-- Power generated reaches 102% of long-term average for the
quarter and 96% of long-term average for 9 months
-- Production for the quarter 15% below last year's record level,
but 7% higher for 9 months
-- Operating revenues decrease 6% to $47.5M for the quarter, but
increase 15% to $132.4M for 9 months
-- Adjusted EBITDA decreases 8% to $37.0M for the quarter, but
increases 14% to $102.1M for 9 months
LONGUEUIL, QC, Nov. 6, 2012 /CNW Telbec/ - Innergex Renewable Energy Inc.
(TSX:INE) ("Innergex" or the "Corporation") today released its operating and
financial results for the third quarter ended September30, 2012.
"While hydrology and wind conditions were good, production levels could not
match the record levels achieved during the third quarter last year" stated
Michel Letellier, President and Chief Executive Officer of the Corporation.
"Hydrology, wind, and solar radiation conditions are among the few variables
the Corporation cannot control. However, the diversification of our assets
across geographic markets and sources of energy should enable our operating
performance year after year to continue to track our expected long-term
average production level" added Mr. Letellier.
Amounts shown are in thousands of Canadian dollars except as noted otherwise.
Three months Nine months
For the periods ended 2012 2011 2012 2011
Power generated (MWh) 564,617 666,009 1,606,825 1,501,506
Long-term average (MWh) 552,852 508,301 1,667,619 1,419,399
Operating revenues 47,549 50,465 132,353 115,126
Adjusted EBITDA(1) 37,006 40,098 102,084 89,440
Net loss (728) (21,598) (4,788) (22,702)
Net loss, $ per share (0.01) (0.34) (0.04) (0.41)
(1) Adjusted EBITDA is defined as operating revenues less operating
expenses, general and administrative expenses and prospective
Third Quarter Results
Electricity production of 564.6GWh was just slightly greater than the
long-term average, due mainly to favourable wind conditions in Quebec and to
better than average hydrologic conditions in British Columbia and the United
States, which were offset by lower than anticipated hydrologic conditions in
Quebec and Ontario. The Stardale solar farm performed above its expected
Operating revenues and Adjusted EBITDA decreased by 6% and 8%, respectively
for the quarter, due mainly to lower production at the hydroelectric
facilities compared to last year's record level; this was partly offset by
higher production at all wind farms, and by additional revenues from the
addition of the Stardale solar farm, the Montagne Sèche wind farm, and Phase
I of the Gros-Morne wind farm.
The favourable variation in net loss for the quarter is attributable mainly to
an unrealized net gain on derivative financial instruments of $9.6 million,
compared to an unrealized net loss of $40.5 million in 2011. The net loss for
the quarter also reflects a realized loss on derivative financial instruments
of $14.1 million related to the settlement of the Kwoiek Creek bond forwards.
This loss is the result of a decrease in benchmark interest rates between the
date the bond forwards were entered into and the settlement date, and is
compensated by a lower fixed rate on the 39-year term loan for the Kwoiek
Creek project. Bond forwards served to protect the economic value of the
project until financing was put in place. Excluding these items and the
related deferred income tax recoveries, earnings for the quarter would have
been $2.7million (compared to earnings of $8.0 million in 2011).
For the nine-month period ended September30, 2012, electricity production
reached 1,607GWh, or 96% of the long-term average of 1,668GWh, due mainly
to low water flows at all Ontario facilities and at most of the Quebec and
British Columbia facilities. While wind conditions were better than
anticipated at most wind farms, electricity produced from wind was affected by
lower-than-expected wind conditions at Carleton, as well as required repairs
at Gros-Morne during the first quarter. The United States facility and the
Stardale solar farm performed above their long-term average.
For the nine-month period ended September30, 2012, operating revenues and
Adjusted EBITDA increased 15% and 14%, respectively, due mainly to the
additional revenues from the Stardale solar farm, the Montagne Sèche wind
farm, and PhaseI of the Gros-Morne wind farm. The addition of six operating
facilities as part of the acquisition of Cloudworks Energy Inc. in April 2011
also explains these increases.
The favourable variation in net loss for the nine-month period is attributable
mainly to an unrealized net gain on derivative financial instruments of $2.6
million, compared to an unrealized net loss of $41.9 million in 2011. The net
loss for the period also reflects a realized loss on derivative financial
instruments of $14.1 million related to the settlement of the Kwoiek Creek
bond forwards, as explained above. Excluding these items and the related
deferred income tax recoveries, earnings for the nine-month period would
have been $3.8million (compared to earnings of $7.9 million in 2011).
Cash Flows from Operating Activities
For the nine-month period ended September 30, 2012, cash flows generated by
operating activities totalled $49.4 million ($33.6million in 2011). This
increase is due primarily to a $26.8 million increase in changes in non-cash
operating working capital items and a $12.6 million increase in Adjusted
EBITDA, partly offset by a $12.0 million increase in interest paid and a
$14.1million realized loss on derivative financial instruments.
Kwoiek Creek Hydroelectric Facility
The construction of this hydroelectric facility began in the last quarter of
2011. Construction is progressing as scheduled and budgeted. By the end of
the third quarter of 2012, the intake diversion channel was completed; the
intake construction and the erection of the powerhouse steel superstructure
were under way; and the transmission line construction and penstock
installation were ongoing. Current activities also include construction of the
fish habitat compensation channel. Construction of this facility is expected
to be completed in the last quarter of 2013.
Last July, the Corporation also secured non-recourse construction and term
project financing of $168.5million for the Kwoiek Creek project. The
financing was arranged with a group of life insurance companies.
Northwest Stave River Hydroelectric Facility
The construction of this hydroelectric facility began in the last quarter of
2011. Construction is progressing as scheduled and budgeted. By the end of the
third quarter of 2012, concrete work at the powerhouse was nearly completed
and the fish habitat compensation construction was completed. The fish habitat
compensation was being tested and revegetated and the penstock installation,
intake, cofferdam, and diversion work were all ongoing and progressing as
planned. Construction of this facility is expected to be completed in the last
quarter of 2013.
Viger-Denonville Wind Farm
In the third quarter of 2012, the Ministère du Développement durable, de
l'Environnement et des Parcs ("MDDEP") confirmed that public hearing would not
be required for the project. As such, Viger-Denonville expects to receive the
government decree in the first quarter of 2013. The notice to proceed was
issued and a purchase order for the procurement of the main power transformer
was also executed during the period. Current activities include selecting the
engineering, procurement and construction contractor. The Corporation expects
to start construction of the Viger-Denonville project in early2013.
Boulder Creek, North Creek, and Upper Lillooet Hydroelectric Facilities
In the third quarter of 2012, RFPs to select the turbines supplier and civil
works contractor were issued. Current activities include review of the
Environmental Assessment Application by federal and provincial governments,
ongoing consultation with stakeholders and applications for obtaining the
relevant permits. The Corporation expects to start construction on the Boulder
Creek and Upper Lillooet projects in 2013 and on the North Creek project in
Tretheway Creek and Big Silver-Shovel Creek Hydroelectric Facilities
Current activities include hydrometric monitoring, environmental studies,
consultation with the various stakeholders, applications for obtaining the
relevant permits and preliminary engineering. An important milestone was
reached when the projects received Environmental Assessment Certificates from
the British Columbia Ministry of Environment and Ministry of Energy, Mines and
Natural Gas on August 20, 2012. The Corporation expects to start construction
on these projects in 2013.
ACQUISITIONS IN PROGRESS
Magpie hydroelectric facility in Quebec
On July 26, 2012, the Corporation announced that it had signed a purchase and
sale agreement to acquire from Hydromega Group of Companies its 70% interest
in the 40.6MW Magpie facility located in the Minganie RCM, in Northeastern
Quebec. Closing procedures are progressing well, albeit slowly, and no
specific closing date can be given at this time. The Corporation is also
working with Hydromega towards completing the other acquisitions pursuant to
the letter of intent that was signed at the same time.
Termination of an Agreement to Acquire a Wind Energy Project in British
On October 1, 2012, the Corporation announced that it had terminated its
agreement to acquire the 77MW Wildmare wind energy project located in
British Columbia, Canada. Despite the efforts of both parties, several
conditions of closing were not met by the prescribed closing date of September
30, 2012. The Corporation considered each of these conditions to be essential
to the successful completion of the project. After careful consideration, the
Corporation decided not to extend the closing date because it strongly
believed that doing so would not change the outcome within an acceptable
period of time.
Official inauguration of the Stardale Solar Farm
On October 4, 2012, Innergex celebrated the inauguration of its Stardale solar
farm during an official ceremony with the Honourable Chris Bentley, Minister
of Energy for the Government of Ontario, Grant Crack, MPP for
Glengarry-Prescott-Russell, and Robert Kirby, Mayor of East Hawkesbury
Closing of the Acquisition of Two Operating Hydroelectric Facilities in
On October 12, 2012, the Corporation announced that it had completed the
previously announced acquisition of the Brown Lake and Miller Creek
run-of-river hydroelectric facilities located in British Columbia, Canada, for
a final purchase price of $68.6million. Brown Lake is a 7.2 MW facility
with an average annual production of 51,800 MWh. The electricity it produces
is sold to BC Hydro under a power purchase agreement which expires in 2016.
The Corporation expects to double the plant's installed capacity to 14.4 MW
and increase its expected average annual production by 27,000 MWh for an
additional investment of approximately $20.0 million. Miller Creek is a 33 MW
facility with an average annual production of 97,900 MWh. The electricity it
produces is sold to BC Hydro under a power purchase agreement which expires in
2023. The Corporation expects to upgrade the penstock and water intake which
should increase the plant's expected average annual production by 4,895 MWh
and reduce operating costs, for an additional investment of approximately $8.5
million. However, this capital expenditure program, which was initially
expected to occur in the fall of 2012, has been postponed to the fall of 2013,
given the longer-than-expected closing process and seasonal constraints.
Dividends to Preferred Shareholders
On November 6, 2012, the Corporation declared a dividend of $0.3125 per Series
A Preferred Share payable on January15,2013, to Series A preferred
shareholders of record at the close of business on December 31, 2012.
Dividends to Common Shareholders
On November 6, 2012, the Corporation declared a dividend of $0.1450 per common
share payable on January15,2013, to common shareholders of record at the
close of business on December 31, 2012.
CONFERENCE CALL REMINDER
The Corporation will hold a conference call tomorrow, Wednesday November 7,
2012 at 10:00 a.m. ET. The third quarter results will be presented by Mr.
Michel Letellier, President and Chief Executive Officer of Innergex and by
Mr.JeanTrudel, Chief Investment Officer and Senior Vice President -
Communications. Investors and financial analysts are invited to access the
conference call by dialing 647427-7450 or 1888231-8191. Media and the
public may also access this conference call, on a listen-only mode. A replay
of the conference call will be available later the same day on the
Corporation's website at www.innergex.com.
About Innergex Renewable Energy Inc.
Innergex Renewable Energy Inc. (TSX: INE) is a leading Canadian independent
renewable power producer. Active since 1990, the Company develops, owns, and
operates run-of-river hydroelectric facilities, wind farms, and solar
photovoltaic farms and carries out its operations in Quebec, Ontario, British
Columbia, and Idaho, USA. Its portfolio of assets currently consists of:
(i)interests in 28 operating facilities with an aggregate net installed
capacity of 577MW (gross 1,031MW), including 22 hydroelectric operating
facilities, five wind farms, and one solar photovoltaic farm; (ii) interests
in eight projects under development or under construction with an aggregate
net installed capacity of 188MW (gross 263MW), for which power purchase
agreements have been secured; and (iii) prospective projects with an aggregate
net capacity totaling 2,904 MW (gross 3,127MW). Innergex Renewable Energy
Inc. is rated BBB- by S&P and BBB (low) by DBRS.
The Corporation's strategy for building shareholder value is to develop or
acquire high-quality facilities generating sustainable cash flows and
providing a high return on invested capital, and to distribute a stable
Non-IFRS Measures Disclaimer
The consolidated financial statements for the three-month and nine-month
periods ended September30, 2012 have been prepared in accordance with
International Financial Reporting Standards ("IFRS").
However, some measures referred to in this news release are not recognized
measures under IFRS, and therefore may not be comparable to those presented by
other issuers. Innergex believes that these indicators are important, as they
provide management and the reader with additional information about its
production and cash generation capabilities, and facilitate the comparison of
results over different periods. Adjusted EBITDA is not a measure recognized by
IFRS and has no standardized meaning prescribed by IFRS. References in this
news release to "Adjusted EBITDA" are to operating revenues less operating
expenses, general and administrative expenses and prospective project
expenses. Investors are cautioned that these non-IFRS measures should not be
construed as an alternative to net income as determined in accordance with
Forward-Looking Information Disclaimer
In order to inform shareholders and potential investors about the
Corporation's future prospects, this news release may contain forward-looking
information within the meaning of securities legislation ("Forward-Looking
Information"). Forward-Looking Information can generally be identified by the
use of words and phrases, such as "about", "approximate", "potential", "may,"
"will," "estimate," "anticipate," "plans," "expects" or "does not expect," "is
expected," "budget," "scheduled," "forecasts," "intends" or "believes," or
variations of such words and phrases that state that certain events will occur.
The Forward-Looking Information includes forward-looking financial information
or financial outlook, within the meaning of securities laws, such as projected
revenues, projected construction costs, or approximate purchase price to
inform investors and shareholders of the potential financial impact of
recently announced acquisitions or expected results; such information may not
be appropriate for other purposes.
Forward-Looking Information represents, as of the date of this news release,
the estimates, forecasts, projections, expectations, or opinions of the
Corporation relating to future events or results. Forward-looking Information
involves known and unknown risks, uncertainties and other important factors,
which may cause the actual results or performance to be materially different
from any future results or performance expressed or implied by the Forward
Looking Information. The material risks and uncertainties which may cause the
actual results and developments to be materially different from the current
expressed expectations in this news release include, without limitation: (i)
execution of strategy; (ii) capital resources; (iii) derivative financial
instruments; (iv) availability of water flows, wind and sun light; (v) failure
to close the recently announced transactions; (vi) construction and design;
(vii) development of new facilities; (viii) project performance; (ix) permits;
* equipment failure; (xi) health, safety and environmental risks; (xii)
interest rate and refinancing risk; (xiii) financial leverage and restrictive
covenants; and (xiv) relationship with public utilities. Although the
Corporation believes that the expectations instigated by the Forward-Looking
Information are based on reasonable and valid hypotheses, there is a risk that
the Forward-looking Information may be incorrect. The reader is cautioned not
to rely unduly on this Forward-Looking Information. The Forward-Looking
Information expressed verbally or in writing, by the Corporation or by a
person acting on its behalf, is expressly qualified by this cautionary
statement. The Corporation does not undertake any obligation to update or
revise any Forward-Looking Information, whether as a result of events or
circumstances occurring after the date hereof, unless required by legislation.
Jean Trudel, MBA Chief Investment Officer and Senior Vice President -
Communications 450 928-2550, ext. 252 firstname.lastname@example.org
Marie-Josée Privyk, CFA Director - Investor Relations 450 928-2550, ext. 222
SOURCE: INNERGEX RENEWABLE ENERGY INC.
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