Innergex Renewable Energy 2010 Q1 Results
- Strategic combination with Innergex Power Income Fund
- $80.5 million issuance of convertible debentures
- Fitzsimmons Creek hydroelectric facility starts commercial operation
earlier than expected
- Three hydro projects totalling 113 MW are awarded PPAs by BC Hydro
- Ashlu Creek and Fitzsimmons Creek receive their EcoLogo certification
LONGUEUIL, QC, May 10 /CNW Telbec/ - Innergex Renewable Energy Inc. (TSX: INE) ("Innergex" or the "Corporation") releases today its operating and financial results for the first quarter ending March 31, 2010. These results follow the strategic combination of Innergex Power Income Fund (the "Fund") and Innergex, by way of a reverse takeover, completed on March 29, 2010.
Michel Letellier, President and Chief Executive Officer of the Corporation, explains the positive impact of the strategic combination: "This first quarter of 2010 sets the tone to a new era for Innergex. With steady cash flows generated by a solid portfolio of 17 operating facilities and a strong pipeline of projects, we have become a major renewable energy pure play in Canada and have the means to pursue our growth objectives."
OPERATING RESULTS
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Highlights Three-month Three-month
(in thousands of Canadian dollars except period ended period ended
as noted and amounts per share) March 31, 2010 March 31, 2009
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Power generated (MW-hr) 157,666 163,912
Gross operating revenues $ 13,551 $ 13,941
EBITDA $ 10,708 $ 11,090
Net (loss) earnings $ (499) $ 3,019
Net (loss) earnings per share $ (0.01) $ 0.07
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As a result of the combination of the two entities and in accordance with Canadian generally accepted accounting principles, the results presented this quarter include the Fund's results with respect to activities occurring prior to March 29, 2010, and the combined entity's results with respect to activities thereafter.
For the first quarter of 2010, operating revenues and EBITDA were slightly lower than for the same quarter in 2009. The negative impact of $0.4 million is mainly due to a lower-than-expected production.
"As the year unfolds, the full contribution from the operating facilities acquired in the strategic combination will materialize and have a significant impact on Innergex's financial results", explains Mr. Letellier.
The production results were favoured by better-than-average hydrologic conditions at the Saint-Paulin, Windsor, Chaudiere and Batawa facilities, and offset by lower-than-expected hydrologic conditions at the Horseshoe Bend and Rutherford Creek facilities. Lower-than-expected wind conditions at the Baie-des-Sables and L'Anse-a-Valleau wind farms also contributed negatively to the production results.
Adjusted Net Earnings
Innergex believes that adjusted net earnings represent important additional information for the reader because they provide a profitability measure that excludes certain elements which have no impact on cash on hand. Adjusted net earnings exclude unrealized foreign exchange gain/loss and unrealized gain/loss on derivative financial instruments as well as any associated future income taxes. Adjusted net earnings also exclude some non-recurring items such as the impact on future income taxes emanating from modifications to fiscal laws or from changes in tax rates. Innergex calculates adjusted net earnings as shown below:
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Adjusted Net Earnings Three-month Three-month
(in thousands of Canadian dollars period ended period ended
except as noted and amounts per share) March 31, 2010 March 31, 2009
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Net (loss) earnings $ (499) $ 3,019
Add/(deduct):
Non-cash expense related to royalty
agreement 983 -
Unrealized loss (gain) on derivative
financial instruments 2,040 (574)
Unrealized foreign exchange (gain) loss (42) 96
Associated future income taxes (804) (86)
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Adjusted net earnings $ 1,678 $ 2,456
Adjusted net earnings per share ($ per
share) $ 0.04 $ 0.06
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The $0.8 million variation in adjusted net earnings is mainly attributable to a decrease in revenues due to lower production and to higher interest expense on long term debt.
Operating facilities
A new facility starts commercial operation
Located in the Resort Municipality of Whistler, British Columbia, the Fitzsimmons Creek run-of-river hydroelectric facility started commercial operation on January 26, 2010, with an installed capacity of 7.5 MW (5 MW net), and an estimated yearly energy output of 33,000 MW-hr. The facility sells all the electricity generated pursuant to a 40-year Electricity Purchase Agreement ("EPA") with BC Hydro and Power Authority ("BC Hydro"). Construction of the facility began in July 2008 and was completed in January 2010 ahead of schedule and within budget.
Innergex receives two EcoLogo certifications
On April 23, 2010, the Ashlu Creek and Fitzsimmons Creek facilities received their EcoLogo certification, thereby confirming that the facilities will receive incentive payments under the Federal government's ecoENERGY incentive for renewable power.
Projects under development
Three new projects under development in British Columbia
On March 11, 2010, BC Hydro announced that the Upper Lillooet River, Boulder Creek and North Creek hydroelectric projects, totalling 113 MW and submitted under the 2008 BC Hydro Clean Power Call RFP had been selected for power purchase agreement ("PPA") awards. The PPAs were executed by both parties on April 22, 2010. Innergex expects North Creek to start commercial operation in 2015 and Boulder Creek and Upper Lillooet River to start commercial operation in 2016. Innergex owns a 66 2/3% ownership interest in these three new projects.
Gros-Morne and Montagne-Seche Wind Farms
Innergex has received and is currently reviewing numerous financing proposals for the construction and long-term financing of the Gros-Morne and Montagne-Seche wind farm projects. Closing of this financing is expected before the end of the second quarter of 2010.
Credit facilities are refinanced and unsecured subordinated debentures are issued
Concurrently with the closing of the strategic combination, Innergex has successfully completed the refinancing of its credit facilities and those of some of its subsidiaries, replacing the existing credit facilities by a new $117.4 million three-year revolving credit facility and a $52.6 million three-year term facility.
On March 8, 2010, Innergex closed the issuance of convertible unsecured subordinated debentures, in the aggregate principal amount of $70 million. On March 16, 2010, the over-allotment option was exercised by the syndicate of underwriters to purchase an additional $10.5 million principal amount, bringing the aggregate gross proceeds of the offering to $80.5 million. The debentures have a maturity date of April 30, 2017. The debentures bear interest at a rate of 5.75% per annum, payable semi-annually, and are convertible at the option of the holder into common shares of Innergex at a conversion rate of $10.65 per Common Share.
Adjusted cash flows from operating activities and distributions
For the quarter ended March 31, 2010, Innergex generated $8.6 million in adjusted cash flows from operating activities ($8.0 million in 2009) and declared cash distributions totalling $7.2 million ($7.3 million in 2009) or $0.17 per share (idem in 2009).
Dividend declaration
Innergex intends to pay a dividend of $0.58 per share per annum, payable on a quarterly basis. The second quarter dividend payment will be prorated to $0.14818 per share, to include two more days, taking into account the closing of the strategic combination which occurred on March 29, 2010. The dividend will be paid on July 15, 2010, with a record date of June 30, 2010.
Outlook for Q2 2010
In July 2010, Innergex intends to submit to Hydro-Quebec Distribution several wind projects under the 500 MW Community and Aboriginal Wind request for proposals. Awards are expected to be announced before the end of 2010.
Innergex Renewable Energy Inc. is a leading developer, owner and operator of run-of-river hydroelectric facilities and wind energy projects in North America. Innergex's management team has been involved in the renewable power industry since 1990. Innergex owns a portfolio of projects which consists of: i) interests in 17 operating facilities with an aggregate net installed capacity of 326 MW; ii) interests in 7 projects under development with an aggregate net installed capacity of 203 MW for which power purchase agreements have been secured; and iii) prospective projects of more than 1,900 MW (net).
The Corporation's unaudited consolidated financial statements and the management's discussion and analysis, can be downloaded from the Innergex website at www.innergex.com and from the SEDAR website at www.sedar.com.
NON-GAAP MEASURES
Some indicators referred to in this press release are not recognized measures under Canadian GAAP, and therefore may not be comparable to those presented by other issuers. Innergex believes that these indicators are important, as they provide management and the reader with additional information about its production and cash generation capabilities and facilitate the comparison of results over different periods.
FORWARD-LOOKING INFORMATION
In order to inform shareholders of Innergex as well as potential investors on future prospects of the Corporation, sections of this news release may contain forward-looking statements within the meaning of securities legislation ("Forward-looking Statements"). Forward-looking Statements can generally be identified by the use of words and phrases, such as "may", "will", "estimate", "anticipate", "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "forecasts", "intends" or "believes", or variations of such words and phrases that state that certain events will occur. Forward-looking Statements represent, as of the date of this news release, the estimates, forecasts, projections, expectations or opinions of the Corporation relating to future events or results. Forward-looking Statements involve known and unknown risks, uncertainties and other important factors which may cause the actual results or performance to be materially different from any future results or performance expressed or implied by the Forward-looking Statements. The material risks and uncertainties which may cause the actual results and developments to be materially different from the current expressed expectations in this news release include: (i) execution of strategy, (ii) capital resources, (iii) derivative financial instruments, (iv) current economic and financial crisis, (v) hydrology and wind regime, (vi) construction and design, (vii) development of new facilities, (viii) project performance, (ix) equipment failure, (X) interest rate and refinancing risk, (xi) financial leverage and restrictive covenants, (xii) separation agreement and (xiii) relationship with public utilities. Although the Corporation believes that the expectations instigated by the Forward-looking Statements are based on reasonable and valid hypotheses, there is a risk that the Forward-looking Statements may be incorrect. The reader is cautioned not to rely unduly on these Forward-looking Statements. The Forward-looking Statements expressed verbally or in writing, by the Corporation or by a person acting on its behalf, are expressly qualified by this cautionary statement. The Corporation does not undertake any obligation to update or revise any Forward-looking Statements, whether as a result of events or circumstances occurring after the date hereof, unless required by legislation.
%SEDAR: 00026108EF
For further information: Ms. Edith Ducharme, LL.L., Director - Financial Communications and Investor Relations, Innergex Renewable Energy Inc., (450) 928-2550, ext. 222, [email protected]; Mr. Jean Trudel, MBA, Vice President - Finance and Investor Relations, Innergex Renewable Energy Inc., (450) 928-2550, ext. 252, [email protected]; www.innergex.com
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