forward Looking Statements

This press release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended and the Private Securities Litigation Reform Act of 1995,
including statements regarding the Company's future financial and
operating guidance, operational and financial results such as estimates
of nominal contracted payments remaining and portfolio run rate, and the
assumptions related to the calculation of the foregoing metrics. The
risks and uncertainties that could cause the Company's results to differ
materially from those expressed or implied by such forward-looking
statements include: the availability of additional financing on
acceptable terms; changes in the commercial and retail prices of
traditional utility generated electricity; changes in tariffs at which
long term PPAs are entered into; changes in policies and regulations
including net metering and interconnection limits or caps; the
availability of rebates, tax credits and other incentives; the
availability of solar panels and other raw materials; its limited
operating history, particularly as a new public company; its ability to
attract and retain its relationships with third parties, including its
solar partners; our ability to meet the covenants in its debt
facilities; meteorological conditions and such other risks identified in
the registration statements and reports that the Company has filed with
the U.S. Securities and Exchange Commission, or SEC, from time to time.
All forward-looking statements in this press release are based on
information available to us as of the date hereof, and the Company
assumes no obligation to update these forward-looking statements.

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP financial measure. The Company presents
Adjusted EBITDA as a supplemental measure of its performance. This
measurement is not recognized in accordance with GAAP and should not be
viewed as an alternative to GAAP measures of performance. The
presentation of Adjusted EBITDA should not be construed as an inference
that the Company's future results will be unaffected by unusual or
non-recurring items.

The Company defines Adjusted EBITDA as net loss (income) plus (a) income
tax expense, (b) interest expense, net, (c) depreciation and
amortization, and (d) loss (income) on foreign currency exchange. The
Company believes 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 debt service capabilities;
    and
  • it is used by its management for internal reporting and planning
    purposes, including aspects of its consolidated operating budget and
    capital expenditures.

Adjusted EBITDA has limitations as an analytical tool, and you should
not consider it in isolation or as a substitute for analysis of the
Company's results as reported under GAAP. Some of these limitations
include:

  • it does not reflect its cash expenditures or future requirements for
    capital expenditures or contractual commitments or foreign exchange
    gain/loss;
  • it does not reflect changes in, or cash requirements for, working
    capital;
  • it does not reflect significant interest expense or the cash
    requirements necessary to service interest or principal payments on
    its outstanding debt;
  • it does not reflect payments made or future requirements for income
    taxes; and
  • although depreciation and amortization are non-cash charges, the
    assets being depreciated and amortized will often have to be replaced
    or paid in the future and Adjusted EBITDA does not reflect cash
    requirements for such replacements or payments.

Investors are encouraged to evaluate each adjustment and the reasons the
Company considers it appropriate for supplemental analysis. For more
information, please see the table captioned "Reconciliations of Non-GAAP
Measures to the Nearest Comparable GAAP Measures" at the end of this
release.

AZURE POWER GLOBAL LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 
  As of   As of
March 31, June 30,
2017 2017   2017
(INR) (INR) (US$)*
Assets
Current assets:
Cash and cash equivalents 5,460,670 5,026,132 77,780
Investments in available for sale securities 3,296,797 2,131,526 32,986
Restricted cash 3,629,037 2,972,242 45,996
Accounts receivable, net 1,138,605 1,303,393 20,170
Prepaid expenses and other current assets 495,937   518,700   8,027  
Total current assets 14,021,046 11,951,993 184,959
Restricted cash 1,383,414 1,323,723 20,485
Property, plant and equipment, net 40,942,608 46,061,670 712,808
Software, net 15,272 18,809 291
Deferred income taxes 31,429 390,407 6,042
Investments in held-to-maturity securities 6,631 6,872 106
Other assets 1,093,565   676,432   10,468  
 
Total assets 57,493,965   60,429,906   935,159  
Liabilities, preferred shares and shareholders' equity
Current liabilities:
Short-term debt 2,460,240 2,471,105 38,241
Accounts payable 3,618,251 4,015,485 62,140
Current portion of long-term debt 1,554,806 1,724,327 26,684
Income taxes payable 232,420 232,420 3,597
Interest payable 189,309 230,731 3,571
Deferred revenue 79,937 79,777 1,235
Other liabilities 484,477   374,296   5,792  
Total current liabilities 8,619,440 9,128,141 141,260
Long-term debt 31,142,762 33,364,041 516,311
Deferred revenue 1,383,691 1,386,275 21,453
Deferred income taxes 1,078,255 1,042,649 16,135
Asset retirement obligations 242,980 264,743 4,097
Other liabilities 109,151   125,779   1,945  
Total liabilities 42,576,279   45,311,628   701,201  
Redeemable non-controlling interest 390,827 401,816 6,219
Shareholders' equity

Equity shares, US$ 0.000625 par value; 25,915,956 and 25,970,057
shares issued and outstanding as of March 31, 2017 and June 30,
2017

1,073 1,075 17
Additional paid-in capital 18,904,151 18,918,251 292,762
Accumulated deficit (5,723,420 ) (5,657,606 ) (87,552 )
Accumulated other comprehensive income 40,326   48,422   749  
Total APGL shareholders' equity 13,222,130 13,310,142 205,976
Non-controlling interest 1,304,729 1,406,320 21,763
Total shareholders' equity 14,526,859   14,716,462   227,739  
Total liabilities, preferred share and shareholders' equity 57,493,965   60,429,906   935,159  
*   Translation of balances from INR to US$ in the consolidated balance
sheet is for the convenience of the reader and was calculated using
a rate of US$ 1.00 = INR 64.62.
 

AZURE POWER GLOBAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

 
  Unaudited three months ended June 30,
2016   2017   2017
INR INR US$*
Operating revenues:
Sale of power 1,021,693 1,877,932 29,061
Operating costs and expenses:
Cost of operations (exclusive of depreciation and amortization shown
separately below)
86,515 173,524 2,685
General and administrative 157,085 235,073 3,638
Depreciation and amortization 235,758   419,738   6,495  
Total operating costs and expenses 479,358   828,335   12,818  
Operating income 542,335   1,049,597   16,243  
Other expenses:
Interest expense, net 666,998 839,639 12,993
Loss/(gain) on foreign currency exchange, net 140,659   (4,758 ) (74 )
Total other expenses 807,657   834,881   12,919  
(Loss)/income before income tax (265,322 ) 214,716 3,324
Income tax benefit/(expense) 33,648   (7,859 ) (122 )
Net (loss)/income (231,674 ) 206,857   3,202  
Less: Net (loss)/income attributable to non-controlling interests (5,784 ) 36,746   570  
Net (loss)/income attributable to APGL (225,890 ) 170,111   2,632  
Accretion to Mezzanine CCPS (122,510 )    
Accretion to redeemable non-controlling interest (10,988 ) (10,988 ) (170 )
Net (loss)/income attributable to APGL equity shareholders (359,388 ) 159,123   2,462  
Net (loss)/income per share attributable to APGL shareholders:
Basic (204 ) 6.14 0.09
Diluted (204 ) 6.00 0.09
Weighted average number of equity shares#
Basic 1,758,080 25,936,050
Diluted 1,758,080 26,502,283
*   Translation of balances from INR to US$ in the consolidated
statement of operations is for the convenience of the reader and was
calculated using a rate of US$ 1.00 = INR 64.62.
# Number of equity shares outstanding as on June 30, 2017 is
25,970,057.
 

AZURE POWER GLOBAL LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
  Unaudited three months ended June 30,
2016   2017   2017
INR INR US$*
Net cash (used)/ provided by operating activities (118,393 ) 421,355 6,520
Net cash used in investing activities (1,109,193 ) (3,316,910 ) (51,329 )
Net cash provided by financing activities 1,225,318 2,460,289 38,073
*   Translation of balances from INR to US$ in the condensed
consolidated statement of cash flow is for the convenience of the
reader and was calculated using a rate of US$ 1.00 = INR 64.62.
 

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP
MEASURES (in thousands)

The table below sets forth a reconciliation of our income from
operations to Adjusted EBITDA for the periods indicated:

  Unaudited three months ended June 30,
2016   2017   2017
INR INR US$*
Net (loss)/income (231,674 ) 206,857 3,202
Income tax (benefit)/expense (33,648 ) 7,859 122
Interest expense, net 666,998 839,639 12,993
Depreciation & amortization 235,758 419,738 6,495
Loss/(gain) on foreign currency exchange 140,659   (4,758 ) (74 )
Adjusted EBITDA 778,093   1,469,335   22,738  

* Translation of balances from INR to US$ in the reconciliation of
Non-GAAP measure is for the convenience of the reader and was calculated
using a rate of US$ 1.00 = INR 64.62.

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