Pattern Energy Reports First Quarter 2016 Financial Results

Press Release

– $41.0 million in Q1 2016 CAFD on track for FY 2016 target –

– Declares increased dividend of $0.39 per Class A common share for Q2 2016 –

SAN FRANCISCO, May 9, 2016– Pattern Energy Group Inc. (the “Company” or “Pattern Energy”) (NASDAQ: PEGI) (TSX: PEG) today announced its financial results for the 2016 first quarter.

Highlights

(Comparisons made between fiscal Q1 2016 and fiscal Q1 2015 results, unless otherwise noted)

Cash available for distribution (CAFD) of $41.0 million, up 340%, on track to meet full year guidance
Adjusted EBITDA of $78.1 million, up 67%
Proportional GWh sold of 1,801 GWh, up 92%
Revenue of $87.6 million, up 35%
Declared a second quarter dividend of $0.39 per Class A common share or $1.56 on an annualized basis, subsequent to the end of the period, representing a 2.4% increase over the previous quarter’s dividend
All 16 existing assets, representing 2,282 MW of owned capacity, are operational with no new capital required to be raised for existing ownership interest levels

“Our fleet continues to operate at a high turbine availability across all 16 operating projects. Delivering $41.0 million in CAFD is an excellent result for the first quarter. It keeps us on track to achieve our 2016 CAFD target and enabled us to increase our dividend for the ninth straight quarter,” said Mike Garland, President and CEO of Pattern Energy. “Our proven, successful relationship with Pattern Development continues to provide us with a strong growth outlook including 1.3 GW of identified ROFO assets and a growing pipeline of development stage assets. Pattern Development has also provided us more flexibility when we drop down future projects. Their development pipeline includes two solar projects that have commenced operations in Japan since March.”

Financial Results

Pattern Energy sold 1,801,034 MWh of electricity on a proportional basis in the first quarter of 2016 compared to 935,981 MWh sold in the same period last year. The increase was primarily attributable to projects which were acquired in May 2015 or became commercially operable since the third quarter of 2015. Specifically, it includes an increase in volume of 763,424 MWh from controlling interest in consolidated MWh; and an increase in volume of 101,629 MWh from unconsolidated investments due primarily to the acquisition of K2 in June 2015. As expected, El Niño conditions continued into early 2016 which resulted in lower wind speeds and lower production than the Company’s long-term average forecast.

Adjusted EBITDA was $78.1 million for the first quarter of 2016 compared to $46.7 million for the same period last prior year, an increase of $31.3 million, or approximately 67.1%. The increase in Adjusted EBITDA for the first quarter as compared to the same period in the prior year was primarily attributable to projects which commenced commercial operations or were acquired since May 2015. Reconciliations of adjusted EBITDA to net loss determined in accordance with GAAP for the quarterly periods are shown below.

Net loss was $29.0 million in the first quarter of 2016, compared to $22.1 million in the same period last year. The change was primarily attributable to projects which were acquired in May 2015 or became commercially operable since the third quarter of 2015. Also contributing to the change were increases in other expense items related to interest expense and losses on undesignated derivatives, net. These changes were partially offset by increases in earnings (losses) in unconsolidated investments, net primarily due to the acquisition of K2 in 2015.

Cash available for distribution was $41.0 million for the first quarter of 2016 as compared to $9.3 million for the same period in the prior year. This $31.7 million increase in cash available for distribution was due to additional revenues of $31.3 million (excluding unrealized loss on energy derivative and amortization of power purchase agreements) primarily from projects which commenced commercial operations or were acquired during 2015. Pattern Energy also received an increase of $14.1 million in cash distributions from its unconsolidated investments when compared to the same period in the prior year due to full operation at each of its unconsolidated investments in 2016. These increases were partially offset by increases in project expenses of $7.0 million and operating expenses of $3.4 million, primarily from projects which commenced commercial operations or were acquired during 2015, as well as, increased interest payments of $3.1 million and distributions to noncontrolling interests of $3.2 million. Reconciliations of cash available for distribution to net cash provided by operating activities determined in accordance with GAAP for the quarterly periods are shown below.

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