Analyst update Q3 FFO MATCHES FORECAST; BEP CONSTRUCTIVE ON BOTH GROWTH AND CAPITAL RECYCLING
Key Data
Symbol NYSE: BEP-N
Market Cap $29.0B
THE TD COWEN INSIGHT
BEP's overall Q3/24 results met expectations. Proportionate generation was 10% below
LTA and slightly below our forecast (we tempered production estimates headed into the
release). Q3 FFO/unit growth was 11% and management reiterated an expectation for 10%
+ FFO/unit growth in 2024. The velocity of both asset recycling (at attractive returns) and
capital deployment toward growth is accelerating.
Event
Brookfield Renewable Partners (BEP) reported Q3/24 financial results this morning.
FFO/unit of $0.42 matched our estimate and the consensus forecast. Management's
FFO calculation does not back out sustaining capex and amortizing debt repayments.
Proportionate adjusted EBITDA of $586 million was slightly above both our forecast of
$567 million and the consensus forecast of $578 million.
Conference Call: Today at 8:30 am ET: 1-855-513-1368 (pre-registration link or link to
webcast).
Impact: NEUTRAL
Details
FFO/unit met conservative expectations, which anticipated below-normal generation.
Output was below long-term averages (LTA) across operating segments with wide
negative variances for Brazil hydro, wind (across regions), and solar (across regions).
Weak generation was offset by favourable price realizations and embedded gains on
development asset sales. Mgmt continues to expect 10%+ FFO/unit growth in 2024.
BEP ended Q3/24 with available liquidity of $4.6 billion. Management expects 2024
to be BEP's largest year ever for growth investments, with ~$1.5 billion net to BEP
committed and deployed YTD. As articulated at the Investor Day in September, the 5-
year average annual target for growth capital deployment is $1.6-$1.8 billion.
Overall Q3/24 proportionate generation was 10% below LTA guidance and 5% below our
forecast. Proportionate hydro output was 8% below LTA, with soft production across all
key markets. Wind and solar production were both 15% below LTA.
Development update: BEP's construction pipeline of wind, solar, hydro, storage, and
transition projects due online from 2024-2026 (21.2 GW, gross) are expected to
add $274 million ($0.41/unit) of FFO. BEP's remaining advanced-stage development
initiatives (43.6 GW, gross) are expected to add $384 million ($0.58/unit) of FFO once
they are added to BEP's construction pipeline and subsequently commissioned.
Areas of focus on this morning's call: 1) potential impacts from this week's U.S. elections
on BEP's pipeline, which is weighted towards the U.S.; 2) the broader environment for
M&A; and 3) context regarding the evolving environment for off-take agreements with
large loads.