Improving Capital Markets Positioning
Robust Pipeline of Accretive Acquisitions
Expect Over 100% Revenue and EBITDA Growth in 2019
Based on Current and Planned Solar Park Operations
New York, NY – May 30, 2019 – Globe Newswire — Alternus Energy Inc. (OTC: ALTN) (the “Company” or “Alternus”), a global renewable energy company, today announced the issuance of the following shareholder letter from its Chairman and Chief Executive Officer, Vincent Browne:
Dear Alternus family, partners and shareholders,
I write to you today with a great sense of gratitude, pride and excitement. Gratitude and pride for the dedication and support of all of our stakeholders – team members, partners and shareholders alike – in making 2018 a breakthrough year for Alternus, and excitement for the value I see for us all in this ongoing journey.
Throughout 2018 Alternus Energy added a record amount of new solar parks and installed solar power, entered into a new and very attractive investment market, Germany, started the audit process and added key new exectives and management. We have laid the groundwork for what lies ahead and solidified our platform for future growth as we look to deliver on our mission statement. All areas of corporate, capital markets, personel, financing and business operations were advanced whereby we expect 2019 to be a major inflection year for the Company.
Alternus Energy aims to become a leading global independent power producer in green energy by owning and operating a global network of distributed and connected green energy power plants in countries where the combination of economic, environmental and political policies are optimized and supportive for the long term, ever growing need for clean renewable energy. Alternus currently owns and operates a diverse portfolio of PV solar parks that connect directly to national power grids on long-term government supply contracts.
Key Recent Corporate Development Highlights:
- We changed our corporate name to Alternus Energy in November 2018 to reflect the longevity of our focus and to give us the flexibility to move into all areas of renewable energy and new technologies, such as storage, over time.
- We increased our footprint across multiple countries with owned solar projects increasing to 29.1MWs from 8MWs a year ago.
- Weexpanded our operations in Italy, entered the AAA German market and established a foothold in The Netherlands; as a result we now operate in 4 European countries including Romania with activities underway to add more.
- We strengthened our executive management team with the appointment of a full- time qualified CFO with over 10 years of direct renewable energy expertise, along with a full-time experienced securities General Counsel to drive our planned up-listing to a U.S. national exchange.
- We added senior and operational management to accelerate expansion within our existing markets and also in new markets which include project and commercial management, as well as an experienced operations and maintenance manager to ensure we get the best performance from our project portfolio going forward.
- We added two independent board members to strengthen corporate governance.
- We completed and filed our 2016 and 2017 annual audited financial statements; the audit was conducted by the Company’s independent auditor, Marcum LLP, who issueda clean opinion on Alternus Energy’s audited financial statements; this is a significant step in our corporate and capital markets progression. An audit of our 2018 annual financial statements is currently underway and is expected to complete in Q2 of 2019.
- We secured a $20 million revolving acquisition fund from an institutional partner in the U.S., some of which we used to add assets in both Italy and Germany. We also opened up new sources of capital to support our ongoing expansion and reduce overall debt costs going forward.
Increased Business Operations Year on Year
Our business operations continue to grow with acquisitions of additional PV solar parks across Europe that enhance our long-term government counterparty income streams. As of today, our total installed capacity is 29.1 MWs of owned solar plants as follows:
- Germany – 25 solar parks totaling 15 MWs
- Italy – 10 solar parks totaling 8 MWs
- Romania – 2 solar parks totaling 6.1 MWs
- Netherlands – acquisitions currently under negotiation
The Germany and Italy projects enjoy20-year government counter-party ‘Feed-in-Tariff’ contracts at fixed sales prices that provide long-term predictable positive cash flows at average 85% gross margins. The Romanian parks operate under a ‘Green Certificate’ government incentive scheme over 15 years whereby the projects earn a certain amount of green certificates for the energy produced that are then subsequently sold to the Romanian energy market. As a result, there is a high degree of visibility of income and cashflows in our business model.
Understanding Our Income and Cashflows
All of our parks generate their revenues from sunlight. As a result there is a seasonality to our business resulting from more sunlight in the summer months than in the winter months. Currently all of our projects are located in Europe and therefore all have similar daylight characteristics. As a result, on average, each solar park generates 15% of its annual revenues in Q1 every year, 35% in each of Q2 and Q3, and the remaining 15% in Q4, which should be understood when reviewing our quarterly results in isolation. Our costs are relatively flat over a year, and so we will always report lower profits in Q1 and Q4 as compared to the middle of the year. Overall, the current annual revenues contracted by our owned projects is approximately $5.8 million, which delivers an underlying group annual EBITDA of approximately $3.25 million, and the Company is cash positive after all debt servicing based on full year results.
We use Annual Contracted Revenues as a key metric in our financial management of the business as we feel it better reflects the long-term stability of operations. It must be noted that the actual revenues recorded by Alternus in a particular year may be lower than the Annual Contracted Revenues because not all parks may be revenue generating for the full year in their first year of operation, and also to allow for timing of acquisitions that take place throughout the financial year.
This can be best illustrated by looking at ourreported 2018 financial results where we reported revenues of $2.6 million revenue for the 12 months, but our contracted revenues at the end of 2018 were $4.8 million, and we have since added an additional $1.0 million of contracted revenues with the recent 4MW’s completed in Italy.
Understanding Our Debt
An observation that we continually get from the investor community is that we have very high debt levels which looks like a negative, so I wanted to take this opportunity to address that point. Given that we enjoy super low – circa 2.5% on average –interest rates on our senior debt that are mostly fixed for the full term of the finance, it is possible, and indeed advantageous, for us to carry such debt levels, which in turn are approximately 85% of the capital cost of our projects.
The certainty of cash flows and the fixed nature of the senior debt servicing provide quite healthy coverage ratios for debt and equity cushion. Added to this is the fact that our senior financing is project specific with no cross-collateralization and with no recourse to Alternus, the parent company. In this environment all free cash flows therefore are available to Alternus to cover corporate costs and for reinvestment in new projects.
In addition to the project specific senior debt, we use a small amount of mezzanine debt that reduces, and in some cases eliminates, the requirement for Alternus to provide equity. In this way, what appears to be very high debt levels are fully serviced by, and contained within, the individual projects. As at March 31, 2019, 91% of our total liabilities was project related debt as described above.
In regards to our capital markets strategy, I am pleased to report that we have completed the first step in the process to become a SEC reporting company. Marcum LLP, our independent auditor, recently issued a clean opinion on our 2016 and 2017 annual financial statements, which are now filed with the OTC Markets. Marcum LLP is currently auditing our 2018 annual financial statements, which we anticipate will be completed before the end of the second quarter. Having audited 2018 financial statements will allow us to file a SEC Form 10 with the Securities and Exchange Commission to become a SEC reporting company. A major goal for 2019 is to become a fully reporting company with the SEC and to further elevate the Company’s capital markets position by up-listing to a U.S. National Exchange.
Outlook for 2019
As I have mentioned many times in the past, we feel that the real competitive advantage of Alternus Energy is our ability to source new projects and acquisitions at below the prices that are typically paid by larger operators and investment funds. This advantage is derived from of our successful niche focus of targeting small and medium sized parks and working with independent developers and project construction companies in each country, and also from a growing number of international strategic partnerships that we have cultivated over the past three years.
This dynamic, coupled with low cost debt, is what generates higher than normal returns to Alternus shareholders, that we feel is sustainable over the long-term based on current market and contract conditions.
Our acquisition pipeline remains strong across Europe, in Germany, Italy, The Netherlands and beyond. Based on current contracts, backlog and project pipeline, we have identified the following additional solar projects that are expected to be added during 2019:
- Germany: 40MW-60MW of new projects owned
- Italy: acquisition of 18MW’s of operational solar parks from an existing partner
- The Netherlands: expansion into new country with agreements to acquire up to 24MW’s of operational solar parks initially and partner contracts completed for further growth
- Romania: additional acquisitions currently being negotiated.
In the event that all of the above transactions conclude by year end, then we would expect to exit 2019 with:
- over 100MWs of installed power combined
- over $15 million in Contracted Annual Revenues at 85% gross margins
- with an approximate $250 million contracted revenue backlog over the following 13 – 20 years.
With access to growth capital in place and a robust pipeline of solar projects, we are at a very exciting inflection point to significantly scale our business in a profitable way over the next few years. As I have said in the past, we do not operate our business on a quarter by quarter basis, but with long term shareholder value creation as a priority. We aim to maximize return for our shareholders by acquiring positive cash flowing assets with long term income streams at the lowest possible risk, and we will continue to do that as we invest in additional infrastructure and income streams.
I invite the readers of this letter to also review our Corporate Profile, Financial Reports and Q1 financial results summary at https://www.otcmarkets.com/stock/ALTN/disclosure.
We look forward to reporting our progress with shareholders and Wall Street as we look to create and build long-term sustainable shareholder value.
Chairman and Chief Executive Officer
About Alternus Energy Inc.
Alternus Energy, Inc. is a global renewable energy company that owns and operates Utility Scale Solar parks internationally. Each solar park generates clean energy every day that is sold to national power grids under long term, government counterparty, fixed price contracts. The Company currently has operational solar parks in Germany, Italy and Romania with contracts in place to add additional solar parks in the Netherlands. For further information please go to: www.AlternusEnergy.com
This news release 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, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “potential” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in the Company’s filings with the OTC Markets. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.