Brookfield Renewable Announces Record Third Quarter Results
All amounts in U.S. dollars unless otherwise indicated
BROOKFIELD, News, Nov. 08, 2024 (GLOBE NEWSWIRE) -- Brookfield Renewable Partners L.P. (TSX:BEP, NYSE:BEP) ("Brookfield Renewable Partners", "BEP") today reported financial results for the three and nine months ended September 30, 2024.
"We had another successful quarter highlighted by agreements to monetize several assets, crystallizing strong returns and generating significant funds to deploy into future growth. We also signed numerous favorable large-scale contracts within our North American hydro portfolio during the quarter that will enable us to execute upfinancings providing additional capital to invest in the current attractive environment," said Connor Teskey, CEO of Brookfield Renewable. "These initiatives continue to demonstrate our sustainable funding model and are enabling us to take advantage of an increasingly strong back-drop for clean power. The tailwinds for renewables continue to be driven by accelerating corporate demand, primarily from the global technology players to enable their data center and AI development. Our scale and geographically and technologically diversified business is uniquely positioned to meet this growing need in all political environments."
For the three months endedSeptember 30
For the nine months endedSeptember 30
US$ millions (except per unit amounts), unaudited
2024
2023
2024
2023
Net income (loss) attributable to Unitholders
$
(181
)
$
(64
)
$
(455
)
$
(135
)
– per LP unit(1)
(0.32
)
(0.14
)
(0.83
)
(0.34
)
Funds From Operations (FFO)(2)
278
253
913
840
– per Unit(2)(3)
0.42
0.38
1.38
1.29
Brookfield Renewable reported FFO of $278 million in the quarter, or $0.42 per unit representing an 11% increase compared to the prior year, benefiting from asset development, recent acquisitions, and strong all-in pricing. After deducting non-cash depreciation and other expenses including marking-to-market on certain hedging instruments, our Net loss attributable to Unitholders for the three months ended September 30, 2024 was $181 million.
Key highlights:
Deployed, or committed to deploy $2.3 billion of capital ($500 million net to Brookfield Renewable).
Commissioned ~1,200 megawatts of new renewable energy capacity in the quarter and continue to advance a record ~7,000 megawatts for the year in total.
Reached new agreements to sell assets this quarter, bringing our year-to-date proceeds from asset sales to over $2.3 billion ($1 billion net to Brookfield Renewable) and generating a ~25% IRR and a 2.5 times multiple on invested capital.
Advanced commercial initiatives securing contracts to deliver an incremental 6,100-gigawatt hours per year of generation, including favorable contracts at our hydro facilities which are expected to result in up to $500 million of upfinancing proceeds.
Our best-in-class balance sheet continues to get stronger with $4.6 billion of available liquidity.
Proven full-cycle value generation
We underwrite our investments on a hold to maturity basis to deliver our target 12-15% returns. However, we can often enhance these returns by monetizing mature assets to buyers with a lower cost of capital, who value the long-life, derisked, infrastructure-like cash flows of renewable power projects. Asset recycling also represents a highly accretive way to fund our business and contributes to our sustainable self-funding model.
Important to successful asset monetizations is the strength of our balance sheet, which enables us to be patient and sell assets when markets are constructive. Throughout 2024, we have seen a very robust bid for high-quality, cash-generative operating platforms, particularly those that have a growth angle. Against this market demand, we have been successful recycling capital from our existing asset base at returns significantly above our targets. While every investment is different, in each case, these results were driven by acquiring for value, improving the assets through the execution of our business plan, and monetizing opportunistically for fair value.
To date this year, we have executed transactions generating ~$2.3 billion of proceeds resulting in returns of 2.5 times our invested capital. These transactions demonstrate strong appetite for contracted, high quality operating assets and the value of having a long and accomplished track record in building, developing, and enhancing renewable power businesses.
In September, we reached an agreement to sell Saeta, which we acquired in 2018 during a period of market uncertainty that created an attractive value entry point. Following the acquisition, we executed our business plan divesting non-core assets, enhancing the operations, optimizing the capital structure, and establishing a corporate development function that was successful in creating organic growth in the business.
We agreed to sell the company, excluding the 350-megawatts of concentrated solar power assets, to a leading global renewable energy company as part of their strategic entry into the Iberian region for an equity value of $730 million ($430 million net to Brookfield Renewable). With the sale, we will generate total proceeds of 3.0 times our invested capital over a six-year hold period, crystalizing strong returns for our shareholders.
In 2017 we acquired a 25% interest in First Hydro, the leading U.K. hydro business, recognizing an opportunity to use our experience in owning and operating hydro assets for decades to implement several value generative initiatives. Upon acquisition, First Hydro completed a refurbishment that extended the life of the pumped storage facilities by over 40 years, and we enhanced the commercial strategy, resulting in record earnings. In September, we reached an agreement to sell our interest in First Hydro for $350 million ($100 million net to Brookfield Renewable) generating over 3.5 times our invested capital since acquisition, and are delivering the buyer a highly strategic asset that will continue to provide critical grid services for decades to come.
During the quarter, we also agreed to sell a 50% interest in our Shepherds Flat wind portfolio where we executed one of the largest wind repowering projects globally, increasing generation by ~25% and extending the asset's useful life by approximately ten years. On closing we will generate almost 2.0 times our invested capital on the portion sold for $415 million (~$105 million net to Brookfield Renewable), while still retaining a 50% interest and operating the asset.
We are now one of the leading renewable energy operators and developers in India, having prudently built our regional presence since entering the market in 2017, off the back of the broader Brookfield business in the country. In November, we signed an agreement to complete our first full cycle investment in the country by selling a ~1,600-megawatt portfolio of operating and under construction wind and solar assets to a large renewable player at our target returns. The closing of this transaction is expected to occur in parts in the first quarter of 2025 and 2026 and is subject to customary closing conditions.
It continues to be both a seller's and a buyer's market
2024 will be our largest year for investments into growth, with over $11 billion of equity (almost $1.5 billion net to Brookfield Renewable) committed and deployed year to date, and for proceeds from asset recycling. We recognize that some may question how a market can be attractive for deployment and monetization at the same time. While every transaction has its own dynamics and there will be exceptions to any broad-based generalizations, we see a simple bifurcation in the current market—high-quality, derisked and cash-generative assets are seeing very strong bids, while large businesses with ongoing capital needs for development and construction are seeing a scarcity of capital to fund their growth pipelines.
This creates a tremendous opportunity for those equipped to deploy capital at attractive value entry points to acquire growing businesses or fund existing operations. This constructive environment also allows us to monetize more mature assets and recycle the proceeds back into accretive new investments under an attractive and high-returning self-funding model.
Recently we agreed to partner with Ørsted, a global leader in offshore wind, to acquire a 12% interest in a portfolio of ~3,500 megawatts of operating capacity in the U.K. for an enterprise value of ~$2.3 billion (~$570 million net to Brookfield Renewable).
The portfolio is secured with long-term, government backed, inflation-linked contracts for difference and approximately 90% of operating costs fixed through long-term O&M, transmission and lease contracts, and comes with no development or construction risk. We are thrilled to partner with Ørsted, a global leader in offshore wind, who will continue to own a 38% interest and operate the portfolio, which we expect to generate returns in-line with our targets.
We also announced a strategic partnership with a leading eFuels manufacturer, Infinium, to invest up to $1.1 billion ($220 million net to Brookfield Renewable). We will fund $200 million upfront for the construction of a production facility in West Texas with capacity fully-contracted to leading global airlines on a take-or-pay basis, and we will be granted the exclusive right to invest up to $850 million in future projects that meet our investment criteria. Our investment is structured to provide strong downside return protection while offering exposure to the growth of one of the world's leading producers of sustainable aviation fuel, an ultra-low carbon intensity drop-in fuel.
Operating Results
We generated FFO of $278 million this quarter, or $0.42 per unit, up 11% from the prior year, benefiting from asset development, recent acquisitions, and strong all-in pricing. With an increasingly diversified portfolio of operating assets, limited off-taker concentration risk, and a strong contract profile, our cash flows are highly resilient. On the back of our strong results year to date, and our outlook for the remainder of the year, we continue to expect to achieve our 10%+ FFO per unit growth target for 2024.
Our hydroelectric segment delivered FFO of $96 million, benefiting from solid generation, particularly from our U.S. and Colombian fleets. We continue to see strong demand for our hydro generation and were successful executing two favorable contracts with U.S. utilities this quarter which are expected to result in upfinancing proceeds of up to $500 million, which when redeployed at our target returns, is expected to generate meaningful incremental annual FFO for the business.
With an additional 6,000 GWh of generation available for recontracting over the next five years, and an increasingly constructive pricing environment for our hydro portfolio, we have significant capacity across our fleet to execute on similar contracts that we expect to contribute additional FFO and generate a highly accretive funding source for our growth.
Our wind and solar segments generated a combined $207 million of FFO, up significantly year-over-year on our recent acquisitions. Our distributed energy, storage, and sustainable solutions segments generated a combined $115 million of FFO, with solid results from Westinghouse which has strong tailwinds to its business, and growth in our distributed generation business.
We continued to grow and advance our development pipeline which now stands at 200,000 megawatts with 65,000 megawatts at the advanced stage. We expect to commission ~7,000 megawatts this year, a record for our business, adding approximately $90 million of annual incremental FFO. We expect to deliver 8,400 megawatts in 2025 and 9,100 megawatts in 2026 as we continue to scale our development activities in-line with our growing capabilities and global footprint.
Balance Sheet & Liquidity
We have $4.6 billion of available liquidity and our sustainable funding model is working well. Our business continues to see tremendous access to capital, reflected by our proceeds from asset recycling, upfinancings, and the growth in our durable operating cash flows.
We expect to execute ~$30 billion of financings this year generating almost $700 million in upfinancing proceeds and have strong visibility to continue generating significant capital via this lever going forward.
Distribution Declaration
The next quarterly distribution in the amount of $0.355 per LP unit, is payable on December 31, 2024 to unitholders of record as at the close of business on November 29, 2024. In conjunction with the Partnership's distribution declaration, the Board of Directors of BEPC has declared an equivalent quarterly dividend of $0.355 per share, also payable on December 31, 2024 to shareholders of record as at the close of business on November 29, 2024. Brookfield Renewable targets a sustainable distribution with increases targeted on average at 5% to 9% annually.
The previously announced proposed reorganization of BEPC, which is expected to be completed in December 2024, will not impact the payment of this dividend on December 31, 2024 to BEPC shareholders of record as at the close of business on November 29, 2024. After completion of the reorganization, it is expected that quarterly dividends will be declared and paid on the new shares held by BEPC shareholders at the same time as quarterly distributions are declared and paid to unitholders.
The quarterly dividends on BEP's preferred shares and preferred LP units have also been declared.
Distribution Currency Option
The quarterly distributions payable on the BEP units and BEPC shares are declared in U.S. dollars. Unitholders who are residents in the United States will receive payment in U.S. dollars and unitholders who are residents in Canada will receive the Canadian dollar equivalent unless they request otherwise. The Canadian dollar equivalent of the quarterly distribution will be based on the Bank of Canada daily average exchange rate on the record date or, if the record date falls on a weekend or holiday, on the Bank of Canada daily average exchange rate of the preceding business day.
Registered unitholders who are residents in Canada who wish to receive a U.S. dollar distribution and registered unitholders who are residents in the United States wishing to receive the Canadian dollar distribution equivalent should contact Brookfield Renewable's transfer agent, Computershare Trust Company of Canada, in writing at 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1 or by phone at 1-800-564-6253. Beneficial unitholders (i.e., those holding their units in street name with their brokerage) should contact the broker with whom their units are held.
Distribution Reinvestment Plan
Brookfield Renewable Partners maintains a Distribution Reinvestment Plan ("DRIP") which allows holders of BEP units who are residents in Canada to acquire additional LP units by reinvesting all or a portion of their cash distributions without paying commissions. Information on the DRIP, including details on how to enroll, is available on our website at www.bep.brookfield.com/stock-and-distribution/distributions/drip.
Additional information on Brookfield Renewable's distributions and preferred share dividends can be found on our website at www.bep.brookfield.com.
Brookfield Renewable
Brookfield Renewable operates one of the world's largest publicly traded platforms for renewable power and sustainable solutions. Our renewable power portfolio consists of hydroelectric, wind, utility-scale solar, distributed generation and storage facilities in North America, South America, Europe and Asia. Our operating capacity totals over 35,000 megawatts and our development pipeline stands at approximately 200,000 megawatts. Our portfolio of sustainable solutions assets includes our investments in Westinghouse (a leading global nuclear services business) and a utility and independent power producer with operations in the Caribbean and Latin America, as well as both operating assets and a development pipeline of carbon capture and storage capacity, agricultural renewable natural gas and materials recycling.
Investors can access the portfolio either through Brookfield Renewable Partners L.P. (NYSE:BEP, TSX:BEP), a Bermuda-based limited partnership, or Brookfield Renewable Corporation ((NYSE, TSX:BEPC), a Canadian corporation. Further information is available at https://bep.brookfield.com. Important information may be disseminated exclusively via the website; investors should consult the site to access this information.
Brookfield Renewable is the flagship listed renewable power and transition company of Brookfield Asset Management, a leading global alternative asset manager with over $1 trillion of assets under management.
Please note that Brookfield Renewable's previous audited annual and unaudited quarterly reports filed with the U.S. Securities and Exchange Commission ("SEC") and securities regulators in Canada, are available on our website at https://bep.brookfield.com, on SEC's website at www.sec.gov and on SEDAR+'s website at www.sedarplus.ca. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.
Contact information:
Media:
Investors:
Simon Maine
Alex Jackson
Managing Director, Communications
Vice President, Investor Relations
+44 (0)7398 909 278
(416)-649-8196
Quarterly Earnings Call Details
Investors, analysts and other interested parties can access Brookfield Renewable's Third Quarter 2024 Results as well as the Letter to Unitholders and Supplemental Information on Brookfield Renewable's website at https://bep.brookfield.com.
The conference call can be accessed via webcast on November 8, 2024 at 8:30 a.m. Eastern Time at https://edge.media-server.com/mmc/p/rj46tx5d/
Brookfield Renewable Partners L.P.
Consolidated Statements of Financial Position
As of
UNAUDITED(MILLIONS)
September 30
December 31
2024
2023
Assets
Cash and cash equivalents
$
1,266
$
1,141
Trade receivables and other financial assets(5)
4,541
5,237
Equity-accounted investments
2,178
2,546
Property, plant and equipment, at fair value and Goodwill
63,371
65,949
Deferred income tax and other assets(6)
3,817
1,255
Total Assets
$
75,173
$
76,128
Liabilities
Corporate borrowings(7)
$
4,160
$
2,833
Borrowings which have recourse only to assets they finance(8)
25,307
26,869
Accounts payable and other liabilities(9)
10,976
9,273
Deferred income tax liabilities
6,777
7,174
Equity
Non-controlling interests
Participating non-controlling interests, in operating subsidiaries
$
18,471
$
18,863
General partnership interest in a holding subsidiary held by Brookfield
45
55
Participating non-controlling interests, in a holding subsidiary, Redeemable/Exchangeable units held by Brookfield
2,211
2,684
BEPC exchangeable shares
2,042
2,479
Preferred equity
571
583
Perpetual subordinated notes
738
592
Preferred limited partners' equity
634
760
Limited partners' equity
3,241
27,953
3,963
29,979
Total Liabilities and Equity
$
75,173
$
76,128
Brookfield Renewable Partners L.P.
Consolidated Statements of Operating Results
UNAUDITED
For the three months endedSeptember 30
For the nine months endedSeptember 30
(MILLIONS, EXCEPT AS NOTED)
2024
2023
2024
2023
Revenues
$
1,470
$
1,179
$
4,444
$
3,715
Other income
155
116
251
203
Direct operating costs(10)
(623
)
(496
)
(1,875
)
(1,322
)
Management service costs
(59
)
(43
)
(157
)
(155
)
Interest expense
(514
)
(370
)
(1,479
)
(1,166
)
Share of earnings (loss) from equity-accounted investments
(12
)
—
(70
)
46
Foreign exchange and financial instrument gain
186
114
422
432
Depreciation
(514
)
(448
)
(1,533
)
(1,335
)
Other
(137
)
(7
)
(176
)
(2
)
Income tax recovery (expense)
Current
38
(9
)
(6
)
(89
)
Deferred
(29
)
(12
)
(18
)
25
Net income (loss)
$
(39
)
$
24
$
(197
)
$
352
Net income attributable to preferred equity, preferred limited partners' equity, perpetual subordinated notes and non-controlling interests in operating subsidiaries
$
(142
)
$
(88
)
$
(258
)
$
(487
)
Net loss attributable to Unitholders
(181
)
(64
)
(455
)
(135
)
Basic and diluted loss per LP unit
$
(0.32
)
$
(0.14
)
$
(0.83
)
$
(0.34
)
Brookfield Renewable Partners L.P.
Consolidated Statements of Cash Flows
UNAUDITED
For the three months endedSeptember 30
For the nine months endedSeptember 30
(MILLIONS)
2024
2023
2024
2023
Operating activities
Net income (loss)
$
(39
)
$
24
$
(197
)
$
352
Adjustments for the following non-cash items:
Depreciation
514
448
1,533
1,335
Unrealized foreign exchange and financial instrument gain
(211
)
(144
)
(450
)
(410
)
Share of (earnings) loss from equity-accounted investments
12
—
70
(46
)
Deferred income tax expense (recovery)
29
12
18
(25
)
Other non-cash items
70
(62
)
163
(48
)
375
278
1,137
1,158
Net change in working capital and other(11)
123
85
(84
)
250
498
363
1,053
1,408
Financing activities
Net corporate borrowings
289
—
586
293
Corporate credit facilities, net
(200
)
—
100
—
Non-recourse borrowings, commercial paper, and related party borrowings, net
683
166
2,095
(890
)
Capital contributions from participating non-controlling interests, in operating subsidiaries, net
236
371
525
1,952
Issuance of equity instruments, net and related costs
—
(12
)
(37
)
618
Distributions paid:
To participating non-controlling interests - in operating subsidiaries
(169
)
(265
)
(570
)
(714
)
To unitholders of Brookfield Renewable or BRELP
(267
)
(250
)
(798
)
(739
)
572
10
1,901
520
Investing activities
Acquisitions net of cash and cash equivalents in acquired entity
(98
)
—
(109
)
(87
)
Investment in property, plant and equipment
(918
)
(604
)
(2,578
)
(1,660
)
Disposal (purchase) of associates and other assets
64
87
16
(131
)
Restricted cash and other
(58
)
(13
)
(68
)
(28
)
(1,010
)
(530
)
(2,739
)
(1,906
)
Foreign exchange gain (loss) on cash
16
(16
)
(28
)
14
Cash and cash equivalents
Increase (decrease)
76
(173
)
187
36
Net change in cash classified within assets held for sale
(46
)
5
(62
)
—
Balance, beginning of period
1,236
1,202
1,141
998
Balance, end of period
$
1,266
$
1,034
$
1,266
$
1,034
PROPORTIONATE RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30
The following chart reflects the generation and summary financial figures on a proportionate basis for the three months ended September 30:
(GWh)
(MILLIONS)
Actual Generation
LTA Generation
Revenues
Adjusted EBITDA
FFO
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Hydroelectric
North America
2,333
2,543
2,449
2,445
$
208
$
221
$
116
$
138
$
44
$
75
Brazil
862
813
1,032
1,035
48
62
33
45
28
38
Colombia
810
705
886
892
87
74
50
39
24
16
4,005
4,061
4,367
4,372
343
357
199
222
96
