Atlantica Sustainable Infrastructure (AY) 6-KCurrent report (foreign)

November 9, 2022 – Atlantica Sustainable Infrastructure plc (NASDAQ: AY) (“Atlantica” or the “Company”) today reported its financial results for the first nine months of 2022. Revenue for the first nine months of 2022 was $858.4 million, an 8.7% decrease compared with the first nine months of 2021 and a 4.9% increase on a comparable basis¹. Adjusted EBITDA was $630.6 million, a 0.6% decrease compared to the first nine months of 2021 and a 4.3% increase on a comparable basis¹. Net cash provided by operating activities reached $515.7 million in the first nine months of 2022, a 16.7% increase compared to the first nine months of 2021. CAFD was $179.0 million, a 6.2% increase compared with $168.5 million in the first nine months of 2021. CAFD per share² was $1.57, a 3.0% increase compared to the same period of the previous year.

Production in the renewable energy portfolio increased by 20% during the first nine months of 2022 compared with the first nine months of 2021 mainly due to the contribution from recent investments.

In our efficient natural gas and heat, transmission lines and water segments, where revenue is based on availability, we maintained very high availability levels.

As of September 30, 2022, cash at Atlantica’s corporate level was $105.8 million, compared with $88.3 million as of December 31, 2021. Additionally, as of September 30, 2022, the Company had $440.0 million available under its Revolving Credit Facility and therefore total corporate liquidity⁸ of $545.8 million, compared with $528.3 million as of December 31, 2021.

As of September 30, 2022, net project debt⁹ was $3.95 billion, compared with $4.50 billion as of December 31, 2021, while net corporate debt¹⁰ was $849.7 million, compared with $934.8 million as of December 31, 2021. As of September 30, 2022, the net corporate debt / CAFD pre-corporate debt service ratio¹¹ was 3.0x and the average corporate debt maturity stood at approximately 4.5 years, providing the Company with significant financial flexibility.

On November 8, 2022, the Board of Directors of Atlantica approved a dividend of $0.445 per share. This dividend is expected to be paid on December 15, 2022, to shareholders of record as of November 30, 2022.

Atlantica has committed approximately $150 million in new investments, including investments in standalone battery storage, solar PV with storage and other investments, including the prepayment of a tranche of project debt with higher cost.

Atlantica announced the construction of a battery storage system located inside its Coso geothermal plant in California, a project that the Company has been developing in-house. The battery system will have a capacity of 100 MWh (4 hours) and is expected to start operation in 2024. The expected investment represents an Enterprise Value¹² / EBITDA¹³ multiple of approximately 10 times. The project will benefit from the U.S. Inflation Reduction Act and from synergies with existing assets in the region.

This is the first project of a pipeline in the Southwest that includes 6 projects with a total 300 MW of PV and over 2,000 MWh of storage. The Southwest of the United States presents a clear opportunity for storage considering current renewable energy penetration and future objectives.

“We believe that the Inflation Reduction Act is going to be a game changer in the renewable energy sector in the U.S. We expect to build new projects on which we have been working during the last years and to continue building our pipeline,” said Santiago Seage, Chief Executive Officer of Atlantica. “As the energy transition accelerates, our experience with most renewable energy technologies and storage will be the key to offer clients and ISOs efficient clean energy solutions”.

In September 2022, Atlantica closed the acquisition of Chile PV 3, a 73 MW solar PV plant through its renewable energy platform in Chile. In 2023, the Company expects to add a battery system of approximately 100 MWh. Storage systems in Chile receive capacity payments, similar to resource adequacy. This asset can also benefit from synergies with existing assets in Chile. The acquisition represents an Enterprise Value¹⁴ / EBITDA¹⁵ multiple of approximately 6 times.

In addition, we have an exclusivity agreement to co-invest in an 80 MW portfolio of solar PV assets which is currently starting construction.

With its prudent financing and hedging policy, Atlantica should be well positioned against current market risks in the power sector:

Atlantica expects to close the year 2022 with CAFD in the range of the guidance provided in March 2022, which is between $230 million and $250 million.

The Company expects to achieve an Adjusted EBITDA modestly below the low end of its guidance, which was $810 million, mainly due to the impact from the depreciation of the euro against the U.S. dollar. This depreciation has not affected CAFD guidance as a result of the Company’s hedging strategy.

Atlantica’s CEO, Santiago Seage and CFO, Francisco Martinez-Davis, will hold a conference call and a webcast on Wednesday, November 9, 2022, at 8:15 am (New York time).

In order to access the conference call participants should dial: + 1-646-664-1960 (US), +44 (0) 20-3936-2999 (UK) or +1-613-699-6539 (Canada), followed by the confirmation code 836967. Atlantica advises participants to access the conference call at least 20 minutes in advance.

The senior management team will also hold meetings with investors on November 13, 14 and 15, at the Edison Electric Institute Financial Conference in Florida and on November 16, at the RBC Midstream and Energy Infrastructure Conference in Texas and at the BNP Paribas Exane 5^th MidCap CEO Conference in Paris. In order to schedule a meeting with Atlantica at the EEI Financial Conference, please send an email to ir@atlantica.com.

This press release contains forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this press release, including, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we operate or are seeking to operate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "guidance," "may,", "should" or "will" or the negative of such terms or other similar expressions or terminology.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements speak only as of the date of this press release and are not guarantees of future performance and are based on numerous assumptions. Our actual results of operations, financial condition and the development of events may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements. Except as required by law, we do not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect anticipated or unanticipated events or circumstances.

Investors should read the section entitled "Item 3.D—Risk Factors" and the description of our segments and business sectors in the section entitled "Item 4.B. Information on the Company—Business Overview", each in our Annual Report on Form 20-F for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”), for a more complete discussion of the risks and factors that could affect us.

Forward-looking statements include, but are not limited to, statements relating to:  new investments and projects, including their expected development, completion,  commercial operations date, expected financial and operating performance (including enterprise value to EBITDA multiples), as well as statements with respect to potential acquisitions; expected output capacity, anticipated synergies and market dynamics relating to such investments and projects; the Inflation Reduction Act in the U.S (“IRA”) and benefits thereunder; our anticipated limited exposure to current market risks, including our position with respect current market risks and the potential impact from foreign exchange rates and interest rates on CAFD; the  impact from potential caps on market prices in the net value of our assets; taxes on energy companies in Spain; equity investments;  estimates and targets; escalation factors in relation to inflation; net corporate leverage based on CAFD estimates; financial flexibility; the use of non-GAAP measures as a useful predicting tool for investors; and various other factors, including those factors discussed under “Item 3.D—Risk Factors” and “Item 5.A—Operating Results” in our Annual Report on Form 20-F for the year ended December 31, 2021 filed with the SEC.

The 2022 CAFD and 2022 Adjusted EBITDA referred to in section “2022 Guidance” are estimates as of November 9, 2022. These estimates are based on assumptions believed to be reasonable as of the date Atlantica published its third quarter 2022 Financial Results. Atlantica disclaims any current intention to update such guidance, except as required by law.

This press release also includes certain non-GAAP financial measures, including Adjusted EBITDA, CAFD and CAFD per share and Enterprise Value to EBITDA. Non-GAAP financial measures are not measurements of our performance or liquidity under IFRS as issued by IASB and should not be considered alternatives to operating profit or profit for the period or net cash provided by operating activities or any other performance measures derived in accordance with IFRS as issued by the IASB or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. Please refer to the appendix of this press release for a reconciliation of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with IFRS. Also, please refer to the following paragraphs in this section for an explanation of the reasons why management believes the use of non-GAAP financial measures (including CAFD, CAFD per share, Adjusted EBITDA and enterprise value to EBITDA) in this press release provides useful information to investors.

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-GAAP financial measures may not be comparable to other similarly titled measures employed by other companies and may have limitations as analytical tools. These measures may not be fit for isolated consideration or as a substitute for analysis of our operating results as reported under IFRS as issued by the IASB. Non-GAAP financial measures and ratios are not measurements of our performance or liquidity under IFRS as issued by the IASB. Thus, they should not be considered as alternatives to operating profit, profit for the period, any other performance measures derived in accordance with IFRS as issued by the IASB, any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. Some of the limitations of these non-GAAP measures are:

We define Adjusted EBITDA as profit/(loss) for the period attributable to the Company, after previously adding back loss/(profit) attributable to non-controlling interest, income tax, finance expense net, depreciation, amortization and impairment charges of entities included in the consolidated financial statements and including depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro rata of our equity ownership). Until September 30, 2021, Adjusted EBITDA excluded share of profit/(loss) of associates carried under the equity method and did not include depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). Prior periods have been presented accordingly.

CAFD is calculated as cash distributions received by the Company from its subsidiaries minus cash expenses of the Company, including debt service and general and administrative expenses. CAFD per share is calculated as CAFD divided by the weighted average number of outstanding ordinary shares of the Company during the period (114,236,482 for the nine-months ended on September 30, 2022, and 110,749,202 for September 30, 2021).

We define enterprise value to EBITDA as an investment's enterprise value divided by its earnings before interest, taxes, depreciation, and amortization.

Our management believes Adjusted EBITDA, CAFD and CAFD per share are useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.

Our management believes CAFD and CAFD per share are relevant supplemental measurements of the Company’s ability to earn and distribute cash returns to investors and are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of our ability to make quarterly distributions. In addition, CAFD and CAFD per share are used by our management team for determining future acquisitions and managing our growth. Adjusted EBITDA, CAFD, CAFD per share and enterprise value to EBITDA are widely used by other companies in the same industry.

Our management believes enterprise value to EBITDA is a useful valuation tool widely used by investors when evaluating transactions as it compares the investment's value to its earnings before interest, taxes, depreciation, and amortization.

Our management uses Adjusted EBITDA, CAFD, CAFD per share and enterprise value to EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis moving forward. They also readily view operating trends as a measure for planning and forecasting overall expectations, for evaluating actual results against such expectations, and for communicating with our board of directors, shareholders, creditors, analysts and investors concerning our financial performance.

In our discussion of operating results, we have included foreign exchange impacts in our revenue and Adjusted EBITDA by providing constant currency growth. The constant currency presentation is not a measure recognized under IFRS and excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations. We calculate constant currency amounts by converting our current period local currency revenue and Adjusted EBITDA using the prior period foreign currency average exchange rates and comparing these adjusted amounts to our prior period reported results. This calculation may differ from similarly titled measures used by others and, accordingly, the constant currency presentation is not meant to substitute for recorded amounts presented in conformity with IFRS as issued by the IASB nor should such amounts be considered in isolation.

Information presented as the pro-rata share of our unconsolidated affiliates reflects our proportionate ownership of each asset in our property portfolio that we do not consolidate and has been calculated by multiplying our unconsolidated affiliates’ financial statement line items by our percentage ownership thereto. Note 7 to our consolidated financial statements as of and for the period ended September 30, 2022 includes a description of our unconsolidated affiliates and our pro rata share thereof. We do not control the unconsolidated affiliates. Multiplying our unconsolidated affiliates’ financial statement line items by our percentage ownership may not accurately represent the legal and economic implications of holding a non-controlling interest in an unconsolidated affiliate. We include pro-rata share of depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates because we believe it assists investors in estimating the effect of such items in the profit/(loss) of associates carried under the equity method (which is included in the calculation of our Adjusted EBITDA) based on our economic interest in such unconsolidated affiliates. Each unconsolidated affiliate may report a specific line item in its financial statements in a different manner. In addition, other companies in our industry may calculate their proportionate interest in unconsolidated affiliates differently than we do, limiting the usefulness of such information as a comparative measure. Because of these limitations, the information presented as the pro-rata share of our unconsolidated affiliates should not be considered in isolation or as a substitute for our or such unconsolidated affiliates’ financial statements as reported under applicable accounting principles.

Atlantica Sustainable Infrastructure plc is a sustainable infrastructure company that owns a diversified portfolio of contracted renewable energy, storage, efficient natural gas, electric transmission and water assets in North & South America, and certain markets in EMEA (www.atlantica.com).