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Press release from Marketwire

Northland Power Announces 104% Increase in Free Cash Flow Year Over Year

Strong Long Term Outlook Leads to Credit Rating Upgrade

Wednesday, February 19, 2014

Northland Power Announces 104% Increase in Free Cash Flow Year Over Year

20:01 EST Wednesday, February 19, 2014

TORONTO, ONTARIO--(Marketwired - Feb. 19, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OR ITS POSSESSIONS. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Northland Power Inc. ("Northland" or "the Company") (TSX:NPI)(TSX:NPI.PR.A)(TSX:NPI.PR.C)(TSX:NPI.DB.A) -

2013 Highlights:

  • Completed $900 million in construction projects, which will provide future, sustainable cash flows;
  • 104% increase in free cash flow from 2012, even with only a partial year of operation from North Battleford and the ground-mounted solar facilities in 2013;
  • Upgraded credit rating by Standard & Poor's to 'BBB' stable;
  • Advancement of development portfolio, including Gemini, the largest offshore wind farm in the North Sea, provides visibility on Northland's continued growth in value for shareholders; and
  • Successfully raised over $1 billion in project financings.

Fourth Quarter Highlights:

  • 91% increase in quarterly adjusted EBITDA from $43.5 million in 2012 to $83.0 million in 2013, primarily due to contributions from the newly operating North Battleford and ground-mounted solar facilities;
  • 115% increase in quarterly free cash flow over the same period in 2012; from $17.7 million to $38.1 million, commensurate with the higher adjusted EBITDA; and
  • Quarterly payout ratio was 72% of free cash flow (93% excluding the effect of dividends reinvested through the Dividend Reinvestment Plan) compared to 127% in the fourth quarter of 2012.

Northland reported its financial results today for the full year and quarter ended December 31, 2013. The following comments are made with reference to the attached unaudited consolidated financial statements of Northland.

"We are very pleased with our performance in 2013," said John Brace, Chief Executive Officer. "We have demonstrated our world class development capabilities by securing the rights to the largest offshore wind farm in the North Sea with the Gemini project. We have also continued our tradition of engineering and construction excellence by completing both North Battleford and our ground-mounted solar facilities on time and on budget. These results show our team's ability to balance strong growth with excellent financial results, providing continuing dividends to our shareholders today and well into the future. Our financial performance confirms that our business plan is sound; the capital that we have deployed into construction is now achieving the operational results we have promised. With proven success developing projects in Canada, we are well-positioned to expand the focus of our development program to international markets, in order to continue delivering growth while preserving Northland's value for shareholders."

Subsequent Events

Two of the three ground-mounted solar phase II projects, representing 20 MW, reached commercial operations by February 2, 2014. Northland now has a total of 80 MW of ground-mounted solar sites in operation.

On January 8, Northland announced the addition of Sean Durfy to its executive team as President and Chief Development Officer. Mr. Durfy had been a member of Northland's Board of Directors for almost three years. Mr. Durfy is the former President and CEO of WestJet airlines, and was previously President of ENMAX Energy Corporation, an electricity and natural gas company headquartered in Calgary, Alberta. He also held senior roles at Honeywell Limited and TransAlta.

Sam Mantenuto, Northland's current Chief Development Officer has, been appointed Vice Chair and will continue as Chief Operating Officer. John Brace will continue to lead Northland's executive team as Chief Executive Officer.

On January 29, 2014, Northland announced that it has entered into an agreement for the right to acquire an additional 5% interest in Gemini; this would bring Northland's total equity interest to 60%. Gemini is a 600 MW offshore wind project located 85 km off the coast of the Netherlands in the North Sea. Northland's partners in the project include affiliates of Siemens AG, Van Oord Dredging and Marine Contractors BV, and HVC, a Dutch public utility company. The project's total cost is projected to be EUR2.8 billion, and is expected to be financed with a combination of non-recourse project debt, mezzanine financing and equity from the consortium. As further disclosed in investor day materials in September 2013, Northland expects to fund the investment with funds on hand, its corporate facility, and expects to access the capital markets in the form of preferred shares, convertible debentures, subscription receipts, or common shares for approximately $275 million. As always, management's objective is to minimize the amount of dilutive equity raised while prudently maintaining healthy credit metrics.

Gemini is well advanced, and has received commitments for EUR1.25 billion in senior secured construction and term debt from 12 international commercial banks. These commitments are in excess of the amounts the project requires to be funded by the commercial banks. In association with a EUR500 million facility previously announced by the European Investment Bank and loans under negotiation with three European export credit agencies (Denmark's EKF, Germany's Euler Hermes and Belgium's ONDD) for the balance of the project debt, management expects the EUR2.2 billion of senior debt required for Gemini to be fully committed late in the first quarter of 2014 or early in the second quarter of 2014.

Summary of Financial Results

3 Months Ended
Dec. 31
12 Months Ended
Dec. 31
2013 2012 2013 2012
FINANCIAL (in thousands of dollars, except per share and energy unit amounts)
Sales 174,331 93,177 557,238 361,682
Gross profit 113,364 59,984 354,759 230,190
Adjusted EBITDA(1) 82,986 43,462 263,296 178,620
Operating income 60,973 28,598 182,338 114,479
Net income (loss) 22,008 (2,538 ) 167,019 (9,913 )
Free cash flow(1) 38,068 17,733 130,117 63,723
Cash Dividends paid to Common and Class A Shareholders 27,385 22,458 98,908 88,734
Total Dividends declared to Common and Class A Shareholders(2) 35,758 31,232 133,200 123,834
Per Share
Free cash flow 0.29 0.15 1.05 0.55
Dividends declared to Shareholders(2) 0.27 0.27 1.08 1.08
Energy Volumes
Electricity sales volume (megawatt hours) 1,653,355 777,443 4,439,908 3,139,031
(1) See "Non-IFRS measures" for a detailed description.
(2) Total dividends to Common and Class A Shareholders represent cash dividends plus share dividends issued as part of Northland's dividend reinvestment plan.

Full Year 2013 Results

Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA")

Northland's 2013 consolidated adjusted EBITDA of $263.3 million was $84.7 million or 47% higher than the prior year largely due to the inclusion of North Battleford and the Ground-mounted Solar Phase I projects, overall favourable results from Northland's operating facilities, higher performance incentive fees earned from Northland's managed facilities, partially offset by increased corporate management and administration costs.

Free Cash Flow, Payout Ratio and Dividends to Shareholders

Free cash flow for the year of $130.1 million was $66.4 million (104%) higher than in 2012; significant factors increasing and decreasing free cash flow in 2013 are described below.

Factors increasing free cash flow over 2012 were:

  • $86.1 million higher adjusted EBITDA from Northland's operating and managed facilities;
  • $1.6 million increase in other income in 2013 related to the sale of Northland's South Kent wind development project announced in 2011 and a cost reimbursement associated with one of Northland's other early stage development prospects;
  • $2 million decrease in scheduled debt repayments as a result of the full repayment of Kingston's debt in January 2013;
  • $2.1 million favourable variance associated with milestone payments to GE related to Kingston's gas turbine maintenance contract;
  • $5.7 million lower operations-related capital expenditures due to Kingston's planned major outage in 2012; and
  • $1.5 million positive variance related to funds that were set aside in 2012 pending the closing of the British Columbia wind development assets.

Factors offsetting the net increase in free cash flow over 2012 were:

  • $19.9 million net interest expense increase (excluding Northland's managed facilities; Kirkland Lake and Cochrane) primarily due to the inclusion of North Battleford and Ground-mounted Solar Phase I;
  • $6.7 million increase in funds set aside for future major maintenance;
  • $3 million higher net corporate management and administration costs, which included increased development prospecting expenditures; and
  • $3 million increase in preferred share dividends and related taxes due to a full year of the Series 3 Preferred Share dividends in 2013.

For 2013, Northland's dividend payout ratio was 76% of free cash flow 101% (excluding the effect of dividends reinvested through the Dividend Reinvestment Plan (DRIP)) compared to 139% and 191%, respectively in 2012. This payout in excess of free cash flow largely reflects the level of spending on growth initiatives and payments of dividends and interest on capital raised for construction projects for which corresponding cash flows will not be received until the underlying projects are completed.

Net income

Net income for 2013 at $167.0 million was $176.9 million higher than the previous year. This was primarily driven by the consolidation of Kirkland Lake and Cochrane facilities after the acquisition of Canadian Environmental Energy Corporation (CEEC) on April 1, 2013 and the increase in adjusted EBITDA described above and a number of non-cash fair value gains associated with Northland's financial derivative contracts.

Fourth Quarter Results

Adjusted EBITDA

In the fourth quarter of 2013, adjusted EBITDA at $83.0 million increased by $39.5 million as described below.

Thermal Facilities

Gross profit and adjusted EBITDA during the quarter were higher than the same period in 2012 due to the inclusion of results from North Battleford, an additional month of financial results at Kingston (due to a one-month scheduled outage in October 2012), a revenue increase at Iroquois Falls due to a Direct Customer Rate "true-up", and lower gas transportation tolls. Plant operating costs exceeded 2012 largely due to the inclusion of North Battleford and additional GE maintenance costs at Iroquois Falls, partly offset by lower costs at Thorold due to fewer operating hours, and additional maintenance costs in 2012.

Renewable Facilities

Electricity production, revenue and adjusted EBITDA during the quarter exceeded the same period in 2012 due to significantly higher output at all three wind projects combined with the inclusion of results from the Ground-mounted Solar Phase I projects. Plant operating expenses for the quarter exceeded the prior year due to the inclusion of the Ground-mounted Solar Phase I projects and higher contracted maintenance and royalty payments at Jardin, which are tied to production, partially offset by lower costs at Mont Louis due to the expiry of the turbine warranty agreements and replacement with a lower-cost service agreement.

Other Sales

Prior to the CEEC acquisition on April 1, 2013, other sales included management and incentive fees earned from services provided to Cochrane and Kirkland Lake, which decreased $6.8 million from 2012 due to those fees now considered as intercompany and eliminated on consolidation. However, in the calculation of adjusted EBITDA and free cash flow, Northland includes the fees and dividends earned rather than all adjusted EBITDA and free cash flow generated by these entities. Adjusted EBITDA contributed from Cochrane and Kirkland Lake of $5.9 million was $1.2 million lower than 2012 due to lower performance fees from Kirkland Lake.

Corporate Management and Administration Costs

Northland's corporate management and administration costs were $1.4 million lower than the same period in 2012. Increased operational costs attributable to increased headcount and other administrative functions in 2013 were offset by reduced development expenditures in 2013 relative to 2012. Development expenditures in the fourth quarter of 2012 included a $1.7 million write-off of deferred development costs and significant expenditures towards wind and hydro projects in British Columbia and Quebec.

Free Cash Flow, Payout Ratio and Dividends to Shareholders

Fourth-quarter free cash flow at $38.1 million was $20.3 million higher than the same period last year. The factors affecting the quarter were: higher adjusted EBITDA from all existing facilities, the addition of North Battleford and the Ground-mounted Solar Phase I projects, lower non-expansionary capital expenditures, partially offset by lower performance incentive fees from Kirkland Lake, higher net finance costs and increased scheduled debt repayments and restricted cash funding for future major maintenance.

For the three month period ending December 31, 2013, common share and Class A Share dividends declared for the quarter totalled $0.27 per share. This is equivalent to a payout ratio of 72% (93% excluding the effect of dividends reinvested through the Dividend Reinvestment Plan (DRIP)) compared to 127% in the fourth quarter of 2012.

Net Income

Fourth quarter net income of $22.0 million ($24.5 million higher than 2012) was primarily driven by the increase in adjusted EBITDA described above and a number of non-cash fair value gains associated with Northland's financial derivative contracts.

Outlook

Northland actively pursues new power development opportunities that encompass a range of clean technologies, including natural gas, wind, solar and hydro.

During 2013 and through the date of this press release, Northland continued to execute on its strategy of expanding its earlier-stage development pipeline in its targeted traditional Canadian market as well as moving into the United States and other jurisdictions that meet the Company's investment criteria. A number of opportunities in these jurisdictions have been identified and are in addition to several projects Northland already has under development. Northland's approach continues to be one of ensuring the balance between progressing development opportunities which meet the Company's investment criteria, while prudently managing the Company's cost exposure to earlier-stage projects.

In 2014, management expects Northland to generate adjusted EBITDA of approximately $345 to $355 million compared with $263.3 million in 2013, a 31% to 35% increase. This estimate primarily reflects the following expected factors:

  • $22 to $25 million in additional adjusted EBITDA from the McLean's wind project and the Ground-mounted Solar Phase II projects once they reach commercial operations;
  • $55 to $58 million in additional adjusted EBITDA from a full year of North Battleford and the Ground-mounted Solar Phase 1 projects because they were operational for only part of 2013;
  • $4 to $6 million lower adjusted EBITDA from Northland's operating facilities primarily due to Kingston's lower PPA prices as a result of the 2013 decrease in Trans Canada toll rates and higher natural gas costs and operating expenditures at Iroquois Falls and Thorold, respectively;
  • $3 to $5 million higher adjusted EBITDA from additional incentive fees earned from Cochrane, and additional one-time payment from Panda-Brandywine offset by lower performance fees from Kirkland Lake which had lower operating expenses in 2013;
  • $10 million higher adjusted EBITDA from investment income on the Gemini junior debt facility in which Northland intends to invest at the time the project achieves financial close; and
  • A net reduction in adjusted EBITDA from management and administration and other sales and income of $2 million, because other sales and income are anticipated to be lower and management expects slightly higher corporate management and administration costs.

Management continues to expect adjusted EBITDA of $380 to $400 million in 2015 based on the current completion schedules for Northland's development projects with power contracts.

Northland's 2014 dividend payments, on a total dividend basis, are expected to exceed free cash flow due largely to the level of spending on growth initiatives and payments of dividends and interest on capital raised for construction projects for which corresponding cash flows will not be received until the projects for which the capital is raised are completed. For 2014, management expects the cash dividends to be 75% to 85% of free cash flow including the impact of reinvested dividends through the DRIP, and 105% to 120% of free cash flow excluding the impact of reinvested dividends through the DRIP (compared with 76% and 101%, respectively, in 2013). Prior to its investment in Gemini, management expected that the payout ratio would drop below 100% in 2014 (including the impact of reinvested dividends through the DRIP), based on the successful conclusion of a period of significant growth and capital expenditures for Northland. Due to the significant capital costs for Northland's investment in Gemini, additional corporate capital will be required in 2014 to fund the project and as a result, the payout ratio may exceed 100% until Gemini is completed in 2017. Northland has sufficient liquidity to bridge the payout of the current dividend in excess of free cash flow during this period. Management expects the payout ratio during Gemini's construction to be significantly lower than during the growth period experienced by Northland from 2009 to 2013.

The 2014 payout ratio reflects the higher forecasted adjusted EBITDA as described previously, along with the following expected changes in free cash flows and dividend payments:

  • $10 to $15 million in additional free cash flow from the McLean's and Ground-mounted Solar Phase II projects;
  • $15 to $20 million in additional free cash flow from North Battleford and Ground-mounted Solar Phase 1 projects because they were operational for only part of 2013;
  • $5 to $10 million lower free cash flow from the current operating facilities due to lower adjusted EBITDA as described previously, combined with higher reserve funding and capital expenditures;
  • $3 to $5 million higher free cash flow from Cochrane and Panda-Brandywine offset by Kirkland Lake as noted above;
  • $11 to $12 million lower free cash flow from interest expense on the Gemini term loan facility entered into at the time the project achieves financial close as further disclosed in Northland's investor day materials in September 2013;
  • An increase in cash and share dividends as a result of the additional equity investment for Gemini and recognizing a full year of all Replacement Rights, Class B and C Shares and LTIPs from North Battleford and the Ground-mounted Solar Phase 1 projects reaching commercial operations; and
  • Other items, including higher corporate and interest costs and renewal fees on the corporate facility that are expected to negatively affect free cash flow up to approximately $4 to $5 million.

Northland's Board and management are committed to maintaining the current monthly dividend of $0.09 per share ($1.08 per share on an annual basis). Northland's management and Board have anticipated the impact of growth on the payout ratio and are confident that Northland has adequate access to funds to meet its dividend commitment, including operating cash flows, cash and cash equivalents on hand and, if necessary, use of its line of credit or external financing. Management expects to continue its DRIP to provide an additional source of liquidity.

Non-IFRS Measures

This press release includes references to Northland's free cash flow and adjusted EBITDA (previously reported as EBITDA) which are not measures prescribed by International Financial Reporting Standards (IFRS). Free cash flow and adjusted EBITDA, as presented, may not be comparable to similar measures presented by other companies. These measures should not be considered alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of Northland's results of operations from management's perspective. Management believes that free cash flow and adjusted EBITDA are widely accepted financial indicators used by investors to assess the performance of a company and its ability to generate cash through operations.

Earnings Conference Call

Northland will hold an earnings conference call on February 20 at 10:00 am EST to discuss its 2013 annual financial results. John Brace, Northland's Chief Executive Officer and Paul Bradley, Northland's Chief Financial Officer will discuss the financial results and company developments before opening the call to questions from analysts and members of the media.

Conference call details are as follows:
Date: Thursday, February 20, 2014
Start Time: 10:00 a.m. eastern standard time
Phone Number: Toll free within North America: 1-800-709-0218 or Local: 416-641-6202

For those unable to attend the live call, an audio recording will be available on Northland's website at (www.northlandpower.ca) from the afternoon of February 20 until March 13, 2014.

ABOUT NORTHLAND

Northland is an independent power producer founded in 1987, and publicly traded since 1997. Northland develops, builds, owns and operates facilities that produce 'clean' (natural gas) and 'green' (wind, solar, and hydro) energy, providing sustainable long-term value to shareholders, stakeholders, and host communities.

The Company owns or has a net economic interest in 1,349 MW of operating generating capacity, with an additional 110 MW (80 MW net to Northland) of generating capacity currently in construction, and another 150 MW (79 MW net to Northland) of wind, solar and run-of-river hydro projects with awarded power contracts. In addition, Northland has acquired the rights to a majority equity stake in Gemini. Northland's cash flows are diversified over five geographically separate regions and regulatory jurisdictions in Canada, Europe and the United States.

Northland's common shares, Series 1 and Series 3 preferred shares and convertible debentures trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A, NPI.PR.C and NPI.DB.A, respectively.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements which are provided for the purpose of presenting information about management's current expectations and plans. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects," "anticipates," "plans," "believes," "estimates," "intends," "targets," "projects," "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could." These statements may include, without limitation, statements regarding future adjusted EBITDA, free cash flows, dividend payment and dividend payout ratios, the construction, completion, attainment of commercial operations, cost and output of development projects, plans for raising capital, and the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. These statements are based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, management's current plans, its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include, but are not limited to, construction risks, counterparty risks, operational risks, foreign exchange rates, regulatory risks, maritime risks for construction and operation, and the variability of revenues from generating facilities powered by intermittent renewable resources and the other factors described in the "Risks and Uncertainties" section of Northland's 2012 Annual Report and Annual Information Form, both of which can be found at www.sedar.com under Northland's profile and on Northland's website www.northlandpower.ca. Northland's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur.

The forward-looking statements contained in this release are based on assumptions that were considered reasonable on February 19, 2014. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

NORTHLAND POWER INC.
Consolidated Balance Sheets
(unaudited, stated in thousands of Canadian dollars)
ASSETS
Dec. 31, 2013 Dec. 31, 2012
Current
Cash and cash equivalents 138,460 31,715
Restricted cash 74,365 27,285
Trade and other receivables 124,606 125,816
Inventories 12,793 7,468
Prepayments 7,595 11,169
Investment in Panda-Brandywine 3,100 -
Finance lease receivable 2,530 2,989
Total current assets 363,449 206,442
Finance lease receivable 161,235 163,764
Investment in Panda-Brandywine - 3,500
Equity accounted investment 4,941 5,317
Property, plant and equipment 2,094,262 1,717,470
Contracts and other intangible assets 187,121 199,608
Other assets 8,845 -
Goodwill 220,167 222,574
Total assets $ 3,040,020 $ 2,518,675
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness - 1,071
Trade and other payables 84,993 92,882
Interest-bearing loans and borrowings 59,173 39,998
Dividends payable - non-controlling interest 3,460 -
Dividends payable 11,968 10,430
Total current liabilities 159,594 144,381
Interest-bearing loans and borrowings 1,762,397 1,225,132
Convertible debentures 15,992 26,668
Other liabilities 3,050 2,056
Provisions 16,205 12,437
Deferred income tax liability 83,422 44,890
Derivative financial instruments 46,622 215,566
Liabilities excluding those attributed to shareholders 2,087,282 1,671,130
Convertible shares - 146,429
Liabilities attributed to shareholders - 146,429
Total liabilities 2,087,282 1,817,559
Shareholders' equity
Preferred shares 261,737 262,195
Common shares 1,637,480 964,311
Long-term incentive plan reserve 7,319 9,391
Convertible shares 14,615 499,033
Replacement Rights - 11,098
Accumulated other comprehensive income 204 1,018
Deficit (1,041,872 ) (1,045,930 )
Equity attributable to shareholders 879,483 701,116
Non-controlling interests 73,255 -
Total shareholders' equity 952,738 701,116
Total liabilities and shareholders' equity $ 3,040,020 $ 2,518,675
NORTHLAND POWER INC.
Consolidated Statements of Income (Loss)
(unaudited, stated in thousands of Canadian dollars except per share amounts)
Three Months Ended
Dec. 31,
Twelve Months Ended
Dec. 31,
2013 2012 2013 2012
Sales
Electricity 173,992 82,524 535,206 325,728
Steam, natural gas and other 339 10,653 22,032 35,954
Total sales 174,331 93,177 557,238 361,682
Cost of sales 60,967 33,193 202,479 131,492
Gross profit 113,364 59,984 354,759 230,190
Expenses
Plant operating costs 19,390 10,653 64,235 40,438
Management and administration costs - operations 5,316 3,888 15,620 13,736
Management and administration costs - development 4,332 5,044 17,512 13,714
Depreciation of property, plant and equipment 27,323 15,500 89,879 62,307
56,361 35,085 187,246 130,195
Investment income 523 189 939 355
Finance lease income 3,447 3,510 13,886 14,129
Operating income 60,973 28,598 182,338 114,479
Finance costs 25,529 15,294 84,885 63,966
Equity investment (gain) loss 9 6 (262 ) (312 )
Amortization of contracts and other intangible assets 5,053 4,855 19,930 19,422
Write-off of deferred development costs - 1,661 - 1,661
Impairment of contracts and other intangible assets - 1,684 - 1,684
Impairment of goodwill 2,407 19,269 2,407 19,269
Foreign exchange (gain) (1,932 ) (690 ) (3,787 ) (55 )
Finance (income) (493 ) (215 ) (1,207 ) (815 )
Fair value (gain) loss on derivative contracts 1,696 (13,603 ) (102,072 ) (1,955 )
Fair value (gain) loss on convertible shares - (888 ) (27,834 ) 14,199
Writedown in Panda-Brandywine equity investment 400 2,100 400 2,100
Lease accounting (gain) - (2,964 ) - (2,964 )
Other (income) - - (1,526 ) -
Income (loss) before income taxes 28,304 2,089 211,404 (1,721 )
Provision for (recovery of) income taxes:
Current 2,917 1,448 8,780 4,990
Deferred 3,379 3,179 35,605 3,202
6,296 4,627 44,385 8,192
Net income (loss) for the year 22,008 (2,538 ) 167,019 (9,913 )
Net income (loss) attributable to:
Non-controlling interests 8,111 - 15,885 -
Common shareholders 13,897 (2,538 ) 151,134 (9,913 )
22,008 (2,538 ) 167,019 (9,913 )
Weighted average number of shares outstanding - basic 132,979 120,855 126,719 120,538
Weighted average number of shares outstanding - diluted 132,979 120,855 133,478 120,538
Net gain (loss) per share - basic $ 0.08 $ (0.05 ) $ 1.08 $ (0.18 )
Net gain (loss) per share - diluted $ 0.08 $ (0.05 ) $ 1.03 $ (0.18 )
NORTHLAND POWER INC.
Consolidated Statements of Cash Flows
(unaudited, stated in thousands of Canadian dollars except per share amounts)
Three Months Ended Dec. 31, Twelve Months Ended Dec. 31,
2013 2012 2013 2012
Operating activities
Net income (loss) for the year 22,008 (2,538 ) 167,019 (9,913 )
Items not involving cash or operating activities:
Depreciation of property, plant and equipment 27,323 15,500 89,879 62,307
Amortization of contracts and other intangible assets 5,053 4,855 19,930 19,422
Write-off and impairment of property, plant and equipment, intangible assets and goodwill 2,407 22,614 2,407 22,614
Writedown in Panda-Brandywine equity investment 400 2,100 400 2,100
Finance costs, net 24,473 19,187 78,402 64,118
Fair value (gain) loss on derivative contracts 1,696 (13,603 ) (102,072 ) (1,955 )
Fair value (gain) loss on convertible shares - (888 ) (27,834 ) 14,199
Finance lease 599 643 2,988 2,606
Lease accounting (gain) - (2,964 ) - (2,964 )
Unrealized foreign exchange (gain) loss (1,864 ) (364 ) (3,620 ) 271
Equity loss (gain), net of distributions 9 6 376 (312 )
Other 931 161 1,548 (1,489 )
Deferred income taxes 3,379 3,179 35,605 3,202
86,414 47,888 265,028 174,206
Net change in non-cash working capital balances related to operating activities (7,930 ) (2,450 ) (7,950 ) (11,808 )
Cash provided by operating activities 78,484 45,438 257,078 162,398
Investing activities
Purchase of property, plant and equipment (59,901 ) (132,088 ) (335,312 ) (303,738 )
Cash reserves (funding) (51,373 ) 18,501 (46,546 ) (17,672 )
Increase in intangible assets (13,541 ) (5,529 ) (84,401 ) (60,705 )
Interest received 493 215 1,207 815
Acquisition of CEEC, net - - 10,865 -
Net change in working capital related to investing activities (29,130 ) 4,824 10,031 7,200
Cash used in investing activities (153,452 ) (114,077 ) (444,156 ) (374,100 )
Financing activities
Proceeds from borrowings 185,486 103,300 462,234 327,617
Net proceeds from bond offerings (528 ) - 816,001 -
Repayment of borrowings (13,384 ) (15,012 ) (719,552 ) (80,360 )
Settlement of interest rate swaps - - (65,409 ) -
Decrease in bank indebtedness (12,000 ) 1,071 (1,071 ) (7,186 )
Issuance of preferred shares - - - 116,037
Interest paid (23,705 ) (18,278 ) (74,857 ) (60,620 )
Dividends to non-controlling interest (1,668 ) - (11,683 ) -
Preferred share dividends (3,469 ) (3,469 ) (13,876 ) (11,484 )
Common and Class A share dividends (27,385 ) (22,458 ) (98,908 ) (88,734 )
Other - - 804 -
Cash provided by financing activities 103,347 45,154 293,683 195,270
Effect of exchange rate differences on cash and cash equivalents 97 40 140 (4 )
Net change in cash and cash equivalents during the year 28,476 (23,445 ) 106,745 (16,436 )
Cash and cash equivalents, beginning of year 109,984 55,160 31,715 48,151
Cash and cash equivalents, end of year 138,460 31,715 138,460 31,715
PER SHARE
Dividends declared to shareholders $ 0.27 $ 0.27 $ 1.08 $ 1.08
NORTHLAND POWER INC.
FREE CASH FLOW AND DIVIDENDS TO SHAREHOLDERS
(stated in thousands of Canadian dollars except per share amounts)
Three Months ended
Dec. 31,
Twelve Months ended
Dec. 31,
2013 2012 2013 2012
Cash provided by operating activities 78,484 45,438 257,078 162,398
Northland adjustments:
Net change in non-cash working capital balances related to operations 7,930 2,450 7,950 11,808
Capital expenditures, net-non-expansionary (863 ) (5,140 ) (1,339 ) (6,281 )
Interest paid, net (23,212 ) (18,063 ) (73,650 ) (59,805 )
Scheduled principal repayments on term loans (11,866 ) (15,012 ) (30,467 ) (34,720 )
Funds utilized (set aside) for quarterly scheduled principal repayments (607 ) 9,653 (607 ) 1,669
Restricted cash utilization (funding) for major maintenance (3,766 ) 2,731 (4,716 ) 1,986
Write-off of deferred development costs - (1,661 ) - (1,661 )
Consolidation of managed facilities (4,621 ) - (10,899 ) -
Equity accounting 58 56 (107 ) 563
Funds set aside for asset purchase - 750 750 (750 )
Preferred share dividends (3,469 ) (3,469 ) (13,876 ) (11,484 )
Free cash flow 38,068 17,733 130,117 63,723
Cash Dividends paid to common and Class A shareholders 27,385 22,458 98,908 88,734
Free cash flow payout ratio 72 % 127 % 76 % 139 %
Total Dividends paid to common and Class A shareholders 35,486 31,138 131,553 121,551
Free cash flow payout ratio 93 % 176 % 101 % 191 %
Free cash flow payout ratio since inception 105 % 105 %
Average number of shares - basic (thousands of share) 132,612 115,288 123,482 115,058
Average number of shares - fully diluted (thousands of shares) 132,612 115,288 123,482 115,058
Per share ($/share)
Free cash flow - basic 0.29 0.15 1.05 0.55
Free cash flow - fully diluted 0.29 0.15 1.05 0.55

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
Northland Power Inc.
Barb Bokla
Manager, Investor Relations
647-288-1438


Northland Power Inc.
Adam Beaumont
Director of Finance
647-288-1929
(416) 962-6266 (FAX)
investorrelations@northlandpower.ca
www.northlandpower.ca

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