UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May 5, 2016
 
NRG YIELD, INC.
(Exact name of Registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation)	 	001-36002
(Commission File Number)	 	46-1777204
(IRS Employer Identification No.)	
 
211 Carnegie Center, Princeton, New Jersey 08540
(Address of principal executive offices, including zip code)
 
(609) 524-4500
(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:
 
o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   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 May 5, 2016, NRG Yield, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2016.  A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K and is hereby incorporated by reference.
 
Item 9.01              Financial Statements and Exhibits
 
(d)         Exhibits
 
Exhibit
Number	 	Document	
 	 	 	
99.1	 	Press Release, dated May 5, 2016	
 
2

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	NRG Yield, Inc.	
 	(Registrant)	
 	 	
 	By:	/s/ Brian E. Curci	
 	 	Brian E. Curci	
 	 	Corporate Secretary	
 	 	 	
Dated: May 5, 2016	 	
 
3

 
Exhibit Index
 
Exhibit
Number	 	Document	
 	 	 	
99.1	 	Press Release, dated May 5, 2016	
 
4

EXHIBIT 99.1

 
NRG Yield, Inc. Reports First Quarter 2016 Financial Results, Names Chief Executive Officer, and Raises Second Quarter Dividend
 
First Quarter 2016 Results and Financial Highlights
 
·                  $188 million of Adjusted EBITDA
·                  $43 million of Cash Available for Distribution (CAFD)
·                  $0.225 per share quarterly dividend paid to Class A and Class C common stock holders ($0.90 per share annualized) on March 15, 2016 representing a 15% year over year increase since the first quarter 2015(1)
 
Increasing Dividend
 
·                  Announcing an increase in the Class A and Class C common stock dividend to $0.23 per share ($0.92 per share annualized) payable in second quarter of 2016
·                  Reaffirming the target of $0.25 per share quarterly dividend ($1.00 per share annualized) by the fourth quarter of 2016, a 67% increase since NRG Yield’s first dividend in the fourth quarter 2013
 
Business Highlights
 
·                  Appoints Christopher Sotos as President and Chief Executive Officer to be employed by NRG Yield
·                  NRG Energy, Inc. (NYSE: NRG) announced its intention to offer NRG Yield the remaining 51.05% interest in the 250 MW California Valley Solar Ranch (CVSR) project during the second quarter of 2016
·                  In the first quarter of 2016, NRG Yield invested an additional $51 million under the existing business renewables and residential solar partnerships with NRG, bringing total capital invested to over $140 million(2)
 
Reaffirming 2016 Guidance(3)
 
·                  Full year 2016 guidance:
·                  Adjusted EBITDA of $805 million
·                  CAFD of $265 million
 
PRINCETON, NJ — May 5, 2016 — NRG Yield, Inc. (NYSE: NYLD, NYLD.A) today reported first quarter 2016 financial results including Adjusted EBITDA of $188 million and CAFD of $43 million. Net income attributable to Class A and Class C stockholders for the three months ended March 31, 2016 was $5 million or $0.05 per Class A and Class C common share.
 
“NRG Yield’s start to the year was strong with excellent financial performance across all of its segments and the announcement of the tenth consecutive quarterly dividend increase in the Company’s history,” said Mauricio Gutierrez, NRG Yield’s Interim Chief Executive Officer. “With Chris Sotos becoming NRG Yield’s dedicated Chief Executive Officer and the

(1)  After taking into account the recapitalization on May 14, 2015
(2)  Includes $26 million for 17 MW of residential solar leases acquired outside of the partnerships
(3)  Guidance excludes the impact of interest on cash drawn on NRG Yield’s revolving credit facility, see appendix A-5
 
1

 
relationship with NRG Energy reaffirmed through the announcement of its intention to offer CVSR, NRG Yield is on track for long term success.”
 
Overview of Financial and Operating Results
 
Note 1: In accordance with GAAP, 2015 results have been recast to include the Drop Down Assets acquired by NRG Yield from NRG on November 3, 2015(4) as if the combination had been in effect since the inception of common control.
 
Table 1: Selected Financial Results
 
 	 	Three Months Ended	 	
($ millions)	 	3/31/16	 	3/31/15	 	
Operating Revenue	 	$	220	 	$	200	 	
Net Income/(Loss)	 	2	 	(20	)	
Adjusted EBITDA	 	188	 	132	 	
Cash Available for Distribution (CAFD)	 	43	 	6	 	

Segment Results
 
Table 2: Adjusted EBITDA
 
($ millions)	 	Three Months Ended	 	
Segment	 	3/31/16	 	3/31/15	 	
Conventional	 	$	70	 	$	65	 	
Renewable	 	105	 	57	 	
Thermal	 	16	 	13	 	
Corporate	 	(3	)	(3	)	
Adjusted EBITDA	 	$	188	 	$	132	 	
 
Table 3: Net Income/(Loss)
 
($ millions)	 	Three Months Ended	 	
Segment	 	3/31/16	 	3/31/15	 	
Conventional	 	$	28	 	$	26	 	
Renewable	 	(12	)	(40	)	
Thermal	 	8	 	6	 	
Corporate	 	(22	)	(12	)	
Net Income/(Loss)	 	$	2	 	$	(20	)	
 
For the first quarter 2016, NRG Yield reported Net Income of $2 million, Adjusted EBITDA of $188 million, and CAFD of $43 million. First quarter Adjusted EBITDA and CAFD were higher than 2015 primarily due to increased wind production and the acquisition of Desert Sunlight.

(4)  November 3, 2015 Drop Down consisted of a 75% interest in a portfolio of twelve wind facilities
 
2

 
Operational Performance
 
Table 4: Selected Operating Results
 
 	 	Three Months Ended	 	
(MWh and MWht in thousands)	 	3/31/16	 	3/31/15	 	
Equivalent Availability Factor (Conventional)	 	86.8	%	82.3	%	
Renewable Generation Sold (MWh)	 	1,650	 	1,174	 	
Thermal Generation Sold (MWht)(1)	 	593	 	661	 	

(1) Also includes Thermal MWh sold
 
For the first quarter 2016, NRG Yield experienced improved availability at the Conventional segment versus the first quarter of 2015 following the January 2015 forced outage at the El Segundo Energy Center. In the first quarter of 2016, generation in the Renewable segment was above expectations and 41% higher than the first quarter of 2015 primarily due to much stronger wind resources at the Alta wind portfolio in California.
 
Liquidity and Capital Resources
 
Table 5: Liquidity
 
($ millions)	 	3/31/16	 	12/31/15	 	
Cash and Cash Equivalents	 	$	76	 	$	111	 	
Restricted Cash	 	60	 	48	 	
Total Cash	 	$	136	 	$	159	 	
Revolver Availability	 	119	 	133	 	
Total Liquidity	 	$	255	 	$	292	 	
 
Total liquidity as of March 31, 2016 was $255 million, a decrease of $37 million from December 31, 2015. This reflects a decrease in revolver availability of $14 million and a decrease in cash of $23 million primarily used to fund capital commitments to NRG Yield’s business renewables partnership with NRG Energy.(5)
 
Governance Changes
 
NRG Yield announced the appointment of Christopher Sotos as Chief Executive Officer, effective May 6, 2016.  Mr. Sotos will be employed and compensated by NRG Yield.  Mauricio Gutierrez, the interim Chief Executive Officer, will transition the role to Mr. Sotos through the second quarter.  Mr. Gutierrez will assume the role of Chairman of the Board of NRG Yield and John Chlebowski will return to his role as the Lead Independent Director.  Further, the NRG Yield Board of Directors appointed John Chillemi, NRG’s Executive Vice President of Business Development, to the Board of Directors to fill the existing vacancy on the Board.
 
Growth Investments
 
California Valley Solar Ranch Project
 
NRG Energy, Inc. announced its intention to offer NRG Yield the opportunity to acquire the remaining 51.05% interest in the CVSR solar facility during the second quarter of 2016. NRG Yield currently owns the remaining 48.95% interest in CVSR. Located in San Luis Obispo County, California, CVSR is a 250 MW solar facility contracted to sell power to Pacific Gas and Electric through 2038.

(5)  See Appendix A-4 for Three Months Ended 2016 Sources and Uses of Cash and Cash Equivalents detail
 
3

 
Investment Partnerships with NRG Energy
 
During the first quarter of 2016, NRG Yield invested $40 million and $11 million respectively in the business renewable and residential solar investment partnerships with NRG Energy. With these investments, NRG Yield now co-owns approximately 100 MW of distributed solar (business and residential) capacity with a weighted average contract life of approximately 18 years.
 
On February 29, 2016, NRG Yield and NRG amended the residential solar partnership, reducing NRG Yield’s total capital commitment to this partnership from $150 million to $100 million with a corresponding increase into a new business renewable partnership. With $53 million dollars remaining as of the end of the first quarter 2016, and based on the most recent information provided by NRG, NRG Yield believes that its incremental investment into the residential solar partnership will not be more than $20 million. This change does not impact NRG Yield’s 2016 financial guidance.
 
Quarterly Dividend Updates
 
On April 26, 2016, NRG Yield’s Board of Directors declared a quarterly dividend on Class A and Class C common stock of $0.23 per share ($0.92 per share annualized) payable on June 15, 2016 to stockholders of record as of June 1, 2016. This equates to a 2.22% increase over the prior quarter and an increase of 15% over the previous year after taking into account the May 14, 2015 recapitalization of the Company.
 
Seasonality
 
NRG Yield’s quarterly operating results are impacted by seasonal factors. The majority of NRG Yield’s revenues are generated from the months of May through September, as contracted pricing and renewable resources are at their highest levels in the Company’s core markets. The factors driving the fluctuation in Adjusted EBITDA and CAFD include the following:
 
·                  Higher summer capacity prices from conventional assets;
·                  Higher solar insolation during the summer months;
·                  Higher wind resources during the spring months;
·                  Debt service payments which are made either quarterly or semi-annually; and
·                  Timing of maintenance capital expenditures
 
The Company takes into consideration the timing of these factors to ensure sufficient funds are available for distribution on a quarterly basis.
 
Financial Guidance
 
NRG Yield is reaffirming full year guidance of $805 million Adjusted EBITDA and $265 million of CAFD, although actual results may vary depending on the operating performance of the assets.
 
Finally, NRG Yield is targeting a quarterly dividend of $0.25 per share ($1.00 per share annualized) on each of its Class A and Class C common stock by the fourth quarter of 2016. This represents a 16% year over year increase since the fourth quarter of 2015.
 
4

 
Earnings Conference Call
 
On May 5, 2016, NRG Yield will host a conference call at 10:30 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG Yield’s website at http://www.nrgyield.com and clicking on “Presentations & Webcasts.”
 
About NRG Yield
 
NRG Yield owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the United States, including fossil fuel, solar and wind power generation facilities that provide the capacity to support more than two million American homes and businesses. Our thermal infrastructure assets provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units in multiple locations. NRG Yield’s Class C and Class A common stock are traded on the New York Stock Exchange under the symbols NYLD and NYLD.A, respectively. Visit nrgyield.com for more information.
 
Safe Harbor Disclosure
 
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions and include our Adjusted EBITDA, cash available for distribution, expected earnings, future growth and financial performance, and typically can be identified by the use of words such as “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “believe” and similar terms. Although NRG Yield believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, general economic conditions, hazards customary in the power industry, weather conditions, including wind and solar performance, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulation, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify or successfully execute acquisitions, our ability to enter into new contracts as existing contracts expire, our ability to acquire assets from NRG Energy, Inc. or third parties,  our ability to maintain or create successful partnering relationships with NRG Energy and other third parties, our ability to close drop-down transactions, and our ability to maintain and grow our quarterly dividends. Furthermore, any dividends are subject to available capital, market conditions, and compliance with associated laws and regulations.
 
NRG Yield undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Adjusted EBITDA and cash available for distribution are estimates as of today’s date, May 5, 2016, and are based on assumptions believed to be reasonable as of this date. NRG Yield expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause NRG Yield’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect NRG Yield’s future results included in NRG Yield’s filings with the Securities and Exchange Commission at www.sec.gov. In addition, NRG Yield makes available free of charge at www.nrgyield.com, copies of materials it files with, or furnish to, the SEC.
 
# # #
 
5

 
Contacts:
 
Media:	 	Investors:	
 	 	 	
Karen Cleeve	 	Kevin Cole, CFA	
609.524.4608	 	609.524.4526	
 	 	 	
Marijke Shugrue	 	Lindsey Puchyr	
609.524.5262	 	609.524.4527	
 
6

 
NRG YIELD, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
 	 	Three months ended March 31,	 	
(In millions, except per share amounts)	 	2016	 	2015	 	
Operating Revenues	 	 	 	 	 	
Total operating revenues	 	$	220	 	$	200	 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of operations	 	83	 	84	 	
Depreciation and amortization	 	66	 	67	 	
General and administrative	 	3	 	3	 	
Total operating costs and expenses	 	152	 	154	 	
Operating Income	 	68	 	46	 	
Other Income (Expense)	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	 	2	 	2	 	
Other income, net	 	—	 	1	 	
Interest expense	 	(68	)	(73	)	
Total other expense, net	 	(66	)	(70	)	
Income (Loss) Before Income Taxes	 	2	 	(24	)	
Income tax benefit	 	—	 	(4	)	
Net Income (Loss)	 	2	 	(20	)	
Less: Pre-acquisition net loss of Drop Down Assets	 	—	 	(4	)	
Net Income (Loss) Excluding Pre-acquisition Net Loss of Drop Down Assets	 	2	 	(16	)	
Less: Net loss attributable to noncontrolling interests	 	(3	)	(11	)	
Net Income (Loss) Attributable to NRG Yield, Inc.	 	$	5	 	$	(5	)	
Earnings (Loss) Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	 	 	
Weighted average number of Class A common shares outstanding - basic and diluted	 	35	 	35	 	
Weighted average number of Class C common shares outstanding - basic and diluted	 	63	 	35	 	
Earnings (Loss) per Weighted Average Class A and Class C Common Share - Basic and Diluted	 	0.05	 	(0.07	)	
Dividends Per Class A Common Share	 	$	0.225	 	$	0.39	 	
Dividends Per Class C Common Share	 	$	0.225	 	N/A	 	
 
7

 
NRG YIELD, INC.
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 
(Unaudited)
 
 	 	Three months ended March 31,	 	
(In millions)	 	2016	 	2015	 	
Net Income (Loss)	 	$	2	 	$	(20	)	
Other Comprehensive Loss, net of tax	 	 	 	 	 	
Unrealized loss on derivatives, net of income tax benefit of $9 and $8	 	(41	)	(20	)	
Other comprehensive loss	 	(41	)	(20	)	
Comprehensive Loss	 	(39	)	(40	)	
Less: Pre-acquisition net loss of Drop Down Assets	 	—	 	(4	)	
Less: Comprehensive loss attributable to noncontrolling interests	 	(27	)	(18	)	
Comprehensive Loss Attributable to NRG Yield, Inc.	 	$	(12	)	$	(18	)	
 
8

 
NRG YIELD, INC.
 
CONSOLIDATED BALANCE SHEETS
 
(In millions)	 	March 31, 2016	 	December 31, 2015	 	
 	 	(Unaudited)	 	 	 	
ASSETS	 	 	 	 	 	
Current Assets	 	 	 	 	 	
Cash and cash equivalents	 	$	76	 	$	111	 	
Restricted cash	 	60	 	48	 	
Accounts receivable — trade	 	85	 	95	 	
Accounts receivable — affiliate	 	2	 	—	 	
Inventory	 	34	 	35	 	
Notes receivable	 	7	 	7	 	
Prepayments and other current assets	 	20	 	22	 	
Total current assets	 	284	 	318	 	
Property, plant and equipment, net of accumulated depreciation of $767 and $701	 	5,012	 	5,056	 	
Other Assets	 	 	 	 	 	
Equity investments in affiliates	 	779	 	798	 	
Notes receivable	 	8	 	10	 	
Intangible assets, net of accumulated amortization of $111 and $93	 	1,338	 	1,362	 	
Deferred income taxes	 	180	 	170	 	
Other non-current assets	 	58	 	61	 	
Total other assets	 	2,363	 	2,401	 	
Total Assets	 	$	7,659	 	$	7,775	 	
 
9

 
NRG YIELD, INC.
 
CONSOLIDATED BALANCE SHEETS (Continued)
 
(In millions, except shares)	 	March 31, 2016	 	December 31, 2015	 	
 	 	(Unaudited)	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	
Current Liabilities	 	 	 	 	 	
Current portion of long-term debt	 	$	242	 	$	241	 	
Accounts payable — trade	 	26	 	23	 	
Accounts payable — affiliate	 	24	 	85	 	
Derivative instruments	 	38	 	39	 	
Accrued expenses and other current liabilities	 	53	 	68	 	
Total current liabilities	 	383	 	456	 	
Other Liabilities	 	 	 	 	 	
Long-term debt	 	4,521	 	4,562	 	
Accounts payable — affiliate	 	20	 	—	 	
Derivative instruments	 	110	 	61	 	
Other non-current liabilities	 	64	 	64	 	
Total non-current liabilities	 	4,715	 	4,687	 	
Total Liabilities	 	5,098	 	5,143	 	
Commitments and Contingencies	 	 	 	 	 	
Stockholders’ Equity	 	 	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	 	—	 	—	 	
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D 1,000,000,000); 182,848,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 62,784,250, Class D 42,738,750) at March 31, 2016, and December 31, 2015	 	1	 	1	 	
Additional paid-in capital	 	1,844	 	1,855	 	
Retained earnings	 	7	 	12	 	
Accumulated other comprehensive loss	 	(44	)	(27	)	
Noncontrolling interest	 	753	 	791	 	
Total Stockholders’ Equity	 	2,561	 	2,632	 	
Total Liabilities and Stockholders’ Equity	 	$	7,659	 	$	7,775	 	
 
10

 
NRG YIELD, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)
 
 	 	Three months ended March 31,	 	
 	 	2016	 	2015	 	
 	 	(In millions)	 	
Cash Flows from Operating Activities	 	 	 	 	 	
Net income (loss)	 	$	2	 	$	(20	)	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	 	 	
Distributions in excess of equity in earnings of unconsolidated affiliates	 	17	 	35	 	
Depreciation and amortization	 	66	 	67	 	
Amortization of financing costs and debt discount/premiums	 	5	 	3	 	
Amortization of intangibles and out-of-market contracts	 	23	 	12	 	
Changes in deferred income taxes	 	—	 	(4	)	
Changes in derivative instruments	 	2	 	(2	)	
Changes in other working capital	 	(13	)	(16	)	
Net Cash Provided by Operating Activities	 	102	 	75	 	
Cash Flows from Investing Activities	 	 	 	 	 	
Acquisition of Drop Down Assets, net of cash acquired	 	—	 	(490	)	
Capital expenditures	 	(7	)	(3	)	
Increase in restricted cash	 	(12	)	(1	)	
Decrease in notes receivable	 	2	 	2	 	
Net investments in unconsolidated affiliates	 	(43	)	3	 	
Other	 	2	 	—	 	
Net Cash Used in Investing Activities	 	(58	)	(489	)	
Cash Flows from Financing Activities	 	 	 	 	 	
Net contributions from noncontrolling interests	 	10	 	—	 	
Distributions to NRG for NRG TE Wind Holdco	 	(4	)	—	 	
Payment of dividends and distributions to shareholders	 	(41	)	(30	)	
Net (payments for) borrowings of long-term debt	 	(44	)	149	 	
Net Cash (Used in) Provided by Financing Activities	 	(79	)	119	 	
Net Decrease in Cash and Cash Equivalents	 	(35	)	(295	)	
Cash and Cash Equivalents at Beginning of Period	 	111	 	429	 	
Cash and Cash Equivalents at End of Period	 	$	76	 	$	134	 	
 
11

 
Appendix Table A-1: First Quarter 2016 Segment Adjusted EBITDA Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):
 
($ in millions)	 	Conventional	 	Renewable	 	Thermal	 	Corporate	 	Total	 	
Net Income/(Loss)	 	28	 	(12	)	8	 	(22	)	2	 	
Plus:	 	 	 	 	 	 	 	 	 	 	 	
Interest Expense, net	 	11	 	36	 	2	 	19	 	68	 	
Depreciation, Amortization, and ARO Expense	 	20	 	42	 	5	 	—	 	67	 	
Contract Amortization	 	7	 	15	 	1	 	—	 	23	 	
Adjustments to reflect NRG Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates	 	4	 	24	 	—	 	—	 	28	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	70	 	105	 	16	 	(3	)	188	 	
 
Appendix Table A-2: First Quarter 2015 Segment Adjusted EBITDA Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):
 
($ in millions)	 	Conventional	 	Renewable	 	Thermal	 	Corporate	 	Total	 	
Net Income/(Loss)	 	26	 	(40	)	6	 	(12	)	(20	)	
Plus:	 	 	 	 	 	 	 	 	 	 	 	
Income Tax Expense	 	—	 	—	 	—	 	(4	)	(4	)	
Interest Expense, net	 	12	 	46	 	2	 	13	 	73	 	
Depreciation, Amortization, and ARO Expense	 	22	 	40	 	5	 	—	 	67	 	
Contract Amortization	 	1	 	10	 	—	 	—	 	11	 	
Mark to Market (MtM) (Gains) on economic hedges	 	—	 	(7	)	—	 	—	 	(7	)	
Adjustments to reflect NRG Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates	 	4	 	8	 	—	 	—	 	12	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	65	 	57	 	13	 	(3	)	132	 	
 
12

 
Appendix Table A-3: Cash Available for Distribution Reconciliation
 
The following table summarizes the calculation of Cash Available for Distribution and provides a reconciliation to Adjusted EBITDA:
 
 	 	Three Months Ended	 	
($ in millions)	 	3/31/16	 	3/31/15	 	
Adjusted EBITDA	 	188	 	132	 	
Pro-rata Adjusted EBITDA from unconsolidated affiliates	 	(29	)	(14	)	
Cash distributions from unconsolidated affiliates, net of tax equity proceeds	 	38	 	40	 	
Cash distributions to non-controlling interest	 	(5	)	—	 	
Cash distributions to non-controlling interest prior to Drop Down (NRG)	 	—	 	(9	)	
Cash interest paid	 	(52	)	(57	)	
Maintenance Capital expenditures	 	(6	)	(3	)	
Change in other assets	 	(37	)	(37	)	
Principal amortization of indebtedness	 	(54	)	(46	)	
Cash Available for Distribution	 	43	 	6	 	
 
Appendix Table A-4: Three Months Ended 2016 Sources and Uses of Liquidity
 
The following table summarizes the sources and uses of liquidity in the three months of 2016.
 
($ in millions)	 	Three months ended
March 31, 2016	 	
 	 	 	 	
Sources:	 	 	 	
Net cash provided by operating activities	 	102	 	
Proceeds from revolver, net of payments	 	10	 	
 	 	 	 	
Uses:	 	 	 	
Payments for long-term debt	 	54	 	
Net investments in unconsolidated affiliates	 	43	 	
Dividends and distributions to NRG Yield’s shareholders and NRG Energy	 	41	 	
Capital expenditures	 	7	 	
Net other cash outflows	 	2	 	
 	 	 	 	
Change in cash and cash equivalents	 	$	(35	)	

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Appendix Table A-5: Adjusted EBITDA and Cash Available for Distribution Guidance(6)
 
($ in millions)	 	2016 Full Year	 	
Income before Income Taxes	 	275	 	
Interest Expense, net	 	270	 	
Depreciation, Amortization, Contract Amortization, and ARO Expense	 	260	 	
Adjusted EBITDA	 	$	805	 	
Pro-rata Adjusted EBITDA from unconsolidated affiliates	 	(122	)	
Cash distributions from unconsolidated affiliates, net of tax equity proceeds	 	101	 	
Cash distributions to non-controlling interest	 	(13	)	
Cash interest paid	 	(235	)	
Maintenance capital expenditures	 	(25	)	
Change in other assets	 	(8	)	
Principal amortization of indebtedness	 	(238	)	
Estimated Cash Available for Distribution	 	$	265	 	
 
Appendix Table A-6: Seasonality of Quarterly Adjusted EBITDA and CAFD in Ranges(7)
 
 	 	1st Quarter	 	2nd Quarter	 	3rd Quarter	 	4th Quarter	 	
Adjusted EBITDA	 	21-22%	 	29-31%	 	25-27%	 	22-23%	 	
Cash Available for Distribution	 	13-17%	 	21-28%	 	48-52%	 	8-13%	 	
 
EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG Yield’s future results will be unaffected by unusual or non-recurring items.
 
EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because NRG Yield considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:
 
·                  EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
·                  EBITDA does not reflect changes in, or cash requirements for, working capital needs;
·                  EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
·                  Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
·                  Other companies in this industry may calculate EBITDA differently than NRG Yield does, limiting its usefulness as a comparative measure.
 
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG Yield’s business. NRG Yield compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only

(6)  Guidance excludes the impact of interest on cash drawn on NRG Yield’s revolving credit facility as of May 5th, 2016 which equates to $9 million on an annualized basis, subject to change
(7)  Seasonality based on full year guidance, percent ranges in table are primarily driven by potential variability in both wind and solar production; Renewable resources may experience deviation beyond +/-5%;  Other items which may impact CAFD include non-recurring events such as forced outages or timing of maintenance CapEx
 
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supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.
 
Adjusted EBITDA is presented as a further supplemental measure of operating performance. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which we do not consider indicative of future operating performance. The reader is encouraged to evaluate each adjustment and the reasons NRG Yield considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG Yield may incur expenses similar to the adjustments in this news release.
 
Cash Available for Distribution (CAFD) is adjusted EBITDA plus cash dividends from unconsolidated affiliates, less maintenance capital expenditures, pro-rata adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in others assets. Management believes cash available for distribution is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors.
 
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