Good day, ladies and gentlemen and welcome to the NRG Yield Fourth Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Chad Plotkin, Vice President, Investor Relations. Please go ahead.

Thank you, Kate, and good morning and welcome to NRG Yield’s full year and fourth quarter 2014 earnings call. This morning’s call is being broadcast live over the phone and via webcast, which can be located on our website at www.nrgyield.com under Presentations and Webcasts. Because this call will be limited to only 30 minutes, we do ask that you limit yourself to only one question. As this is the earnings call for NRG Yield, any statements made on this call that may pertain to NRG Energy will be provided from NRG Yield’s perspective. Please note that today’s discussion may contain forward-looking statements which are based on assumptions that we believe to be reasonable as of this date. Such statements are subject to risks and uncertainties that could cause actual results to differ materially. We urge everyone to review the Safe Harbor statement provided in today’s presentation as well as the risk factors contained in our SEC filings. We undertake no obligation to update these statements as a result of future events except as required by law. During this morning’s call, we will refer to both GAAP and non-GAAP financial measures of the company’s operating and financial results. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today’s press release in this presentation. And with that, I will now turn the call over to David Crane, NRG Yield’s Chairman and Chief Executive Officer.

Thank you, Chad and good morning everyone. Joining me on today’s call and providing the majority of our prepared remarks is our Chief Financial Officer, Kirk Andrews. Additionally, Mauricio Gutierrez and Gaetan Frotte are available to answer your questions. Since I know many of you know listened to the NRG Energy’s call that concluded a short time ago, our comments will be very brief. But since 2014 marked the first full year that NRG Yield operated as a public company, we did wanted to take this opportunity to reflect on what in my opinion at least was a tremendously successful year. Additionally, in case you did not listen to the NRG Energy’s call, I did want to note that NRG Yield is also experiencing a change in its Investor Relations capability as Matt Orendorff is assuming the role of Managing Director of Investor Relations replacing Chad Plotkin who is assuming new responsibilities within the NRG group of companies. So, let’s turn to Slide 4. Our financial results for the year at NRG Yield highlight one of the attributes investors should value most, predictability in our financial performance. A predictability, which stems from the highly contracted nature of our portfolio and in this regard, we delivered on both adjusted EBITDA and cash available for distribution. But more importantly than just achieving these results is our dividend growth. Last year, we increased our original target compound annual growth rate for dividend per share from 10% to 15% to 15% to 18% over the next 5 years. This growth trajectory was substantiated by our announcement just 10 days ago of an increase in our annualized dividend payment of $1.56 per share, which represents a 30% increase since our IPO and also by the strengthened and increased ROFO pipeline. While the predictability of NRG…

Thank you, David and good morning everyone. Turning to Slide 6, in the financial summary, NRG Yield is reporting fourth quarter 2014 adjusted EBITDA of $114 million and $10 million in cash available for distribution. For the full year NRG Yield delivered on its financial commitments with adjusted EBITDA of $455 million and CAFD of $147 million. As previously announced, NRG Yield completed the drop-down transaction from NRG on January 2, 2015 for a total cash consideration of $489 million. NRG Yield’s pro forma liquidity following the January 2 drop-down was $336 million, which provides us with sufficient liquidity for opportunistic near-term smaller acquisitions such as those just announced Spring Canyon and the Fuel Cell investments. The issuance of the proposed Class C and D shares, which I will cover in more detail shortly, will further increase our flexibility to fund potential larger transactions to drive future growth. Pro forma for the latest drop-down in January of 2015, our corporate debt to corporate EBITDA ratio is 3.29 times, in line with our targeted ratio of 3.25. We continue to target this ratio to strike what we believe that the appropriate balance amongst optimized returns, managing financial risk and ensuring consistent access to the capital markets. Turning to guidance for 2015 on Slide 7, we are initiating first quarter 2015 adjusted EBITDA of $125 million and CAFD of negative $10 million. The negative CAFD for the quarter results from seasonal impact of conventional capacity payments and the timing of interest payments for the corporate level debt financing executed in 2014. As depicted on the graphs to the right the first and fourth quarters of the year are the shoulders for CAFD mainly due to the timing of capacity payments on our conventional assets in California during the summer months, solar resource…

Thank you. [Operator Instructions] Our first question comes from the line of Matt Tucker with KeyBanc. Your line is open.

Thanks. Hi, good morning. On the home solar opportunity, could you just discuss the expected timing there and when you might be able to provide expectations for CAFD or adjusted EBITDA?

Sure, Matt. Good morning. As I indicated both at NRG’s Investor Day in January as well as in my remarks this morning, the independent directors are currently evaluating that first portfolio of potential drop-downs. And we would expect likely later in this quarter to make an announcement along that end. Once we have arrived at an agreement for that drop-down, we would provide specifics around obviously the magnitude of purchase price as well as the CAFD associated with that solar lease portfolio.

Okay. So, we should expect to hear about that later this quarter?

I would say towards the end of this quarter, that’s probably a good timeframe, yes.

Okay, thanks a lot.

Our next question comes from Julien Dumoulin-Smith with UBS. Your line is open.

Hey, Julien.

Hey, good morning.

Good morning.

Good morning, Julien.

So, a quick follow-up to Matt’s question, can you elaborate a little bit on the leverage employed ultimately sort of the capital structure on the NRG home stuff at NRG Yield? Specifically, out of tax equity and conventional leverage, what the mix you are seeing is? And also just if you can elaborate how you think about that in the context of the 18-year life of these assets?

Sure. The first thing I would say Julien is the portfolio that I alluded to that’s being evaluated right now is a portfolio without tax equity largely due to the fact that the leases in that portfolio were all cash grant rather than ITC. Obviously, the former of which requires or it’s less necessary to monetize the ITCs, because you basically got cash grants upfront. For that portfolio in terms of leverage given the fact that there is no tax equity for this first step, we would expect the cash available for distribution, which again as I indicated earlier, you provide greater details once we have greater clarity around that as the evaluation process is completed with the independent directors. That CAFD basically is un-levered CAFD and we look at that in much the same way as we do with the CAFD for any other un-levered asset. It has – it adds to the corporate EBITDA, those distributions. And obviously over time as that CAFD grows, it builds leverage capacity. And so for that first step, one way to think about it is we would inherit the opportunity to take advantage of that debt capacity as we moved south of our 3.25 leverage ratio and we could, if you will, back lever the portfolio at the corporate level. Moving forward, as we continue to evaluate potential drop-downs or offers of leases through this similar partnership structure, I think the one additional element that you would expect given the fact that going forward, most of the leases in the portfolio, given the fact, they will have ITCs, we would expect to use tax equity as the component of that partnership to monetize at least the tax attributes around that. And then the residual cash flows would basically work the same way…

Great, thanks for the detail.

You bet.

Our next question comes from the line Angie Storozynski with Macquarie Capital. Your line is open.

Thank you. I am not going to ask about M&A, I promise.

Angie, I was waiting for it.

No, not this time I believe. So, I have a bigger picture question. So clearly, looking at your stocks, I mean the investors are concerned and some of the questions that we are hearing are about a future drop-down from NRG, now that your economic interest will be falling. Can you assure us that this entire strategy, the adding of additional classes of shares will eventually lead us to actually an improved growth in distributions per share for NRG Yield, meaning that I am going to be benefiting from third-party acquisitions, but I am also going to be getting drop-downs from NRG at multiples that are similar to the ones that I have seen recently, simply because as your stake drops, your incentive to drop these assets at attractive prices is somewhat reduced. So, can you tell us that the distribution per share growth for NRG Yield will be improved on the back of this new share structure?

Yes.

Okay, that was simple.

Yes, Angie, I absolutely will give you our insurance that, that is our intention. And Kirk will go into more detail about it, but yes. And I tried to say that I guess inelegantly on the previous call in terms of our commitment to keep NRG Yield at the top of the yield asset class, which to me is one of the biggest indicator that is the growth pipeline and that in our case as we have thoroughly demonstrated in the year that we have been out there that’s a growth pipeline that’s fed from two base of sources from NRG and third-party. And there is nothing about what we are playing here that’s designed to do anything other than to enhance both of those streams of growth prospects. So, I agree with you entirely, Angie and thank you for asking us to clarify it and Kirk is going to pile on.

And the way I address that question, Angie, first of all, I absolutely agree with what David has characterized things, but specifically I address that in two parts. First, in terms of the ROFO drop-downs that being assets that are made available to NRG Yield by NRG, whether you consider the prior structure before this proposal or after the same truth holds, NRG Yield would acquire those assets at a value obviously negotiated as we have done in the past between NRG and NRG Yield. The only difference is prior to this increased flexibility in the structure, on the one hand prior to that NRG Yield would have paid for those assets in two parts. One, it would be a proportion of cash and then two the extent to which it was necessary to maintain the ownership and governance structure, NRG would have received B units at the end of the day as part of the consideration. So, at the end of the day, it would be at the same purchase price for a given drop-down, you have the same amount of incremental shares overall issued in connection with that drop-down. Moving forward, we simply expect that same negotiating dynamic to hold on the ROFO assets, it’s just that NRG Yield issuance of equity would come in at different form likely to be the same number of shares, it would simply be – those shares would be issued exclusive with the public and the proceeds of that would be paid to NRG as cash consideration. I think the more important distinction is as an NRG Yield shareholder is on the third-party acquisition, because the distinction with third-party acquisitions as we reached the inflection point of a 50% ownership on the part of NRG, the equity issuance required to fund the cash purchase of those third-party acquisitions would have otherwise required an investment by NRG in cash at NRG Yield. So, thinking about it that way that’s governed by NRG’s A appetite to allocate capital in that direction and B to the degree to which NRG has the capital to allocate in that magnitude. So, if the growth is that great, they are no longer constrained by considering how much capital NRG has to fund that, it is simply reliant on the liquidity in the capital markets to do so. And that I think is the main distinction in terms of to drive growth on the third-party acquisition unfettered by considerations about NRG’s capital allocation.

Perfect. Look, I mean, it’s – I think, I mean, these are fair concerns, I mean from our perspective of these, because the economic interest of the parent over time will be dropping below 50% and then yet, your voting interest will stay at a majority level. So, I mean, the concern which will arise is that what ties to all those future drop-downs happen, but if you can assure us that the growth will exceed the current expectations, then I think we are all set? Thank you.

Thanks Angie.

Thanks, Angie.

Our next question comes from the line of Brian Chin with Bank of America Merrill Lynch. Your line is open.

Hi, good morning.

Hi, Brian.

Just a broader step back question on the industry, we have seen a lot of your peers on the YieldCo side talk up the international story a little bit more. And some of the international utilities out there have been exploring ideas around doing an international YieldCo. David, obviously you have had a history of working in the international arena prior to NRG, I have always had the impression that at least with regards to NRG Yield, you are more focused on the North American market. But just any thoughts around whether what’s happening in the industry might prompt you to look internationally on the margin or whether you would want to remain focused in the domestic market?

Brian, I would say we see so much opportunity in the domestic market right now. I mean, we are aware that the international markets out there, but I mean it’s so far away from anything that it serves currently on the horizon for NRG Yield. I mean, I don’t think that I can recall in the couple of years that we have been existing as NRG Yield with independent directors. I don’t think we have even raised the question of international expansion because of the breadth and depth of our domestic opportunity. So, I learned a long time ago, Brian, never say never, but it’s not – it’s certainly not. I guess what I can tell you is it’s certainly not on the immediate horizon. And if we ever did go down that international path whether or not the stuff that we did went into NRG Yield or was into some sort of yield vehicle that sort of listed on the Botswana Stock Exchange or something, it’s just way premature.

That’s great color. Thank you very much.

Okay, thank you.

So, well with that, I think we are done. We appreciate your interest in NRG Yield and we look forward to talking to you next quarter.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a good day.