CIBCEQUITY RESEARCH
August 5, 2022 Flash Research
BROOKFIELD RENEWABLE PARTNERS LP
Q2/22 First Look: In-line Results; Development & Capital
Deployment Outlook Remains Strong
Summary: FFO per unit of $0.46 matched our estimate of $0.46 and was
one cent below consensus of $0.47. BEP’s diversification showed its merits
as segment variances largely offset. The growth update was positive—1GW
was commissioned, contracted projects are advancing, and the pipeline
(advanced and total) has expanded. Further, there were new investments
across a range of technologies (wind, utility scale & DG solar, CCS) and
markets. Equity deployment YTD is also tracking well, and the liquidity and
funding outlook remains strong (aided by ongoing asset sales).
Conference Call: 8:30 a.m. ET; dial-in: 1-855-513-1368.
Summary Of Operating Results (see inside note for summary chart)
Generation: Proportionate generation was ~2% below long-term average
(LTA) and 8% below our forecast. There were some variances across the
segments—North American hydro generation was weaker than we forecast
(we assumed it would be modestly above LTA, while South America was in
line). Wind and solar were below LTA in aggregate across all the operating
regions.
Adjusted EBITDA & FFO: Proportionate EBITDA of $482MM (after
subtracting management expense) was relatively in line with our estimate of
$479MM. Hydro across regions was relatively in line with our forecasts
(stronger pricing offset weaker generation vs. our forecast) while weaker
wind in North America (driven by below-LTA generation) was largely offset by
stronger wind results across other regions (higher average $/MWh). The
Solar/Energy Transition segments matched our forecast. FFO/unit of $0.46
matched our estimate of $0.46 but was one cent below consensus of $0.47,
with lower cash taxes partially offsetting higher interest expense.
Other Highlights
Acquisitions, Asset Sales & Development: Good progress on
development assets. The development pipeline is up 6GW and now stands
at 75GW. Further, BEP’s advanced-stage/construction-ready project list
increased by 2GW and is now 17GW. 1GW of projects were commissioned
(~$10MM FFO impact). Capital deployment for the year stands at $1B net to
BEP ($650MM in the quarter). While not all is completed (some pending), the
company is tracking very well toward its annual target of $1B to $1.2B. New
investments include U.S. distributed generation development pipeline
($140MM net to BEP), investment/ partnership on CCS in the U.S. (initial
$100MM investment that could grow), and a handful of tuck-in deals across
Brazil and Asia ($140MM investments in aggregate).
Liquidity & Funding: Total liquidity remains strong at $3.9B vs. $3.8B at the
end of Q1/22 and the company continues to use asset sales to fund new
growth. BEP should receive $90MM net to BEP from pending sales across a
number of smaller deals.