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Azure Power Announces Results for Fiscal First Quarter 2019

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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 first quarter ended June 30, 2018.

First Quarter 2019 Period Ended June 30, 2018 Operating Highlights:

  • Operating Megawatts were 1,011 MW, as of June 30, 2018, an increase of
    31% over June 30, 2017.
  • Operating & Committed Megawatts were 2,141 MW, as of June 30, 2018, an
    increase of 100% over June 30, 2017.
  • Revenue for the quarter was INR 2,422.5 million (US$35.4 million), an
    increase of 29% over the quarter ended June 30, 2017.
  • Adjusted EBITDA for the quarter was INR 1,955.7 million (US$28.6
    million), an increase of 33% over the quarter ended June 30, 2017.

Key Operating Metrics

Electricity generation during the three months ended June 30, 2018
increased by 111 million kWh, or 38%, to 400.8 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 three months ended June 30, 2018 was INR
2,422.5 million (US$35.4 million), up 29% from INR 1,877.9 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 three months ended June 30, 2018
decreased by INR 5.38 million (US$0.08 million) to INR 44.3 million
(US$0.65 million) primarily due to lower costs on account of the
reduction in solar module prices for the projects commissioned during
the period.

As of June 30, 2018, our operating and committed megawatts increased by
1,072 MW to 2,141 MW compared to June 30, 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 June 30,
2017   2018
  INR INR   US$
Nominal contracted payments (in thousands) 253,438,388 399,905,032 5,841,441
Total estimated energy output (kilowatt hours in millions) 44,358 97,192
 

Nominal contracted payments increased from June 30, 2017 to June 30,
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 June 30,
2017   2018
    INR INR   US$
Portfolio revenue run-rate (in thousands) 11,005,761 17,538,553 256,187
Estimated annual energy output (kilowatt hours in millions) 1,921 4,200
 

Portfolio revenue run-rate increased by INR 6,532.8 million (US$95.4
million) to INR 17,538.6 million (US$256.2 million) as of June 30, 2018,
as compared to June 30, 2017, due to an increase in operational and
committed capacity.

First Quarter 2019 Period ended June 30, 2018 Consolidated Financial
Results:

Operating Revenue

Operating revenue in the quarter ended June 30, 2018 was INR 2,422.5
million (US$35.4 million), an increase of 29% from INR 1,877.9 million
over the same period in 2017. The increase in revenue was driven by the
commissioning of new projects.

In May 2014, the FASB issued revised accounting guidance for revenue
recognition from contracts with customers. The Company adopted this
revised accounting guidance for interim and annual reporting periods
beginning April 1, 2018 using the modified retrospective method. Upon
adoption of the standard the Company recorded a cumulative-effect of a
change in accounting principle as of April 1, 2018 to reduce its
accumulated deficit by INR 218.4 million (US$3.2 million), related to
changes in the timing of revenue recognition for certain contracts with
its customers.

Cost of Operations

Cost of operations in the quarter ended June 30, 2018 increased by 26%
to INR 218.2 million (US$3.2 million) from INR 173.5 million in the same
period in 2017. The increase was primarily due to plant maintenance cost
for newly commissioned projects.

General and Administrative Expenses

General and administrative expenses for the quarter ended June 30, 2018
increased by INR 13.6 million (US$0.02 million), to INR 248.7 million
(US$3.6 million) compared to the same period in 2017. The general and
administrative expenses did not increase significantly due to scale of
operations during the three months ended June 30, 2018, as compared to
previous comparable quarter in 2017.

Depreciation and Amortization Expenses

Depreciation and amortization expenses during the quarter ended June 30,
2018 increased by INR 133.9 million (US$2.0 million), or 32%, to INR
553.6 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 June 30, 2017 to June 30, 2018.

Interest Expense, Net

Net interest expense during the quarter ended June 30, 2018 increased by
INR 233.8 million (US$3.4 million), or 28%, to INR 1,073.4 million
(US$15.7 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 June 30, 2018.

Gain / Loss on Foreign Currency Exchange

The Indian rupee depreciated against the U.S. dollar by INR 3.6 to US$
1.00 (5.5%) during the period from March 31, 2018 to June 30, 2018. This
depreciation during the period from March 31, 2018 to June 30, 2018
resulted in a foreign exchange loss of INR 204.2 million (US$3.0
million), compared to a marginal gain of INR 4.8 million during the same
period in 2017.

Income Tax Expense / Benefit

The income tax expense increased during the quarter ended June 30, 2018
by INR 86.7 million (US$1.3 million) to INR 94.6 million (US$1.4
million), compared to income tax expense of INR 7.9 million in the same
period in 2017.

Net Income/ Loss

The net income for the quarter ended June 30, 2018 was INR 29.8 million
(US$0.4 million), as compared to a net income of INR 206.9 million for
the quarter ended June 30, 2017, a decrease in net income by INR 177.1
million (US$2.6 million) as compared to the same period in 2017. This
was primarily due to foreign exchange loss related to the depreciation
of the Indian Rupee compared to the U.S. Dollar during the quarter ended
June 30, 2018.

Cash Flow and Working Capital

Cash used in operating activities for the fiscal quarter ended June 30,
2018 was INR 749.6 million (US$11.0 million), INR 1,171.0 million
(US$17.1 million) lower than the prior comparable period, primarily due
to the repayment of INR 1,412.0 million (US$20.6 million) of interest
accrued since August 2017 on the Solar Green Bonds during the current
period.

Cash used in investing activities, for the fiscal quarter ended June 30,
2018 was INR 4,196.0 million (US$61.3 million), compared to INR 3,316.9
million for the prior comparable period, primarily on account of
purchases of property plant and equipment for new projects amounting to
INR 2,500.0 million (US$36.5 million) and an increase in cash available
for future projects invested in short term investments for INR 1,705.6
million (US$24.9 million).

Cash generated from financing activities was INR 4,251.7 (US$62.1
million) for the fiscal quarter ended June 30, 2018, compared to INR
2,460.3 million for the prior comparable period.

Liquidity Position

As of June 30, 2018, the Company had INR 10,831.3 million (US$158.2
million) of cash, cash equivalents and current investments. The Company
had undrawn project debt commitments of INR 12,629.9 million (US$184.5
million) as of June 30, 2018.

Adjusted EBITDA

Adjusted EBITDA was INR 1,955.7 million (US$28.6 million) for the fiscal
first quarter period ended 2019, compared to INR 1,469.3 million in the
first quarter ended June 30, 2017. The increase was primarily due to the
increase in revenue and economies of scale achieved during the period.

Guidance for Fiscal Year 2019

The following statements are based on current expectations. These
statements are forward-looking and actual results may differ materially.
The Company continues to expect to have 1,300 – 1,400 MWs operational by
March 31, 2019 and revenue 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 Thursday, August 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

6706725. 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 Wednesday, August 15, 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 10122828. 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 68.46 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 29, 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 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, June 30,
2018 2018   2018
(INR) (INR) (US$)
(Unaudited)
(in thousands, except per share data)
 
Assets
Current assets:
Cash and cash equivalents 8,346,526 7,707,137 112,579
Investments in available for sale securities 1,383,573 3,124,125 45,634
Restricted cash 2,406,569 2,491,890 36,399
Accounts receivable, net 2,223,455 2,865,920 41,863
Prepaid expenses and other current assets 1,114,482 1,134,384 16,570
Total current assets 15,474,605 17,323,456 253,045
Restricted cash 329,926 235,318 3,437
Property, plant and equipment, net 56,580,700 58,643,437 856,609
Software, net 39,802 41,960 613
Deferred income taxes 1,052,393 1,003,922 14,664
Investments in held-to-maturity securities 7,041 7,419 108
Other assets 499,653 3,274,026 47,824
Total assets 73,984,120 80,529,538 1,176,300
Liabilities and shareholders' equity
Current liabilities:
Short-term debt 835,000 835,000 12,197
Accounts payable 1,521,854 1,674,257 24,456
Current portion of long-term debt 873,883 953,516 13,928
Income taxes payable 5,878 6,981 102
Interest payable 1,220,463 499,078 7,290
Deferred revenue 79,192 81,896 1,196
Other liabilities 611,598 496,757 7,256
Total current liabilities 5,147,868 4,547,485 66,425
Long-term debt 52,234,940 59,340,705 866,794
Deferred revenue 1,563,732 1,437,922 21,004
Deferred income taxes 892,138 1,202,995 17,572
Asset retirement obligations 356,649 397,048 5,800
Other liabilities 513,344 198,362 2,895
Total liabilities 60,708,671 67,124,517 980,490
Shareholders' equity
Equity shares (US$ 0.000625 par value; 25,996,932 and 25,996,932
shares issued and outstanding as of
March 31, 2018 and June 30, 2018) 1,076 1,076 17
Additional paid-in capital 19,004,604 19,024,251 277,889
Accumulated deficit (6,593,471) (6,367,034) (93,004)
Accumulated other comprehensive income (loss) (294,672) (432,964) (6,324)
Total APGL shareholders' equity 12,117,537 12,225,329 178,578
Non-controlling interest 1,157,912 1,179,692 17,232
Total shareholders' equity 13,275,449 13,405,021 195,810
Total liabilities and shareholders' equity 73,984,120 80,529,538 1,176,300
 
AZURE POWER GLOBAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
 
  Unaudited three months ended June 30,
2017   2018   2018
INR INR US$*
Operating revenues:
Sale of power 1,877,932 2,422,539 35,386
Operating costs and expenses:
Cost of operations (exclusive of depreciation and amortization shown
separately below)
173,524 218,230 3,188
General and administrative 235,073 248,650 3,632
Depreciation and amortization 419,738 553,609 8,087
Total operating costs and expenses 828,335 1,020,489 14,907
Operating income 1,049,597 1,402,050 20,479
Other expenses:
Interest expense, net 839,639 1,073,440 15,680
Loss/(gain) on foreign currency exchange, net (4,758) 204,226 2,983
Total other expenses 834,881 1,277,666 18,663
Income before income tax 214,716 124,384 1,816
Income tax benefit/(expense) (7,859) (94,581) (1,382)
Net income 206,857 29,803 434
Less: Net (loss)/income attributable to non-controlling interests 36,746 21,780 318
Net income attributable to APGL 170,111 8,023 116
Accretion to redeemable non-controlling interest (10,988)
Net income attributable to APGL equity shareholders 159,123 8,023 116
Net income per share attributable to APGL shareholders:
Basic 6.14 0.31
Diluted 6.00 0.30
Weighted average number of equity shares
Basic 25,936,050 25,996,932
Diluted 26,502,283 26,910,175
 

* 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 68.46.

  AZURE POWER GLOBAL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  Unaudited three months ended June 30,
2017   2018   2018
    INR INR US$*
Net cash (used)/ provided by operating activities 421,355 (749,647) (10,950)
Net cash used in investing activities (3,316,910) (4,195,954) (61,291)
Net cash provided by financing activities 2,460,289 4,251,738 62,105
 

* 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 68.46.

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,
2017   2018   2018
INR   INR   US$*
Net income 206,857   29,803   434
Income tax (benefit)/expense 7,859 94,581 1,382
Interest expense, net 839,639 1,073,440 15,680
Depreciation & amortization 419,738 553,609 8,087
Loss/(gain) on foreign currency exchange (4,758) 204,226 2,983
Adjusted EBITDA 1,469,335 1,955,659 28,566
 

* 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 68.46.

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