- Second quarter included historic operational expansion.
- Company reports results in new financial statement presentation due to the acquisition of its external advisor.
- Greenbacker: An Independent Power Producer and an Investment Manager.
New York, NY, November 23, 2022 — Greenbacker Renewable Energy Company LLC (“Greenbacker,” “GREC,” or the “Company”), an independent power producer and a leading climate-focused investment manager, has announced financial results for the second quarter of 2022.
Second quarter included historic operational expansion
The Company’s previously released second quarter operating results noted record year-over-year growth in several aspects of the business. These included doubling GREC’s operating capacity to over 1,200 megawatts (“MW”), growing its total clean–energy production by 82%, and adding 123 new assets to its fleet of renewable energy projects.
Table 1 summarizes Greenbacker’s year-over-year operational portfolio expansion. Table 2 shows significant increases in the amount of power the Company produced during the three- and six-month periods ended June 30, 2022, as well as on a year-over-year basis, broken down by generating technology.
|GREC Portfolio Metrics||June 30, 2022||June 30, 2021||Change||Change as %|
|Power-production capacity of operating fleet at end of period||1.2 GW||608.6 MW||607.4 MW||100%|
|Power-generating capacity of pre-operational fleet at end of period||1.6 GW||1.5 GW||0.2 GW||11%|
|Total power-generating capacity of fleet at end of period||2.9 GW||2.1 GW||0.8 GW||37%|
|Total energy produced (MWh)||656,125||360,941||295,184||82%|
|YTD total energy produced at end of period (MWh)||1,161,792||685,411||476,381||70%|
|Total number of fleet assets at end of period||425||302||123||41%|
|MWh by Technology||Three months ended June 30, 2022||Six months ended June 30, 2022||Three months ended June 30, 2021||Six months ended June 30, 2021||YoY change for three months ended June 30||YoY change for six months ended June 30|
Company reports results in new financial statement presentation due to the acquisition of its external advisor
As previously announced, on May 19, 2022, the Company completed the acquisition of Greenbacker Capital Management LLC (“GCM”) and certain other affiliated companies (the “Acquisition”). As a result of the Acquisition, the Company now operates as a fully integrated and internally managed company with its own executive management team and other employees to manage its business and operations.
As a result of the Acquisition and other steps taken by the Company to transition the Company’s business from mostly an investor in clean energy projects to a diversified independent power producer coupled with an investment management business, the Company was required to transition the basis of its accounting. Since inception, the Company’s historical financial statements had been prepared using the investment company basis of accounting in accordance with ASC Topic 946, Financial Services – Investment Companies.
Since the Acquisition and accounting change occurred during the Company’s second fiscal quarter, financial results for the period April 1, 2022 through May 18, 2022 are presented in accordance with historical investment company basis of accounting, and financial results for the period from May 19, 2022 through June 30, 2022 are presented under non-investment company accounting guidance. Given that the financial information is not comparable, the Company included its consolidated financial statements for both time periods.
This change to the financial statement presentation reflects the next step in Greenbacker’s evolution, enabling the Company to enhance and align the financial transparency of its operating results to both the underlying drivers of performance, as included herein, as well as the comparability to similar renewable energy and investment management businesses. Greenbacker believes that as it executes its strategy of owning and operating renewable energy assets as an IPP—while also expanding its investment management business —this update to the Company’s financial presentation will better align with its business activities.
Greenbacker: An Independent Power Producer and an Investment Manager
Financial information will now be presented for the Company’s two operating segments: Independent Power Producer and Investment Management. Included in the Company’s second quarter quarterly report on Form 10-Q are discrete financial results and analysis for the two segments, as well as information regarding corporate functions.
We believe that reporting financial results and the key performance indicators of the Independent Power Producer and Investment Management segments will provide our investors with a better understanding of how our business is progressing and how our strategy creates value for our shareholders.
Independent Power Producer (“IPP”)
Our Independent Power Producer segment is comprised of the acquisition of and active management and operations of renewable energy assets, including those that are currently pre-operational.
As of June 30, 2022, our IPP fleet includes 425 renewable energy assets which represent an aggregate power-generating capacity of 2.9GW once fully operational. The Company’s renewable energy assets generally earn revenue through the sale of generated electricity and through the sale of other commodities such as renewable energy credits (“REC”).
Included in the results of operations for our IPP segment are the direct operating costs incurred to operate our fleet; including costs incurred for operations at the site level as well as Greenbacker’s internal team of technical asset managers monitoring the performance of our assets.
Investment Management (“IM”)
Our IM segment represents GCM’s investment management platform – a climate focused investment management company with fund formation, capital raising, asset acquisition, financing, consulting, and development capabilities that is registered with the Securities and Exchange Commission as an investment adviser. The Company believes that the IM business will enable it to further diversify its revenue streams through investment management of funds on behalf of external investors. GCM’s platform will allow the Company to raise and deploy capital for the managed funds – consistent with our overall mission and expanding our ability to positively impact social and environmental challenges.
The primary source of IM revenues will be management fees earned under the respective advisory agreements with our managed funds and are generally based upon the underlying net asset value of the managed funds for which GCM provides investment management services. For certain of our IM customers, the Company is also eligible to receive certain performance-based fees. The primary source of IM operating expenses will include the costs of raising and deploying capital for the managed funds. As of November 23, 2022, GCM serves as the registered investment adviser to four funds in the renewable energy industry.
Second Quarter Financial Results
NOTE: See the Company’s Q2 2022 10-Q filed with the SEC for quarterly financial information and important related disclosures.
|In Thousands Unaudited||For the period from May 19, 2022 through June 30, 2022|
|Select Financial Information|
|Total Revenue||$ 19,615|
|Total operating revenue (1)||21,453|
|Net income (loss) attributable to Greenbacker||1,936|
|Adjusted EBITDA (2)||$ 7,999|
|Funds From Operations (FFO) (2)||1,666|
- – Total operating revenue excludes non-cash contract amortization, net
- – See “Non-GAAP Financial Measures” for additional discussion
During the period from May 19, 2022 through June 30, 2022, the Company generated total operating revenue, which excludes contract amortization, of $21.5 million. This includes $17.2 million from the sale of energy generated under the Company’s power purchase agreements (“PPAs”) and $1.9 million of REC and other incentive revenue.
Net income attributable to the Company was $1.9 million for the period from May 19, 2022 through June 30, 2022.
Adjusted EBITDA and FFO, both of which are non-GAAP measures, were $8.0 million and $1.7 million, respectively, for the period from May 19, 2022 through June 30, 2022.
The Company will provide additional details on full-quarter financial results and the underlying business drivers of financial performance, as well as comparison to historical periods (when possible), in future financial updates.
The Company has included consolidated financial statements as prepared under both non-investment company accounting and investment company accounting as included in our quarterly report on Form 10-Q for the quarter ended June 30, 2022, in subsequent sections of this press release.
Non-GAAP Financial Measures
In addition to evaluating the Company’s performance on a U.S. GAAP basis, the Company now utilizes certain non-GAAP financial measures to analyze the operating performance of our segments as well as our consolidated business. Each of these measures should not be considered in isolation from or as superior to or as a substitute for other financial measures determined in accordance with U.S. GAAP, such as net income (loss) or operating income (loss). The Company uses these non-GAAP financial measures to supplement its U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting its operations.
Adjusted EBITDA is a non-GAAP financial measure that the Company uses as a performance measure, as well as for internal planning purposes. We believe that Adjusted EBITDA is useful to management and investors in providing a measure of core financial performance adjusted to allow for comparisons of results of operations across reporting periods on a consistent basis, as it includes adjustments relating to items that are not indicative of the ongoing operating performance of the business.
Adjusted EBITDA is a performance measure used by management that is not calculated in accordance with U.S. GAAP. Adjusted EBITDA should not be considered in isolation from or as superior to or as a substitute for net income (loss), operating income (loss) or any other measure of financial performance calculated in accordance with U.S. GAAP. Additionally, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Funds From Operations
FFO is a non-GAAP financial measure that the Company uses as a performance measure to analyze net earnings from operations without the effects of certain non-recurring items that are not indicative of the ongoing operating performance of the business. FFO is calculated using Adjusted EBITDA less the impact of interest expense (excluding the non-cash component) and distributions to tax equity investors under the financing facilities associated with our IPP segment.
The Company believes that the analysis and presentation of FFO will enhance our investor’s understanding of the ongoing performance of our operating business. The Company will consider FFO, in addition to other GAAP and non-GAAP measures, in assessing operating performance and as a proxy for growth in distribution coverage over the long-term.
FFO should not be considered in isolation from or as a superior to or as a substitute for net income (loss), operating income (loss) or any other measure of financial performance calculated in accordance with U.S. GAAP.
Refer to Non-GAAP Reconciliations for reconciliations from net income as determined under U.S. GAAP to Adjusted EBITDA and FFO.
Non-Investment Company Accounting Financial Statements
Investment Company Accounting Financial Statements
Adjusted EBITDA The following table reconciles Net income attributable to Greenbacker Renewable Energy Company LLC to Adjusted EBITDA:
The Company defines Adjusted EBITDA as net income (loss) before: (i) interest expense; (ii) income taxes; (iii) depreciation expense; (iv) amortization expense (including contract amortization); (v) accretion; (vi) amounts attributable to our redeemable and non-redeemable noncontrolling interests; (vii) unrealized gains and losses on financial instruments; (viii) other income (loss); and (ix) foreign currency gain (loss). Additionally, the Company further adjusts for the following items described below:
• Share-based compensation is excluded from Adjusted EBITDA as it is different from other forms of compensation as it is a non-cash expense and is highly variable. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a share-based compensation valuation methodology and underlying assumptions that may vary over time;
• The change in fair value of contingent consideration, which is related to the Acquisition, is excluded from Adjusted EBITDA, if any such change occurs during the period. The non-cash, mark-to-market adjustments are based on the expected achievement of revenue targets that are difficult to forecast and can be variable, making comparisons across historical and future quarters difficult to evaluate; and
• Other costs that are not consistently occurring, not reflective of expected future operating expense and provide no insight into the fundamentals of current or past operations of our business are excluded from Adjusted EBITDA. This includes costs such as professional fees incurred as part of the Acquisition and the change in status and other non-recurring costs unrelated to the ongoing operations of the Company.
Funds From Operations
The following table reconciles Net income attributable to Greenbacker Renewable Energy Company LLC to Adjusted EBITDA and then to FFO:
FFO is a non-GAAP financial measure that the Company uses as a performance measure to analyze net earnings from operations without the effects of certain non-recurring items that are not indicative of the ongoing operating performance of the business.
FFO is calculated using Adjusted EBITDA less the impact of interest expense (excluding the non-cash component) and distributions to tax equity investors under the financing facilities associated with our IPP segment.
The financial and portfolio metrics set forth herein are unaudited and subject to change. Past performance is not indicative of future results.
Greenbacker Renewable Energy Company LLC (GREC) is a publicly reporting, non-traded limited liability sustainable infrastructure company that both acquires and manages income-producing renewable energy and other energy-related businesses, including solar and wind farms, and provides investment management services to other renewable energy investment vehicles. We seek to acquire and operate high-quality projects that sell clean power under long-term contracts to high-creditworthy counterparties such as utilities, municipalities, and corporations. We are long-term owner-operators, who strive to be good stewards of the land and responsible members of the communities in which we operate. GREC conducts its investment management business through its wholly owned subsidiary, Greenbacker Capital Management, LLC, an SEC-registered investment adviser. We believe our focus on power production and asset management creates value that we can then pass on to our shareholders—while facilitating the transition toward a clean energy future. For more information, please visit www.greenbackercapital.com.
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. Although Greenbacker believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Greenbacker undertakes no obligation to update any forward-looking statement contained herein to conform to actual results or changes in its expectations.