Ladies and gentlemen, thank you for standing by. And welcome to the BEP First Quarter 2020 Results Conference Call and Webcast. At this time, all participants lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions].I'd now like to hand the call over to Sachin Shah. Please go ahead.

Thank you. Thank you, operator. Good morning, everyone. And thank you for joining us for our first quarter 2020 conference call. Before we begin, I'd like to remind you that a copy of our news release, investor supplement and letter to unitholders can be found on our Web site. I also want to remind you that we may be making forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you're encouraged to review our regulatory filings available on SEDAR, EDGAR and on our Web site.From my remarks today, I'd like to provide an update on our business and position during this period of global disruption and uncertainty. Over the last two decades, Brookfield Renewable has become one of the premiere global renewable energy companies. We have over $50 billion of renewable assets with $16 billion market capitalization, including our recently announced merger with TerraForm Power and a 20-year track record of stable and growing dividend, delivering 17% compounded annual return to unitholders.As a special advantage in this greening world, our business avoids over 28 million tonnes of carbon dioxide annually and this number continues to grow each year. As the world transitions to renewable energy and looks to reduce carbon dioxide consumption, we believe we are one of the entities of scale with the track record and global capabilities to deliver investors a resilient, stable distribution, plus meaningful growth through all market cycles. As always, our objective remains the same to deliver 12% to 15% total returns on a per-unit basis over the long-term.We are currently in the midst of an unprecedented global health and financial crisis. Today, I want to emphasize that in spite of the significant market volatility and a potentially deep recession,…

Thank you, Sachin and good morning everyone. During the quarter, we generated FFO of $217 million or $0.70 per unit, reflecting solid performance as our operations benefited from strong underlying asset availability and resource and efficiency initiatives. On a normalized basis, our results are up 5% over last year. Our business continues to benefit from our growing and diverse generation portfolio, limited off take concentration risk and a strong contract profile.During the quarter, overall generation was slightly ahead of long-term average, as we continue to benefit from the diversity of our fleet. Our focus over the last decade has been to diversify the business, which over the long-term mitigates exposure to any resource, regional or market disruption and potential credit event. For example, with over 600 counterparties, we have a diversified high quality customer base comprised primarily of public power authorities and utilities that is insulated from single counterparty risk.Our single largest non-government third-party customer represents 2% of generation, providing strong downside protection and safeguarding our cash flows. Our cash flows are also long duration, with a weighted average remaining contract length of 14 years. Lastly, the portfolio is largely contracted, with 95% of total generation contracted in 2020. Meaning our business does not have meaningful exposure to short-term price declines from slowing economic activity or lower power demand.Turning to our segment results. During the first quarter, our hydroelectric segment delivered FFO of $222 million. Our storage segment performed particularly well, generating $6 million of FFO in the quarter. Our focus in Latin America continues to be extending the average duration of our power purchase agreements where power price volatility provides opportunity to enhance and stabilize future revenues. In this regard, we signed 17 contracts in the quarter with high quality, creditworthy counterparties for a total of over 300 gigawatt…

[Operator Instructions] Our first question comes from Sean Steuart of TD Securities. Your line is open.

With respect to M&A, I'm wondering if you can give us some updated thoughts on valuation perceptions and opportunity sets and public versus private markets as you advance your growth aspirations on that front?

I think the reality is on the M&A front, we've seen this divergence of public versus private valuations really occurring over the last five years and a number of the opportunities that we've progressed at Brookfield had been a function of that divergence. So what we historically saw was that private market valuations tended to be higher and definitely more stable than what we were seeing in the public markets. And we were often taking advantage or capturing that volatility in the transactions that we were pursuing. I'd say it's no different right now, which is in part why we're building our liquidity position and we've really made sure that we've got ample firepower to pursue something of scale.The only difference I would say in this current environment, it is two things. One is many of the private transactions that were actively coming to market over the last sort of six to 12 months have really stopped. If a seller doesn't need to they're being patient and they're taking their time. And number two transactions that are coming to market often have some element of an issue that needs to be solved, whether that's a balance sheet issue or an end of fund like issue. And therefore, those transactions tend to be a little bit more interesting for us to pursue, and we would look at them. But definitely on the private side, transaction activity has slowed.

And following on that, Sachin, you touched on the sale of TerraForm Global’s Thailand assets. Can you give us a sense or scale of other asset recycling plans and has that process been at all compromised in the wake of COVID-19?

Thankfully, and maybe this is a little bit of luck, which is always helpful, is we had a few processes to sell assets underway but we're not a forced seller. We've talked a lot about our liquidity position, no near-term debt maturities, a really strong balance sheet. We sell assets opportunistically. So to the extent we're selling something like Thailand that was a really well advanced process and we were far, far down the path with a buyer, there was no reason to turn it off and the buyer didn't want to walk away.And where we are continuing a few select processes like that around the world is because we're advanced, and even the potential buyers know that we're not a forced seller. On the flip side, it's unlikely we're going to start an aggressive sales campaign right now just given where the market is, we don't need to and we don't need the funding for anything. So I would say we're in a pretty fortunate position where we have many levers we could pull and in particular, our level of cash and available liquidity is high.

Our next question comes from Nelson Ng of RBC Capital Markets. Your line is open.

My first question is for Wyatt. I think Wyatt you mentioned that there's three contracts rolling off in the U.S. Northeast next year. Is the plan to re-contract them next year, or are you able to hedge in advance of that? I was wondering, given that your contracted profile drops from 95% to 77%. Should we expect additional hedges as the year progresses?

So two things comment first, the three contracts we mentioned, those are starting next year. So it's not all next year. And then furthermore, as you mentioned, a big chunk of our, as you mentioned comes from 95% of the 70% is the fact that we have hedges right now in place on our merchant hydros that are rolling off next year. And so with respect to the contracts that are rolling off, we prefer to be contracted and if we can find contracts that are attractive, as you mentioned in our prepared remarks, that are going to be shorter duration, we will secure those and we see the benefit of doing so.But to the extent we're not finding those attractive contracts, et cetera, we're very comfortable, including those in our normal hedging practices and which we generally hedge, two to three years out to make sure that we are managing that pricing volatility, like we saw this quarter where we were well protected given the drop off in demand, none of that impacted our pricing this quarter.

And then my next question relates to the development pipeline, I believe there were a few additions. Could you give a bit more color on the new and solar projects in Brazil and the Millinocket battery project in North America? Could you just give some color on in terms of net ownership interest and also the contract term?

So Millinocket and the Brazilian projects will go into our fund, it'll be -- we'll own 25% of it at that and 75% will be held by our institutional partners. The project qualifies for the government -- for various government PAAs that were put out in the auction. So these would be 20 plus year tariffs that would be received on the projects. And the broader theme in Brazil right now is development capital has really dried up. So we're seeing really meaningful amount of development for both wind and solar in the country and the returns are quite attractive.On a nominal basis, we would target north of 20% IRR and significantly more than a 2x multiple of our capital. And given local currency financing that you can find today with lower rates and with term, your unhedged piece becomes quite small. So, it's good from a cash flow perspective, good from a natural and hedging perspective. And we're pretty bullish on the development market in Brazil right now.The Millinocket battery storage, it's a 20 megawatt battery that we're building inside some of the existing infrastructure that we have at our Millinocket hydro facility. And there, because it's providing storage attributes, we would bid that into capacity market auctions over time. We'd also look to arbitrage on peak and off peak power prices. So very similar to a traditional pump storage facility. It won't have a direct contract on it, but what we’ll benefit from is the real need for storage as wind and solar continue to come online in that part of the U.S. and we see the need to match supply with demand. And again, I'd say that the unique part about that is because we have a large embedded infrastructure there with access to transmission, it's unique in that we can defray some of the upfront capital costs, which makes the project build returns in line with our targets.

So this is like for Millinocket. Does this mean that this project is essentially, it's a project that makes sense economically without any subsidies and what it sounds like, and you're doing it on a optimistic way…

It's a good way to think about it. I'd say for getting subsidies for a second, what I really think about is we talked about batteries for a few years. And what I would say is batteries on a standalone basis are still quite a ways away from being from delivering strong returns, unless you have something that's unique that you can do like in our situation some of the interconnection capital costs associated with the traditional battery installation, we can defray because we already have that infrastructure in place. So, I guess my point is, this is a bit of a one off, you shouldn't expect us to be able to replicate this in any meaningful way. But we'll learn a lot about batteries. And we are adding this to our existing battery storage portfolio that we've been selectively putting around in various U.S. markets.

Our next question comes from Rupert Merer of National Bank.

I wanted to ask about BEPC, and if you look at your sister company Brookfield infrastructure, we've got BEPC trading at a significant premium to the units today. Do you have a view on whether or not the same conditions are in place for that to happen with BEPC and whether or not it's an issue in your mind?

So Rupert, just for the broader call what you're referencing is that in the context of BEP and BEPC that their -- BEPC is generally trading at 5% to 10% premium over the last two weeks call it compared to the BEP units. Our general takeaway is that we had launched the C-Corp share because we thought that there would be significant demand for C-Corp share, just providing investors the optionality of investing in a C-Corp, or the LP units was a beneficial thing. And I think with the shares trade in the case of BEP trading above the unit, that's clearly shows that there is a pent up demand for the shares. And we think that will apply equally to BEP in terms of the demand.BEP and BEPC is a little bit different in the sense that our original market capitalization on BEPC will be a bit bigger, just because of the way we're able to structure the transaction and then if we're also successful in closing the transaction, so that being impacted a little bit. But our general takeaway, ignoring the premium that we're seeing right now and because that may normalize overtime. We'll have to see as time progresses. But the reason for offering the share, which is we think is strong demand for us, has clearly been borne out in the infrastructure instance and we think that it will be the same for our vehicle as well.

And the only thing I would add, Rupert, is that it's still early days. I mean, clearly, on the infrastructure side, what we've seen is a very significant pickup in retail interest, which makes sense, because it's an easy tax filing. I would suspect you're going to see a lot of investors maybe held out because of the tax filings now coming to our offering of BEPC as well. As far as this value difference though, I would say, we're going to be a little bit patient and just wait. I think it's going to take a while for it to all settle out. And you shouldn't expect over the long-term to have that difference in valuation.

In any case, it must look attractive to TerraForm shareholders at this point I would think?

Yes, from a TerraForm perspective, you're trading you're trading an existing C-Corp for another C-Corp. So I think it is a nice feature for them to have. It is one where if you don't like it, you can always exchange it on a one-for-one basis with the LP unit. So we're trying to give people maximum flexibility and options to meet whatever various considerations they have.

And then secondly you mentioned that the reals and other currency exposures had 9 million impact on FFO in Q1. Give us a sense that at current levels, what does that look like for Q2? And looking at the new contracts you've signed in Brazil and all your contracts in Brazil, if you could talk to us about how they would be protected on inflation, if we're going to see inflation in those developing markets now?

So in terms of the $9 million impact. What I'd say is that that's a pretty, that was for this quarter. That's a pretty good estimate of what it would look liked for the rest of the year provided currency stay where they are. Obviously, the real has appreciated a bit in the start of Q2 versus Q1, but the offset there is that to start generation profile such that Q1 is a heavy generation quarter. So 9 million to 10 million a quarter for assets, the impact on FFO is a pretty good estimate of what it will be for the rest of the year.In terms of our contracts in those markets, we get inflation indexation in those markets just because of the ways where they are in their evolution as a country. There still is, unlike in North America, there's strong demand for new electricity. And so that means the contracts that we're able to sign are generally above the contracts that are rolling off, so we have that benefit. So we definitely are seeing, from a perspective of South America, that in local currency basis that with the inflation indexation and those the contracting initiatives that are driving a positive benefit, that in the local currency it is definitely driving higher in terms of our average realized dollar per megawatt hour. But the impact of the FX during the quarter was so severe that it's going to more than offset that.

Our next question comes from Frederic Bastien from Raymond James. Your line is open.

Just a couple follow-up on Rupert's question. Any lessons you've learned and taken from this BEPC transaction as you close it on yours?

I think look instinctively, we always try to balance the trade off between giving investors options versus putting things out there that could potentially create confusion. And I'd say in this instance that was one of our debates was, are people are going to like this, will they see it for what it is, which is an economically equivalent security, but one that offers a more simple tax filing profiles to it. And I think credit to the infrastructure team, they've done a great job getting out there and explaining it to people and we're obviously going to benefit from that coming out second.And I think looking at this short period under which these securities have traded, it looks like the retail investors and some institutions have really understood the merits of the C-Corp share. And if that last then from our business perspective, I think it will attract a lot of U.S. investors and potentially a lot of European investors, which I think is really important for our business, because renewable stocks tend to get more profile in Europe. And there tends to be more funds that are directed towards ESG investing or green investing. And if they can acquire our C-Corp shares, because it fits in with their structure, that could be really good for the underlying demand of our stock and for the overall liquidity and our securities position.

And with the sort of the back to work orders that are starting to be coming out of most jurisdictions. Are you seeing sort of a pickup in sort of the projects that are in your pipeline or are you seeing more disruptions? Or is that kind of like, are you comfortable that on a go forward basis, your pipeline of projects will continue as expected?

We saw, starting about three to four weeks ago, we have active development in Brazil and in parts of Europe, Ireland and Spain. And we started to see construction activity come back at our facilities. And that was under what I’d call government's clarifying what was considered critical services, critical industries. And obviously, we were making accommodations for health and safety and social distancing at our site, but the activity really resumed back. And therefore, I would say we only experienced two to three weeks of delays in any of our sites.And if we look at our long-term schedules as it relates to projects that typically take one to two years to build out, we're really not behind. We typically have more than that built into our contingencies. And therefore, we don't expect any major disruption on construction projects that are currently underway. Obviously, we have to assess whether or not we bring new projects to market, but we always assess those for all of the key commercial variables anyway, and this is now one of them.

Our next question comes from Andrew Kuske of Credit Suisse.

The question just focuses on the re-powering projects that you have in the portfolio and some of the hydro facilities. They have considerable age, so there's a good market opportunity on doing the re-powering initiatives, which you can really control unlike M&A, which chipped away from the market. And then how do you think about the re-powering economics and the returns versus building outright or just M&A?

Andrew, it's Sachin. We typically do small re-powering that are hydros every year, we call them profit improvement projects. We're actively starting one our air swamp pumped hydro facility in Massachusetts this year. It's a 60 megawatt expansion actually. So it's pretty meaningful and increases the capacity of the plant by 10%. And it will allow us to bid that additional capacity into the FCA auctions that happen in New England. It will also qualify for some of the tax incentives in United States as newbuild generation and get renewable energy credit status.So, there are lucrative opportunities to do that. I would say, but I wouldn't want to mislead people. It's small and it's on the margins. It's not a meaningful area. And in light of the fact that it's difficult to find contracts at significant premiums to the current market price, this is not something that we're actively pursuing. If we were getting contracts that were at a healthy premium to current market prices then I think the opportunity would increase. But at this point in time, really what we're focused on is maintaining our assets so that they have a perpetual useful life and keeping them available to run at all times, but not trying to increase their capacity.

And then maybe just a broader question just on the dislocations we've seen in the last couple months in the market, and some of the uncertainty that exists on a go forward basis. Where are you seeing more interesting opportunities? Is it effectively looking at the emerging markets, or developed markets where in certain cases there's assets that have a depress value versus what you've seen in the past?

Schematically, it's really on what we've seen as public market valuation. And our sector and we've been saying this for a long time is our sector has generally grown up over the last four or five years using sub investment grade balance sheets. And in particular, many of our U.S. counterparts use converts or high yield debt. And obviously, with government stimulus and some of the programs in place, some of the pressure is off. But what that does present is that their ability to be acquisitive and as aggressive has dampened.And therefore, I think we're seeing opportunities in the U.S. that we weren't otherwise seen that were typically really aggressively pursued for one off assets. And we're also seeing public company valuations trade-off. Obviously, there's been a bit of a recovery, but still off of the highs that we signed January. So I'd say, broadly public market valuations are off that presents an opportunity for us, because we do have the capability to invest in stocks. And on the private side, we're definitely seeing less competition. But as my earlier comments alluded to, there's also less products coming to market.And in terms of geography, you asked about developing markets versus developed. This is a global crisis. So funny enough, we're seeing these select opportunities in every market we operate. In India, we have really unusually exceptional opportunities coming to market. Hopefully, we can capitalize in Brazil. I just talked about development that we're seeing come to market. And then in the U.S. and Europe, more in the U.S., we're seeing a few select very good private market opportunities that looked unattainable just a few months ago.

There are no further questions. I'd like to turn the call back over to Sachin Shah for any closing remark.

Well look once again, we thank you for your support. We know these are unique time so we hope that everyone is staying safe and looking after themselves. And as always, we look forward to updating you each quarter. We will talk to you again in Q2. Thanks you everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.