ContourGlobal makes solid earnings progress since November IPO

Wholesale power generation business owner and operator ContourGlobal announced its interim results for the six months ended 30 June on Tuesday, reporting consolidated revenue growth of 16% to $535.4m year-on-year.

The FTSE 250 company said its adjusted EBITDA was ahead 12% at $261.8m, with thermal energy adjusted EBITDA up 2% at $163m and renewable energy adjusted EBITDA rising 27% to $119.8m.

It said it was ahead of its own plan to double EBITDA by 2022, with the board expecting 2018 adjusted EBITDA to be in the range of $600m to $630m for the full year.

The board declared an interim dividend of $26.6m, or 4.0 US cents per share, which corresponded to one-third of the high end of its previously-announced range of between $75m and $80m.

Since the end of the half-year, ContourGlobal said it had sold its minority stake in its European PV portfolio at an “attractive premium” to its cost.

It also refinanced its corporate bonds on “attractive terms”, reduces its corporate interest costs by $10m per annum.

“We are announcing strong first-half results, our first since our IPO last November, driven by continued excellent power plant operations in our thermal and renewable fleets as well as our recent acquisitions of renewable assets in Europe and Latin America,” said president and chief executive officer Joseph C Brandt.

“The integration of our recently closed acquisition in Spain is proceeding as planned and recent regulatory statements about the next rate reset are very positive for the revenue outlook for that business.”

Brandt also pointed to the sale of 49% of ContourGlobal’s solar business in Italy and Slovakia “at an attractive premium to our cost basis” to funds advised by Credit Suisse Energy Infrastructure Partners (CSEIP), and the entry into a joint venture with CSEIP to achieve further growth in Italy to further the company’s roll-up strategy there.

“As noted in our 2017 annual report, we see significant opportunities to become the asset manager of choice for investors looking for opportunities to acquire interests in long-term contracted power assets such as those in our portfolio and, as shown today, we believe that these opportunities exist for both greenfield and acquired assets.

“We continue to see attractive growth opportunities in our core markets in both the acquisition and greenfield segment and expect to announce further acquisitions this year.

“We are pleased with the status of our pipeline and our substantial and accelerated progress towards achieving our IPO objective of doubling adjusted EBITDA by 2022 without the need to issue shares or exceed target leverage.”

Brandt said that, including a full-year contribution from the recently-acquired Spanish CSP assets, ContourGlobal’s pro forma adjusted EBITDA for the last 12 months was $643m, representing a 40% increase over the adjusted EBITDA for the year ended 30 June 2018.

“We expect 2018 adjusted EBITDA to be in the range of $600m to $630m for the full year.

“Our recent successful refinancing of our parent-level bonds at attractive rates and extended maturities will decrease parent interest expense by $10m per annum.

“Together with the announcement of today's asset sale, cash balances more than support an interim dividend of $26.6m, 4.0 US cents per share, corresponding to one third of the high end of the previously announced range of $75m to $80m.”