Market Overview

Azure Power Announces Results for Fiscal Third Quarter 2018

Share:

Azure Power Global Limited (NYSE:AZRE), a leading independent solar
power producer in India, today announced its consolidated results under
United States Generally Accepted Accounting Principles ("GAAP") for the
third quarter ended December 31, 2017.

Third Quarter 2018 Period Ended December 31, 2017 Operating
Highlights:

  • Operating Megawatts were 805 MW, as of December 31, 2017, an increase
    of 57% over December 31, 2016.
  • Operating & Committed Megawatts were 1,580 MW, as of December 31,
    2017, an increase of 48% over December 31, 2016.
  • Revenue for the quarter was INR 1,739.9 million (US$27.3 million), an
    increase of 83% over the quarter ended December 31, 2016.
  • Adjusted EBITDA for the quarter was INR 1,226.9 million (US$19.2
    million), an increase of 76% over the quarter ended December 31, 2016.

Key Operating Metrics
Electricity generation during
the nine months ended December 31, 2017 increased by 438 million kWh, or
105%, to 855 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 the nine months ended December 31, 2017 was INR
5,441.6 million (US$ 85.3 million), up 90% from INR 2,865.4 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 nine months ended
December 31, 2017 increased by INR 8.7 million (US$ 0.14 million) to INR
52.9 million (US$ 0.83 million), as compared to the same period in 2016.
The project cost per megawatt was higher due to the use of higher-cost
domestic modules as required by the Power Purchase Agreement "PPA" and
purchased land compared to lower-cost open source modules and leased
land in the corresponding previous period.

As of December 31, 2017, our operating and committed megawatts increased
by 509 MW to 1,580 MW compared to December 31, 2016 as a result of
winning new projects. In addition, we won a 250 MW contract with NTPC
Vidyut Vyapar Nigam (NVVN) in October 2017 for which we are seeking
clarity with regards to signing off on the PPA given the recent MNRE
advisory that no tenders will progress under the DCR category for
private developers.

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 December 31,

2016

 

2017

INR

INR

 

US$

Nominal contracted payments (in thousands) 256,312,193 321,241,800 5,032,771
Total estimated energy output (kilowatt hours in millions) 44,745 70,956

Nominal contracted payments increased from December 31, 2016 to December
31, 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 December 31,

2016

 

2017

INR

INR

 

US$

Portfolio run-rate (in thousands) 11,049,222 14,007,890 219,456
Estimated annual energy output (kilowatt hours in millions) 1,932 2,587

Portfolio run-rate increased by INR 2,958.7 million (US$ 46.4 million)
to INR 14,007.9 million (US$ 219.5 million) as of

December 31, 2017, as compared to December 31, 2016, due to an increase
in operational and committed capacity.

Third Quarter Period ended December 31, 2017 Consolidated Financial
Results:

Operating Revenue
Operating
revenue in the quarter ended December 31, 2017 was INR 1,739.9 million
(US$ 27.3 million), an increase of 83% from INR 948.8 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 December 31, 2017 increased by 90% to INR 158.4 million (US$ 2.5
million) from INR 83.2 million in the same period in 2016. The increase
was primarily due to plant maintenance cost for newly commissioned
projects which was partially offset by the implementation of improved
O&M methods which improved plant productivity. This includes INR 8.7
million (US$ 0.1 million) of non-cash expense, which pertains to the
amortisation of lease expense.

General and Administrative Expenses
General and
administrative expenses for the quarter ended December 31, 2017
increased by INR 185.3 million (US$ 2.9 million), to INR 354.5 million
(US$ 5.6 million) compared to the same period in 2016. However, due to a
delay by the government in bundling of thermal power with solar power
production at one of our recently commissioned project, we recorded a
one-time charge of INR 83.6 million (US$ 1.3 million). Our project
contract period was extended by the duration of the delay by the
government.

Depreciation and Amortization Expenses
Depreciation
and amortization expenses during the quarter ended December 31, 2017
increased by INR 224.7 million (US$ 3.5 million), or 90%, to INR 474.9
million (US$ 7.4 million) compared to the same period in 2016. The
principal reason for the increase was capitalization of new projects
during the period from December 31, 2016 to December 31, 2017.

Interest Expense, Net
Net interest expense during
the quarter ended December 31, 2017 increased by INR 639.6 million (US$
10.0 million), or 130%, to INR 1,130.0 million (US$ 17.7 million)
compared to the same period in 2016. Interest expense increased on
account of borrowings for new projects and was partially offset by the
increased interest income on investments during the quarter ended
December 31, 2017.

Gain / Loss on Foreign Currency Exchange
The Indian
rupee depreciated against the U.S. dollar by INR 1.3 to US$ 1.00 (2.0%)
during the period from September 30, 2016 to December 31, 2016, while
the Indian rupee appreciated against the U.S. dollar by INR 1.5 to US$
1.00 (2.2%) during the period from September 30, 2017 to December 31,
2017. This appreciation during the period from September 30, 2017 to
December 31, 2017 resulted in a foreign exchange gain of INR 90.8
million (US$ 1.4 million), compared to a loss of INR 135.6 million
during the same period in 2016.

Income Tax Expense / Benefit
The income tax benefit
increased during the quarter ended December 31, 2017 by INR 485.6
million (US$ 7.6 million) to INR 150.9 million (US$ 2.4 million),
compared to the same period in 2016. The increase in the income tax
benefit was primarily on account of the commissioning of new projects.
During the current quarter, we recorded non-cash income tax benefit
amounting to INR 150.9 million (US$ 2.4 million) and there was no cash
outflow relating to income taxes during the period.

Net Loss
The net loss for the quarter ended December
31, 2017 was INR 136.1 million (US$ 2.1 million), as compared to a net
loss of INR 514.3 million for the quarter ended December 31, 2016, a
decrease in loss of INR 378.1 million (US$ 5.9 million) as compared to
the same period in 2016. This was primarily due to an increase in
revenue during the quarter ended December 31, 2017, compared to December
31, 2016.

Cash Flow and Working Capital
Cash generated from
operating activities for the nine months ended December 31, 2017 of INR
405.5 million (US$ 6.4 million), INR 181.8 million (US$ 2.8 million)
higher than the prior comparable period, primarily due to an increase in
revenue during the current period.

Cash used in investing activities, for the nine months ended December
31, 2017 was INR 15,406.9 million (US$ 241.3 million), compared to INR
14,601.8 million for the prior comparable period. The cash used in
investing activities was higher due to purchases of property plant and
equipment for new projects as compared to the prior comparable period.

Cash generated from financing activities was INR 16,757.0 (US$ 262.5
million) for the nine months ended December 31, 2017, compared to INR
17,182.9 million for the prior comparable period. During the nine months
ended December 31, 2017, the Company raised INR 42,712.0 million (US$
669.2 million) of non-convertible debentures and project debt, including
green bonds.

Liquidity Position
As of December 31, 2017, the
Company had INR 11,740.7 million (US$ 183.9 million) of cash, cash
equivalents and current investments. The Company had undrawn project
debt commitments of INR 3,631.6 million (US$ 56.9 million) as of
December 31, 2017.

Adjusted EBITDA
Adjusted EBITDA was INR 1,226.9
million (US$ 19.2 million) for the third quarter ended December 31,
2017, compared to INR 696.4 million in the third quarter ended December
31, 2016. The increase was primarily due to the increase in revenue
during the period.

Guidance for Fiscal Year 2018 and 2019
The following
statements are based on current expectations. These statements are
forward-looking and actual results may differ materially. The Uttar
Pradesh 40 MW and Andhra Pradesh 50 MW projects are expected to be
materially complete by fiscal year end 2018. However, the government
provided transmission interconnections are likely to roll over into the
next fiscal year. As a result, we now expect 905 – 1,000 MWs will be
operational by March 31, 2018. The delays in commissioning of the two
mentioned projects is expected to have a limited impact on revenues for
the fiscal year ending March 31, 2018 and, as a result, we reiterate our
revenue guidance for fiscal year 2018 of US$ 118 - 125 million.

With a robust pipeline and strong execution capabilities, we expect to
continue to deliver high growth in the next fiscal year ended March 31,
2019. For the fiscal year March 31, 2019, the Company is guiding to have
1,300 – 1,400 MWs operational, or a 30-55% year on year increase. In
addition, the company is guiding to revenues of between US$ 143 – 151
million for fiscal year ending March 31, 2019.

Webcast and Conference Call Information
The Company will
hold its quarterly conference call to discuss earnings results on
Friday, February 9, 2018 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 4632044.
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 Friday, February 16, 2018 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 10116458. 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
63.83 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 December 31, 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 a leading
independent solar power producer in India. 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 inhouse 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

 

As of

 

As of

March 31,

December 31,

2017

2017

 

2017

(INR)

(INR)

(US$)

(audited) (unaudited)

(in thousands, except per share data)

Assets
Current assets:
Cash and cash equivalents 5,460,670 7,575,629 118,684
Investments in available for sale securities 3,296,797 4,165,110 65,253
Restricted cash 3,629,037 3,855,911 60,409
Accounts receivable, net 1,138,605 1,898,717 29,746
Prepaid expenses and other current assets 495,937 848,567 13,294

Total current assets

14,021,046

18,343,934

287,386

Restricted cash 1,383,414 260,240 4,077
Property, plant and equipment, net 40,942,608 53,305,939 835,124
Software, net 15,272 24,962 391
Deferred income taxes 31,429 425,410 6,665
Investments in held-to-maturity securities 6,631 6,947 109
Other assets 1,093,565 760,481 11,914

Total assets

57,493,965

73,127,913

1,145,666

Liabilities and shareholders' equity
Current liabilities:
Short-term debt 2,460,240 558,075 8,743
Accounts payable 3,618,251 2,134,626 33,442
Current portion of long-term debt 1,554,806 775,471 12,149
Income taxes payable 232,420
Interest payable 189,309 862,284 13,509
Deferred revenue 79,937 79,758 1,250
Other liabilities 484,477 621,130 9,731

Total current liabilities

8,619,440

5,031,344

78,824

Long-term debt 31,142,762 51,791,293 811,394
Deferred revenue 1,383,691 1,384,190 21,686
Deferred income taxes 1,078,255 659,810 10,337
Asset retirement obligations 242,980 280,469 4,394
Other liabilities 109,151 706,109 11,062

Total liabilities

42,576,279

59,853,215

937,697

Redeemable non-controlling interest 390,827

Shareholders' equity

Equity shares (US$ 0.000625 par value; 25,915,956 and 25,985,057
shares issued and
  outstanding as of March 31, 2017 and
December 31, 2017)

1,073 1,076 17
Additional paid-in capital 18,904,151 19,002,461 297,704
Accumulated deficit (5,723,420) (6,738,709) (105,573)
Accumulated other comprehensive income (loss) 40,326 (145,674) (2,282)

Total APGL shareholders' equity

13,222,130

12,119,154

189,866

Non-controlling interest 1,304,729 1,155,544 18,103

Total shareholders' equity

14,526,859

13,274,698

207,969

Total liabilities and shareholders' equity

57,493,965

73,127,913

1,145,666

AZURE POWER GLOBAL LIMITED
UNAUDITED INTERIM
CONSOLIDATED INCOME STATEMENTS

 

Three months ended December 31,

 

Nine months ended December 31,

2016

 

2017

 

2017

2016

 

2017

 

2017

INR

INR

US$

INR

INR

US$

(in thousands, except per share data)

Operating revenues:

Sale of power 948,804 1,739,850 27,258 2,865,408 5,441,579 85,251

Operating costs and expenses:

Cost of operations (exclusive of depreciation

  and amortization shown separately below)

83,160 158,384 2,481 245,046 476,597 7,467
General and administrative 169,206 354,542 5,554 584,715 769,224 12,051
Depreciation and amortization 250,265 474,930 7,441 732,566 1,357,667 21,270

     Total operating cost and expenses

502,631 987,856 15,476 1,562,327 2,603,488 40,788

Operating income

446,173 751,994 11,782 1,303,081 2,838,091 44,463

Other expense:

Interest expense, net 490,298 1,129,929 17,702 1,740,686 4,334,514 67,907
Loss / (gain) on foreign currency exchange, net 135,558 (90,825) (1,423) 200,090 (52,566) (824)

     Total other expenses

625,856 1,039,104 16,279 1,940,776 4,281,948 67,083

Loss before income tax

(179,683) (287,110) (4,497) (637,695) (1,443,857) (22,620)
Income tax (expense) / benefit (334,614) 150,948 2,365 (247,146) 274,023 4,293

Net loss

(514,297) (136,162) (2,132) (884,841) (1,169,834) (18,327)
Net loss attributable to non-controlling interest (24,240) (69,761) (1,093) (25,801) (203,916) (3,194)

Net loss attributable to APGL

(490,057) (66,401) (1,039) (859,040) (965,918) (15,133)
Accretion to Mezzanine CCPS (32,858) (227,528)
Accretion to redeemable non-controlling interest (11,109) 15,700 246 (33,206) (6,397) (100)

Net loss attributable to APGL equity
  shareholders

(534,024)

(50,701)

(793)

(1,119,774)

(972,315)

(15,233)

Net loss per share attributable to APGL equity
  stockholders

     Basic and diluted

(23) (2) (0.03) (127) (37) (0.59)

Shares used in computing basic and diluted per
  share amounts

Equity shares 22,798,811 25,985,057 8,811,474 25,968,240

AZURE POWER GLOBAL LIMITED
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Three months ended December 31,

 

Nine months ended December 31,

2016

 

2017

 

2017

2016

 

2017

 

2017

INR

INR

US$

INR

INR

US$

(in thousands)

Net cash provided by operating activities 33,634 177,720 2,784 223,750 405,543 6,353
Net cash used in investing activities (9,107,183) (10,134,350) (158,771) (14,601,809) (15,406,968) (241,375)
Net cash provided by financing activities 8,852,986 1,406,012 22,027 17,182,896 16,756,967 262,525

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP
MEASURES

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

 

Three months ended December 31,

 

Nine months ended December 31,

2016

 

2017

 

2017

2016

 

2017

 

2017

INR

INR

US$

INR

INR

US$

(in thousands)

Net Loss

(514,297) (136,162) (2,132) (884,841) (1,169,834) (18,327)
Income tax expense / (benefit) 334,614 (150,948) (2,365) 247,146 (274,023) (4,293)
Interest expense, net 490,298 1,129,929 17,702 1,740,686 4,334,514 67,907
Depreciation and amortization 250,265 474,930 7,441 732,566 1,357,667 21,270
(Gain)/loss on foreign currency exchange, net 135,558 (90,825) (1,423) 200,090 (52,566) (824)

Adjusted EBITDA

696,438 1,226,924 19,223 2,035,647 4,195,758 65,733

View Comments and Join the Discussion!