8point3 reports beats Q4 guidance, ups dividends

8point3 may lose its right of first offer for the El Pelicano PV plant in Chile, but is acquiring other projects.

Yieldco 8point3 Energy Partners (NASDAQ: CAFD) has reported strong results for the fourth quarter of 2016, as it continues to increase dividend payments and acquires stakes in more projects. The company reported quarterly revenue of $14.5 million, at the top end of its guidance, and instead of a loss $4.2 million in net income.

This helped the company narrowly beat its revenue guidance for the full year with $61.2 million, and place well above its net income guidance at $12.9 million. The company also reported $20.4 million in cash available for distribution (CAFD) at the end of Q4, despite having to defer $6 million in CAFD to Q1 2017.

Along the way the company completed acquisition of SunPower’s 49% stake in the 102 MW Henrietta project, First Solar’s 34% stake in the 300 MW Stateline project, and the third phase of the 21 MW Kern Project. Henrietta and Stateline are expected to bring in $43 million in annual distributions over 20-year contract lives, and this brings 8point3’s portfolio to interest in 942 MW of solar projects.

However, the company’s sponsors have proposed pulling the 100 MW El Pelicano project in Chile and 179 MW Switch Station projects from 8point3’s right of first offer  portfolio, as they do not expect 8point3 to acquire these projects within a year’s time.  The board of director’s committee is currently reviewing these requests.

“As we have stated many times in the past, adjustments to the ROFO provide us with much needed flexibility and better match potential dropdown timing with our long-term growth plans,” noted CEO Chuck Boynton during the company’s quarterly earnings call.

These positive numbers have been accompanied by an increase in quarterly dividends. The company’s Q4 dividend payment earlier this month rose 3.5% to $0.2490 per share, its sixth consecutive quarterly increase in distributions. The yieldco expects this to increase another 3% in Q1 to $0.2565 per share, and expects to grow distributions 12% over the course of 2017.

For the first quarter of 2017, 8point3 is forecasting revenue of $8.3-98 million, but a net loss of $5.6-6.4 million, with around $20 million in CAFD. Over the full year 8point3 expects $63-67 million in revenue, a net income of $27-33 million, and CAFD to $91-101 million.

Despite these promising numbers, it may not be all roses going forward. “While we have seen some improvement in the market related to the yield co industry over the last quarter, the overall dynamics remain somewhat challenging as investors evaluate the effect of rising interest rates and the potential impact of the current administration,” stated CEO Boynton. “Also, as a solar-only yieldco, we’re currently managing our business through a transition phase in the solar industry.”

“We believe these factors are contributing to a sustained higher than expected yield profile for 8point3, despite the fact that our solar contracts average 20 years, with primarily investment grade offtakes generating long-term predictable cash flows. In simple terms, we are currently not getting rewarded for high growth at this point. As a result, we are currently reviewing a number of options to properly position ourselves for success in this environment.”