Good morning, ladies and gentlemen, and welcome to Clearway Energy, Inc.’s Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference over to your host Mr. Chris Sotos, President and Chief Executive Officer..

Thank you, Sylvia. Good morning. Let me thank you for taking time to join today’s call. Joining me this morning is Chad Plotkin, our chief financial officer as well as Craig Cornelius, President and CEO Clearway Energy Group. Craig will be available for the Q&A portion of our presentation.

Before we begin, I’d like to quickly note that today’s discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this day. Actual results may differ materially. Please review the safe harbor in today’s presentation as well as the risk factors in our SEC filings.

In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today’s presentation.

Turning to Page four; for recap on 2018, I’d like to highlight that Clearway Energy generated for full year CAFD of $291 million, ahead of our guidance and adjusted EBITDA of $983 million.

During a year in which the Clearway platform was undergoing a transformation with a new sponsor, we managed to deploy $94 million in new growth capital at accretive CAFD yields.

We also raised over $750 million in new capital to fund this growth as well as managed our balance sheet to take into account the results of our tender offers and corporate maturities.

Looking forward to 2019, and as discussed in the February 14 business update call, our primary focus in the near term is to manage the platform through this period of uncertainty created by the PG&E bankruptcy.

We are maintaining our CAFD guidance of $270 million, inclusive of contributions from PG&E related projects; we’re reducing our quarterly dividend to $0.20 per share, while the situation with PG&E unfolds to preserve our balance sheet flexibility.

Once this period clears, our Board would revisit our normalized divide level commensurate with our long-term CAFD per share generation.

Clearway Energy was also able to lower its capital commitments by over $500 million, primarily by utilizing the GIP backstop facility, while still dedicating capital to the group projects with $86 million of capital to be deployed during 2019.

We also enter this period of uncertainty with limited near-term debt maturities with only $45 million of corporate debt due in 2020. As we work through 2019, the support from our sponsor, GIP is critical, especially as it relates to their continued focus on building long-term growth for CWEN.

This has been demonstrated by their backstop of the Carlsbad purchase from NRG for a future acquisition by Clearway Energy; continued development process and spend on our greater than 9 gigawatt pipeline at the Clearway Group; by expanding the ROFO pipeline through the $75 million Hawaii Phase II – excuse me, 75 megawatt Hawaii Phase II projects with CODs anticipate in 2021, as well as advancement of our repowering partnership.

Turning to Page five, this slide is identical to the one utilized on our February 14 call, and provides an overview of the strong development work going on at the Group level.

At Clearway Energy, Inc., we are particularly excited about the addition to the ROFO pipeline of two additional Hawaii projects with long-dated PPA durations and CODs anticipated in 2021. Craig will be available on our Q&A session for any questions around development.

Turning it over to Chad, Chad?.

Thank you, Chris. Turning to Slide seven, Clearway is reporting fourth quarter cash available for distribution or CAFD of $41 million and adjusted EBITDA of $200 million. For the full year, the Company is reporting CAFD of $291 million and adjusted EBITDA of $983 million.

While full year results were materially in-line with guidance, weak renewable energy conditions prevailed during the fourth quarter across the wind and solar portfolio, offsetting the strong wind performance realized in the third quarter. Additionally, an outage at Walnut Creek unit two impacted fourth quarter results at the conventional segment.

However, the overall cost to the Company was mitigated due to terms of the amended comprehensive service agreement executed in 2017. Additionally, and due to timing related to new financing, lower corporate interest expense resulting from the tendered convertible notes provided an additional offset for this outage during the quarter.

In addition to achieving our full year 2018 financial objectives, the Company realized GIP as its new sponsor, invested $94 million in accretive growth capital and raised $754 million in new corporate capital, an amount sufficient to handle the $572 million in corporate maturities now retired and support the funding of the existing committed growth investments in 2019.

So while the PG&E situation has impacted our near-term forward outlook, I want to take a moment and thank our many new colleagues that have joined the Company over the past few months and acknowledge the hard work in helping the Company meet its objectives.

Now, let’s turn to the next few slides to recap some of the points raised on the February 14 business update call. On Friday – we are today reaffirming our updated 2019 CAFD guidance $270 million and forward pro forma CAFD outlook of $295 million.

Based on median P50 renewable energy conditions for the full year, our forward guidance and outlook factors in new growth investments that the Company plans to complete during 2019.

This includes the Mylan project in our thermal segment, Hawaii Solar Phase I, ongoing investments in the DG Partnerships and the impact from the buyout of the Wind TE HoldCo tax equity partnership which closed in January.

As a reminder, and due to our adjusted capital allocation plan presented on February 14, we have not factored in any contribution from Carlsbad, due to the uncertain timing of when the Company will close this acquisition now that the GIP equity backstop has been exercised.

As previously discussed, 2019 financial expectations also include the $90 million of full year expected CAFD from the projects that have been impacted by the PG&E bankruptcy.

From our perspective, because we expect these projects to continue to perform in the normal course, even if projects are subject to distribution restrictions, we will report on the associated CAFD. On that point, we did see payments made by PG&E for post-petition invoice revenue on our projects which we view as a positive sign.

As it relates to reported CAFD, we do want to remind you of the difference between consolidated and unconsolidated investments.

For consolidated projects, CAFD reflects what is the accrued during the quarter, meaning if project level distributions are restricted, CAFD would still be reflected in the Company’s results and the associated cash would be visible on the restricted cash account on the balance sheet.

However, for unconsolidated projects, such as the Company’s interest in Desert Sunlight or Agua Caliente. Reported CAFD generally reflects actual distributions received.

This distinction is important because if projects are restricted from making distributions, the CAFD would technically not be booked in results nor would the associated trapped cash be visible on the consolidated balance sheet.

As such, and assuming PG&E continues to perform, our intention on a go-forward basis is to provide what the CAFD would have been for these unconsolidated investments if distributions were received.

This will provide a view as to how the projects are performing operationally relative to expectations and give perspective to what cash would otherwise have been available for allocation by the Company since this cash is not evident on the balance sheet.

Now let’s summarize the company’s overall liquidity and balance sheet including the impact of trapped cash. Slide nine provides a snapshot of the Company’s liquidity table as provided in today’s earnings release.

This table excludes any cash related to the unconsolidated projects and has been pro forma adjusted to account for two uses of corporate cash in early 2019. Specifically, the repayment of the $221 million in outstanding 2019 convertible notes and the $19 million used to buyout the Wind TE HoldCo tax equity partnership in January.

In the chart, we provide the three key areas of restricted cash, including reserves held in distribution accounts of $34 million. In the normal course, this account holds the cast related to consolidated projects that is restricted from distribution until compliance covenants have been met under the various project-level credit agreements.

Upon meeting the compliance covenant, this cash would then be available for distribution and use for corporate level capital allocation or non-recourse HoldCo debt service if applicable.

In that regard, since the projects impacted by PE& G are in the fold, we are anticipating this account will build overtime as the project perform or until such distributions are no longer restricted by project lenders. As you can see, as at the end of 2018, total restricted cash held in distribution accounts impacted by PG&E was $31 million.

Despite this impact, with the revolver completely undrawn, the Company maintains adequate liquidity to fund its revised capital allocation plan. We will continue to provide this update on a regular basis. With that, I’ll turn it back to Chris for his closing remarks..

Thank you, Chad. Turn to page 11. In a transformational year for Clearway Energy, I’m pleased to summarize the results we delivered. The platform exceeded full year CAFD guidance.

We were able to deploy $94 million in new accretive growth acquisitions to strengthen our platform, and Clearway successfully raised over $750 million in capital to fund our growth and balance sheet requirements.

Finally, we successfully completed, with minimal friction cost, the transition of the Clearway platform to a new, more robust, and a line sponsor in GIP, which we view as a strong positive for shareholders in the years' to come.

And looking forward to 2019, given the situation in California, our goals are focused on working through the PG&E situation in the most effective way possible by maintaining balance sheet flexibility and funding financial commitments, while continuing to grow the platform on an accretive basis.

In addition to hitting the $270 million of CAFD guidance, we also want to finalize all of our remaining transition and integration items to ensure the separation from NRG is complete.

I want to stress to our investors that we at Clearway do not intend to simply wait in stasis during this period, but rather focus on improving the existing platform, continuing to progress and execute on growth investments that we’ve already discussed, and finding new sources of growth to support efficient and accretive deployment of capital across the platform.

Our goal is to emerge from this period with a positive conclusion with our contracts assumed, cash distributed, and CAFD/ dividend per share growth reignited and in line with our long-term objectives. Thank you. Operator, please open the line for questions..

[Operator Instruction] Your first question comes from Colin Rusch from Oppenheimer..

Thanks, so much guys.

Now that you’ve been integrated with Clearway for a little while, have you done additional look at how to integrate energy storage into some of your existing facilities and how likely would that happen or how likely would it be for that to happen?.

I think from – this is Chris Sotos. I think, from our perspective, the two new Hawaii projects with CODs in 2021; both have energy storage as part of that. I think for existing projects; that tends to not be something that we emphasized, just because of additional capital cost to put in and kind of where those sit from a footprint perspective.

So to answer your question, the new projects in Hawaii in 2021, CODs have those elements as part of it. That’s probably looking at our baseline platform. We haven’t seen a lot of opportunities to-date to include storage….

Great.

And then, you know on the P50 calculation, on a portfolio basis, what are you guys looking at in terms of a plus – plus/minus on that, on an average? Is it – is much as 10% plus or minus or are you below that when you look at it all-in?.

I know we have sensitives in the [indiscernible] Chad, if you don’t mind..

Yeah, Colin, I think you know we provide the sensitivity on plus or minus 5%, so that generally equates to P75 or P90. That’s just the sensitivity we elected. I think if you look on a quarterly basis, there are periods of time where you will go above and beyond that, especially on the wind side.

But I think as we think about it, it’s more about the averaging per year. So like, if you look at our sensitivities, like a 5% move for the entire year is sort of going to be a combination of maybe higher moves than any individual quarter.

So you could definitely see that in the fourth quarter where fourth quarter weather was very challenging far – it was more than P90 on wind if you will. But on an overall basis for the year, you know we were in-line with our target which means it was averaging out for the balance of the year..

All right, thanks guys..

Your next question comes from the line of Michael Lapides from Goldman Sachs..

Hey guys, just curious, how do you – how are you thinking about valuation, meaning your equity valuation, and the overhang related to obviously what’s going on in California, but also whether there is a potential to diversify the Company outside of California with either stuff in the ROFO or other stuff in the marketplace and whether you can make the accretion/dilution math work at current equity valuation or do you need to wait to get California resolved to potentially see the equity value benefit before you would do anything?.

Unidentified Company Representative:.

Sure, thanks Michael. There is a couple of questions in there, so to try to kind of unpack your question a little bit. I think in terms of diversification; first of all, as you can see from the ROFO pipeline, basically those assets, with the exception of Carlsbad obviously, tend to be outside of California.

So I think, in a lot ways, Craig’s team, when the look at development, if they have the ability to look outside of California on an equivalent basis, they would tend to do so. However, I think to be fair, as we’re all well aware, California has the most robust renewable portfolio standard.

And so a little bit is, if you want to be in the renewable business, it’s little bit tough to say you don’t want to be in California.

So I think your question, Michael, we always look to diversify and if you said, hey, there is a project outside of California that has identical PPA tenures, identical risk and IRR, we would tend to want to invest that dollar outside of California versus within it.

But I think to be fair to that question; California is the most robust renewable portfolio standard in the United States and therefore kind of as were a lot of the supply, so to speak, of the assets and PPAs are.

To your second question around equity and kind of accretion/dilution, I think that’s why you’ve seen an emphasis, from our perspective, on really trying to using cash and then saying on a long-term basis where you fund some of these acquisitions in the interim under the revolver, then we tend to fund it on a long-term basis through how we look at our capital structure historically at about a 4.25 kind of corporate debt-to-corporate EBITDA basis and then equity as the other part of it.

I think your question, if the equity were to stay at about a $14 level while during the pendency of the PG&E process; I think we’d be obviously very reluctant to issue equity on an accretive basis.

However, I think given our view that basically the contracts will be assumed and we’ll kind of come out the other side of this with our valuation intact, I would think the equity markets would appreciate that value, our stock would increase and then we’d intend to finance those interim acquisitions on a more long-term capital basis..

Got it. Thank you guys, much appreciated..

[Operator Instructions] And I show no further questions at this time, gentlemen are there any other remarks?.

No, just wanted to thank everyone for your time and we’ll look forward to updating you in May. Thank you..

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. Have a wonderful day. You may all now disconnect..