The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from PR Newswire

Boralex Steps up Profitability in the First Quarter

Wednesday, May 09, 2012

Boralex Steps up Profitability in the First Quarter07:00 EDT Wednesday, May 09, 2012 Growth strategy delivers upbeat results MONTREAL, May 9, 2012 /PRNewswire/ - Boralex Inc. ("Boralex" or the "Corporation") recorded $57.5 million in revenues for the three-month period ended March 31, 2012 compared with $57.3 million in the first quarter of 2011. However, excluding the first quarter 2011 results of the Dolbeau, Québec thermal power station which ceased operations in the third quarter of 2011, revenues were up 7.7%. This improvement was driven by organic growth on the order of 13% in the output of the wind and hydroelectric power segments, higher average selling prices for Boralex and the contribution of the Corporation's first solar power station, commissioned in June 2011. The same drivers fostered the growth in earnings before interest, taxes, depreciation and amortization ("EBITDA") which came in at $33.3 million, for a margin of 57.9% of revenues, up from $31.2 million and a margin of 54.5% for the first quarter of 2011. Excluding Dolbeau, EBITDA climbed 12.5%. The wind and hydroelectric power segments posted combined EBITDA growth of $3.4 million or 14.2%, while the solar power station contributed an additional $0.5 million. In addition to the strong performance of the wind, hydroelectric and solar power segments, which generated an EBITDA margin of 79.7%, the increase in the average margin reflected the larger weight in Boralex's energy portfolio of these three segments, in which nearly all energy assets are covered by long-term power sales contracts. Accordingly, following the asset acquisitions and disposals over the past three years, 96% of Boralex's energy portfolio currently in operation is covered by indexed fixed-price long-term power sales contracts?the cornerstone of the Corporation's development strategy going forward. (in millions of Canadian dollars, except per share data and EBITDA margin)   Three-month periods ended March 31 Net earnings from continuing operations: 2012 2011       Revenues from energy sales 57.5 57.3 EBITDA 33.3 31.2 EBITDA margin 57.9% 54.5% Net earnings from continuing operations* 4.8 3.9   Per share (basic) $0.13 $0.11 Cash flows from operations 21.8 17.5   Per share (basic) $0.58 $0.46 * Attributable to shareholders of Boralex. Boralex ended the first quarter of 2012 with $4.8 million in net earnings from continuing operations attributable to shareholders or $0.13 per share (basic), compared with $3.9 million or $0.11 per share (basic) for the same period of fiscal 2011. Net earnings for the first quarter of 2011 notably included $1.7 million in net gains on the sale of assets, while net earnings for the first quarter of 2012 included $0.5 million in net asset impairment. Excluding these items not related to operations, adjusted net earnings from continuing operations attributable to shareholders surged 141.0%. Cash flows from operations amounted to $21.8 million or $0.58 per share, up 25%. Furthermore, under the terms of the December 2011 sale of the U.S. thermal power stations, the Corporation recognized $2.3 million in after-tax proceeds on the sale of the balance of the RECs generated by these power stations in 2011. "Our first-quarter results show the decisive benefits of the strategic approach we've taken over the past three years to lay the foundation for superior, balanced and sustainable growth. To date, our strategic decisions have enhanced our portfolio asset value and profit margins, generated steadier, more predictable revenue and cash flow streams and reduced our business risk exposures," indicated Patrick Lemaire, Boralex President and CEO. "Lastly, due to the sale of less strategic assets and to Boralex's self-financing capacity, we have approximately $160 million in available cash resources, providing a powerful lever for expansion in our key markets, particularly in the wind power segment. With the recent acquisition of a power sales contract covering a 50 MW wind power project to be developed in the Témiscouata area, 441 MW in additional wind power capacity will be commissioned in Québec by late 2015, of which Boralex owns 246 MW. In addition, we continue to keep a watchful eye on opportunities to acquire advanced-phase development projects in Canada and Europe," concluded Mr. Lemaire. About Boralex Boralex is a power producer whose core business dedicated to the development and the operation of renewable energy power stations. Currently, the Corporation operates an asset base with an installed capacity of nearly 500 MW in Canada, the Northeastern United States and France. Boralex is also committed under power development projects, both independently and with Canadian and European partners, to add approximately 450 MW of power. With more than 200 employees, Boralex is known for its diversified expertise and in-depth experience in four power generation types ? wind, hydroelectric, thermal and 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. Excerpts from the unaudited interim 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, EBITDA margin, cash flows from operations, and cash flows from operations per share 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 Statements of Financial Position (in thousands of Canadian dollars) (unaudited) As at March 31 2012 As at December 31 2011 ASSETS     Cash and cash equivalents 157,417 144,703 Restricted cash 17,528 18,288 Trade and other receivables 39,515 50,500 Inventories 3,492 3,573 Available-for-sale financial asset 2,144 2,208 Prepaid expenses 2,566 2,137 CURRENT ASSETS 222,662 221,409       Property, plant and equipment 632,676 643,047 Energy sales contracts 96,000 97,705 Water rights 111,103 111,844 Goodwill 38,063 38,063 Other intangible assets 7,173 5,285 Interest in the Joint Venture 55,014 45,266 Other non-current assets 13,203 14,236 NON-CURRENT ASSETS 953,232 955,446 TOTAL ASSETS 1,175,894 1,176,855 LIABILITIES     Trade and other payables 37,873 34,209 Current portion of debt 23,676 26,659 Current income tax liability 2,216 10,776 Other current financial liabilities 26,025 29,757 CURRENT LIABILITIES 89,790 101,401       Non-current debt 470,440 479,525 Convertible debentures 224,036 223,347 Deferred income tax liability 29,624 26,031 Other non-current financial liabilities 15,373 14,273 Other non-current liabilities 3,918 3,400 NON-CURRENT LIABILITIES 743,391 746,576 TOTAL LIABILITIES 833,181 847,977 EQUITY     Equity attributable to shareholders 335,419 321,764 Non-controlling interests 7,294 7,114 TOTAL EQUITY 342,713 328,878 TOTAL LIABILITIES AND EQUITY 1,175,894 1,176,855 Consolidated Statements of Earnings   Three-month periods ended March 31 (in thousands of Canadian dollars, except per share amounts) (unaudited) 2012 2011       REVENUES     Revenues from energy sales 57,451 57,266 Other income 150 152   57,601 57,418       COSTS AND OTHER EXPENSES     Operating expenses 19,464 21,331 Administrative 4,167 3,974 Development 671 884 Amortization 13,935 13,851 Other gains - (2,377) Impairment of property, plant and equipment and intangible assets 823 -   39,060 37,663       OPERATING INCOME 18,541 19,755       Financing costs 12,103 11,975 Foreign exchange loss 121 1,537 Net loss (gain) on financial instruments (337) 313       EARNINGS BEFORE THE FOLLOWING ITEMS 6,654 5,930       Share in earnings of the Joint Venture (43) - Income tax expense 1,759 1,971       NET EARNINGS FROM CONTINUING OPERATIONS 4,938 3,959 Net earnings from discontinued operations 2,323 3,108 NET EARNINGS 7,261 7,067       NET EARNINGS ATTRIBUTABLE TO:       Shareholders of Boralex 7,149 7,011   Non-controlling interests 112 56 NET EARNINGS 7,261 7,067       NET EARNINGS ATTRIBUTABLE TO SHAREHOLDERS OF BORALEX:       Continuing operations 4,826 3,903   Discontinued operations 2,323 3,108   7,149 7,011       BASIC NET EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF BORALEX:       Continuing operations $0.13 $0.11   Discontinued operations $0.06 $0.08   $0.19 $0.19 DILUTED NET EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF BORALEX:       Continuing operations $0.12 $0.10   Discontinued operations $0.06 $0.08   $0.18 $0.18 Consolidated Statements of Comprehensive Income     Three-month periods ended March 31 (in thousands of Canadian dollars) (unaudited) 2012 2011 NET EARNINGS 7,261 7,067 OTHER COMPREHENSIVE INCOME (LOSS)     Translation adjustments       Unrealized foreign exchange gain (loss) on translation of financial statements of self-sustaining foreign operations (1,385) 347 Cash flow hedges       Change in fair value of financial instruments (1,548) 1,042   Hedging items realized and recognized in net earnings 4,139 1,093   Hedging items realized and recognized in statement of financial position - 120   Taxes (413) (688) Cash flow hedges - Joint Venture       Change in fair value of financial instruments 7,762 -   Taxes (2,064) - Available-for-sale financial asset       Change in fair value of an available-for-sale financial asset (64) 1,378   Items realized and recognized in net earnings - (624) Discontinued operations - (2,021) Total other comprehensive income 6,427 647 COMPREHENSIVE INCOME 13,688 7,714 COMPREHENSIVE INCOME ATTRIBUTABLE TO:       Shareholders of Boralex 13,600 6,752   Non-controlling shareholders 88 962 COMPREHENSIVE INCOME 13,688 7,714 COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREHOLDERS OF BORALEX       Continuing operations 11,277 5,665   Discontinued operations 2,323 1,087   13,600 6,752 Consolidated Statements of Changes in Equity                 Three-month period ended March 31       2012   Equity attributable to shareholders     (in thousands of Canadian dollars) (unaudited) Capital stock Equity component of convertible debentures Contributed surplus Retained earnings Other comprehensive loss Total Non-controlling interests Total equity Balance as at January 1, 2012 222,758 14,379 6,106 144,501 (65,980) 321,764 7,114 328,878                   Net earnings - - - 7,149 - 7,149 112 7,261 Other comprehensive income (loss) - - - - 6,451 6,451 (24) 6,427 Comprehensive income - - - 7,149 6,451 13,600 88 13,688                   Conversion of convertible debentures 5 - - - - 5 - 5 Stock option expense - - 50 - - 50 - 50 Contribution of non-controlling interest - - - - - - 92 92 Balance as at March 31, 2012 222,763 14,379 6,156 151,650 (59,529) 335,419 7,294 342,713                                   Three-month period ended March 31       2011   Equity attributable to shareholders     (in thousands of Canadian dollars) (unaudited) Capital stock Equity component of convertible debentures Contributed surplus Retained earnings Other comprehensive loss Total Non-controlling interests Total equity Balance as at January 1, 2011 222,853 14,488 5,028 141,693 (24,705) 359,357 8,332 367,689                   Net earnings - - - 7,011 - 7,011 56 7,067 Other comprehensive income (loss) - - - - (259) (259) 906 647 Comprehensive income (loss) - - - 7,011 (259) 6,752 962 7,714                   Conversion of convertible debentures 17 - - - - 17 - 17 Stock option expense - - 161 - - 161 - 161 Balance as at March 31, 2011 222,870 14,488 5,189 148,704 (24,964) 366,287 9,294 375,581 Consolidated Statements of Cash Flows   Three-month periods ended March 31 (in thousands of Canadian dollars) (unaudited) 2012 2011 Net earnings attributable to shareholders of Boralex 7,149 7,011 Less: Net earnings from discontinued operations 2,323 3,108 Net earnings from continuing operations attributable to shareholders of Boralex 4,826 3,903 Financing costs 12,103 11,975 Interest paid (10,354) (12,402) Income tax expense 1,759 1,971 Income taxes paid (1,696) (1,441) Non-cash items in earnings:       Amortization 13,935 13,851   Other gains - (2,377)   Impairment of property, plant and equipment and intangible assets 823 -   Net loss (gain) on financial instruments (337) 313   Share in earnings of the Joint Venture (43) -   Other 833 1,660   21,849 17,453 Change in non-cash items related to operating activities 12,691 15,170 NET CASH FLOWS RELATED TO OPERATING ACTIVITIES 34,540 32,623       Additions to property, plant and equipment (1,495) (10,498) Change in restricted cash 760 9,412 Increase in interest in the Joint Venture (1,858) - Development projects (1,010) (593) Other 68 47 NET CASH FLOWS RELATED TO INVESTING ACTIVITIES (3,535) (1,632)       Decrease in bank loans and overdraft - (201) Net increase in non-current debt - 11,737 Repayments on non-current debt (12,076) (12,061) Other 12 - NET CASH FLOWS RELATED TO FINANCING ACTIVITIES (12,064) (525) Cash from discontinued operations (5,713) 7,486 TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS (514) 666 NET INCREASE IN CASH AND CASH EQUIVALENTS 12,714 38,618 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 144,703 92,650 CASH AND CASH EQUIVALENTS - END OF PERIOD 157,417 131,268 Segmented Information The Corporation's power stations are grouped into four distinct operating segments?wind, hydroelectric, thermal and solar power. The Corporation operates under one reportable segment: power generation. The classification of these operating segments is based on the different cost structures relating to each of the four types of power stations. The same accounting rules are used for segmented information as apply to the consolidated accounts. Following the sale of its five U.S. wood-residue thermal power stations, the Corporation redefined its operating segments. Previously, operations were grouped into five distinct segments. Wood-residue thermal power stations and natural gas thermal power stations have been combined in a single segment called Thermal Power Stations. The comparative data have been adjusted to reflect this change. In addition, the data related to discontinued operations have been excluded as they are reported on a separate line in the Consolidated Statement of Earnings. The operating segments are presented according to the same criteria used to prepare the internal report submitted to the chief operating decision-maker, who allocates resources and assesses operating segment performance. The chief operating decision-maker is considered to be the President and Chief Executive Officer, who assesses segment performance based on production of electricity, revenues from energy sales, EBITDA and cash flows from operations. EBITDA does not have a standardized meaning under IFRS; accordingly, it 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, which are IFRS measures. EBITDA is reconciled to the most comparable IFRS measure, namely, net earnings attributable to shareholders of Boralex, in the following table:   Three-month periods ended March 31 (in thousands of Canadian dollars) (unaudited) 2012 2011 Net earnings attributable to shareholders of Boralex 7,149 7,011 Net earnings from discontinued operations (2,323) (3,108) Non-controlling interests 112 56 Income tax expense 1,759 1,971 Net loss (gain) on financial instruments (337) 313 Foreign exchange loss 121 1,537 Financing costs 12,103 11,975 Impairment of property, plant and equipment and intangible assets 823 - Other gains - (2,377) Amortization 13,935 13,851 EBITDA 33,342 31,229 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-month periods ended March 31 (in thousands of Canadian dollars) (unaudited) 2012 2011 Net cash flows related to operating activities 34,540 32,623 Less:     Change in non cash items related to operating activities 12,691 15,170 CASH FLOWS FROM OPERATIONS 21,849 17,453 Information by Operating Segment   Three-month periods ended March 31 (in thousands of Canadian dollars, unless otherwise specified) (unaudited) 2012 2011 Power production (MWh)     Wind power stations 172,405 152,570 Hydroelectric power stations 163,095 145,004 Thermal power stations 118,323 175,046 Solar power station 1,329 -   455,152 472,620 Revenues from energy sales     Wind power stations 20,647 18,273 Hydroelectric power stations 13,986 12,732 Thermal power stations 22,242 26,261 Solar power station 576 -   57,451 57,266 EBITDA     Wind power stations 16,934 15,066 Hydroelectric power stations 10,644 9,076 Thermal power stations 8,395 11,532 Solar power station 495 - Corporate and eliminations (3,126) (4,445)   33,342 31,229 Additions to property, plant and equipment     Wind power stations 347 8,119 Hydroelectric power stations 189 174 Thermal power stations 66 1,159 Solar power station 692 951 Corporate and eliminations 201 95   1,495 10,498       As at March 31 As at December 31 (in thousands of Canadian dollars) (unaudited) 2012 2011 Total assets     Wind power stations 535,120 528,521 Hydroelectric power stations 366,784 366,099 Thermal power stations 101,758 101,683 Solar power station 19,593 23,586 Corporate 152,639 156,966   1,175,894 1,176,855 Total liabilities     Wind power stations 386,466 392,611 Hydroelectric power stations 142,438 143,439 Thermal power stations 32,951 29,581 Solar power station 17,083 21,043 Corporate 254,243 261,303   833,181 847,977 Information by Geographic Segment   Three-month periods ended March 31 (in thousands of Canadian dollars, unless otherwise specified) (unaudited) 2012 2011 Power production (MWh)     Canada 226,953 266,747 United States 113,472 100,035 France 114,727 105,838   455,152 472,620 Revenues from energy sales     Canada 31,170 33,594 United States 8,403 7,786 France 17,878 15,886   57,451 57,266 EBITDA     Canada 17,327 17,091 United States 6,646 5,698 France 9,369 8,440   33,342 31,229 Additions to property, plant and equipment     Canada 365 6,962 United States 85 170 France 1,045 3,366   1,495 10,498       As at March 31 As at December 31 (in thousands of Canadian dollars) (unaudited) 2012 2011 Total assets     Canada 694,011 679,354 United States 200,573 209,003 France 281,310 288,498   1,175,894 1,176,855 Non-current assets     Canada 548,433 543,319 United States 151,782 156,631 France 253,017 255,496   953,232 955,446 Total liabilities     Canada 487,353 483,731 United States 111,980 122,827 France 233,848 241,419   833,181 847,977   SOURCE BORALEX INC.For further information: <p> <b>Media</b><br/> Ms. Andréan Gagné<br/> Advisor, Communications<br/> Boralex Inc.<br/> 514-985-1353<br/> <a href="mailto:andrean.gagne@boralex.com">andrean.gagne@boralex.com </a> </p> <p> <b>Investors</b><br/> Mr. Marc Jasmin<br/> Boralex Inc.<br/> 514-284-9868<br/> <a href="mailto:marc.jasmin@boralex.com">marc.jasmin@boralex.com</a><br/> <br/> </p>