Welcome to Atlantica's Third Quarter 2019 Financial Results Conference Call. Atlantica is a sustainable infrastructure 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 webcast live on the Internet, and a replay of this call will be available at the Atlantica Yield corporate website. Atlantica will be making forward-looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties.

Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of the factors discussed in today's earnings presentation or the comments made during this conference call in the Risk Factors section of the accompanying presentation 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'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. Thank you for joining our third quarter 2019 conference call. We are going to start on Page 3 with the key messages. We continued showing a strong performance in the third quarter of 2019 with CAFD that increased by 7% year-over-year to approximately $46 million.

Further adjusted EBITDA including unconsolidated affiliates for the first 9 months of the year also increased on a like-for-like basis. Additionally, our Board of Directors has declared a quarterly dividend of $0.41 per share representing an increase of 14% compared with the third quarter of last year.

Additionally, we have closed the previously announced investment acquisition of ATN Expansion 2. On Slide 5, we can see that the revenues in the first 9 months of 2019 reached $798 million, a 5% decrease versus the same period of 2018, primarily due to currency translation effects.

On a constant currency basis, revenues were in line with the same period of 2018. If we take a look at further adjusted EBITDA including unconsolidated affiliates, we can see that it decreased by 8%, reaching $658 million.

The decrease was due again to currency translation effects and to a onetime noncash gain recorded in 2018 -- in the second quarter of 2018. If we exclude those effects on a like-for-like basis, our EBITDA for the first 9 months of the year is 1%.

Finally, CAFD generated in the first 9 months of the year increased by 6% year-over-year, reaching a bit more than $140 million, on track to meet our guidance for the year. If we move to the next page, #6, we see that overall our portfolio of assets delivered a good performance in the first 3 quarters of 2019.

In North America, EBITDA decreased compared with the same period last year due to solar -- lower solar radiation among other factors. In South America, both revenues and EBITDA increased, thanks to the continued solid performance of the assets and the contribution from the new assets acquired.

In the case of EMEA, revenue decreased, mainly due to the same currency translation effect, and EBITDA increased by 3% on a like-for-like basis. In Spain, production was significantly higher, thanks to higher solar radiation and solid operating performance, while the Kaxu -- Kaxu solar plant continued delivering a strong operating performance.

If we look below at the results by sector, we see very similar trends. Renewable energy with revenue decreasing due to the currency translation and due to the extraordinary item in 2018 that I mentioned before.

In the case of natural gas, our Mexican asset continues showing very solid performance while in our transmission lines, revenues increased by 7% and EBITDA increased by an 8%, mainly thanks to the contribution from new assets. And finally, our water segment keeps showing the strong EBITDA levels with a 5% growth year-over-year.

If we move to Page 7, we can take a look at the key operational metrics. We see there that electricity produced by our renewable energy assets reached 2,700 gigawatt hours in the first 9 months, a 6% increase compared with the same period last year. Overall, our renewable energy assets delivered a strong operating performance.

If we look at the availability-based contracts, ACT, the Mexican asset, as I mentioned before, keeps showing a solid performance. The transmission lines and water, the 2 other sectors where our revenues are based on availability, we continue to see high availability levels and a strong performance.

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

Thank you, Santiago, and good morning to all. Let's move on to Slide 8 to walk you through our cash flow for the third quarter and for the 9 months of 2019. Our operating cash flow for the first 9 months of 2019 reached $321.4 million compared to $338.3 million in the first 9 months of 2018.

In the third quarter of 2019, we generated an operating cash flow of $172.3 million, similar to third quarter 2018.

Net cash used in investment activities in the first 9 months of 2019 was $147.5 million and corresponded mostly to investment in new assets, and should be seen in conjunction with net cash used in financing activities as it includes investments made by our partners.

Net cash invested in acquisitions of assets and/or accretive investments in the first 9 months of 2019 amounted to approximately $90 million. Net cash used in financing activities in the first 9 months of 2019 amounted to $148.6 million, and it included the impact of the refinancing of part of our corporate debt earlier this year.

All in all, the net change in consolidated cash for the first 9 months of 2019 was an increase of $25.4 million. On the next slide, #9, we would like to review our net debt position. Our consolidated net debt as of September 30, 2019, is approximately $170 million lower than at the end of 2018.

We closed the first 9 months of 2019 with net corporate debt of $613.2 million, slightly higher than the net corporate debt as of December 31, 2018. With this, our net corporate rate -- our net corporate debt-to-CAFD pre corporate debt service ratio stood at 2.7x.

On the other hand, net project debt as of September 30, 2019, was $4,362 million, approximately, $200 million lower than at the closing of last year. I will now turn the call back to Santiago, who will provide an update on our growth strategy..

If we move to Page 11, you will see that we have closed the previously announced acquisition of ATN Expansion 2 for a total equity investment of around $20 million. As you may recall, these are transmission lines in operation that receive revenues denominated in U.S.

dollars based on availability like our other transmission lines and with 20 and 30-year contract PPA. This is part of the accretive investments that we have announcing on -- we have been announcing on closing during the last year.

If we move to the next page, #12, you will also see that our Board of Directors has approved a quarterly dividend of $0.41 per share for the third quarter of 2019 or $1.64 if we annualize that number. This dividend represents a 14% increase compared with the same quarter last year, and represents a 3% increase versus the Q2 2019 dividend.

Thank you for your attention. With that, operator, we are ready to take questions..

[Operator Instructions]. And your first question comes from the line of Julien Dumoulin-Smith, Bank of America..

So I just wanted to follow-up on a couple of questions. I suppose, just perhaps the obvious one here.

Can you elaborate a little bit on where you stand on the strategic process and how you think about the merits here? I know we've talked about this at various points, but I believe, as best I understand it, we've talked about a 4Q resolution here on that process.

Can you speak to that? And perhaps what you're seeing out there in terms of read-throughs from potentially peer transactions out there as well? And how that might impact your decision making?.

Sure. So as you know, and you can imagine, there's not much I can comment regarding that. The strategic review process is ongoing. As we mentioned from the beginning, it's a process about analyzing wide range of options. In that context, the [indiscernible] happening in the sector, obviously, it's something we -- the Board will look at.

But beyond that, there's not much we can announce at this point in time. And whenever that process is over, we will be sharing with everybody the results of that strategic review..

Excellent. And sorry to nitpick here.

When you say whenever that process is over, will you be affirming that publicly? How do you think about that just from a resolution time frame given, I think, what you've said about Q4?.

So what I said in the past was that from my personal point of view. The end of the year could be a reasonable timing to update regarding that process.

And again, I personally think that within a similar time frame, we should update the market whether that's beginning of next year or with the results of the year, we will see, because it's a process ongoing. And therefore, I do not control the timing of our process, Julien..

Completely understood. And then to the extent to which we're looking at continued dividend growth, and obviously, sort of dependent on strategic outcome and process. How do you think about sustained dividend growth from here? I know you guys have historic targets. Obviously, you're trending very nicely year-over-year.

How do you think about that more narrowly into 2020 when you think about both the CAFD improvement trend and then your own payout targets over time, just setting expectations in the next year to come?.

Yes. So as you know, we always give guidance for the year with the year results presentation. So we will be providing guidance in late February. As you know as well, our midterm growth, we shared that with the market some time ago. And at this point in time, our expectation is to continue growing along those lines.

But we will be able to be more specific for next year, as you are asking, when we present the 2019 results in February..

Right. And sorry, to be more clear on this, if I can.

There's nothing to say that the linearity of that -- the long-term growth target would differ for the coming year, correct?.

Yes, there's nothing new on that front, if you want..

And your next question comes from the line of Praful Mehta from Citibank..

Yes. If you don't mind, another one on the strategic review.

In terms of alignment between your parent, Algonquin, ownership and yourself, or at least the partner, how are you thinking about alignment? I mean are there any differences of views? Or from your perspective, are all parties aligned towards the same goal, I guess?.

I mean from that point of view, our collaboration with our larger shareholder, Algonquin and partner has been ongoing for some time. As you know, we have been publicly talking about the things we have been working on with them. And from that point of view, I think that we are properly aligned, if you want..

All right. Fair enough. In terms of assets as part of the strategic review, we've heard about South Africa and further concerns there.

Is there any impact in your mind around what that process is going through in terms of nationalization maybe and what that means in terms of your assets there?.

So I don't think that nationalization is something we have ever heard talking about. The asset in South Africa has been performing very well, generating cash very nicely. And from that point of view, we are very happy with the performance operationally and financially of the asset.

Whether we will consider anything different than owning the assets on the long term, we will see, and we will consider any options, as you can imagine. But up to now, we are very happy with the asset..

Got you. Fair enough. And just 1 quick clarification from a California perspective. Obviously, that situation continues to evolve.

From your perspective, do you just wait and see how that plays out and, hopefully, have the company exit bankruptcy by next year? Or is there anything else from your perspective proactively that can be done?.

So obviously, it's a process we don't control. And probably each of you will have a different point of view. Our point of view is that the probabilities of that process reaching resolution next year are high.

What we can control is what we announced a few months ago, meaning that in 2019 and 2020, we would be able to compensate delays in distributions from the Mojave asset, the only one we have in California, if those delays happen, and that's where we are. So hopefully, it will be resolved by 2020, ideally by June.

But in any case, we have taken the actions necessary to compensate potential delays this year and next year..

[Operator Instructions]. Your next question comes from [indiscernible] from Raymond James..

It's Collin [ph] on behalf of Dave Quezada. Just on your funding plan, you guys are still well below your corporate leverage targets.

Can you just talk about how much more leverage you'd be willing to take based on any asset sales?.

This is Francisco. As you rightly point out, I mean, we have a lower leverage. You see on the slide that we're at 2.7x on the leverage. We have additional capabilities to get additional debt on the balance sheet. We increased the revolver to $425 million.

So I mean, there's certainly room to do future acquisitions via the cash that we have on hand, the additional leverage that we have and also the percentage of cash that we keep out of the captive that we generate. But that side, we have expressly said that we have a target of keeping the corporate leverage around 3x. This is an internal target.

It's not a covenant, but as I said, we're below that number right now..

Right.

And so you don't see yourself going above that at all like some of the peers have?.

I think, as I said, this number is not set in stone. This is an internal target that we have. So as I said, we do have the cash on hand. We haven't -- we're comfortable at the 3x right now..

[Operator Instructions]. There are currently no further questions. Sir, please continue..

Okay. Thank you very much to everybody for attending..