Northland Power Delivers 43% Increase in Second Quarter Free Cash Flow

Northland Power Delivers 43% Increase in Second Quarter Free Cash Flow 
FOR: Northland Power Inc. 
AUGUST 5, 2014 
Northland Power Delivers 43% Increase in Second Quarter Free Cash Flow 
Company achieves strong results in the quarter while continuing to expand
portfolio of operating assets 
TORONTO, ONTARIO--(Marketwired - Aug. 5, 2014) -  
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may constitute a violation of U.S. securities law.  
Northland Power Inc. ("Northland" or "the Company")
Second Quarter Highlights: 
--  63% increase in quarterly earnings before interest, taxes, depreciation 
and amortization ("adjusted EBITDA") from 2013; 
--  43% increase in quarterly free cash flow from 2013; 
--  Decreased quarterly cash payout ratio to 93% of free cash flow from 108% 
in the second quarter of 2013 (126% excluding the effect of the Dividend 
Reinvestment Plan versus 144% in 2013); 
--  Completed the acquisition of a 60% controlling interest in Project 
Gemini, a 600 megawatt (MW) offshore wind project located off the coast 
of the Netherlands in the North Sea;  
--  Subsequent to the acquisition, Project Gemini reached financial 
close, having placed all of the EUR2.8 billion of equity and debt 
commitments required for the project. 
--  Declared commercial operations on Northland's 60 MW (30 MW net interest) 
McLean's wind project located on Manitoulin Island, Ontario, on May 1, 
2014. The project was completed on time and on budget, and has a 20-year 
power purchase agreement (PPA) with the Ontario Power Authority (OPA) 
under Ontario's renewable energy Feed-in-Tariff (FIT) Program; 
--  Commenced construction on the final remaining ground-mounted solar 
projects ("Cluster 4") and completed $240 million of non-recourse 
project financing for the remaining unfinanced solar projects; and 
--  Due to the strong performance in our operations over the first half of 
2014, Northland has increased its adjusted EBITDA forecast range for 
2014 upward by $5 million to $350 million to $360 million. The 
forecasted payout ratio range for 2014 was also favourably adjusted to 
be in the range of 100% to 110% of free cash flow on a total dividend 
Northland reported its financial results today for the quarter ended June 30,
"We delivered excellent financial results in the second quarter while
continuing to grow the megawatts in our operating asset base," said John
Brace, Chief Executive Officer. "Our free cash flow increased by 43% over
the same quarter last year, and adjusted EBITDA increased by 63%. We completed
our 60 MW McLean's wind project on time and on budget, and closed
financing on our five remaining Ontario ground-mounted solar projects. We also
reached financial close on Gemini, representing the largest-ever financing for
an offshore wind farm; the project has now entered construction and is
proceeding well. These results demonstrate Northland's ongoing focus and
strength: delivering long-term value to our shareholders through steady growth
and a commitment to excellence in all that we do. Finally, I want to thank all
the Northland employees for their dedication and effort in helping to achieve
these outstanding results."  
Summary of Financial Results 
Due to Northland acquiring a controlling interest in Project Gemini in May
2014, Northland's consolidated financial results for the three and six
months ending June 30, 2014 include the financial results for the Gemini
3 Months Ended June 30  6 Months Ended June 30  
2014         2013       2014         2013
FINANCIAL (in thousands of                                                  
 dollars, except per share                                                  
 and energy unit amounts)                                                   
  Sales                         169,945      124,400    399,369      230,534
  Gross profit                  103,701       73,779    237,139      141,763
  Adjusted EBITDA(1)             81,452       50,064    183,549      104,629
  Operating income               50,397       32,755    134,406       70,125
  Net income (loss)(2)          (91,845)      80,129    (63,269)     103,746 
Free cash flow(1)                31,369       21,977     88,121       52,395
Cash Dividends paid to                                                      
 Common and Class A                                                         
 Shareholders                    29,281       23,754     56,898       46,436
Total Dividends declared to                                                 
 Common and Class A                                                         
 Shareholders(2)                 39,787       31,718     76,969       63,201 
Per Share                                                                   
  Free cash flow                   0.21         0.19       0.62         0.45
  Dividends declared to                                                      
Shareholders(3)                 0.27         0.27       0.54         0.54
Energy Volumes                                                              
  Electricity sales volume                                                   
(megawatt hours)           1,099,457      733,006  2,590,072    1,711,042
(1) See "Non-IFRS measures" for a detailed description. Adjusted EBITDA was 
previously reported as EBITDA.                                              
(2) Net income (loss) as reported in the financial statements includes non- 
cash fair value gains and losses on derivative contracts that are explained 
(3) Total dividends to Common and Class A Shareholders represent cash       
dividends declared irrespective of whether the dividend is received in cash 
or in shares as part of the DRIP program.                                    
Second Quarter Results 
Northland's consolidated sales, adjusted EBITDA and operating income for
the three months ending June 30, 2014 were significantly higher than the same
period of 2013.  
Adjusted EBITDA  
The $31.4 million increase in adjusted EBITDA from the same period for 2013 was
primarily due to (i) a $32.2 million contribution from a full second quarter of
North Battleford and the Ground-mounted Solar Phase I and II projects, and the
introduction of adjusted EBITDA from McLean's in this quarter; and (ii) a
$5.4 million increase in adjusted EBITDA from Northland's other
facilities, including higher dividends from Panda-Brandywine and interest on
the Gemini subordinated debt. Offsetting these favourable variances were: (i) a
$4 million decrease from Northland's existing thermal and wind facilities,
largely due to scheduled maintenance outages at Kingston and Iroquois Falls and
calm wind conditions at all wind facilities; (ii) a $0.5 million decrease in
performance and management fees from Kirkland Lake and Cochrane; and (iii) $2.3
million of higher corporate costs.  
Free Cash Flow, Payout Ratio and Dividends to Shareholders 
Free cash flow of $31.4 million for the quarter was $9.4 million higher (43%)
than the corresponding period in 2013; significant factors increasing and
decreasing free cash flow for the comparative quarter are described below. 
Factors increasing free cash flow in the second quarter of 2014 over the same
quarter of 2013:  
--  $28.2 million higher adjusted EBITDA from Northland's operating 
facilities, as previously discussed; 
--  $3.4 million increase in adjusted EBITDA generated from Northland's 
managed and other facilities; 
--  $1.3 million positive variance associated with Kingston and North 
Battleford's payments to General Electric related to their gas turbine 
maintenance contracts; 
--  $0.7 million increase in other income related to contingent sales 
proceeds from the 2011 sale of Northland's South Kent wind development 
--  $0.8 million in proceeds from the sale of Northland's wood chipping 
facility; and 
--  $1 million increase in other miscellaneous items.  
Factors decreasing free cash flow in the second quarter of 2014 over the same
quarter of 2013: 
--  $12.8 million net interest expense increase primarily due to the full 
quarter inclusion of North Battleford and Ground-mounted Solar Phase I 
and II debt; 
--  $7.2 million increase in scheduled debt repayments as a result of 
including the full quarter of North Battleford and Ground-mounted Solar 
Phase I projects; 
--  $2.3 million increase in corporate general and administration costs; 
--  $2.6 million of fees related to the renewal and expansion of Northland's 
corporate credit facility; 
--  $0.5 million decrease in management fees from Kirkland Lake and 
Cochrane; and 
--  $0.6 million increase in operations related capital expenditures and 
funds set aside for future major maintenance.  
For the three months ending June 30, 2014, Northland's dividend payout
ratio was 93% of free cash flow or 126% if all dividends were paid out in cash
(i.e. excluding the effect of dividends reinvested through the Dividend
Reinvestment Plan (DRIP)) compared to 108% and 144%, respectively in 2013.  
Net income  
The second quarter net loss exceeded the prior year because the increase in
adjusted EBITDA was more than offset by higher finance costs, a fair value loss
on derivative contracts that include interest rate swaps on the
facilities' non-recourse project debt, the long term financial hedge
related to future natural gas prices at Iroquois Falls and foreign exchange
contracts associated with the Gemini project and the write down of the Panda
investment due to termination of the PPA and the transfer of the
facility's assets to the PPA offtaker, JP Morgan in May 2014.  
A significant portion ($109.2 million) of the second quarter net loss
represents the fair value accounting treatment of Project Gemini's
interest rate swaps that are marked to market and consolidated with
Northland's operating results. Changes in interest and currency rates give
rise to non-cash marked to market adjustments each quarter as a result of
Northland's and Project Gemini's accounting election to forego the
application of hedge accounting. These fair value adjustments are non-cash
items that will reverse over time, and have no impact on the cash obligations
of Northland or its projects. 
During the first six months of 2014 and through the date of this report,
Northland continued to expand its earlier-stage development pipeline, pursuing
opportunities that meet the Company's investment criteria in targeted
markets including North America, Europe and Latin America. We have identified a
number of opportunities in these jurisdictions, in addition to several projects
already under development. Our sustained focus is on purposefully advancing
those development opportunities that align with the Company's business
strategy while prudently managing the cost exposure of earlier-stage projects.  
Due to the strong performance in our operations over the first half of 2014,
management has increased its 2014 adjusted EBITDA forecast to approximately
$350 to $360 million.  
Management continues to expect adjusted EBITDA of $380 to $400 million in 2015
based on the current completion schedules for Northland's 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,
commensurate with EBITDA guidance, management has improved its payout ratio
forecast and expects cash dividends to be 75-85% of free cash flow, including
the impact of reinvested dividends through the DRIP, and 100-110% 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 Project
Gemini, management expected the dividend payout ratio to drop below 100% in
2014 on a total dividend basis, 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 Project Gemini,
additional corporate capital has been raised in 2014 to fund the project, and
as a result the payout ratio may exceed 100% until Project 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 Project Gemini's construction to be significantly
lower than during the growth period experienced by Northland from 2009 to 2013. 
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 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
Earnings Conference Call 
Northland will hold an earnings conference call on August 6th at 10:00 a.m. EDT
to discuss its second quarter 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: Wednesday, August 6, 2014                                             
Start Time: 10:00 a.m. EDT                                                  
Phone Number: Toll free within North America: 1-800-381-7839 or Local: 416- 
For those unable to attend the live call, an audio recording will be available
on Northland's website at ( from the afternoon of
August 6 until August 20, 2014. 
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 1,335 MW of operating
generating capacity, with an additional 650 MW (410 MW net to Northland) of
generating capacity currently in construction, and another 124 MW (66 MW net to
Northland) of projects with awarded power contracts. The above includes
Northland's majority equity stake in Gemini, a 600 MW (360 MW net to
Northland) offshore wind project in the North Sea currently under construction.
Northland's cash flows are diversified over four geographically separate
regions and regulatory jurisdictions in Canada and Europe. 
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, NPI.DB.A and NPI.DB.B, respectively. 
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 plans for raising capital. These statements are based upon certain
material factors or assumptions that were applied in developing the
forward-looking statements, including 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, operational risks, foreign exchange rates, regulatory risks,
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 2013 Annual
Report and Annual Information Form, both of which can be found at
under Northland's profile and on Northland's website 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 August 5, 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.
Barb Bokla
Manager, Investor Relations
Northland Power Inc.
Adam Beaumont
Director of Finance
(416) 962-6266 
INDUSTRY:  Energy and Utilities - Alternative Energy, Energy and Utilities -
Utilities, Energy and Utilities - Pipelines 
-0- Aug/06/2014 00:06 GMT
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