Santiago Seage - CEO Francisco Martinez-Davis - CFO.

Andy Gupta - HITE Hedge Jeff Friedman - GMO.

Welcome to the Atlantica Yield Third 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. Atlantica Yield will be making forward-looking statements during this call based on current expectation and assumption which are subject to risk and uncertainties.

The company will be referring to agreements between third parties which are subject to condition precedent. Atlantica Yield cannot make any representation regarding an agreement reached by two third parties. The company will be also referring to non-binding term sheets which are subject to negotiation of definitive document.

Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today’s earnings presentation or the comments made during this conference call in the risk factor section of the accompanying representation on our latest reports and filings with the Securities and Exchange Commission each of which can be found on our website.

Atlantica Yield does not undertake any duty to update any forward-looking statements. 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 Q&A session. I will now pass you over to Mr. Seage. Please sir, go ahead..

Thank you very much. Good morning, everybody, and thanks for joining us for our third quarter 2017 earnings conference call. Please let’s just start on page three, where we share with you the key messages of today’s presentation. In first place, we have seen an overall solid operating result for another quarter.

Our revenues for the nine month period until September reached $775 million, an increase of 2% compared to the same period last year. Further, adjusted EBITDA including unconsolidated affiliates reached $629 million in line with the previous year.

Operating cash flow was $327 million, an 8% increase, and CAFD generation in the period reached $132 million, an 18% increase compared to the same period in the previous year. In addition, we have achieved two important wavers; in the first place, we have secured the ACT waiver our asset in Mexico.

In the second place, for Solana and Mojave, we have obtained consent from the DOE, Department of Energy that allows Abengoa to lower its stake in Atlantica down to 16%. Effectiveness of that consent is subject to several conditions present.

Additionally, we announced a few days ago, we have signed a term sheet for a strategic partnership agreement with Algonquin. Subject to conditions precedent, Algonquin will become our new largest shareholder with a 25% ownership.

We believe that this opens a new chapter for Atlantica with a new stronger sponsor and with new growth opportunities in the short and in the long term. Finally, our board of directors has declared a quarterly distribution of $0.29 per share, up 12% higher than in the previous quarter. Turning now to page six, we are going to review our main results.

As I just mentioned revenues in Q3 reached $292 million in line with the third quarter of 2016. If we look at further adjusted EBITDA for Q3, it is important to remember that in the third quarter of 2016 we recorded a onetime impact of more than $21 million related to the dividend we retained to our main shareholder.

Without these one-off impacts, further adjusted EBITDA in the quarter would have been very similar to the same quarter in 2016. If we now look at the nine month period on the right of the slide, we can see that we have had revenues of $775 million for the nine month period at 2% versus the previous year.

Further Adjusted EBITDA, including unconsolidated affiliates, reached $629 million for that same nine months period very similar to the previous year or at 2% higher without the one-off effect mentioned before.

In terms of cash available for distribution, for CAFD given these nine month period, we achieved a $132 million, 18% more than in the previous year on track versus guidance. So overall what we believe are very good results.

If we take a look by segment on page seven, we can see that in North America, EBITDA and EBITDA margins for the first nine months of the year have been stable when compared with the year before.

In South America, revenues increased by a 2% thanks to improved performance in our wind assets while in EBITDA we can see the impact of the one-off we mentioned before which was classified as South America and transmission. Without these one-off EBITDA would have shown a 2% increase.

In our EMEA region, revenues and EBITDA increased thanks to an excellent performance of our solar assets in Spain.

If we look at the results by business sector, we see very similar effects and when we look at renewable energy revenues have a solid increase of 3% the same in revenues and in EBITDA as a result of the good performance again of our assets, our solar assets in Spain.

Conventional power, we see that EBITDA was similar to last year and maintaining the very good performance of the asset. Transmission lines, revenues remained stable while the variation in further adjusted EBITDA corresponds again to the one-off affect mentioned before. Finally, water had solid results, very similar to the year before.

Overall, all our segments and geographies have delivered what we believe are very positive numbers in this first nine months of the year. On the next page number eight, we see the operational performance of the assets. Within renewable, production reached 2,577 gigawatt hours in the first nine months of the year in line with the same period in 2016.

In Solana, the incident we had in the electric transformers that we already mentioned in our last earnings release affected production in the U.S. for several weeks in July and August. In Spain, production was outstanding, thanks to very high solar radiation as well as very good performance.

Finally, our wind assets in South America had a level of production significantly higher than in the same period of 2016. Our cogeneration plant, ACT within conventional keeps showing a very consistent performance with very high availability levels. Finally, in transmission lines and water, availabilities have been very strong once more.

I will now turn the call over to Francisco who will take us through the financial numbers. .

Thank you Santiago, and good morning everyone. Let’s move on to Slide nine to discuss our liquidity position. As of September 30, 2017, we closed the quarter with a strong total liquidity position of $880.6 million, an increase of over $200 million with respect to December 2016. Cash at the corporate level reached $197.1 million.

Cash at project level companies amounted to $597 million as of September 30 of which $256.1 million was restricted cash and the remaining $340.9 million was non-restricted. If you look at September 2016, restricted cash levels, you could see that they were very similar levels.

Moving onto the following slide, we will go through the cash flow statement. Operating cash flow for the quarter reached $223 million, which is 21% higher than previous year and it demonstrates the good performance of the portfolio.

Variations in working capital in the third quarter have been positive starting to reverse the seasonality affect we always see in the first half of the year. With this, if we look at the nine months period, variations in working capital improved with respect to the previous year and operating cash flow increased by 8%.

In the nine month period, net cash provided by investing in activities amounted to $15.7 million in the nine months period and it corresponded mainly to the $27.4 million of proceeds from the sale of the financial instruments we received from Abengoa.

Finally, financing cash flow corresponds mainly to the schedule of principal debt repayment as well as dividends paid in the period. On slide 18, we showed reconciliation from further adjusted EBITDA included unconsolidated affiliates to CAFD.

Starting with further adjusted EBITDA including unconsolidated affiliates of $629.1 million in the period, deducted interest paid, debt amortization, movements in restricted cash accounts and other effects, we arrived with cash generated in the period of $236.5 million, which is 40% higher than in 2016.

Then as we define CAFD as cash distributions for projects to the holding level, which depends on specific windows, we need to add charges in non-restricted cash at the project level to reach CAFD for the nine months period of $132.1 million, an 18% increase compared to 2016.

In addition, the cash distributed from the projects during the year we have sold a significant portion of the instruments that we received from Abengoa. The total amount already monetized reached $27.4 million, which added to the CAFD figures, results in a total CAFD including those proceeds of $159.5 million.

Turning to slide 12, you can see the details of our net debt position. We closed September with net corporate debt of approximately $504 million and net projects and asset in our subsidiaries of a slightly below $5 billion.

With this corporate net debt and considering our expected CAFD, pre-corporate debt service for 2017 we are again well below internal target of 3 times. Turning now to Slide 13, we can see the consolidated net debt bridge. Our net debt has increased slightly from December of 2016 to September 2017.

We would like to clarify that the main reason for this increase as we already saw in June is the appreciation of the euro against the dollar. This caused an artificial increase in our reported consolidated debt when converted into U.S.

dollars, although we have not issued any new debt other than the corporate refinancing we did at the beginning of the year. We closed 2016 with net debt $5,404 million. The inflow from our project operations in the nine months period is $526 million.

The main outflows during the period has been interest paid for approximately $200 million and dividends paid for approximately $71 million. Translation differences arising from the conversion of our project in corporate debt in euros to U.S. dollars amounted to $267 million.

Foreign exchange translation differences are just a result of converting assets and liabilities of euro denominated series to U.S. dollars in the consolidation process and this movement is just purely an accounting effect.

In the third quarter of 2017, we also had an increase in debt to accrues and unpaid interest as most of our assets typically paid debt service twice a year in the second and fourth quarter.

With this and the cash inflow from the monetization of the Abengoa instruments as well as other small effects, we ended with net debt of $5,486 million as September 2017. Now, I will turn the call over to Santiago for the strategic update..

Thank you, Francisco. If we continue on page 15, we are going to review the agreement we made public recently with Algonquin. We believe that this is an extremely important agreement for us that sets what will be a key milestone for the company. As you know Algonquin has reached an agreement for the acquisition of 25% of Atlantica’s outstanding shares.

Algonquin is a North American diversified generation, transmission and distribution company listed both in Toronto and New York with an excellent track record in terms of growth in North America. Algonquin will represent for us a strong new sponsor with an investment grade rating and with proven expertise in development and asset management.

Additionally, these transaction should represent for us a great opportunity in terms of accretive growth. Our existing ROFO becomes stronger, while our new ROFO with AAGES, the joint development vehicle that they would create and the possibility of direct dropdowns will provide us what we believe will be very important growth opportunities.

Additionally, the fact that Algonquin is willing to invest in our future growth through potential future capital increases offers a much better visibility on future growth financing plans. Moving on to page 16, we are updating you on the status of our waivers.

As I mentioned before we have secured waiver for the ACT project finance agreement for the minimum ownership. As a reminder, in the ACT project finance agreement in Mexico we had a clause requiring Abengoa to maintain a minimum ownership in Atlantica of 35%. With this waiver this clause has disappeared, therefore there is no minimum ownership anymore.

Regarding Solana and Mojave, we have obtained a consent from the DOE to lower the minimum ownership requirement for Abengoa in Atlantica down to a 16%. This should allow Abengoa to sell the 25% stake to Algonquin.

Nevertheless, the effectiveness of that consent is still subject to Abengoa fulfilling a number of conditions precedent; including payments from Abengoa that we be used mostly to reduce the project debt. This means, that a two waivers that we should secure in order for Abengoa to be able to sell the 25% stake have been secured.

Nevertheless, we know that the sale of the shares is subject to other conditions precedent that are beyond our control. I remind you that Algonquin and Abengoa have said publicly that they expect the 25% stake transaction to close in early Q1.

On the next slide, the Board of Directors of Atlantica had approved the dividend of $0.29 per share for the third quarter 2017. These represents an increase of around 12% compared to the previous quarter or an increase of 78% compared to the dividend in the third quarter of 2016.

Our Board of Directors have decided to increase a quarterly dividend considering the progress achieved regarding waivers, but at the same time have decided to remain prudent while the final waivers become effective and the Abengoa sales process is closed. In any case our target for 2018 as you know is to have an 80% payout ratio.

Finally, on slide 18, we would like to announce that our stock ticker will change to AY effective tomorrow November 14th. We now say good bye to ABY and we’ll start a new phase as AY. Our CUSIP number will stay the same with no change. And just the final reminder, this week we will be meeting investors in New York, Boston and Dallas.

Please contact your RBC sales representative or our Investor Relations team in case you are interested. Thank you for your attention. And now we will open the lines for questions. Operator, we are ready for Q&A..

Thank you very much. [Operator Instructions] The first question comes from Andy Gupta from HITE Hedge. Please go ahead sir..

Hey, Santiago. Thanks for the updates here. I’ve got a couple of questions on the growth profile. It’s great to have Algonquin as your partner now.

Can you provide some commentary on the cadence of growth you’re expecting in the level of – approximate level of dropdowns you might be expecting, and how you plan to finance them? You did mentioned 80% payout ratio. You alluded to the response of the Algonquin, perhaps, participating the growth.

If you can expand on that I would appreciate it?.

Sure. So, the agreement with Algonquin we believe is extremely material because it makes our growth pipeline both in the short, the mid and the long term much more visible.

Our expectation at this point in time would be that after a transaction closes we – our current ROFO, obviously going to be much more visible and we're going to have the opportunity to see assets to be offered assets coming from the ROFO both an assets identified in the presentation we made on November the 1st when we shared with you the Algonquin transaction and we include the list of assets and we included there some estimations regarding the equity size we would expect to see.

We mentioned there that in the year 2018-2019 we -- our estimation was that we might be offered $600 million to $800 million of equity.

Additionally we said, that we expect the vehicle they are creating AAGES to be able to develop new assets that will be coming to us latter starting probably in 2020 and we estimated that around $200 million of equity.

So this is -- all these numbers are sizeable for us in terms of which assets with what returns, too early tell in terms of how to finance them.

Our combination of cash on hand, some debt and equity as you know our key ratio there is we don't want our corporate, our net corporate debt to go over three times a CAFD before corporate interest, so that’s the metric we will be watching when deciding exactly how to finance..

Got it. Just one follow-up, Santiago, is in this some MLPs, I know you’re not an MLP, but some MLPs talking about self-financing.

How do you view -- and some of them have done sort of potential pros [ph], et cetera, what is your view on the equity portion of straight equity versus perhaps using some more creative instruments that would not require as much overnight equity issuance?.

Well, at this point in time I think it’s too soon to speculate regarding what instrument we would be using.

What we try to share with you and I think its important message is Algonquin as our new sponsor has publicly said that their intention is to be leading our future capital increases if needed, so that should make it if you want it easier from our capital market point of view, if that’s your concern..

That makes sense, Saniago. Thank you..

Thank you..

Thank you much. The next question comes from Jeff Friedman from GMO. Please go ahead sir..

Hey, Santiago and Francisco, congratulations on a solid quarter. I have a couple of questions. The first is your cash balance went up about $190 million from 2Q and the company has more cash I think than you’ve had in a really, really long time.

I’m just curious, do you any plans to do anything with that cash balance, like, obviously the dividend increase today is great to see, but it still 30% to 40% below your run rate dividend.

So like, how should we think about that cash increase in your cash balance?.

Thank, Jeff. Regarding the cash balance you need to remember this is uniting our business. So Q3 tends to be higher then Q2 in terms of cash balance.

It is true that it compared with the third Q, 2016 still our cash balance is slightly higher, a significant part of difference is at corporate level where we do have a significant cash position, 197 million, so it obvious that we will using that cash. As we have always said, we will use that cash in the most accretive way.

With the agreement with Algonquin we hope that we will be using at least part of that cash to support growth with accretive acquisitions, but like always we will be using the cash for what creates more value for shareholders..

Okay, great. And then, on the DOE waiver, obviously, it’s great to see that you guys have obtain DOE waiver pending certain Abengoa precedent condition.

Abengoa has mentioned that a roughly – they’ll be putting $90 million of proceeds from their Algonquin share sell into the projects into this Mojave and Solana to satisfy certain projects, guarantee obligation.

Upon them putting that cash in would you be able to actually release some other cash that currently are restricted there, but how should we think about your restricted cash balance?.

So specifically regarding the two assets you in the obligations, obligations are regarding Solana and not Mojave, and upon Abengoa meeting those conditions precedent pay in – making certain payments we would not expect to see any significant amount released in the case of Solana.

As I mentioned in the call we do expect a reduction in the project finance debt in Solana..

Okay. Thank you..

Thank you. [Operator Instructions]. We have no more questions in today’s conference call. So I now give back the floor to Mr. Seage for final comments. Thank you..

Thank you very much to everybody for joining the call. And as I mentioned before, we’ll be meeting many of you in New York, Boston and Dallas. Contact our Investor Relations team if you would like to be meeting or speaking with us. Thanks a lot. Bye..