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

Anthony Crowdell - Jefferies Sophie Karp - Guggenheim Securities Julien Dumoulin-Smith - UBS.

Welcome to the Atlantica Yield First Quarter 2017 Financial Results 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. Joining us for today’s conference call is Atlantica Yield’s 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. Please sir, go ahead..

Thank you very much. Good afternoon, everybody, and thank you for joining us today for our first quarter 2017 earnings conference call. Let’s just start on Slide #3, where we are going to be sharing with you the key messages regarding this quarter. In first place, we are very happy to announce strong operational results for another quarter.

Our revenues in the quarter reached $198 million and further adjusted EBITDA, including unconsolidated affiliates reached $165 million, a 7% more than in the first quarter of 2016. In second place, our operational performance was very good overall.

Additionally, the first quarter has been outstanding in terms of CAFD, in terms of cash available for distribution, with nearly $61 million generated in the quarter. This is the highest ever and reflects the impact of some of waivers we secured in some of the project finance agreements in the very last part of 2016.

Finally, we announced that our Board of Directors has declared a quarterly distribution of $0.25 per share. If we move to a Slide #6, we will now review the main financial figures. Revenues for the quarter, as I mentioned before, amounted to $198 million, representing a slight decrease of 4% over the previous year.

This is due in part to currency translation, euros versus dollars, and partially due to lower generation in Kaxu, our asset in South Africa, where as you know, we discussed last quarter about some performance issues at the very end of 2016.

Regarding further adjusted EBITDA, we reached $165 million, a 7% higher than the same quarter in the previous year. And finally, as I mentioned before, CAFD was $60.9 million, an excellent level in what is our key performance indicator. With this, we are on track to meet our guidance for the year 2017.

On Slide #7, we show a detailed breakdown of the results by geography and sector. Starting with geographies, in North America, EBITDA increased by 7%, thanks to a strong performance, both our solar assets in the southwest of the U.S., in spite of lower solar radiation during the first part of the quarter.

In South America, revenues remained fairly stable and further adjusted EBITDA increased by $10 million. In EMEA, revenues and EBITDA decreased mainly due to the currency effect mentioned before and to the lowest – lower performance in Kaxu, South Africa in the quarter.

Looking at these numbers by sector, we see that in renewable energy, revenues decreased again due to the same currency translation difference and due to the lower performance in Kaxu. Nevertheless, that lower performance in Kaxu was compensated by improved performance of our solar assets in the U.S. and in Spain.

EBITDA was slightly higher, thanks to that performance. In conventional power, EBITDA was very similar to the same quarter last year, while in transmission lines, revenues remained stable and further adjusted EBITDA again improved significantly. Finally, our Water segment have similar levels of revenue and EBITDA to the first quarter 2016.

Overall, all our segments and geographies have delivered strong numbers in the quarter. If we now move to Slide #8, we will cover the operational performance of the assets. Starting with renewable energy, generations reached 460 gigawatt hours in the first quarter, a slight decrease compared to the first quarter of 2016.

As mentioned before, the main reason – the only reason in fact is a lower production level in Kaxu, where we have technical issues at the end of 2016 after the asset had performed very well during most of that year. We are now carrying out the necessary repairs and we expect to see a higher performance in the third and fourth quarter of 2017.

In the U.S., we were able to increase production despite lower levels of solar radiation in the region. Although we remain prudent, Solana has performed well in the quarter. In fact, Solana has achieved its daily production record ever in April 2017. In Spain, production was in line with expectations.

Our fleet of solar assets, as you know, more mature than in the rest of the other geographies has demonstrated a very reliable performance. Finally, our wind assets, which as you know, represent a small proportion of our portfolio, continue to perform below expectations due to lower than expected wind – of wind availability.

Moving to our Conventional Power segment, our cogeneration plant in Mexico ACP has continued to operate close to its capacity levels, reaching in fact availability of very close to 100%, with very good levels of production.

In transmission, availability has decreased slightly versus the same quarter last year due to the effect of heavy rains in Peru in February. Finally, our water assets have exceeded forecasted availability again. With these very good operating results, I will now turn the call to Francisco, who will take us through the financial section..

Thank you, Santiago, and good afternoon, everyone. Please turn now to Slide #9 to discuss our liquidity position. Before we enter into the numbers review, let me remind you of them back in the third quarter of 2016, we reached an agreement with Abengoa related to a preferred equity investment in Brazil.

Basically, we agreed to waive the dividend retention right related to the financial instrument and in exchange Abengoa recognized a financial liability with us subject to restructuring. According to the terms of the restructuring agreement, that debt was converted into Abengoa’s equity and junior debt.

After analyzing the situation, we decided to invest in Abengoa new money in order to elevate the status of our Abengoa debt from junior to senior. The Abengoa super senior new money in which we invested consist of super senior debt, which is guaranteed by Atlantica Yield shares and another asset in Mexico.

Since our business does not consist in holding financial investments, as of March 31, 2017, we reached agreements with different financial institution to sell our new money, but the settlement of these agreements did not happen until early April.

Thus, after March 31, 2017, our financial statement show the cash out required for the investments in the new money, but not the cash in resulting from its sales. As a result, we believe it’s appropriate to show an adjusted liquidity position, including the proceeds obtained from the sale of the new money in early April amounting to $44.9 million.

Taking this into consideration, total corporate cash adjusted post new money sale in early April reached $146.9 million. In addition, cash project level companies remained strong amounting to $487 million, of which $223.6 million was restricted and the remaining $263.8 million non-restricted.

Non-restricted cash corresponds to cash standing at the project level waiting for a time window to be distributed. Restricted cash corresponds mainly to debt service reserve accounts required by project financing at the asset level. Short-term financial investments also restricted accounts.

With this, total liquidity adjusted post new money sale reached $718.6 million. Moving onto the next slide, you can see our cash flow for the first quarter of 2017. Operating cash flow for the quarter reached $86.4 million, which is in line with the same quarter of last year and reflects the solid performance of our portfolio.

Interest and income tax paid correspond almost exclusively to interest paid and in line with last year. As a reminder, there is some seasonality in our project debt. A majority of our assets pay debt service in the second and fourth quarters, and as a result, interest payments are lower in the first and third quarters.

Variation in working capital have been negative with almost $29 million in the quarter. Working capital is also subject to seasonality caused by the seasonality in production and invoicing in our solar assets thus this negative variation is expected.

Non-monetary items another are negative $22 million and correspond mainly to the non-cash EBITDA related to grants in our U.S. solar assets. Reported investing cash flow as of March 31, 2017, includes investments made in the new money, which are previously described.

Similarly, as shown in the previous slide, we have adjusted amount, including the amount received after its sale. The remaining $13.9 million correspond mainly the variations in short-term financial investments, which are basically movements in restricted project accounts.

Financing cash flow amounts to negative $36 million and corresponds primarily to the dividends paid as well the scheduled project debt repayments. Taken this into consideration and if you look at our reported numbers, you can see a decrease in consolidated cash of $8.6 million.

But if we look at the first column, adjusted by the proceeds of the new money sale in early April, consolidated cash flow have increased by $36.2 million, a more – much more realistic picture of our first quarter. Looking at Slide 11, you can see the bridge from further adjusted EBITDA, including our consolidated affiliate for CAFD.

If we start with our further adjusted EBITDA including unconsolidated affiliates of $165 million and we deduct interest paid, debt amortization and other effects, we arrive to our cash generated in first quarter of $88 million, significantly higher than in the first quarter of 2016, then we go from cash generation of CAFD.

We remind you that we define CAFD as cash distribution from projects to the holding level, which depend on specific windows. Typically, these distributions are not significantly in the first quarter. However, in the first quarter of 2017, we have higher distributions than usual, thanks to some of the waiver secured in late 2016.

As a result of the strong corporate liquidity position, we can see turning now to Slide 12, that our adjusted net corporate debt has decreased. We closed first quarter 2017 with a net corporate debt of $566 million, while the position adjusted for the new money sale in early April amounts to $521 million.

In addition, net project debt totaled approximately $4.9 billion at the end of the quarter. The variation is due to interest accrual that not paid, which is also part of our debt balance. Our corporatenet debt ratio now stands at 2.6 times CAFD pre-corporate debt service below our internal target of three times.

I will now turn the call back over to Santiago for the dividend and strategic update..

Thank you very much, Francisco. Regarding dividend, we are pleased to announce that our Board of Directors approved a quarterly dividend of $0.25.

As a reminder and as we have discussed in previous quarters, our Board of Directors decided to maintain a conservative dividend policy until we secure all the waivers for cost defaults and change of ownership provisions that’s still contained in a few of our project finance agreements.

During the first quarter, we have obtained a new waiver in Kaxu, which covers potential past score defaults in the project finance agreement as of late March and allows a reduction of ownership by Abengoa below the 35%. Since this is a partial waiver, it doesn’t cover potential current defaultsituations in the future.

The Board of Directors have decided to remain prudent until the company secures the last remaining waivers and have decided to maintain the same dividend as last quarter $0.25. We obviously expect to increase the distributionsonce we secure the last pending waivers.

Turning on now moving to page 14, I would like to provide here a brief update regarding our strategic priorities for the year. In first place, our main priority continues to be to meet our targets for 2017. After a good first quarter from an operational point of view, we are having an even better first part of Q2.

And we are going to continue working for the rest of the year to make sure that we do meet our targets and that all our assets reach their full potential as soon as possible. Our second priority is securing the remaining – the very few remaining waivers.

After we have obtained a waiver in Kaxu, as I described, we are now clear of cross default risks in our portfolio, which is obviously good news. In terms of minimum ownership waivers, which as you know, we would need if and when Abengoa sells their stake in the company.

We believe that the very few waivers missing should be obtained in the coming months, but it is difficult to forecast when.

In third place, we plan to maintain a conservative corporate leverage, while we monitor closely value creating opportunities within our existing portfolio on existing financial instruments, both at the corporate and the project level.

And finally, regarding growth, our priority is to build during this year a growth pipeline that will allow us to grow through acquisitions in the remainder of 2017 and in the years to come.

In fact, if we move to the next page, and as we have discussed in the past, the infrastructure investing is a key theme today in most of the geographies where we operate. And we do expect to play an important role in that space and capture opportunities that will come in the next few years.

With the know-how and the capabilities we have as a long-term infrastructure owner and manager in power and water, we are confident that we can put together the strategy that will allow us to grow through three key strategic priorities. In first place, we plan to grow through the current ROFO agreement we have.

The ROFO agreement we have can provide us attractive opportunities that could fit in our portfolio.

As an example of the assets that are within the current ROFO agreement, we can include or the ROFO includes 300 megawatt cogeneration asset in Mexico, basically very close to the asset we own today a 20% interest in a water transportation asset in the south of the U.S. or 210 megawatt solar complex in Northern Chile, among other assets.

At this point in time, we do not have complete visibility on these projects. But nevertheless, we will be monitoring these assets and others that are included in the ROFO, and we will be more than willing to exercise our ROFO rights if the conditions are reasonable.

Therefore, this ROFO agreement should provide us a certain growth in the years to come, obviously, this is not enough. And therefore, our second growth strategy is to partner either through ROFO agreements or other partnership structures with developers or financial players who need a long-term holder of their assets as a partner.

We have been working on these for several quarters now. And we are convinced that we will be able to reach reasonable accretive agreements with players like the ones I have described. And these agreements would be complimentary to the ROFO we have today.

Finally as a third growth pillar, we have invested a very significant amount of time and effort building a strong local presence in several markets that is allowing us to look at acquisition opportunities that in many cases are provisory.

Given our broad geographical and technological exposure, we expect to be able to close reasonably attractive opportunities. In this context of partnerships and acquisitions during the first quarter of 2017, we completed the acquisition of our 12.5% stake in a transmission line located in the Southwest of the U.S. between California and Arizona.

We have invested a very limited amount at this stage, and we have as well an option to acquire an additional 12.5% interest once the asset reaches commercial operations.

We believe that now is the time to focus on accretive growth, and we are and will continue to devote our time to capture opportunities during the second part of 2017, and more importantly to build a growth pipeline that can demonstrate the growth potential through acquisitions going forward.

With that, I conclude the presentation of our first quarter results. During these weeks, we will be meeting investors in New York, please contact our Investor Relations team if you are interested. Thanks for your attention. And now we open the lines for questions. Operator, whenever you want we are ready for Q&A..

Thank you very much, sir. Ladies and gentlemen, the question-and-answer session begins now [Operator Instructions] The first question today comes from Anthony Crowdell from Jefferies. Please, sir, go ahead..

Hey, good afternoon. My first question is on the waiver agreement. So for Kaxu, you got a partial waiver agreement.

How should we look at that? And also it seems that the final agreement is taking longer than expected, is that accurate?.

Anthony, I didn’t get your – the second part of the question, which one did you say is taking longer?.

It seems that the final waiver agreement, it appears that is taking longer than expected, is that accurate?.

Okay. So in Kaxu, well, I mean, Kaxu is good news obviously, because we did sign a waiver agreement.

The waiver is not total, so it’s covering minimum ownership completely, so in Kaxu there would be no impact if Abengoa reduced or sold their stake in Atlantica, nevertheless regarding cross-default, it covers any past potential cross-default, but it doesn’t cover future potential cross-defaults, so it’s not 100% what we wanted, but clearly it’s a very important step in the right direction.

In general, the last few waivers are taking us a bit longer than expected, that’s I think it’s fair, your comment. As I mentioned before, we believe we are on the right track, it’s a question of time, but yes, it’s taking us a bit longer than anticipated..

Are you still working with Kaxu to get a full waiver or you at look now is getting this partial waiver as it being completed, and there is just no impact to the – increasing your dividend to this partial waiver?.

We received – it’s done, signed and secure. We will obviously continue working with the lenders to see if we can get a full cross-default going forward so that we can totally complete waiver in that project..

Does this partial waiver prohibit you from paying out more or am I misunderstanding the partial waiver?.

There is no prohibition anywhere, so with this waiver we are finding the asset. We can make distributions if the asset is performing, no issue whatsoever. A different decision is what kind of payout or dividend does the Board want to approve when it hasn’t secured all the waivers yet..

Okay and my last question is, what are the issues with this, I believe, solar – with the solar in the U.S.

the first quarter or you made some repairs at the end of the fourth quarter, what are the actual issues that are happening?.

So what I tried to explain was a little bit the opposite, Anthony. I tried to explain that the first quarter in the U.S., in solar in the U.S. has been very good. And I talked about repairs in Kaxu in South Africa.

This is an asset where we have some technical issues in the very last part of Q4 2016, and we have been making the repairs needed to go back to normal. So, the U.S. doing well, Kaxu in South Africa having some technical issues..

Great, thank you for taking my questions..

Welcome..

Thank you. The next question comes from Sophie Karp from Guggenheim Securities. Please, madam, go ahead..

Hi, good afternoon guys, congratulations on a great quarter.

Maybe you could give us a little color on what drove the performance and the margin, EBITDA margin, this quarter it was a quite a bit higher I think on the margin level versus last year? And also if you apply sort of Abengoa seasonality, it would imply the full-year guidance above you midpoint, I’m kind of looking to get some color on that?.

Regarding the EBITDA margin, probably the main effect, and correct me if there is something else, but I think that the main effect in the higher EBITDA margin is the fact that during Q1 we were able to retain the dividend payable to Abengoa following the agreements that we have in place at the time, so that’s an extra $10 million of EBITDA that we didn’t have it previous year and that should be non-recurrent if you want.

This happened in Q1, but it should not happen in the rest of the year..

Got it, got it, thank you. Thank you..

Thank you. The next question comes from Julien Dumoulin-Smith from UBS. Please, sir, go ahead..

Thank you, good afternoon..

Good afternoon Julien..

Thank you. So, perhaps just to come back on the waiver, just to be very clear about this.

As I presume, it’s the Mexican waiver that is one of the critical issues still in terms of deciding future dividend policy if that’s correct?.

Correct..

And what the status in that conversation Is this still relatively status quo from last quarter?.

Yes. The situation is, we expect to receive these waivers in the coming months, but it’s unclear when we will be able to secure it. So it’s a similar situation to what we described a few months ago. Then let’s say, we are not worried about the waiver itself, the issue is the timing..

Right.

Cash is still accruing at a restricted account at the subsidiary?.

Actually, the Mexican asset is generating cash and has been able to distribute that cash. This asset is making payments, because remember, the waiver we are missing in Mexico is a waiver for minimum ownership. So as of today, we are fully compliant, because Abengoa owns more than the minimum ownership.

So this is – if you want the waiver we are discussing is something we are asking for to be ready in case and whenever Abengoa sells shares in Atlantica. But as of today we are fully compliant and therefore, the asset is making distributions to the holding company..

Got it, excellent.

Can you elaborate a little bit on what you need to see in order to get the dividend up further? Is it simply the Mexican minimum ownership, or you need to…?.

It is mainly of the – it is mainly the Mexican waiver, Julien..

All right, excellent..

The Mexican asset, as you know, is a significant part of our cash flow. And therefore, our Board believes that we need to have that waiver in order to be able to increase distributions..

Excellent. Can you discuss a little bit more your growth plans, I’d be curious as you think about the liquidity that that’s accumulating on your balance sheet through the last few quarters, given the reduced dividend, how do you think about priorities? You obviously articulated a number of new opportunities out there.

How near-term are subsequent acquisitions as dropdown practically speaking?.

So regarding acquisitions, our expectation should be, we should be able to make some small acquisitions in the early short-term from third parties. Things are accretive as we have discussed in the past, perhaps not large, but clearly accretive from third parties.

Regarding timing for dropdowns still, the visibility we have is not enough to give you an accurate answer.

And use of cash, as we have mentioned in the last quarter, our intention would be to invest some money in clear value creating strategies within our own portfolio, plus spending some money in these small acquisitions that are accretive I mentioned before..

Right, absolutely. Then a further follow-up question, just very small. And I think you’re saying, revenue for South America versus EBITDA, EBITDA is higher for the quarter.

Can you just elaborate just quickly on that?.

It’s the same answer I gave to, I think, it was Sophie. EBITDA is high overall, and specifically in South America this quarter because of this dividend retention we could do to the Abengoa dividend..

Got it. That makes sense. Lastly, just a follow-up, if I can.

In terms of the potential ABG sell of your share, what are the risks or implications, I presume largely to the extent, once you have these waivers in place, there are almost practically no implications for your day-to-day operations, whether it would be a change of control or whatever? Guys, you want to make sure that’s correct?.

So regarding our potential sale by Abengoa, the key thing is to obtain the waivers obviously on a transaction, I understand, would only happen if we do have those waivers. And regarding implications elsewhere, we do have a number of contracts in place and in our public filings, we described implications in each of them.

The main one are the operational and maintenance contracts, where our intention would be to continue working with Abengoa as a supplier, as if we’re working with any other supplier. There’s a contract in place. They need to do a number of things. We need to do a number of things.

And as long as we both do or we need to do, we will continue working with them..

Right. Sorry, just to be clear, clearly, the operational maintenance contracts would be set at market rates. But to the extent to which tat there are any detrimental impacts in terms of contract research et cetera. I just want to be abundantly clear about this..

And then, what’s specifically is the question, Julien? I don’t know if I understood you, if there are what?.

There’s no issues with regards to the specific PPAs, et cetera, on any change of control?.

No, no, there are – no, this is including our public filings. There are no provisions in our PPAs, which would be impacted by changes in ownership..

Excellent. Well, thank you for your patience. I appreciate it. Talk to you soon..

Thank you, Julien..

Thank you very much. Ladies and gentlemen, there are no further questions in the conference. So, you may now disconnect your lines. Thank you very much..

Thank you..

Thank you..