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Azure Power Announces Results for Fiscal Fourth Quarter 2018

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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
fourth quarter ended March 31, 2018.

Fourth Quarter 2018 Period Ended March 31, 2018 Operating Highlights:

  • Operating Megawatts were 911 MW, as of March 31, 2018, an increase of
    40% over March 31, 2017.
  • Operating & Committed Megawatts were 1,871 MW, as of March 31, 2018,
    an increase of 75% over March 31, 2017.
  • Revenue for the quarter was INR 2,259.0 million (US$34.7 million), an
    increase of 71% over the quarter ended March 31, 2017.
  • Adjusted EBITDA for the quarter was INR 1,625.5 million (US$25.0
    million), an increase of 67% over the quarter ended March 31, 2017.

Key Operating Metrics

Electricity generation during the fiscal year ended March 31, 2018
increased by 618 million kWh, or 100%, to 1,236 million kWh, compared to
the same period in 2017. The increase in electricity generation was
principally a result of additional capacity operating during the period.

Total revenue during the fiscal year ended March 31, 2018 was INR
7,700.6 million (US$ 118.3 million), up 84% from INR 4,183.0 million
during the same period in 2017. The increase in revenue was primarily
driven by the commissioning of new projects.

Project cost per megawatt operating (megawatt capacity per the power
purchase agreement) 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 fiscal year ended March 31, 2018
increased by INR 1.7 million (US$ 0.03 million) to INR 51.0 million (US$
0.78 million), as compared to the same period in 2017. The project cost
per megawatt was marginally higher due to the use of higher-cost
domestic modules as required by Power Purchase Agreements "PPA" and use
of purchased land compared to lower-cost open source modules and leased
land in the corresponding previous period.

As of March 31, 2018, our operating and committed megawatts increased by
802 MW to 1,871 MW compared to March 31, 2017 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 March 31,
2017 2018
INR INR US$
Nominal contracted payments (in thousands) 255,474,775 358,816,034 5,510,921
Total estimated energy output (kilowatt hours in millions) 44,677 82,884

Nominal contracted payments increased from March 31, 2017 to March 31,
2018 as a result of the Company entering into additional PPAs.

Portfolio Revenue Run-Rate

Portfolio revenue run-rate equals annualized payments from customers
extrapolated based on the operating and committed capacity as of the
reporting dates. In estimating the portfolio revenue 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 revenue run-rate and estimated annual energy output
as of the reporting dates. The portfolio revenue run-rate has not been
discounted to arrive at the present value.

               
As of March 31,
2017 2018
INR INR US$
Portfolio revenue run-rate (in thousands) 11,005,761 15,764,719 242,124
Estimated annual energy output (kilowatt hours in millions) 1,921 3,557

Portfolio revenue run-rate increased by INR 4,759.0 million (US$ 73.1
million) to INR 15,764.7 million (US$ 242.1 million) as of March 31,
2018, as compared to March 31, 2017, due to an increase in operational
and committed capacity.

Fourth Quarter 2018 Period ended March 31, 2018 Consolidated
Financial Results:

Operating Revenue

Operating revenue in the quarter ended March 31, 2018 was INR
2,259.0 million (US$ 34.7 million), an increase of 71% from INR
1,317.6 million over the same period in 2017. The increase in revenue
was driven by the commissioning of new projects.

Cost of Operations

Cost of operations in the quarter ended March 31, 2018 increased by 65%
to INR 215.4 million (US$ 3.3 million) from INR 130.7 million in the
same period in 2017. 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.

General and Administrative Expenses

General and administrative expenses for the quarter ended March 31, 2018
increased by INR 205.7 million (US$ 3.2 million), to INR 418.2 million
(US$ 6.4 million) compared to the same period in 2017. The increase was
primarily due to increase in personnel costs to support the Company's
growth and higher professional charges compared to previous comparable
quarter.

Depreciation and Amortization Expenses

Depreciation and amortization expenses during the quarter ended March
31, 2018 increased by INR 210.8 million (US$ 3.2 million), or 67%, to
INR 524.8 million (US$ 8.1 million) compared to the same period in 2017.
The principal reason for the increase was capitalization of new projects
during the period from December 31, 2016 to March 31, 2018.

Interest Expense, Net

Net interest expense during the quarter ended March 31, 2018 increased
by INR 202.6 million (US$ 3.1 million), or 32%, to INR 833.7 million
(US$ 12.8 million) compared to the same period in 2017. 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 March 31, 2018. This includes one-time reclassification
from interest expense to Income tax expense of INR 136.2 million (US$
2.1 million), due to issuance of Green bonds.

Gain / Loss on Foreign Currency Exchange

The Indian rupee appreciated against the U.S. dollar by INR 3.1 to US$
1.00 (4.5%) during the period from December 31, 2016 to March 31, 2017,
while the Indian rupee depreciated against the U.S. dollar by INR 1.3 to
US$ 1.00 (2.0%) during the period from December 31, 2017 to March 31,
2018. This depreciation during the period from December 31, 2017 to
March 31, 2018 resulted in a foreign exchange loss of INR 98.3 million
(US$ 1.5 million), compared to a gain of INR 309.2 million during the
same period in 2017.

Income Tax Expense / Benefit

The income tax expense decreased during the quarter ended March 31, 2018
by INR 624.0 million (US$ 9.6 million) to INR 21.1 million (US$ 0.3
million), compared to income tax expense of INR 645.2 million in the
same period in 2017. During the current quarter, we recorded a non-cash
deferred tax income amounting to INR 115.1 million (US$ 1.8 million),
was primarily on account of new projects commissioned during the quarter
and there was cash outflow of INR 136.2 million (US$2.1 million) related
to current income taxes.

Net income/ loss

The net income for the quarter ended March 31, 2018 was INR
147.6 million (US$ 2.3 million), as compared to a net loss of INR
306.7 million for the quarter ended March 31, 2017, an increase in net
income by INR 454.3 million (US$ 7.0 million) as compared to the same
period in 2017. This was primarily due to an increase in revenue and
economics of scale during the quarter ended March 31, 2018, compared to
March 31, 2017.

Cash Flow and Working Capital

Cash generated from operating activities for the fiscal year ended March
31, 2018 of INR 1,839.1 million (US$ 28.2 million), INR 1,866.3 million
(US$ 28.7 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 fiscal year ended March 31,
2018 was INR 15,772.2 million (US$ 242.2 million), compared to INR
21,944.3 million for the prior comparable period. The cash used in
investing activities was lower due to realisation of cash from
maturities of available for sale investment and restricted term deposits
and used in purchase of property, plant and equipment. The purchases of
property plant and equipment for new projects as compared to the prior
comparable period, was higher by INR 4,207.9 million (US$ 64.6 million).

Cash generated from financing activities was INR 16,816.1 (US$ 258.3
million) for the fiscal year ended March 31, 2018, compared to INR
24,331.5 million for the prior comparable period. During the fiscal year
ended March 31, 2018, the Company raised INR 43,807.3 million (US$ 672.8
million) of non-convertible debentures and project debt, including green
bonds.

Liquidity Position

As of March 31, 2018, the Company had INR 9,730.1 million (US$ 149.4
million) of cash, cash equivalents and current investments. The Company
had undrawn project debt commitments of INR 3,398.6 million (US$ 52.2
million) as of March 31, 2018.

Adjusted EBITDA

Adjusted EBITDA was INR 1,625.5 million (US$ 25.0 million) for the
fiscal fourth quarter period ended 2018, compared to INR 974.4 million
in the fourth quarter ended March 31, 2017. The increase was primarily
due to the increase in revenue and economics of scale during the period.

Guidance for Fiscal Year 2019

The Company continues to expect to have 1,300 – 1,400 MWs operational by
March 31, 2019 and 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 Monday, June 18, 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
6564518. 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, June 22, 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 10120191. 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 65.11 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 March 30, 2018. 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.
Portfolio represents the aggregate megawatts capacity of solar power
plants pursuant to PPAs, signed or allotted or where the Company has
been cleared as one of the winning bidders or won a reverse auction but
has yet to receive a letter of allotment. 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

Adjusted EBITDA is a non-GAAP financial measure. We present Adjusted
EBITDA as a supplemental measure of our performance. This measurement is
not recognized in accordance with U.S. GAAP and should not be viewed as
an alternative to U.S. GAAP measures of performance. The presentation of
Adjusted EBITDA should not be construed as an inference that our future
results will be unaffected by unusual or non-recurring items.

We define 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. We believe Adjusted
EBITDA is useful to investors in assessing our ongoing financial
performance and provides improved comparability between periods through
the exclusion of certain items that management believes are not
indicative of our operational profitability and that may obscure
underlying business results and trends. However, this measure should not
be considered in isolation or viewed as a substitute for net income or
other measures of performance determined in accordance with U.S. GAAP.
Moreover, Adjusted EBITDA as used herein is not necessarily comparable
to other similarly titled measures of other companies due to potential
inconsistencies in the methods of calculation.

Our management believes this measure is useful to compare general
operating performance from period to period and to make certain related
management decisions. Adjusted EBITDA is also used by securities
analysts, lenders and others in their evaluation of different companies
because it excludes certain items that can vary widely across different
industries or among companies within the same industry. For example,
interest expense can be highly dependent on a company's capital
structure, debt levels and credit ratings. Therefore, the impact of
interest expense on earnings can vary significantly among companies. In
addition, the tax positions of companies can vary because of their
differing abilities to take advantage of tax benefits and because of the
tax policies of the various jurisdictions in which they operate. As a
result, effective tax rates and tax expense can vary considerably among
companies.

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

  • it does not reflect our 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
    our 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 we
consider it appropriate for supplemental analysis.

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
March 31,
As of
March 31,
2017
(INR)
2018
(INR)
2018
(US$)
(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents 5,460,670 8,346,526 128,191
Investments in available for sale securities 3,296,797 1,383,573 21,250
Restricted cash 3,629,037 2,406,569 36,962
Accounts receivable, net 1,138,605 2,223,455 34,149
Prepaid expenses and other current assets   495,937   1,114,482   17,117
 
Total current assets 14,021,046 15,474,605 237,668
Restricted cash 1,383,414 329,926 5,067
Property, plant and equipment, net 40,942,608 56,580,700 869,002
Software, net 15,272 39,802 611
Deferred income taxes 196,773 1,052,393 16,163
Investments in held-to-maturity securities 6,631 7,041 108
Other assets   928,221   499,653   7,674
 
Total assets   57,493,965   73,984,120   1,136,293
 
Liabilities and shareholders' equity
Current liabilities:
Short-term debt 2,460,240 835,000 12,824
Accounts payable 3,618,251 1,521,854 23,374
Current portion of long-term debt 1,554,806 873,883 13,422
Income taxes payable 232,420 5,878 90
Interest payable 189,309 1,220,463 18,745
Deferred revenue 79,937 79,192 1,216
Other liabilities   484,477   611,598   9,393
 
Total current liabilities 8,619,440 5,147,868 79,064
Long-term debt 31,142,762 52,234,940 802,257
Deferred revenue 1,383,691 1,563,732 24,017
Deferred income taxes 1,078,255 892,138 13,702
Asset retirement obligations 242,980 356,649 5,478
Other liabilities   109,151   513,344   7,882
 
Total liabilities   42,576,279   60,708,671   932,400
 
Redeemable non-controlling interest 390,827
Shareholders' equity

Equity shares (US$ 0.000625 par value; 25,915,956 and 25,996,932
shares
issued and outstanding as of March 31, 2017 and March
31, 2018)

1,073 1,076 17
Additional paid-in capital 18,904,151 19,004,604 291,885
Accumulated deficit (5,723,420 ) (6,593,471) (101,267)
Accumulated other comprehensive income (loss)   40,326   (294,672)   (4,526)
 
Total APGL shareholders' equity 13,222,130 12,117,537 186,109
Non-controlling interest   1,304,729   1,157,912   17,784
 
Total shareholders' equity   14,526,859   13,275,449   203,893
 
Total liabilities and shareholders' equity   57,493,965   73,984,120   1,136,293
 

AZURE POWER GLOBAL LIMITED

INTERIM CONSOLIDATED INCOME STATEMENTS

                                 
Unaudited Three months ended March 31, Year ended March 31,
2017 2018 2018 2017 2018 2018
INR INR US$ INR INR US$
(in thousands, except per share data)
Operating revenues:
Sale of power 1,317,577 2,259,021 34,695 4,182,985 7,700,600 118,271
Operating costs and expenses:

Cost of operations (exclusive of depreciation and
amortization
shown separately below)

130,741 215,350 3,307 375,787 691,947 10,627
General and administrative 212,446 418,155 6,422 797,161 1,187,379 18,237
Depreciation and amortization   313,999   524,784   8,060   1,046,565   1,882,451   28,912
 

Total operating cost and expenses

  657,186   1,158,289   17,789   2,219,513   3,761,777   57,776
 
Operating income   660,391   1,100,732   16,906   1,963,472   3,938,823   60,495
 
Other expense:
Interest expense, net 631,150 833,704 12,805 2,371,836 5,168,218 79,377

(Gain) loss on foreign currency exchange, net

  (309,218)   98,282   1,509   (109,128)   45,716   702
 
Total other expenses   321,932   931,986   14,314   2,262,708   5,213,934   80,079
 

Income (Loss) before income tax

  338,459   168,746   2,592   (299,236)   (1,275,111)   (19,584)
 
Income tax (expense) benefit   (645,187)   (21,141)   (325)   (892,333)   252,882   3,884
 

Net (loss) income

  (306,728)   147,605   2,267   (1,191,569)   (1,022,229)   (15,700)
 

Net income (loss) attributable to non-controlling interest

  6,877   2,369   36   (18,924)   (201,547)   (3,094)
 

Net (loss) Income attributable to APGL

  (313,605)   145,236   2,231   (1,172,645)   (820,682)   (12,606)
 
Accretion to Mezzanine CCPS (8,325) (235,853)

Accretion to redeemable non-controlling interest

  (10,867)       (44,073)   (6,397)   (98)
 

Net (loss) income attributable to APGL equity shareholders

  (332,797)   145,236   2,231

 

  (1,452,571)   (827,079)   (12,704)
 

Net (loss) income per share attributable to APGL equity
stockholders

Basic (13) 6 0.09 (111) (32) (0.49)
Diluted (13) 5 0.08 (111) (32) (0.49)

Shares used in computing basic and diluted per share amounts

Equity shares: Basic 25,915,956 25,992,050 13,040,618 25,974,111
Equity shares: Diluted 25,915,956 26,937,258 13,040,618 25,974,111

AZURE POWER GLOBAL LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 
Unaudited Three months ended March 31, Year ended March 31,
2017 2018 2018 2017 2018 2018
INR INR US$ INR INR US$
(in thousands)
Net cash (used in) provided by operating activities (250,939) 1,433,582 22,018 (27,190) 1,839,125 28,246
Net cash used in investing activities (7,342,453) (365,199) (5,609) (21,944,262) (15,772,167) (242,239)
Net cash provided by financing activities 7,148,611 59,114 908 24,331,507 16,816,081 258,272
 

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:

                                 
Unaudited Three months ended March 31, Year ended March 31,
2017 2018 2018 2017 2018 2018
INR INR US$ INR INR US$
(in thousands)
Net (Loss)/ Income (306,728) 147,605 2,267 (1,191,569) (1,022,229) (15,700)
Income tax expense / (benefit) 645,187 21,141 325 892,333 (252,882) (3,884)
Interest expense, net 631,150 833,704 12,805 2,371,836 5,168,218 79,377
Depreciation and amortization 313,999 524,784 8,060 1,046,565 1,882,451 28,912
(Gain)/loss on Foreign currency exchange, net   (309,218)   98,282   1,509   (109,128)   45,716   702
 
Adjusted EBITDA   974,390   1,625,516   24,966   3,010,037   5,821,274   89,407
 

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