Santiago Seage - Chief Executive Officer Francisco Martinez-Davis - Chief Financial Officer.

Sophie Karp - Guggenheim Securities Michael Morosi - Avondale Partners.

Welcome to the Atlantica Yield Second Quarter 2016 Earnings Presentation Conference Call. Atlantica Yield is a total return Company that owns a diversified portfolio of contracted renewable energy, power generation, electric transmission, and water assets in North and South America and certain markets in EMEA.

Just a reminder, that this call is being webcasted live on the Internet and the replay of this call will be available at the Atlantica Yield Corporate website at www.atlanticayield com. Joining us for today’s conference call is Atlantica Yield CEO, Santiago Seage; and CFO, Francisco Martinez-Davis.

As usual, at the end of the conference call, we will open the lines for the Q&A session. I will now pass you over to Mr. Seage. Please go ahead, sir..

Thank you, very much. Good morning, thank you for joining us today for Atlantica Yield’s second quarter conference call. Please proceed to Page 3 where we will start the presentation with the key messages.

In first place, we are pleased to announce that we have closed first half of the year with excellent operating results in terms of revenue and further adjusted EBTDA. Our assets, in general, have shown a very good performance.

Our revenue, as we will see later, has increased by 52% up to $468 million, and further adjusted EBITDA has increased by 37%, up to $363 million. Operating cash flow has been very solid, reaching in the first half of the year $118 million, nearly a 50% increase with respect to the same period in the previous year.

In terms of cash available for distribution, CAFD, we have generated close to $40 million during the second quarter, in line with our expectations, when we consider seasonality. In addition, we continue making good progress towards achieving full autonomy from our sponsor on managing our sponsor-related risks.

In this regard, we have completed the transfer of personnel to Atlantica and we now have the resources required to manage all corporate and back office functions.

Regarding waivers and forbearances, as we will see, we still have some significant projects for which we continue to negotiate with lenders, including our two large projects in the southwest of the US.

However, since the last earnings presentation, we have obtained further waivers on one of the cross-default projects and three of the minimum ownership requirements. Out of 20 assets, we are now missing waivers for seven assets.

Finally, we are pleased to announce that our Board of Directors have decided to reinitiate the dividend and has declared a dividend of $0.29 per share in spite of the fact that we do not have all the waivers. On Page 6, we are going to review the main results for the quarter and the first half of the year.

As you can see, the second quarter has been very positive in terms of operating results. Revenues for the quarter reached $261 million, a 37% increase over the same quarter of the previous year. Further adjusted EBITDA has reached a bit more than $207 million, a 30% increase period-over-period.

The decrease in EBITDA margin is mainly due to the different mix of projects in the portfolio and to the fact that we have not received the dividend from the preferred equity investment in Brazil in 2016. Finally, we have generated close to the $40 million of CAFD in the quarter.

We have experienced some delays in distribution from project companies to the holding level, but we are on track to meet our guidance. If we look at the first half of the year, operating results have also been very positive with revenue of $468 million and further adjusted EBTDA of over $362 million and a 78% further adjusted EBITDA margin.

On Slide 7, you can see our revenues and further adjusted EBITDA breakdown by geography and by business sector, showing the strong results across segments and geographies.

Specifically, in North America, the increase in revenues was mainly driven by higher generation in Mojave, in one of our large solar plants in the U.S., which had an outstanding performance in the second quarter. In South America, growth was mainly explained by the acquisition of our large transmission line acquired to date in Peru.

In our EMEA region, the results have more than doubled due to the integration of the acquisitions closed last year, which continue to show excellent operating performance. Looking at further adjusted EBITDA margins, you can see the impact of not receiving the dividend from our investment in Brazil in the South American region.

Looking at our results by business sector. Renewal energy consolidates as the largest sector, revenues have increased by 77%. Thanks to the assets acquired and excellent production levels in several assets including Mojave. In conventional power, our asset in Mexico ACT continues to deliver excellent results.

In Transmission, higher revenues are driven mainly by the acquisition of our last line in Latin America in the second quarter of 2015. And finally, water assets have delivered once more good operating results. Moving on to Slide number 8. The strong financial results are based on a very sound overall operating performance of the portfolio.

Within renewals, generation has reached 1,488 gigawatt hours in the first half of the year compared with less than 1,100 gigawatt hours in the same period last year. In Solana, the plant is still not meeting our expectations, and we continue to implement the improvements identified at the plant.

On the other side, as mentioned before, Mojave has delivered outstanding results in the quarter. In fact, Mojave has been exceeding theoretical capacity for many days in that quarter. Kaxu, our other maturing asset in the second year of operation, has also exceeded our expectations this quarter.

Finally, in Spain, generation of the solar plants has been slightly lower than expected, mostly due to lower solar radiation. However, the assets have continued to demonstrate very solid performance. Wind assets have shown very good operating results, although the wind resource remains below expected levels.

In conventional, as mentioned before, the plant has again exceeded its contractual targets, while transmission lines and water plants have either comfortably achieved or exceeded forecasted availability levels. I now turn the call to Francisco, who is going to review our main financial metrics..

Thank you very much, Santiago. On Slide 9, you can see that we have generated $118 million of operating cash flow during the first half of the year, almost a 50% increase with regards to the first half of the last year. The increase is mainly driven by the strong cash generation of the assets acquired during 2015.

The sturdy performance of the assets is clearly shown in the operating cash flow our portfolio is producing. Investing cash flow corresponds mainly to the closing in the first quarter of the transaction of our 13% stake in Solar Corp 1 and 2. Financing cash flow corresponds mainly to the scheduled principle debt repayments.

We repaid $68 million of principal payments in our projects in the first half of the year 2016. Moving on to the next Slide, page 10, we have closed the quarter with a solid total liquidity position of $635 million, an increase of $43 million with respect to December 2015.

From this amount, we have $85 million of available cash at Atlantica Yield PLC holding level. Cash at the project level companies amounted to $469.7 million as of June 30 of which $216.6 million was restricted.

As we explained in the first quarter results presentation, this amount already includes our best estimation of the cash, which will be restricted as a result of our ongoing negotiations on waivers and forbearances for cross-default and change of ownership provisions. In addition to this, we had $259 million of non-restricted cash at project level.

This non-restricted cash at the project level will be progressively distributed to the holding level in the specific timing of distribution for each asset. Turning to Slide 11, here you can see the details of our net debt position, which consist of net corporate debt of $581 million and net project debt of slightly over $5 billion.

Net corporate debt has decreased as a result of the increase in corporate cash. With this corporate net debt and considering our expected CAFD before corporate interest for 2016, our corporate leverage is at 2.7 times CAFD. We continue to be below the internal limit of 3 times that we have communicated to the market.

Looking at the project level, net debt has remained stable from December 31, 2015 to June 30, 2016. On Slide 10, we have included a consolidated net debt bridge from December to June to show how we get to very similar level of net debt.

During the first six months of 2016, our operation generated $287 million of cash, out of which $169 million were used to pay interest, resulting in an operating cash flow of $118 million. Additionally, in the first quarter, as I mentioned previously, we have used $19 million to close the acquisition of 13% stake in Solar Corp 1 and 2.

Furthermore, the effect of translating debt denominated in other currencies to U.S. dollar has caused an increase in debt of $63 million. This means that on a constant exchange rate, our net consolidated debt would have been reduced by $60 million. It is normal to see a decrease as all our project debt is amortizing debt.

In fact, we have repaid $68 million of principal in the first six months of 2016. Finally, we have $40 million increased corresponding to other movements, mainly accrued interest, which are also considered as debt. I will now pass the call back to Santiago..

Thank you very much. If we move to Slide number 14, we are going to update you regarding our progress on the key initiatives.

As we explained in previous quarterly presentations, 2016 is a year where our focus should be on execution and should be on execution on how to manage the risks related to our sponsor, how to achieve full autonomy and how to prepare ourselves for growth again.

In terms of mitigating risks, and starting with the waivers, we continue our progress and we have obtained them in four assets. One for cross-default and three additional for a minimum ownership, the detail will be included in our full report.

At this point in time, we still have seven assets where we could need some sort of waiver, three for cross-defaults and seven for minimum ownership provisions.

In this regard, we continue conversations with lenders and we expect to be able to secure waivers or forbearances for projects representing majority of our CAFD in the near-term, as a remainder, these cross-defaults and change of ownership provisions affect our project finance agreements.

And we do not have any similar clauses in our PPAs or contracts with off-takers. Regarding our preferred equity investment in Brazil, as you probably remember, Abengoa presented a consolidated restructuring plan in Brazil on behalf of the Company where we owned a preferred equity investment and two other of their subsidiaries.

We continue working on defending our interests in the context of Abengoa’s proceedings in the different jurisdictions. In terms of our process of gaining autonomy from our sponsor, we have now completed our back office separation and we have therefore, terminated the support service agreement that was in place with Abengoa.

In addition, we have a team focused on the information technology, the systems, the IT systems are split and we are on track to finish that process by the end of the year as previously announced. Regarding growth, we have just closed a small opportunistic acquisition, a 1 megawatt solar photovoltaic plant in Spain.

The expected equity and project IRR is at 12% as well as the expected CAFD yield at 12% as well. The plant is co-located with existing assets, therefore we have considered that with these numbers, this was a good opportunity. In summary, we continue to deliver according to our plan.

Let’s now move to the next slide to discuss our dividend, so on page 15. We are pleased to announce that we are re-initiating our dividend. In our last earnings call, we explained that our Board of Directors decided to postpone the decision on the first quarter dividend until we have greater clarity on waivers.

Considering that we still have some important projects with pending waivers, but at progress, significant progress has been made, the Board of Directors has decided to be prudent and to use the lower range of guidance in order to approve a dividend, calculating that dividend using the proportional part of assets that do not require any waivers.

So the percentage of cash flow coming from our assets, that is not - doesn’t have any risk of waivers whatsoever. As a result, the dividend approved is the result of applying a 40% to the lower range of the guidance. With this, we get to $0.145 for the first quarter of 2016 and $0.145 for the second quarter, $0.29 per share in total.

Going forward, in the upcoming quarters, we expect that the Board will review these figures as we obtain waivers for the main assets that are still pending. With this, I conclude the presentation of our second quarter 2016 results and we will be available for questions, if there are questions. Thank you for your attention.

Operator, we are ready for Q&A..

Ladies and gentlemen the Q&A session starts now. [Operator Instructions] First question comes from Sophie Karp from Guggenheim Securities. Please go ahead madam..

Hello, good morning and thank you for taking my question.

I was wondering if you could give us more color on this small acquisition that you’ve made in Spain, which asset is this PC plant collocated with? And are you going to see more opportunities like that where you’re going to opportunistically realize a premium yield?.

Thank you, Sophie. So this opportunistic acquisition is a photovoltaic plant in operation in Spain, it is collocated with our Solnovas and PS assets, very close by.

And we do expect to find similar opportunity going forward, either from our current sponsor, from Abengoa, or from other entities in some of the geographies where we operate, and we will try to be prudent and disciplined with the numbers at which we make acquisitions, like we believe it has been the case with this small acquisition..

Thank you. And one follow-up, if I may, on Solana. So you continue to work on that project and continue to try to bring it up to its design, I guess, capacity.

Have you given any thought to seek [indiscernible] reimbursements from your sponsor or is it an option for possible defects that were in the design and they are in the construction phase or am I looking at this wrong?.

So in Solana, we continue working on the improvements identified that are going to be [that we see] for most of the year. This is a plant that is in operation, and still has in place guarantees from Abengoa as the EPC supplier for the plant, therefore, there are contractual obligations there in place.

And at this point in time, those contracts are valid and obviously once the different milestones are met, we will need to review if there’s anything there or not. But at this point in time, there are guarantees in place..

Thank you..

Next question comes from Michael Morosi from Avondale Partners. Please go ahead sir..

Hi, thank you for taking the question.

First off, with respect to the progress you’ve made with the sponsor separation, what should we assume in terms of incremental annual OpEx from internalizing the back office operations and bringing the IT systems in-house?.

So in terms of incremental, more than operating expenses, it will be general G&A expenses. We assume when we gave guidance for the year, we already included a small increase in our G&A due mostly to the IT split and some legal expenses this year that we can quantify, that’s a few million dollars per year..

With respect to the small acquisition that you announced today, we appreciate the increased disclosures around the equity IRR.

Do you anticipate communicating your future project acquisitions in the same way where you give both IRR and CAFD yields?.

Yes. For us, the old fashioned IRR continues being a key metric for us. And therefore, we would be sharing with the market equity IRR on top of yield. At the end of the day, we believe that you create value through the IRR although we also want to make acquisitions that are accretive obviously..

That’s great. And that’s very refreshing to hear thanks for the rest of the sector as well. Finally, just looking at the available liquidity, it seems like there is a decent amount of cash that’s being trapped at the project level.

How should we expect that to change once for all the waivers have been obtained and once the sponsor separation and the risk mitigation measures have been eventually [indiscernible]?.

Yes. At this point of time, we have a higher level of unrestricted cash at the project level than what you should consider normal. And as time goes by, and we secure waivers and hopefully our sponsor situation changes, then we should see some of that cash flowing up to the holding Company so that we can operate with a lower ongoing unrestricted cash..

That’s great. Thanks a lot guys. And great job managing through these risks..

There are no further questions in the conference call. Thank you..

Thank you very much..

Thank you..

Ladies and gentlemen, this now concludes our conference call. Thank you all for attending. You may now disconnect your lines..