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DEARBORN, Mich.--(BUSINESS WIRE)--Ford Motor Company’s Dearborn Truck Plant, home of the Ford F-150 and Ford Raptor, Michigan Assembly Plant, home of the new 2019 Ford Ranger, and several new buildings on the Ford Research and Engineering Campus and Corktown campus, including Michigan Central Station, will soon be powered by 100 percent locally sourced renewable energy. This is in addition to the 500-kilowatt solar photovoltaic panel system already in place at Michigan Assembly.

This collaboration is part of a commitment by Ford to a substantial renewable energy procurement through DTE Energy’s MIGreenPower program, supporting the company’s Southeast Michigan portfolio and providing 500,000 megawatt hours of locally sourced Michigan wind energy.

“Ford supports the implementation of renewable energy where the project can be tied to the customer’s facility, either directly or through the local distribution utility, and we believe that supports local jobs, improves the local environment and adds resiliency to the local grid,” said George Andraos, Ford Global Director of Energy and Technology. “This project is a great investment for the State of Michigan and will have direct impact on our state.”

“Ford is proud to be a part of this initiative, as it builds on the early achievement of our aggressive 30 percent per vehicle carbon reduction target,” said Andy Hobbs, Director, Environmental Quality Office. “That early achievement reduced the company’s annual footprint by 3.4 million metric tons.”

Ford plans to announce a new Global Carbon Reduction Strategy, which will focus on renewable energy in conjunction with the launch of the company’s 20th annual Sustainability Report in June.

With MIGreenPower, DTE electric customers can join the company’s efforts to develop more Michigan-made renewable energy by matching their energy use to local wind and solar projects. In January, DTE received approval from the Michigan Public Service Commission (MPSC) to expand its voluntary renewable offerings to include a tariff designed specifically for large corporate and industrial customers. Ford is the first company to announce involvement with this new tariff.

“Expanding MIGreenPower to help our largest corporate customers meet their sustainability goals is another milestone in our clean energy transformation,” said Trevor F. Lauer, president and COO, DTE Electric. “It’s exciting that iconic Ford vehicles like the F-150 will be built in a plant powered by DTE wind energy, and we appreciate the leadership role Ford is taking in reducing its carbon footprint and supporting our state’s clean energy economy.”

DTE plans to build additional renewable energy projects and expand MIGreenPower to meet increasing customer demand. As the state’s largest producer of renewable energy, DTE will more than double its renewable energy generation capacity, investing an additional $2 billion in wind and solar by 2024. Through its investment in renewable energy and other clean energy sources, DTE is delivering on its commitment to reduce carbon emissions by more than 80 percent by 2050. To learn more about DTE’s clean energy transformation, visit journeyto80.com.

To learn more about Ford’s sustainability performance, data and reporting, visit sustainability.ford.com.

About Ford Motor Company

Ford Motor Company is a global company based in Dearborn, Michigan. The company designs, manufactures, markets and services a full line of Ford cars, trucks, SUVs, electrified vehicles and Lincoln luxury vehicles, provides financial services through Ford Motor Credit Company and is pursuing leadership positions in electrification, autonomous vehicles and mobility solutions. Ford employs approximately 199,000 people worldwide. For more information regarding Ford, its products and Ford Motor Credit Company, please visit www.corporate.ford.com.

About DTE Energy

DTE Energy (NYSE: DTE) is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include an electric company serving 2.2 million customers in Southeastern Michigan and a natural gas company serving 1.3 million customers in Michigan. The DTE portfolio includes energy businesses focused on power and industrial projects, renewable natural gas, natural gas pipelines, gathering and storage, and energy marketing and trading. As an environmental leader, DTE will reduce carbon dioxide and methane emissions by more than 80 percent by 2050 to produce cleaner energy while keeping it safe, reliable and affordable. DTE is committed to being a force for good in the communities where it serves through volunteerism, education and employment initiatives, philanthropy and economic progress. Information about DTE is available at dteenergy.com, empoweringmichigan.com, twitter.com/dte_energy and facebook.com.

For news releases, related materials and high-resolution photos and video, visit www.media.ford.com.

DALLAS--(BUSINESS WIRE)--Flowserve Corporation (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, today announced its financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Highlights (all comparisons to the 2017 fourth quarter, unless otherwise noted)

  • Reported Earnings Per Share (EPS) of $0.48 and Adjusted EPS[1] of $0.58
    • Reported EPS includes pre-tax adjusted items of approximately $27 million, including realignment and transformation expenses and below-the-line foreign exchange impacts
    • Adjusted EPS increased 16%, and 18% on a sequential basis
  • Total bookings were $1.05 billion, up 6.1%, or 8.8% on a constant currency basis, and included approximately 1% negative impact related to divested businesses. Book-to-bill was 1.06
    • Aftermarket bookings were $533 million, or 51% of total bookings, up 14.9%, or 18.2% on a constant currency basis
  • Sales were $987 million, down 4.6%, or 2.0% on a constant currency basis and included approximately 1% negative impact related to divested businesses
    • Aftermarket sales were $496 million, down 1.2%, or up 1.9% on a constant currency basis
  • Reported gross and operating margins were 32.6% and 9.4%, respectively
    • Adjusted gross and operating margins[2] increased 300 and 170 basis points to 33.7% and 11.9%, respectively

Full Year 2018 Highlights (all comparisons to full year 2017, unless otherwise noted)

  • Reported EPS of $0.91 and Adjusted EPS[1] of $1.75
    • Reported EPS includes pre-tax adjusted items of approximately $146 million, primarily related to realignment and transformation expenses, a loss on divested assets and below-the-line foreign exchange impacts
  • Total bookings were $4.02 billion, up 5.7%, or 4.9% on a constant currency basis, and included approximately 1% negative impact related to divested businesses. Book-to-bill was 1.05.
    • Aftermarket bookings were $2.03 billion, or 50% of total bookings, up 10.6%, or 11.0% on a constant currency basis
  • Backlog at December 31, 2018 was $1.90 billion, up 5.3% versus 2018 beginning backlog
  • Sales were $3.83 billion, up 4.7%, or 3.8% on a constant currency basis and included approximately 1% negative impact related to divested businesses.
    • Aftermarket sales were $1.90 billion, up 6.3%, or 5.2% on a constant currency basis
  • Reported gross and operating margins of 31.0% and 6.5%, respectively
    • Adjusted gross and operating margins[2] increased 90 and 100 basis points to 32.3% and 9.8%, respectively

“The Flowserve 2.0 transformation continues to drive significant improvement as seen by the 29% increase in our full year 2018 adjusted EPS. Improved operational performance drove adjusted gross and operating margin expansion for both the quarter and full year, including IPD’s highest adjusted operating margin since 2015,” said Scott Rowe, Flowserve’s president and chief executive officer. “Double-digit growth in aftermarket bookings in the quarter, combined with an increased backlog at year-end provides a solid foundation for growth in 2019.”

Lee Eckert, Flowserve’s senior vice president and chief financial officer, added, “Flowserve delivered solid operating cash flow of $164 million in the 2018 fourth quarter, continuing the momentum of the second and third quarters. Working capital efficiency remains a key priority and we delivered improvement in 2018, including both inventory and accounts receivables declines since the beginning of 2018, even with growth in bookings and sales.”

Rowe concluded, “As we look to this year, we remain focused on advancing our Flowserve 2.0 initiatives to capitalize on the momentum we achieved in 2018. Our priorities include further operating improvements and driving strategic and deliberate growth. Despite the current market uncertainties from ongoing geopolitical headwinds, including tariffs, sanctions and certain regional challenges, we believe in our ability to deliver continued operational improvements together with top- and bottom-line growth. We look forward to our continued progress in 2019 as we remain committed to driving long-term value creation for our customers, employees and shareholders.”

2019 Initial Guidance[3]

Flowserve is providing Reported and Adjusted EPS guidance for 2019, as well as certain other financial metrics, as shown in the table below.

    2019 Target Range
Revenues Up 4.0% to 6.0%
Reported Earnings Per Share $1.60 - $1.80
Adjusted Earnings Per Share $1.95 - $2.15
Net interest expense $55 - $57 million
Adjusted Tax rate 26% - 28%
 

Flowserve’s 2019 Adjusted EPS target range excludes expected realignment and transformation charges of approximately $65 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items. Both the Reported and the Adjusted EPS target range includes the expected revenue increase of approximately 4.0 to 6.0 percent year-over-year, and is based on current foreign currency rates and commodity prices, 2018 year-end backlog, expected bookings levels and market conditions, the reset of annual incentive performance goals, a broad-based merit increase, modest above-the-line negative foreign currency impacts, net interest expense in the range of $55 to $57 million and an adjusted tax rate of 26 to 28 percent. The quarterly phasing of expected 2019 earnings is anticipated to reflect Flowserve’s traditional seasonality, although more pronounced in its second half weighting as additional transformation benefits are expected to be realized.

Fourth Quarter 2018 Results Conference Call

Flowserve will host its conference call with the financial community on Thursday, February 21st at 11:00 AM Eastern. Scott Rowe, president and chief executive officer, as well as other members of the management team will be presenting. The call can be accessed by shareholders and other interested parties at www.flowserve.com under the “Investor Relations” section.

[1]   See Reconciliation of Non-GAAP Measures table for detailed reconciliation of reported results to adjusted measures.
[2] Adjusted gross and operating margins are calculated by dividing adjusted gross profit and adjusted operating income, respectively, by revenues. Adjusted gross profit and adjusted operating income are derived by excluding the adjusted items. See reconciliation of Non-GAAP Measures table for detailed reconciliation.
[3] Adjusted 2019 EPS will exclude the Company’s realignment expenses, the impact from other specific one-time events and below-the-line foreign currency effects and utilizes year-end 2018 FX rates and approximately 131 million fully diluted shares.
_ FX headwind is calculated by comparing the difference between the actual average FX rates of 2018 and the year-end 2018 spot rates both as applied to our 2019 expectations, divided by the number of shares expected for 2019.
 

About Flowserve

Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com.

Safe Harbor Statement: This news release includes 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, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from our strategic transformation and realignment initiatives, our business could be adversely affected; risks associated with cost overruns on fixed-fee projects and in taking customer orders for large complex custom engineered products; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Russian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; our furnishing of products and services to nuclear power plant facilities and other critical processes; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Throughout our materials we refer to non-GAAP measures as “Adjusted.” Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
  Three Months Ended December 31,
(Amounts in thousands, except per share data)   2018       2017  
 
Sales $ 986,867 $ 1,034,069
Cost of sales   (665,022 )   (727,575 )
Gross profit 321,845 306,494
Selling, general and administrative expense (231,869 ) (221,422 )
Gain on sale of businesses - 159
Net earnings from affiliates   3,235     3,564  
Operating income 93,211 88,795
Interest expense (14,516 ) (15,041 )
Interest income 2,228 1,056
Other expense, net   (2,362 )   (7,855 )
Earnings before income taxes 78,561 66,955
Provision for income taxes   (14,197 )   (172,843 )
Net earnings (loss), including noncontrolling interests 64,364 (105,888 )
Less: Net (earnings) loss attributable to noncontrolling interests   (1,261 )   6  
Net earnings (loss) attributable to Flowserve Corporation $ 63,103   $ (105,882 )
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.48 $ (0.81 )
Diluted 0.48 (0.81 )
       
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended December 31, 2018
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 986,867 $ - $ - $ 986,867
Gross profit 321,845 (11,104 ) - 332,949

Gross margin

32.6 % - - 33.7 %
 
Selling, general and administrative expense (231,869 ) 513 (13,815 ) (3) (218,567 )
Loss on sale of business - - - -
 
Operating income 93,211 (10,591 ) (13,815 ) 117,617
Operating income as a percentage of sales 9.4 % - - 11.9 %
 
Interest and other expense, net (14,650 ) - (2,337 ) (4) (12,313 )
 
Earnings before income taxes 78,561 (10,591 ) (16,152 ) 105,304
Provision for income taxes (14,197 ) 3,211 (2) 10,062 (5) (27,470 )
Tax Rate 18.1 % 30.3 % 62.3 % 26.1 %
 
Net earnings attributable to Flowserve Corporation $ 63,103 $ (7,380 ) $ (6,090 ) $ 76,573
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.48 $ (0.06 ) $ (0.05 ) $ 0.59
Diluted $ 0.48 $ (0.06 ) $ (0.05 ) $ 0.58
 
Basic number of shares used for calculation 130,845 130,845 130,845 130,845
Diluted number of shares used for calculation 131,413 131,413 131,413 131,413
 
(a) Reported in conformity with U.S. GAAP
 

Notes:

(1) Represents realignment expense incurred as a result of realignment programs
(2) Includes tax impact of items above
(3) Represents Flowserve 2.0 transformation efforts
(4) Represents below-the-line foreign exchange impacts
(5) Includes tax impact of items above and a $5.7 million tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017
       
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended December 31, 2017
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 1,034,069 $ - $ - $ 1,034,069
Gross profit 306,494 (10,575 ) - 317,069
Gross margin 29.6 % - - 30.7 %
 
Selling, general and administrative expense (221,422 ) (1,672 ) (4,115 ) (3) (215,635 )
Gain on sale of businesses 159 - 159 (4) -
 
Operating income 88,796 (12,247 ) (3,956 ) 104,999
Operating income as a percentage of sales 8.6 % - - 10.2 %
 
Interest and other expense, net (21,841 ) - (4,294 ) (5) (17,547 )
 
Earnings before income taxes 66,955 (12,247 ) (8,250 ) 87,452
Provision for income taxes (172,843 ) 4,361 (2) (155,538 ) (6) (21,666 )
Tax Rate 258.1 % 35.6 % -1885.3 % 24.8 %
 
Net (loss) earnings attributable to Flowserve Corporation $ (105,882 ) $ (7,886 ) $ (163,788 ) $ 65,792
 
Net (loss) earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ (0.81 ) $ (0.06 ) $ (1.25 ) $ 0.50
Diluted $ (0.81 ) $ (0.06 ) $ (1.25 ) $ 0.50
 
Basic number of shares used for calculation 130,681 130,758 130,758 130,758
Diluted number of shares used for calculation 130,681 131,417 131,417 131,417
 
(a) Reported in conformity with U.S. GAAP
 

Notes:

(1) Represents realignment expense incurred as a result of realignment programs
(2) Includes tax impact of items above
(3) Represents $1.2 million of SIHI integration costs and purchase price adjustments ("PPA") and $2.9 million of Mexico asset impairment charge
(4) Represents gain related to the sale of Vogt business
(5) Represents below-the-line foreign exchange impacts
(6) Includes tax impact of items above, a $115.3 million tax charge related to the U.S. Tax Cuts and Jobs Act of 2017 and certain tax valuation allowances totaling $43.1 million
   
SEGMENT INFORMATION
(Unaudited)
ENGINEERED PRODUCT DIVISION Three Months Ended December 31,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 545.0 $ 485.5
Sales 484.6 498.9
Gross profit 146.6 141.7
Gross profit margin 30.3 % 28.4 %
SG&A 90.6 93.9
Segment operating income 59.1 51.5
Segment operating income as a percentage of sales 12.2 % 10.3 %
 
INDUSTRIAL PRODUCT DIVISION Three Months Ended December 31,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 203.2 $ 205.8
Sales 196.4 215.3
Gross profit 59.2 45.9
Gross profit margin 30.1 % 21.3 %
SG&A 40.5 49.1
Segment operating income (loss) 18.9 (2.9 )
Segment operating income (loss) as a percentage of sales 9.6 % (1.4 %)
 
FLOW CONTROL DIVISION Three Months Ended December 31,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 318.0 $ 314.1
Sales 325.9 344.6
Gross profit 118.3 118.8
Gross profit margin 36.3 % 34.5 %
SG&A 53.8 49.7
Gain on sale of businesses - 0.2
Segment operating income 64.5 68.8
Segment operating income as a percentage of sales 19.8 % 20.0 %
 
CONSOLIDATED STATEMENTS OF INCOME
     
Year Ended December 31,
(Amounts in thousands, except per share data)   2018     2017     2016  
 
Sales $ 3,832,666 $ 3,660,831 $ 3,990,487
Cost of sales   (2,644,830 )   (2,571,878 )   (2,753,689 )
Gross profit 1,187,836 1,088,953 1,236,798
Selling, general and administrative expense (943,714 ) (901,727 ) (965,376 )
(Loss) gain on sale of businesses (7,727 ) 141,317 (7,664 )
Net earnings from affiliates   11,143     12,592     12,926  
Operating income 247,538 341,135 276,684
Interest expense (58,160 ) (59,730 ) (60,137 )
Interest income 6,465 3,429 2,804
Other expense, net   (19,569 )   (21,827 )   (6,439 )
Earnings before income taxes 176,274 263,007 212,912
Provision for income taxes   (51,224 )   (258,679 )   (77,380 )
Net earnings, including noncontrolling interests 125,050 4,328 135,532
Less: Net earnings attributable to noncontrolling interests   (5,379 )   (1,676 )   (3,077 )
Net earnings attributable to Flowserve Corporation $ 119,671   $ 2,652   $ 132,455  
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.91 $ 0.02 $ 1.02
Diluted 0.91 0.02 1.01
       
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
12 Months Ended December 31, 2018
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 3,832,666 $ - $ - $ 3,832,666
Gross profit 1,187,836 (42,697 ) (7,713 ) (3) 1,238,246
Gross margin 31.0 % - - 32.3 %
 
Selling, general and administrative expense (943,714 ) (11,235 ) (58,180 ) (4) (874,299 )
Gain on sale of business (7,727 ) - (7,727 ) (5) -
 
Operating income 247,538 (53,932 ) (73,620 ) 375,090
Operating income as a percentage of sales 6.5 % - - 9.8 %
 
Interest and other expense, net (71,264 ) - (18,686 ) (6) (52,578 )
 
Earnings before income taxes 176,274 (53,932 ) (92,306 ) 322,512
Provision for income taxes (51,225 ) 12,863 (2) 23,273 (7) (87,361 )
Tax Rate 29.1 % 23.9 % 25.2 % 27.1 %
 
Net earnings attributable to Flowserve Corporation $ 119,671 $ (41,069 ) $ (69,033 ) $ 229,773
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.91 $ (0.31 ) $ (0.53 ) $ 1.76
Diluted $ 0.91 $ (0.31 ) $ (0.53 ) $ 1.75
 
Basic number of shares used for calculation 130,823 130,823 130,823 130,823
Diluted number of shares used for calculation 131,271 131,271 131,271 131,271
 
(a) Reported in conformity with U.S. GAAP
 

Notes:

(1) Represents realignment expense incurred as a result of realignment programs
(2) Includes tax impact of items above
(3) Represents $7.7 million related to IPD divestiture write-down of assets
(4) Represents $9.7 million related to IPD divestiture write-down of assets, $7.3 million related to implementation costs for the adoption of ASC 606 and $41.2 million related to Flowserve 2.0 transformation efforts
(5) Represents IPD loss on sale of business
(6) Represents below-the-line foreign exchange impacts
(7) Includes tax impact of items above and a $5.7 million tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017
       
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Twelve Months Ended December 31, 2017
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 3,660,831 $ - $ - $ 3,660,831
Gross profit 1,088,953 (43,946 ) (16,928 ) (3) 1,149,827
Gross margin 29.7 % - - 31.4 %
 
Selling, general and administrative expense (901,727 ) (27,308 ) (33,798 ) (4) (840,621 )
Gain on sale of businesses 141,317 - 141,317 (5) -
 
Operating income 341,135 (71,254 ) 90,591 321,798
Operating income as a percentage of sales 9.3 % - - 8.8 %
 
Interest and other expense, net (78,128 ) - (13,965 ) (6) (64,163 )
 
Earnings before income taxes 263,007 (71,254 ) 76,626 257,635
Provision for income taxes (258,679 ) 17,003 (2) (198,264 ) (7) (77,418 )
Tax Rate 98.4 % 23.9 % 258.7 % 30.0 %
 
Net earnings attributable to Flowserve Corporation $ 2,652 $ (54,251 ) $ (121,638 ) $ 178,541
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.02 $ (0.42 ) $ (0.93 ) $ 1.37
Diluted $ 0.02 $ (0.41 ) $ (0.93 ) $ 1.36
 
Basic number of shares used for calculation 130,703 130,703 130,703 130,703
Diluted number of shares used for calculation 131,358 131,358 131,358 131,358
 
(a) Reported in conformity with U.S. GAAP
 

Notes:

(1) Represents realignment expense incurred as a result of realignment programs
(2) Includes tax impact of items above
(3) Represents reserve for costs incurred related to a contract to supply oil and gas platform equipment to an end user in Latin America
(4) Represents $4.4 million of SIHI integration costs and purchase price adjustments ("PPA"), $29.0 million of asset impairment charges and $0.4 million reserve for costs incurred related to a contract to supply oil and gas platform equipment to an end user in Latin America
(5) Represents gain related to the sale of Gestra and Vogt businesses
(6) Represents below-the-line foreign exchange impacts
(7) Includes tax impact of items above, a $115.3 million tax charge related to the U.S. Tax Cuts and Jobs Act of 2017 and certain tax valuation allowances totaling $43.1 million
     
SEGMENT INFORMATION
 
ENGINEERED PRODUCT DIVISION Year Ended December 31,
(Amounts in millions, except percentages)   2018     2017     2016  
Bookings $ 1,995.1 $ 1,842.1 $ 1,823.8
Sales 1,899.2 1,775.4 1,996.0
Gross profit 586.0 545.9 624.0
Gross profit margin 30.9 % 30.7 % 31.3 %
SG&A 390.5 399.3 457.6
Loss on sale of business - - (7.7 )
Segment operating income 206.9 159.1 171.1
Segment operating income as a percentage of sales 10.9 % 9.0 % 8.6 %
 
INDUSTRIAL PRODUCT DIVISION Year Ended December 31,
(Amounts in millions, except percentages)   2018     2017     2016  
Bookings $ 838.5 $ 821.7 $ 797.7
Sales 799.4 775.2 835.1
Gross profit 189.4 144.1 183.2
Gross profit margin 23.7 % 18.6 % 21.9 %
SG&A 188.4 193.7 189.3
Loss on sale of business (7.7 ) - -
Segment operating loss (6.2 ) (48.8 ) (5.2 )
Segment operating loss as a percentage of sales -0.8 % -6.3 % -0.6 %
 
FLOW CONTROL DIVISION Year Ended December 31,
(Amounts in millions, except percentages)   2018     2017     2016  
Bookings $ 1,274.3 $ 1,225.7 $ 1,216.8
Sales 1,215.8 1,188.1 1,233.7
Gross profit 416.9 396.7 429.9
Gross profit margin 34.3 % 33.4 % 34.8 %
SG&A 215.0 213.6 226.9
Gain on sale of businesses - 141.3 -
Segment operating income 201.2 323.7 202.6
Segment operating income as a percentage of sales 16.5 % 27.2 % 16.4 %
           
Fourth Quarter and Year-to-Date 2018 - Segment Results
(dollars in millions, comparison vs. 2017 fourth quarter and year-to-date, unaudited)
 
EPD IPD FCD
4th Qtr YTD 4th Qtr YTD 4th Qtr YTD
Bookings $ 545.0 $ 1,995.1 $ 203.2 $ 838.5 $ 318.0 $ 1,274.3
- vs. prior year 12.3 % 8.3 % -1.3 % 2.0 % 1.2 % 4.0 %
- on constant currency 15.3 % 7.9 % 1.0 % 0.5 % 3.5 % 3.0 %
 
Sales $ 484.6 $ 1,899.2 $ 196.4 $ 799.4 $ 325.9 $ 1,215.8
- vs. prior year -2.9 % 7.0 % -8.8 % 3.1 % -5.4 % 2.3 %
- on constant currency - 6.3 % -6.8 % 1.7 % -3.2 % 1.7 %
 
Gross Profit $ 146.6 $ 586.0 $ 59.2 $ 189.4 $ 118.3 $ 416.9
- vs. prior year 3.4 % 7.3 % 29.0 % 31.4 % -0.4 % 5.1 %
 
Gross Margin (% of sales) 30.3 % 30.9 % 30.1 % 23.7 % 36.3 % 34.3 %
- vs. prior year (in basis points) 190 bps 20 bps 880 bps 510 bps 180 bps 90 bps
 
Operating Income / (Loss) $ 59.1 $ 206.9 $ 18.9 $ (6.2 ) $ 64.5 $ 201.2
- vs. prior year 14.8 % 30.0 % 751.7 % 87.3 % -6.3 % -37.8 %
- on constant currency 19.6 % 29.3 % 765.6 % 91.0 % -3.9 % -37.4 %
 
Operating Margin (% of sales) 12.2 % 10.9 % 9.6 % -0.8 % 19.8 % 16.5 %
- vs. prior year (in basis points) 190 bps 190 bps 1090 bps 550 bps 20 bps (1070) bps
 
Adjusted Operating Income / (Loss) * $ 70.3 $ 245.1 $ 20.1 $ 26.0 $ 62.8 $ 204.1
- vs. prior year 17.6 % 14.7 % NM NM -10.8 % 3.7 %
- on constant currency 21.7 % 14.2 % NM NM -8.5 % 4.4 %
 
Adj. Oper. Margin (% of sales)* 14.5 % 12.9 % 10.2 % 3.3 % 19.3 % 16.8 %
- vs. prior year (in basis points) 250 bps 90 bps 950 bps 350 bps (110) bps 20 bps
 
Backlog $ 922.6 $ 394.0 $ 608.4
 

* Adjusted Operating Income and Adjusted Operating Margin exclude realignment and transformation charges, below-the-line FX impacts and other specific discrete items

   
CONSOLIDATED BALANCE SHEETS
 
December 31,
(Amounts in thousands, except per share data)   2018     2017  
 
ASSETS
Current assets:
Cash and cash equivalents $ 619,683 $ 703,445
Accounts receivable, net 792,434 856,711
Contract assets, net 228,579 -
Inventories, net 633,871 884,273
Prepaid expenses and other   108,578     114,316  
Total current assets 2,383,145 2,558,745
Property, plant and equipment, net 610,096 671,796
Goodwill 1,197,640 1,218,188
Deferred taxes 44,682 51,974
Other intangible assets, net 190,550 210,049
Other assets, net   190,164     199,722  
Total assets $ 4,616,277   $ 4,910,474  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable 418,893 443,113
Accrued liabilities 391,406 724,196
Contract liabilities 202,458 -
Debt due within one year   68,218     75,599  

Total current liabilities

1,080,975 1,242,908
Long-term debt due after one year 1,414,829 1,499,658
Retirement obligations and other liabilities 459,693 496,954
Shareholders’ equity:
Common shares, $1.25 par value 220,991 220,991
Shares authorized – 305,000
Shares issued — 176,793 and 176,793, respectively
Capital in excess of par value 494,551 488,326
Retained earnings 3,543,007 3,503,947
Treasury shares, at cost — 46,237 and 46,471 shares, respectively (2,049,404 ) (2,059,558 )
Deferred compensation obligation 7,117 6,354
Accumulated other comprehensive loss   (573,947 )   (505,473 )
Total Flowserve Corporation shareholders' equity 1,642,315 1,654,587
Noncontrolling interests   18,465     16,367  
Total equity   1,660,780     1,670,954  
Total liabilities and equity $ 4,616,277   $ 4,910,474  
     
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Year Ended December 31,
(Amounts in thousands)   2018     2017     2016  
 
Cash flows – Operating activities:
Net earnings, including noncontrolling interests $ 125,050 $ 4,328 $ 135,532
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation 95,820 101,438 99,897
Amortization of intangible and other assets 16,653 17,016 16,855
Loss (gain) on disposition of businesses 7,727 (141,317 ) 7,664
Stock-based compensation 19,912 22,820 30,213
Provision for U.S. Tax Cuts and Jobs Act of 2017 and Latin America accounts receivable reserve (5,654 ) 115,320 73,452
Foreign currency, asset impairments and other non-cash adjustments 36,052 33,087 (8,127 )
Change in assets and liabilities:
Accounts receivable, net (25,448 ) 60,216 36,927
Inventories, net (29,314 ) 48,642 52,892
Contract assets, net (23,693 ) - -
Prepaid expenses and other assets, net (7,869 ) 32,935 (45,475 )
Contract liabilities 33,710 - -
Accounts payable (4,823 ) 12,403 (71,008 )
Accrued liabilities and income taxes payable (18,248 ) (3,383 ) (88,770 )
Retirement obligations and other (44,314 ) (43,431 ) 16,372
Net deferred taxes   15,270     50,992     (15,948 )
Net cash flows provided by operating activities   190,831     311,066     240,476  
Cash flows – Investing activities:
Capital expenditures (83,993 ) (61,602 ) (89,699 )
Proceeds from disposal of assets 6,190 5,435 3,294
(Payments for) proceeds from disposition of businesses   (3,663 )   232,767     (5,064 )
Net cash flows (used) provided by investing activities   (81,466 )   176,600     (91,469 )
Cash flows – Financing activities:
Payments on long-term debt (60,000 ) (60,000 ) (60,000 )
Payments of deferred loan costs - (1,503 ) -
Proceeds under other financing arrangements 3,377 7,359 35,680
Payments under other financing arrangements (9,853 ) (19,030 ) (12,636 )
Payments related to tax withholding for stock-based compensation (3,061 ) (6,238 ) (10,405 )
Payments of dividends (99,416 ) (99,233 ) (97,746 )
Other   (4,331 )   (6,708 )   1,386  
Net cash flows used by financing activities (173,284 ) (185,353 ) (143,721 )
Effect of exchange rate changes on cash   (19,843 )   33,970     (4,568 )
Net change in cash and cash equivalents (83,762 ) 336,283 718
Cash and cash equivalents at beginning of period   703,445     367,162     366,444  
Cash and cash equivalents at end of period $ 619,683   $ 703,445   $ 367,162  
Income taxes paid (net of refunds) $ 87,009 $ 59,409 $ 151,191
Interest paid 54,576 56,808 57,393
       
CONSOLIDATED QUARTERLY FINANCIAL DATA
(Unaudited)
(Amounts in millions, except per share data)
2018
Quarter 4th 3rd 2nd 1st
Sales $ 986.9 $ 952.7 $ 973.1 $ 920.0
Gross profit 321.8 308.5 286.1 271.4
Earnings before income taxes 78.6 44.4 28.3 25.0
Net earnings attributable to Flowserve Corporation 63.1 28.2 13.2 15.1
Earnings per share (1):
Basic $ 0.48 $ 0.22 $ 0.10 $ 0.12
Diluted $ 0.48 $ 0.21 $ 0.10 $ 0.12
 
 
2017
Quarter 4th 3rd 2nd 1st
Sales $ 1,034.1 $ 883.4 $ 877.1 $ 866.3
Gross profit 304.4 267.5 245.0 268.4
Earnings before income taxes 67.0 68.4 103.0 24.6
Net (loss) earnings attributable to Flowserve Corporation (105.9 ) 47.6 41.9 19.1
(Loss) earnings per share (1):
Basic ($0.81 ) $ 0.36 $ 0.32 $ 0.15
Diluted ($0.81 ) $ 0.36 $ 0.32 $ 0.15
 
(1) Earnings per share is computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in weighted average quarterly shares outstanding.

CAMDEN, N.J.--(BUSINESS WIRE)--American Water Works Company, Inc. (NYSE: AWK) today reported results for the fourth quarter and year ended Dec 31, 2018.

"This past year was one of strong growth for American Water and outstanding execution by our employees," said Susan Story, president and CEO of American Water. "Our 2018 adjusted EPS increased 8.9% over adjusted 2017. To meet the nationally recognized need to improve water infrastructure, we invested $1.5 billion in capital into investment in our water and wastewater systems. We also completed the $365 million acquisition of Pivotal Home Solutions welcoming 650,000 new warranty customers, and we added 25,000 new customers through closed acquisitions and organic growth. We also look forward to welcoming an additional 61,000 customers through signed acquisitions following regulatory approval.

“We plan to invest between $8.0 billion to $8.6 billion over the next five years," added Story. "We are also affirming our 2019 EPS guidance of $3.54 to $3.64, and remain confident in our ability to achieve growth in the top half of our long-term EPS range of 7 to 10%."

Consolidated Results Adjusted Earnings per Share Reconciliation (A Non-GAAP, unaudited measure)

   

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2018   2017 2018   2017
Diluted earnings per share (GAAP):
Net income attributable to common stockholders $ 0.62 $ (0.01 ) $ 3.15 $ 2.38
Adjustments:
Gain on sale of portion of Contract Services Group contracts (0.08 )
Income tax impact     0.02    
Net adjustment     (0.06 )  
 
Keystone impairment charge 0.31
Income tax impact (0.08 )
Net loss attributable to noncontrolling interest     (0.01 )  
Net adjustment     0.22    
 
Freedom Industries settlement and insurance recoveries (0.11 ) (0.12 )
Income tax impact     0.03   0.05  
Net adjustment     (0.08 ) (0.07 )
 
Early extinguishment of debt at the parent company 0.03
Income tax impact       (0.01 )
Net adjustment       0.02  
 
Impact of re-measurement from the Tax Cuts and Jobs Act 0.07 0.70 0.07 0.70
       
Total net adjustments $ 0.07   $ 0.70   $ 0.15   $ 0.65  
           
Adjusted diluted earnings per share (non-GAAP) $ 0.69   $ 0.69   $ 3.30   $ 3.03  
 

For the fourth quarter of 2018, diluted earnings per share (GAAP) were $0.62, compared to $(0.01) in the same period of 2017, which includes the item identified in the table above and discussed in greater detail in “Adjustments to GAAP” below.

Excluding the adjustment identified in the table above, adjusted diluted earnings per share (a non-GAAP measure) were $0.69 for the fourth quarter of 2018, flat as compared to the same period in 2017.

These results were driven by continued growth in the Regulated Businesses offset by a positive impact in 2017 from the implementation of new depreciation rates in our Illinois subsidiary and the lower tax shield on interest expense at the parent from tax reform.

For the full year 2018, diluted earnings per share (GAAP) were $3.15, compared to $2.38 in the same period of 2017, which includes the items identified in the table above and discussed in greater detail in “Adjustments to GAAP” below.

Excluding the net adjustments identified in the table above, adjusted diluted earnings per share (a non-GAAP measure) were $3.30 in 2018, an increase of $0.27 per diluted share, or 8.9%, compared to adjusted 2017.

These results were driven by continued growth in the Regulated Businesses, resulting from infrastructure investment, acquisitions and organic growth, combined with strong results in the Market-Based Businesses, mainly from Homeowner Services Group with the mid-year acquisition on Pivotal Home Solutions. These increases were partially offset by the lower tax shield on interest expense at the parent from tax reform.

For the full year 2018, the company made capital investments of approximately $2.0 billion, including $1.5 billion dedicated primarily to improving infrastructure in the Regulated Businesses, $365 million for the Pivotal acquisition, and $100 million primarily for the new headquarters building.

Regulated Businesses Adjusted Net Income Reconciliation (A Non-GAAP, unaudited measure)

   

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2018   2017 2018   2017
Net income (GAAP) $ 118 $ 113 $ 602 $ 559
Adjustments:
Impact of Freedom Industries settlement activities (20 ) (22 )
Income tax impact     5   9  
Net adjustment     (15 ) (13 )
 
Impact of the Tax Cuts and Jobs Act 6 8 6
       
Total net adjustments   6   (7 ) (7 )
       
Adjusted net income (non-GAAP) $ 118   $ 119   $ 595   $ 552  
 

In the fourth quarter of 2018, net income in the Regulated Businesses (GAAP) was $118 million, compared to $113 million for the same period in 2017, which includes the item identified in the table above and discussed in greater detail in “Adjustments to GAAP” below.

Excluding the adjustment identified in the table above, adjusted net income in the Regulated Businesses (a non-GAAP measure) was $118 million for the fourth quarter of 2018, compared to $119 million for the same period in 2017.

These results were driven by an increase in Regulated revenue of approximately $7 million, comprised of a $49 million increase from additional authorized revenue to support infrastructure investments, acquisitions, and organic growth, partially offset by the $38 million impact of the lower federal corporate income tax rate expected to benefit customers. The company had higher O&M expense of $15 million to support regulated acquisitions and other growth and timing of expenses including tank painting in New Jersey. Depreciation, interest, and general taxes increased $26 million, mainly from infrastructure investment growth and a positive impact in 2017 from the implementation of new depreciation rates in our Illinois subsidiary. Income taxes were lower by $31 million mainly due to the lower federal corporate income tax rate under the Tax Cuts and Jobs Act (the “TCJA”) of $28 million.

For the full year 2018, net income in the Regulated Businesses (GAAP) was $602 million, compared to $559 million for the same period in 2017, which includes the items identified in the table above and discussed in greater detail in “Adjustments to GAAP” below.

Excluding the adjustments identified in the table above, adjusted net income in the Regulated Businesses (a non-GAAP measure) was $595 million, compared to $552 million for the same period in 2017.

These results were driven by an increase in Regulated revenue of $26 million, comprised of a $171 million increase from additional authorized revenue to support infrastructure investments, acquisitions, and organic growth, largely offset by $148 million resulting from the lower federal corporate income tax rate that is expected to benefit customers. The company had higher O&M expense of $83 million including: $20 million to support regulated acquisition and other growth, $15 million of higher production expense for purchased water price increases in our California subsidiary and higher chemical costs resulting from weather conditions in 2018, $13 million from the timing of maintenance and operating activities, including higher tank painting expense in New Jersey and higher main breaks from the frigid weather conditions across several regulated states during the first quarter of 2018; $9 million in customer uncollectible expense and higher call volume at our customer service centers; $7 million of higher insurance expense, and $5 million related to the settlement of litigation in our New York subsidiary. Depreciation, interest, and general taxes increased $67 million from infrastructure investment growth. Income taxes were lower by $143 million mainly due to the lower federal corporate income tax rate under the TCJA of $114 million.

For the full year 2018, the company received additional annualized revenues of approximately $150 million from general rate cases and step increases and approximately $21 million in additional annualized revenues from infrastructure surcharges. The company is awaiting final orders for general rate cases in three states and filed for infrastructure surcharges in one state for a total annualized revenue request of approximately $45 million. The extent to which requested rate increases will be granted by the applicable regulatory agencies will vary.

For the full year 2018, the adjusted regulated O&M efficiency ratio (a non-GAAP financial measure) was 35.6%, compared to 35.3% for the full year 2017. The unfavorability in our adjusted O&M efficiency ratio in 2018 when compared to 2017, was primarily due to additional expense from a settlement of litigation in our New York subsidiary and higher expenses incurred from colder weather experienced during the first quarter of 2018. By reducing O&M expense as a proportion of revenue, American Water is able to make investments in needed capital improvements without significantly impacting customer bills.

Market-Based Businesses Adjusted Net Income Reconciliation (A Non-GAAP, unaudited measure)

   

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2018   2017 2018   2017
Net income (GAAP) $ 14 $ 9 $ 32 $ 38
Adjustments:
Keystone Impairment charge 57
Income tax impact (15 )
Net loss attributable to noncontrolling interest     (2 )
Net adjustment     40  
 
Gain on sale of portion of Contract Services Group contracts (14 )
Income tax impact     4  
Net adjustment     (10 )
 
Impact of the Tax Cuts and Jobs Act 5 5
       
Adjusted net income (non-GAAP) $ 14   $ 14   $ 62   $ 43
 

In the fourth quarter of 2018, net income (GAAP) in the Market-Based Businesses was $14 million, compared to $9 million of net income for the same period in 2017. The increase was primarily driven by the Homeowner Services Group with the Pivotal integration proceeding as expected.

For the full year 2018, net income (GAAP) in the Market-Based Businesses was $32 million, compared to $38 million for the same period in 2017, which includes the items identified in the table above and discussed in greater detail in “Adjustments to GAAP” below.

Excluding the adjustments identified in the table above, adjusted net income in the Market-Based Businesses was $62 million, compared to $43 million for the same period in 2017.

These results were primarily driven by the Homeowner Services Group with the Pivotal integration proceeding as expected; customer growth and cost management.

Dividends

On Dec 7, 2018, our Board of Directors declared a quarterly cash dividend payment of $0.455 per share payable on Mar 1, 2019, to shareholders of record as of Feb 7, 2019.

2019 Earnings Guidance

American Water has affirmed its 2019 earnings guidance to be in the range of $3.54 - $3.64 per diluted share. The Company’s earnings forecasts are subject to numerous risks and uncertainties, including, without limitation, those described under “Forward-Looking Statements” below and under “Risk Factors” in its annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”).

Adjustments to GAAP

This press release includes presentations of consolidated adjusted diluted earnings per share (“Adjusted EPS”) as well as adjusted net income for the Regulated Businesses and the Market-Based Businesses. These items constitute “non-GAAP financial measures” under SEC rules. Adjusted EPS is defined as GAAP diluted earnings per common share, excluding the impact of one or more of the following events: (i) a gain in the third quarter of 2018 on the sale of the majority of our Contract Services Group’s O&M contracts; (ii) a goodwill and intangible impairment charge in the third quarter of 2018 resulting from narrowing the scope of the Keystone business; (iii) insurance settlements received in the third quarter of 2017 and the second quarter of 2018 related to the Freedom Industries chemical spill in West Virginia; (iv) non-cash re-measurement charges recorded in the fourth quarters of 2017 and 2018 resulting from the impact of the change in the federal corporate income tax rate on the company’s deferred income taxes from the enactment of the TCJA; and (v) an early extinguishment of debt at the parent company in the third quarter of 2017. Adjusted net income for the Regulated Businesses is defined as GAAP diluted net income for the Regulated Businesses, excluding the impact of the following events: (i) insurance settlements received in the third quarter of 2017 and the second quarter of 2018 related to the Freedom Industries chemical spill; and (ii) the non-cash re-measurement charge in the fourth quarter of 2017 associated with the change in the federal corporate income tax rate on American Water's deferred income taxes from the enactment of the TCJA. Adjusted net income for the Market-Based Businesses is defined as GAAP diluted net income for the Market-Based Businesses, excluding the impact of the following events: (i) a gain in the third quarter of 2018 on the sale of the majority of our Contract Services Group’s O&M contracts; (ii) a goodwill and intangible impairment charge in the third quarter of 2018 resulting from the narrowing of the scope of the Keystone business; and (iii) the non-cash re-measurement charge in the fourth quarter of 2017 associated with the impact of the change in the federal corporate income tax rate on American Water's deferred income taxes from the enactment of the TCJA. These non-GAAP financial measures supplement the company’s GAAP disclosures and should not be considered as alternatives to the GAAP measures.

Management believes that the presentation of these non-GAAP financial measures are useful to American Water’s investors because they provide an indication of its baseline performance excluding items that are not considered by management to be reflective of ongoing operating results. Although management uses these non-GAAP financial measures internally to evaluate American Water’s results of operations, management does not intend results excluding the adjustments to represent results as defined by GAAP, and the reader should not consider them as indicators of performance. These non-GAAP financial measures are derived from American Water’s consolidated financial information but are not presented in its financial statements prepared in accordance with GAAP. The company’s definition of adjusted net income or Adjusted EPS may not be comparable to the same or similar measures used by other companies, and, accordingly, these non-GAAP financial measures may have significant limitations on their use.

Set forth in this release is a table that reconciles each of adjusted net income and Adjusted EPS to its most directly comparable GAAP financial measure.

This press release also includes a presentation of adjusted regulated O&M efficiency ratio, which excludes from its calculation estimated purchased water revenues and purchased water expenses, the impact of certain activities related to the Freedom Industries chemical spill, and the allocable portion of non-O&M support services costs, mainly depreciation and general taxes. This item constitutes a “non-GAAP financial measure” under SEC rules. This item is derived from American Water’s consolidated financial information but is not presented in its financial statements prepared in accordance with GAAP. This non-GAAP financial measure supplements and should be read in conjunction with the company’s GAAP disclosures and should not be considered an alternative to any GAAP measure.

Management believes that the presentation of this measure is useful to investors because it provides a means of evaluating the company’s operating performance without giving effect to items that are not reflective of management’s ability to increase efficiency of the company’s regulated operations. In preparing operating plans, budgets and forecasts, and in assessing historical performance, management relies, in part, on trends in the company’s historical results, exclusive of estimated revenues and expenses related to purchased water, the impact of settlement activities related to the Freedom Industries chemical spill and the allocable portion of non-O&M support services costs. The company’s definition of this metric may not be comparable to the same or similar measures used by other companies, and, accordingly, this non-GAAP financial measure may have significant limitations on its use.

Set forth in this release is a table that reconciles each of the components used to calculate adjusted regulated O&M efficiency ratio to the most directly comparable GAAP financial measure.

2018 Year-end and Fourth Quarter Earnings Conference Call

The 2018 and fourth quarter earnings conference call will take place on Wednesday, Feb 20, 2019, at 9 a.m. Eastern Standard Time. Interested parties may listen to the conference call over the Internet by logging on to the Investor Relations page of the company’s website at ir.amwater.com. Presentation slides that will be used in conjunction with the earnings conference call will also be made available online. The company recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under SEC Regulation FD.

Following the earnings conference call, an audio archive of the call will be available through Feb 27, 2019. U.S. callers may access the audio archive toll-free by dialing 1-877-344-7529. International callers may listen by dialing 1-412-317-0088. The access code for replay is 10128489. The audio webcast will be available on American Water's investor relations homepage at ir.amwater.com through March 20, 2019. After that, the archived webcast will be available for one year at ir.amwater.com/events.

About American Water

With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly-traded water and wastewater utility company. The company employs more than 7,100 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to more than 14 million people in 46 states and Ontario, Canada. More information can be found by visiting amwater.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release including, without limitation, 2018 earnings guidance, projected long-term earnings and dividend growth, the outcome of pending acquisition activity and estimated revenues from rate cases and other government agency authorizations, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. In some cases, these forward-looking statements can be identified by words with prospective meanings such as “intend,” “plan,” “estimate,” “believe,” “anticipate,” “expect,” “predict,” “project,” “propose,” “assume,” “forecast,” “outlook,” “future,” “pending,” “goal,” “objective,” “potential,” “continue,” “seek to,” “may,” “can,” “will,” “should” and “could” and or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on American Water’s current expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, financial results of levels of activity, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in the forward-looking statements included in this press release as a result of the factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and subsequent filings with the SEC, and because of factors such as: the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates; the timeliness and outcome of regulatory commissions’ actions concerning rates, capital structure, authorized return on equity, capital investment, system acquisitions, taxes, permitting and other decisions; changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts; limitations on the availability of our water supplies or sources of water, or restrictions on our use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors; changes in laws, governmental regulations and policies, including with respect to environmental, health and safety, water quality and emerging contaminants, public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections; weather conditions and events, climate variability patterns, and natural disasters, including drought or abnormally high rainfall, prolonged and abnormal ice or freezing conditions, strong winds, coastal and intercoastal flooding, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms and solar flares; the outcome of litigation and similar governmental and regulatory proceedings, investigations or actions; our ability to appropriately maintain current infrastructure, including our operational and technology systems, and manage the expansion of our business; exposure or infiltration of our critical infrastructure and our technology systems, including the disclosure of sensitive, personal or confidential information contained therein, through physical or cyber attacks or other means; our ability to obtain permits and other approvals for projects; changes in our capital requirements; our ability to control operating expenses and to achieve efficiencies in our operations; the intentional or unintentional actions of a third party, including contamination of our water supplies or water provided to our customers; our ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our operations; our ability to successfully meet growth projections for our business and capitalize on growth opportunities, including our ability to, among other things, acquire, close and successfully integrate regulated operations and market-based businesses, enter into contracts and other agreements with, or otherwise obtain, new customers in our market-based businesses, and realize anticipated benefits and synergies from new acquisitions; risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations; cost overruns relating to improvements in or the expansion of our operations; our ability to maintain safe work sites; our exposure to liabilities related to environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers, including, for example, our water transfer business focused on customers in the shale natural gas exploration and production market; changes in general economic, political, business and financial market conditions; access to sufficient capital on satisfactory terms and when and as needed to support operations and capital expenditures; fluctuations in interest rates; restrictive covenants in or changes to the credit ratings on us or our current or future debt that could increase our financing costs or funding requirements or affect our ability to borrow, make payments on debt or pay dividends; fluctuations in the value of benefit plan assets and liabilities that could increase our cost and funding requirements; changes in federal or state general, income and other tax laws, including any further rules, regulations, interpretations and guidance by the U.S. Department of the Treasury and state or local taxing authorities related to the enactment of the TCJA, the availability of tax credits and tax abatement programs, and our ability to utilize our U.S. federal and state income tax net operating loss carryforwards; migration of customers into or out of our service territories; the use by municipalities of the power of eminent domain or other authority to condemn our systems, or the assertion by private landowners of similar rights against us; our difficulty or inability to obtain insurance, our inability to obtain insurance at acceptable rates and on acceptable terms and conditions, or our inability to obtain reimbursement under existing insurance programs for any losses sustained; the incurrence of impairment charges related to our goodwill or other assets; labor actions, including work stoppages and strikes; our ability to retain and attract qualified employees; civil disturbances or terrorist threats or acts, or public apprehension about future disturbances or terrorist threats or acts; and the impact of new, and changes to existing, accounting standards.

These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the risk factors included in the company’s annual and quarterly SEC filings, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking statements speak only as of the date of this press release. The company does not have or undertake any obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as otherwise required by the Federal securities laws. Furthermore, it may not be possible to assess the impact of any such factor on the company’s businesses, either viewed independently or together, or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The foregoing factors should not be construed as exhaustive.

 
American Water Works Company, Inc. and Subsidiary Companies
Consolidated Statements of Operations

(In millions, except per share data)

   

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2018   2017 2018   2017
(Unaudited)    
Operating revenues $ 850   $ 821   $ 3,440   $ 3,357  
Operating expenses:
Operation and maintenance 394 368 1,479 1,369
Depreciation and amortization 141 114 545 492
General taxes 67 67 277 259
(Gain) on asset dispositions and purchases (7 ) (20 ) (16 )
Impairment charge     57    
Total operating expenses, net 602   542   2,338   2,104  
Operating income 248   279   1,102   1,253  
Other income (expense):
Interest, net (91 ) (83 ) (350 ) (342 )
Non-operating benefit costs, net 10 (2 ) 20 (9 )
Loss on early extinguishment of debt (2 ) (1 ) (4 ) (7 )
Other, net 5   6   19   17  
Total other income (expense) (78 ) (80 ) (315 ) (341 )
Income before income taxes 170 199 787 912
Provision for income taxes 58   202   222   486  
Consolidated net income $ 112   $ (3 ) $ 565   $ 426  
Net loss attributable to noncontrolling interest $   $   $ (2 ) $  
Net income attributable to common stockholders $ 112   $ (3 ) $ 567   $ 426  
 
Basic earnings per share: (a)
Net income attributable to common stockholders $ 0.62   $   $ 3.16   $ 2.39  
Diluted earnings per share: (a)
Net income attributable to common stockholders $ 0.62   $ (0.01 ) $ 3.15   $ 2.38  
Weighted-average common shares outstanding:
Basic 181   178   180   178  
Diluted 181 179 180 179
 
(a)   Amounts may not calculate due to rounding.
 
 
American Water Works Company, Inc. and Subsidiary Companies
Consolidated Balance Sheets

(In millions, except share and per share data)

   
December 31, 2018 December 31, 2017
ASSETS
Property, plant and equipment $ 23,204 $ 21,716
Accumulated depreciation (5,795 ) (5,470 )
Property, plant and equipment, net 17,409   16,246  
Current assets:
Cash and cash equivalents 130 55
Restricted funds 28 27
Accounts receivable, net 301 272
Unbilled revenues 186 212
Materials and supplies 41 41
Other 95   113  
Total current assets 781   720  
Regulatory and other long-term assets:
Regulatory assets 1,156 1,061
Goodwill 1,575 1,379
Intangible assets 84 9
Postretirement benefit asset 155
Other 63   67  
Total regulatory and other long-term assets 3,033   2,516  
Total assets $ 21,223   $ 19,482  
 
 
American Water Works Company, Inc. and Subsidiary Companies
Consolidated Balance Sheets

(In millions, except share and per share data)

   
December 31, 2018 December 31, 2017
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock ($0.01 par value, 500,000,000 shares authorized, 185,367,158 and 182,508,564 shares issued, respectively) $ 2 $ 2
Paid-in-capital 6,657 6,432
Accumulated deficit (464 ) (723 )
Accumulated other comprehensive loss (34 ) (79 )
Treasury stock, at cost (4,683,156 and 4,064,010 shares, respectively) (297 ) (247 )
Total common shareholders' equity 5,864   5,385  
Long-term debt 7,569 6,490
Redeemable preferred stock at redemption value 7   8  
Total long-term debt 7,576   6,498  
Total capitalization 13,440   11,883  
Current liabilities:
Short-term debt 964 905
Current portion of long-term debt 71 322
Accounts payable 175 195
Accrued liabilities 556 630
Taxes accrued 45 33
Interest accrued 87 73
Other 196   167  
Total current liabilities 2,094   2,325  
Regulatory and other long-term liabilities:
Advances for construction 252 271
Deferred income taxes, net 1,718 1,551
Deferred investment tax credits 22 22
Regulatory liabilities 1,907 1,664
Accrued pension expense 390 384
Accrued postretirement benefit expense 40
Other 78   66  
Total regulatory and other long-term liabilities 4,367   3,998  
Contributions in aid of construction 1,322 1,276
Commitments and contingencies    
Total capitalization and liabilities $ 21,223   $ 19,482  
 
 
American Water Works Company, Inc. and Subsidiary Companies
Adjusted Regulated Operation and Maintenance Efficiency Ratio (A Non-GAAP, unaudited measure)

In millions

     
(Dollars in millions) 2018 2017 2016
Total operation and maintenance expenses (a) $ 1,479 $ 1,369 $ 1,499
Less:
Operation and maintenance expenses—Market-Based Businesses 362 337 372
Operation and maintenance expenses—Other (a) (42 ) (44 ) (38 )
Total operation and maintenance expenses—Regulated Businesses (a) 1,159 1,076 1,165
Less:
Regulated purchased water expenses 133 128 122
Allocation of non-operation and maintenance expenses 31 29 30
Impact of Freedom Industries settlement activities (b) (20 ) (22 ) 65  
Adjusted operation and maintenance expenses—Regulated Businesses (i) $ 1,015   $ 941   $ 948  
 
Total operating revenues $ 3,440 $ 3,357 $ 3,302
Less:
Pro forma adjustment for impact of the TCJA (c)   166   161  
Total pro forma operating revenues 3,440 3,191 3,141
Less:
Operating revenues—Market-Based Businesses 476 422 451
Operating revenues—Other (20 ) (23 ) (20 )
Total operating revenues—Regulated Businesses 2,984 2,792 2,710
Less:
Regulated purchased water revenues (d) 133   128   122  
Adjusted operating revenues—Regulated Businesses (ii) $ 2,851   $ 2,664   $ 2,588  
 
Adjusted O&M efficiency ratio—Regulated Businesses (i) / (ii) 35.6 % 35.3 % 36.6 %
 
NOTE   The adjusted O&M efficiency ratios previously reported for the years ended December 31, 2017 and 2016, were 33.8% and 34.9%, respectively, which did not include the adjustments for the items discussed in footnotes (a) and (c) below.
 
(a)

Includes the impact of the Company’s adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit, on January 1, 2018.

 
(b) Includes the impact of the binding global agreement in principle to settle claims in 2016, and settlements in 2017 and 2018 with two of our general liability insurance carriers in connection with the Freedom Industries chemical spill.
 
(c) Includes the estimated impact of the TCJA on operating revenues for our Regulated Businesses for all periods presented prior to January 1, 2018, as if the lower federal corporate income tax rate was in effect for these periods.
 
(d) The calculation assumes regulated purchased water revenues approximate regulated purchased water expenses.
 

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MIDLAND, Texas--(BUSINESS WIRE)--Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) today reported results for fourth-quarter and full-year 2018.

2018 Highlights

  • Delivered full-year production of 263 MBoepd (64% oil), in-line with the high-end of the Company’s guidance range.
  • Generated $2.6 billion of cash from operating activities, exceeding $2.5 billion of cash used in investing activities for additions to oil and natural gas properties.
  • Reported net income of $2.3 billion, or $13.25 per share. Adjusted net income (non-GAAP) totaled $792 million, or $4.59 per share.
  • Generated $2.8 billion of adjusted EBITDAX (non-GAAP).
  • Acquired and integrated RSP Permian, enhancing the Company’s scale advantage in the Permian Basin.
  • Advanced manufacturing-style development across asset portfolio, driving strong well performance with the Company’s average 30-day peak rate up 21% year-over-year on an absolute and lateral-adjusted basis.
  • Executed 15 asset trades, improving the Company’s development platform for large-scale, long-lateral manufacturing projects.
  • Divested non-core assets for $361 million in proceeds, bringing the Company’s total divestiture proceeds to approximately $1.5 billion since 2016.
  • Ended 2018 in a strong financial position with investment-grade credit ratings from Fitch, Moody’s and S&P.
  • Issued $1.6 billion aggregate senior notes and redeemed $1.2 billion of RSP’s aggregate senior notes. These debt management transactions reduce annual interest expense by more than $15 million (pro forma for RSP).
  • Received $157 million cash distribution from Oryx Southern Delaware Holdings, LLC.

2019 Outlook & Recent Events

  • Reducing 2019 planned capital expenditures to approximately $2.9 billion; moderating activity enhances free cash flow outlook and capital efficiency.
  • Expecting to generate 15% oil volume growth from fourth-quarter 2018 to fourth-quarter 2019.
  • Diversifying a portion of the Company’s oil sales to waterborne market pricing with a firm sales agreement covering 50 MBopd.

See “Supplemental Non-GAAP Financial Measures” below for descriptions of non-GAAP measures including adjusted net income, adjusted earnings per share and adjusted EBITDAX as well as a reconciliation of these measures to the associated GAAP (as defined herein) measures.

Tim Leach, Chairman and Chief Executive Officer, commented, “Last year was an exceptional year for Concho. Throughout the year, we demonstrated our ability to execute consistently, control costs and capitalize on opportunities to strengthen our competitive position, highlighted by the acquisition of RSP Permian. Our updated plans for 2019 improve our trajectory for free cash flow growth while maintaining strong operational efficiencies. The fundamentals of our business are strong, and in an increasingly dynamic macroenvironment, we are confident that our scale and the quality of our portfolio, as well as our high-margin cash flow and financial flexibility, will enable us to build value for our shareholders.”

Full-Year 2018 Summary

Total production for 2018 increased 36% to 96 million barrels of oil equivalent (MMBoe), or 263 thousand Boe per day (MBoepd), driven by a 41% increase in oil production to 168 thousand barrels per day (MBopd). Natural gas production for 2018 was 571 million cubic feet per day (MMcfpd).

For 2018, Concho’s average realized price for oil and natural gas, excluding the effect of commodity derivatives, was $56.22 per Bbl and $3.40 per Mcf, respectively, compared with $48.13 per Bbl and $3.07 per Mcf, respectively, for 2017.

Net income for 2018 was $2.3 billion, or $13.25 per share, compared with net income of $956 million, or $6.41 per share, in 2017. Excluding non-cash and special items, full-year 2018 adjusted net income was $792 million, or $4.59 per share, compared with adjusted net income of $311 million, or $2.09 per share, for full-year 2017.

Adjusted EBITDAX for 2018 totaled $2.8 billion, compared with $1.9 billion in 2017.

In 2018, cash flow from operating activities was approximately $2.6 billion, exceeding $2.5 billion in cash used for investing activities for additions to oil and natural gas properties.

Fourth-Quarter 2018 Summary

Production for fourth-quarter 2018 was 28 MMBoe, or an average of 307 MBoepd, an increase of 45% from fourth-quarter 2017 and 7% from third-quarter 2018. Average daily oil production for fourth-quarter 2018 totaled 199 MBopd, an increase of 53% from fourth-quarter 2017 and 8% from third-quarter 2018. Natural gas production for fourth-quarter 2018 totaled 649 MMcfpd.

Concho’s average realized price for oil and natural gas for fourth-quarter 2018, excluding the effect of commodity derivatives, was $49.10 per Bbl and $2.82 per Mcf, respectively, compared with $52.84 per Bbl and $3.33 per Mcf, respectively, for fourth-quarter 2017.

Net income for fourth-quarter 2018 was $1.5 billion, or $7.55 per share, compared with net income of $267 million, or $1.79 per share, for fourth-quarter 2017. Excluding non-cash and special items, fourth-quarter 2018 adjusted net income was $189 million, or $0.94 per share, compared with adjusted net income of $98 million, or $0.66 per share, for fourth-quarter 2017.

Adjusted EBITDAX for fourth-quarter 2018 totaled $751 million, compared with $513 million for fourth-quarter 2017.

Operations Update

During fourth-quarter 2018, Concho averaged 34 rigs, compared to 31 rigs in third-quarter 2018. The Company is currently running 34 rigs, including 22 rigs in the Delaware Basin and 12 rigs in the Midland Basin. Additionally, the Company is currently utilizing 7 completion crews. See the table under “Operating Activity” below for detailed information about the Company’s drilling and completion activity by operating area for fourth-quarter and full-year 2018.

Delaware Basin

In the Delaware Basin, excluding the New Mexico Shelf, the Company added 50 wells with at least 60 days of production as of the end of fourth-quarter 2018. The average 30-day and 60-day peak rates for these wells were 1,594 Boepd (73% oil) and 1,454 Boepd (72% oil), respectively. These wells were drilled to an average lateral length of 7,807 feet.

Achieving Strong Results with Large-Scale Development Projects in the Delaware Basin

Concho’s Gettysburg project includes five wells targeting the 3rd Bone Spring in the Deep area in Lea County, New Mexico. The average 30-day and 60-day peak rates for this project were 2,018 Boepd (79% oil) and 1,857 Boepd (79% oil) per well, respectively. The project’s average lateral length was 6,989 feet.

Concho recently completed the Square Bill project, which includes four wells targeting the 3rd Bone Spring and Wolfcamp A in the Red Hills area in Lea County, New Mexico. The average 30-day and 60-day peak rates for this project were 2,015 Boepd (82% oil) and 1,874 Boepd (82% oil) per well, respectively. The project’s average lateral length was 7,088 feet.

Midland Basin

In the Midland Basin, Concho added 23 wells with at least 60 days of production as of the end of fourth-quarter 2018. The average 30-day and 60-day peak rates for these wells were 1,202 Boepd (86% oil) and 1,070 Boepd (85% oil), respectively. These wells were drilled to an average lateral length of 7,869 feet.

Delivering Top-Tier Results in Midland Basin

Concho recently completed the Windham TXL project, which includes 11 wells targeting the Lower Spraberry and Wolfcamp B zones in Midland County, Texas. The average 30-day and 60-day peak rates for this project were 1,303 Boepd (83% oil) and 1,187 Boepd (82% oil) per well, respectively. The project’s average lateral length was 7,670 feet.

2018 Proved Reserves

At December 31, 2018, Concho’s estimated proved reserves totaled 1.2 billion Boe, compared to 840 million Boe at year-end 2017. The Company’s proved reserves are approximately 63% oil and 37% natural gas. Proved developed reserves totaled 824 MMBoe, or 69% of total proved reserves. For a summary of the Company’s estimated proved reserves, see “Estimated Year-End Proved Reserves” below.

Maintaining a Strong Financial Position

Concho maintains a strong financial position with investment-grade credit ratings, a low leverage ratio and substantial liquidity. At December 31, 2018, Concho had long-term debt of $4.2 billion, including $242 million of outstanding borrowings under its credit facility.

Outlook

Concho’s updated outlook for 2019 reinforces the Company’s commitment to generating shareholder value at all points in the cycle. Capital spending for 2019 is expected to be between $2.8 billion and $3.0 billion, representing a 17% reduction at the midpoint compared with the Company’s prior capital guidance. Additionally, the Company’s base plans for 2020 entail maintaining a consistent level of investment compared with 2019. Prioritizing capital discipline and moderating activity enhances Concho’s free cash flow outlook, capital efficiency and financial flexibility.

Approximately 94% of the 2019 capital program will be allocated to drilling and completion operations. The Company’s activity will be primarily focused on large-scale manufacturing projects across Concho’s portfolio and will keep the Company on track to deliver the value creation benefits of the RSP Permian, Inc. (“RSP”) acquisition. Concho’s planned activity for 2019 is expected to deliver oil growth of 26% to 30%, and the base plan for 2020 is expected to drive a two-year oil compound annual growth rate of 23% (from 2018 to 2020).

For first-quarter 2019, Concho expects production to average between 300 MBoepd and 306 MBoepd, and lease operating expense per Boe to average between $6.30 and $6.50. Additionally, Concho expects capital expenditures to total between $825 million and $875 million.

Detailed guidance for 2019 is provided under “2019 Guidance” below. The Company’s outlook for 2019 and 2020 excludes acquisitions and is subject to change without notice depending upon a number of factors, including commodity prices, industry conditions and other risks described under “Forward-Looking Statements and Cautionary Statements.”

Oil Marketing and Commodity Derivatives Update

Consistent with the Company’s strategy of diversifying its oil pricing, Concho entered into a firm sales agreement with a third-party purchaser. The purchaser provides an integrated transportation and marketing strategy, including ample dock capacity. The agreement covers 50 MBopd. Additionally, the barrels transported under this agreement will receive waterborne market pricing following the startup of Plains All American Pipeline LP’s Cactus II pipeline system.

The Company’s commodity derivatives strategy is intended to manage its exposure to commodity price fluctuations. Please see the table under “Derivatives Information” below for detailed information about Concho’s current derivatives positions.

Conference Call

Concho will host a conference call tomorrow, February 20, 2019, at 8:00 AM CT (9:00 AM ET) to discuss fourth-quarter and full-year 2018 results. The telephone number and passcode to access the conference call are provided below:

Dial-in: (844) 263-8298
Intl. dial-in: (478) 219-0007
Participant Passcode: 5077474

To access the live webcast and view the related earnings presentation, visit Concho’s website at www.concho.com. The replay will also be available on the Company’s website under the “Investors” section.

Upcoming Conferences

The Company will participate in the following upcoming conferences:

           
Conference Date Conference Presentation Time
February 27, 2019 Simmons Energy Conference 5:30 PM CT
March 4, 2019 Raymond James Institutional Investors Conference 8:50 AM CT
March 25, 2019 Scotia Howard Weil Energy Conference 8:50 AM CT
 

The Company’s presentation at the Raymond James Institutional Investors Conference will be webcast and accessible on the Events & Presentations page under the Investors section of the Company’s website, www.concho.com.

About Concho Resources

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. We are working today to deliver a better tomorrow for our shareholders, people and communities. For more information about Concho, visit www.concho.com.

Forward-Looking Statements and Cautionary Statements

The foregoing contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “could,” “may,” “enable,” “foresee,” “plan,” “will,” “guidance,” “outlook,” “goal” or other similar expressions that convey the uncertainty of future events or outcomes are intended to identify forward-looking statements, which generally are not historical in nature. However, the absence of these words does not mean that the statements are not forward-looking. These statements are based on certain assumptions and analyses made by the Company based on management’s experience, expectations and perception of historical trends, current conditions, current plans, anticipated future developments, expected financings and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the risk factors and other information discussed or referenced in the Company’s most recent Annual Report on Form 10-K and other filings with the SEC. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Information on Concho’s website is not part of this press release.

Use of Non-GAAP Financial Measures

To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release contains certain financial measures that are not prepared in accordance with GAAP, including adjusted net income, adjusted earnings per share and adjusted EBITDAX.

See “Supplemental Non-GAAP Financial Measures” below for a description and reconciliation of each non-GAAP measure presented in this press release to the most directly comparable financial measure calculated in accordance with GAAP.

The release also contains the non-GAAP term free cash flow. Free cash flow is cash flow provided by operating activities in excess of cash flow used in investing activities for additions to oil and gas properties. The Company believes that free cash flow is useful to investors as it provides measures to compare cash provided by operating activities and exploration and development costs across periods on a consistent basis.

   

Concho Resources Inc.

Consolidated Balance Sheets

Unaudited

 
December 31,
(in millions, except share and per share amounts)     2018     2017
Assets
Current assets:    
Cash and cash equivalents $ - $ -
Accounts receivable, net of allowance for doubtful accounts:
Oil and natural gas 466 331
Joint operations and other 365 212
Inventory 35 14
Derivative instruments 484 -
Prepaid costs and other   59     35  
Total current assets   1,409     592  
Property and equipment:
Oil and natural gas properties, successful efforts method 31,706 21,267
Accumulated depletion and depreciation   (9,701 )   (8,460 )
Total oil and natural gas properties, net 22,005 12,807
Other property and equipment, net   308     234  
Total property and equipment, net   22,313     13,041  
Deferred loan costs, net 10 13
Goodwill 2,224 -
Intangible assets, net 19 26
Noncurrent derivative instruments 211 -
Other assets   108     60  
Total assets $ 26,294   $ 13,732  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable - trade $ 50 $ 43
Bank overdrafts 159 116
Revenue payable 253 183
Accrued drilling costs 574 330
Derivative instruments - 277
Other current liabilities   320     216  

Total current liabilities

  1,356     1,165  
Long-term debt 4,194 2,691
Deferred income taxes 1,808 687
Noncurrent derivative instruments - 102
Asset retirement obligations and other long-term liabilities 168 172
Stockholders’ equity:

Common stock, $0.001 par value; 300,000,000 authorized; 201,288,884 and 149,324,849 shares issued at December 31, 2018 and 2017, respectively

- -
Additional paid-in capital 14,773 7,142
Retained earnings 4,126 1,840

Treasury stock, at cost; 1,031,655 and 598,049 shares at December 31, 2018 and 2017, respectively

  (131 )   (67 )

Total stockholders’ equity

  18,768     8,915  
Total liabilities and stockholders’ equity $ 26,294   $ 13,732  
                     
 
       

Concho Resources Inc.

Consolidated Statements of Operations

Unaudited

 
Three Months Ended Years Ended
December 31, December 31,
(in millions, except per share amounts)     2018     2017     2018     2017
       
Operating revenues:
Oil sales $ 898 $ 631 $ 3,443 $ 2,092
Natural gas sales   169     149     708     494  
Total operating revenues   1,067     780     4,151     2,586  
Operating costs and expenses:
Oil and natural gas production 174 115 590 408
Production and ad valorem taxes 76 59 305 199
Gathering, processing and transportation 19 - 55 -
Exploration and abandonments 29 17 65 59
Depreciation, depletion and amortization 445 298 1,478 1,146
Accretion of discount on asset retirement obligations 3 2 10 8

General and administrative (including non-cash stock-based compensation of $24 and $17 for the three months ended December 31, 2018 and 2017, respectively, and $82 and $60 for the years ended December 31, 2018 and 2017, respectively)

90 64 311 244
(Gain) loss on derivatives (1,625 ) 415 (832 ) 126
Gain on disposition of assets, net (81 ) (11 ) (800 ) (678 )
Transaction costs   -     1     39     3  
Total operating costs and expenses   (870 )   960     1,221     1,515  
Income (loss) from operations   1,937     (180 )   2,930     1,071  
Other income (expense):
Interest expense (46 ) (28 ) (149 ) (146 )
Loss on extinguishment of debt - - - (66 )
Other, net   -     2     108     22  
Total other expense   (46 )   (26 )   (41 )   (190 )
Income (loss) before income taxes 1,891 (206 ) 2,889 881
Income tax (expense) benefit   (378 )   473     (603 )   75  
Net income $ 1,513   $ 267   $ 2,286   $ 956  
Earnings per share:
Basic net income $ 7.56 $ 1.80 $ 13.28 $ 6.44
Diluted net income $ 7.55 $ 1.79 $ 13.25 $ 6.41
                         
 
 
Concho Resources Inc.
Earnings per Share
Unaudited
 

The Company uses the two-class method of calculating earnings per share because certain of the Company’s unvested share-based awards qualify as participating securities.

The Company’s basic earnings per share attributable to common stockholders is computed as (i) net income as reported, (ii) less participating basic earnings (iii) divided by weighted average basic common shares outstanding. The Company’s diluted earnings per share attributable to common stockholders is computed as (i) basic earnings attributable to common stockholders, (ii) plus reallocation of participating earnings (iii) divided by weighted average diluted common shares outstanding.

The following table reconciles the Company’s earnings from operations and earnings attributable to common stockholders to the basic and diluted earnings used to determine the Company’s earnings per share amounts for the periods indicated under the two-class method:

 
      Three Months Ended     Years Ended
December 31, December 31,
(in millions)     2018     2017     2018     2017
       
Net income as reported $ 1,513 $ 267 $ 2,286 $ 956
Participating basic earnings (a)   (10)   (2)   (17)   (7)
Basic earnings attributable to common stockholders 1,503 265 2,269 949
Reallocation of participating earnings   -   -   -   -
Diluted earnings attributable to common stockholders $ 1,503 $ 265 $ 2,269 $ 949
                                     
 
(a)   Unvested restricted stock awards represent participating securities because they participate in nonforfeitable dividends or distributions with the common equity holders of the Company. Participating earnings represent the distributed earnings of the Company attributable to the participating securities. Unvested restricted stock awards do not participate in undistributed net losses as they are not contractually obligated to do so.
 

The following table is a reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the periods indicated:

                         
    Three Months Ended     Years Ended
December 31, December 31,
(in thousands)     2018     2017     2018     2017
       
Weighted average common shares outstanding:
Basic 198,885 147,579 170,925 147,320
Dilutive common stock options - - - 3
Dilutive performance units 269 886 324 633
Diluted 199,154 148,465 171,249 147,956
                         
   
 

Concho Resources Inc.

Consolidated Statements of Cash Flows

Unaudited

 
Years Ended December 31,
(in millions)     2018     2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 2,286 $ 956
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 1,478 1,146
Accretion of discount on asset retirement obligations 10 8
Exploration and abandonments 35 27
Non-cash stock-based compensation expense 82 60
Deferred income taxes 605 (71 )
Gain on disposition of assets, net (800 ) (678 )
(Gain) loss on derivatives (832 ) 126
Net settlements received from (paid on) derivatives (218 ) 79
Loss on extinguishment of debt - 66
Other (92 ) (1 )
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable (35 ) (126 )
Prepaid costs and other (10 ) (9 )
Inventory (12 ) -
Accounts payable 1 14
Revenue payable 52 52
Other current liabilities   8     46  
Net cash provided by operating activities   2,558     1,695  
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties (2,496 ) (1,581 )
Acquisitions of oil and natural gas properties (136 ) (908 )
Additions to property, equipment and other assets (90 ) (44 )
Proceeds from the disposition of assets 361 803
Deposits on dispositions of oil and natural gas properties - 29
Direct transaction costs for disposition of assets (3 ) (18 )
Distribution from equity method investment   148     -  
Net cash used in investing activities   (2,216 )   (1,719 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility 3,316 1,001
Payments on credit facility (3,396 ) (679 )
Issuance of senior notes, net 1,595 1,794
Repayments of senior notes - (2,150 )
Repayments of RSP debt (1,690 ) -
Debt extinguishment costs (83 ) (63 )
Payments for loan costs (16 ) (25 )
Purchase of treasury stock (64 ) (23 )
Increase (decrease) in bank overdrafts   (4 )   116  
Net cash used in financing activities   (342 )   (29 )
Net decrease in cash and cash equivalents - (53 )
Cash and cash equivalents at beginning of period   -     53  
Cash and cash equivalents at end of period $ -   $ -  
SUPPLEMENTAL CASH FLOWS:
Cash paid for interest $ 118 $ 139
Cash paid for income taxes $ 2 $ 13
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for business combinations $ 7,549 $ 291
                     
 
                 

Concho Resources Inc.

Summary Production and Price Data

Unaudited

 

The following table sets forth summary information concerning production and operating data for the periods indicated:

 
 
Three Months Ended Years Ended
December 31, December 31,
          2018     2017     2018     2017
 
Production and operating data:
Net production volumes:
Oil (MBbl) 18,304 11,945 61,251 43,472
Natural gas (MMcf) 59,693 44,848 208,326 161,089
Total (MBoe) 28,253 19,420 95,972 70,320
 
Average daily production volumes:
Oil (Bbl) 198,957 129,837 167,811 119,101
Natural gas (Mcf) 648,837 487,478 570,756 441,340
Total (Boe) 307,097 211,083 262,937 192,658
 
Average prices per unit:
Oil, without derivatives (Bbl) $ 49.10 $ 52.84 $ 56.22 $ 48.13
Oil, with derivatives (Bbl) (a) $ 50.81 $ 48.55 $ 52.73 $ 49.93
Natural gas, without derivatives (Mcf) $ 2.82 $ 3.33 $ 3.40 $ 3.07
Natural gas, with derivatives (Mcf) (a) $ 2.63 $ 3.39 $ 3.37 $ 3.06
Total, without derivatives (Boe) $ 37.78 $ 40.18 $ 43.25 $ 36.78
Total, with derivatives (Boe) (a) $ 38.47 $ 37.69 $ 40.98 $ 37.88
 
Operating costs and expenses per Boe: (b)
Oil and natural gas production $ 6.15 $ 5.92 $ 6.14 $ 5.80
Production and ad valorem taxes $ 2.71 $ 3.02 $ 3.19 $ 2.82
Gathering, processing and transportation $ 0.68 $ - $ 0.58 $ -
Depreciation, depletion and amortization $ 15.74 $ 15.33 $ 15.41 $ 16.29
General and administrative $ 3.20 $ 3.19 $ 3.25 $ 3.46
                             
 
(a) Includes the effect of net cash receipts from (payments on) derivatives:
                         
 
Three Months Ended Years Ended
December 31, December 31,
(in millions)     2018     2017     2018     2017
 
Net cash receipts from (payments on) derivatives:
Oil derivatives $ 32 $ (50 ) $ (213 ) $ 79
Natural gas derivatives   (12 )   3     (5 )   -
Total $ 20   $ (47 ) $ (218 ) $ 79
                         
 
The presentation of average prices with derivatives is a result of including the net cash receipts from (payments on) commodity derivatives that are presented in our statements of cash flows. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our commodity derivatives for the respective periods and presents oil and natural gas prices with derivatives in a manner consistent with the presentation generally used by the investment community.
 
(b) Per Boe amounts calculated using dollars and volumes rounded to thousands.
 
           

Concho Resources Inc.

Operating Activity

Unaudited

 

The tables below provide a summary of gross operating activity for fourth-quarter and full-year 2018.

 

Total Activity (Gross)

 

 

Number of Wells
Drilled

Number of Wells
Completed

Number of Wells

Put on Production

      4Q18     FY18 4Q18     FY18 4Q18     FY18
Delaware Basin 87 281 74 267 76 239
Midland Basin     64 147 50 128 33 111
Total 151 428 124 395 109 350
                   
 

Total Activity (Gross Operated)

 

 

Number of Wells
Drilled

Number of Wells
Completed

Number of Wells Put
on Production

      4Q18 FY18 4Q18 FY18 4Q18 FY18
Delaware Basin 64 195 56 184 54 150
Midland Basin     53 116 36 97 27 92
Total 117 311 92 281 81 242
                                     
 
   

Concho Resources Inc.

Estimated Year-End Proved Reserves

Unaudited

 

The table below provides a summary of changes in total proved reserves for the year ended December 31, 2018, as well as the proved developed reserves balance at the beginning and end of the year.

       
(MMBoe)     2018
 
Total proved reserves
Balance, January 1 840
Purchases of minerals-in-place 308
Sales of minerals-in-place (17 )
Extensions and discoveries 226
Revisions (74 )
Production (96 )
Balance, December 31 1,187  
 
Proved developed reserves
Balance, January 1 588  
Balance, December 31 824  
         
 
               

Concho Resources Inc.

Costs Incurred

Unaudited

 

The table below provides the costs incurred for oil and natural gas producing activities for the periods indicated:

                                 
Three Months Ended Years Ended
December 31, December 31,
(in millions)     2018     2017     2018       2017
 
Property acquisition costs:
Proved $ 10 $ 2 $ 4,136 $ 303
Unproved 21 40 3,617 905
Exploration 529 296 1,588 1,021
Development   397   175   1,050   653
Total costs incurred for oil and natural gas properties $ 957 $ 513 $ 10,391 $ 2,882
                                 
 
                             

Concho Resources Inc.

Derivatives Information

Unaudited

 

The table below provides data associated with the Company’s derivatives at February 19, 2019, for the periods indicated:

 
2019  
First Quarter Second Quarter Third Quarter Fourth Quarter Total 2020 2021
 
Oil Price Swaps: (a)
Volume (Bbl) 13,709,250 13,383,750 11,998,000 11,232,000 50,323,000 39,340,000 8,027,000
Price (Bbl) $ 56.55 $ 56.12 $ 55.98 $ 55.88 $ 56.15 $ 57.21 $ 54.46
 
Oil Costless Collars: (a)
Volume (Bbl) 1,335,250 1,213,250 1,135,000 1,058,000 4,741,500 - -
Ceiling price (Bbl) $ 64.67 $ 64.00 $ 63.47 $ 62.95 $ 63.83 $ - $ -
Floor price (Bbl) $ 56.46 $ 56.06 $ 55.74 $ 55.43 $ 55.96 $ - $ -
 
Oil Basis Swaps: (b)
Volume (Bbl) 11,929,000 11,965,500 12,650,000 12,189,000 48,733,500 41,079,000 8,395,000
Price (Bbl) $ (3.00 ) $ (3.03 ) $ (2.82 ) $ (2.90 ) $ (2.94 ) $ (0.70 ) $ 0.55
 
Natural Gas Price Swaps: (c)
Volume (MMBtu) 10,891,533 17,241,387 17,298,537 17,209,535 62,640,992 24,703,000 -
Price (MMBtu) $ 2.86 $ 2.87 $ 2.87 $ 2.87 $ 2.87 $ 2.70 $ -
                                               
 
(a) The index prices for the oil price swaps are based on the New York Mercantile Exchange (“NYMEX”) – West Texas Intermediate (“WTI”) monthly average futures price.
(b) The basis differential price is between Midland – WTI and Cushing – WTI. The majority of these contracts are settled on a calendar-month basis, while certain contracts assumed in connection with the RSP Acquisition are settled on a trading-month basis.
(c) The index prices for the natural gas price swaps are based on the NYMEX – Henry Hub last trading day futures price.
     
 
 
Concho Resources Inc.
Supplemental Non-GAAP Financial Measures
Unaudited
 

The Company reports its financial results in accordance with the United States generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between its current results and the results of its peers and of prior periods. In addition, the Company believes these measures are used by analysts and others in the valuation, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. See the reconciliations throughout this release of GAAP financial measures to non-GAAP financial measures for the periods indicated.

Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share

The Company’s presentation of adjusted net income and adjusted earnings per share that exclude the effect of certain items are non-GAAP financial measures. Adjusted net income and adjusted earnings per share represent earnings and diluted earnings per share determined under GAAP without regard to certain non-cash and unusual items. The Company believes these measures provide useful information to analysts and investors for analysis of its operating results on a recurring, comparable basis from period to period. Adjusted net income and adjusted earnings per share should not be considered in isolation or as a substitute for earnings or diluted earnings per share as determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.

The following table provides a reconciliation from the GAAP measure of net income to adjusted net income, both in total and on a per diluted share basis, for the periods indicated:

                         
    Three Months Ended     Years Ended
December 31, December 31,
(in millions, except per share amounts)     2018     2017     2018     2017
       
Net income - as reported $ 1,513 $ 267 $ 2,286 $ 956
 
Adjustments for certain non-cash and unusual items:
(Gain) loss on derivatives (1,625 ) 415 (832 ) 126
Net cash receipts from (payments on) derivatives 20 (47 ) (218 ) 79
Leasehold abandonments 15 3 35 27
Loss on extinguishment of debt - - - 66
Gain on disposition of assets and other (82 ) (9 ) (792 ) (678 )
Gain on equity method investment - - (103 ) -
RSP transaction costs - - 32 -
Tax impact 380 (133 ) 426 139
Changes in deferred taxes and other estimates   (32 )   (398 )   (42 )   (404 )
Adjusted net income $ 189   $ 98   $ 792   $ 311  
 
Earnings per diluted share - as reported $ 7.55 $ 1.79 $ 13.25 $ 6.41
 
Adjustments for certain non-cash and unusual items per diluted share:
(Gain) loss on derivatives (8.11 ) 2.77 (4.82 ) 0.85
Net cash receipts from (payments on) derivatives 0.10 (0.32 ) (1.27 ) 0.52
Leasehold abandonments 0.07 0.02 0.20 0.18
Loss on extinguishment of debt - - - 0.44
Gain on disposition of assets and other (0.40 ) (0.06 ) (4.59 ) (4.54 )
Gain on equity method investment - - (0.60 ) -
RSP transaction costs - - 0.19 -
Tax impact 1.89 (0.89 ) 2.47 0.93
Changes in deferred taxes and other estimates   (0.16 )   (2.65 )   (0.24 )   (2.70 )
Adjusted earnings per diluted share $ 0.94   $ 0.66   $ 4.59   $ 2.09  
 
Adjusted earnings per share:
Basic earnings $ 0.94 $ 0.67 $ 4.60 $ 2.10
Diluted earnings $ 0.94 $ 0.66 $ 4.59 $ 2.09
 

Reconciliation of Net Income to Adjusted EBITDAX

Adjusted EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator.

The Company defines adjusted EBITDAX as net income, plus (1) exploration and abandonments, (2) depreciation, depletion and amortization, (3) accretion of discount on asset retirement obligations, (4) non-cash stock-based compensation, (5) (gain) loss on derivatives, (6) net cash receipts from (payments on) derivatives, (7) gain on disposition of assets and other, (8) interest expense, (9) loss on extinguishment of debt, (10) gain on equity method investment distribution, (11) RSP transaction costs and (12) income tax expense (benefit). Adjusted EBITDAX is not a measure of net income or cash flows as determined by GAAP.

The Company’s adjusted EBITDAX measure provides additional information that may be used to better understand the Company’s operations. Adjusted EBITDAX is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income as an indicator of operating performance. Certain items excluded from adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that adjusted EBITDAX is a widely followed measure of operating performance and is one of many metrics used by the Company’s management team and by other users of the Company’s consolidated financial statements. For example, adjusted EBITDAX can be used to assess the Company’s operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure and to assess the financial performance of the Company’s assets and the Company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of the GAAP measure of net income to adjusted EBITDAX for the periods indicated:

                         
               
Three Months Ended Years Ended
      December 31,     December 31,
(in millions)     2018     2017     2018     2017
 
Net income $ 1,513 $ 267 $ 2,286 $ 956
Exploration and abandonments 29 17 65 59
Depreciation, depletion and amortization 445 298 1,478 1,146
Accretion of discount on asset retirement obligations 3 2 10 8
Non-cash stock-based compensation 24 17 82 60
(Gain) loss on derivatives (1,625 ) 415 (832 ) 126
Net cash receipts from (payments on) derivatives 20 (47 ) (218 ) 79
Gain on disposition of assets and other (82 ) (11 ) (800 ) (678 )
Interest expense 46 28 149 146
Loss on extinguishment of debt - - - 66
Gain on equity method investment distribution - - (103 ) -
RSP transaction costs - - 32 -
Income tax expense (benefit)   378     (473 )   603     (75 )
Adjusted EBITDAX $ 751   $ 513   $ 2,752   $ 1,893  
                         
 
 
Concho Resources Inc.
2019 Guidance
 

For first-quarter 2019, Concho expects production to average between 300 MBoepd and 306 MBoepd, and lease operating expense per Boe to average between $6.30 and $6.50. Additionally, Concho expects capital expenditures for first-quarter 2019 to total between $825 million and $875 million.

The following table summarizes the Company’s operational and financial guidance for 2019.

    2019
Production
Total production growth 21% - 25%
Oil production growth 26% - 30%
 
Price realizations, excluding commodity derivatives
Oil differential to NYMEX (per Bbl) (Relative to NYMEX – WTI;

excludes Midland-Cushing basis differential)

($2.00) – ($2.50)
Natural gas (per Mcf) (% of NYMEX – Henry Hub) 80% - 100%
 
Operating costs and expenses ($ per Boe, unless noted)
Lease operating expense and workover costs $6.00 - $6.50
Gathering, processing and transportation $0.85 - $0.95
Oil & natural gas taxes (% of oil and natural gas revenues) 7.60%
General and administrative (“G&A”) expense:
Cash G&A expense $2.20 - $2.40
Non-cash stock-based compensation $0.70 - $0.90
Depletion, depreciation and amortization expense $15.75 - $16.25
Exploration and other $0.25 - $0.50
Interest expense ($ in millions):
Cash $200 - $220
Non-cash $6
Income tax rate (%) 22%
 
Capital program ($ in billions) $2.8 - $3.0
 

ORANGE, Conn.--(BUSINESS WIRE)--Today AVANGRID, Inc. (NYSE: AGR) reported consolidated U.S. GAAP net income of $119 million, or $0.38 per share, for the fourth quarter ended December 31, 2018, compared to a net loss of $77 million, or $0.25 per share, for the same period in 2017. For the full year ended December 31, 2018, consolidated net income was $595 million, or $1.92 per share, compared to $381 million, or $1.23 per share, for the full year in 2017.

Excluding the Gas Storage and Trading businesses and certain losses related to its sale, restructuring charges, Tax Act-related adjustments, mark-to-market adjustments, and other adjustments in Renewables, non-U.S. GAAP consolidated adjusted net income was $173 million, or $0.56 per share, for the quarter ended December 31, 2018, compared to $188 million, or $0.61 per share, for the same period in 2017. For the full year ended December 31, 2018, non-U.S. GAAP consolidated adjusted net income was $684 million, or $2.21 per share, compared to $682 million, or $2.20 per share in 2017.

“2018 was an excellent year for AVANGRID in terms of executing on our strategic plan, but challenging from an earnings perspective,” commented James P. Torgerson, chief executive officer of AVANGRID. “Minor storms and storm-related impacts, lower than expected wind resource and start-up and transmission interruptions at two of our new wind farms negatively affected our 2018 financial performance. We met these challenges head-on by managing our operating costs to partially mitigate earnings setbacks.”

“Our two New England clean energy strategic projects are advancing and remain on track,” added Torgerson. “Vineyard Wind, our 800 MW offshore wind farm in a joint-venture with Copenhagen Infrastructure Partners, and the NECEC transmission project are both making progress on key approvals and permits and we continue to expect to begin construction in late 2019.”

“For 2019, we are looking to achieve our growth objectives, deliver efficiencies in all areas of the company and address the issues that impacted our results in 2018, ensuring we remain on the path to achieving best-in-class service, safety, reliability and financial performance and rank among the elite companies in our industry.”

Net income and earnings per share for the fourth quarter and full year of 2018 and 2017 on a U.S. GAAP basis and a non-U.S. GAAP adjusted basis are set forth below:

           
GAAP Net Income (Loss) - $M
Three Months ended December 31, Year ended December 31,
2018 2017 '18 vs '17 2018 2017 '18 vs '17
 
Networks $ 103 $ 124 $ (20 ) $ 478 $ 496 $ (18 )
Renewables 7 218 (210 ) 148 333 (185 )
Corporate 8 53 (46 ) (12 ) 60 (72 )
Gas Storage   1   (472 )   473     (19 )   (508 )   489  
Net Income $ 119 $ (77 ) $ 196   $ 595   $ 381   $ 214  
 
GAAP Earnings (Loss) Per Share
 
Three Months ended December 31, Year ended December 31,
2018 2017 '18 vs '17 2018 2017 '18 vs '17
 
Networks $ 0.33 $ 0.40 $ (0.07 ) $ 1.54 $ 1.60 $ (0.06 )
Renewables 0.02 0.70 (0.68 ) 0.48 1.07 (0.60 )
Corporate 0.02 0.17 (0.15 ) (0.04 ) 0.19 (0.23 )
Gas Storage   0.00   (1.53 )   1.53     (0.06 )   (1.64 )   1.58  
Earnings Per Share $ 0.38 $ (0.25 ) $ 0.63   $ 1.92   $ 1.23   $ 0.69  
 
Weighted-avg # of Shares (M): 309.5 309.5 309.5 309.5
Amounts may not add due to rounding
 
 
Non-GAAP Adjusted Net Income (Loss) - $M
 
Three Months ended December 31, Year ended December 31,
Adjusted 2018 Adjusted 2017

Adjusted
'18 vs '17

  Adjusted 2018 Adjusted 2017

Adjusted '18
vs '17

Networks $ 110 $ 133 $ (23 ) $ 486 $ 507 $ (21 )
Renewables 37 6 31 185 120 65
Corporate   26   49     (23 )   13     55     (42 )
Adjusted Net Income $ 173 $ 188   $ (14 ) $ 684   $ 682   $ 2  
 
Non-GAAP Adjusted Earnings (Loss) Per Share
 
Three Months ended December 31, Year ended December 31,
Adjusted 2018 Adjusted 2017

Adjusted
'18 vs '17

  Adjusted 2018 Adjusted 2017

Adjusted '18
vs '17

Networks $ 0.35 $ 0.43 $ (0.07 ) $ 1.57 $ 1.64 $ (0.07 )
Renewables 0.12 0.02 0.10 0.60 0.39 0.21
Corporate   0.08   0.16     (0.07 )   0.04     0.18     (0.13 )
Adjusted Earnings Per Share $ 0.56 $ 0.61   $ (0.05 ) $ 2.21   $ 2.20   $ 0.01  
 
Weighted-avg # of Shares (M): 309.5 309.5 309.5 309.5
Amounts may not add due to rounding
 

For additional information, see “Use of Non-U.S. GAAP Financial Measures” and “Reconciliation of Non-U.S. GAAP Financial Measures” at the end of the release.

The following results for AVANGRID’s business segments are reported in U.S. GAAP.

Avangrid Networks

For the fourth quarter 2018, Avangrid Networks earned $103 million, or $0.33 per share, compared to $124 million, or $0.40 per share, for the same period in 2017. Earnings for the full year 2018 were $478 million, or $1.54 per share, compared to $496 million, or $1.60 per share, for the same period in 2017. Earnings for the fourth quarter and full year 2018 compared to 2017 benefited primarily from the implementation of the multi-year rate plans and lower restructuring charges, which were more than offset by non-deferrable storm-related costs (minor storms and related impacts), increased depreciation expenses, the absence of performance incentives which expired in 2017 and higher tax sharing adjustments (partially offset in Corporate).

Networks adjusted earnings for the fourth quarter 2018 were $110 million, or $0.35 per share, compared to $133 million, or $0.43 per share, for the same period in 2017. Adjusted earnings for the full year 2018 were $486 million, or $1.57 per share, compared to $507 million, or $1.64 per share in 2017.

Avangrid Renewables

For the fourth quarter 2018, Avangrid Renewables earned $7 million, or $0.02 per share, compared to $218 million, or $0.70 per share, for the same period in 2017. Earnings for the full year 2018 were $148 million, or $0.48 per share, compared to $333 million, or $1.07 per share, for the same period in 2017. Earnings for the fourth quarter and full year 2017 compared to the same periods in 2018 reflect tax reform measurements of a $301 million benefit and $16 million expense, respectively. Earnings for the fourth quarter compared to the same period in 2017 benefited from increased wind generation from new capacity (although below expectations), and income from the sale of projects in development and the absence of an impairment of an equity method investment recorded in 2017, partially offset by expiring tax credits. Adjusted earnings for the fourth quarter 2018 were $37 million, or $0.12 per share, compared to $6 million or $0.02 per share, for the same period in 2017.

Earnings for the full year 2018 benefited from increased wind generation from new capacity (although below expectations), income from the settlement of a counterparty bankruptcy proceeding, recovery of bad debt and revenues from a disputed contract, the sale of transmission rights and income from the sale of projects in development. These benefits were partially offset by the impact of start-up issues at two new wind farms during the second quarter 2018. Adjusted earnings for the full year 2018 were $185 million, or $0.60 per share, compared to $120 million, or $0.39 per share in 2017.

Corporate

For the fourth quarter 2018, Corporate earned net income of $8 million, or $0.02 per share, compared to $53 million, or $0.17 per share, for the same period in 2017. For the full year 2018, Corporate incurred a net loss of $12 million, or $0.04 per share, compared to net income of $60 million, or $0.19 per share, in 2017. Earnings for the fourth quarter and full year 2018 compared to the same period in 2017 reflect tax sharing adjustments (mentioned above in Networks), additional finance expenses associated with new long-term debt issued in November 2017, the elimination of intercompany interest income from the Gas Storage and Trading Businesses in 2018 and the absence of a unitary tax benefit driven by the sale of the Gas Storage and Trading Businesses recorded in the fourth quarter 2017.

Adjusted earnings for the fourth quarter 2018 were $26 million, or $0.08 per share, compared to $49 million, or $0.16 per share, for the same period in 2017. For the full year 2018, adjusted earnings for were $13 million, or $0.04 per share, compared to $55 million, or $0.18 per share in 2017.

Gas Storage and Trading

The sales of the Gas Storage and Trading and businesses were completed on May 1 and March 1 2018, respectively. For the fourth quarter 2018, Gas Storage and Trading reported net income of $1 million, compared to a net loss of $472 million, or $1.53 per share, for the same period in 2017. For the full year 2018, Gas Storage and Trading incurred a net loss of $19 million, or $0.06 per share, compared to net loss of $508 million, or $1.64 per share, compared to the full year 2017.

Outlook

AVANGRID’s U.S. GAAP consolidated earnings outlook and adjusted non-U.S. GAAP consolidated earnings outlook for 2019 are projected to be $2.18-$2.33 per share and $2.25-$2.40 per share, respectively. AVANGRID believes the adjusted consolidated earnings outlook is useful in understanding and evaluating actual and projected financial performance of the company. Details of the earnings components of the outlook are summarized as follows, including reconciliations to the U.S. GAAP earnings outlook for 2019 to the adjusted non-U.S. GAAP consolidated earnings outlook.

Details of the earnings components are as follows:

 
Outlook - Estimated EPS
   
U.S. GAAP(1) Non-U.S. GAAP Adjusted
Networks $1.75 - $1.88 $1.75 - $1.88
Renewables $0.45 - $0.53 $0.52 - $0.60
Corporate   ($0.08) - ($0.02)   ($0.08) - ($0.02)
EPS   $2.18 - $2.33   $2.25 - $2.40
 
(1) Includes the MtM portion asset or liability that will be realized in '19 & an estimate of
accelerated depreciation on repowering
Amounts may not add due to rounding; Estimates are not expected to be additive.
Assumes approx. 309.5 million shares outstanding
 
  • Earning allowed returns at the utilities through best practices & cost management
  • Addresses cost recovery mechanisms for minor storms in rate requests, implementing operational improvements and investing in storm resiliency
  • FERC ROE decision approving current proposal
  • Revised wind forecast from 2011-2014 average to life-to-date average
  • Potential sale and/or partnership sale of projects
  • Conducting mid-period assessment of Forward 2020+ plan to achieve best in class objectives

Webcast

AVANGRID will webcast an audio-only financial presentation in conjunction with releasing fourth quarter and full year 2018 earnings tomorrow, Wednesday, February 20th beginning at 9:00 A.M. Eastern time. The webcast will feature a presentation 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 www.avangrid.com.

In addition, AVANGRID will host a meeting for the investor community on Tuesday, February 26, 2019 in New York beginning at 9:00 A.M. Eastern time. AVANGRID’s Executive team will present an update of AVANGRID’s Long-term Outlook followed by a question and answer session. The audio-webcast can also be accessed through the Investor Relations’ section of Avangrid’s website at www.avangrid.com

About AVANGRID: AVANGRID, Inc. (NYSE: AGR) is a leading, sustainable energy company with approximately $32 billion in assets and operations in 24 U.S. states. AVANGRID has two primary lines of business: Avangrid Networks and Avangrid Renewables. Avangrid Networks owns eight electric and natural gas utilities, serving 3.2 million customers in New York and New England. Avangrid Renewables owns and operates 7.2 gigawatts of electricity capacity, primarily through wind power, with a presence in 22 states across the United States. AVANGRID supports the achievement of the Sustainable Development Goals approved by the member states of the United Nations, and earned the Compliance Leader Verification, a third party verification of its ethics and compliance program certification, from Ethisphere Institute.. AVANGRID employs approximately 6,500 people. For more information, visit www.avangrid.com.

Forward Looking Statements

Forward Looking Statements: This news release contains a number of forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “can,” “expects,” “future,” “would,” “could,” “can,” “expect(s,)” “believe(s),” “anticipate(s),” “intend(s),” “plan(s),” “estimate(s),” “project(s),”“assume(s),” “guide(s),” “target(s),” “forecast(s),” “are (is) confident that” and “seek(s)”“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 business, results of operations or financial condition of the business and other statements that are not historical facts. Such statements are based upon the reasonable current beliefs, expectations, and assumptions 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: our future financial performance, anticipated liquidity and capital expenditures; actions or inactions of local, state or federal regulatory agencies; success in retaining or recruiting our officers, key employees or directors; changes in levels or timing of capital expenditures; adverse developments in general market, business, economic, labor, regulatory and political conditions; fluctuations in weather patterns; technological developments; the impact of any cyber-breaches, grid disturbances, acts of war or terrorism or natural disasters; the impact of any change to applicable laws and regulations affecting operations, including those relating to environmental and climate change, taxes, price controls, regulatory approvals and permitting; and other presently unknown or unforeseen factors. Additional risks and uncertainties are set forth under the “Risk Factors” in the AVANGRID, Inc. Annual Report on Form 10-K for the year ended December 31, 2017, and the AVANGRID, Inc. Quarterly Report on Form 10-Q for the nine months ended September 30, 2018, which are on file with the U.S. Securities and Exchange Commission. 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 this press release, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Use of Non-U.S. GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, AVANGRID considers certain non-GAAP financial measures that are not prepared in accordance with U.S. GAAP, including adjusted net income and EPS. The non-GAAP financial measures we use are specific to AVANGRID and the non-GAAP financial measures of other companies may not be calculated in the same manner. We use these non-GAAP financial measures, in addition to U.S. GAAP measures, to establish operating budgets and operational goals to manage and monitor our business, evaluate our operating and financial performance and to compare such performance to prior periods and to the performance of our competitors. We believe that presenting such non-GAAP financial measures 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 as well as allow for an evaluation of AVANGRID with a focus on the performance of its core operations. In addition, 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 provide adjusted net income and adjusted earnings per share, which are adjusted to reflect the effect of mark-to-market changes in the fair value of derivative instruments used by AVANGRID to economically hedge market price fluctuations in related underlying physical transactions for the purchase and sale of electricity, adjustments for the non-core Gas Storage and Trading businesses including certain losses related to the sale of such businesses, restructuring charges primarily associated with reorganizing to better align our people resources with business demands and priorities as part of the Forward 2020+ program, impact from measurement of deferred income tax balances as a result of the Tax Act enacted by the U.S. federal government on December 22, 2017, impact of accelerated depreciation on the repowering of certain Renewables assets and the impairment of equity method investments. We believe that presenting these non-GAAP financial measures is useful in understanding and evaluating actual and projected financial performance and contribution of AVANGRID core lines of business and to more fully compare and explain our results. The most directly comparable U.S. GAAP measure to adjusted net income is net income. We also provide adjusted EPS, which is adjusted net income converted to an earnings per share amount.

The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, AVANGRID’s U.S. GAAP financial information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness, may be unique to AVANGRID, and should be considered only as a supplement to AVANGRID’s U.S. GAAP financial measures. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools. 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.
Condensed Consolidated Statements of Income
(In Millions except per share amounts)
(Unaudited)
 
Three months ended Year ended
December 31, December 31,
($M) 2018 2017 2018 2017
Operating Revenues $ 1,665   $ 1,533   $ 6,478   $ 5,963  
Operating Expenses
Purchased power, natural gas and fuel used 456 381 1,653 1,338
Loss from assets held for sale - 642 16 642
Operations and maintenance 614 545 2,248 2,091
Depreciation and amortization 211 216 855 824
Taxes other than income taxes   135     141     579     563  
Total Operating Expenses   1,416     1,925     5,351     5,458  
Operating Income   249     (392 )   1,127     505  
Other Income and (Expense)
Other expense (9 ) (10 ) (66 ) (62 )
Earnings from equity method investments 2 (43 ) 10 (40 )
Interest expense, net of capitalization   (84 )   (70 )   (303 )   (280 )
Income Before Income Tax   158     (515 )   768     123  
Income tax expense   42     (438 )   170     (259 )
Net Income   116     (77 )   598     382  
Less: Net (loss) income attributable to noncontrolling interests   (3 )   -     3     1  
Net Income Attributable to Avangrid, Inc. $ 119   $ (77 ) $ 595   $ 381  
       
Earnings per Common Share, Basic: $ 0.79   $ (0.25 ) $ 1.92   $ 1.23  
Earnings per Common Share, Diluted: $ 0.79   $ (0.25 ) $ 1.92   $ 1.23  
Weighted-average Number of Common Shares Outstanding (M):
Basic 309.5 309.5 309.5 309.5
Diluted 309.7 309.7 309.7 309.7
 
Amounts may not add due to rounding
 
 
Avangrid, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
    December 31,
($M) 2018   2017
ASSETS
Current assets $ 1,963 $ 2,260
Net property, plant & equipment in service 21,849 21,244
Total property, plant & equipment 23,459 22,669
Regulatory assets 2,646 2,738
Goodwill 3,127 3,127
Other assets   972     877  
Total Assets $ 32,167   $ 31,671  
LIABILITIES AND EQUITY
Current liabilities 3,004 3,114
Regulatory liabilities 3,223 3,252
Other non-current liabilities 5,169 5,013
Non-current debt   5,368     5,196  
Total Liabilities   16,764     16,575  
EQUITY
Common stock 3 3
Additional paid-in-capital 13,657 13,653
Treasury stock (12 ) (8 )
Retained earnings 1,528 1,475
Accumulated other comprehensive loss   (72 )   (46 )
Total Stockholders' Equity   15,104     15,077  
Noncontrolling interests 299 19
Total Equity   15,403     15,096  
Total Liabilities & Equity $ 32,167   $ 31,671  
 
Amounts may not add due to rounding
 
 
Avangrid, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
   
AVANGRID CONS
Year ended
December 31,
$M 2018 2017
Cash Flow from Operating Activities:
Net income $ 598   $ 382  
Net Cash Provided by Operating Activities   1,791     1,763  
Cash Flow from Investing Activities:
Capital expenditures (1,787 ) (2,416 )
Contributions in aid of construction 60 57
Proceeds from sale of assets 186 12
Proceeds from sale of property, plant and equipment 18
Cash distribution from equity method investments 4 4
Receipts from (payments to) affiliates
Other investments and equity method investments, net   (45 )   2  
Net Cash Used in Investing Activities   (1,564 )   (2,341 )
Cash Flow from Financing Activities:
Contribution from parent
Non-current note issuance 597 888
Repayments of non-current debt (217 ) (305 )
(Repayments) receipts of other short-term debt, net (201 ) 625
Payments on tax equity financing arrangements (113 )
Repayments of capital leases (13 ) (33 )
Repurchase of common stock (4 ) (3 )
Issuance of common stock (2 ) (1 )
Distributions to noncontrolling interests (76 )
Contributions from noncontrolling interests 223 5
Dividends paid   (537 )   (535 )
Net Cash (Used in) Provided by Financing Activities   (230 )   528  
Net Decrease in Cash, Cash Equivalents and Restricted Cash   (3 )   (50 )
Cash, Cash Equivalents and Restricted Cash, beginning of period   46     96  
Cash, Cash Equivalents and Restricted Cash, end of period $ 43   $ 46  
 
Amounts may not add due to rounding
 

Reconciliation of Non-GAAP Financial Measures

 
Avangrid, Inc.
Reconciliation of Non-GAAP Adjusted Net Income (Loss) - $M
(Unaudited)
         
Three Months ended December 31, Year ended December 31,
2018   2017 '18 vs '17 2018 2017 '18 vs '17
 
Networks $ 103 $ 124 $ (20 ) $ 478 $ 496 $ (18 )
Renewables 7 218 (210 ) 148 333 (185 )
Corporate 8 53 (46 ) (12 ) 60 (72 )
Gas Storage   1     (472 )   473     (19 )   (508 )   489  

Net Income

$ 119 $ (77 ) $ 196 $ 595 $ 381 $ 214
Adjustments:
Restructuring charges 2 18 (16 ) 4 20 (16 )
Mark-to-market adjustments - Renewables 16 17 (1 ) 25 15 10
Loss from held for sale measurement - 642 (642 ) 16 642 (627 )
Accelerated depreciation from repowering 3 - 3 3 - 3
Impairment of equity method investment - 49 (49 ) - 49 (49 )
Impact of the Tax Act 40 (328 ) 367 46 (328 ) 374
Income tax impact of adjustments* (5 ) (162 ) 157 6 (162 ) 169
Gas Storage, net of tax   (1 )   29     (29 )   (11 )   64     (75 )
Adjusted Net Income $ 173   $ 188   $ (14 ) $ 684   $ 682   $ 2  
 
* 2018: Income tax impact of adjustments: $(6.6)M from mark-to-market (MtM) adjustment and $(0.7)M from accelerated depreciation - Renewables, $(1.1)M from restructuring charges - Networks, $14.4M from loss from held for sale measurement - Gas.
* 2017: Income tax impact of adjustments: $(5)M from mark-to-market adjustment, $(13)M from other than temporary impairment (OTTI) on equity method investment - Renewables, $(8)M from restructuring charges - Networks, $(179)M from loss from held for sale measurement - Gas, $43 million from adjustment to unitary income taxes at Renewables as a result of expected future sale of Gas.
 
 
Non-GAAP Adjusted Net Income (Loss) - $M
 
Three Months ended December 31, Year ended December 31,
Adjusted 2018 Adjusted 2017

Adjusted
'18 vs '17

  Adjusted 2018 Adjusted 2017

Adjusted '18
vs '17

Networks $ 110 $ 133 $ (23 ) $ 486 $ 507 $ (21 )
Renewables 37 6 31 185 120 65
Corporate   26     49     (23 )   13     55     (42 )
Adjusted Net Income $ 173   $ 188   $ (14 ) $ 684   $ 682   $ 2  
 
 
Avangrid, Inc.
Reconciliation of Adjusted Non-GAAP Earnings (Loss) Per Share (EPS)
(Unaudited)
 
Three Months ended December 31, Year ended December 31,
2018 2017 '18 vs '17 2018 2017 '18 vs '17
 
Networks $ 0.33 $ 0.40 $ (0.07 ) $ 1.54 $ 1.60 $ (0.06 )
Renewables 0.02 0.70 (0.68 ) 0.48 1.07 (0.60 )
Corporate 0.02 0.17 (0.15 ) (0.04 ) 0.19 (0.23 )
Gas Storage   0.00     (1.53 )   1.53     (0.06 )   (1.64 )   1.58  
Earnings Per Share $ 0.38 $ (0.25 ) $ 0.63 $ 1.92 $ 1.23 $ 0.69
Adjustments:
Restructuring charges 0.01 0.06 (0.05 ) 0.01 0.07 (0.05 )
Mark-to-market adjustments - Renewables 0.05 0.05 (0.00 ) 0.08 0.05 0.03
Loss from held for sale measurement - 2.08 (2.08 ) 0.05 2.08 (2.02 )
Accelerated depreciation from repowering 0.01 - 0.01 - 0.01
Impairment of equity method investment - 0.16 (0.16 ) - 0.16 (0.16 )
Impact of the Tax Act 0.13 (1.06 ) 1.19 0.15 (1.06 ) 1.21
Income tax impact of adjustments* (0.02 ) (0.52 ) 0.51 0.02 (0.52 ) 0.54
Gas Storage, net of tax   (0.00 )   0.09     (0.09 )   (0.04 )   0.21     (0.24 )
Adjusted Earnings Per Share $ 0.56   $ 0.61   $ (0.05 ) $ 2.21   $ 2.20   $ 0.01  
 
 
Weighted-avg # of Shares (M): 309.5 309.5 309.5 309.5
Amounts may not add due to rounding
 
* 2018: EPS Income tax impact of adjustments: $(0.02) from mark-to-market (MtM) adjustment - Renewables, $(0.01) from restructuring charges - Networks, $0.05 from loss from held for sale measurement.
* 2017: EPS Income tax impact of adjustments: $(0.01) from mark-to-market adjustment, $(0.04) from other than temporary impairment (OTTI) on equity method investment - Renewables and $(0.03) from restructuring charges - Networks, $(0.58) from loss from held for sale measurement, $0.14 from adjustment to unitary income taxes at Renewables as a result of expected future sale of Gas.
 
Non-GAAP Adjusted Earnings (Loss) Per Share
 
Three Months ended December 31, Year ended December 31,
Adjusted 2018 Adjusted 2017

Adjusted
'18 vs '17

  Adjusted 2018 Adjusted 2017

Adjusted '18
vs '17

Networks $ 0.35 $ 0.43 $ (0.07 ) $ 1.57 $ 1.64 $ (0.07 )
Renewables 0.12 0.02 0.10 0.60 0.39 0.21
Corporate   0.08     0.16     (0.07 )   0.04     0.18     (0.13 )
Adjusted Earnings Per Share $ 0.56   $ 0.61   $ (0.05 ) $ 2.21   $ 2.20   $ 0.01  
 
Weighted-avg # of Shares (M): 309.5 309.5 309.5 309.5
Amounts may not add due to rounding

NEW YORK--(BUSINESS WIRE)--Greenbacker Renewable Energy Company LLC (“the Company”) announced today that, through a wholly-owned subsidiary, it signed an agreement to purchase the managing member interest to a 6.3 megawatt (MW) portfolio of two utility scale solar projects (“Rockville Portfolio”) from Melink Corporation (“Melink”). The Rockville Portfolio projects have been operating since 2014.

The projects consist of a 3.1 MW site ground-mounted project and a 3.2 MW roof-mounted project, both located in Indianapolis, Indiana. The projects are contracted for 15 years through power purchase agreements with Indianapolis Power & Light (“IP&L”) and have approximately 10 years remaining under the contracts.

“With the Rockville Portfolio acquisition, we continue to expand our operating portfolio, adding assets with proven performance,” said Charles Wheeler, CEO of the Company. “We are pleased to continue to execute on our pipeline of operating renewable energy projects which exceed the Company’s investment criteria.”

With the addition of the Rockville Portfolio, the Company will own approximately 377.7 MW of generating capacity (including assets that are to be constructed) comprising 61.5 MW of wind facilities and 316.2 MW of utility-scale and distributed solar facilities.

About Greenbacker Renewable Energy Company

Greenbacker Renewable Energy Company LLC is a publicly registered, non-traded limited liability company that owns a diversified portfolio of income-producing renewable energy power plants, energy efficiency projects and other sustainable investments. For more information, please visit www.greenbackercapital.com.

About Melink

Melink is a global leader in energy efficiency and renewable energy solutions for the commercial building industry. Products and services include HVAC testing & balancing services, demand control kitchen ventilation systems, building pressure monitoring controls, and solar PV and geothermal HVAC systems. For more information, please visit www.melinkcorp.com.

Forward-Looking Statements

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 the Company 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. The Company undertakes no obligation to update any forward-looking statement contained herein to conform to actual results or changes in the Company’s expectations.

The Nordex Group has succeeded in entering the Ukrainian market with a major order for 133 MW.

EDF Renewables and its Indian partner SITAC Group have signed a 300-MW power purchase agreement for an unnamed project in India, the green unit of French utility EDF said on Monday.

ISGF gears up for India Smart Utility Week 2019 from 12 -16 March 2019 in Delhi

One of the broadest portfolios in the industry with Wind, Hydro, Grid, and Renewable Hybrids coming together to provide end-to-end solutions for our customers demanding reliable, affordable green power. 

BOSTON – 30 January 2018: GE (NYSE: GE) today announced that it intends to intensify its focus on the growing renewable energy market by consolidating all of the company’s renewable and grid assets into a single, simplified Renewable Energy business. 

Global demand for renewable power generation and the associated grid integration continues to increase globally; the latest report from the International Energy Agency* showed that renewable capacity additions of 178 gigawatts (GW) accounted for more than two-thirds of global net electricity capacity growth in 2017.  The proposed moves announced today are part of a broader effort on the part of GE to position the company to meet the evolving needs of the power market, including the growth of renewable energy. These moves include:

  • Moving GE’s grid solutions and hybrid renewables (including solar and storage systems) technologies into the GE Renewable Energy Business, complementing its existing onshore wind, offshore wind, LM Windpower, and hydro offerings. 
  • Complementing all offerings with digitally enabled services
  • Streamlining its Onshore Wind structure, eliminating its headquarters layer and elevating its current regional teams—Americas, Europe/Africa, MENAT and APAC—to improve competitiveness, speed, customer focus, and local execution in the Onshore Wind business.

The proposed moves will enable GE Renewable Energy to drive more local and integrated solutions, simplify its structure, and improve performance. The business will be capable of supporting customers from project development, to equipment and services, to full turnkey solutions. It will have the most diverse and broadest renewable portfolios in the industry, enabling customers to bring green electrons to the grid or to power their operations. 

GE Chairman and CEO H. Lawrence Culp, Jr., said, “This strategic realignment positions GE to lead in the fast-growing renewable energy market. This move will help our Renewable Energy teams to better support their customers in leading the energy transition by simplifying the way they can access innovative products, integrated solutions, and services that reflect the evolution of the clean energy marketplace.”

GE Renewable Energy CEO Jerome Pecresse said, “With the unique diversity and scale of this portfolio and the combination of expertise, technology, and local reach, we will create enhanced value for all our customers seeking to power the world with affordable, reliable green electrons. Our team is excited by the possibilities this new structure creates to help us lead the energy transition for GE.”

The expanded Renewable Energy is part of GE’s energy related portfolio, which also includes the newly created Gas Power business and GE’s Power portfolio which operates Steam, Nuclear, and Power Conversion. 

About GE 

GE (NYSE:GE) drives the world forward by tackling its biggest challenges. By combining world-class engineering with software and analytics, GE helps the world work more efficiently, reliably, and safely. For more than 125 years, GE has invented the future of industry, and today it leads new paradigms in additive manufacturing, materials science, and data analytics. GE people are global, diverse and dedicated, operating with the highest integrity and passion to fulfill GE’s mission and deliver for our customers. www.ge.com

GE Investor Contact: 

Steve Winoker 

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+1 617 443 3400

 

GE Media Contact: 

Jim Healy 

This email address is being protected from spambots. You need JavaScript enabled to view it. 

+33 603399299

  • Solar

SAN DIEGO (Jan. 29, 2019):  EDF Renewables North America today announced the 212 megawatt (MWdc) / 170 MWac Morris Ridge Solar Project was awarded a long-term contract by the New York State Energy Research and Development Authority (NYSERDA) as part of the 2018 Renewable Energy Standard Solicitation. The Project, sited on approximately 1,000 acres in the Town of Mount Morris, south of the Village of Mount Morris, expects to deliver clean electricity by the end of 2022.

Stephane Desdunes, Director of Development, Northeast Region for EDF Renewables North America said, “Our team is thrilled to be awarded the 170 MWac Morris Ridge Solar Project to help fulfill New York State’s goal to achieve 70% of the state’s electricity from renewable energy by 2030.  The region, including the Town of Mount Morris and Livingston County, will benefit from procurement and employment opportunities throughout the development, construction and operational phases. Morris Ridge will bring more than 200 jobs during peak construction and contribute millions of dollars to the County, Town and School District during the operational life of the project.”

EDF Renewables looks forward to a continued collaboration with the Town of Mount Morris towards the realization of the Project.  Supervisor Charles DiPasquale commented, “The Town Board is excited by the contract with NYSERDA that will make the project and its benefits a reality for the town and surrounding community.”

“Congratulations to EDF Renewables for its successful participation in this solicitation, which is a concrete step towards meeting New York’s nation-leading clean energy goals under Governor Cuomo’s Green New Deal,” said Doreen Harris, Director of Large-Scale Renewables, NYSERDA. “NYSERDA worked closely with EDF Renewables and the Town of Mount Morris to make community engagement and responsible siting a priority, ensuring the project will not only help steward our precious natural resources, but benefit the state and local economy, and its workers.”

The expected electricity generated at full capacity is enough to meet the consumption of over 39,000 average New York homes1.  This is equivalent to avoiding nearly 140,000 metric tons of carbon (CO₂) emissions annually which represents the greenhouse gas emissions from nearly 30,000 passenger vehicles driven over the course of one year2.

EDF Renewables is one of the largest renewable energy developers in North America with 15 gigawatts of wind, solar, and storage projects developed throughout the U.S., Canada, and Mexico.

1 According to U.S. Energy Information Administration (EIA) 2017 Residential Electricity Sales and U.S. Census Data.  

2 According to U.S. EPA Greenhouse Gas Equivalencies calculations.

Contact

Media Relations

Phone: 858-521-3525
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New Delhi, India – January 24, 2019–GE announced today that it has implemented the first Predix Asset Performance Management (APM) solution in India for Tata Power’s thermal business. This is one of two deals that GE won in India to optimize approximately 8GW of Tata Power’s thermal and renewable energy power portfolio using digital solutions. GE is implementing the Reliability Centered Maintenance (RCM) solutions for Tata Power’s thermal assets across nine sites for a period of seven years. The renewable deal is still under execution.

Mr. Praveer Sinha, CEO & MD, Tata Power said, “Our aim is to continue to be the leading power company in India and globally by constantly upgrading our assets with state-of-the-art technology and provide our customers with quality and reliable power. GE has provided a noteworthy contribution to fulfill our vision of digitizing our thermal and renewable assets.”

Mr. Ashok Sethi, COO and Executive Director, Tata Power said, “Tata Power is a pioneer in India, as well as globally, to have taken up the RCM led O&M transformation on a large scale. This company wide program aims to improve assets reliability, embed best in class O&M processes while optimizing cost. Digitization is one of the main pillars of this program and we’re glad to partner with GE and their APM solution to bring to life our vision.”


GE is supporting Tata Power’s ambitious program to drive operational excellence across its entire fleet—from traditional generation to renewable sources. This includes the implementation of RCM on their thermal assets, which was launched two years ago by Tata Power to increase the reliability of all its equipment with a proactive approach of the daily operation and maintenance. GE’s solution will help Tata Power reduce its operations & maintenance (O&M) expenses, optimize availability, reliability, reduce risk, and reduce costs through intelligent asset strategies, as well as improve maintenance planning for its power plants. In addition, this agreement includes GE’s Renewable Energy Digital’s lifecycle and APM solutions on their wind and solar assets. GE has also been chosen to provide a digital wind and solar APM solution to manage Tata Power’s wind turbine and solar inverter assets across 10 additional sites in India. The wind sites covered by this agreement include 7 different OEM wind turbine models totaling 1 GW.


Commenting on the significance of the announcement, Andrew DeLeone, Managing Director, GE Power India Ltd. said, “We are excited to partner with Tata Power in extending our range of digital solutions to the company’s fleet of power plants. Given the enormous potential of digitization and IIoT to drive operational performance, this technology will help improve asset reliability and availability while reducing O&M costs. GE remains committed to improve India’s thermal assets, thereby moving the country forward in its journey towards cleaner power.”

 “The TATA win is a solid milestone in the evolution of GE’s digital strategy in energy. From the inception, this deal was driven by TATA’s own operational strategy and success measured in outcomes. The combined offering of our digital and lifecycle solutions will position TATA for the future in managing unplanned maintenance costs, reducing risk and ultimately increasing revenue, across not only their GE but also non-GE assets” said Anne McEntee, CEO of GE Renewable Energy Digital Services. “Digital also enables flexibility. The power market transformation is a race for flexibility. As TATA’s generations sources diversify, the integration and orchestration across assets becomes even more critical.”

GE’s APM employs holistic and risk-based intelligent asset strategies to balance performance and cost by considering design, operational procedures, and maintenance plans for all assets. These solutions can be applied across GE or non-GE assets. The Predix-operated APM helps reduce unplanned downtime and increases availability and reliability by helping to ensure that critical assets and systems are monitored and protected from emerging threats. Further, costly emergency repairs can be drastically reduced by detecting problems early, turning unplanned downtime into planned downtime. The implementation of this technology will help provide heads up on potential problems and consequently help users make better-informed decisions. GE’s APM solution has helped customers globally improve the reliability of power generating machines, reducing unplanned downtime up to 5 percent, reducing false positive alerts up to 75 percent and reducing overall operations and maintenance costs.

###

About GE
GE (NYSE:GE) drives the world forward by tackling its biggest challenges: Energy, health, transportation—the essentials of modern life. By combining world-class engineering with software and analytics, GE helps the world work more efficiently, reliably, and safely. For more than 125 years, GE has invented the future of industry, and today it leads new paradigms in additive manufacturing, materials science, and data analytics. GE people are global, diverse and dedicated, operating with the highest integrity and passion to fulfill GE’s mission and deliver for our customers. www.ge.com

For India media

please contact:

Tarun Nagrani

GE India

+91-124-490 6760

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For Power global media
please contact:

Jessica Giansanti
GE  Steam Power

+1 203 814 7604

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For Renewable Energy media,

please contact:

Elizabeth Kollross

GE Renewable Energy Digital Services

+1.312.270.5562

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February 1, 2019

OFFRE D’EMPLOI #PRC195
POSTE : CooRdonnateur – Relations avec les communautés
et les propriétaires
Vancouver, BC (canada) ou san diego, ca (usa)

Profil de l’entreprise

Innergex énergie renouvelable inc. est un acteur mondial en pleine croissance possédant un nombre important d’installations au Canada, aux États-Unis, en France, au Chili et en Islande. L’entreprise développe, acquiert, détient et exploite des centrales hydroélectriques, des parcs éoliens, des parcs solaires et des centrales géothermiques qui produisent exclusivement de l’énergie renouvelable.

Le développement durable générant des résultats positifs sur les plans social, environnemental et économique guide nos actions. Nous sommes non seulement fiers du travail que nous accomplissons, mais aussi de notre façon de le faire. Nos nombreuses réalisations et notre succès continu sont rendus possibles grâce à notre équipe exceptionnelle d’employés.

Innergex, une société publique, possède des bureaux à Longueuil, Vancouver, Lyon et San Diego.

Le candidat retenu travaillera au bureau de Vancouver, BC ou au bureau de San Diego, CA.

Rôle et responsabilités

Relevant de la Vice-présidente – Relations d’entreprise, le Coordonnateur – Relations avec les communautés et les propriétaires fera partie de l’équipe des relations d’entreprise et travaillera en étroite collaboration avec le Chef – Relations avec les communautés et les propriétaires. L’équipe des Relations d’entreprise établit et maintien des relations avec les gouvernements de tous niveaux, les communautés autochtones et locales, les parties prenantes des projets et autres, tout au long de la vie du projet.

Les principales responsabilités seront :

  • Participer à la transmission d’information pour aviser les parties prenantes du projet de travaux ou d’études pouvant avoir lieu sur leurs propriétés;
  • Faciliter la signature de divers documents de projets avec les parties prenantes, incluant sans s’y limiter des ententes, des documents juridiques, des avenants, des formulaires d’autorisation de paiement, etc.;
  • Recueillir et organiser les formulaires des propriétaires (incluant sans s’y limiter les autorisations de paiement et les formulaire W9);
  • Faciliter la préparation et la révision des plans des sites;
  • Interagir avec les compagnies locales intéressées à fournir des services pour le(s) projet(s) et faire le lien avec les ressources appropriées;
  • Organiser et planifier des événements pour les propriétaires et les communautés (en lien avec les représentants communautaires et les représentants des gouvernements locaux pour diverses initiatives);
  • Collaborer étroitement avec les conseillers juridiques internes et externes pour la préparation d’ententes;
  • Vérifier et organiser les documents juridiques (incluant sans s’y limiter les baux fonciers, les servitudes et les ententes de développement des ressources);
  • Travailler en étroite collaboration avec les compagnies d’assurance titres pour s’assurer que les engagements relatifs aux titres soient respectés pour les projets;
  • Analyser les ententes et préparer une matrice des engagements pour usage interne;
  • Préparer les tableaux de suivi pour les exceptions aux ententes-types;
  • Suivre et gérer les engagements prévus dans les ententes de projets;
  • Assurer le suivi des travaux liés aux projets (incluant sans s’y limiter les envois, les demandes d’information et les avis de changement);
  • Planifier et organiser les réunions, incluant la réservation des lieux et les invitations aux participants;
  • Fournir le soutien requis pour la préparation du matériel pour les réunions et la prise de procès-verbaux.

Profil recherché

  • Minutie et solide éthique de travail;
  • Fortes aptitudes pour l’organisation et l’administration;
  • Capacité de gérer plusieurs projets à la fois, savoir prioriser et rencontrer des délais serrés;
  • Capacité à identifier des améliorations aux processus et des gains d’efficacité;
  • Bon jugement, savoir quand s’approprier une tâche et quand demander de l’aide;
  • Solides habiletés de communication, à l’écrit et à l’oral;
  • Fortes aptitudes pour la résolution de problèmes et la communication se reflétant dans la capacité à établir de solides relations de travail à l’interne et à l’externe;
  • Solide esprit d’équipe et fortes habiletés interpersonnelles, dont la capacité de composer avec des gens ou des situations difficiles.

Exigences professionnelles

  • Minimum de 5 ans d’expérience dans un rôle similaire;
  • Maîtrise de la Suite MS Office (Word, Excel, etc.);
  • Expérience avec de multiples parties prenantes;
  • Expérience avec les documents juridiques;
  • Expérience avec les ententes foncières aux États-Unis ou au Canada;
  • Doit posséder un permis de conduire valide;
  • Doit posséder ou pouvoir obtenir un passeport valide;
  • Apte à voyager au Canada et aux États-Unis.

Pour postuler à ce poste, veuillez envoyer votre lettre de motivation et votre CV à This email address is being protected from spambots. You need JavaScript enabled to view it. avec le numéro de poste # PRC195 dans la ligne d’objet. Veuillez noter que seuls les candidats sélectionnés pour une entrevue seront contactés.

April 4, 2018

Un événement de l’industrie s’intéressera aux conditions nécessaires à la croissance durable de l’énergie éolienne et à son influence sur l’évolution du réseau, en tant que filière de production d’électricité la plus abordable au Canada

L’Association canadienne de l’énergie éolienne (CanWEA) convie les journalistes à son Colloque du printemps, qui se tiendra les 10 et 11 avril 2018 à l’hôtel The Westin Calgary.

Lors de cet événement, des chefs de file de l’éolien s’exprimeront sur l’actualité, les tendances clés et les débouchés des principaux marchés de l’énergie renouvelable au pays, notamment l’Alberta. Grâce à sa stratégie visant l’élimination de l’électricité produite par le charbon et la diversification de son réseau, la province s’est placée dans le peloton de tête des marchés de l’éolien au Canada. Un récent appel d’offres a confirmé que l’énergie éolienne est désormais la source de production d’électricité la moins chère au pays.

Dans son discours d’ouverture, le président de CanWEA, Robert Hornung, expliquera comment l’industrie éolienne doit maintenant miser sur ses coûts concurrentiels afin d’offrir une plus vaste gamme de produits et services au réseau, tout en établissant des partenariats avec les propriétaires fonciers, les collectivités locales et les communautés autochtones qui garantiront que la filière peut combler les besoins en énergie propre de l’Alberta et du Canada de façon fiable, responsable et rentable, et générer d’importantes retombées économiques locales.

À l’occasion de son Colloque du printemps, CanWEA laissera aussi la parole au président du Conservative Energy Network. Établie au Michigan, cette organisation vise à rassembler les conservateurs qui s’engagent en faveur de l’essor de l’énergie renouvelable partout aux États-Unis.

Pour en savoir plus, veuillez consulter le programme complet du Colloque du printemps de CanWEA.

Date :                                   

10 et 11 avril 2018

Lieu :                                    

The Westin Calgary*
320 4th Avenue SW
Calgary (Alberta) T2P 2S6

Pour obtenir une accréditation, communiquez avec Ameera Shivji, conseillère en affaires publiques, région des Prairies, à This email address is being protected from spambots. You need JavaScript enabled to view it., en décrivant brièvement votre principal domaine d’intérêt.

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À propos de l’Association canadienne de l’énergie éolienne (CanWEA)

CanWEA est la voix de l’industrie éolienne au Canada, faisant activement la promotion d’une croissance responsable et durable du secteur éolien. Association nationale sans but lucratif, CanWEA constitue la plus importante source de renseignements fiables sur l’énergie éolienne ainsi que sur ses avantages pour la société, l’économie et l’environnement. Suivez-nous sur Facebook, Twitter et LinkedIn. Pour en savoir plus, visitez le www.canwea.ca/fr.

Pour obtenir plus de renseignements ou pour demander une entrevue, veuillez communiquer avec :
Ameera Shivji, conseillère en affaires publiques, région des Prairies
Association canadienne de l’énergie éolienne
403 815-1407
This email address is being protected from spambots. You need JavaScript enabled to view it.

* Lien en anglais seulement

Asia-Pacific installed 24.9 GW new onshore wind capacity during 2018

  • Total installed onshore wind capacity in Asia-Pacific is now 256 GW
  • Leading countries in the region for onshore installations in 2018 were China (21.2 GW) and India (2.2 GW)
  • The surge for wind energy in Asia-Pacific is expected to continue with GWEC forecasting over 145 GW of new onshore wind capacity to be installed by 2023

The latest data released by the Global Wind Energy Council (GWEC) shows Asia-Pacific installed 24.9 GW capacity of onshore wind power in 2018, an increase of 4.2% compared to 2017. The preview data from GWEC’s Global Wind Report forecasts that a further 145 GW of onshore wind capacity will be added by 2023 – this would mean that total installed onshore capacity will reach over 400 GW in the region.

Top three onshore wind markets in Asia-Pacific in 2018:

  • China – 21.2 GW (preliminary)
  • India – 2.2 GW
  • Australia – 0.549 GW

China installed the most onshore wind capacity during 2018 in Asia-Pacific and globally. GWEC expects China to remain the largest onshore market in the future. However, other markets are developing and with auctions progressing in India, new onshore wind capacity installations could exceed 5 GW annually in India.

Ben Backwell, CEO of GWEC, said: “Asia-Pacific is the leading growth market for the global wind industry. Aside from the largest markets in China, India and Australia, GWEC expects positive developments in South-East Asia with onshore wind representing a cost-competitive choice for markets with growing energy demand.”

Karin Ohlenforst, Director of Market Intelligence at GWEC, said: “Wind markets in South-East Asia offer an opportunity for growth if policy commitments focus on the competitiveness and efficiency that wind energy can offer. More mature Asian markets like Japan and South Korea will continue to install new onshore capacity growing the onshore market in Asia.”

GWEC, together with key industry stakeholders, is working to increase policy momentum and to increase the understanding of the competitiveness of wind energy compared to coal in developing markets such as Vietnam, Taiwan and the Philippines. Growth in renewables is a priority across Asia-Pacific in a bid to decarbonise whilst satisfying rising energy demand.

These latest figures released by GWEC form the statistical release of the Global Wind Report. The Global Wind Report is GWEC’s flagship publication and the most widely used source of data for industry and governments. This report provides a comprehensive snapshot of the global wind industry and an overview of trends such as the growth of offshore wind, corporate sourcing and changing business models. The full report will be released on 3 April.

Notes to editors:

About GWEC 

GWEC is a member-based organization that represents the entire wind energy sector. The members of GWEC represent over 1,500 companies, organizations and institutions in more than 80 countries, including manufacturers, developers, component suppliers, research institutes, national wind and renewables associations, electricity providers, finance and insurance companies. 

For more information, please contact: 

Olivia Thornton 
H+K Strategies 
This email address is being protected from spambots. You need JavaScript enabled to view it. 
T +44207 413 3711 

From niche to mainstream: how wind is winning – DNV GL Talks Energy Podcast features Ben Backwell

Ben Backwell, CEO of the Global Wind Energy Council, highlights the extraordinary growth in the wind industry globally, and how an industry that was once seen as niche and expensive has been transformed into one that is both mainstream and cost-effective.

In this enlightening episode, Ben reveals the advances in technology that have helped to establish wind as a credible alternative to fossil fuels. He also describes how those same technologies have enabled a ‘full system approach’ where wind, solar and hydro complement each other to counteract the challenges traditionally associated with variable energy sources. He outlines why, how and where other renewable sources can work best alongside wind in this way, reducing the need for storage and the reliance on fossil fuel baselines in energy grids. However, he cautions that much of the world, including the Asia Pacific region, has a great deal to do before the infrastructure and regulations needed to support this ‘complementarity’ are in place.

*This episode was recorded live at the Singapore International Energy Week 2018.

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“Wind is the largest single source of zero-carbon power-generating capacity in the U.S.” This fact and more were revealed yesterday by the Business Council for Sustainable Energy in its 2019 edition of the Sustainable Energy in America Factbook. AWEA is a proud sponsor of the report and I’m excited to share a few more of the findings with you.  

Growing fast, remaining affordable 

Wind and solar capacity have more than quadrupled since 2009 (from 36.2 GW to 164.6 GW in 2018). That’s remarkable progress to make in a decade.  

Even with record amounts of renewables on the grid, most Americans aren’t paying more for it. Consumers dedicated a record low share of their household spending to electricity (1.3 percent), according to the new report. The report also found that the U.S. has the second lowest industrial electricity prices out of the G7 nations. That gives American businesses an important competitive advantage in the global marketplace.

Corporations are taking note of these low prices and are commissioning wind projects left and right. Facebook, Google and Walmart have worked together with utilities in New Mexico, Georgia and Tennessee (among others) to build new wind and solar projects. And let’s not forget how Budweiser put wind power right at the center of their Super Bowl 2019 strategy with a commercial titled “Wind Never Felt Better,” featuring Clydesdales and a dalmatian alongside wind turbines – set to the soundtrack of Bob Dylan’s “Blowin’ in the Wind.” 

New aggregation models are also allowing smaller energy buyers like Etsy and Adobe to combine their demand to sign onto an individual project. This means small and large companies alike can use wind to meet their sustainability goals and save money.  

Riding on the renewable energy highway 

The Factbook shows that we are well on our way to a sustainable energy future. But our journey is far from over. To keep moving on an upward trajectory, we’ll need to bring markets and the power grid into the 21st Century. Transmission infrastructure will be essential.  

Much like America’s highways, transmission lines move a valuable product—low-cost electricity—from where it’s produced to where it’s needed on the grid. If we have road blocks and lane closures, there’s no way we can make the system reliable or efficient. That’s why we need electric transmission upgrades and investments.  

Transmission helps connect and scale up new energy technologies that benefit consumers, including renewable energy, distributed generation, energy storage and demand response, while remaining essential for traditional power sources. We can make the grid cleaner, more reliable, and lower cost with faster, smarter permitting and planning for transmission lines.  

Access the Factbook 

You can download the full report on the Business Council for Sustainable Energy website.  

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Tens of millions of Americans experienced record cold weather at the end of January as Arctic air inundated much of the Midwest and Eastern U.S. However, the power system and electricity markets worked as designed, keeping the lights (and heat) on when customers needed it most. And the value of transmission in keeping the grid reliable and affordable was on full display.

This success demonstrated how renewable energy and transmission increase the power system’s resilience to extreme events. As shown below, wind energy output (orange line) was consistently well above the level planned for by grid operators (grey line) during the period of highest electricity demand (blue line, left axis) on January 30-31 across the Midwest (MISO) and Great Lakes, and Mid-Atlantic regions (PJM). Wind output was even higher on the evening of January 29 when the Midwest experienced very high demand.

This follows wind’s large contributions during last winter’s Bomb Cyclone event, the 2014 Polar Vortex event, and a similar cold snap in Texas in 2011. It is not surprising that wind output was strong, as these events were driven by an intrusion of fast-moving Arctic air into the United States. A secondary factor is that cold air is denser than warm air, proportionally increasing wind turbine output for a given wind speed.

Solar output was also very strong in PJM during the morning peak demand periods on January 30 and 31. Specifically, PJM utility-scale solar output ramped up by around 1,000 megawatts (MW) from 7-10 AM on each of those mornings, helping to meet high electricity demand in those hours. This occurred because the semiconductors that produce electricity in solar photovoltaic panels are significantly more efficient when they are cooled by low temperatures and high wind speeds.

The value of transmission

This event and previous cold snaps also showed the value of transmission for increasing resilience and maintaining access to reliable electricity during extreme weather. On January 30, the cold air moved eastward sooner than expected, decreasing wind energy output in the Midwest but increasing it in the Great Lakes region. This higher wind output helped the Great Lakes and Mid-Atlantic grid operator (PJM) export in excess of 5,000 MW of power westward to the Midwest grid operator (MISO) during its time of peak demand, a reversal of the typical eastward flow of power. This shows the value of wind’s geographic diversity paired with a well-connected grid, creating a more resilient overall system.

Transmission also allowed MISO and PJM to take advantage of the diversity in their electricity demand patterns, in addition to the diversity in their wind output. PJM electricity demand was relatively low on Wednesday morning when MISO experienced its peak demand, while MISO demand was lower by Wednesday evening when PJM experienced its peak demand for the day.

Similarly, during last winter’s Bomb Cyclone, eastern PJM was more affected by extreme cold than western PJM. PJM’s large operating footprint allowed excess power supply from western PJM – including high wind output there and in MISO – to help meet demand in the east, though expanded transmission infrastructure would have provided even larger savings to PJM consumers. Because of transmission congestion, power prices per megawatt hour were consistently higher in eastern PJM (Dominion’s Virginia footprint) than western PJM (ConEd’s Illinois footprint) during the Bomb Cyclone, as shown below. Largely as a result, PJM customers incurred $900 million in transmission congestion costs in the first half of 2018, up from $285 million in the first half of 2017. Expanded transmission infrastructure would have helped alleviate some of these costs.

Last week’s extreme cold also revealed opportunities for expanding transmission in order to provide consumers with greater access to low-cost energy resources like wind. For example, when MISO and PJM experienced their highest electricity demand on the morning of January 31, the grid operator to their west (the Southwest Power Pool) had more than 9,000 MW of wind output. Similarly, electricity prices in MISO‘s South region were consistently low throughout January 30 and 31 because that area was not as affected by the extreme cold. Stronger transmission ties within MISO would have benefited consumers by providing them with greater access to low-cost electricity generation.

Onsite fuel is not a silver bullet

This year’s Polar Vortex also demonstrated why it is misguided to focus on generator attributes, like the presence of onsite fuel, when discussing grid resilience. Last week saw large contributions from resources like wind and solar that do not have onsite fuel, just as many resources with onsite fuel experienced outages. PJM has documented that power plants with onsite fuel experienced a variety of challenges during the Polar Vortex, with coal and nuclear generators accounting for nearly half of outages. A similar pattern was also observed during the 2018 Bomb Cyclone, 2014 Polar Vortex, and the 2011 ERCOT event, when generators with onsite fuel experienced widespread outages, mostly due to equipment freezing and breaking in the extreme cold. Instead of specifying characteristics like onsite fuel that are of questionable value for predicting performance, grid operators and others should focus on market-based solutions to obtain needed reliability services from all resources, with payment based on performance.

As studies by the New England and PJM grid operators have shown, wind and solar make important contributions to grid resilience and fuel diversity, particularly during extreme cold weather. For example, during this year’s Polar Vortex, wind output was consistently high in Michigan, helping to compensate for natural gas supply shortages resulting from a fire at a compressor station.

More importantly, these cold snap events show the electricity transmission and distribution systems should be the primary focus of efforts to increase electric resilience, and not power plants. Some customers did lose power in each of the last two winters’ events due to extreme cold causing localized failures on the low-voltage electricity distribution system. As demonstrated above, transmission played a critical role in allowing power to be shared within and between MISO and PJM during both events, and stronger ties could have yielded even greater savings for consumers. These events reinforce the fact that transmission and distribution infrastructure account for more than 99 percent of customer electric outages, with generation and fuel supply failures accounting for a fraction of one percent of power outages.

Together with the entire Product Development team, the Senvion Patent Department is constantly looking for innovative approaches that will make Senvion and the wind industry better, cheaper or more adaptable in the future. In this case, the Senvion colleagues have jointly managed to find a patent solution for sound emissions from the turbines in the truest sense of the word. The “Hamburger Wirtschaft” magazine has taken a close look at the innovation:

Senvion has developed an innovative procedure for reducing the operating noise of wind turbines. The innovation and patent center has selected it as ‘Patent of the Month.’

Wherever wind turbines are installed, one topic generally arises sooner or later: are the turbines too loud?

It is a fact that roughly one third of German gross electricity consumption is currently covered by renewable energy sources. In 2016, wind energy usage in particular was further expanded in Germany. According to the register of installations of the German Bundesnetzagentur for Electricity, Gas, Telecommunications, Post and Railway, new onshore wind turbines with a total power of 4,402 megawatts were commissioned. This represents a 10 percent increase on the previous year. One of the manufacturers of wind turbines is Senvion GmbH (up to 2014: REpower Systems), which has its German headquarters in Hamburg.

Less and less space is available for wind farms. To achieve more power, old turbines are being replaced with new ones and increasingly wind farms are being built closer to residential areas or nature reserves. “The importance of noise protection has increased,” says Ulrike Keltsch, head of the patent department at Senvion. In addition to residents, animals can also be disturbed by the operating noises.

In summer 2015, Senvion's Development department applied for a patent for a procedure that can reduce the sound volume of the wind turbines in operation. The noise emissions of wind turbine generators include broadband noises that form a masking noise. However, narrowband noises may also be audible under certain circumstances; for example they can be caused by a generator or a gearbox of the wind turbine. The invention consists of a noise emission control device for a wind turbine that reduces any noises that may arise by surrounding them with the broadband noises that are more pleasant for humans and animals. This is achieved by means of an active noise source that emits a masking noise in at least one spatial direction in a frequency band around the individual sound frequency.

“This control device is not yet available,” says Keltsch. “Our turbines are quiet enough for the existing wind farm sites.” Senvion's engineers frequently develop their inventions preventatively, looking to the future. However, since the requirements regarding generating volume are in-creasing, the turbines themselves will also increase in size , and Keltsch believes that it is perfectly possible that the invention will come into use. If a customer wants a noise reduction measure, for a new construction or a retrofit, prototypes of the control device would then be in-stalled and tested in an existing wind farm, Keltsch states. “We would probably have to perform two to three correction cycles before the invention is implemented perfectly,” says Keltsch. Then Senvion would talk to the suppliers, clarify the supply chain, order the necessary individual parts, and finally manufacture the product in a small production run. The invention could then be tested in practice, and be ready for operation within four to twelve weeks.

Courtesy Senvion

There is a growing trend in the international wind industry: The technological evolution of wind turbines is moving towards machines with larger rotors to better capture wind at low wind sites. France is fully participating in this movement. At the Lussac-Les-Églises wind farm Senvion completed the installation of six 3.0M122 wind turbines with rotor diameters of 122 meters, as large as the diameter of the famous Ferris wheel “London Eye”.

The wind farm, developed by Quadran Groupe Direct Energie, is located in the French department of Haute Vienne. Guirec Dufour, Construction Director at Quadran states: "Lussac-Les-Églises is a low wind site and the wind turbine 3.0M122, capturing the most energy, allows us to optimize the yield of our project. However the challenge was the transportation of the blades to the site. The Blade Lifter solution, proposed by Senvion, made this project possible.”

Each blade is measured at 60 meters and weighs 15 tons. The blades were transported over a distance of 200 kilometers, from the port of La Rochelle to Poitiers, where a transshipment area was used to equip the Blade Lifter. From there the transport went on the challenging route to Lussac-Les-Églises.

Florian Dufresne, Senvion Europe South West Logistics Coordinator explains: "The only possible route for the convoy was to cross the village of Lussac-Les-Églises. However, the total length of the semi-trailer carrying the blade, is 66 meters. With such a ground length, it is impossible to turn in the many tight corners of the village. Facing this challenge, we opted for an innovative solution: The Blade Lifter. By lifting the blade to a 30 degrees angle, the ground length could be reduced to 17 meters, which allowed the safe passage of the convoy."

Technically, the Blade Lifter can lift the blade to 50 degree angles for the passage of even longer blades. The residents of the town were impressed by the technical prowess of this equipment. Guirec Dufour adds: “Thanks to a close collaboration between the Quadran and Senvion teams, the particularities related to the use of the Blade Lifter - transshipment location, moving telecommunications and power lines, pruning - were efficiently managed. This good collaboration limited the impact of the oversized transportation on the village residents and made the commissioning of the wind farm possible without any delay.”

Installing a 122-meter rotor at 89 meters height was also a challenge. The excellent coordination of the teams, a precise planning, while integrating the environment constraints and the uncertainties of the weather conditions, were essential to successfully install the six wind turbines with such a large dimension. Samson Lecluyse, Senvion Europe South-West Project Manager states: "The construction of the Lussac-Les-Eglises wind farm was an exciting project. The complexity for this wind farm lies in the environment with high wooded obstacles, which is close to the lifting zones. Due to the very large dimension of the components, the Senvion team had to prepare the ground with a maximum of rigor and precision so that the project is realized within the deadlines defined in the planning."

The Senvion team is proud to have met all the delivery and installation challenges of this project. The Lussac-Les-Églises wind farm, with a total capacity of 15 megawatts (MW) was commissioned beginning of November 2017. It will produce enough electricity to power nearly 15,000 people (including heating) in France.

Senvion is now ready to meet other challenges, including the transport of wind turbines with even longer blades: the newly announced Senvion turbine 3.7M144 EBC has blades over 70 meters long!

Courtesy Senvion

At the Ria Blades production plant, rotor blades with a length of 74 meters are now manufactured. A completely new production process was designed for this purpose. In line with the continuous improvement approach of the production processes, an efficient robot was developed in cross-functional collaboration.

One of the most photographed monuments in Portugal is located in Lisbon at the mouth of the river Tejo in the Atlantic. The "Padrão dos Descobrimentos", a 56 meter high sailing vessel made of stone and concrete, is dedicated to sailors and explorers. The monumental mosaic of a compass is adorned on the ground in front of the monument. Wind has always been a mainstay of development in the coastal state at the south-west corner of Europe. The wind, which the Portuguese explorers capitalized on more than half a thousand years ago, is now also used by Senvion.

250 kilometers north of Padrão dos Descobrimentos, in the industrial region of Aveiro, Senvion can be found in the town of Vagos. Here, Ria Blades is located on an area of 83,000 square meters where currently 1300 colleagues are employed.

Francisco Mira, Process Engineer at Ria Blades, stands in the plant's largest manufacturing facility: "To make rotor blades of this enormous size, we had to greatly expand the site and completely redesign the manufacturing process. The concept then arose with the cooperation of different departments - production, maintenance and HSE (Health, Safety & Environment). But the close collaboration with our suppliers and partners was also essential. This was a real team effort and I am proud that we have worked hand in hand to find the best solution in the end."

At the center of the manufacturing process are two semi-automated processes. On the one hand, the stacking of the fiberglass layers of some rotor blade components. So far this process has been carried out manually in a time-consuming manner, since the positioning of the different layers required the highest precision. In Portugal, RodPack technology is used which has much better material properties than conventional glass fibers and opens up new production possibilities. Thus, in the new process, each fiberglass layer is precisely set in the right place effortlessly by the equipment. Francisco Mira explains, "RodPack was the reason why we completely changed this process." The result is that there are considerably fewer shifts and working hours needed to complete the rotor blade.

The second process is now almost completely taken over by an equipment that sands the rotor blades before painting. While the rotor blades were previously sanded with a 35 kilogram sanding machine, which had to be operated by two people, 90 percent of this work is now done by robots, which are monitored by a colleague.

"Both processes, the semi-automatic fiberglass lay-up and the sanding process are thus much faster, more efficient and physically less strenuous. What is clear with Mira, however, is that "humans are responsible for decisions and will remain indispensable. A machine remains a machine.


Originally, Francisco Mira comes from the automotive industry. Since 2015 he has been with Ria Blades. "A lot of things in the organization and the way of thinking reminds me of my previous work: precision, flexibility, lean production concepts or high quality requirements. But we are trying to absorb the experience from very different branches of industry and make it usable for us. In particular, it is decisive for us to have the ability to think 'out of the box'. This is the only way to revolutionize the manufacturing process."

Courtesy Senvion

AMSTERDAM, November 28, 2017 -- The World Bank and the Technical University of Denmark (DTU) today launched new Global Wind Atlas, a free web-based tool to help policymakers and investors identify promising areas for wind power generation, virtually anywhere in the world. 

The Global Wind Atlas is expected to help governments save millions of dollars by avoiding the need for early-stage, national-level wind mapping. It will also provide commercial developers with an easily accessible platform to compare resource potential between areas in one region or across countries.

The new tool is based on the latest modeling technologies, which combine wind climate data with high-resolution terrain information—factors that can influence the wind, such as hills or valleys—and provides wind climate data at a 1km scale. This yields more reliable information on wind potential. The tool also provides access to high-resolution global and regional maps and geographic information system (GIS) data, enabling users to print poster maps and utilize the data in other applications.

The Global Wind Atlas was unveiled at an event at the Wind Europe Conference in Amsterdam, following the successful launch of the Global Solar Atlas earlier in the year.

Solar and wind are proving to be the cleanest, least-cost options for power generation in many countries. These tools will help governments assess their resource potential and understand how solar and wind can fit into their energy mix. An example of how good data can help boost renewable energy is Vietnam where solar maps from the Global Solar Atlas laid the groundwork for the installation of five solar measurement stations across the country.

“There is great scope in many countries for the clean, low-cost power that wind provides, but they have been hampered by a lack of good data,” said Riccardo Puliti, Senior Director and Head of the World Bank’s Energy & Extractives Global Practice. “By providing high quality resource data at such a detailed level for free, we hope to mobilize more private investment for accelerating the scale-up of technologies like wind to meet urgent energy needs.”

The work was funded by the Energy Sector Management Assistance Program(ESMAP), a multi-donor trust fund administered by the World Bank, in close partnership with DTU Wind Energy.

“The partnership between DTU Wind Energy and the World Bank allows us to reach a broader audience, especially in developing countries while remaining at the forefront of wind energy research. We are excited by the scientific advances that the new Global Wind Atlas incorporates, and look forward to seeing how this data can enable countries to advance wind projects,” said Peter Hauge Madsen, Head of DTU Wind Energy.

While the data powering the Global Wind Atlas is the most recent and most accurate currently available, it is not fully validated in many developing countries due to the lack of ground-based measurement data from high precision meteorology masts and LiDARs. ESMAP has funded a series of World Bank projects over the last four years to help fill this gap, with wind measurement campaigns under implementation in Bangladesh, Ethiopia, Nepal, Malawi, Maldives, Pakistan, Papua New Guinea, and Zambia. All measurement data is published via https://energydata.info, a World Bank Group data sharing platform.

Courtesy The World Bank

WIND POWER CONTINUES TO SET RECORDS

On May 16, 2017, the state of California set a new record—that day, it generated 42% of its electricity from wind and solar, and peaked at 72% that afternoon. In addition to this wind power record, wind farms by themselves accounted for 18% of the state’s needs. But renewable energy’s popularity doesn’t just extend to California. According to the Global Wind Energy Council, the total generating capacity of wind farms around the world is now greater than all of the world’s nuclear power plants combined.

So what’s driving this growth? One answer is innovation. The “levelized cost of electricity” (LCOE)—a key number that measures electricity’s costs—has fallen 58% over the past six years. Additionally, the use of  wind turbine management software—like GE’s Predix—has let operators run their wind farms more efficiently, lowering maintenance costs and saving money. In fact, GE estimates that by deploying its Digital Wind Farm solutions and wind turbine software, the wind industry could save as much as $10 billion a year. One thing’s for sure: with 30,000 GE wind turbines deployed across the globe and capable of generating more than 57 GW of electricity, wind energy isn’t going anywhere.

Learn more about GE’s wind power software and Digital Wind Farms by contacting us today.

Read the full story at https://www.ge.com/reports/wind-blows-innovation-dropping-costs-drive-renewables-growth/

Courtesy GE Renewable Energy

ENERCON is developing two new types of converter for its 3 megawatt platform (EP3). E-126 EP3 and E-138 EP3 are designed for sites with moderate and low winds respectively, and are scheduled to go into production in late 2018 and late 2019. As well as promising much improved performance and efficiency, the two new converters will benefit from optimised processes for production, transport and logistics, and installation. ENERCON will be introducing the two converter types for the first time at the Brazil Windpower event in Rio de Janeiro (29 to 31 August).

The machines are ENERCON’s response to new challenges facing converter technology in the important 3 MW segment. “We are increasing overall performance significantly”, says Arno Hildebrand, Director of System Engineering at ENERCON’s research and development arm, WRD. The greater efficiency will come mainly from an increase in swept area and in nominal power. The E-126 EP3 will have a rotor diameter of 127 metres and a nominal power of 3.5 MW, and is being designed for sites with moderate wind conditions in Class IIA (IEC). The E-138 EP3 will also have a nominal power of 3.5 MW, but with a rotor diameter of 138 metres it is intended for use at low-wind sites in Class IIIA (IEC).

“At sites with moderate wind speeds of 8.0 m/s at hub height, the yield of the new E-126 EP3 will therefore be more than 13 percent higher than that of our existing E-115 model”, says Hildebrand. Annual energy yields of more than 14.5 million kilowatt hours (kWh) are forecast for a typical Wind Class IIA site with speeds of 8.0 m/s at a hub height of 135 metres. As for the E-138 EP3 – a completely new type of converter, and the first low-wind turbine to feature in ENERCON’s EP3 portfolio – the developers calculate that, at a typical low-wind site with average speeds of 7.0 m/s at a hub height of 131 metres, annual energy yields in excess of 13.2 million kWh can be achieved.

Not only that, but the two converter types will be consistently streamlined for efficiency. Every single process – from production to transport and logistics, installation and commissioning – will be optimised. The E-126 EP3 and E-138 EP3 will be available with a choice of hybrid or tubular steel towers with hub heights of between 81 and 160 metres. Installation of the E-126 EP3 prototype is scheduled for as early as the third quarter of 2018; it will enter series production later that year. ENERCON plans to erect the E-138 EP3 prototype in the fourth quarter of 2018, then introduce a few pre-series machines in 2019 before full production begins towards the end of 2019.

Courtesy ENERCON

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The World Bank and the Technical University of Denmark today launched new Global Wind Atlas, a free web-based tool to help policymakers and investors identify promising areas for wind power generation, virtually anywhere in the world.

The Global Wind Atlas is expected to help governments save millions of dollars by avoiding the need for early-stage, national-level wind mapping. It will also provide commercial developers with an easily accessible platform to compare resource potential between areas in one region or across countries.