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Press release from PR Newswire

Boralex: Quarterly operating results on the rise

Wednesday, November 09, 2011

Boralex: Quarterly operating results on the rise07:00 EST Wednesday, November 09, 2011 MONTREAL, Nov. 9, 2011 /PRNewswire/ - Boralex Inc. ("Boralex" or the "Corporation") reported an improvement in its operating results for the third quarter of 2011, reflecting the positive impacts of the Corporation's recent growth. (in millions of Canadian dollars, except per share amounts)     Three-month periods ended September 30  Nine-month periods ended September 30   2011 2010 2011 2010           Revenues from energy sales 50.1 42.1 186.1 129.8 EBITDA 16.8 11.0 76.3 34.2 Net earnings (loss)* (7.2) 34.7 (5.3) 32.0   per share (basic) $(0.19) $0.92 $(0.14) $0.85 Cash flows from operations 9.7 2.0 42.7 21.8 *attributable to shareholders of Boralex During the third quarter of 2011, Boralex recorded revenues from energy sales and earnings before interest, income taxes and amortization ("EBITDA") of $50.1 million and $16.8 million, respectively, up 19% and 53% from the same period of 2010. This growth was driven by the addition of the ten power stations acquired from Boralex Power Income Fund (the "Fund") and the commissioning of new wind and solar power stations, despite a decline in revenues at U.S. wood-residue power stations. The Corporation reported a net loss attributable to the shareholders of Boralex of $7.2 million, compared with net earnings of $34.7 million year over year, which included an extraordinary gain of $43.6 million related to the deemed disposal of investment in the Fund and the related income tax recovery. Excluding this gain, Boralex would have recorded a net loss of $5.4 million in the third quarter of 2010. The significant positive contribution of the new sites that were recently acquired and commissioned by Boralex was not able to offset the adverse impact, in particular, of the impairment charge against the property, plant and equipment at the Dolbeau power station. "After acquiring the assets of the Fund and bringing online new wind and solar power stations totalling over 140 MW since December 2009, Boralex once again demonstrated, with the sale of its U.S. wood-residue assets, its unwavering resolve to maximize its asset portfolio with long-term contracts in the wind, hydroelectric and solar power segments, as well as to afford itself the financial leeway to continue expanding," said Boralex president and CEO Patrick Lemaire. Boralex generated significant cash inflows from its operations, a testament to the quality of its assets, in the amount of $42.7 million for the first nine months of 2011, compared with $21.8 million for the same period of 2010. Segmented financial results In the wind power segment, the third quarter of 2011 saw revenues surge 44.9% to $11.3 million, and EBITDA soar 46.4% to $8.2 million. In addition, Boralex and its partner in the development of 341 MW of wind power at the Seigneurie de Beaupré wind farms announced on November 8, 2011 the completion of $725 million in financing to conduct the first 272 MW phase. The hydroelectric power segment generated $11.6 million in quarterly revenues, up fourfold year over year. EBITDA stood at $8.5 million, 5.7 times higher than for the same period of 2010. This significant growth was driven by consolidation of the results of the Fund's power stations and favourable water flows conditions. Difficult business conditions in the U.S. generated revenues of $17.0 million in the wood-residue thermal power segment, down $11.1 million from the 2010 period and a negative EBITDA of $0.6 million. The decisions by Boralex's management to close the Ashland power station, scale back electricity production at the other U.S. power stations and defer REC sales did have an adverse impact on results for the quarter. Note that Boralex announced on November 7, 2011 the disposal of its U.S. wood-residue assets which the closing is expected by the end of the year and will generate a net proceeds of about US$81 million. Lastly, the natural gas cogeneration thermal power segment reported revenues and EBITDA of $9.3 million and $3.7 million, respectively, while recently commissioned solar power station contributed $0.9 million and $0.8 million to the Corporation's revenues and EBITDA, respectively. About Boralex Boralex is a power producer whose core business is dedicated to the development and the operation of renewable energy power stations. The Corporation currently operates an asset base with an 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. There can be no assurance as to the materialization of the results, performance or achievements as expressed or implied by forward-looking statements. The reader is cautioned not to place undue reliance on such forward-looking statements. Unless required to do so under applicable securities legislation, Boralex management does not assume any obligation to update or revise forward-looking statements to reflect new information, future events or other changes. 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 standardized meaning 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 SEPTEMBER 30, 2011 AS AT DECEMBER 31, 2010         ASSETS       CURRENT ASSETS       Cash and cash equivalents   133,068 92,650 Restricted cash   1,277 15,924 Accounts receivable   33,845 60,420 Available-for-sale financial asset   2,339 23,251 Future income taxes   - 512 Inventories   8,422 9,179 Prepaid expenses   4,205 2,516 Fair value of derivative financial instruments   47 769     183,203 205,221 Interest in a joint venture   16,039 _ Property, plant and equipment   734,479 738,884 Energy sales contracts   101,914 103,994 Water rights   110,792 113,015 Other long-term assets   39,585 46,842 Goodwill   38,063 38,063     1,224,075 1,246,019 LIABILITIES       CURRENT LIABILITIES       Bank loans and advances   - 195 Accounts payable and accrued liabilities   39,634 59,558 Income taxes payable   449 3,209 Fair value of derivative financial instruments   29,740 183 Current portion of long-term debt   24,023 34,033     93,846 97,178 Long-term debt   492,367 479,546 Convertible debentures   222,579 220,824 Long-term lease accruals   3,385 2,981 Future income taxes   49,280 66,967 Fair value of derivative financial instruments   18,614 10,834     880,071 878,330 EQUITY       Capital stock   222,751 222,853 Equity component of convertible debentures   14,379 14,488 Contributed surplus   5,878 5,028 Retained earnings   136,921 142,300 Accumulated other comprehensive loss   (44,064) (25,874) Equity attributable to shareholders   335,865 358,795 Non-controlling interests   8,139 8,894 Total equity   344,004 367,689     1,224,075 1,246,019 Consolidated Statements of Earnings (Loss)   THREE-MONTH PERIODS ENDED SEPTEMBER 30 NINE-MONTH PERIODS   ENDED SEPTEMBER 30 (in thousands of Canadian dollars, except per share amounts and number of shares) (unaudited)   2011 2010 2011 2010   REVENUES Revenues from energy sales 50,120 42,096 186,112 129,828 Management revenues from the Fund - 1,158 - 4,437 Other income 189 144 513 598   50,309 43,398 186,625 134,863           COSTS AND OTHER EXPENSES         Operating costs     28,139 26,629 93,397 77,562 Administrative     4,338 1,842 14,206 12,373 Development     1,055 785 2,724 3,587 Management and operation of the Fund     - 1,176 - 3,995 Amortization     15,957 8,374 48,790 24,314 Impairment of property, plant and equipment     6,503 - 6,503 - Net gain on deemed disposal of investment in the Fund     - (25,692) - (25,692) Other gains     (582) - (2,959) (774)   55,410 13,114 162,661 95,365   OPERATING INCOME (LOSS)   (5,101) 30,284 23,964 39,498   Financing costs 12,553 4,195 37,049 13,078 Foreign exchange loss (gain) (5,377) 361 (3,340) (69) Net loss (gain) on financial instruments 68 214 477 (125)   EARNINGS (LOSS) BEFORE INCOME TAXES AND SHARE IN LOSS OF THE FUND (12,345) 25,514 (10,222) 26,614   Income tax recovery (4,804) (10,801) (4,157) (8,249)   NET EARNINGS (LOSS) BEFORE SHARE IN LOSS OF THE FUND (7,541) 36,315 (6,065) 34,863   Share in loss of the Fund - (1,955) - (3,148) NET EARNINGS (LOSS) (7,541) 34,360 (6,065) 31,715   NET EARNINGS (LOSS) ATTRIBUTABLE TO:   Shareholders of Boralex (7,208) 34,730 (5,304) 31,992   Non-controlling shareholders (333) (370) (761) (277) NET EARNINGS (LOSS) (7,541) 34,360 (6,065) 31,715   Net earnings (loss) per share (basic) $(0.19) $0.92 $(0.14) $0.85 Net earnings (loss) per share (diluted) $(0.19) $0.87 $(0.14) $0.84 Weighted average number of shares outstanding (basic) 37,745,598 37,740,921 37,761,692 37,740,921 Weighted average number of shares outstanding (diluted) 37,792,349 40,186,969 37,856,776 38,658,117 Consolidated Statements of Comprehensive Income (Loss)   THREE-MONTH PERIODS ENDED SEPTEMBER 30 NINE-MONTH PERIODS ENDED SEPTEMBER 30 (in thousands of Canadian dollars) (unaudited)   2011 2010 2011 2010             NET EARNINGS (LOSS)   (7,541) 34,360 (6,065) 31,715 Other comprehensive income (loss)             Translation adjustments               Unrealized foreign exchange gain (loss) on translation of financial statements of self-sustaining foreign operations   9,562 (179) 9,845 (6,553)     Share of cumulative translation adjustments of the Fund   - (216) - -     Taxes   - (123) (259) 37   Cash flow hedges               Change in fair value of financial instruments   (30,949) 228 (41,672) (13,849)     Hedging items realized and recognized in net earnings (loss)   990 (1,076) 3,140 (4,454)     Hedging items realized and recognized in balance sheet   - 2,711 198 4,848     Taxes   9,149 545 11,335 4,458   Available-for-sale financial asset               Unrealized loss on available-for-sale financial asset   (571) - (771) -       (11,819) 1,890 (18,184) (15,513) COMPREHENSIVE INCOME (LOSS)   (19,360) 36,250 (24,249) 16,202             COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:     Shareholders of Boralex   (19,027) 36,573 (23,494) 16,454     Non-controlling shareholders   (333) (323) (755) (252) COMPREHENSIVE INCOME (LOSS)   (19,360) 36,250 (24,249) 16,202 Consolidated Statements of Changes in Equity     NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2011   Attributable to shareholders     (in thousands of Canadian dollars) (unaudited) Capital stock Equity component of convertible debentures  Contributed surplus   Retained earnings  Comprehensive loss Total Non- controlling interests Total equity   Balance - beginning of period 222,853 14,488 5,028 142,300 (25,874)  358,795 8,894 367,689                   Net loss for the period - - - (5,304) - (5,304) (761) (6,065) Other comprehensive loss - - - - (18,190) (18,190) 6 (18,184) Comprehensive loss - - - (5,304) (18,190) (23,494) (755) (24,249)                   Conversion of convertible debentures 250 - - - - 250 - 250 Share repurchase (352) - - (75) - (427) - (427) Stock option expense - - 850 - - 850 - 850 Other - (109) - - - (109) - (109) Balance - end of period 222,751 14,379 5,878 136,921 (44,064) 335,865 8,139 344,004         NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2010   Attributable to shareholders   (in thousands of Canadian dollars) (unaudited) Capital stock Equity   component of  convertible debentures Contributed surplus Retained earnings Comprehensive loss Total Non- controlling interests Total equity                   Balance - beginning of period 222,694 - 4,290 105,538 (2,344) 330,178 7,031 337,209                   Net earnings for the period - - - 31,992 - 31,992 (277) 31,715 Other comprehensive loss - - - - (15,538) (15,538) 25 (15,513) Comprehensive income (loss) - - - 31,992 (15,538) 16,454 (252) 16,202                   Excess of purchase price paid for acquisition of non-controlling interests - - - (1,725) - (1,725) (26) (1,751) Excess of proceeds from partial sale of a subsidiary - - - 3,415 - 3,415 - 3,415 Stock option expense - - 594 - - 594 - 594 Issuance of convertible debentures and imputed interest - 13,185 - - - 13,185 - 13,185 Contribution of non-controlling interest - - - - - - 2,247 2,247 Acquisition of the Fund - - - - - - 81,002 81,002 Balance - end of period 222,694 13,185 4,884 139,220 (17,882) 362,101 90,002 452,103 Consolidated Statements of Cash Flows   THREE-MONTH PERIODS ENDED SEPTEMBER 30 NINE-MONTH PERIODS  ENDED SEPTEMBER 30 (in thousands of Canadian dollars) (unaudited)  2011 2010 2011 2010 OPERATING ACTIVITIES         Net earnings (loss) attributable to shareholders of Boralex (7,208) 34,730 (5,304) 31,992 Distributions received from the Fund - 1,377 - 4,475 Financing costs 12,553 4,195 37,049 13,078 Interest paid (9,073) (6,231) (33,796) (13,682) Income tax recovery (4,804) (10,801) (4,157) (8,249) Income taxes paid (1,469) (961) (4,298) (2,535) Adjustments for non-cash items:           Unrealized foreign exchange gain on intercompany advances (2,899) - (1,324) -   Net loss (gain) on financial instruments 68 214 477 (125)   Share in earnings of the Fund - 1,955 - 3,148   Amortization 15,957 8,374 48,790 24,314   Impairment of property, plant and equipment 6,503 - 6,503 -   Gain on sale of assets - - (2,377) (774)   Gain on sale of assets to a joint venture (582) - (582) -   Gain on deemed disposal of investment in the Fund - (30,874) - (30,874)   Other 680 6 1,732 1,066   9,726 1,984 42,713 21,834 Change in non-cash working capital items 7,492 887 30,471 2,988   17,218 2,871 73,184 24,822 INVESTING ACTIVITIES         Additions to property, plant and equipment (6,598) (73,541) (30,039) (137,822) Change in restricted cash - 38,663 14,647 (35,022) Business acquisitions (700) (40,953) (700) (40,953) Increase in interest in a joint venture (8,164) - (10,376) - Proceeds from sale of a subsidiary - - - 878 Change in reserve funds (10) - (254) 882 Development projects (532) (335) (1,181) (730) Proceeds from sale of asset - - 2,050 - Other 1,055 703 1,367 2,207   (14,949) (75,463) (24,486) (210,560) FINANCING ACTIVITIES         Decrease in bank loans and advances - - (201) (12,291) Net increase in long-term debt (67) 54,405 33,186 263,271 Payments on long-term debt (9,311) (6,983) (42,427) (67,757) Net issuance of convertible debentures - 103,945 - 103,945 Share repurchase (427) - (427) - Purchase of non-controlling interests - - - (1,751) Increase in non-controlling interests - 5,662 - 5,662   (9,805) 157,029 (9,869) 291,079 TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS 1,867 6,540 1,589 (2,430) NET CHANGE IN CASH AND CASH EQUIVALENTS (5,669) 90,977 40,418 102,911 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 138,737 49,755 92,650 37,821 CASH AND CASH EQUIVALENTS - END OF PERIOD 133,068 140,732 133,068 140,732 SEGMENTED INFORMATION In 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 financial indicators widely used by investors to assess operating performance and its ability to generate cash through operations. These non-GAAP 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 of Boralex, in the following table:   THREE-MONTH PERIODS ENDED SEPTEMBER 30 NINE-MONTH PERIODS  ENDED SEPTEMBER 30   2011 2010 2011 2010 Net earnings (loss) attributable to shareholders of Boralex (7,208) 34,730 (5,304) 31,992 Non-controlling interests (333) (370) (761) (277) Income tax recovery (4,804) (10,801) (4,157) (8,249) Net loss (gain) on financial instruments 68 214 477 (125) Foreign exchange loss (gain) (5,377) 361 (3,340) (69) Financing costs 12,553 4,195 37,049 13,078 Other gains (582) - (2,959) (774) Net gain on deemed disposal of investment in the Fund - (25,692) - (25,692) Impairment of property, plant and equipment 6,503 - 6,503 - Amortization 15,957 8,374 48,790 24,314 EBITDA 16,777 11,011 76,298 34,198 Investors 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 PERIODS ENDED SEPTEMBER 30   NINE-MONTHS PERIODS ENDED SEPTEMBER 30   2011 2010   2011 2010 Cash flows related to operating activities 17,218 2,871   73,184 24,822 Cash flows provided by change in non-cash working capital items (7,492) (887)   (30,471) (2,988) CASH FLOWS FROM OPERATIONS 9,726 1,984   42,713 21,834 INFORMATION BY OPERATING SEGMENT   THREE-MONTH PERIODS ENDED SEPTEMBER 30 NINE-MONTH PERIODS ENDED SEPTEMBER 30   2011 2010 2011 2010 Power generation (MWh)         Wind power stations 94,840 66,722 371,771 234,013 Hydroelectric power stations 148,596 33,300 507,091 107,910 Wood-residue thermal power stations 287,369 339,903 837,822 925,429 Natural gas thermal power stations 39,397 7,953 167,024 30,460 Solar power station 1,942 - 2,210 -   572,144 447,878 1,885,918 1,297,812 Revenues from energy sales         Wind power stations 11,328 7,802 44,794 28,446 Hydroelectric power stations 11,615 2,784 40,337 8,161 Wood-residue thermal power stations 16,990 28,072 63,843 81,184 Natural gas thermal power stations 9,300 3,438 36,127 12,037 Solar power station 887 - 1,011 -   50,120 42,096 186,112 129,828 EBITDA         Wind power stations 8,160 5,628 35,217 22,159 Hydroelectric power stations 8,513 1,473 30,237 4,528 Wood-residue thermal power stations (585) 7,135 7,525 21,587 Natural gas thermal power stations 3,694 254 14,892 2,186 Solar power station 810 - 931 - Corporate and eliminations (3,815) (3,479) (12,504) (16,262)   16,777 11,011 76,298 34,198 Additions to property, plant and equipment         Wind power stations 3,362 72,250 12,094 133,592 Hydroelectric power stations 908 1,835 1,239 2,250 Wood-residue thermal power stations 725 334 3,368 2,392 Natural gas thermal power stations 1,246 1 1,250 10 Solar power station 112 251 11,545 505 Corporate and eliminations 245 (1,130) 543 (927)   6,598 73,541 30,039 137,822   AS AT SEPTEMBER 30, 2011 AS AT DECEMBER 31, 2010 Total assets     Wind power stations 491,938 536,135 Hydroelectric power stations 386,016 364,548 Wood-residue thermal power stations 146,952 162,070 Natural gas thermal power stations 35,546 37,974 Solar power station 21,707 7,607 Corporate and eliminations 141,916 137,685   1,224,075 1,246,019 Long-term assets     Wind power stations 462,048 469,707 Hydroelectric power stations 348,489 350,773 Wood-residue thermal power stations 126,621 137,376 Natural gas thermal power stations 17,635 22,619 Solar power station 20,169 6,723 Corporate and eliminations 65,910 53,600   1,040,872 1,040,798 INFORMATION BY GEOGRAPHIC SEGMENT   THREE-MONTH PERIODS ENDED SEPTEMBER 30 NINE-MONTH PERIODS ENDED SEPTEMBER 30   2011 2010 2011 2010 Power generation (MWh)         Canada 186,271 44,116 670,834 114,172 United States 320,537 353,021 977,911 996,127 Europe 65,336 50,741 237,173 187,513   572,144 447,878 1,885,918 1,297,812 Revenues from energy sales         Canada 18,746 4,828 75,560 13,405 United States 20,349 29,187 73,199 85,757 Europe 11,025 8,081 37,353 30,666   50,120 42,096 186,112 129,828 EBITDA         Canada 5,810 (430) 32,701 (3,596) United States 5,122 7,689 24,446 23,642 Europe 5,845 3,752 19,151 14,152   16,777 11,011 76,298 34,198 Additions to property, plant and equipment         Canada 4,932 30,492 13,378 72,246 United States 646 683 1,639 3,120 Europe 1,020 42,366 15,022 62,456   6,598 73,541 30,039 137,822   AS AT SEPTEMBER 30, 2011 AS AT DECEMBER 31, 2010 Total assets     Canada 621,618 634,043 United States 306,743 301,921 Europe 295,714 310,055   1,224,075 1,246,019 Long-term assets     Canada 517,346 529,787 United States 247,251 263,094 Europe 276,275 247,917   1,040,872 1,040,798 SOURCE BORALEX INC.For further information: <table border="0"> <tr valign="top"> <td align="left"> <b>Media</b> </td> <td align="left">   </td> <td align="left"> <b>Investors</b> </td> </tr> <tr valign="top"> <td align="left"> Patricia Lemaire<br/> Director, Publics Affairs and Communications<br/> Boralex Inc.<br/> 514-985-1353<br/> <a href="mailto:patricia.lemaire@boralex.com">patricia.lemaire@boralex.com</a> </td> <td align="left">   </td> <td align="left"> Marc Jasmin<br/> Boralex Inc.<br/> 514-284-9868<br/> <a href="mailto:marc.jasmin@boralex.com">marc.jasmin@boralex.com</a> </td> </tr> </table>