Innergex reports second quarter 2015 results
News Release
For Immediate Distribution
INNERGEX REPORTS SECOND QUARTER 2015 RESULTS
- Production increases 1% for the quarter and reaches 93% of long-term average; increases 19% for the six-month period and reaches 103% of long-term average
- Revenues increase 1% to $70.2 million for the quarter and 19% to $127.9 million for the six-month period
- Adjusted EBITDA decreases 1% to $53.4 million for the quarter and increases 22% to $96.4 million for the six-month period
- A $197.2 million fixed-rate, non-recourse debt financing closes for the 40.6 MW Big Silver Creek hydroelectric project in British Columbia
- Construction activities begin for the Mesgi’g Ugju’s’n wind farm in Quebec
- Impact of forest fire at Upper Lillooet River and Boulder Creek projects appears to be limited as the Corporation expects to be indemnified and to suffer no significant adverse financial consequences
LONGUEUIL, Quebec, August 5, 2015 – Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) releases its operating and financial results for the second quarter ended June 30, 2015.
“Strong production of our wind and solar farms during the quarter compensated for the effects of low water flows in British Columbia, and we are very satisfied with our performance for the first half of the year”, declares Michel Letellier, President and Chief Executive Officer of the Corporation. “We made progress on our project-debt funding program with the closing of the low-rate financing for the Big Silver Creek hydro facility, and we began construction as planned of the Mesgi’g Ugju’s’n wind farm, our fifth development project. We maintain our very favourable outlook for visible cash flow growth to 2017 and we continue to pursue our efforts to find new sources of long-term growth in Canada and internationally”, adds Mr. Letellier.
OPERATING RESULTS
| Amounts shown are in thousands of Canadian dollars except as noted otherwise. |
Three months ended June 30 |
Six months ended June 30 |
||
|
2015 |
2014 |
2015 |
2014 |
|
| Power generated (MWh) |
904,172 |
898,722 |
1,562,600 |
1,315,931 |
| Long-term average (MWh) |
971,195 |
934,874 |
1,513,964 |
1,433,838 |
| Revenues |
70,171 |
69,649 |
127,898 |
107,248 |
| Adjusted EBITDA1 |
53,415 |
53,817 |
96,370 |
79,146 |
| Net earnings (loss) |
22,506 |
(14,189) |
(15,304) |
(52,294) |
| Net earnings (loss), $ per share – basic2 |
0.21 |
(0.10) |
(0.10) |
(0.40) |
|
Trailing 12 months ended June 30 |
|||
| 2015 |
2014 |
||
| Free Cash Flow1 | 85,733 |
48,347 |
|
| Payout Ratio1 |
72% |
118% |
|
1 Please refer to the “Non-IFRS measures disclaimer” for the definition of Adjusted EBITDA, Free Cash Flow and Payout Ratio.
2 Net earnings (loss) per share is calculated as net earnings (loss) attributable to owners of the parent, less dividends declared on preferred shares, divided by the weighted average number of common shares outstanding.
Electricity Production
During the three-month period ended June 30, 2015, the Corporation’s facilities produced 904 GWh of electricity or 93% of the LTA of 971 GWh. Overall, the hydroelectric facilities produced 88% of their LTA, due mainly to below-average water flows at the six 50%-owned facilities of the Harrison Hydro L.P. in British Columbia, which more than offset average water flows in Quebec and Ontario. Overall, the wind farms produced 120% of their LTA, due mainly to above-average wind regimes. The Stardale solar farm produced 107% of its LTA, due mainly to above-average solar regimes. The production increase of 1% compared with the same period last year is attributable mainly to higher wind regimes and to the contribution of the SM-1 hydroelectric facility acquired in June 2014, offset by lower water flows in British Columbia.
During the six-month period ended June 30, 2015, the Corporation’s facilities produced 1,563 GWh of electricity or 103% of the LTA of 1,514 GWh. Overall, the hydroelectric facilities produced 102% of their LTA, due mainly to average water flows in almost all markets. Overall, the wind farms produced 108% of their LTA, due mainly to above-average wind regimes. The Stardale solar farm produced 102% of its LTA, due mainly to average solar regimes. The production increase of 19% compared with the same period last year is attributable mainly to higher water flows in British Columbia, higher wind regimes and the contribution of the SM-1 hydroelectric facility acquired in June 2014.
Revenues
For the three-month period ended June 30, 2015, the Corporation recorded revenues of $70.2 million, compared with $69.6 million in 2014. This 1% increase is attributable mainly to higher wind regimes and to the contribution of the SM-1 hydroelectric facility acquired in June 2014, offset by lower water flows in British Columbia.
For the six-month period ended June 30, 2015, the Corporation recorded revenues of $127.9 million, compared with $107.2 million in 2014. This 19% increase is attributable mainly to higher water flows in British Columbia, higher wind regimes and the contribution of the SM-1 hydroelectric facility acquired in June 2014.
Adjusted EBITDA
For the three-month period ended June 30, 2015, the Corporation recorded Adjusted EBITDA of $53.4 million, compared with $53.8 million for the same period last year. When compared with the 1% increase in production and revenues, this 1% decrease is due mainly to higher prospective project expenses. As a result, the Adjusted EBITDA Margin fell from 77.3% to 76.1%.
For the six-month period ended June 30, 2015, the Corporation recorded Adjusted EBITDA of $96.4 million, compared with $79.1 million for the same period last year. This 22% increase is in line with the increase in production and revenues explained above. As a result, the Adjusted EBITDA Margin rose from 73.8% to 75.3%.
Net Earnings (Loss)
Excluding the realized loss on derivative financial instruments (“Derivatives”) and the unrealized net gain or loss on Derivatives and the related income taxes, the net earnings for the three- and six-month periods ended June 30, 2015, would have been $7.4 million and $13.6 million respectively, compared with net earnings of $8.5 million and a net loss of $2.8 million respectively in 2014. The lower net earnings during the three-month period would be due mainly to higher prospective project expenses and the higher earnings for the six-month period would be due mainly to the increase in production.
For the three-month period ended June 30, 2015, the Corporation recorded net earnings of $22.5 million (basic and diluted net earnings of $0.21 and $0.20 per share), compared with a net loss of $14.2 million (basic and diluted net loss of $0.10 per share) in 2014. It is attributable in part to a $43.1 million unrealized gain on Derivatives resulting from the reversal of the unrealized loss accrued upon settlement of the Big Silver Creek bond forward contracts, as well as the increase in benchmark interest rates during the quarter, partly offset by a $24.5 million realized loss on Derivatives resulting from the settlement of these Derivatives. The recognition of a $14.2 million net loss for the same period last year is attributable to a $29.1 million unrealized net loss on Derivatives resulting from a decrease in benchmark interest rates.
For the six-month period ended June 30, 2015, the Corporation recorded a net loss of $15.3 million (basic and diluted net loss of $0.10 per share), compared with a net loss of $52.3 million (basic and fully diluted net loss of $0.40 per share) in 2014. It is attributable mainly to a $92.6 million realized loss on Derivatives resulting from the settlement of the Boulder Creek, Upper Lillooet River and Big Silver Creek bond forward contracts, partly offset by the $55.1 million reversal of the unrealized loss accrued upon settlement of these Derivatives. The recognition of a $52.3 million net loss for the same period last year is attributable to a $65.2 million unrealized net loss on Derivatives resulting from a decrease in benchmark interest rates.
Free Cash Flow and Payout Ratio
For the trailing 12 months ended June 30, 2015, the Corporation generated Free Cash Flow of $85.7 million, compared with $48.3 million for the same period last year. This increase is due mainly to greater cash flows from operating activities before realized losses on Derivatives and to the cash receipt for wheeling services provided by the Harrison Hydro L.P. to other facilities owned by the Corporation, partly offset by greater scheduled debt principal payments.
The Payout Ratio represents the dividends declared on common shares divided by Free Cash Flow. For the trailing 12 months ended June 30, 2015, the dividends on common shares declared by the Corporation corresponded to 72% of Free Cash Flow, compared with 118% for the corresponding period last year. This positive change is due mainly to the increase in Free Cash Flow explained above, which more than offset the increase in dividends resulting from the higher number of common shares outstanding by virtue of the DRIP, the issuance of 4,027,051 common shares of the Corporation in June 2014 to pay for the acquisition of the SM-1 hydroelectric facility and the conversion of a portion of convertible debentures during the first quarter of 2015.
