Azure Power Global Limited (NYSE: AZRE), a leading independent solar power producer in India, today announcedits consolidated results under United States Generally Accepted Accounting Principles (“GAAP”) for the first quarter ended June 30, 2018.
First Quarter 2019 Period Ended June 30, 2018 Operating Highlights:
• Operating Megawatts were 1,011 MW, as of June 30, 2018, an increase of 31% over June 30, 2017.
• Operating & Committed Megawatts were 2,141 MW, as of June 30, 2018, an increase of 100% over June 30, 2017.
• Revenue for the quarter was INR 2,422.5 million (US$35.4 million), an increase of 29% over the quarter ended June 30, 2017.
• Adjusted EBITDA for the quarter was INR 1,955.7 million (US$28.6 million), an increase of 33% over the quarter ended June 30, 2017.
Key Operating Metrics
Electricity generation during the three months ended June 30, 2018 increased by 111 million kWh, or 38%, to 400.8 million kWh, compared to the same period in 2017. The increase in electricity generation was principally a result of additional capacity operating during the period.
Total revenue during the three months ended June 30, 2018 was INR 2,422.5 million (US$35.4 million), up 29% from INR 1,877.9 million during the same period in 2017. The increase in revenue was primarily driven by the commissioning of new projects.
Project cost per megawatt operating (megawatt capacity per the power purchase agreement) consists of costs incurred for one megawatt of new solar power plant capacity during the reporting period. The project cost per megawatt operating for the three months ended June 30, 2018 decreased by INR 5.38 million (US$0.08 million) to INR 44.3 million (US$0.65 million) primarily due to lower costs on account of the reduction in solar module prices for the projects commissioned during the period.
As of June 30, 2018, our operating and committed megawatts increased by 1,072 MW to 2,141 MW compared to June 30, 2017 as a result of winning new projects.
Nominal Contracted Payments
The Company’s PPAs create long-term recurring customer payments. Nominal contracted payments equal the sum of the estimated payments that the customer is likely to make, subject to discounts or rebates, over the remaining term of the PPAs. When calculating nominal contracted payments, the Company includes those PPAs for projects that are operating or committed.
The following table sets forth, with respect to our PPAs, the aggregate nominal contracted payments and total estimated energy output as of the reporting dates. These nominal contracted payments have not been discounted to arrive at the present value.
As of June 30,
INR INR US$
Nominal contracted payments (in thousands) 253,438,388 399,905,032 5,841,441
Total estimated energy output (kilowatt hours in millions) 44,358 97,192
Nominal contracted payments increased from June 30, 2017 to June 30, 2018 as a result of the Company entering into additional PPAs.
Portfolio Revenue Run-Rate
Portfolio revenue run-rate equals annualized payments from customers extrapolated based on the operating and committed capacity as of the reporting dates. In estimating the portfolio revenue run-rate, the Company multiplies the PPA contract price per kilowatt hour by the estimated annual energy output for all operating and committed solar projects as of the reporting date. The estimated annual energy output of the Company’s solar projects is calculated using power generation simulation software and validated by independent engineering firms. The main assumption used in the calculation is the project location, which enables the software to derive the estimated annual energy output from certain meteorological data, including the temperature and solar insolation based on the project location.
The following table sets forth, with respect to the Company’s PPAs, the aggregate portfolio revenue run-rate and estimated annual energy output as of the reporting dates. The portfolio revenue run-rate has not been discounted to arrive at the present value.
As of June 30,
INR INR US$
Portfolio revenue run-rate (in thousands) 11,005,761 17,538,553 256,187
Estimated annual energy output (kilowatt hours in millions) 1,921 4,200
Portfolio revenue run-rate increased by INR 6,532.8 million (US$95.4 million) to INR 17,538.6 million (US$256.2 million) as of June 30, 2018, as compared to June 30, 2017, due to an increase in operational and committed capacity.
First Quarter 2019 Period ended June 30, 2018 Consolidated Financial Results:
Operating revenue in the quarter ended June 30, 2018 was INR 2,422.5 million (US$35.4 million), an increase of 29% from INR 1,877.9 million over the same period in 2017. The increase in revenue was driven by the commissioning of new projects.
In May 2014, the FASB issued revised accounting guidance for revenue recognition from contracts with customers. The Company adopted this revised accounting guidance for interim and annual reporting periods beginning April 1, 2018 using the modified retrospective method. Upon adoption of the standard the Company recorded a cumulative-effect of a change in accounting principle as of April 1, 2018 to reduce its accumulated deficit by INR 218.4 million (US$3.2 million), related to changes in the timing of revenue recognition for certain contracts with its customers.
Cost of Operations
Cost of operations in the quarter ended June 30, 2018 increased by 26% to INR 218.2 million (US$3.2 million) from INR 173.5 million in the same period in 2017. The increase was primarily due to plant maintenance cost for newly commissioned projects.
General and Administrative Expenses
General and administrative expenses for the quarter ended June 30, 2018 increased by INR 13.6 million (US$0.02 million), to INR 248.7 million (US$3.6 million) compared to the same period in 2017. The general and administrative expenses did not increase significantly due to scale of operations during the three months ended June 30, 2018, as compared to previous comparable quarter in 2017.
Depreciation and Amortization Expenses
Depreciation and amortization expenses during the quarter ended June 30, 2018 increased by INR 133.9 million (US$2.0 million), or 32%, to INR 553.6 million (US$8.1 million) compared to the same period in 2017. The principal reason for the increase was capitalization of new projects during the period from June 30, 2017 to June 30, 2018.
Interest Expense, Net
Net interest expense during the quarter ended June 30, 2018 increased by INR 233.8 million (US$3.4 million), or 28%, to INR 1,073.4 million (US$15.7 million) compared to the same period in 2017. Interest expense increased on account of borrowings for new projects and was partially offset by the increased interest income on investments during the quarter ended June 30, 2018.
Gain / Loss on Foreign Currency Exchange
The Indian rupee depreciated against the U.S. dollar by INR 3.6 to US$ 1.00 (5.5%) during the period from March 31, 2018 to June 30, 2018. This depreciation during the period from March 31, 2018 to June 30, 2018 resulted in a foreign exchange loss of INR 204.2 million (US$3.0 million), compared to a marginal gain of INR 4.8 million during the same period in 2017.
Income Tax Expense / Benefit
The income tax expense increased during the quarter ended June 30, 2018 by INR 86.7 million (US$1.3 million) to INR 94.6 million (US$1.4 million), compared to income tax expense of INR 7.9 million in the same period in 2017.
Net Income/ Loss
The net income for the quarter ended June 30, 2018 was INR 29.8 million (US$0.4 million), as compared to a net income of INR 206.9 million for the quarter ended June 30, 2017, a decrease in net income by INR 177.1 million (US$2.6 million) as compared to the same period in 2017. This was primarily due to foreign exchange loss related to the depreciation of the Indian Rupee compared to the U.S. Dollar during the quarter ended June 30, 2018.
Cash Flow and Working Capital
Cash used in operating activities for the fiscal quarter ended June 30, 2018 was INR 749.6 million (US$11.0 million), INR 1,171.0 million (US$17.1 million) lower than the prior comparable period, primarily due to the repayment of INR 1,412.0 million (US$20.6 million) of interest accrued since August 2017 on the Solar Green Bonds during the current period.
Cash used in investing activities, for the fiscal quarter ended June 30, 2018 was INR 4,196.0 million (US$61.3 million), compared to INR 3,316.9 million for the prior comparable period, primarily on account of purchases of property plant and equipment for new projects amounting to INR 2,500.0 million (US$36.5 million) and an increase in cash available for future projects invested in short term investments for INR 1,705.6 million (US$24.9 million).
Cash generated from financing activities was INR 4,251.7 (US$62.1 million) for the fiscal quarter ended June 30, 2018, compared to INR 2,460.3 million for the prior comparable period.
As of June 30, 2018, the Company had INR 10,831.3 million (US$158.2 million) of cash, cash equivalents and current investments. The Company had undrawn project debt commitments of INR 12,629.9 million (US$184.5 million) as of June 30, 2018.
Adjusted EBITDA was INR 1,955.7 million (US$28.6 million) for the fiscal first quarter period ended 2019, compared to INR 1,469.3 million in the first quarter ended June 30, 2017. The increase was primarily due to the increase in revenue and economies of scale achieved during the period.
Guidance for Fiscal Year 2019
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. The Company continues to expect to have 1,300 – 1,400 MWs operational by March 31, 2019 and revenue between US$143 – 151 million for fiscal year ending March 31, 2019.
Webcast and Conference Call Information
The Company will hold its quarterly conference call to discuss earnings results on Thursday, August 9, 2018 at 8:30 a.m. US Eastern Time. The conference call can be accessed live by dialling 1-888-317-6003 (in the U.S.) and 1-412-317-6061 (outside the U.S.) and entering the passcode
This press release contains translations of certain Indian rupee amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise stated, the translation of Indian rupees into U.S. dollars has been made at INR 68.46 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York on June 29, 2018. The Company makes no representation that the Indian rupee or U.S. dollar amounts referred to in this press release could have been converted into U.S. dollars or Indian rupees, as the case may be, at any particular rate or at all.