Innergex reports second quarter 2014 results

PROGRESS ON SEVERAL FRONTS 


    --  Production increases 13% for the quarter and reaches 96% of
        long-term average; increases 12% for the six-month period and
        reaches 92% of long-term average
    --  Revenues increase 10% to $69.6 million for the quarter and 8%
        to $107.2 million for the six-month period
    --  Adjusted EBITDA increases 5% to $53.8 million for the quarter
        and 3% to $79.1 million for the six-month period
    --  Projects under development continue to advance as planned

LONGUEUIL, QC, Aug. 7, 2014 /CNW Telbec/ - Innergex Renewable Energy Inc. 
(TSX: INE) ("Innergex" or the "Corporation") releases its operating and 
financial results for the second quarter ended June 30, 2014.

"We are very pleased to have completed the acquisition of the SM-1 
hydroelectric facility in Quebec and to have begun construction activities at 
the Big Silver Creek hydroelectric project in British Columbia. In addition, 
construction activities have intensified at our three other hydroelectric 
projects in BC, and preconstruction activities for the Mesgi'g Ugju's'n wind 
project are progressing well", declares Michel Letellier, President and Chief 
Executive Officer of the Corporation. "We are also very active in preparing 
submissions to the request for proposals for 450 MW of new wind energy in 
Quebec, and submissions for promoter-developer qualification in view of an 
upcoming request for proposals for new wind and solar energy in Ontario", adds 
Mr. Letellier.

OPERATING RESULTS
    Amounts shown
     are in
     thousands of
     Canadian
     dollars
     except as
     noted
     otherwise.         Three months ended June 30                                   Six months ended June 30
    -------------
                   2014        2013                   2014                               2013
                   ----        ----                   ----                               ----
    Power
     generated
     (MWh)                  898,722           792,542                               1,315,931           1,178,711
    Long-term
     average (MWh)          934,874           766,961                               1,433,838           1,228,490
    --------------          -------           -------                               ---------           ---------
    Revenues                 69,649            63,167                                 107,248              98,855
    Adjusted
     EBITDA(1)               53,817            51,260                                  79,146              76,663
    ----------               ------            ------                                  ------              ------
    Net (loss)
     earnings              (14,189)           31,039                                (52,294)             30,861
    Net (loss)
     earnings, $
     per share(2)            (0.10)             0.28                                  (0.40)               0.29
    -------------             -----              ----                                   -----                ----
                                                           Trailing 12-months ended June 30
                                                                                       2014                2013
                                                                                       ----                ----
    Free Cash
     Flow(1)                                                                         48,347              56,803
    Payout
     Ratio(1)                                                                         118 %               96 %
    =========                                                                          ====                 ===
         (1)    Please refer to the "Non-IFRS
                 measures disclaimer" for the
                 definition of Adjusted EBITDA,
                 Free Cash Flow and Payout
                 Ratio.
         (2)    Net (loss) earnings per share
                 is calculated as net (loss)
                 earnings attributable to
                 owners of the parent, less
                 dividends declared on
                 preferred shares, divided by
                 the weighted average number of
                 common shares outstanding.

Electricity Production

During the three-month period ended June 30, 2014, the Corporation's 
facilities produced 899 GWh of electricity or 96% of the long-term average 
(LTA) of 935 GWh. Overall, the hydroelectric facilities produced 98% of their 
LTA, as water flows were above-average in Quebec and the United States, 
below-average in Ontario and only slightly below average in British Columbia. 
Overall, the wind farms produced 82% of their LTA, due to below-average wind 
regimes. The Stardale solar farm produced 113% of its LTA, due to 
above-average solar regimes.

During the six-month period ended June 30, 2014, the Corporation's facilities 
produced 1,316 GWh of electricity or 92% of the LTA of 1,434 GWh. Overall, the 
hydroelectric facilities produced 90% of their LTA, due mainly to 
below-average water flows during the first quarter, especially in British 
Columbia. Overall, the wind farms produced 95% of their LTA, due mainly to 
below-average wind regimes during the second quarter, which more than offset 
above-average wind regimes during the first quarter. The Stardale solar farm 
produced 109% of its LTA, due mainly to above-average solar regimes during the 
second quarter.

Production increases of 13% and 12% for the three- and six-month periods ended 
June 30, 2014 respectively, compared with the same periods last year, are 
attributable mainly to the addition of the Magpie hydroelectric facility 
acquired in July 2013 and the addition of the Kwoiek Creek and Northwest Stave 
River hydroelectric facilities commissioned at the end of 2013.The SM-1 
hydroelectric facility acquired in June 2014 contributed only marginally to 
operating results during the second quarter.

Revenues

For the three-month period ended June 30, 2014, the Corporation recorded 
revenues of $69.6 million, compared with $63.2 million in 2013, corresponding 
to a 10% increase. For the six-month period ended June 30, 2014, the 
Corporation recorded revenues of $107.2 million, compared with $98.9 million 
in 2013, corresponding to an 8% increase. For both the three- and six-month 
periods, the increase in revenues is attributable mainly to the increase in 
production. Furthermore, the smaller increase in revenues is attributable to 
the lower average selling price for electricity, resulting mainly from the 
addition of the Magpie facility, for which the selling price is considerably 
lower than for most other facilities of the Corporation.

Adjusted EBITDA

For the three-month period ended June 30, 2014, the Corporation recorded 
Adjusted EBITDA of $53.8 million, compared with $51.3 million in 2013, 
corresponding to a 5% increase. For the six-month period ended June 30, 2014, 
the Corporation recorded Adjusted EBITDA of $79.1 million, compared with $76.7 
million in 2013, corresponding to a 3% increase. When compared with the 
increases in production and revenues described above, the smaller increase in 
Adjusted EBITDA for the three- and six-month periods is attributable to the 
higher operating, general and administrative and prospective project expenses, 
which are not directly correlated to production levels.

Net Loss

Excluding the unrealized net loss or gain and the realized loss on derivative 
financial instruments and the related income taxes, net earnings for the 
three-month period ended June 30, 2014 would have been $8.5 million, compared 
with net earnings of $11.3 million in 2013, and the net loss for the six-month 
period ended June 30, 2014  would have been $2.8 million, compared with net 
earnings of $8.3 million in 2013, due mainly to production below the LTA, to 
higher operating, general and administrative and prospective project expenses, 
and to higher finance costs attributable to the expensing of interest on the 
Kwoiek Creek and Northwest Stave River loans now that the facilities are in 
operation and to the addition of project-level debt related to the Magpie 
acquisition in July 2013.

For the quarter ended June 30, 2014, the Corporation recorded a net loss of 
$14.2 million (basic and diluted net loss of $0.10 per share), compared with 
net earnings of $31.0 million (basic and diluted net earnings of $0.28 per 
share) in 2013. For the six-month period ended June 30, 2014, the Corporation 
recorded a net loss of $52.3 million (basic and diluted net loss of $0.40 per 
share) in 2013, compared with a net earnings of $30.9 million (basic and 
diluted net earnings of $0.29 per share) for the same period last year. For 
both the three- and six-month periods, the variation is attributable to the 
reasons mentioned above and to an unrealized net loss on derivative financial 
instruments of $29.1 million and $65.2 million respectively, resulting from a 
decrease in benchmark interest rates during these periods, compared with an 
unrealized net gain on derivative financial instruments of $27.3 million and 
$31.2 million respectively, resulting from an increase in benchmark interest 
rates for the same periods last year.

Free Cash Flow and Payout Ratio

For the trailing 12-month period ended June 30, 2014, the Corporation 
generated Free Cash Flow of $48.3 million, compared with $56.8 million for the 
same period last year. This decrease is due mainly to the greater scheduled 
debt principal payments, and to lower cash flows from operating activities, 
before changes in non-cash operating working capital items and realized losses 
on derivative financial instruments, attributable mainly to production being 
below the long-term average over a longer period during the trailing 12-month 
period ended June 30, 2014, compared with the same period last year.

The Payout Ratio represents the dividends declared on common shares divided by 
Free Cash Flow. The Corporation believes it is a measure of its ability to 
sustain current dividends and dividend increases, as well as its ability to 
fund its growth. For the trailing 12-month period ended June 30, 2014, 
dividends declared represented 118% of Free Cash Flow, compared with 96% for 
the same period last year. The negative variation is due mainly to the 
decrease in Free Cash Flow explained above, as well as to the increase in 
dividends declared on common shares resulting from the higher number of shares 
outstanding by virtue of the Dividend Reinvestment Plan and the issuance of 
4,027,051 common shares to pay for the acquisition of the SM-1 hydroelectric 
facility.

DEVELOPMENT PROJECTS

Tretheway Creek hydroelectric project

The construction of this hydroelectric facility began in October 2013. 
Construction of the overflow weir and diversion channel is completed; 
excavation for the powerhouse and switchyard is also completed; installation 
of the penstock, pouring of the concrete for the powerhouse foundation and 
design and procurement of electrical equipment are ongoing.

Upper Lillooet River and Boulder Creek hydroelectric projects (the "Upper 
Lillooet Hydro Project")

The construction of the Upper Lillooet River and Boulder Creek hydroelectric 
facilities began in October 2013. The construction camp is now operational; 
most of the clearing work has been completed for both sites; construction of a 
new 4 km road and bridge has been completed and construction of a 3.6 km 
access road to the Boulder Creek intake is almost complete. Excavation is 
progressing for the Upper Lillooet River intake diversion channel, tunnel and 
powerhouse and for the Boulder Creek tunnel. Clearing for the joint 
transmission line and pole installation are ongoing, in preparation for 
providing temporary power to the construction site by the fall.

Big Silver Creek hydroelectric project

Construction of this hydroelectric facility began in June, upon receipt of the 
Leave to Commence Construction.  Clearing for the intake, penstock and 
powerhouse is completed, construction of a permanent intake access bridge is 
completed, and excavation for the powerhouse, intake and penstock is underway.

Mesgi'g Ugju's'n ("MU") wind project

Negotiations with potential turbine suppliers are ongoing and a selection 
should be made by the fall. Since there has been no request for a public 
hearing pursuant to the province's environmental review process, there will be 
no hearing and the project is expected to receive the government decree by the 
fall. Preconstruction activities are expected to start in late 2014, 
construction is expected to start in 2015 and commercial operation is expected 
to begin at the end of 2016.

Hedging program

For each of these five development projects, a hedging program has for all 
intents and purposes been completed, to fix the interest rate for each 
project's financing through the use of derivative financial instruments until 
closing of the project-level financing; this effectively eliminates these 
projects' exposure to interest rate fluctuations.

DIVIDEND DECLARATION

The following dividends will be paid by the Corporation on October 15, 2014:
            Date of       Record date       Payment date   Dividend per           Dividend per            Dividend per
         announcement                                      common share             Series A                Series C
                                                                                Preferred Share         Preferred Share
    ---                                                                         ---------------         ---------------


    August 7, 2014 September 30, 2014 October 15, 2014              $0.1500                 $0.3125                 
$0.359375 
    ============== ================== ================              =======                 =======                 
========= 
CONFERENCE CALL AND WEBCAST 
The Corporation will hold a conference and webcast call tomorrow, Friday 
August 8, 2014 at 10:00 a.m. EDT. The second quarter results and a mid-year 
review will be presented by Mr. Michel Letellier, President and Chief 
Executive Officer of Innergex and by Mr. Jean Trudel, Chief Investment Officer 
and Senior Vice President - Communications. Investors and financial analysts 
are invited to access the conference call by dialing 647 427-7450 or 1 888 
231-8191, or to access the webcast via the Corporation's website at 
www.innergex.com or at http://cnw.ca/ezA5A. Media and the public may also 
access this conference call and webcast on a listen-only mode.  A replay of 
the conference call and webcast will be available later the same day on the 
Corporation's website. 
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 33 operating facilities with an aggregate net installed capacity 
of 687 MW (gross 1,194 MW), including 26 hydroelectric operating facilities, 
six wind farms, and one solar photovoltaic farm; (ii) interests in five 
projects under development or under construction with an aggregate net 
installed capacity of 210 MW (gross 321 MW), for which power purchase 
agreements have been secured; and (iii) prospective projects with an aggregate 
net capacity totaling 2,900 MW (gross 3,125 MW). Innergex Renewable Energy 
Inc. is rated BBB- by S&P and BB (high) by DBRS (unsolicited rating). 
The Corporation's strategy for building shareholder value is to develop or 
acquire high-quality facilities that generate sustainable cash flows and 
provide a high return on invested capital, and to distribute a stable dividend. 
Non-IFRS measures disclaimer 
The consolidated financial statements for the three- and six-month periods 
ended June 30, 2014 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 the Corporation's production and cash generation 
capabilities, its ability to sustain current dividends and dividend increases 
and its ability to fund its growth. These indicators also facilitate the 
comparison of results over different periods. Adjusted EBITDA, Free Cash Flow 
and Payout Ratio are not measures recognized by IFRS and have no standardized 
meaning prescribed by IFRS. References in this document to "Adjusted EBITDA" 
are to revenues less operating expenses, general and administrative expenses 
and prospective project expenses. References to "Free Cash Flow" are to cash 
flows from operations before changes in non-cash operating working capital 
items, less maintenance capital expenditures net of proceeds from disposals, 
scheduled debt principal payments, preferred share dividends declared and the 
portion of Free Cash Flow attributed to non-controlling interests, plus cash 
receipts by the Harrison Hydro L.P. for the wheeling services to be provided 
to other facilities owned by the Corporation over the course of their PPA, 
plus or minus other elements such as transaction costs related to realized 
acquisitions (which are financed at the time of the acquisition) and realized 
losses or gains on derivative financial instruments used to hedge the interest 
rate on project-level debt. References to "Payout Ratio" are to dividends 
declared on common shares divided by Free Cash Flow. Readers are cautioned 
that Adjusted EBITDA should not be construed as an alternative to net earnings 
and Free Cash Flow should not be construed as an alternative to cash flows 
from operating activities, as determined in accordance with IFRS. 
Forward-looking information disclaimer 
In order to inform readers of the Corporation's future prospects, this press 
release contains forward-looking information within the meaning of applicable 
securities laws ("Forward-Looking Information"). Forward-Looking Information 
can generally be identified by the use of words such as "projected", 
"potential", "expect", "will", "should", "estimate", "forecasts", "intends", 
or other comparable terminology that states that certain events will or will 
not occur. It represents the estimates and expectations of the Corporation 
relating to future results and developments as of the date of this press 
release. It includes future-oriented financial information, such as estimated 
project costs, to inform readers of the potential financial impact of 
development projects. Such information may not be appropriate for other 
purposes. 
Forward-Looking Information in this press release is based on certain key 
expectations and assumptions made by the Corporation. The following table 
outlines Forward-Looking Information contained in this press release, the 
principal assumptions used to derive this information and the principal risks 
and uncertainties that could cause actual results to differ materially from 
this information. 


            Principal Assumptions                                             Principal Risks and Uncertainties
            ---------------------                                             ---------------------------------
    Estimated project
     costs, expected
     obtainment of
     permits, start of
     construction, work
     conducted and start
     of commercial
     operation for
     Development Projects
     or Prospective
     Projects                     Performance of counterparties, such as the
                                  EPC contractors
    For each development          Delays and cost overruns in the design and construction
     project, the                  financing costs,
     Corporation provides          which are eventually
     an estimate of                adjusted for
     project costs based           projected costs
     on its extensive              provided by the
     experience as a               engineering,
     developer, directly           procurement and
     related incremental           construction (EPC)
     internal costs, site          contractor retained
     acquisition costs and
                                  of projects
    The Corporation               Obtainment of permits
     provides indications          as a developer.
     regarding scheduling
     and construction
     progress for its
     development projects
     and indications
     regarding its
     Prospective Projects,
     based on its
     extensive experience
                                  Equipment supply
                                  Interest rate fluctuations and availability of financing
                                  Relationships with stakeholders
                                  Regulatory and political risks
                                  Higher-than-expected inflation
    ---                           ------------------------------

The material risks and uncertainties that may cause actual results and 
developments to be materially different from current expressed Forward-Looking 
Information are referred to in the Corporation's Annual Information Form in 
the "Risk Factors" section and include, without limitation: the ability of the 
Corporation to execute its strategy for building shareholder value; its 
ability to raise additional capital and the state of capital markets; 
liquidity risks related to derivative financial instruments; variability in 
hydrology, wind regimes and solar irradiation; delays and cost overruns in the 
design and construction of projects; uncertainty surrounding the development 
of new facilities; variability of installation performance and related 
penalties; the ability to secure new power purchase agreements or to renew 
existing ones; and the ability to realize the benefits of the acquisition of 
the SM-1 hydroelectric facility.

Although the Corporation believes that the expectations and assumptions on 
which Forward-Looking Information is based are reasonable, readers of this 
press release are cautioned not to rely unduly on this Forward-Looking 
Information since no assurance can be given that they will prove to be 
correct. 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 of this press release, unless so 
required by legislation.



SOURCE  Innergex Renewable Energy Inc. 
Jean Trudel, MBA, Chief Investment Officer and Senior Vice President - 
Communications, 450 928-2550, ext. 252, jtrudel@innergex.com; Marie-Josée 
Privyk, CFA, SIPC, Director - Investor Relations, 450 928-2550, ext. 222, 
mjprivyk@innergex.com; www.innergex.com 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2014/07/c3692.html 
CO: Innergex Renewable Energy Inc.
ST: Quebec
NI: UTI DIV ERN CONF  
-0- Aug/07/2014 16:26 GMT
 
 
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