Form 8-K Avangrid, Inc. For: Apr 20
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
April 26, 2016 (April 20, 2016)
Avangrid, Inc.
(Exact name of registrant as specified in its charter)
| New York | 001-37660 | 14-1798693 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
| 157 Church Street New Haven, CT |
06506 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Telephone: (207) 688-6363
(Registrant’s telephone number, including area code)
N.A.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
On April 26, 2016, Avangrid, Inc. (the “Company”) issued a press release announcing its financial results for the three-month period ended March 31, 2016. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
| Item 7.01 | Regulation FD Disclosure |
The Company will conduct an audio-only financial presentation on Tuesday, April 26, 2016, beginning at 10:00 a.m., Eastern Time. The Company’s executive management will present an overview of the financial results followed by a question and answer session. Interested parties, including analysts, investors and the media, are able to listen live via the internet by logging onto the investor relations section of the Company’s website at http:// www.avangrid.com. Institutional investors can access the conference via Thomson Street Events (www.streetevents.com), a password-protected event management site. A copy of the Company’s presentation is furnished herewith as Exhibit 99.2 and incorporated by reference herein.
Pursuant to General Instruction B.2 of Form 8-K and SEC Release No. 33-8176, the information contained in Item 2.02 and 7.01 of this Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events |
On April 20, 2016, the Company issued a press release announcing that its Board of Directors had declared a quarterly dividend of $0.432 per share on its common stock. This dividend is payable July 1, 2016 to shareholders of record at the close of business on June 10, 2016. A copy of the Company’s press release is attached hereto as Exhibit 99.3 and incorporated by reference herein.
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated April 26, 2016. | |
| 99.2 | First Quarter 2016 Earnings Presentation. | |
| 99.3 | Press Release dated April 20, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AVANGRID, INC. | ||||||
| (Registrant) | ||||||
| Dated: April 26, 2016 | By: | /s/ Richard J. Nicholas | ||||
| Name: | Richard J. Nicholas | |||||
| Title: | Chief Financial Officer | |||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated April 26, 2016. | |
| 99.2 | First Quarter 2016 Earnings Presentation. | |
| 99.3 | Press Release, dated April 20, 2016. |
EXHIBIT 99.1
NEWS RELEASE
April 26, 2016
AVANGRID Reports First Quarter 2016 Earnings Results and Increases Outlook
(New Haven, CT – April 26, 2016) Today Avangrid, Inc. (NYSE: AGR) reported consolidated net income of $212.3 million, or $0.69 per share, for the first quarter of 2016, compared to $171.6 million, or $0.56 per share, for the same period in 2015 (adjusted to reflect the combination of AVANGRID with UIL Holdings Corporation). Excluding non-recurring items, described below, consolidated net income was $195.0 million, or $0.63 per share, for the first quarter of 2016, compared to $171.6 million, or $0.56 per share, excluding non-recurring items, for the same period in 2015.
Segment details for AVANGRID’s earnings for the quarter ended March 31, 2016, compared to the same period in 2015 are presented in the table below. Net income for the quarter ended March 31, 2016 reflected a net gain in the amount of $17.3 million, primarily from the sale of AVANGRID’s equity interest in the Iroquois Gas Transmission Pipeline, which is a non-recurring item. Net income for the quarter ended March 31, 2015 is adjusted below to reflect the combination of AVANGRID with UIL:
| Net Income (Loss) - $M | ||||||||||||
| Quarter ended March 31, | ||||||||||||
| 2016 | Adjusted 2015 | Adjusted ‘16 vs ‘15 |
||||||||||
| Networks |
$ | 165 | $ | 154 | $ | 11 | ||||||
| Renewables |
$ | 43 | $ | 26 | $ | 17 | ||||||
| Other |
$ | 5 | $ | (8 | ) | $ | 13 | |||||
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| Net Income |
$ | 212 | $ | 172 | $ | 41 | ||||||
| Non-recurring Items |
$ | 17 | $ | — | $ | 17 | ||||||
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| Adjusted Net Income |
$ | 195 | $ | 172 | $ | 23 | ||||||
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| Earnings (Loss) Per Share | ||||||||||||
| Quarter ended March 31, | ||||||||||||
| 2016 | Adjusted 2015 | Adjusted ‘16 vs ‘15 |
||||||||||
| Networks |
$ | 0.53 | $ | 0.50 | $ | 0.04 | ||||||
| Renewables |
0.14 | 0.08 | 0.05 | |||||||||
| Other |
0.02 | (0.03 | ) | 0.04 | ||||||||
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| EPS |
$ | 0.69 | $ | 0.56 | $ | 0.13 | ||||||
| Non-recurring Items |
0.06 | — | 0.06 | |||||||||
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| Adjusted EPS |
$ | 0.63 | $ | 0.56 | $ | 0.07 | ||||||
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Amounts may not add due to rounding
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“We had strong financial performance for the first quarter of 2016. Earnings increased approximately 24% through improvements at all of our businesses, and cash generation remains strong,” commented James P. Torgerson, AVANGRID’s chief executive officer.
“It has only been four months since the closing of the transaction combining AVANGRID and UIL. The comprehensive process of merging the former Iberdrola USA companies with the former UIL companies is on track and the first phase of the integration has been completed,” added Torgerson. “We will continue to focus on integration, as well as executing on our strategic growth plan.”
Avangrid Networks
Avangrid Networks earned $164.7 million, or $0.53 per share, in the first quarter 2016, compared to $153.5 million, or $0.50 per share, in the first quarter 2015. The net increase in earnings for the first quarter 2016 was mainly related to lower employee-related costs offset by reduced demand at Southern Connecticut Gas Company and Berkshire Gas Company as a result of the mild winter weather.
Avangrid Renewables
Avangrid Renewables earned $42.8 million, or $0.14 per share, in first quarter 2016, compared to $26.1 million, or $0.08 per share, in the first quarter 2015. The increase in earnings for the first quarter 2016 was mainly due to increased production from our wind generation facilities. The useful lives of certain renewable assets have been extended.
Other
The results from AVANGRID’s gas storage & transportation business and AVANGRID’s corporate costs are included under “Other”. Earnings for the first quarter of 2016 for this segment were $4.8 million, or $0.02 per share, compared to a loss of $8.0 million, or $0.03 per share, in the first quarter 2015. The increase in earnings was primarily due to improved gas storage spreads and the termination of a gas storage contract with negative mark-to-market.
Outlook
AVANGRID is increasing its consolidated earnings outlook for 2016 to $2.10 - $2.20 per share.
| Outlook - Estimated EPS (1) | ||||||
| As of February 22, 2016 |
Updated | |||||
| Networks |
$ | 1.65 | $1.62 - $ 1.68 | |||
| Renewables |
$ | 0.40 | $0.53 - $ 0.58 | |||
| Other(2) |
$ | (0.05 | ) | $(0.06) - $(0.05) | ||
| 2016 AVANGRID |
$ | 2.00 | $2.10 - $ 2.20 | |||
Amounts may not add due to rounding; Estimates are not expected to be additive
| (1) | Assumes approx. 309.5 million shares outstanding |
| (2) | Includes Corporate and Gas Storage & Transportation |
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Webcast
AVANGRID will webcast an audio-only financial presentation in conjunction with releasing first quarter 2016 earnings, on Tuesday, April 26, 2016 beginning at 10:00 A.M. Eastern time. The webcast will feature presentations from AVANGRID’s CEO, James P. Torgerson and other members of the executive team, and can be accessed through the investor relations section of AVANGRID’s website at http://www.avangrid.com.
Contacts:
Analysts: Patricia Cosgel 203-499-2624
Media: Michael West Jr. 203-499-3858
Avangrid, Inc. (NYSE: AGR) is a diversified energy and utility company with more than $30 billion in assets and operations in 25 states. The company operates regulated utilities and electricity generation through two primary lines of business. Avangrid Networks includes eight electric and natural gas utilities, serving approximately 3.1 million customers in New York and New England. Avangrid Renewables operates 6.3 gigawatts of electricity capacity, primarily through wind power, in states across the United States. AVANGRID employs approximately 7,000 people. The company was formed through a merger between Iberdrola USA, Inc. and UIL Holdings Corporation in 2015. Iberdrola S.A. (Madrid: IBE), a worldwide leader in the energy industry, owns 81.5% of AVANGRID. For more information, visit www.avangrid.com.
Forward Looking Statements
Certain statements in this presentation may relate to our future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “can,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “is confident that” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, statements about our plans, objectives and intentions, outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on our business, results of operations or financial condition. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission (SEC) and available on our investor relations website at www.avangrid.com and on the SEC website at www.sec.gov. Additional information will also be set forth in subsequent filings with the SEC. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of the communication, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Use of Non-GAAP Measures
We supplement the use of U.S. GAAP financial measures in this document with non-GAAP financial measures, including adjusted net income and adjusted EPS. We refer to these measures as “non-GAAP financial measures” given they are not required by, or presented in accordance with U.S. GAAP.
We define adjusted net income as excluding certain non-recurring items and reflecting a full three month period for UIL as we believe it is more useful in understanding and evaluating actual and projected financial performance and contribution of AVANGRID and to more fully compare and explain our results without including the impact of the non-recurring items and with reflecting pro forma information to reflect a full quarter of results for merged entities. . The most directly comparable U.S. GAAP measure to adjusted net income is net income. We also define adjusted EPS as adjusted net income converted to an earnings per share amount.
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We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, as well as to evaluate our underlying historical performance. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP.
Non-GAAP financial measures are not primary measurements of our performance under U.S. GAAP and should not be considered as alternatives to operating income, net income or any other performance measures determined in accordance with U.S. GAAP.
Avangrid, Inc.
Consolidated Statements of Operations
(In Millions except per share amounts)
(Unaudited)
| Three Months Ended | ||||
| March 31, 2016 | ||||
| $M |
||||
| Operating Revenues |
$ | 1,670 | ||
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| Operating Expenses |
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| Purchased power, natural gas and fuel used |
428 | |||
| Operations and maintenance |
551 | |||
| Impairment of non-current assets |
— | |||
| Depreciation and amortization |
205 | |||
| Taxes other than income taxes |
137 | |||
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| Total Operating Expenses |
1,321 | |||
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| Operating Income |
349 | |||
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| Other Income and (Expense) |
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| Other income and (expense) |
49 | |||
| Earnings (losses) from equity method investments |
2 | |||
| Interest expense, net of capitalization |
(84 | ) | ||
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| Income (Loss) Before Income Tax |
316 | |||
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| Income tax expense |
(104 | ) | ||
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| Net Income (Loss) |
$ | 212 | ||
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| Earnings (Loss) per Common Share, Basic: |
$ | 0.69 | ||
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| Earnings (Loss) per Common Share, Diluted: |
$ | 0.69 | ||
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| Weighted-average Number of Common Shares Outstanding: |
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| Basic |
309,538,215 | |||
| Diluted |
309,808,006 | |||
Avangrid, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
| March 31, | ||||
| ($M) |
2016 | |||
| ASSETS |
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| Current assets |
$ | 2,323 | ||
| Net property, plant and equipment in service |
19,372 | |||
| Total property, plant & equipment |
20,698 | |||
| Regulatory assets |
3,306 | |||
| Goodwill |
3,113 | |||
| Other assets |
1,099 | |||
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| Total Assets |
30,539 | |||
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| LIABILITIES AND EQUITY |
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| Current liabilities |
1,821 | |||
| Regulatory liabilities |
1,807 | |||
| Deferred income taxes regulatory |
551 | |||
| Other noncurrent liabilities |
6,717 | |||
| Non-current debt |
4,519 | |||
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| Total Liabilities |
15,415 | |||
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| EQUITY |
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| Common stock |
3 | |||
| Additional paid-in-capital |
13,653 | |||
| Retained earnings |
1,527 | |||
| Accumulated other comprehensive loss |
(72 | ) | ||
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| Total Stockholder’s Equity |
15,111 | |||
| Noncontrolling interests |
13 | |||
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| Total Equity |
15,124 | |||
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| Total Liabilities & Equity |
$ | 30,539 | ||
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Amounts may not add due to rounding
Avangrid, Inc.
Consolidated Cash Flow
(Unaudited)
| Three Months Ended | ||||
| $M | March 31, 2016 | |||
| Cash Flows From Operating Activities |
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| Net income |
$ | 212 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
205 | |||
| Accretion expenses |
3 | |||
| Regulatory assets/liabilities amortization |
41 | |||
| Regulatory assets/liabilities carrying cost |
10 | |||
| Pension cost |
33 | |||
| Earnings from equity method investments |
(2 | ) | ||
| Amortization of debt cost (premium) |
(7 | ) | ||
| Gain on sale of equity method investment |
(31 | ) | ||
| Unrealized losses (gains) on marked to market derivative contracts |
29 | |||
| Deferred taxes |
106 | |||
| Changes in: |
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| Accounts receivable and unbilled revenues, net |
16 | |||
| Inventories |
75 | |||
| Other assets, net |
(76 | ) | ||
| Accounts payable |
(108 | ) | ||
| Other liabilities |
(51 | ) | ||
| Taxes accred |
9 | |||
| Regulatory assets/liabilities |
(67 | ) | ||
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| Net Cash provided by Operating Activities |
397 | |||
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| Cash Flows from Investing Activities |
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| Capital expenditures |
(276 | ) | ||
| Contribution in aid of construction |
8 | |||
| Government grants |
1 | |||
| Proceeds from sale of business, net of cash |
54 | |||
| (Payments to) Receipts from affiliates |
6 | |||
| Other investments and equity method investments |
6 | |||
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| Net Cash used in Investing Activities |
(201 | ) | ||
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| Cash Flows from Financing Activities |
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| Non-current note issuance |
— | |||
| Repayments of non-current debt |
(42 | ) | ||
| Proceeds (repayments) of other short-term debt, net |
(160 | ) | ||
| Repayments of capital leases |
(1 | ) | ||
| Payment of dividend |
— | |||
| Payments on tax equity financing arrangements |
(17 | ) | ||
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| Net Cash used in Financing Activities |
(220 | ) | ||
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| Cash & cash equivalents, net |
(24 | ) | ||
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| Cash and cash equivalents, beginning of period |
427 | |||
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| Cash and cash equivalents, end of period |
$ | 403 | ||
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Avangrid, Inc.
Reconciliation of Net Income
(Unaudited)
| $M | 2016 | Adjusted 2015 |
Adjusted ‘16 vs ‘15 |
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| Networks |
$ | 165 | $ | 91 | $ | 74 | ||||||
| Renewables |
$ | 43 | $ | 26 | $ | 17 | ||||||
| Other |
$ | 5 | $ | (11 | ) | $ | 16 | |||||
| Net Income |
$ | 212 | $ | 106 | $ | 107 | ||||||
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| Adjustments: |
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| Net income representing a full quarter for UIL |
$ | — | $ | 58 | $ | (58 | ) | |||||
| Merger Costs |
$ | — | $ | 8 | $ | (8 | ) | |||||
| Sale of equity method investment |
$ | (19 | ) | $ | — | $ | (19 | ) | ||||
| Impairment of investment |
$ | 1 | $ | — | $ | 1 | ||||||
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| Adjusted Net Income |
$ | 195 | $ | 172 | $ | 23 | ||||||
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Avangrid, Inc.
Reconciliation of Earnings Per Share (EPS)
(Unaudited)
| 2016 | Adjusted 2015 |
Adjusted ‘16 vs ‘15 |
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| Networks |
$ | 0.53 | $ | 0.36 | $ | 0.17 | ||||||
| Renewables |
0.14 | 0.10 | $ | 0.03 | ||||||||
| Other |
0.02 | (0.04 | ) | $ | 0.06 | |||||||
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| Earnings Per Share |
0.69 | 0.42 | 0.27 | |||||||||
| Adjustments: |
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| Reduction for acquisition of UIL shares |
— | (0.08 | ) | 0.08 | ||||||||
| Net income representing a full quarter for UIL |
— | 0.19 | (0.19 | ) | ||||||||
| Merger Costs |
— | 0.03 | (0.03 | ) | ||||||||
| Sale of equity method investment |
(0.06 | ) | — | (0.06 | ) | |||||||
| Impairment of investment |
0.00 | — | 0.00 | |||||||||
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| Adjusted Earnings Per Share |
0.63 | 0.56 | 0.07 | |||||||||
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Amounts may not add due to rounding
1Q 2016 Earnings Presentation April 26, 2016 EXHIBIT 99.2
Legal Notices FORWARD LOOKING STATEMENTS Certain statements in this presentation may relate to AVANGRID’s future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “can,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “is confident that” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, statements about our plans, objectives and intentions, outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on our business, results of operations or financial condition. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission (SEC) and available on our investor relations website at www.avangrid.com and on the SEC website at www.sec.gov. Additional information will also be set forth in filings with the SEC. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of the communication, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Legal Notices Use of Non-GAAP Measures AVANGRID believes that a breakdown presented on a net income and per share basis by line of business is useful in understanding the change in the results of operations of AVANGRID’s lines of business from one reporting period to another and in evaluating the actual and projected financial performance and contribution of AVANGRID’s lines of businesses. Earnings per share (EPS) by business is a non-GAAP (not determined using generally accepted accounting principles) measure that is calculated by taking the pre-tax amounts determined in accordance with GAAP of each line of business, and applying the effective statutory federal and state tax rate and then dividing the results by the average number of diluted shares of AVANGRID’s common stock outstanding for the periods presented. Any such amounts provided are provided for informational purposes only and are not intended to be used to calculate "Pro-forma" amounts. AVANGRID also believes presenting earnings excluding certain non-recurring items, including as presented in the net income discussion, is useful in understanding and evaluating actual and projected financial performance of AVANGRID and to more fully compare and explain our results without including the impact of the non-recurring items. Lastly, AVANGRID, believes that presenting certain non-GAAP metrics (as defined in the Appendix) is useful because such measures can be used to analyze and compare profitability between companies and industries because it eliminates the impact of financing and certain non-cash charges. Non-GAAP financial measures should not be considered as alternatives to AVANGRID’s consolidated net income or EPS determined in accordance with GAAP as indicators of AVANGRID’s operating performance. About AVANGRID Avangrid, Inc. (NYSE: AGR) is a diversified energy and utility company with more than $30 billion in assets and operations in 25 states. The company operates regulated utilities and electricity generation through two primary lines of business. Avangrid Networks includes eight electric and natural gas utilities, serving 3.1 million customers in New York and New England. Avangrid Renewables operates approximately 6.6 gigawatts of electricity capacity, primarily through wind power, in states across the United States. AVANGRID employs approximately 7,000 people. The company was formed through a merger between Iberdrola USA, Inc. and UIL Holdings Corporation in 2015. Iberdrola S.A. (Madrid: IBE), a worldwide leader in the energy industry, owns 81.5% of AVANGRID. For more information, visit www.avangrid.com.
Presenters James P. TorgersonChief Executive Officer Richard J. NicholasChief Financial Officer AVANGRID 1Q ‘16 Earnings IR Contacts: Patricia Cosgel Vice President Investor and Shareholder Relations Michelle Hanson Manager Investor Relations Carlota Lopez Manager Investor Relations [email protected]
AVANGRID Earnings Summary 1Q ‘16
Highlights for 1Q ‘16 (1) See Appendix for calculation of Adjusted EBITDA and reconciliation to GAAP Net Income 1Q ’15 is adjusted to reflect the combination of AVANGRID with UIL Net income & EPS grow 24% to $212M and $0.69 2016 EPS Outlook increases to $2.10 - $2.20 Adjusted EBITDA(1) grows 8% to $575M Earnings growth in all businesses & strong cash generation Improvement in operating expense and revenue decoupling offset mild winter Higher wind production (+13%) Extended useful lives of renewable assets First quarterly AVANGRID dividend of $0.432/share paid on April 1, 2016 Second quarterly dividend of $0.432/share declared by the Board on April 20, 2016 payable July 1, 2016 Expected pay-out ratio declining faster
1Q ‘16 Earnings Results … impacted by higher wind production and the extension of Renewable assets useful lives, as well as non-recurring items primarily related to the sale of the equity interest in the Iroquois pipeline (1) (1) See Appendix for calculation of Adjusted Net Income and Adjusted EPS and reconciliation to GAAP Net Income. (1) 1Q ‘15 1Q ‘16 1Q ‘15 1Q ‘16 First quarter 2016 results on target… +24% +14% +24% +14% $M (1) (1) 7
FY ‘16 Key Earnings & Cash Drivers Networks Renewables Other Rigorous attention to integration and identifying and planning for best practices in ‘16 Impact of weather Focus on operating expenses Wind production Energy prices on Merchant projects PPA contracts; pricing & roll-offs Low leverage and interest costs Consolidated credit facilities and executed $1.5B credit facility
Renewable assets useful life … based on Iberdrola experience and consistent with industry practice Moving from a conservative average depreciation period of 25 years to approximately 30 years Best-in class technology, operational management and world-wide experience Extension of useful life of certain Renewable assets…
Merger Integration Summary Phase I Launched last October, focused on Day 1 implementation and merger integration planning Phase II Next Steps… Project teams transition to: Implement integration plans Identify and execute operational best practices Phase I Successfully Completed… … Day 1 readiness achieved and Integration Plans developed for all Project teams
Projections 2016 - 2020 Investment 2016-2020 70% of investment in regulated activities 2020: 73% of Adjusted EBITDA coming from regulated activities Networks Renewables 29% 70% $ 9.6B Adjusted EBITDA 2020 (1) Networks Renewables Other 73% 26% 1% Other See Appendix for calculation of Adjusted EBITDA and reconciliation to GAAP Net Income
NY Transco FERC approved settlement 3/17/16. Total ROE 10%, equity ratio 53%, investment $44M Implementing settlement & obtaining an asset transfer order from the NYPSC Projects on track – expect to have rates in effect June 1, 2016 NY REV Final Track 1 Guidance released Distributed System Implementation Plan & Benefit/Cost Analysis to be filed by each utility June 30, 2016 New England RFP Bidder selection expected by July 26, 2016 Connect NY Anticipate filing in New York by end of April 2016 1,000 MW DC underground transmission line FERC NE- 206 Complaint FERC ALJ issued order on March 22, 2016 recommending: Base ROE/Cap ROE 9.59/10.42% for 15-month refund period in Complaint II Base ROE/Cap ROE 10.90/12.19% for 15-month refund period in Complaint III and prospectively FERC expected to make its final decision in late 2016 or early 2017 If adopted as final, the impact of the initial decision would be a net increase in the reserve for Complaints II and III of $10.2M, net of tax, based on currently available information for these proceedings AVANGRID Networks: Regulatory, Legislative & FERC Updates NY Rate Case Hearings completed Commission decision expected May 19, 2016
AVANGRID Networks: Utility Projects Metro-North Railroad Corridor Increases capacity and reliability of the transmission lines along the Metro-North corridor. Includes installing new transmission structures & line conductor Investment: ~$150M (2016-2020) Ginna Retirement Transmission Alternative Provides new 345 kV connections to NY power grid. Ensures reliable service to the Rochester region. Allows local generation plant retirement Investment: ~$140M (2015-2017) Focus on resiliency, aging infrastructure and automation of the system CT NY Coopers Mills Static Synchronous Compensator (STATCOM) NE-ISO requested investment to support regional bulk electric system upgrades in Boston area Requires substation expansion and 200 MVAR STATCOM Investment: ~$52M (2016-2018) Customer Smart Care data system upgrade Enhances customer service and flexibility for innovative rate design. Enables dynamic pricing and optimizes AMI system capabilities Investment: ~$52M (2016-2017) ME
208 MW project in North Carolina COD late 2016 $375M CAPEX 13 years PPA with Amazon Status: Under Construction AVANGRID Renewables: 2016-2017 Projects Under Construction - Update Amazon Wind Farm US East Raleigh Durham Albuquerque Phoenix Las Vegas 298 MW project in New Mexico* COD late 2017 $515M CAPEX 20 years PPA with California IOU Status: Under construction. Finalizing off-take agreements and transmission service agreements El Cabo (1) Includes 50% of JVs + owned portfolio and 50 MW solar * Option for JV partner to purchase 49.5% at COD 5,695 MW(1) in operation, 744 MW under construction
30 MW project in Vermont COD late 2017 $75M CAPEX 25-Year PPA with IOU Status: Awaiting agency pre-construction ruling AVANGRID Renewables: 2016-2017 Projects Under Construction - Update Deerfield 76 MW project in Colorado COD late 2017 $120M CAPEX 25-Year PPA with IOU Status: Finalizing interconnection agreement Twin Buttes II 132 MW project in California COD late 2017 $235M CAPEX 15-Year PPA with California IOU Status: Finalizing off-take agreements Tule I
Deer River 100 MW Desert Wind 2 92 MW La Joya 400 MW Otter Creek 150 MW Buffalo Ridge IV 95 MW Penn Forest 99 MW Tule 2 69 MW McCloud 200 MW Karankawa 200 MW Sorrel Solar 200 MW Champagne Solar 100 MW Estacado Solar 100 MW Montague 200 MW Comanche Run 200 MW Roaring Brook 78 MW Camino Solar 44 MW Gala Solar 56 MW 6.1GW pipeline(1), of which 1,700 MW of Wind & 550 MW of Solar projects provides opportunity in 2018-2020 AVANGRID Renewables: Pipeline Includes 744 MW under construction Pipeline increased from previous 5.9GW Amounts may not add due to rounding Horse Creek 100 MW North Ridge 100 MW
AVANGRID Highlights Strategic plan on track Good performance 1Q’ 16 gives visibility for remaining year Integration/execution plan in progress Extended useful lives of renewable assets 1 2 3 4 2016 EPS outlook increases to $2.10 - $2.20 5
1Q ‘16 AVANGRID 1Q ‘16 Financial Updates
1Q ‘16 Earnings Profile for AVANGRID Businesses 1Q ‘16 Net Income Networks largest contributor, representing 78% of Net Income Renewables (+63.9%) Networks (+7.3%) 20% 78% 2% Corporate/ Other 1Q ’16 Networks Renewables Corporate/Other NI EPS $ 165 $ 43 $ 5 $0.53 $0.14 $0.02 $ 212 $0.69 Subtotal $ 195 $0.63 Consol. NI excl. non-recurring Net Income grows 24% to $212M Earnings growth in all business segments 1Q ’15(1) NI EPS $ 154 $ 26 $ (8) $0.50 $0.08 $(0.03) $ 172 $0.56 $ 172 $0.56 Amounts may not add due to rounding (1) 1Q ’15 is adjusted to reflect the combination of AVANGRID with UIL
Key Drivers for 1Q ‘16 Earnings Results by Business Networks Renewables Other Higher wind energy production (+13%) Extension of renewable asset useful lives (+$13M) Sale of equity interest in Iroquois pipeline for an after-tax gain of ~$19M Higher gas spreads and contracted gas storage (1) 1Q ’15 is adjusted to reflect the combination of AVANGRID with UIL The positive impact of revenue decoupling benefitted most companies Supply costs increased for New Reliability Support Agreement for Ginna nuclear plant costs, but were offset in Revenue Lower employee-related costs Net Income 1Q ‘16 v. 1Q ’15 (1)
AVANGRID Renewables Earning Drivers Average load factor improves to 31%... Load Factor(1) 1Q ‘15 1Q ‘16 West 20% +3.4pp vs. 1Q ‘15 1Q ‘16 Load Factor by areas Average annual capacity factor based on wind production & capacity. MidCont 38% -2.9pp Northeast 40% +3.8pp South/Texas 32% +7.4pp …due to improved wind resource +10% pp: percentage points
AVANGRID Renewables Earnings Drivers Higher wind production (+13%)… West 755 +22% vs. 1Q ‘15 1Q ‘16 MidCont 1,162 -6% Northeast 916 +12% South/Texas 897 +47% GWh 3,730 +13% TOTAL …with growth in the areas of South/Texas, West and Northeast 1Q ‘16 Wind Production
AVANGRID Renewables Earnings Drivers Average energy sale price(1) increase by 1% PPA Avg. Price Merchant Avg. Price $/MWh $/MWh 1Q ‘15 1Q ‘16 1Q ‘15 1Q ‘16 West +6% +$3.7/MWh vs. 1Q ‘15 Var % MidCont -4% -$1.7/MWh NorthEast +13% +$7.7/MWh South/Texas -19% -$8.6/MWh 1Q ‘16 Average sale price (1) (1) Average sale price excluding PTC & including REC’s 67% MW sold in PPAs, 33% MW merchant +3% -1% $36.1 $35.7 $54.0 $55.8
AVANGRID Renewables Earnings Drivers Gross Margin(1) grows 7% to $220M …driven by growth in production Effects on Gross Margin 1Q ‘16 Gross Margin by areas $M 1Q ‘16 PTCs expired 1Q ‘15 Production effect +7% $220 $206 +$26 -$3 -$9 MtM See Appendix for reconciliation of Gross Margin to GAAP Net Income Gross Margin for Wind & Solar includes: Energy Sales, RECs, Transmission cost, Hedge gains/losses, Firming & Shaping revenues, curtailment revenues, utility costs to power the wind farms, PTCs Gross Margin for Thermal and Other includes: Energy sales, costs of generation, power purchases and transmission
AVANGRID - 1Q ‘16 Adjusted EBITDA (1) Amounts may not add due to rounding; (1) See Appendix for calculation of Adjusted EBITDA and reconciliation to GAAP Net Income 1Q ’15 is adjusted to reflect the combination of AVANGRID with UIL Adjusted EBITDA by Business Renewables (+18%) Networks (+3%) 25% 75% Networks $432M (+3%) Lower employee-related costs and revenue decoupling in most companies offset mild winter Renewables $143M (+18%) Higher wind energy production Adjusted EBITDA grows 8% to $575M Highlights
($M) Cash from Operations and sale proceeds exceed Capex (capex is seasonal; expected to increase through the year) Free Cash Flow AVANGRID - 1Q ’16 Cash Flow Capex Cash from Operations + Sale of Investment (1) Includes $54M cash from sale of equity investment in Iroquois pipeline (1) AVANGRID Networks Renewables Free Cash Flow Capex Cash from Operations Free Cash Flow Capex Cash from Operations ($M) ($M)
AVANGRID – 1Q ’16 Leverage Approximately $1.7B of Networks debt matures 2016 – 2020: $192M 2016 $292M 2017 Includes maturity of $450M of UIL Senior Notes in 2020 $17M tax equity liabilities amortized in 1Q ’16 - Tax equity investments (TEI) are expected to be fully amortized by end of 2019 Leverage is Primarily at Networks Short-term liquidity supported with new $1.5B bank credit facility Highlights ($M)
AVANGRID – Credit Metrics Net Debt is defined as long-term debt, current portion of long-term debt, short-term debt and accrued interest, less cash. Net Leverage is Net Debt as a percentage of Net Debt plus Total Equity. See Appendix for calculation of Adjusted EBITDA and reconciliation to GAAP Net Income. No new debt issuances in 1Q ‘16 Through 2020, net leverage expected to increase modestly and Net Debt/EBITDA to remain relatively flat Strong financial position 2015 Net Leverage 24.3% 1Q ‘16 Net Debt/Adj. EBITDA(1) 2.6x 23.5% 2.4x Avangrid’s rating upgraded by S&P’s and Fitch to BBB+ (from BBB)
Outlook Amounts may not add due to rounding; Estimates are not expected to be additive (1) Assumes approx. 309.5 million shares outstanding (2) Includes Corporate and Gas Storage & Transportation Outlook revised As of February 22, 2016 Networks EPS Estimated (1) $ 1.65 Updated as of April 26, 2016 Renewables $ 0.40 Other (2) $ (0.05) AVANGRID $ 2.00 $1.62 - $1.68 $0.53 - $0.58 $(0.06) - $(0.05) $2.10 - $2.20
Appendix
Reconciliation - AVANGRID Amounts may not add due to rounding 31
Reconciliation - AVANGRID Amounts may not add due to rounding 32
$6.7B of capital invested in rate base 2016 – 2020 Avangrid Networks - Implementation of Capex Plans 2016-2020 Investment profile relatively flat Peak year is 2018 $4.0B $2.7B $6.7B Networks Investment 2016-2020
AVANGRID Renewables – 2016 Contracted/Merchant Generation Distributed Across Regions PPA Merchant Amounts may not add due to rounding
AVANGRID Renewables – PPAs & Merchant: 2016-2020 GWs 33% 37% 34% 36% 37% 37% 67% 63% 66% 64% 63% 63% Merchant % PPA % Plan to mitigate pricing exposure with focus on adding contracts and use of conservative pricing assumptions Reflects PPA expiration before re-contracting:
AVANGRID Renewables - PTC Evolution 2015 2016P 2017P 2018P 2019P 2020P Existing Assets $110 $93 $79 $38 $19 $19 New Build - - $20 $64 $81 “96 Total $110 $93 $99 $102 $100 $115 PTC’S forgone* $185 $206 $217 $225 $162 $109 * PTCs forgone/not available due to the alternative utilization of Section 1603 ITC Grant program for which AVANGRID Renewables (former Iberdrola USA) received $2B in grants in lieu of PTCs $ Millions Initial projects funded with Tax-Equity; liabilities rolling off over next few years From ‘09-’12, projects funded with Section 1603 ITC cash grants; AVANGRID Renewables received ~ $2B in cash for ~$6B investments vs. retaining PTCs on these projects Lower retained PTCs per annum, but allowed company to use cash and avoided debt Recent projects were contracted and funded with cash and equity from Iberdrola. PTCs on older projects roll off and PTCs are added with new build
High quality, diversified pipeline of development projects in key markets Industry leading team Strong balance sheet with low leverage & no need to raise equity World-wide leadership position in renewables AVANGRID competitive advantages support pipeline execution AVANGRID Renewables - Competitive Advantages Scale advantage in cost & expertise State of the art national control center Sophisticated approach to sourcing/inventory Experienced energy management team to extract value Global meteorology, development & construction expertise Strong reputation among counterparties Capital discipline Ability to offer customized products
EXHIBIT 99.3
NEWS RELEASE
| April 20, 2016 |
Contact: Patricia Cosgel (203) 499-2624 |
AVANGRID Declares Quarterly Dividend
New Haven, CT – April 20, 2016 (NYSE: AGR) – AVANGRID announced that its Board of Directors declared a quarterly dividend of $0.432 per share on its Common Stock at today’s Board meeting. This dividend is payable July 1, 2016 to shareowners of record at the close of business on June 10, 2016.
AVANGRID, Inc. (NYSE: AGR) is a diversified energy and utility company with more than $30 billion in assets and operations in 25 states. The company operates regulated utilities and electricity generation through two primary lines of business. Avangrid Networks includes eight electric and natural gas utilities, serving 3.1 million customers in New York and New England. Avangrid Renewables operates 6.3 gigawatts of electricity capacity, primarily through wind power, in states across the United States. AVANGRID employs 7,000 people. The company was formed by a merger between Iberdrola USA and UIL Holdings Corporation in 2015. IBERDROLA S.A. (Madrid: IBE), a worldwide leader in the energy industry, owns 81.5% of AVANGRID. For more information, visit www.avangrid.com.