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Press release from Marketwire

Brookfield Renewable Reports Strong Q2 2013 Results

Thursday, August 08, 2013

Brookfield Renewable Reports Strong Q2 2013 Results

08:00 EDT Thursday, August 08, 2013

HAMILTON, BERMUDA--(Marketwired - Aug. 8, 2013) - Brookfield Renewable Energy Partners L.P. (TSX:BEP.UN)(NYSE:BEP) -

Investors, analysts and other interested parties can access Brookfield Renewable's 2013 second quarter results as well as the Letter to Shareholders and Supplemental Results on the web site under the Investor Relations section at www.brookfieldrenewable.com.

The 2013 second quarter results conference call can be accessed via webcast on August 8, 2013 at 9:00 a.m. ET at www.brookfieldrenewable.com or via teleconference at 1-800-319-4610 toll free in North America. For overseas calls please dial 1-604-638-5340, at approximately 8:50 a.m. ET. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 (password: 1557#) until September 8, 2013.

All amounts in U.S. dollars unless stated otherwise.

Brookfield Renewable Energy Partners L.P. (TSX:BEP.UN)(NYSE:BEP) ("Brookfield Renewable") today announced significantly improved results for the three and six months ended June 30, 2013.

"We are very pleased with our results for the second quarter and first half of the year," said Richard Legault, President and CEO of Brookfield Renewable. "Recent acquisitions have met or exceeded expectations and contributed meaningfully to improved generation and cash flows. Moreover, we continue to be very well positioned for growth, with significant upside tied to a strengthening U.S. economy and ultimately, rising energy prices. The current investment environment complements our unique strengths as a renewable energy company and is expected to further support attractive total returns to shareholders over time."

Financial Results
Unaudited Three months ended Six months ended
US$ millions June 30 June 30
(except per unit amounts)
2013 2012 2013 2012
Generation (GWh)
- Total 6,265 4,101 11,800 8,918
- Brookfield Renewable's share 5,403 3,638 10,037 8,091
Revenues $ 484 $ 337 $ 921 $ 763
Adjusted EBITDA(1) $ 357 $ 221 $ 676 $ 539
Funds from operations (FFO)(1) $ 187 $ 87 $ 349 $ 262
FFO per unit(1)(2) $ 0.71 $ 0.33 $ 1.32 $ 0.99
  1. Non-IFRS measure. Refer to "Cautionary Statement Regarding Use of Non-IFRS Measures".
  2. Weighted average LP units, redeemable/exchangeable partnership units held by Brookfield Asset Management and general partnership units totaled 265.2 million.

Review of Operations

Total generation was 6,265 GWh for the three months ended June 30, 2013 compared to the long-term average of 6,171 GWh and to 4,101 GWh for the same period in the prior year. Hydroelectric generation was 1,948 GWh higher than the prior year reflecting new assets which performed strongly and contributed 994 GWh to generation, and a return to long-term average generation in the current quarter relative to the very dry conditions in the same period last year. Reservoir levels on a portfolio basis are in line with long-term average conditions for this time of year.

Generation from wind totaled 737 GWh and was essentially in line with the long-term average. Wind generation increased by 270 GWh year-over-year, reflecting improved wind conditions as well as the acquisition of wind facilities in California.

For the second quarter, Adjusted EBITDA was $357 million as compared to $221 million in Q2 2012, and assets acquired in the last year contributed $45 million. Funds from operations of $187 million or $0.71 per unit was in line with plan as compared with $87 million or $0.33 per unit in the prior year.

For the first half of 2013, funds from operations of $349 million or $1.32 per unit was in line with plan as compared with $262 million or $0.99 per unit in the first six months of 2012.

The tables below summarize generation by segment and region:

Generation (GWh) Variance of Results
For the three months ended June 30 Actual
2013
Actual
2012
LTA
2013
Actual vs.
LTA
Actual vs.
Prior Year
Hydroelectric generation
United States 2,942 1,619 2,829 113 1,323
Canada 1,519 986 1,461 58 533
Brazil (1) 903 811 903 - 92
5,364 3,416 5,193 171 1,948
Wind Energy
United States 459 221 468 (9) 238
Canada 278 246 292 (14) 32
737 467 760 (23) 270
Other 164 218 218 (54) (54)
Total generation (2) 6,265 4,101 6,171 94 2,164
  1. In Brazil, assured generation levels are used as a proxy for long-term average.
  2. Includes 100% of generation from equity-accounted investments.
Generation (GWh) Variance of Results
For the six months ended June 30 Actual
2013
Actual
2012
LTA
2013
Actual vs.
LTA
Actual vs.
Prior Year
Hydroelectric generation
United States 5,503 3,577 5,218 285 1,926
Canada 2,801 2,294 2,657 144 507
Brazil (1) 1,839 1,678 1,839 - 161
10,143 7,549 9,714 429 2,594
Wind Energy
United States 675 311 726 (51 ) 364
Canada 601 614 616 (15 ) (13 )
1,276 925 1,342 (66 ) 351
Other 381 444 440 (59 ) (63 )
Total generation (2) 11,800 8,918 11,496 304 2,882
  1. In Brazil, assured generation levels are used as a proxy for long-term average.
  2. Includes 100% of generation from equity-accounted investments.

Quarterly Highlights

Achievements in the second quarter include:

  • Completed the acquisition and integration of Western Wind Energy Corp., expanding Brookfield Renewable's operating wind portfolio in the attractive California market to 430 MW.
  • Successfully integrated the 360 MW White Pine hydroelectric portfolio in Maine, providing meaningful upside potential from rising energy prices.
  • Enhanced liquidity by $300 million to approximately $1 billion as at the date of this release, reflecting an increase to the corporate credit facility to approximately $1.3 billion, strong operating cash flows and the proceeds of the preferred share issuance in May 2013.
  • Advanced construction of the 45 MW Kokish River hydro project in western Canada which is progressing as planned and is on track for completion in mid-2014.
  • Achieved a listing of shares on the New York Stock Exchange on June 11, 2013, under the symbol BEP, which is expected to enhance Brookfield Renewable's long-term access to capital globally.

Distribution Declaration

The Board of Directors has declared a quarterly distribution in the amount of US$0.3625 per unit, payable on October 31, 2013 to unitholders of record as at the close of business on September 30, 2013. This distribution is consistent with Brookfield Renewable's policy of targeting a long-term, sustainable distribution in the range of 60-70% of FFO and which increases on average by 3% to 5% annually.

The regular quarterly dividends on the Brookfield Renewable Power Preferred Equity Inc. preferred shares have also been declared.

Information on Brookfield Renewable's distributions and preferred share dividends can be found on its website at www.brookfieldrenewable.com under Investor Relations.

Distribution Reinvestment Plan

Brookfield Renewable maintains a Distribution Reinvestment Plan ("DRIP") which allows holders of its limited partnership units who are resident in Canada to acquire additional units by reinvesting all or a portion of their cash distributions without paying commissions. Information on the DRIP, including details on how to enroll, is available on Brookfield Renewable's website at www.brookfieldrenewable.com/DRIP.

Additional Information

The Letter to Shareholders and the Supplemental Results for the period ended June 30, 2013 contain further information on Brookfield Renewable's strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available at www.brookfieldrenewable.com.

Brookfield Renewable Energy Partners (TSX:BEP.UN)( NYSE:BEP) operates one of the largest publicly-traded, pure-play renewable power platforms globally. Its portfolio is primarily hydroelectric and totals approximately 5,900 megawatts of installed capacity. Diversified across 70 river systems and 12 power markets in the United States, Canada and Brazil, the portfolio's output is sold predominantly under long-term contracts and generates enough electricity from renewable resources to power more than three million homes on average each year. With a portfolio of high-quality assets and strong growth prospects, the business is positioned to generate stable, long-term cash flows supporting regular and growing cash distributions to shareholders. For more information, please visit www.brookfieldrenewable.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements and information, within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, "safe harbor" of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations, concerning the business and operations of Brookfield Renewable. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements in this news release include statements regarding the quality of Brookfield Renewable's assets and the resiliency of the cash flow they will generate, Brookfield Renewable's anticipated financial performance, future commissioning of assets, contracted portfolio, technology diversification, acquisition opportunities, expected completion of acquisitions, future energy prices and demand for electricity, economic recovery, the future growth prospects, achieving long term average generation, project development and capital expenditure costs, diversification of shareholder base, energy policies, economic growth, growth potential of renewable asset class and distribution profile of Brookfield Renewable and Brookfield Renewable's access to capital. Forward-looking statements can be identified by the use of words such as "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "believes", "potentially", "tends", "continue", "attempts", "likely", "primarily", "approximately", "endeavours", "pursues", "strives", "seeks", or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information in this news release are based upon reasonable assumptions and expectations, we cannot assure you that such expectations will prove to have been correct. You should not place undue reliance on forward-looking statements and information as such statements and information involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: our limited operating history; the risk that we may be deemed an "investment company" under the Investment Company Act; the fact that we are not subject to the same disclosure requirements as a U.S. domestic issuer; the risk that the effectiveness of our internal controls over financial reporting could have a material effect on our business; changes to hydrology at our hydroelectric stations or in wind conditions at our wind energy facilities; the risk that counterparties to our contracts do not fulfill their obligations, and as our contracts expire, we may not be able to replace them with agreements on similar terms; increases in water rental costs (or similar fees) or changes to the regulation of water supply; volatility in supply and demand in the energy market; our operations are highly regulated and exposed to increased regulation which could result in additional costs; the risk that our concessions and licenses will not be renewed; increases in the cost of operating our plants; our failure to comply with conditions in, or our inability to maintain, governmental permits; equipment failure; dam failures and the costs of repairing such failures; exposure to force majeure events; exposure to uninsurable losses; adverse changes in currency exchange rates; availability and access to interconnection facilities and transmission systems;

health, safety, security and environmental risks; disputes and litigation; our operations could be affected by local communities; losses resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events; general industry risks relating to the North American and Brazilian power market sectors; advances in technology that impair or eliminate the competitive advantage of our projects; newly developed technologies in which we invest not performing as anticipated; labour disruptions and economically unfavourable collective bargaining agreements; our inability to finance our operations due to the status of the capital markets; the operating and financial restrictions imposed on us by our loan, debt and security agreements; changes in our credit ratings; changes to government regulations that provide incentives for renewable energy; our inability to identify and complete sufficient investment opportunities; the growth of our portfolio; our inability to develop existing sites or find new sites suitable for the development of greenfield projects; risks associated with the development of our generating facilities and the various types of arrangements we enter into with communities and joint venture partners; Brookfield Asset Management's election not to source acquisition opportunities for us and our lack of access to all renewable power acquisitions that Brookfield Asset Management identifies; our lack of control over our operations conducted through joint ventures, partnerships and consortium arrangements; our ability to issue equity or debt for future acquisitions and developments will be dependent on capital markets; foreign laws or regulation to which we become subject as a result of future acquisitions in new markets; the departure of some or all of Brookfield's key professionals.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our views as of the date of this news release and should not be relied upon as representing our views as of any date subsequent to August 8, 2013, the date of this news release. While we anticipate that subsequent events and developments may cause our views to change, we disclaim any obligation to update the forward-looking statements, other than as required by applicable law. For further information on these known and unknown risks, please see "Risk Factors" included in our Annual Information Form and Form 20-F.

CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES

This news release contains references to Adjusted EBITDA, funds from operations and net asset value which are not generally accepted accounting measures under IFRS and therefore may differ from definitions of Adjusted EBITDA, funds from operations and net asset value used by other entities. We believe that Adjusted EBITDA, funds from operations and net asset value are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by our operating portfolio. Neither Adjusted EBITDA, funds from operations nor net asset value should be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS.

A reconciliation of Adjusted EBITDA and funds from operations to net income is presented in our Management's Discussion and Analysis and in our interim consolidated financial statements for the second quarter of 2013 at www.brookfieldrenewable.com.

References to Brookfield Renewable are to Brookfield Renewable Energy Partners L.P. together with its subsidiary and operating entities unless the context reflects otherwise.

ADJUSTED EBITDA AND FUNDS FROM OPERATIONS
Three months ended June 30 Six months ended June 30
(MILLIONS, EXCEPT AS NOTED) 2013 2012 2013 2012
Generation (GWh) 6,265 4,101 11,800 8,918
Revenues $ 484 $ 337 $ 921 $ 763
Other income 2 5 4 10
Share of cash earnings from equity-accounted investments 6 4 12 8
Direct operating costs (135 ) (125 ) (261 ) (242 )
Adjusted EBITDA (1) 357 221 676 539
Interest expense - borrowings (106 ) (104 ) (208 ) (214 )
Management service costs (11 ) (8 ) (23 ) (15 )
Current income taxes (8 ) (7 ) (11 ) (13 )
Cash portion of non-controlling interests
Preferred equity (10 ) (4 ) (17 ) (7 )
Participating non-controlling interests - in operating subsidiaries (35 ) (11 ) (68 ) (28 )
Funds from operations (1) $ 187 $ 87 $ 349 $ 262
  1. Non-IFRS measures. See "Cautionary Statement Regarding Use of Non-IFRS Measures".
NET ASSET VALUE
Total Per Share
Jun 30 Dec 31 Jun 30 Dec 31
(MILLIONS, EXCEPT AS NOTED) 2013 2012 2013 2012
Property, plant and equipment, at fair value
Hydroelectric(1) $ 13,532 $ 13,005 $ 51.02 $ 49.04
Wind energy 2,588 2,244 9.76 8.46
Other 67 71 0.25 0.27
16,187 15,320 61.03 57.77
Development assets 398 382 1.50 1.44
Equity-accounted investments 318 344 1.20 1.30
Working capital and other, net 322 149 1.21 0.56
Long-term debt and credit facilities (6,923 ) (6,119 ) (26.10 ) (23.07 )
Participating non-controlling interests - in operating subsidiaries (1,019 ) (1,028 ) (3.84 ) (3.88 )
Preferred equity (804 ) (500 ) (3.03 ) (1.89 )
Net asset value(2) $ 8,479 $ 8,548 $ 31.97 $ 32.23
  1. Includes $37 million of intangible assets (2012: $44 million).
  2. Non-IFRS measure. See "Cautionary Statement Regarding Use of Non-IFRS Measures".

FINANCIAL RESULTS ON A CONSOLIDATED AND PROPORTIONATE BASIS

The following table reflects generation for the three months ended June 30, 2013 on a proportionate and consolidated basis.

Proportionate Third party
interests
Consolidated
Generation (GWh) Wholly-owned
assets
Partially-owned
assets
Equity-accounted
investments
Total
Hydroelectric generation
United States 1,997 383 50 2,430 512 2,942
Canada 1,443 - 38 1,481 38 1,519
Brazil(1) 788 17 23 828 75 903
4,228 400 111 4,739 625 5,364
Wind energy
United States 156 66 - 222 237 459
Canada 278 - - 278 - 278
434 66 - 500 237 737
Other 164 - - 164 - 164
Total generation - 2013 4,826 466 111 5,403 862 6,265
Total generation - 2012 3,252 233 153 3,638 463 4,101
  1. In Brazil, assured energy generation levels are used as a proxy for long-term average.

The following table illustrates our financial results for the three months ended June 30, 2013, including revenues, adjusted EBITDA, and funds from operations, on a proportionate basis, while adjusting for our share from facilities in which we own less than 100%:

Proportionate Third party
interests
Consolidated
(MILLIONS, EXCEPT AS NOTED) Wholly-
owned
assets


Partially-
owned
assets


Equity-
accounted
investments


Total
















Revenues $ 359 $ 64 $ - $ 423 $ 61 $ 484
Other income 2 - - 2 - 2
Share of cash earnings from equity-accounted investments - - 6 6 - 6
Direct operating costs (112 ) (9 ) - (121 ) (14 ) (135 )
Adjusted EBITDA(1) 249 55 6 310 47 357
Interest expense - borrowings (80 ) (14 ) - (94 ) (12 ) (106 )
Management service costs (11 ) - - (11 ) - (11 )
Current income taxes (8 ) - - (8 ) - (8 )
Participating non-controlling interests - in operating subsidiaries - - - - (35 ) (2) (35 )
Preferred equity (10 ) - - (10 ) - (10 )
Funds from operations - 2013(1) $ 140 $ 41 $ 6 $ 187 $ - $ 187
Funds from operations - 2012(1) $ 70 $ 13 $ 4 $ 87 $ - $ 87
  1. Non-IFRS measures. Refer to "Cautionary Statement Regarding Use of Non-IFRS Measures".
  2. Represents third party interests' funds from operations.

The following table reflects generation for the six months ended June 30, 2013 on a proportionate and consolidated basis.

Proportionate Third party
interests
Consolidated
Generation (GWh) Wholly-owned
assets
Partially-owned assets Equity-accounted
investments
Total
Hydroelectric generation
United States 3,536 746 98 4,380 1,123 5,503
Canada 2,579 - 111 2,690 111 2,801
Brazil(1) 1,612 35 43 1,690 149 1,839
7,727 781 252 8,760 1,383 10,143
Wind energy
United States 191 104 - 295 380 675
Canada 601 - - 601 - 601
792 104 - 896 380 1,276
Other 381 - - 381 - 381
Total generation - 2013 8,900 885 252 10,037 1,763 11,800
Total generation - 2012 7,280 536 275 8,091 827 8,918
  1. In Brazil, assured energy generation levels are used as a proxy for long-term average.

The following table illustrates our financial results for the six months ended June 30, 2013, including revenues, adjusted EBITDA, and funds from operations, on a proportionate basis, while adjusting for our share from facilities in which we own less than 100%:

Proportionate Third party
interests
Consolidated
(MILLIONS, EXCEPT AS NOTED) Wholly-
owned
assets
Partially-
owned
assets
Equity-
accounted
investments
Total
Revenues $ 685 $ 119 $ - $ 804 $ 117 $ 921
Other income 4 - - 4 - 4
Share of cash earnings from equity-accounted investments - - 12 12 - 12
Direct operating costs (217 ) (18 ) - (235 ) (26 ) (261 )
Adjusted EBITDA(1) 472 101 12 585 91 676
Interest expense - borrowings (157 ) (28 ) - (185 ) (23 ) (208 )
Management service costs (23 ) - - (23 ) - (23 )
Current income taxes (11 ) - - (11 ) - (11 )
Participating non-controlling interests - in operating subsidiaries - - - - (68 ) (2) (68 )
Preferred equity (17 ) - - (17 ) - (17 )
Funds from operations - 2013(1) $ 264 $ 73 $ 12 $ 349 $ - $ 349
Funds from operations - 2012(1) $ 207 $ 45 $ 10 $ 262 $ - $ 262
  1. Non-IFRS measures. Refer to "Cautionary Statement Regarding Use of Non-IFRS Measures".
  2. Represents third party interests' funds from operations.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
Brookfield Renewable Energy Partners L.P.
Zev Korman
Vice President, Investor and Media Relations
416-359-1955
zev.korman@brookfield.com
www.brookfieldrenewable.com

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