Northland Power Reports Third Quarter 2023 Results
Press Release
TORONTO, Nov. 09, 2023 — Northland Power Inc. (“Northland” or the “Company”) (TSX: NPI) reported today financial results for the three and nine months ended September 30, 2023. All dollar amounts set out herein are in thousands of Canadian dollars, unless otherwise stated.
“Our third quarter financial results were solid and in line with our expectations. We are maintaining the low end of our Adjusted EBITDA, Adjusted Free Cash Flow and Free Cash Flow guidance for 2023. Despite the regulatory changes in Spain last quarter and the challenges in the economy more broadly, we expect to deliver solid financial and operating results this year, as a result of positive offsets from other planned activities, including sell-downs. Notwithstanding recent challenges experienced in the offshore wind sector, we delivered on two very significant milestones this quarter for the Company, having achieved financial close on our two offshore wind projects, Hai Long and Baltic Power. Through achieving these milestones, our global team demonstrated again that we have the capability and expertise to develop and finance complex, large-scale projects in multiple jurisdictions. Having achieved financial close of Hai Long, our team is now working on closing the final element of the funding plan, being the 49% sell down transaction to Gentari,” Mike Crawley, Northland’s President and Chief Executive Officer noted.
Third Quarter Highlights
Financial results for the three months ended September 30, 2023 were lower compared to the same quarter of 2022, primarily due to the non-recurrence of the unprecedented spike in market prices in Europe realized in 2022, partially offset by higher band adjustment revenue generated from Northland’s Spanish portfolio.
Financial Results
- Sales decreased to $513 million from $556 million in 2022.
- Gross Profit decreased to $458 million from $484 million in 2022.
- Adjusted EBITDA (a non-IFRS measure) decreased to $267 million from $290 million in 2022.
- Adjusted Free Cash Flow per share (a non-IFRS measure) decreased to $0.25 from $0.28 in 2022.
- Free Cash Flow per share (a non-IFRS measure) decreased to $0.14 from $0.19 in 2022.
- Net income decreased to $43 million from $76 million in 2022.
Sales, gross profit, operating income and net income, as reported under IFRS, include consolidated results of entities not wholly owned by Northland, whereas Northland’s non-IFRS financial measures include only Northland’s proportionate ownership interest.
| Summary of Consolidated Results | ||||||||||||
| (in thousands of dollars, except per share amounts) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| FINANCIALS | ||||||||||||
| Sales | $ | 513,290 | $ | 555,854 | $ | 1,606,558 | $ | 1,807,700 | ||||
| Gross profit | 458,316 | 484,103 | 1,454,687 | 1,604,818 | ||||||||
| Operating income | 146,188 | 201,814 | 521,355 | 780,990 | ||||||||
| Net income (loss) | 42,987 | 76,089 | 171,786 | 631,535 | ||||||||
| Net income (loss) attributable to common shareholders | 36,166 | 81,661 | 110,401 | 548,835 | ||||||||
| Adjusted EBITDA (a non-IFRS measure) (2) | 267,258 | 289,763 | 851,212 | 1,045,105 | ||||||||
| Cash provided by operating activities | 148,005 | 523,338 | 649,345 | 1,282,294 | ||||||||
| Adjusted Free Cash Flow (a non-IFRS measure) (2) | 63,917 | 66,367 | 306,690 | 420,362 | ||||||||
| Free Cash Flow (a non-IFRS measure) (2) | 36,316 | 44,670 | 232,297 | 364,588 | ||||||||
| Cash dividends paid | 52,137 | 49,673 | 153,332 | 145,508 | ||||||||
| Total dividends declared (1) | $ | 76,036 | $ | 71,957 | $ | 227,101 | $ | 210,410 | ||||
| Per Share | ||||||||||||
| Weighted average number of shares — basic and diluted (000s) | 253,279 | 238,011 | 252,152 | 232,712 | ||||||||
| Net income (loss) attributable to common shareholders — basic and diluted | $ | 0.14 | $ | 0.33 | $ | 0.42 | $ | 2.32 | ||||
| Adjusted Free Cash Flow — basic (a non-IFRS measure) (2) | $ | 0.25 | $ | 0.28 | $ | 1.22 | $ | 1.81 | ||||
| Free Cash Flow — basic (a non-IFRS measure) | $ | 0.14 | $ | 0.19 | $ | 0.92 | $ | 1.57 | ||||
| Total dividends declared | $ | 0.30 | $ | 0.30 | $ | 0.90 | $ | 0.90 | ||||
| ENERGY VOLUMES | ||||||||||||
| Electricity production in gigawatt hours (GWh) | 2,172 | 2,129 | 7,027 | 7,130 | ||||||||
| (1) Represents total dividends paid to common shareholders, including dividends in cash or in shares under the DRIP. | ||||||||||||
| (2) See Forward-Looking Statements and Non-IFRS Financial Measures below. Further, note that non-IFRS measures during the three and nine months ended September 30, 2023, include the effect of changes in the definition of non-IFRS measures. For a reconciliation of these non-IFRS financial measures to the same measures before the definition changes, please refer to Northland’s Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2023. | ||||||||||||
Third Quarter Results Summary
Offshore wind facilities
Electricity production for the three months ended September 30, 2023, slightly increased by 2% or 14GWh compared to the same quarter of 2022. This was primarily due to higher wind resource at Gemini and higher turbine availability at Nordsee One following the completion of the rotor shaft assembly (“RSA”) replacement campaign in 2022, partially offset by lower wind resource and higher unpaid curtailments related to negative prices at German offshore wind facilities.
Sales of $232 million for the three months ended September 30, 2023, decreased 16% or $46 million compared to the same quarter of 2022, primarily due to the non-recurrence of the unprecedented spike in market prices realized in 2022 of $75 million. This decline was partially offset by higher turbine availability at Nordsee One following the completion of the RSA replacement campaign in 2022, and the effect of foreign exchange fluctuations due to the strengthening of the Euro and other items by $30 million.
Adjusted EBITDA of $126 million for the three months ended September 30, 2023, decreased 28% or $50 million compared to the same quarter of 2022, due to the same factors as noted above.
An important indicator for performance of offshore wind facilities is the current and historical average power production of the facility. The following tables summarize actual electricity production and the historical average, high and low, for the applicable operating periods of each offshore facility:
| Three months ended September 30, | 2023 (1) | 2022 (1) | Historical Average (2) |
Historical High (2) |
Historical Low (2) |
||||
| Electricity production (GWh) | |||||||||
| Gemini | 467 | 436 | 449 | 524 | 397 | ||||
| Nordsee One | 176 | 179 | 190 | 220 | 173 | ||||
| Deutsche Bucht | 172 | 185 | 173 | 185 | 164 | ||||
| Total | 815 | 800 | |||||||
| (1) Includes GWh produced and attributed to paid curtailments. | |||||||||
| (2) Represents the historical power production for the period since the commencement of commercial operation of the respective facility (2017 for Gemini and Nordsee One and 2020 for Deutsche Bucht) and excludes unpaid curtailments. | |||||||||
Onshore renewable facilities
Electricity production was 12% or 59GWh lower than the same quarter of 2022, primarily due to lower wind resource across the Canadian and Spanish onshore wind facilities, partially offset by higher solar resource at these facilities.
Sales of $118 million were 25% or $23 million higher than the same quarter of 2022, primarily due to the increase in band adjustments by $47 million as a result of the regulated posted price being higher than the merchant pool price in 2023, partially offset by the aggregate decrease in merchant revenue and return on investment (“Ri”) by $24 million from the Spanish portfolio. Please refer to the MD&A for further breakdown of Spanish portfolio revenue by component.
Adjusted EBITDA of $88 million was 45% or $27 million higher than the same quarter of 2022, due to the same factors as above.
Adjusted EBITDA from the Spanish portfolio of $54 million for the three months ended September 30, 2023, increased 116% or $29 million compared to the same quarter of 2022, due to the same factors discussed above. Free Cash Flow from the Spanish portfolio of $16 million for the three months ended September 30, 2023, increased by $22 million compared to the same quarter of 2022, due to the same factors discussed above.
Efficient natural gas facilities
Electricity production increased 10% or 88GWh compared to the same quarter of 2022, mainly due to higher market demand for dispatchable power.
Sales of $81 million decreased 27% or $31 million compared to the same quarter of 2022, primarily due to lower natural gas prices resulting in lower energy rates affecting revenue, and lower margins triggered by unplanned outages.
Adjusted EBITDA of $46 million for the three months ended September 30, 2023, decreased 12% or $6 million, compared to the same quarter of 2022, primarily due to lower management fee income from Kirkland Lake, in addition to the same factors as above.
Utility
Sales of $78 million for the three months ended September 30, 2023, increased 12% or $8 million compared to the same quarter of 2022, primarily due to the foreign exchange fluctuations as a result of the strengthening of the Colombian Peso.
Adjusted EBITDA of $30 million for the three months ended September 30, 2023, remained in line with the same quarter of 2022.
Consolidated statement of income (loss)
General and administrative (“G&A”) costs of $22 million in the third quarter increased $3 million compared to the same quarter of 2022, primarily due to increased costs and resources to support Northland’s projects and global platform and additional projects entering operation during the period, including La Lucha.
Development costs of $35 million increased $13 million compared to the same quarter of 2022, primarily due to timing of spending to advance development projects.
Net finance costs of $72 million in the third quarter decreased $5 million compared to the same quarter of 2022, primarily due to scheduled repayments on facility-level loans and higher loan repayments related to loan restructurings that occurred in 2022.
Fair value loss on derivative contracts was $46 million compared to a $43 million loss in the same quarter of 2022, primarily due to net movement in the fair value of derivatives related to commodity, interest rate and foreign exchange contracts.
Foreign exchange gain of $12 million in the third quarter was primarily due to unrealized gain from fluctuations in the closing foreign exchange rates.
Other income of $20 million increased by $19 million compared to the same quarter of 2022, primarily due to the gains associated with the partial sell-down of development assets in the third quarter of 2023.
Net income of $43 million in the third quarter decreased by $33 million compared to the same quarter of 2022, primarily as a result of the factors described above.
Adjusted EBITDA
The following table reconciles net income (loss) to Adjusted EBITDA:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income (loss) | $ | 42,987 | $ | 76,089 | $ | 171,786 | $ | 631,535 | |||||||
| Adjustments: | |||||||||||||||
| Finance costs, net | 72,421 | 77,814 | 210,699 | 237,054 | |||||||||||
| Gemini interest income | (150 | ) | 3,344 | 6,112 | 10,800 | ||||||||||
| Provision for (recovery of) income taxes | 18,682 | 47,410 | 94,706 | 233,672 | |||||||||||
| Depreciation of property, plant and equipment | 147,924 | 132,416 | 438,981 | 424,445 | |||||||||||
| Amortization of contracts and intangible assets | 14,463 | 14,042 | 42,505 | 39,645 | |||||||||||
| Fair value (gain) loss on derivative contracts | 43,711 | 38,238 | 106,714 | (334,937 | ) | ||||||||||
| Foreign exchange (gain) loss | (11,514 | ) | (39,668 | ) | (36,162 | ) | 27,281 | ||||||||
| Elimination of non-controlling interests | (53,380 | ) | (56,897 | ) | (186,389 | ) | (198,715 | ) | |||||||
| Finance lease (lessor) | (1,349 | ) | (1,563 | ) | (4,318 | ) | (4,841 | ) | |||||||
| Others (1) | (6,537 | ) | (1,462 | ) | 6,578 | (20,834 | ) | ||||||||
| Adjusted EBITDA (2) | $ | 267,258 | $ | 289,763 | $ | 851,212 | $ | 1,045,105 | |||||||
| (1) Others primarily include Northland’s share of profit (loss) from equity accounted investees, Northland’s share of Adjusted EBITDA from equity accounted investees, gains from partial asset sell-downs, acquisition costs and other expenses (income). | |||||||||||||||
| (2) See Forward-Looking Statements and Non-IFRS Financial Measures below. Further, note that non-IFRS measures during the three and nine months ended September 30, 2023, include the effect of changes in the definition of non-IFRS measures. For a reconciliation of these non-IFRS financial measures to the same measures before the definition changes, please refer to the MD&A. | |||||||||||||||
Adjusted EBITDA of $267 million for the three months ended September 30, 2023, decreased 8% or $23 million compared to the same quarter of 2022. The significant factors decreasing Adjusted EBITDA include:
- $50 million decrease in operating results at the offshore wind facilities primarily due to the non-recurrence of the unprecedented spike in market prices realized in 2022. This decline was partially offset by higher turbine availability at Nordsee One following the completion of the RSA replacement campaign in 2022 and the effect of foreign exchange fluctuations due to the strengthening of the Euro and other items; and
- $14 million increase in G&A costs and development expenditures, primarily due to higher administrative costs to support the sustainable operations and the latter driven by timing of spend.
The factors partially offsetting the decrease in the Adjusted EBITDA were:
- $29 million increase in the contribution from the Spanish renewables portfolio, as discussed above; and
- $19 million in gains from partial sell-down of development assets.
Adjusted Free Cash Flow and Free Cash Flow
The following table reconciles cash flow from operations to Adjusted Free Cash Flow and Free Cash Flow:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Cash provided by operating activities | $ | 148,005 | $ | 523,338 | $ | 649,345 | $ | 1,282,294 | |||||||
| Adjustments: | |||||||||||||||
| Net change in non-cash working capital balances related to operations | 99,938 | (189,623 | ) | 234,963 | (148,631 | ) | |||||||||
| Non-expansionary capital expenditures | (369 | ) | (14,263 | ) | (1,268 | ) | (45,573 | ) | |||||||
| Restricted funding for major maintenance, debt and decommissioning reserves | (582 | ) | (228 | ) | (3,235 | ) | (11,326 | ) | |||||||
| Interest | (43,341 | ) | (75,396 | ) | (182,951 | ) | (223,429 | ) | |||||||
| Scheduled principal repayments on facility debt | (55,677 | ) | (52,044 | ) | (381,319 | ) | (400,429 | ) | |||||||
| Funds set aside (utilized) for scheduled principal repayments | (149,854 | ) | (153,735 | ) | (158,020 | ) | (170,661 | ) | |||||||
| Preferred share dividends | (1,527 | ) | (2,811 | ) | (4,530 | ) | (8,252 | ) | |||||||
| Consolidation of non-controlling interests | (3,533 | ) | (1,707 | ) | (65,186 | ) | (43,513 | ) | |||||||
| Investment income (1) | 5,041 | 4,268 | 22,311 | 12,666 | |||||||||||
| Proceeds under NER300 and warranty settlement at Nordsee One | — | 16,911 | — | 55,787 | |||||||||||
| Others (2) | 38,215 | (10,040 | ) | 122,187 | 65,655 | ||||||||||
| Free Cash Flow (3) | $ | 36,316 | $ | 44,670 | $ | 232,297 | $ | 364,588 | |||||||
| Add back: Growth expenditures | 31,914 | 21,697 | 86,151 | 55,774 | |||||||||||
| Less: Historical growth expenditures’ recovery due to sell-down | (4,313 | ) | — | (11,758 | ) | — | |||||||||
| Adjusted Free Cash Flow (3) | $ | 63,917 | $ | 66,367 | $ | 306,690 | $ | 420,362 | |||||||
| (1) Investment income includes Gemini interest income and repayment of Gemini subordinated debt. | |||||||||||||||
| (2) Others mainly include the effect of foreign exchange rates and hedges, interest rate hedge, Nordsee One interest on shareholder loans, share of joint venture project development costs, acquisition costs, lease payments, interest income, Northland’s share of Adjusted Free Cash Flow from equity accounted investees, gains from sales of development assets, interest on corporate-level debt raised to finance capitalized growth projects and other non-cash expenses adjusted in working capital excluded from Free Cash Flow in the period. | |||||||||||||||
| (3) See Forward-Looking Statements and Non-IFRS Financial Measures below. Further, note that non-IFRS measures during the three and nine months ended September 30, 2023, include the effect of changes in the definition of non-IFRS measures. For a reconciliation of these non-IFRS financial measures to the same measures before the definition changes, please refer to the MD&A. | |||||||||||||||
Adjusted Free Cash Flow of $64 million for the three months ended September 30, 2023, was 4% or $2 million lower than the same quarter of 2022.
The significant factors decreasing Adjusted Free Cash Flow were:
- $23 million decrease in contribution from the operating facilities leading to lower Adjusted EBITDA primarily due to the factors described above; and
- $10 million decrease primarily as a result of higher net proceeds from the Empresa de Energía de Boyacá S.A E.S.P (“EBSA”) refinancing recognized in 2022.
The factors partially offsetting the decrease in Adjusted Free Cash Flow were:
- $16 million gains from partial asset sales of offshore wind development assets and foreign exchange hedge settlements; and
- $18 million decrease in net finance costs primarily due to scheduled repayments on facility-level loans and higher loan repayments related to loan restructurings in 2022.
Free Cash Flow, which is reduced by growth expenditures, totaled $36 million for the three months ended September 30, 2023, and was 19% or $8 million lower than the same quarter of 2022, due to the same factors as Adjusted Free Cash Flow.
The following table reconciles Adjusted EBITDA to Adjusted Free Cash Flow.
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Adjusted EBITDA (2) | $ | 267,258 | $ | 289,763 | $ | 851,212 | $ | 1,045,105 | |||||||
| Adjustments: | |||||||||||||||
| Scheduled debt repayments | (166,900 | ) | (163,945 | ) | (450,443 | ) | (459,499 | ) | |||||||
| Interest expense | (43,859 | ) | (61,808 | ) | (143,019 | ) | (183,112 | ) | |||||||
| Current taxes | (26,212 | ) | (33,535 | ) | (90,902 | ) | (122,644 | ) | |||||||
| Non-expansionary capital expenditure | (358 | ) | (12,160 | ) | (1,078 | ) | (38,828 | ) | |||||||
| Utilization (funding) of maintenance and decommissioning reserves | (583 | ) | (228 | ) | (3,228 | ) | (10,458 | ) | |||||||
| Lease payments, including principal and interest | (1,783 | ) | (4,234 | ) | (6,312 | ) | (7,357 | ) | |||||||
| Preferred dividends | (1,526 | ) | (2,811 | ) | (4,529 | ) | (8,252 | ) | |||||||
| Foreign exchange hedge gain (loss) | 747 | 8,125 | 31,035 | 56,216 | |||||||||||
| Proceeds under NER300 and warranty settlement at Nordsee One | — | 14,376 | — | 47,420 | |||||||||||
| EBSA Refinancing proceeds, net of growth capital expenditures | — | 10,119 | — | 26,896 | |||||||||||
| Others (1) | 9,532 | 1,008 | 49,561 | 19,101 | |||||||||||
| Free Cash Flow (2) | $ | 36,316 | $ | 44,670 | $ | 232,297 | $ | 364,588 | |||||||
| Add Back: Growth expenditures | 31,914 | 21,697 | 86,151 | 55,774 | |||||||||||
| Less: Historical growth expenditures’ recovery due to sell-down | (4,313 | ) | — | (11,758 | ) | — | |||||||||
| Adjusted Free Cash Flow (2) | $ | 63,917 | $ | 66,367 | $ | 306,690 | $ | 420,362 | |||||||
| (1) Others mainly include Gemini interest income, repayment of Gemini subordinated debt, interest rate hedge settlement, gains from sales of development assets, and interest received on third-party loans to partners. | |||||||||||||||
| (2) See Forward-Looking Statements and Non-IFRS Financial Measures below. Further, note that non-IFRS measures during the three and nine months ended September 30, 2023, include the effect of changes in the definition of non-IFRS measures. For a reconciliation of these non-IFRS financial measures to the same measures before the definition changes, please refer to the MD&A. | |||||||||||||||
Significant Events and Updates
Balance Sheet:
- At-The-Market Equity Program – The Company’s “at-the-market” equity program (“ATM program”) was terminated in accordance with its terms upon the expiry of the Company’s short form base shelf prospectus on July 16, 2023. During the third quarter of 2023, there was no activity under the ATM program.
Renewables Growth:
- Hai Long Offshore Wind Project – During the third quarter, Northland successfully closed its NTD117 billion (equivalent to $5 billion) long term, over 20-year non-recourse green financing, which will be provided by international and local lenders with support from multiple Export Credit Agencies (“ECAs”). The Hai Long project’s total cost is projected to be approximately $9 billion, with funding from $5 billion of non-recourse debt by the project lenders, approximately $1 billion of pre-completion revenues and the remaining equity investment contributed by the project’s partners. Northland’s interest (post targeted sell-down to Gentari International Renewables Pte. Ltd. (“Gentari”)) in Hai Long is expected to generate a five-year average of approximately $230 to $250 million of Adjusted EBITDA and $75 to $85 million of Free Cash Flow per year once operational, delivering significant long-term value for Northland’s shareholders. The weighted average all-in interest cost for the term of the financing is approximately 5% per annum. Northland’s equity investment has and will be funded through proceeds raised under its ATM program in 2022 and the anticipated sale of its 49% interest to Gentari, which is discussed below, and in the Outlook sections of this press release.On December 14, 2022, Northland signed an agreement with Gentari to sell 49% of its current 60% ownership stake in Hai Long (the “Gentari Sell-Down”). Northland is targeting to close Gentari Sell-Down in the fourth quarter of 2023, subject to the satisfaction of certain closing conditions, which also include meeting requirements under the existing multi-party project finance agreements. Subject to closing, the transaction will result in Gentari holding a 29.4% indirect equity interest in Hai Long. The proposed sell-down is consistent with Northland’s long-term financing strategy and will allow Northland to share development costs for Hai Long with its joint venture partners. Northland will hold a 30.6% interest in the project upon closing of the transaction and will continue to take the lead role in the construction and operation phases of the project.The Hai Long project continues to advance its construction activities. Completion of construction activities and full commercial operations are expected in 2026/2027.
- Baltic Power Offshore Wind Project – During the third quarter, Northland closed an equivalent of $5.2 billion, 20-year non-recourse green financing, which will be supported by a consortium of international and local commercial banks, and multiple ECAs and multi-lateral agencies. The Baltic Power project’s total cost is projected to be approximately $6.5 billion, with funding from its $5.2 billion of non-recourse debt by the project lenders and remaining capital to be contributed by the project partners. Northland’s share of equity for the project was fully funded through the $500 million of Fixed-to-Fixed Rate Green Subordinated Notes, Series 2023-A, due June 30, 2083 (the “Green Notes”) issuance in June 2023 and existing corporate liquidity. Northland’s interest in Baltic Power is expected to generate a high quality, inflation-protected five-year average Adjusted EBITDA of approximately $300 to $320 million and $95 to $105 million of Free Cash Flow per year once operational, delivering significant long-term cash flow for Northland’s shareholders.The weighted average all-in interest cost for the term of the financing is approximately 5% per annum. In addition, Northland has entered into currency hedges to stabilize the Canadian dollar equivalent for the majority of its projected distributions through 2038 and will enter into additional hedges on an ongoing basis, in line with the Northland’s risk management policies.
- New York Onshore Wind Projects – On October 31, 2023, the 112MW Bluestone and 108MW Ball Hill onshore wind projects have commenced earning revenue under the 20-year PPA with the New York State Energy Research and Development Authority (“NYSERDA”). These projects are expected to contribute an aggregate of $42 million and $15 million of Adjusted EBITDA and Free Cash Flow, respectively, towards Northland’s 2024 financial results.
- NorthWind and CanWind Offshore Wind Projects – During the third quarter of 2023, Northland executed an investment partnership agreement with Gentari resulting in the completion of a 49% stake sell-down in early-stage offshore wind development projects in Taiwan: NorthWind and CanWind. The partnership with Gentari is an extension of the agreement formed in December 2022, as related to Hai Long, as discussed above. The transaction resulted in Gentari holding a 49% indirect equity interest in these projects, and Northland holding a 51% interest.
Outlook on 2023 Funding Plan
Northland’s focus is on successfully constructing the Oneida energy storage project, and Baltic Power and Hai Long offshore wind projects.
These projects represent an aggregate equity investment by Northland of $1.75 billion, net of the Gentari Sell-Down transaction. Northland had access to $563 million of available liquidity at September 30, 2023, including $63 million of cash on hand and approximately $500 million of capacity on its corporate revolving credit facilities.
Northland also has a $500 million short-term corporate credit facility (“Short Term Facility”) to help fund its equity contribution in Hai Long, of which $344 million was utilized at September 30, 2023. This facility matures at the end of November 2023 and is expected to be repaid upon receipt of the proceeds from the Gentari Sell-Down transaction, which management is targeting to close in the fourth quarter of 2023, upon certain closing conditions being met, as discussed above. In the event that the Gentari Sell-Down is delayed due to satisfying closing conditions taking more time than planned, the facility may need to be extended or re-financed. In addition, Northland has secured a $1.0 billion Hai Long related corporate LC facility to support Hai Long credit requirements during construction. Northland’s Hai Long related letter of credit obligations and this facility would decrease by 49% upon closing of the Gentari Sell-Down.
2023 and Long-term Outlook
As of November 9, 2023, management has reiterated its 2023 financial outlook. Adjusted EBITDA in 2023 is expected to be at the low end of original guidance of $1.2 billion to $1.3 billion. Adjusted Free Cash Flow and Free Cash Flow per share in 2023 are also expected to be at the low end of our previously communicated ranges of $1.70 to $1.90 and $1.30 to $1.50, respectively. The ranges for Adjusted EBITDA, Adjusted Free Cash Flow and Free Cash Flow include sell-down gains.
Northland continues to implement a selective partnership strategy to sell interests in certain development projects on or before financial close. The Company will assess each opportunity individually and intends to remain a long-term owner of the renewable power assets it develops.
Over the longer term, Northland remains positioned to achieve substantial growth in Adjusted EBITDA by 2027, upon achieving targeted commercial operations of Oneida, Baltic Power and Hai Long, each with long-term contracted revenues of between 20 to 30 years.
Once all three projects are fully operational, anticipated by 2027, they are expected to collectively generate an aggregate Adjusted EBITDA and Free Cash Flow of $570 to $615 million and $185 to $210 million, respectively, resulting in significant value creation and accretion for Northland’s shareholders.
With over 3 gigawatts (GW) of gross operating capacity and a robust development pipeline of approximately 15GW, with 2.4GW being under construction and expected to be operational by 2026/2027, the Company is well positioned for an accelerating global energy transition. Northland intends to be selective and pursue only projects within its pipeline that meet its strategic objectives and targeted returns and closely monitor macroeconomic conditions surrounding renewables development globally.
Third-Quarter Earnings Conference Call
Northland will hold an earnings conference call on November 10, 2023, to discuss its 2023 third quarter results. The call will be hosted by Northland’s Senior Management, who will discuss the Company’s financial results and developments as well as answering questions from analysts.
Conference call details are as follows:
Friday, November 10, 2023, 10:00 a.m. ET
Participants wishing to join the call and ask questions must register using the following URL below:
https://register.vevent.com/register/BIb14b87ba5135410fb9fed115bde5d406
For all other attendees, the call will be broadcast live on the internet, in listen-only mode and can be accessed using the following link:
Webcast URL: https://edge.media-server.com/mmc/p/ysmaxpt8
For those unable to attend the live call, an audio recording will be available on northlandpower.com on November 13, 2023.
Northland’s unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2023, and related Management’s Discussion and Analysis can be found on SEDAR+ at www.sedarplus.ca under Northland’s profile and on northlandpower.com.
For further information, please contact:
Adam Beaumont, Vice President
Dario Neimarlija, Vice President
647-288-1019
investorrelations@northlandpower.com
northlandpower.com
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