Boralex discloses its results for the second quarter of 2018
A series of acquisitions strengthens Boralex's industry-leading position
MONTRÉAL, Aug. 10, 2018 /PRNewswire/ - For the three-month period ended June 30, 2018, Boralex Inc. ("Boralex" or the "Corporation") (TSX: BLX) announces that EBITDA(A) was comparable to that recorded in the corresponding quarter of 2017. Contributions from assets acquired and commissioned over the past twelve months offset the effect of less favourable weather conditions on production at existing facilities, including wind farms, both Canadian and French, and hydroelectric power stations in the United States.
"The prevailing weather conditions did not allow us to achieve the expected operating results, but it's important to note that the quarter provided an opportunity to significantly strengthen our position as an industry leader in our main markets," said Patrick Lemaire, President and Chief Executive Officer of Boralex. "In addition to an immediate contribution to operating results, the Kallista(1) assets acquired and commissioned and the announced acquisition of the interests of Invenergy(2) in five wind farms across Canada will significantly increase our flexibility as a wind farm operator. Moreover, it will allow us to realize significant operational synergies over time, making it easier to forge new partnerships and negotiate favourable supply contracts."
Mr. Lemaire also noted his great satisfaction with the successful completion of the public and private placements to finance the acquisition of Invenergy's interests: "The success of these investments, including the exercise of the full over-allotment option, has once again confirmed the financial markets' confidence in our business model and strategy. These investments, coupled with the conclusion in July of an additional joint investment of $100 million in the Corporation in the form of unsecured subordinated debt maturing in 2028 by the Caisse de dépôt et placement du Québec ($80 million) and the Fonds de solidarité FTQ ($20 million), provide us with a strengthened balance sheet that we can count on to continue on our growth path, while creating value for our shareholders."
FINANCIAL HIGHLIGHTS Three-month periods ended June 30
-------------------- ---------------------------------
(in millions of
dollars, unless
otherwise specified) 2018 2017 2018 2017
--------------------- ---- ---- ---- ----
IFRS Combined(1)
---- ----------
Production (GWh)(2) 747 744 881 863
Revenues from energy
sales 95 92 110 105
EBITDA(A)(3) 57 57 68 67
EBITDA(A) margin (%) 60 62 62 64
Net loss (33) (7) (33) (7)
Net loss attributable
to shareholders (28) (2) (28) (2)
Per share - basic and
diluted $(0.36) $(0.03) $(0.36) $(0.03)
Net cash flows
related to operating
activities 52 38 59 43
Cash flows from
operations(4) 21 44 26 46
--------------- --- --- --- ---
(1) These amounts are adjusted on a Combined
basis and are non-IFRS measures. For
more details, see the Non?IFRS measures
section in the 2018 Interim Report 2
available on the websites of Boralex
(boralex.com) and SEDAR (sedar.com).
(2) If the 28 GWh power limitation for which
Boralex was compensated had been
included, production (GWh) would have
totalled 775 GWh for the three-month
period ended June 30, 2018 (909 GWh) on
a Combined basis.
(3) EBITDA(A) consists of earnings before
interest, taxes, depreciation and
amortization, adjusted to include other
items. For more details, see the Non-
IFRS measures section in the 2018
Interim Report 2 available on the
websites of Boralex (boralex.com) and
SEDAR (sedar.com).
(4) This is a non-IFRS measure. For more
details, see the Non-IFRS measures
section in the 2018 Interim Report 2
available on the websites of Boralex
(boralex.com) and SEDAR (sedar.com).
FINANCIAL HIGHLIGHTS Six-month periods ended June 30
-------------------- -------------------------------
(in millions of dollars,
unless otherwise
specified) 2018 2017 2018 2017
------------------------ ---- ---- ---- ----
IFRS Combined(1)
---- ----------
Production (GWh)(2) 1,802 1,653 2,085 1,926
Revenues from energy sales 247 211 278 240
EBITDA(A)(3) 161 144 182 165
EBITDA(A) margin (%) 65 68 66 69
Net earnings (loss) (10) 8 (10) 8
Net earnings (loss)
attributable to
shareholders (8) 13 (8) 13
Per share - basic and
diluted $(0.10) $0.18 $(0.10) $0.18
Net cash flows related to
operating activities 162 92 174 103
Cash flows from
operations(4) 98 102 111 115
--------------- --- --- --- ---
Notes (1), (3) and (4) are identical to those in the table
above.
(2) If the 84 GWh power limitation for which
Boralex was compensated had been included,
production (GWh) would have totalled 1,886 GWh
for the three-month period ended December 31,
2017 (2,169 GWh).
Financial highlights
Note: The figures in brackets are results on a Combined basis compared with results determined in accordance with IFRS.
Three-month period ended June 30, 2018
For the second quarter of 2018, Boralex generated revenues from energy sales totalling $95 million ($110 million), up 3% (5%) from the same period of 2017. EBITDA(A) for the second quarter amounted to $57 million ($68 million), amounts similar to those reported in the same quarter of 2017.
Cash flows from operations stood at $21 million ($26 million) for the second quarter of 2018, compared with $44 million ($46 million) for the same period last year. The decline stemmed in particular from a $3 million decrease in distributions received from the Joint Ventures, a $9 million increase in interest paid and $7 million in acquisition costs.
Accordingly, the Corporation reported a net loss attributable to shareholders of $28 million or $0.36 per share (basic and diluted) for the second quarter of 2018, compared with a net loss attributable to shareholders of $2 million or $0.03 per share (basic and diluted) for the same period a year earlier.
The increase in net loss between the two periods was primarily due to lower than expected production volume at existing facilities, $7 million in extraordinary acquisition costs and $12 million in impairment losses on property, plant and equipment and intangible assets, related mainly to the Cham Longe I wind farm repowering and the cancellation of the power purchase agreement for the Otter Creek wind farm in Ontario.
Six-month period ended June 30, 2018
For the first six months of 2018, Boralex generated revenues from energy sales totalling $247 million ($278 million), up 17% (16%) from the same period of 2017. EBITDA(A) for the period was $161 million ($182 million), up 12% (10%) from $144 million ($165 million) in the first half of 2017.
Cash flows from operations amounted to $98 million ($111 million) for the first six months of 2018, compared with $102 million ($115 million) for the same period a year earlier. The decline was largely due to a $12 million increase in interest paid and $7 million in acquisition costs. These changes were partly offset by a $17 million increase in EBITDA(A).
For the first six months of 2018, the Corporation reported a net loss attributable to shareholders of $8 million or $0.10 per share (basic and diluted), compared with net earnings attributable to shareholders of $13 million or $0.18 per share (basic and diluted) for the same period a year earlier. Note that reporting on a Combined basis had no effect on the net earnings (loss).
Outlook
Taking into account the facilities to be commissioned by 2020 for a total of 244 MW, the Kallista acquisition and its 15 wind farms in operation for a total of 163 MW, and the anticipated acquisition of Invenergy's interests representing up to an additional 201 MW, Boralex could reach an installed capacity of nearly 2,065 MW at the end of 2020. The Corporation will continue to review market opportunities and expects to announce a new long-term capacity target updated in accordance with its continuous growth objectives by the end of the year.
Taken together, the recently announced transactions will result in a substantial increase in the Corporation's operating asset base. Once the acquisition of Invenergy's interests has been completed, which is expected in August 2018, the installed capacity under Boralex's control will total 1,820 MW, up 364 MW or 25% year to date.
The Corporation has updated its Growth path to take into account other developments during the past quarter. In particular, the Board of Directors approved the project to repower the Cham Longe I wind farm in France (maturity of contract in 2020) by replacing existing wind turbines with more efficient models, resulting in an additional capacity of 17 MW. In Canada, the Otter Creek (50 MW) wind power project in Ontario was withdrawn following receipt by the Corporation of a July 16, 2018 notice from the IESO informing the Corporation that the IESO was unilaterally terminating the power purchase agreement for the project. This termination apparently resulted from a statement issued by the Ontario government on July 13 directing the IESO to terminate all power purchase agreements for all renewable energy projects with a status not sufficiently advanced to allow them to be commissioned.
To drive new growth, Boralex has several options available, including a portfolio of potential projects representing over 1,000 MW in Europe alone, recently boosted by 158 MW with the Kallista acquisition. In light of its long-standing presence in and in-depth knowledge of the French market, the Corporation enjoys a host of competitive advantages to capitalize on the favourable development environment for renewable energies, including the wind power sector. The Corporation also intends to participate in the tendering system, which anticipates the awarding of contracts of an installed capacity of onshore wind power totalling 3,000 MW by June 2020, with 2,500 MW still to be awarded to date, given that the results of the most recent RFPs (500 MW) have yet to be announced. Boralex is also pursuing initiatives elsewhere in Europe, including the United Kingdom, as well as in North America.
In light of these recent developments, management has revised its EBITDA(A) target on an annualized basis to a range of $390 million to $410 million under IFRS ($480 million to $500 million on a Combined basis) by the end of 2020.
Dividend declaration
The Corporation's Board of Directors has conditionally authorized and declared a quarterly dividend of $0.1575 per common share to be paid on September 18, 2018 to shareholders of record at the close of business on August 31, 2018. Boralex has designated this dividend as an eligible dividend within the meaning of section 89.14 of the Income Tax Act (Canada) and all provisions of provincial laws applicable to eligible dividends.
In addition, after entering into an agreement to acquire Invenergy's interests in five wind farms and in light of its confidence in the Corporation's outlook, the Board of Directors conditionally authorized a further 4.8% increase in the annual dividend from $0.63 to $0.66 per share (from $0.1575 to $0.1650 per share on a quarterly basis), marking what would be the second increase year to date, for a total increase in the dividend payout of 10%. This second increase will take effect as of the closing of the acquisition of the Des Moulins and Le Plateau I projects. This dividend will be paid to shareholders of record at the close of business on the next record date following the closing of the acquisition of these wind farms. What is more, Boralex maintains its dividend policy of distributing 40% to 60% of its discretionary cash flows.
About Boralex
Boralex develops, builds and operates renewable energy power facilities in Canada, France, the United Kingdom and the United States. A leader in the Canadian market and France's largest independent producer of onshore wind power, the Corporation is recognized for its solid experience in optimizing its asset base in four power generation types - wind, hydroelectric, thermal and solar. Boralex ensures sustainable growth by leveraging the expertise and diversification developed over the past 25 years. Boralex's shares and convertible debentures are listed on the Toronto Stock Exchange under the ticker symbols BLX and BLX.DB.A, respectively. More information is available at www.boralex.com or www.sedar.com. Follow us on Facebook, LinkedIn and Twitter.
Caution regarding forward-looking statements
Some of the statements contained in this press release, including those regarding future results and performance, are forward-looking statements based on current expectations, within the meaning of securities legislation. Boralex would like to point out that, by their very nature, forward-looking statements involve risks and uncertainties such that its results or the measures it adopts could differ materially from those indicated by or underlying these statements, or could have an impact on the degree of realization of a particular forward-looking statement. The main factors that could lead to a material difference between the Corporation's actual results and the forward-looking financial information or expectations set forth in the forward-looking statements include, but are not limited to, the general impact of economic conditions, currency fluctuations, volatility in energy selling prices, the Corporation's financing capacity, competition, changes in general market conditions, the regulations governing the industry and raw material price increases and availability, regulatory disputes and other issues related to projects in operation or under development, well as certain other factors described in the documents filed by the Corporation with the different securities commissions.
Unless otherwise specified by the Corporation, the forward-looking statements do not take into account the possible impact on its activities, transactions, non-recurring items or other exceptional items announced or occurring after the statements are made.
There can be no assurance as to the materialization of the results, performance or achievements as expressed or implied by forward-looking statements. The reader is cautioned not to place undue reliance on such forward-looking statements. Unless required to do so under applicable securities legislation, Boralex management does not assume any obligation to update or revise forward-looking statements to reflect new information, future events or other changes.
The data expressed as a percentage is calculated using amounts in thousands of dollars.
Non-IFRS measures
The interim report contains a "Non-IFRS measures" section. In order to assess the performance of its assets and reporting segments, Boralex uses EBITDA(A) and cash flows from operations as performance measures determined using information under IFRS and on a Combined basis. EBITDA(A) represents earnings before interest, taxes, depreciation and amortization, adjusted to include other items. Cash flows from operations are equal to net cash flows related to operating activities before change in non-cash items related to operating activities.
Management believes that these measures are widely accepted financial indicators used by investors to assess the operational performance of a company and its ability to generate cash through operations. Such non-IFRS measures also provide investors with insight into the Corporation's decision making as the Corporation uses these non-IFRS measures to make financial, strategic and operating decisions. These non-IFRS measures are derived primarily from the audited consolidated financial statements, but do not have a standardized meaning under IFRS; accordingly, they may not be comparable to similarly named measures used by other companies. Non-IFRS measures are not audited. These non-IFRS measures have important limitations as analytical tools and investors are cautioned not to consider them in isolation or place undue reliance on ratios or percentages calculated using these non-IFRS measures.
Combined information
The information presented on a combined basis above and in the Management's Discussion and Analysis (MD&A) ("Combined information," "on a Combined basis" or "Combined") results from the combination of Boralex's financial information under IFRS and its share of the financial information of the Joint Ventures (as defined in note 5 to Boralex's interim financial statements). The Joint Ventures represent significant investments by Boralex and although IFRS does not permit the consolidation of their financial information within that of Boralex, management considers that information on a Combined basis is useful data for investors. In order to prepare information on a Combined basis, Boralex first prepares its financial statements and those of the Joint Ventures in accordance with IFRS. Then, the Interests in Joint Ventures, Share in earnings of the Joint Ventures and Distributions received from the Joint Ventures line items are replaced by Boralex's share (50%) in the financial statement items of the Joint Ventures (such as revenues, expenses, assets and liabilities). All the information required to make this calculation can be found in Boralex's financial statements, more specifically in Note 5, Interests in the Joint Ventures, with respect to the financial information of the Joint Ventures under IFRS. We also refer you to the Non-IFRS measures section in the Management's Discussion and Analysis for more information. It is important to note that the calculation method described here is identical to the method previously used to establish the data identified as Proportionate consolidation in previous MD&As.
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1 Acquisition of Kallista Energy Investment SAS and KE Production SAS.
2 Invenergy Renewables LLC.
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