Brookfield Renewable Partners Non Voting Units BEP

TD

[retiredcf]

On their Action Buy List with a US$40.00 target. GLTA

Brookfield Renewable Partners L.P.

(BEP-N, BEP.UN-T) US$26.40 | C$35.25

No Significant Surprises; Q2/23 Results Near Expectations

Event

Brookfield Renewable Partners reported Q2/23 financial results this morning.

• Q2/23 FFO/unit of $0.48 was slightly below our estimate of $0.49, which matched consensus. Management's FFO definition excludes sustaining capex and amortizing debt repayments.

• Proportionate adjusted EBITDA of $586 million was between our forecast of $575 million and the consensus forecast of $595 million.

  Conference Call: Today at 8:30 am ET: 1-855-513-1368 (pre-registration link or link to webcast).

  Impact: NEUTRAL

  Q2/23 FFO was slightly below tempered expectations. As anticipated, generation was soft across the company's operating segments; this was partially offset by stronger-than-forecast price realizations and margins. Management noted that meaningful North American precipitation in July has left its reservoirs set up to capture strong summer pricing, and believes BEP is well-positioned to outperform its 10% FFO/unit growth target for 2023.

  Details

• Q2/23 proportionate generation was 10% below LTA guidance. Proportionate hydro output was 9% below LTA; a 15% negative variance in North America was mitigated by robust price realizations. Wind and solar production were 19% and 22% below LTA, respectively. Output from the distributed energy & sustainable solutions segment was 55% above LTA.

• BEP's capital recycling activities are progressing. Year-to-date, the company has executed recycling activities of $600 million ($400 million net to BEP). Recall, in Q1/23, the company referenced potential recycling of up to $4 billion of total proceeds once closed ($1.5 billion net to BEP). BEP ended Q2/23 with available liquidity of $4.5 billion; we estimate ~$1.6 billion is earmarked for pending transactions.

• Development update: BEP's construction pipeline of wind, solar, hydro, storage, and transition projects due online from 2023-2025 (16.1 GW, gross) are expected to add $213 million ($0.32/unit) of FFO. BEP's advanced-stage development initiatives (6.3 GW, gross) are expected to add $61 million ($0.09/unit) of FFO once they are added to BEP's construction pipeline and subsequently commissioned.

• Areas of focus on this morning's call: Timelines for closing previously announced transactions, further context regarding expected progress on capital recycling initiatives, and wider thoughts on demand for renewable power from corporate buyers (particularly large technology companies).