Santiago Seage - CEO Francisco Martinez-Davis - CFO.

Sophie Karp - Guggenheim Securities Michael Morosi - Avondale Partners Craig Gilbert - Linden Advisors Angie Storozynski - Macquarie Research.

Welcome to the Atlantica Yield Third 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 question-and-answer session. I will now pass you over to Mr. Seage. Sir, please go ahead..

Thank you, very much. Good morning, thank you for joining us today for Atlantica Yield's Third Quarter 2016 Conference Call. Please proceed to Slide 3 where we will start the presentation with our key messages. In first place, we are very pleased to announce very strong operating results for the third quarter of 2016.

Our revenues in this quarter have increased by 10%, reaching $295 million on further adjusted EBITDA including unconsolidated affiliates grew by 21% reaching $264 million. If we look at the three quarters, the first nine months of 2016, growth has been both in terms of revenue and EBITDA more than 30%.

This has happened because our assets have continued to generate a strong operating cash flow, reaching $184 million in the quarter, demonstrating the good overall performance of our portfolio in the peak season for most of our renewable energy assets.

In terms of CAFD, cash available for distribution, we have generated nearly $54 million during the quarter. In addition, our Board of Directors has approved a dividend of $0.0163 per share, maintaining a prudent approach until we achieve a majority of waivers and forbearances, but showing the fact that we expect some key waivers in the short-term.

Finally, regarding the operating separation from our sponsor, we consider that we are done. Moving on to Slide 6, we will now review the main results for the quarter and for the first nine months of the year. As you can see, the third quarter has been very strong in terms of operating results.

Revenues for the quarter have reached $295 million, a 10% increase over the same quarter last year. Further adjusted EBITDA including unconsolidated affiliates has reached $264 million in the quarter, a 21% increase. Finally, we have generated $53.8 million of CAFD in this quarter.

We do continue to experience certain delays in distributions from certain project companies to the holding, but cash generation at the asset level has been really solid. If we look at the nine-month period, operating results have also been very positive.

Revenue of $763 million and further adjusted EBITDA of $627 million with growth levels of 32% and 30% with respect to the same period last year.

Additionally, we believe that we are on track to meet guidance for the year on key metrics, understanding that regarding CAFD, we will need as we expect to secure some waivers to avoid delays in distributions into next year. On Page 7, we will look at the breakdown of the results by geography and business sector.

What we can see there is growth and strong results across all segments on all geographies. In North America, the increasing revenues was mainly driven by higher production in Mohave, one of our solar plants in the Southwest of the U.S., we had an outstanding performance during the summer season.

In South America, growth was mainly explained by the acquisition of our last transmission line in Peru. In EMEA, the operating performance has been excellent with all acquisitions made last year fully-integrated.

If we look at the results by business sector, we can see that in renewable energy -- by far our largest sector -- revenues have increased by 45%, thanks to the assets acquired last year and excellent production levels at Mohave. In conventional power, our assets in Mexico continue delivering very consistent results.

In transmission lines, higher revenues are driven by the acquisition by the last line in Peru I mentioned before in the second quarter of 2015 and finally the water assets have delivered good results. For the adjusted EBITDA margins, we flagged the good performance of the portfolio as well.

Turning to Slide 8, we see that our portfolio keeps demonstrating a solid performance in-line with our expectations. Within renewables, production reached close to 2,600 gigawatt hours in the first nine months of the year, compared to 2,041 gigawatt hours reported in the same period last year.

If we look at solar energy with renewables, solar radiation during the third quarter of 2016 was very high throughout our geographies. In Solana, we continue to perform the improvements required at the plant and performance continues to be below expectations. On the other hand, Mohave keeps producing well above the targets for 2016.

Mohave is, and we believe will continue being an excellent asset in terms of operating performance and cash generation. In Spain, high radiation levels and solid performance in all the assets have allowed to close an excellent third quarter this year.

Wind assets have shown very good operating performance although wind resource remained below expectations in the quarter. Our core generation facility in Mexico continues to show a remarkable performance as mentioned before. Finally, transmission lines and water plants have either met or exceeded forecasted availability levels.

With that, I will now turn the call to Francisco who will take you through our financial numbers..

Thank you, Santiago. Let's move to Slide 9 to discuss the nine months operating cash flow. The good performance of the portfolio has resulted in a very solid operating cash flow. As you can see, we reached $302 million in the first nine months of the year; a 27% increase compared with last year.

In the third quarter, operating cash flow amounted to $184 million, a 17% increase period-over-period.

The investing cash flow corresponding mainly to the closing in the first quarter of the transaction of our 13% stake in Solar Corp 1 and 2, the acquisitions of a small photovoltaic plant announced last quarter and the pending payment from the Solaben 1 and 6 acquisition.

Financing cash flow corresponds mainly to the schedule principle that repayments and the dividends paid in the third quarter. Moving on to the next slide, Page 10, we have closed the quarter with a strong total liquidity position of $769 million, an increase of $177 million with respect to that of December 2015.

$85.8 million of our available cash are at Atlantica Yield PLC Holding Company level. Cash at project-leveled companies accounted to $587.6 million as of September 30, of which $238.2 million was restricted cash flow our project level and $349 million was non-restricted. Turning to Slide 11, here you can see the details of our net debt position.

We closed September with our net corporate debt position of approximately $586 million and a net project finance debt in our subsidiaries of slightly over $5 billion.

With this corporate net debt and considering our expected CAFD before corporate interest for 2016, we continue to be below the internal limit of three times that we have communicated to the market. On Slide 12, we show the reconciliation between EBITDA and CAFD that we always include as an appendix.

In this quarter, we believe it is important to highlight that our assets have generated $168.7 million in the first nine months, which is a 20% increase compared to last year.

However, we are experiencing certain delays in cash distribution from project companies to the holding level, in particular in some of the projects in which we're negotiating waivers. This is why CAFD for the period was lower than last year.

However, the cash is just accumulating at the asset level as you can see in the line change in non-restricted cash at project level and also in the significant liquidity position that we have. I will now pass the call back to Santiago..

Thank you, Francisco. Going to Slide 14, we would like to share with you the agreement we reached with Abengoa, subject obviously to the closing of their own restructuring process which would allow us to recover part of the value of our preferred equity investment in Brazil.

As a reminder, this is the preferred equity instrument in ACBH, a Brazilian subsidiary of Abengoa which has been under insolvency proceedings in Brazil since earlier this year.

As you know, on top of our rights as an investor in the Brazilian entity, we have a guarantee from Abengoa Holding and we also have the right to retain dividends under certain conditions, the dividends payable to Abengoa as a shareholder in Atlantica Yield. This in case of Abengoa did or does not meet their obligations in AHBH.

Up to now, we have retained a total of $21 million in accordance with these agreements. During the quarter, we have reached an agreement with Abengoa under which Abengoa acknowledges that we are the owner of the dividends we have retained and therefore those $21 million have been included or recorded as a cash available for distribution.

Second, since our preferred investment in Brazil has a guarantee from Abengoa Holding, Abengoa recognized a credit of around $330 million.

Upon completion of Abengoa restructuring, a 30% of that amount -- a 30% of the $330 million more or less would be converted into junior debt within the debt structure of Abengoa cost restructuring, and the remaining 70% would be converted into equity of Abengoa.

Additionally, in order to convert this junior debt into tradable senior debt and subject to a number of conditions precedent included in Abengoa's restructuring agreement, we have decided to participate in Abengoa's new money notes. Subject obviously to restructuring completion including the conditions precedent.

These notes would be tradable, super senior and secured in a ring-fenced structure with Atlantica Yield's shares and other asset as guarantees. We have committed a subject again to restructuring the amount necessary to elevate all the debt I described before into senior debt.

The maximum potential commitment would be $48 million, nevertheless subject to scale back.

However, we expect that the final investment will be significantly lower and we expect our exposure after Abengoa's restructuring to the different Abengoa instruments I mentioned before the senior debt, the equity and this new money note to decrease very quickly after closing as all the instruments are expected to trade.

Obviously, the real value we will recover from Brazil including the 30% of the $330 million I mentioned before will be determined by its trading value and as of today, it is difficult to estimate. We believe that this is a positive agreement to Atlantica since it should allow us to recover partially the value of our investment in Brazil.

If we move now to the next page, 15, what we can see there is the progress we have made on the different strategic goals we defined for 2016. In first place, the waivers -- the waivers that we still need to secure for some of our project finance agreements for some of the assets.

We continue negotiations and we have made significant progress since the last quarter, although we have not closed any additional waiver. Nevertheless, we do expect to close and obtain several key waivers in the short-term.

Second, our key functions have been separated from our sponsor and we are taking the last steps to totally split the last IT systems. As a result, the process to achieve autonomy is over and we can now move towards our third priority.

As we said at the beginning of the year, our objective was to be able to restore growth and we believe that we are there, ready to restore growth once we close some of the key remaining waivers that again we expect to happen very soon.

We believe that visibility over our growth plans will come to a combination of our current sponsors' go-for [ph] agreement, other partnerships and third-party acquisitions. We believe that we have significant opportunities for value creation, for value creating growth going forward.

Nevertheless, we also acknowledge that if our equity and/or our debt do not fade at levels that we consider sufficient, we will need to consider delivering growth in CAFD per share or dividend per share through acquiring our own portfolio, purchasing our own portfolio through equity or debt is probably easier and if our equity or debt do not trade where we believe it should be trading, that would be the way to restore growth until our instruments trade at levels that are both considered reasonable.

If we move to Slide 16, we can talk about dividend. Our Board of Directors has decided to remain prudent until a majority of the waivers and forbearances are secured and has declared a dividend of $0.0163 per share. The reasoning is the same reasoning that was shared last quarter.

We are applying a percentage representing the proportional part of assets that do not require any waivers as of today. Last quarter, we used a 40% and since then, we have not closed any additional waiver.

However, the Board has decided to increase the percentage used from 40% to 45% to reflect the likelihood of securing some key waivers in the short-term. We obviously expect to reveal the amount of future quarterly dividends as we obtained those final waivers.

With this, we conclude the presentation of our third quarter 2016 results and we will be available for questions. Thank you very much for your attention. Operator, we are ready..

Thank you. [Operator Instructions] Thank you. The first question is from Sophie Karp from Guggenheim Securities. Madam, please go ahead madam..

Hi, good morning guys, thank you for taking my questions. I wanted to ask you more about the waivers progress that you are making and given the administration condition that's going to happen in the U.S. in the next couple of months.

Is that something that you expect to accomplish before the better transition occurs or is it something that [indiscernible] thinking about more like a first and second quarter or the next year within the administration in place? Thank you..

Our expectation and obviously we are no expert in U.S. administration transitions. Our expectation is that this should not affect our waivers and this is a technical market under discussion with technical teams within the DOE specifically, so we don't expect the transition to impact.

Our expectations as I mentioned before is to secure several key waivers in the coming weeks..

Thank you..

The next question is from Michael Morosi from Avondale Partners. Sir, please go ahead..

Hi, thanks for taking the questions. First, with respect to the buyback, I was encouraged by your indication that you'd consider buying back stock.

Could you share a little bit more about how do you think about returns or comparing buybacks relative to organic growth?.

I think that these reasoning from our point of view is obvious. Our Board of Directors when restarting growth we need to consider our opportunities of external growth versus let's call it internal growth.

And at that point of time, they will need and we will need to compare respective accretion from transactions where we purchased assets from third-parties versus transactions where we purchase our own instruments in that equity or whatever.

It's difficult to be able to be more specific but you know perfectly well how the Board will look at that and with all remarks to compare accretion of one option versus the other.

And the only thing I'm saying is that obviously I want everybody to remember that -- the Board, we need to go to that and depending on the price of the equity under debt, the decision might be to vote for one or the other depending on the value creation potential..

That's helpful.

With respect to the waivers, it sounds like you're reasonably confident that we should have some progress here in the near-term but let's say that we pushed into the next year and something happened -- say with protocol risk around the administration, what is the alternative in terms of being able to take out the existing projects of the vendors with new debt and have you evaluated that and what the implications would be -- say for -- and just in terms of thinking of contingency plans?.

Our lenders in all the projects where we don't have the waivers as of today have been supportive and we see -- at this point in time we see no reason why we would need to consider what you're saying.

We believe that the lenders we have are happy with their projects, with the performance and we see no reason why we would need to consider let's say a plan B or C or D, like the one you're mentioning. From a theoretical point of view, it's something we could do but at this point in time our focus is on securing the waivers we are missing..

Very good, thanks a lot..

The next question is from Andy [ph] from Ike Edge. Sir, please go ahead..

Hi, good afternoon, couple of quick questions.

On the slide where you talk about getting ABG equity, are you disclosing or is there an agreement of how many shares you're going to receive?.

As I mentioned and subject to their restructuring, we would be receiving a debt on equity. You have some disclosure regarding some numbers but as of today it is extremely difficult to calculate how much we will be receiving and how much it would be worth and this will be subject to them closing to how well those instruments trade.

As I have mentioned before, in any case is obviously for us is not a strategic -- this is done to be able to recover part of the value in Brazil which we think is surplus but our intention would be to correct this into money as quickly as possible..

I understand.

And -- so what are the clarifications of 514 and $333 million of credit that would be restructured to debt and equity, I guess I don't follow the bullet points below it -- why only $100 million debt-on-equity would be determined by trading price, shouldn't it be all of the $333 million?.

So it's difficult to understand you -- you have a bit of noise in the background but let me try to answer. What we are saying here is out of the $330 million debt, let's say 30% would be converted into equity and that equity will trade.

And therefore, what we are saying is that those $100 million which is more or less a 30% of $330 million or $333 million, would be the face value out of that and there will be a market and that market will decide what's the credible value of that piece of debt, and obviously up to you to estimate [indiscernible]..

So $330 million will obviously be based on the ABG equity value?.

That includes a number of shares, your initial question is valid which is where will the share of ABG trade and therefore, what will be the real value of the 70% which would be significantly lower than the nominal value..

Okay, I understand. Thank you..

Thank you..

The next question is from Craig Gilbert from Linden Advisors. Sir, please go ahead..

Hi, thanks for taking my questions.

Can you talk a little bit about Solana; you said that it was meeting your expectations but can you expand upon that? And additionally, as it relates to Solana, can you talk about the impact and CAFD when that ownership percentage changes from 46% to 76%?.

So in Solana -- what I said is that this year Solana is not meeting expectations. And Solana this year has been below expectations because as we have been telling you for several quarters, we are making a number of repairs and improvements in the plant, and until that is finished, Solana will not be operating at the run rate.

And we will need to see going forward either repairs being conducted will result in the plant reaching the run rate. Regarding your second question, if you don't mind, I will prefer to take it offline simply because I don't have in front of me the details of the change [ph]..

That's no problem.

When do you think repairs and improvements would be complete and we would get back up to that run rate, at the level that you previously expected?.

The repairs have been ongoing to cover several areas. Some of them happening already, others are expected to finish before the end of the year and the third group of repairs would continue into 2017.

And therefore by then, once we see the 2017 summer, when we go to the summer, we'll know if the repairs are for good or whether we need to look into other solutions..

Okay.

And a question again on the ACBH equity investment and your deal with Abengoa; the $330 million, the 30% of that gets you to about $100 million and that would be the senior debt -- I mean would that be effectively equivalent to the senior debt that we see quote now at $0.45 on the dollar?.

No. It should be -- without entering too much detail because I'm talking about another company -- the short answer would be no because it's a senior debt versus the current debt you're seeing trading..

Okay. And my last question is just, I saw, I think in the appendix, it said there was a $14.8 million payment for acquisitions.

Were those new acquisitions that were made during the quarter, or was that a payment for acquisitions that have been made previously?.

Both; there is a payment for a small photovoltaic plant that happened this quarter, was announced three months ago and there's a payment for an acquisition done in the past..

Okay, thanks very much..

The next question is from Angie Storozynski from Macquarie. Madam, please go ahead..

Thank you. I have two questions -- one about the waivers that you're hoping to secure shortly.

Should we expect that there will be still some amount of cash -- I wouldn't say trapped -- but held at project levels basically as a condition for these waivers? That's one; and two, could you talk about the policy going forward? Once those waivers are in, what's the dividend payout ratio out of your CAFD? Are you thinking maybe of lowering it, to a low, to say 85% to 90% level that you have in the past?.

Sure. Regarding the first question, our expectation as of today is the same we shared with you a few quarters ago, which is that we would have some cash trapped there and our current estimation corresponds with the one we gave you -- I think it was in the first quarter 2016.

So around $30 million more or less of impact in 2016 that is already taken into account in our guidance and our projections and has been taken into account since the beginning of the year. And at this point in time, we believe that we will end up within that range that we shared with you.

Regarding the policy, the policy as you know is said by the Board. We expect to give you guidance when we present the results for 2016 like we always do. At this point in time, I don't see a reason to change our policy and our payout..

Okay, thank you..

We have no further questions at the moment. Gentlemen, back to you for the conclusion..

Okay. Thank you very much, Operator, and thanks, everybody for attending the call..

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect..