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Press release from CNW Group

Boralex - 2010 Third Quarter Financial Results

Thursday, November 11, 2010

Boralex - 2010 Third Quarter Financial Results07:00 EST Thursday, November 11, 2010MONTREAL, Nov. 11 /CNW Telbec/ - Financial results of Boralex Inc. ("Boralex" or the "Corporation") for the third quarter of 2010 already show the impact of the acquisition of Boralex Power Income Fund (the "Fund") as well as the contributions made by the newly commissioned wind power facilities, but also reflect the Canadian dollar's strength and weak REC market. << (in millions of dollars, except per share amounts) ------------------------------------------------------------------------- Three-month periods Nine-month periods ended ended ------------------------------------------------------- September 30, September 30, September 30, September 30, 2010 2009 2010 2009 As reported in the financial statements Revenues from energy sales 42.1 39.7 129.8 138.6 EBITDA 10.9 11.4 33.7 45.3 Net earnings 27.1 0.7 22.6 9.7 per share (basic) $0.72 $0.02 $0.60 $0.26 per share (diluted) $0.69 $0.02 $0.60 $0.26 Cash flows from operations 4.4 9.2 23.8 36.1 Adjusted data(1) Adjusted EBITDA 10.2 11.4 39.1 44.6 Adjusted net earnings (loss) (2.7) 0.7 (1.4) 9.2 per share (basic and diluted) $(0.07) $0.02 $(0.04) $0.24 ------------------------------------------------------------------------- >>For the three-month period ended September 30, 2010, Boralex generated revenues of $42.1 million and earnings before interest, taxes, depreciation and amortization ("EBITDA") of $10.9 million compared with $39.7 million and $11.4 million, respectively, for the same quarter of 2009. Results were bolstered by the contribution of the Fund's power stations since September 15, 2010 and the commissioning of new wind power facilities but dampened by the Canadian dollar's strength against the U.S. currency and the euro as well as lower REC sales and expiry of the U.S. government's renewable energy tax credit program.Boralex generated net earnings of $27.1 million in the third quarter of 2010 compared with $0.7 million in the corresponding period of 2009. Excluding the impact of the acquisition of the Fund and certain other specific items related to the transaction with the Fund, Boralex recorded a net loss of $2.7 million compared with net earnings of $0.7 million for the same quarter of 2009.With the completion of the acquisition of the Fund and the integration of its assets into Boralex's portfolio, the significant impact these power stations will have on Boralex's revenues and EBITDA is already evident. Their contribution to revenue growth and stable cash flows will be fully reflected over the coming quarters. "With the acquisition of the Fund, we have achieved a strategic objective that creates value for all the stakeholders of the Corporation. It will provide leverage for Boralex's future development, contributing to the successful completion of projects and continued expansion," states Patrick Lemaire, President and Chief Executive Officer of Boralex.Boralex anticipates growth in the wind power segment for the remainder of 2010, with the three new wind farms in France contributing fully to results and the commissioning of Phase II of the Thames River wind farms. With regards to the hydroelectric segment, the unfavourable water flow conditions in the third quarter will likely make room for improved results in the coming months with the addition of the Fund's power stations.Last, in line with its strategy, Boralex continues to fine tune its thermal power stations' output according to market conditions. Boralex is also analyzing in detail the american rules of the new Biomass Crop Assistance Program and will soon be able to assess its future impact on Boralex's results, as well as the renewal of the U.S. renewable energy tax credit program currently under review at the U.S. Congress.Boralex announces the re-election of Pierre Seccareccia, as Director, whose experience and advice will continue to greatly benefit the Corporation.About BoralexBoralex is a major independent power producer whose core business is the development and operation of power stations that generate renewable energy. Employing over 300 people, the Corporation operates 41 power stations with a total installed capacity of 650 megawatts ("MW") in Canada, in the North Eastern United States and in France. In addition, the Corporation has, alone or with its European and Canadian partners, power projects under development that will add almost 300 MW of power, of which almost 50 MW will come online by the end of fiscal 2010. Boralex is distinguished by its diversified expertise and in-depth experience in three power generation segments - wind, hydroelectric and thermal. Boralex shares and convertible debentures are listed on the Toronto Stock Exchange under the ticker symbol BLX. More information is available at www.boralex.com or www.sedar.com.Certain statements contained in this press release, including those regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the general impact of economic conditions, raw material price increases and availability, currency fluctuations, fluctuations in electricity selling prices, the Company's financing capacity, adverse changes in general market and industry conditions, as well as other factors listed in the Company's filings with different securities commissions.The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as Generally Accepted Accounting Principles of Canada ("GAAP"). To assess the operating performance of its assets and reporting segments, the Corporation uses earnings before interest, taxes, depreciation and amortization ("EBITDA") and cash flows from operations as performance measurements. These measures are not defined under GAAP and do not have a standardized definition prescribed by GAAP. Therefore, they may not be comparable to similar measures presented by other companies. EBITDA corresponds to Operating income as defined in the summarized financial statements included with this press release. Cash flows from operations corresponds to cash flows from operating activities before changes in non-cash working capital items as disclosed in the consolidated statements of cash flows attached in this press release. << -------------------------- (1) Non-GAAP measure, see reconciliation table at the end of this press release. The following table reconciles EBITDA and net earnings as reported in the financial statements with adjusted EBITDA and net earnings (loss): ------------------------------------------------------------------------- EBITDA Three-month periods ended Nine-month periods ended September 30, September 30, ------------------------------------------------------- (in thousands of dollars) 2010 2009 2010 2009 ------------------------------------------------------------------------- As reported in the financial statements 10,851 11,445 33,725 45,340 Specific items: The Fund's results since the takeover (266) - (266) - Share of Boralex in impairment of property, plant and equipment at a power station owned by the Fund 1,899 - 5,620 - Professional fees incurred in connection with the offer to acquire the Fund (2,242) - - - Gain on disposal of investment in subsidiary - - - (720) ------------------------------------------------------------------------- Adjusted data 10,242 11,445 39,079 44,620 ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET EARNINGS* Three-month periods ended Nine-month periods ended September 30, September 30, ------------------------------------------------------- (in thousands of dollars) 2010 2009 2010 2009 ------------------------------------------------------------------------- As reported in the financial statements 27,092 698 22,642 9,727 Specific items: The Fund's results since the takeover, net of share of non- controlling interests 410 - 410 - Share of Boralex in impairment of property, plant and equipment at a power station owned by the Fund 1,397 - 4,136 - Professional fees incurred in connection with the offer to acquire the Fund 2,058 - 3,627 - Amortization of balance of deferred financing costs under former financing for Phase I of Thames River - - 1,915 - Gain on sale of subsidiary - - (519) - Gain on disposal of investment in subsidiary - - - (482) Interest on convertible debentures 467 - 467 - Amortization of fair value adjustment to the Fund's debts (88) - (88) - Gain on deemed disposal of investment in the Fund (21,260) - (21,260) - Income tax recovery on the deemed disposal of investment in the Fund (12,750) - (12,750) - ------------------------------------------------------------------------- Adjusted data (2,674) 698 (1,420) 9,245 ------------------------------------------------------------------------- * Impact net of income taxes Consolidated Balance Sheets AS AT AS AT SEPTEMBER 30, DECEMBER 31, (in thousands of dollars) (unaudited) 2010 2009 ------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents 140,732 37,821 Restricted cash 35,022 - Accounts receivable 42,278 39,632 Future income taxes 387 422 Inventories 10,722 8,726 Prepaid expenses 3,906 2,537 Fair value of derivative financial instruments 4,424 - ------------------------------------------------------------------------- 237,471 89,138 Investment - 55,446 Property, plant and equipment 808,238 413,539 Power and steam sales contracts 98,550 49,023 Goodwill 88,589 - Other long-term assets 48,894 56,621 ------------------------------------------------------------------------- 1,281,742 663,767 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES CURRENT LIABILITIES Bank loans and advances - 12,291 Accounts payable and accrued liabilities 55,903 28,913 Income taxes payable 172 283 Current portion of long-term debt 35,763 24,273 Distributions payable to unitholders of the Fund 1,025 - ------------------------------------------------------------------------- 92,863 65,760 Long-term debt 494,362 206,116 Convertible debentures 173,435 - Long-term lease accruals 2,995 - Future income taxes 43,174 37,185 Fair value of derivative financial instruments 15,611 7,645 ------------------------------------------------------------------------- 822,440 316,706 ------------------------------------------------------------------------- EQUITY ATTRIBUTABLE TO SHAREHOLDERS Capital stock 222,694 222,694 Equity component of convertible debentures 17,883 - Contributed surplus 5,260 4,295 Retained earnings 184,232 159,900 Accumulated other comprehensive loss (60,769) (46,859) ------------------------------------------------------------------------- 369,300 340,030 Non-controlling interests 90,002 7,031 ------------------------------------------------------------------------- Total equity 459,302 347,061 ------------------------------------------------------------------------- 1,281,742 663,767 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Earnings (in thousands of FOR THE FOR THE dollars, except THREE-MONTH PERIODS NINE-MONTH PERIODS per share amounts ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, and number of shares) (unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenues from energy sales 42,096 39,676 129,828 138,631 Renewable energy tax credits - 3,473 - 10,449 Operating costs 27,289 28,339 80,751 97,193 ------------------------------------------------------------------------- 14,807 14,810 49,077 51,887 Share in earnings of the Fund (1,991) 146 (3,251) 2,998 Management revenues from the Fund 1,158 1,338 4,437 4,087 Other income 144 117 598 1,773 ------------------------------------------------------------------------- 14,118 16,411 50,861 60,745 ------------------------------------------------------------------------- OTHER EXPENSES Management and operation of the Fund 1,176 1,104 3,995 3,441 Administrative 2,091 3,862 13,141 11,964 ------------------------------------------------------------------------- 3,267 4,966 17,136 15,405 ------------------------------------------------------------------------- OPERATING INCOME 10,851 11,445 33,725 45,340 Amortization 8,761 6,434 24,512 19,382 Foreign exchange loss 532 236 1,562 202 Net loss (gain) on financial instruments 214 398 (125) (6) Financing costs 4,195 3,362 13,078 10,228 Net gain on deemed disposal of investment in the Fund (16,078) - (16,078) - Gain on sale of subsidiary - - (774) - ------------------------------------------------------------------------- (2,376) 10,430 22,175 29,806 ------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAXES 13,227 1,015 11,550 15,534 Income taxes (recovery) (13,495) 316 (10,815) 5,751 ------------------------------------------------------------------------- Net earnings including non-controlling interests 26,722 699 22,365 9,783 Non-controlling interests 370 (1) 277 (56) ------------------------------------------------------------------------- Net earnings attributable to shareholders 27,092 698 22,642 9,727 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings per Class A share (basic) 0.72 0.02 0.60 0.26 Net earnings per Class A share (diluted) 0.69 0.02 0.60 0.26 Weighted average number of Class A shares outstanding (basic) 37,740,921 37,740,921 37,740,921 37,740,921 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Retained Earnings FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, (in thousands of dollars) (unaudited) 2010 2009 ------------------------------------------------------------------------- Balance - beginning of period 159,900 135,461 Net earnings for the period 22,642 9,727 Excess of purchase price paid for acquisition of non-controlling interests (1,725) - Excess of proceeds from partial sale of a subsidiary 3,415 - ------------------------------------------------------------------------- Balance - end of period 184,232 145,188 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income (Loss) FOR THE FOR THE THREE-MONTH PERIODS NINE-MONTH PERIODS (in thousands of ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, dollars) (unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Net earnings for the period including non-controlling interests 26,722 699 22,365 9,783 ------------------------------------------------------------------------- Other comprehensive income (loss) TRANSLATION ADJUSTMENTS Unrealized foreign exchange loss on translation of financial statements of self-sustaining foreign operations (209) (15,215) (6,581) (26,333) Reclassification to net earnings of a realized foreign exchange loss (gain) related to the reduction of net investment in self-sustaining foreign operations 171 - 1,631 (65) Share of cumulative translation adjustments of the Fund (216) (1,036) - (2,073) Taxes (123) 258 37 548 CASH FLOW HEDGES Change in fair value of financial instruments 228 (2,099) (13,849) 7,101 Hedging items realized and recognized in net earnings (1,076) (5,857) (4,454) (18,617) Hedging items realized and recognized in balance sheet 2,711 (1,352) 4,848 (3,613) Taxes 545 2,495 4,458 3,732 ------------------------------------------------------------------------- 2,031 (22,806) (13,910) (39,320) ------------------------------------------------------------------------- Comprehensive income (loss) including non-controlling interests 28,753 (22,107) 8,455 (29,537) ------------------------------------------------------------------------- Less: Comprehensive income (loss) for the period attributable to non-controlling interests 370 (1) 277 (56) ------------------------------------------------------------------------- Comprehensive income (loss) for the period attributable to shareholders 29,123 (22,108) 8,732 (29,593) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Cash Flows FOR THE FOR THE THREE-MONTH PERIODS NINE-MONTH PERIODS (in thousands of ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, dollars) (unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- OPERATING ACTIVITIES Net earnings 27,092 698 22,642 9,727 Distributions received from the Fund 1,377 2,409 4,475 7,228 Adjustments for non-cash items Net loss (gain) on financial instruments 214 535 (125) 534 Share in earnings of the Fund 1,991 (146) 3,251 (2,998) Amortization 8,761 6,434 24,512 19,382 Amortization of financing costs and monetization program expenses 154 667 3,285 2,174 Renewable energy tax credits - (2,231) 988 (3,948) Gain on sale of subsidiary - - (774) - Gain on deemed disposal of investment in the Fund (21,260) - (21,260) - Future income taxes (14,201) 402 (14,753) 3,053 Other 224 415 1,531 931 ------------------------------------------------------------------------- 4,352 9,183 23,772 36,083 Change in non-cash working capital items (1,650) (13,286) (581) 110 ------------------------------------------------------------------------- 2,702 (4,103) 23,191 36,193 ------------------------------------------------------------------------- INVESTING ACTIVITIES Additions to property, plant and equipment - projects under construction (71,978) (23,986) (130,303) (53,770) - power stations in operation (1,563) (1,399) (7,519) (6,363) Change in restricted cash 38,663 - (35,022) - Business acquisition - the Fund (38,811) - (38,811) - Business acquisition - other (2,142) (1,706) (2,142) (6,475) Proceeds from sale of a subsidiary - - 878 - Change in restricted funds - 300 882 (1,241) Development projects (335) (943) (730) (6,980) Purchase of non- controlling interest - - (1,751) (968) Contribution of non- controlling interest 5,662 - 5,662 - Other 703 (1,212) 2,207 (7,035) ------------------------------------------------------------------------- (69,801) (28,946) (206,649) (82,832) ------------------------------------------------------------------------- FINANCING ACTIVITIES Increase (decrease) in bank loans and advances - (1,109) (12,291) 13,217 Net increase in long-term debt 54,405 33,776 263,271 33,557 Payments on long-term debt (6,983) (9,795) (67,757) (20,751) Net increase in convertible debentures 103,945 - 103,945 - ------------------------------------------------------------------------- 151,367 22,872 287,168 26,023 ------------------------------------------------------------------------- TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS 6,709 (4,101) (799) (10,941) ------------------------------------------------------------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 90,977 (14,278) 102,911 (31,557) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 49,755 51,916 37,821 69,195 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS - END OF PERIOD 140,732 37,638 140,732 37,638 ------------------------------------------------------------------------- SUPPLEMENTAL INFORMATION Cash and cash equivalents paid for: Interest 5,094 2,387 13,697 6,604 Income taxes 683 535 3,109 1,736 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>SEGMENTED INFORMATIONThe Corporation's power stations are grouped into four distinct segments: wind power, hydroelectric power, wood-residue thermal power and natural gas thermal power, and are engaged mainly in power generation. The classification of these segments is based on the different cost structures relating to each of the four types of power stations. The main accounting policies that apply to the operating segments are the same as those described in note 2 in Boralex's 2009 Annual Report.The Corporation analyzes the performance of its operating segments based on the earnings before interest, taxes, depreciation and amortization ("EBITDA"). EBITDA is not a measure of performance under Canadian GAAP; however, management uses this measure to assess the operating performance of its segments. EBITDA corresponds to Operating income. Results for each segment are presented on the same basis as those of the Corporation.The following table reconciles EBITDA with net earnings: << FOR THE FOR THE THREE-MONTH PERIODS NINE-MONTH PERIODS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------------------------------------------------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- Net earnings attributable to shareholders 27,092 698 22,642 9,727 Non-controlling interests (370) 1 (277) 56 Income taxes (recovery) (13,495) 316 (10,815) 5,751 Gain on sale of subsidiary - - (774) - Net gain on deemed disposal of investment in the Fund (16,078) - (16,078) - Financing costs 4,195 3,362 13,078 10,228 Net loss (gain) on financial instruments 214 398 (125) (6) Foreign exchange loss 532 236 1,562 202 Amortization 8,761 6,434 24,512 19,382 ------------------------------------------------------------------------- EBITDA 10,851 11,445 33,725 45,340 ------------------------------------------------------------------------- ------------------------------------------------------------------------- INFORMATION BY SEGMENT FOR THE FOR THE THREE-MONTH PERIODS NINE-MONTH PERIODS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------------------------------------------------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- Power generation (MWh) Wind farms 66,722 39,758 234,013 155,677 Hydroelectric power stations 33,300 27,554 107,910 104,286 Wood-residue thermal power stations 339,903 297,851 925,429 852,253 Natural gas thermal power stations 7,953 - 30,460 22,642 ------------------------------------------------------------------------- 447,878 365,163 1,297,812 1,134,858 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenues from energy sales Wind farms 7,802 5,797 28,446 22,898 Hydroelectric power stations 2,784 1,779 8,161 7,381 Wood-residue thermal power stations 28,072 29,841 81,184 96,360 Natural gas thermal power stations 3,438 2,259 12,037 11,992 ------------------------------------------------------------------------- 42,096 39,676 129,828 138,631 ------------------------------------------------------------------------- ------------------------------------------------------------------------- EBITDA Wind farms 5,628 4,247 22,159 17,704 Hydroelectric power stations 1,473 301 4,528 3,795 Wood-residue thermal power stations 7,135 10,685 21,587 30,636 Natural gas thermal power stations 254 (126) 2,186 1,240 Corporate and eliminations (3,639) (3,662) (16,735) (8,035) ------------------------------------------------------------------------- 10,851 11,445 33,725 45,340 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Additions to property, plant and equipment Wind farms 72,250 24,024 133,592 53,877 Hydroelectric power stations 1,835 312 2,250 1,031 Wood-residue thermal power stations 334 431 2,392 4,181 Natural gas thermal power stations 1 - 10 28 Corporate and eliminations (879) 618 (422) 1,016 ------------------------------------------------------------------------- 73,541 25,385 137,822 60,133 ------------------------------------------------------------------------- ------------------------------------------------------------------------- AS AT AS AT SEPTEMBER 30, DECEMBER 31, 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total assets Wind farms 537,908 363,644 Hydroelectric power stations 286,213 34,622 Wood-residue thermal power stations 213,851 138,014 Natural gas thermal power stations 38,129 13,600 Corporate and eliminations 205,641 113,887 ------------------------------------------------------------------------- 1,281,742 663,767 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Property, plant and equipment Wind farms 411,611 288,225 Hydroelectric power stations 203,431 25,758 Wood-residue thermal power stations 163,261 84,660 Natural gas thermal power stations 23,469 7,150 Corporate and eliminations 6,466 7,746 ------------------------------------------------------------------------- 808,238 413,539 ------------------------------------------------------------------------- ------------------------------------------------------------------------- INFORMATION BY GEOGRAPHIC SEGMENT FOR THE FOR THE THREE-MONTH PERIODS NINE-MONTH PERIODS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 2010 2009 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Power generation (MWh) United States 353,021 319,186 996,127 938,613 France 50,741 39,758 187,513 178,319 Canada 44,116 6,219 114,172 17,926 ------------------------------------------------------------------------- 447,878 365,163 1,297,812 1,134,858 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenues from energy sales United States 29,187 30,913 85,757 101,891 France 8,081 8,056 30,666 34,889 Canada 4,828 707 13,405 1,851 ------------------------------------------------------------------------- 42,096 39,676 129,828 138,631 ------------------------------------------------------------------------- ------------------------------------------------------------------------- EBITDA United States 7,689 10,735 23,642 33,152 France 3,752 3,406 14,152 16,162 Canada (590) (2,696) (4,069) (3,974) ------------------------------------------------------------------------- 10,851 11,445 33,725 45,340 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Additions to property, plant and equipment United States 683 431 3,120 4,072 France 42,366 2,526 62,456 3,145 Canada 30,492 22,428 72,246 52,916 ------------------------------------------------------------------------- 73,541 25,385 137,822 60,133 ------------------------------------------------------------------------- ------------------------------------------------------------------------- AS AT AS AT SEPTEMBER 30, DECEMBER 31, 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total assets United States 311,327 179,494 France 296,829 254,142 Canada 673,586 230,131 ------------------------------------------------------------------------- 1,281,742 663,767 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Property, plant and equipment United States 182,405 89,889 France 229,999 190,797 Canada 395,834 132,853 ------------------------------------------------------------------------- 808,238 413,539 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>For further information: Ms. Patricia Lemaire, Director, Publics Affairs and Communications, Boralex Inc., 514-985-1353, patricia.lemaire@boralex.com