Is Pattern Energy (PEGI, $19.84) Getting Back on the Growth Track?

Pattern Energy Group (PEGI) saw its shares rise by +7% the day after it posted much improved Q3 results.

The renewable power company hit a rough patch over the last couple of years, owing largely to a string of acquisitions. To stabilize its financial situation, the company had to stop its pay-out increase in 2018, after increasing its dividend for 15 straight quarters.

However, a much-improved performance in the Q3, coupled with a few strategic moves during the quarter, have brought the company back on track to achieve its growth target.

PEGI increased its power sales by 7% to 1,623 GW, compared to 1,514 GW in Q3 2017. Adjusted EBITDA of the company grew by 45% to $79.5 million compared to $54.7 million in Q2 2017, whereas cash available for distribution (CAFD) for Q3 2018 stood at $31.7 million – after an increase of 235% from Q2 2017. CAFD per share also increased by 191%, and the dividend coverage ratio grew by 189% in Q3 2018 from Q2.

According to the company, favorable wind conditions in several regions coupled with increased availability of its assets and great asset utilization is what helped them post such strong growth numbers. Furthermore, the company added that a strong y-o-y increase in electricity sales is what helped power the surge in earnings and cash flow. Reduced transmission costs and declining finance costs have helped them rake-in more profit during the quarter.

PEGI also received $70.4 million from the sale of El Arrayan, which helped bolster its balance sheet as well as provide the requisite funds to acquire a 51% interest in the Mont Sainte-Marguerite project in Quebec.