8point3 Energy Partners delivers strong & steady Q3 results

Sunpower and First Solar’s joint yieldco beat guidance this quarter, while announcing a significant acquisition and $250 million in additional credit.

September 21, 2016 Christian Roselund

Image: First Solar

8point3 Energy Partners has presented itself as the most conservatively run company among solar yieldcos, and the company’s Q3 results appear to support that assertion. During the quarter 8point3 reported solid income, profit and dividends, while acquiring more projects and significantly expanding its credit.

8point3 brought in Q3 revenue of $26 million, net income of $16 million and cash available for distribution (CAFD) of $24 million. The company also claims $33 million in adjusted EBITDA.

With these strong results, 8point3 will pay out a dividend of $0.241 per share in early October, which it expects to increase to $0.249 per share in Q4.

The yieldco has also agreed to acquire a 49% stake in the 102 MW-AC Henrietta Solar Project from SunPower, which built Henrietta. This will require $134 million in cash, and 8point3 says the acquisition will be funded through a potential combination of cash, credit facility and equity issuance.

Concurrently, 8point3 announced that the sponsors of its existing $100 million five-year credit facility have agreed to expand this facility by $250 million, which will bring in extra liquidity for the acquisition. $150 million of this will come from BofA Merrill Lynch and Wells Fargo.

At the end of Q3 8point3 had only $131 million in liquidity, including $30 million in cash an $101 million in its credit facility, but this will rise to $381 million when the additional financing closes.

“With closing of our $250 million accordion credit facility, we will be well positioned to acquire additional projects as well as have sufficient resources to fund future growth,” notes 8point3 Chief Financial Officer Bryan Schumaker.

No date is set for the close of financing, but 8point3 expects to close on the acquisition of Henrietta on or about September 30. The company expects Henrietta to bring in $11 million in cash annually, and the project holds a 20-year power contract with California utility PG&E.

However, 8point3 expects Henrietta to deliver even after the PPA ends. “Given the quality and durability of this project, we expect it to deliver clean energy for decades to come even after the end of the PPA term,” said CEO Charles Boynton on the company’s earnings call.

Like all of the projects in 8point3’s portfolio, Henrietta carries no project-level debt, in line with the yieldco’s conservative approach to acquisitions.

8point3 is moving slowly and carefully with acquisitions. During the quarter the company added 5 MW-AC of projects at Macy’s and the 280 MW-AC California Flats project to its Right of First Offer (ROFO) list, but removed the 250 MW-AC Moapa solar project in Nevada.

This means a net increase of only 35 MW-AC to ROFO projects, which currently stand at 1.13 GW. Like the assets 8point3 owns an interest in, nearly all are located in California, with a minority in Maryland and other locations including ROFO projects in Japan and Chile.

The bulk are also utility-scale, but the yieldco also owns a minority of C&I projects and 39 MW of residential assets.

For Q4, 8point3 is anticipating revenue to fall to $13.5-$14.5 million, a net loss of up to $1 million, but CAFD of $22 million and to increase its distribution per share to $0.249. Over the full year the yieldco is expecting revenue of $60-61 million, net income of $7.7-8.7 million and CAFD to $74.8-76.8 million.

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