Clearway Energy, Inc. Reports Second Quarter 2019 Financial Results

Clearway Energy, Inc. (NYSE: CWEN, CWEN.A) today reported second quarter 2019 financial results, including a Net Loss of $36 million, Adjusted EBITDA of $278 million, Cash from Operating Activities of $89 million, and Cash Available for Distribution (CAFD) of $68 million, which includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy.

"Despite the Company’s current year financial outlook having been impacted by challenging renewable resource conditions in the first half of the year and the June outage at the CVSR facility, the prospects for long term growth at Clearway Energy remain clear as GIP’s sponsorship continues to provide new accretive investment opportunities,” said Christopher Sotos, Clearway Energy, Inc.’s President and Chief Executive Officer. “With today’s announced expansion of the ROFO pipeline by 354 MW, the recently announced equity commitments to the Repowering Partnership with Clearway Group to repower 283 MW of wind projects, and the ongoing investment in the Company’s existing growth commitments, the Company is able to incrementally grow during the pendency of the PG&E bankruptcy while also positioning itself for long term CAFD per share growth."

Overview of Financial and Operating Results

Segment Results

Table 1: Net (Loss)/Income

Table 2: Adjusted EBITDA

Table 3: Cash from Operating Activities and Cash Available for Distribution (CAFD)

For the second quarter of 2019, the Company reported a Net Loss of $36 million, Adjusted EBITDA of $278 million, Cash from Operating Activities of $89 million, and CAFD of $68 million, which includes adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends due to the PG&E bankruptcy. Net Income was lower than the second quarter of 2018 due to non-cash changes in the fair value of interest rate swaps, a non-cash asset impairment charge in the Thermal segment, weaker renewable energy conditions, and the June outage at the CVSR facility. Adjusted EBITDA results were lower than 2018 primarily due to weaker renewable energy conditions and the CVSR outage, but partially offset by the contribution of growth investments. In the second quarter, CAFD results were lower than 2018 primarily due to lower Adjusted EBITDA and the expiration of network upgrade reimbursements.

Operational Performance

Table 4: Selected Operating Results

In the second quarter of 2019, availability at the Conventional segment was in line with operational targets but lower than second quarter of 2018 due to the timing of spring outages. Generation in the Renewables segment during the quarter was below median expectations and 16% lower than the second quarter of 2018 due to weak solar and wind conditions across the portfolio and the impact from the previously disclosed outage in June at the Company's CVSR facility.

On June 5, 2019 a fire occurred at the CVSR facility impacting approximately 1,200 acres of property. While the fire did not impact solar arrays, damage occurred to associated infrastructure including distribution poles and cabling. The facility was restored to full operations on July 1, 2019. The full year cash impact of the fire is estimated to be approximately $9 million, which assumes insurance recovery for associated repair work by the end of the year.

Liquidity and Capital Resources

Table 5: Liquidity

Total liquidity as of June 30, 2019 was $746 million, $291 million lower than as of December 31, 2018. This reduction was primarily due to the repayment, with cash on hand, of $220 million in outstanding 2019 Convertible Notes, $19 million for the buyout of the Wind TE HoldCo tax equity partnership in January 2019, and $27 million for growth investments, including Duquesne, Mylan, Hawaii Solar Phase I, and ongoing contributions to the DG Investment Partnerships. Borrowing capacity under the revolving credit facility was reduced by $4 million due to the issuance of corporate letters of credit.

The Company's liquidity includes $203 million of restricted cash balances as of June 30, 2019. Restricted cash consists primarily of funds to satisfy the requirements of certain debt arrangements and funds held within the Company's projects that are restricted in their use. As of June 30, 2019, these restricted funds were comprised of $60 million designated to fund operating expenses, approximately $45 million designated for current debt service payments, and $42 million of reserves for debt service, performance obligations and other items including capital expenditures. The remaining $56 million is held in distribution accounts, of which $36 million related to subsidiaries affected by the PG&E bankruptcy.

Potential future sources of liquidity include excess operating cash flow, the existing ATM program, of which $36 million remained available as of August 6, 2019, availability under the revolving credit facility, and, subject to market conditions, new corporate financings.

PG&E Bankruptcy Update

As of August 5, 2019, the Company’s contracts with PG&E have operated in the normal course and the Company currently expects these contracts to continue as such. However, unless such lenders for the related project-level debt otherwise agree, distributions to the Company from these projects may not be made during the pendency of the bankruptcy. These restrictions, therefore, have resulted in the Company accumulating less unrestricted cash and thus decreased the Company’s corporate liquidity and cash available for shareholder dividends and growth investments. The Company has entered into forbearance agreements for certain project-level financing arrangements and continues to seek similar agreements with the lenders for the remaining project-level financing arrangements affected by the PG&E bankruptcy. The Company continues to assess the potential future impacts of the PG&E bankruptcy filing as events occur.

Clearway Group ROFO Pipeline

Additions to the Pipeline

On August 1, 2019, the Company entered into a Second Amendment to the Right of First Offer Agreement with Clearway Group. The following projects were added to the Company's ROFO pipeline:

Drop Down Offer

On June 18, 2019, Clearway Group offered the Company the opportunity to purchase 100% of CEG's interests in Mesquite Star Pledgor LLC, which owns the Mesquite Star wind project, a 419 MW utility scale wind facility expected to reach COD in 2020. On August 1, 2019, Clearway Group and the Company agreed to extend the negotiation period for the Mesquite Star project. The acquisition is subject to negotiation and approval by the Company's Independent Directors.

Growth Investments

Equity Commitments in Repowering 1.0 Partnership

On June 17, 2019 through an indirect subsidiary, the Company entered into binding equity commitment agreements in the previously announced partnership with Clearway Group to enable the repowering of two of its existing wind assets, Wildorado and Elbow Creek, which total a combined 283 MW. As part of the transaction, a subsidiary of the Company entered into a financing agreement for construction debt of $219 million. The construction financing was in part used to reduce outstanding principal at the existing Viento project financing through the removal of Wildorado from the Viento collateral package. In connection with the completion of this financing, and after taking into account the reduction in debt service in 2019 resulting from the partial repayment of the Viento financing, the Company committed to invest an estimated $111 million⁴ in net corporate capital to fund the repowering of the wind facilities, subject to closing adjustments. The transaction is expected to contribute incremental asset CAFD on an average annual basis of approximately $12 million beginning in 2020⁵, which reflects the improved operational profile of the projects and the impact from the new tax equity capital structure employed at the partnership.

Hawaii Solar Phase I ROFO Acquisition Update

During the second quarter of 2019, the Company made an incremental corporate capital contribution of $2 million toward the previously disclosed Hawaii Solar Phase I ROFO Acquisition. In aggregate, the Hawaii Solar Phase I ROFO Acquisition totals approximately 80 MW of utility-scale solar projects located in Kawailoa and Oahu, Hawaii and is being purchased from Clearway Group for a total cash consideration of approximately $29 million (of which $23 million remains to be funded as of June 30, 2019) plus the assumption of non-recourse debt of $169 million anticipated at transaction close. The purchase price for the Hawaii Solar Phase I projects will be funded with existing liquidity and the transaction is expected to contribute CAFD on an average annual basis of approximately $2.6 million⁶ beginning in 2020. The projects are expected to be completed in the fourth quarter of 2019.

DG Investment Partnerships with Clearway Group

During the second quarter of 2019, the Company invested approximately $6 million in the DG investment partnerships with Clearway Group, bringing total capital invested to $252 million⁷ in these investment partnerships. As of June 30, 2019, through the existing partnership agreements, the Company owns approximately 253 MW⁸ of distributed and community solar capacity with a weighted average contract life by CAFD of approximately 19 years.

Financing Update

Viento Repayment

On June 14, 2019, and in connection with the Repowering 1.0 Partnership, proceeds from the construction debt were utilized to repay $109 million for the outstanding balance, including accrued interest, under the Viento non-recourse project financing.

South Trent Wind Refinancing

On June 14, 2019, the Company, through South Trent Wind LLC, refinanced $49 million of non-recourse debt due 2020 by issuing $46 million of new non-recourse financing due 2028 at an interest rate of LIBOR plus 1.350%. In conjunction with the

refinancing, the Company invested $3 million of additional cash into the project, net of fees and financing costs.

Quarterly Dividend

On August 1, 2019, Clearway Energy, Inc.’s Board of Directors declared a quarterly dividend on Class A and Class C common stock of $0.20 per share payable on September 17, 2019, to stockholders of record as of September 3, 2019. The Company will continue to assess the level of the dividend pending developments in the PG&E Bankruptcy, including the Company's ability to receive unrestricted project distributions.

Seasonality

Clearway Energy, Inc.’s quarterly operating results are impacted by seasonal factors, as well as variability in renewable energy resources. Most of the Company's revenues are generated from the months of May through September, as contracted pricing and renewable resources are at their highest levels in the Company’s portfolio. Factors driving the fluctuation in Net Income, Adjusted EBITDA, Cash from Operating Activities, and CAFD include the following:

• Higher summer capacity prices from conventional assets;
• Higher solar insolation during the summer months;
• Higher wind resources during the spring and summer months;
• Debt service payments which are made either quarterly or semi-annually;
• Timing of maintenance capital expenditures and the impact of both unforced and forced outages; and
• Receipt of distributions from or generated by unconsolidated affiliates impacted by the PG&E bankruptcy

The Company takes into consideration the timing of these factors to ensure sufficient funds are available for distributions and operating activities on a quarterly basis.

2019 Financial Guidance

The Company is reducing its 2019 full year CAFD guidance to $250 million to account for the previously disclosed impact of the CVSR outage in June and year to date renewable resource performance. This financial guidance assumes that all CAFD related to the projects impacted by the PG&E Bankruptcy is realized in 2019 and Mylan and Hawaii Solar Phase I achieve target commercial operational dates. Financial guidance for 2019 also continues to be based on median renewable energy production estimates for the remainder of the year.

Earnings Conference Call

On August 6, 2019, Clearway Energy, Inc. will host a conference call at 8:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to Clearway Energy, Inc.’s website at http://www.clearwayenergy.com and clicking on “Presentations & Webcasts” under “Investor Relations.”

About Clearway Energy, Inc.

Clearway Energy, Inc. is a leading publicly-traded energy infrastructure investor focused on modern, sustainable and long-term contracted assets across North America. Clearway Energy’s environmentally-sound asset portfolio includes over 7,000 megawatts of wind, solar and natural gas-fired power generation facilities, as well as district energy systems. Through this diversified and contracted portfolio, Clearway Energy endeavors to provide its investors with stable and growing dividend income. Clearway Energy’s Class C and Class A common stock are traded on the New York Stock Exchange under the symbols CWEN and CWEN.A, respectively. Clearway Energy, Inc. is sponsored by its controlling investor Global Infrastructure Partners III (GIP), an independent infrastructure fund manager that invests in infrastructure and businesses in both OECD and select emerging market countries, through GIP’s portfolio company, Clearway Energy Group.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, and typically can be identified by the use of words such as “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “outlook,” “believe” and similar terms. Such forward-looking statements include, but are not limited to, statements regarding impacts resulting from the PG&E bankruptcy, the benefits of the relationship with Global Infrastructure Partners III (GIP) and GIP’s expertise, the Company’s future relationship and arrangements with GIP and Clearway Energy Group, as well as the Company's Net Income, Adjusted EBITDA, Cash from Operating Activities, Cash Available for Distribution, the Company’s future revenues, income, indebtedness, capital structure, strategy, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although Clearway Energy, Inc. believes that the expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, impacts relating to the PG&E bankruptcy, general economic conditions, hazards customary in the power industry, weather conditions, including wind and solar performance, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulations, the condition of capital markets generally, the Company's ability to access capital markets, cyber terrorism and inadequate cybersecurity, the ability to engage in successful acquisitions activity, unanticipated outages at its generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions (including receipt of third party consents and regulatory approvals), the Company's ability to enter into new contracts as existing contracts expire, risk relating to the Company's relationships with GIP and Clearway Energy Group, the Company's ability to successfully transition services previously provided by NRG, the Company's ability to acquire assets from GIP, Clearway Energy Group or third parties, the Company's ability to close drop down transactions, and the Company's ability to maintain and grow its quarterly dividends. Furthermore, any dividends are subject to available capital, market conditions, and compliance with associated laws and regulations.

Clearway Energy, Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Adjusted EBITDA and Cash Available for Distribution are estimates as of today’s date, August 6, 2019, and are based on assumptions believed to be reasonable as of this date. Clearway Energy, Inc. expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause Clearway Energy, Inc.’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect Clearway Energy, Inc.’s future results included in Clearway Energy, Inc.’s filings with the Securities and Exchange Commission at www.sec.gov. In addition, Clearway Energy, Inc. makes available free of charge at www.clearwayenergy.com, copies of materials it files with, or furnishes to, the SEC.

Appendix Table A-1: Three Months Ended June 30, 2019, Segment Adjusted EBITDA Reconciliation

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

Appendix Table A-2: Three Months Ended June 30, 2018, Segment Adjusted EBITDA Reconciliation

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

Appendix Table A-3: Six Months Ended June 30, 2019, Segment Adjusted EBITDA Reconciliation

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

Appendix Table A-4: Six Months Ended June 30, 2018, Segment Adjusted EBITDA Reconciliation

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

Appendix Table A-5: Cash Available for Distribution Reconciliation

The following table summarizes the calculation of Cash Available for Distribution and provides a reconciliation to Cash from Operating Activities: