Azure Power Global Limited (NYSE: AZRE), (“Azure Power” or “the Company”), one of the leaders in the Indian solar industry, today announced its consolidated results under United States Generally Accepted Accounting
Principles (US GAAP) for the fiscal third quarter 2017, period ended December 31, 2016.
Third Quarter 2017 Period Ended December 31, 2016 Operating Highlights:
|•||Operating & Committed Megawatts were 1,071 MW, as of December 31, 2016, an increase of 33% over December 31,|
|•||Revenue for the quarter was INR 949 million (US$ 14.0 million), an increase of 46% over the quarter ended December 31, 2015.|
|•||Adjusted EBITDA for the quarter was INR 696 million (US$ 10.3 million), an increase of 49% over the quarter ended December 31, 2015.|
Key Operating and Financial Metrics:
Electricity generation during the nine months’ period ended December 31, 2016 increased by 163.0 million kWh, or 64%, to 416.9 million kWh, compared to the same period in 2015. The increase in electricity generation was principally a result of additional operational capacity during the period.
Total revenue during the nine months ended December 31, 2016 was INR 2,865.4 million (US$ 42.2 million), up 54% from INR 1,858.9 million during the same period in 2015. 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, 2016 decreased by INR
16.0 million (US$ 0.23 million) to INR 44.2 million (US$ 0.65 million), as compared to the same period in 2015. The decline is in line with decreasing solar module prices and the reduction in balance of system costs.
As of December 31, 2016, our operating and committed megawatts increased by 267 MW to 1,071 MW compared to December 31, 2015, as a result of the increase in new projects won.
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,|
|Nominal contracted payments (in thousands)||206,588,831||256,312,193||3,773,737|
|Total estimated energy output (kilowatt hours in millions)||34,514||44,745|
Nominal contracted payments increased from December 31, 2015 to December 31, 2016 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 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,|
|Annual portfolio revenue run-rate (in thousands)||9,208,299||11,049,222||162,680|
|Estimated annual energy output (kilowatt hours in millions)||1,542||1,932|
Portfolio run-rate increased by INR 1,841 million (US$ 27.1 million) to INR 11,049 million (US$ 162.7 million) as of
December 31, 2016, as compared to December 31, 2015, due to an increase in operational and committed capacity during the period.
Third Quarter 2017 Period ended December 31, 2016 Consolidated Financial Results:
Operating revenue in the quarter ended December 31, 2016 was INR 948.8 million (US$ 14.0 million), an increase of 46% from INR 647.8 million over the same period in 2015. The increase in revenue was driven by the commissioning of new projects.
Cost of Operations
Cost of operations in the quarter ended December 31, 2016, increased by 68% to INR 83.2 million (US$ 1.2 million) from INR 49.6 million in the same period in 2015. The increase was primarily due to plant maintenance cost for newly commissioned projects and implementation of improved O&M methods for better plant productivity.
General and Administrative Expenses
General and administrative expenses during the quarter ended December 31, 2016 increased by INR 39.8 million (US$ 0.6 million), or 31%, to INR 169.2 million (US$ 2.5 million) compared to the same period in 2015. This was primarily due to an increase in lease expense of projects under construction and an increase in personnel expenses to support Company’s growth.
Depreciation and Amortization Expenses
Depreciation and amortization expenses during the quarter ended December 31, 2016 increased by INR 69.9 million (US$ 1.0 million), or 39%, to INR 250.3 million (US$ 3.7 million) compared to the same period in 2015. The principal reason for the increase was capitalization of new projects during the period from December 31, 2015 to December 31, 2016.
Interest Expense, Net
Net interest expense during the quarter ended December 31, 2016 increased by INR 23.4 million (US$ 0.3 million), or 5%, to INR 490.3 million (US$ 7.2 million) compared to the same period in 2015. Interest expense increased primarily as a result of increased borrowings for new solar power projects, which was partially offset by eliminating interest on Compulsorily Convertible Debentures following their conversion after the Company’s initial public offering and higher interest income on investments during the three-month period ended December 31, 2016.
Loss on Foreign Currency Exchange
The Indian rupee depreciated against the U.S. dollar by INR 0.7 to US$ 1.00 (1.1%) during the period from September 30, 2015 to December 31, 2015, while 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. This higher depreciation during the period from September 30, 2016 to December 31, 2016, resulted in an increase in foreign exchange loss during this period of INR 75.9 million (US$ 1.1 million) to INR 135.6 million (US$ 2.0 million) compared to the same period in 2015.
Income Tax Expense
Income tax expense increased during the quarter ended December 31, 2016 by INR 199.9 million (US$ 2.9 million) to INR
334.6 million (US$ 4.9 million), compared to the same period in 2015. The increase in income tax expense was a result of an increase in taxable income on profits generated by a subsidiary, which provides certain engineering, procurement and construction services to its subsidiaries, in the quarter ended December 31, 2016.
Net loss for the quarter ended December 31, 2016 was INR 514.3 million (US$ 7.6 million), an increase of INR 141.4 million (US$ 2.1 million) as compared to the same period in 2015. This was primarily due to an increase in income tax expense during the period.
Cash Flow and Working Capital
Cash generated from operating activities for the nine months ended December 31, 2016 was INR 223.8 million (USD$ 3.3 million), a decrease of INR 1,305.3 million (US$ 19.2 million) as compared to the same period in 2015, primarily due to one-time receipt of Viability Gap Funding (VGF) during the same period in 2015.
Cash used for investing activities increased by INR 7,410.4 million (US$ 109.1 million) during the nine months ended December 31, 2016 compared to the same period in 2015 as purchases of property, plant and equipment for new projects rose by an additional INR 5,252.1 million (US$ 77.3 million).
During the nine months ended December 31, 2016, the Company raised INR 17,182.9 million (US$ 253.0 million) from financing activities. The Company raised equity of INR 9,261.8 million (US$ 136.4 million), during the quarter ended December 31, 2016 from its initial public offering and concurrent private placement.
As of December 31, 2016, the Company had INR 8,420.2 million (US$ 124.0 million) of cash, cash equivalents and current investments. The Company drew down INR 5,315.2 million (US$ 78.2 million) of project debt during the quarter and had undrawn project debt commitment of INR 8,876.4 million (US$ 130.7 million) as of the end of the quarter.
Adjusted EBITDA was INR 696.4 million (US$ 10.3 million) for the quarter ended December 31, 2016, compared to INR
468.8 million in the same period in 2015. This was primarily due to the increase in revenue during the period.
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. The Company is reiterating its revenue guidance for fiscal year 2017 ending March 31, 2017 of US$ 64 – 68 million. In addition, the Company continues to expect 950 – 1,050 MW operational by December 31, 2017.
Webcast and Conference Call Information
The Company will hold its quarterly conference call to discuss earnings results on Tuesday, February 14, 2017 at 8:30 a.m. US Eastern Standard 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 enter passcode 2993026. 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 Tuesday, February 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 pass code 10101107. An archived webcast will be available at http://investors.azurepower.com following the call.
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 67.92 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, 2016. 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.