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Press release from CNW Group

Boralex: Financial Results for Second Quarter of 2011

Friday, August 05, 2011

Boralex: Financial Results for Second Quarter of 201107:00 EDT Friday, August 05, 2011MONTREAL, Aug. 5, 2011 /CNW Telbec/ - Boralex Inc. ("Boralex" or the "Corporation") reported revenues totalling $54.0 million in the second quarter of 2011, up 47.1% compared with the same period of 2010 owing to the expansion in its wind power segment and asset acquisitions.(in millions of dollars, except per share amounts)   Three-month periods endedJune 30Six-month periods endedJune 30 2011201020112010     Revenues from energy sales54.036.7136.087.7EBITDA21.75.459.523.2Net earnings (loss)(5.1)(4.7)1.9(2.7) per share (basic) in dollars(0.14)(0.12)0.05(0.07)Cash flows from operations8.95.333.019.9During the second quarter, Boralex recorded earnings before interest, income taxes and amortization ("EBITDA") of $21.7 million, up $16.3 million from the second quarter of 2010. This increase mostly results from the positive $11.9 million contribution stemming from the addition of the ten power stations of the Boralex Power Income Fund (the "Fund") and the $5.4 million generated by the commissioning of new wind power facilities. For the three-month period ended June 30, 2011, the Corporation recorded a net loss of $5.1 million or $0.14 per share which compares to a net loss of $4.7 million or $0.12 per share at the same period in 2010. The increase in net loss is explained by the decline in operating income from U.S. wood-residue power stations and higher financing costs arising from the issuance of convertible debentures."Our results for the first half of fiscal 2011 show the growing positive impact of Boralex's expansion strategy," said Patrick Lemaire, President and CEO of Boralex. "The performance of the assets acquired from the Fund coupled with the growth of our wind power portfolio lessened the impact of difficult market conditions for U.S. wood-residue power stations and rising amortization and financing expenses resulting from Boralex's recent expansion. These second quarter results were impacted by current economic conditions beyond our control," added Mr. Lemaire."Boralex's second quarter is usually its weakest of the year due to the seasonal nature of our operations, and 2011 was no exception," stated Boralex Vice-President and CFO Jean-François Thibodeau. "The current state of the U.S. market and wind conditions below historical averages in France compounded the effect of this seasonal cycle on our operations during the last quarter," indicated Mr. Thibodeau.During the second quarter, Boralex commissioned its first solar power facility of 4.5 MW, on time and on budget.Segmented quarterly resultsThe wind power segment continued to capitalize on the significant contribution of new wind power facilities and reported revenues and EBITDA for the second quarter of 2011 totalling $15.2 million and $12.0 million, respectively, representing increases of 65% and 69% compared with the same period of 2010. At the end of April, construction work began at the two first Seigneurie de Beaupré wind farms, in which Boralex holds a 50% stake. The Corporation and its partner expect to complete financing for the two projects by the end of 2011. Furthermore, in June 2011, the two community wind power projects developed by Boralex in conjunction with the Québec regional county municipalities of Témiscouata and La Côte-de-Beaupré both have been granted 20-year power sales contracts with Hydro-Québec Distribution.In the hydroelectric segment, revenues for the second quarter of 2011 grew nearly sevenfold to $16.0 million, with EBITDA reaching $12.6 million—10.5 times higher than a year ago. The addition of the Fund's seven power stations coupled with favourable water flow conditions were behind the segment's good showing.Boralex's wood-residue segment continued to weather difficult business conditions in the U.S., given currently low electricity free market selling prices and the shutdown of the Ashland power station after a sales agreement was not secured. Bear in mind that the second quarter is typically the weakest for Boralex's U.S. thermal power stations, which usually schedule periodic maintenance in the spring. Accordingly, for the three-month period ended June 30, 2011, the segment reported revenues totalling $12.5 million, down $10.4 million or 45.4% from $22.9 million for the same period a year ago.Lastly, revenues in the natural gas segment stood at $10.1 million, up from $2.3 million year over year, owing to the $7.3 million contribution of the Canadian power station coupled with a $0.5 million revenue boost from the French facility. Quarterly EBITDA was $3.6 million, up $3.7 million from the same period of 2010.About BoralexBoralex is a power producer whose core business involves developing and operating renewable energy power stations with a total installed capacity of more than 700 MW in Canada, the Northeastern United States and France. Boralex is also committed under power development projects, both independently and with European and Canadian partners, to add approximately 400 MW of power. With nearly 350 employees, Boralex is known for its diversified expertise and in-depth experience in four power generation types — wind, hydroelectric, thermal and more recently, solar.Boralex's shares and convertible debentures are listed on the Toronto Stock Exchange under the ticker symbols BLX and BLX.DB, respectively. 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, volatility in electricity selling prices, the company's financing capacity, negative changes in general market conditions and regulations affecting the industry, 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 non-GAAP financial measures. To assess the performance of its assets and reporting segments, the Corporation uses EBITDA and cash flows from operations as performance measures, as defined in the accompanying financial statements. These non-GAAP measures have no standardizedmeaning under IFRS. As a result, these measures may not be comparable to similarly named measures used by other companies. Consolidated Balance Sheets(in thousands of Canadian dollars) (unaudited) AS AT JUNE 30, 2011 AS AT DECEMBER 31, 2010     ASSETS    CURRENT ASSETS    Cash and cash equivalents 138,737 92,650Restricted cash 1,277 15,924Accounts receivable 38,698 60,420Available-for-sale financial asset 2,910 23,251Future income taxes - 512Inventories 7,392 9,179Prepaid expenses 3,866 2,516Fair value of derivative financial instruments 55 769  192,935 205,221Interest in a joint venture 7,292 _Property, plant and equipment 736,804 738,884Energy sales contracts 102,498 103,994Water rights 111,535 113,015Other long-term assets 38,408 46,842Goodwill 38,063 38,063  1,227,535 1,246,019     LIABILITIES    CURRENT LIABILITIES    Bank loans and advances - 195Accounts payable and accrued liabilities 35,317 59,558Income taxes payable 2,545 3,209Fair value of derivative financial instruments - 183Current portion of long-term debt 23,944 34,033  61,806 97,178Long-term debt 497,449 479,546Convertible debentures 221,973 220,824Long-term lease accruals 3,058 2,981Future income taxes 61,571 66,967Fair value of derivative financial instruments 18,207 10,834  864,064 878,330     EQUITY    Capital stock 223,049 222,853Equity component of convertible debentures 14,379 14,488Contributed surplus 5,612 5,028Retained earnings 144,204 142,300Accumulated other comprehensive loss (32,245) (25,874)Equity attributable to shareholders 354,999 358,795Non-controlling interests 8,472 8,894Total equity 363,471 367,689  1,227,535 1,246,019     Consolidated Statements of Earnings (Loss)  THREE-MONTH PERIODSENDED JUNE 30SIX-MONTH PERIODSENDED JUNE 30(in thousands of Canadian dollars, except per share amountsand number of shares) (unaudited) 2011201020112010      REVENUES     Revenues from energy sales 53,96336,728135,99287,732Management revenues from the Fund -1,523-3,279Other income 172155324454  54,13538,406136,31691,465      COSTS AND OTHER EXPENSES     Operating costs 26,04323,91465,25850,933Administrative 5,5746,8259,86810,531Development 7851,1891,6692,802Management and operation of the Fund -1,314-2,819Amortization 17,0538,27232,83315,940Gain on sale of assets --(2,377)(774)  49,45541,514107,25182,251      OPERATING INCOME (LOSS) 4,680(3,108)29,0659,214      Financing costs 12,5133,12324,4968,883Foreign exchange loss (gain) 518(884)2,037(430)Net loss (gain) on financial instruments 93220409(339)      EARNINGS (LOSS) BEFORE INCOME TAXES AND SHARE INEARNINGS (LOSS) OF THE FUND (8,444)(5,567)2,1231,100      Income taxes (recovery) (2,853)(433)6472,552      NET EARNINGS (LOSS) BEFORE SHARE IN EARNINGS (LOSS)OF THE FUND (5,591)(5,134)1,476(1,452)      Share in earnings (loss) of the Fund -232-(1,193)      NET EARNINGS (LOSS) (5,591)(4,902)1,476(2,645)      NET EARNINGS (LOSS) ATTRIBUTABLE TO:      Shareholders of Boralex Inc. (5,107)(4,714)1,904(2,738) Non-controlling shareholders (484)(188)(428)93NET EARNINGS (LOSS) (5,591)(4,902)1,476(2,645)      Net earnings (loss) per share (basic and diluted) $(0.14)$(0.12)$0.05$(0.07)Weighted average number of shares outstanding (basic) 37,773,21337,740,92137,769,87237,740,921Weighted average number of shares outstanding (diluted) 37,881,85737,880,11537,879,08337,976,830            Consolidated Statements of Comprehensive Loss       THREE-MONTH PERIODSENDED JUNE 30SIX-MONTH PERIODSENDED JUNE 30(in thousands of Canadian dollars) (unaudited) 2011201020112010      NET EARNINGS (LOSS) (5,591)(4,902)1,476(2,645)      Other comprehensive income (loss)      Translation adjustments       Unrealized foreign exchange gain (loss) on translation offinancial statements of self-sustaining foreign operations (64)2,929283(6,374)  Share of cumulative translation adjustments of the Fund -694-216  Taxes (259)154(259)160 Cash flow hedges       Change in fair value of financial instruments (9,947)(8,482)(10,723)(14,077)  Hedging items realized and recognized in net earnings (loss) 1,521(2,159)2,150(3,378)  Hedging items realized and recognized in balance sheet 789911982,137  Taxes 2,6133,1362,1863,913 Available-for-sale financial asset       Unrealized loss on available-for-sale financial asset (954)-(200)-  (7,012)(2,737)(6,365)(17,403)COMPREHENSIVE LOSS (12,603)(7,639)(4,889)(20,048)      COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:      Shareholders of Boralex Inc. (12,121)(7,441)(4,467)(20,119) Non-controlling shareholders (482)(198)(422)71COMPREHENSIVE LOSS (12,603)(7,639)(4,889)(20,048)      Consolidated Statements of Changes in Equity            SIX-MONTH PERIODENDED JUNE 30, 2011  Attributable to shareholders    (in thousands of Canadian dollars)(unaudited) Capitalstock Equitycomponent ofconvertibledebentures Contributedsurplus Retainedearnings Comprehensiveloss Total Non-controllinginterests Totalequity                 Balance - beginning of period 222,853 14,488 5,028 142,300 (25,874) 358,795 8,894 367,689                 Net earnings for the period - - - 1,904 - 1,904 (428) 1,476Other comprehensive loss - - - - (6,371) (6,371) 6 (6,365)Comprehensive loss - - - 1,904 (6,371) (4,467) (422) (4,889)                 Conversion of convertible debentures 196 - - - - 196 - 196Stock option expense - - 584 - - 584 - 584Other - (109) - - - (109) - (109)Balance - end of period 223,049 14,379 5,612 144,204 (32,245) 354,999 8,472 363,471                                                SIX-MONTH PERIODENDED JUNE 30, 2010    Attributable to shareholders    (in thousands of Canadian dollars)(unaudited)   Capitalstock Contributedsurplus Retainedearnings Comprehensiveloss Total Non-controllinginterests Totalequity                 Balance - beginning of period   222,694 4,290 105,538 (2,344) 330,178 7,031 337,209                 Net loss for the period   - - (2,738) - (2,738) 93 (2,645)Other comprehensive loss   - - - (17,381) (17,381) (22) (17,403)Comprehensive loss   - - (2,738) (17,381) (20,119) 71 (20,048)                 Excess of purchase price paid foracquisition of non-controllinginterests   - - (1,725) - (1,725) (26) (1,751)Stock option expense   - 438 - - 438 - 438Balance - end of period   222,694 4,728 101,075 (19,725) 308,772 7,076 315,848                 Consolidated Statements of Cash Flows THREE-MONTH PERIODSENDED JUNE 30 SIX-MONTH PERIODSENDED JUNE 30(in thousands of Canadian dollars) (unaudited) 20112010 20112010OPERATING ACTIVITIES     Net earnings (loss) attributable to shareholders(5,107)(4,714) 1,904(2,738)Distributions received from the Fund-1,377 -3,098Financing costs12,5133,123 24,4968,883Interest paid(12,319)(1,312) (24,723)(7,451)Income taxes (recovery)(2,853)(433) 6472,552Income taxes paid(1,388)(1,393) (2,829)(1,574)Adjustments:      Unrealized foreign exchange loss on intercompany advances485- 1,575- Net loss (gain) on financial instruments93220 409(339) Share in earnings of the Fund-(232) -1,193 Amortization17,0538,272 32,83315,940  Gain on sale of assets -- (2,377)(774)  Other451422 1,0521,060 8,9285,330 32,98719,850Change in non-cash working capital items6,780(6,102) 22,9792,101 15,708(772) 55,96621,951INVESTING ACTIVITIES     Additions to property, plant and equipment(12,803)(43,573) (23,441)(64,281)Change in restricted cash5,23520,602 14,647(73,685)Increase in interest in a joint venture(2,212)- (2,212)-Proceeds from sale of a subsidiary-- -878Change in reserve funds(240)24 (244)882Development projects(56)(350) (649)(395)Sale of asset2,050- 2,050-Other269549 3121,504 (7,757)(22,748) (9,537)(135,097)FINANCING ACTIVITIES     Decrease in bank loans and advances-(7,865) (201)(12,291)Net increase in long-term debt21,51620,317 33,253208,866Payments on long-term debt(21,054)(1,357) (33,116)(60,774)Purchase of non-controlling interests-(1,751) -(1,751) 462(9,344) (64)134,050TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS(944)(2,457) (278)(8,970)NET CHANGE IN CASH AND CASH EQUIVALENTS7,469(16,633) 46,08711,934CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD131,26866,388 92,65037,821CASH AND CASH EQUIVALENTS - END OF PERIOD138,73749,755 138,73749,755      SEGMENTED INFORMATIONIn order to assess the performance of its assets and reporting segments, Boralex uses EBITDA and cash flows from operations as performance measures. Management believes that these measures are widely accepted financial indicators used by investors to assess the operational performance of a company and its ability to generate cash through operations.These non-GAAP performance measures are drawn primarily from the unaudited interim condensed consolidated financial statements, but do not have a standardized meaning under IFRS; accordingly, they may not be comparable to similarly named measures used by other companies.Investors should not view EBITDA as an alternative measure to, for example, net earnings, or as a measure of operating results or cash flows, or as a parameter for measuring liquidity, which are IFRS measures.EBITDA is reconciled to the most comparable IFRS measure, namely, net earnings (loss) attributable to shareholders, in the following table: THREE-MONTH PERIODSENDED JUNE 30 SIX-MONTH PERIODSENDED JUNE 30 20112010 20112010Net earnings (loss) attributable to shareholders(5,107)(4,714) 1,904(2,738)Non-controlling interests(484)(188) (428)93Income taxes (recovery)(2,853)(433) 6472,552Net loss (gain) on financial instruments93220 409(339)Foreign exchange loss (gain)518(884) 2,037(430)Financing costs12,5133,123 24,4968,883Gain on sale of assets-- (2,377)(774)Amortization17,0538,272 32,83315,940EBITDA21,7335,396 59,52123,187Investors should not consider cash flows from operations as an alternative measure to cash flows related to operating activities, which is an IFRS measure.Cash flows from operations are reconciled to the most comparable IFRS measure, namely, cash flows related to operating activities, in the following table: THREE-MONTHS PERIODSENDED JUNE 30 SIX-MONTHS PERIODSENDED JUNE 30 20112010 20112010Cash flows related to operating activities15,708(772) 55,96621,951Cash flows provided by change in non-cash working capital items(6,780)6,102 (22,979)(2,101)CASH FLOWS FROM OPERATIONS8,9285,330 32,98719,850      INFORMATION BY OPERATING SEGMENT THREE-MONTH PERIODSENDED JUNE 30 SIX-MONTH PERIODSENDED JUNE 30 20112010 20112010Power generation (MWh)   Wind power stations124,36276,999 276,931167,291Hydroelectric power stations213,49034,301 358,49574,610Wood-residue thermal power stations178,033265,470 550,453585,577Natural gas thermal power station45,33677 127,62722,507Corporate (solar power)268- 268- 561,489376,847 1,313,774849,985Revenues from energy sales   Wind power stations15,1939,230 33,46620,643Hydroelectric power stations15,9902,323 28,7225,377Wood-residue thermal power stations12,54422,896 46,85353,111Natural gas thermal power station10,1122,279 26,8278,601Corporate (solar power)124- 124- 53,96336,728 135,99287,732EBITDA     Wind power stations11,9917,112 27,05716,531Hydroelectric power stations12,6481,182 21,7243,055Wood-residue thermal power stations(2,174)4,424 8,11014,452Natural gas thermal power station3,559(106) 11,1981,932Corporate and eliminations (including solar power)(4,291)(7,216) (8,568)(12,783) 21,7335,396 59,52123,187Additions to property, plant and equipment     Wind power stations61342,000 8,73261,341Hydroelectric power stations157199 331415Wood-residue thermal power stations1,3481,073 2,6432,057Natural gas thermal power station-6 49Corporate and eliminations (including solar power)10,685295 11,731459 12,80343,573 23,44164,281    AS ATJUNE 30,2011AS ATDECEMBER 31,2010Total assets Wind power stations513,005536,135Hydroelectric power stations367,857364,548Wood-residue thermal power stations149,644162,070Natural gas thermal power station35,97237,974Corporate and eliminations (including solar power)161,057145,292 1,227,5351,246,019Long-term assets  Wind power stations470,997469,707Hydroelectric power stations339,857350,773Wood-residue thermal power stations128,157137,376Natural gas thermal power station18,71622,619Corporate and eliminations (including solar power)76,87360,323 1,034,6001,040,798            INFORMATION BY GEOGRAPHIC SEGMENT      THREE-MONTH PERIODSENDED JUNE 30 SIX-MONTH PERIODSENDED JUNE 30 20112010 20112010Power generation (MWh)    Canada217,81633,229 484,56370,058United States277,675292,164 657,374643,156Europe65,99851,454 171,837136,771 561,489376,847 1,313,774849,985Revenues from energy sales   Canada23,2204,143 56,8148,577United States20,30124,433 52,85056,570Europe10,4428,152 26,32822,585 53,96336,728 135,99287,732EBITDA     Canada9,568(2,838) 26,892(3,166)United States7,2994,902 19,32315,953Europe4,8663,332 13,30610,400 21,7335,396 59,52123,187Additions to property, plant and equipment     Canada1,46137,770 8,42341,755United States6831,265 9932  436Europe10,6594,538 14,02520,090 12,80343,573 23,44164,281       AS ATJUNE 30,2011AS ATDECEMBER 31,2010Total assets  Canada635,793634,043United States283,984301,921Europe307,758310,055 1,227,5351,246,019Long-term assets  Canada520,289529,787United States233,490263,094Europe280,821247,917 1,034,6001,040,798  For further information: Ms. Patricia Lemaire Director, Publics Affairs and Communications Boralex Inc. 514-985-1353 patricia.lemaire@boralex.com