Innergex posts strong first quarter results

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Ultra Club
$500/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
JOIN THE CLUB

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

Innergex posts strong first quarter results

Canada NewsWire

AGREEMENT TO SELL ITS 53.9% INTEREST IN ICELANDIC ASSETS

  • Revenues from continuing operations up 24% to $126.4 million in Q1 2019 compared with Q1 2018.
  • Revenues Proportionate up 29% to $141.2 million in Q1 2019 compared with Q1 2018.
  • Adjusted EBITDA for continuing operations rose 27% to $93.2 million in Q1 2019 compared with Q1 2018.
  • Adjusted EBITDA Proportionate rose 27% to $99.7 million in Q1 2019 compared with Q1 2018.
  • Construction activities progressing well and on budget at the Phoebe solar project.
  • Closing of a construction financing and tax equity commitment for the Foard City wind project.

 

All amounts are in Canadian dollars, except as noted.

 

LONGUEUIL, QC, May 14, 2019 /CNW Telbec/ - Innergex Renewable Energy Inc. (TSX: INE) ("Innergex" or the "Corporation") today released its operating and financial results for the first quarter ended March 31, 2019. The significant increase in revenues and Adjusted EBITDA for continuing operations is mainly attributable to the acquisitions achieved in 2018.

On March 25, 2019, Innergex announced that an agreement has been reached to sell its wholly owned subsidiary Magma Energy Sweden A.B. ("Magma Sweden") which owns an equity interest of approximately 53.9% in HS Orka hf ("HS Orka"). The activities of HS Orka included two geothermal facilities, one hydro project in development and prospective projects in Iceland which are now treated as discontinued operations. As a result, the comparative figures have been restated.

"Our acquisition of the remaining interest in the Cartier Wind Farms largely contributed to our improved results in the quarter. I am also proud to have secured financing for the Foard City wind project which is on track and progressing well", said Michel Letellier, President and Chief Executive Officer of Innergex. "By starting off the year with an agreement to divest our Icelandic interests, we have positioned ourselves to focus on our core sources of energy in markets where we see the most opportunities for growing our portfolio of assets with additional high quality facilities. With projects in development and construction, 2019 is shaping up to be another busy year at Innergex and we look forward to pursuing our growth strategy while remaining true to the core values that have made us a leader in the renewable energy sector."

 

OPERATING RESULTS




Amounts shown are in thousands of Canadian dollars except as noted otherwise.

Three months ended March 31

2019


2018




Restated2,3

Production (MWh)

1,308,505


944,108

Long-term average (MWh) ("LTA")

1,326,479


990,803

Revenues

126,419


101,788

Adjusted EBITDA1

93,243


73,566

Net loss from continuing operations

(4,420)


(9,695)

Net loss

(854)


(14,840)

Net loss from continuing operations attributable to owners, $ per share - basic and diluted

(0.07)


(0.04)

Net loss attributable to owners, $ per share - basic and diluted

(0.06)


(0.07)





Production Proportionate (MWh)1

1,589,827


1,047,770

Revenues Proportionate1

141,228


109,153

Adjusted EBITDA Proportionate1

99,674


78,650






Trailing twelve months ended March 31


2019


2018


Restated2,3


Restated2,3

Free Cash Flow1

119,055


96,372

Payout Ratio1

77%


79%



1.

Please refer to the "Non-IFRS Measures" Disclaimer for the definition of Production Proportionate, Revenues Proportionate, Adjusted EBITDA, Adjusted EBITDA Proportionate, Free Cash Flow and Payout Ratio.

2.

For more information on the restatement, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis for the first quarter of 2019.

3.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

 

Three-month period ended March 31, 2019
Production increased 39% and Production Proportionate increased 52% compared to the same quarter last year.

  • Production was 99% of the LTA:
    • Hydroelectric facilities: 79% of their LTA;
    • Wind farms: 106% of their LTA; and
    • Solar farms: 93% of their LTA.

The 24% increase in revenues and 27% in Adjusted EBITDA mainly stems from the contribution of the 62% remaining interest in the Cartier Wind Farms acquired in October 2018, partly offset by lower revenues in the hydro power generation segment.

The Adjusted EBITDA Margin increased from 72.3% to 73.8% for the three-month period due mainly to changes in our mix of segments as wind generation now represents a higher proportion of Adjusted EBITDA since the acquisition of the remaining 62% interest in the Cartier Wind Farms in October 2018. Wind activities have typically a better return on revenues than hydro due to lower operating costs.

The 29% increase in Revenues Proportionate and 27% increase in Adjusted EBITDA Proportionate are mainly due to the investment in Energia Llaima and to the Flat Top wind farm which was commissioned on March 23, 2018. The increase in Revenues Proportionate is also due to a three-month contribution from the joint ventures and associates acquired as part of Alterra in February 2018.

For the three-month period ended March 31, 2019, the Corporation recorded net loss from continuing operations of $4.4 million (basic and diluted net loss from continuing operations of $0.07 per share attributable to owners), compared with net loss from continuing operations of $9.7 million (basic and diluted net loss from continuing operations of $0.04 per share attributable to owners) for the corresponding period in 2018. The $5.3 million improvement can be explained by the $19.7 million increase in Adjusted EBITDA and by the $3.2 million decrease in other net expenses, partly offset by the $10.2 million increase in depreciation and amortization, the $9.1 million increase in finance costs and the $8.0 million negative change in the share of earnings of joint ventures and associates.

Free Cash Flow and Payout Ratio
For the trailing twelve-month period ended March 31, 2019, the Corporation generated Free Cash Flow of $119.1 million, compared with $96.4 million for the corresponding period last year. The increase in Free Cash Flow is due mainly to higher cash flows from operating activities before changes in non-cash working capital items, partly offset by greater scheduled debt principal payments, higher Free Cash Flow attributed to non-controlling interests and higher maintenance capital expenditures net of proceeds from disposals.

For the trailing twelve-month period ended March 31, 2019, the dividends on common shares declared by the Corporation amounted to 77% of Free Cash Flow, compared with 79% for the corresponding period last year. This change results mainly from higher dividend payments as a result of the issuance of 24,327,225 shares on February 6, 2018, related to the Alterra acquisition, to the increase in the quarterly dividend and to additional shares issued under the Dividend Reinvestment Plan ("DRIP").

FIRST QUARTER OPERATIONAL HIGHLIGHTS

Divestment of HS Orka
On March 25, 2019, Innergex announced that an agreement has been reached to sell its wholly owned subsidiary Magma Sweden which owns an equity interest of approximately 53.9% in HS Orka for a purchase price of US$304.8 million (approximately CAN$408.8 million) to a Macquarie Infrastructure and Real Assets managed European infrastructure fund, subject to customary closing adjustments.

The transaction is subject to the satisfaction of certain closing conditions, including receipt of key third party consents, a right of first refusal in respect of the shares of Magma Sweden (exercisable for two months on the same terms and conditions), as well as other customary conditions. All required conditions are expected to be satisfied in the second quarter of 2019 with closing of the transaction to be completed after the satisfaction of such conditions.

Net proceeds will be used to reimburse the $228 million one-year credit facility contracted in October 2018 at the time of the acquisition of the remaining interest in the Cartier Wind Farms and Operating Entities, to deleverage corporate facilities and for general corporate purposes. On April 23, 2019, the one-year credit facility was amended to add additional capacity of $100 million to be drawn as needed. Please refer to the "Subsequent Event" section for more information.

Construction Activities

Phoebe Solar Project (Texas)
In the three-month period ended March 31, 2019, the contractor has completed clearing of the site and installation of the piles and trackers is ongoing and expected to be completed in June 2019. Delivery of the modules started in early February and will continue into June, with over 750,000 modules to be delivered. Substation construction is nearly complete and the main power transformers have been delivered, installed and commissioned. Construction costs are in line with the budget at this stage and commercial operation should be reached in the third quarter of 2019.

Foard City Wind Project (Texas)
In early Q2 2019, the project was resized to 327.6 MW (130 turbines). The Federal Aviation Administration ("FAA") and the Corporation came to an agreement regarding turbine layout and subsequently, in April, the project received 94 Determination of No Hazards from the FAA. The remaining 36 Determination of No Hazards are expected to be released in the coming months. Despite permitting delays, construction progresses on site with 67% of the 130 turbine foundations completed and roads and collectors construction in progress. Delivery of turbines to site commenced in early April and their erection commenced mid-April. On May 8, 2019, closing of a construction financing, tax equity commitment and a term loan facility was announced. Please refer to the "Subsequent Event" section for more information.

SUBSEQUENT EVENT

Increase to the Revolving Credit Facilities
On April 23, 2019, Innergex amended its one-year credit facility contracted in October 2018, at the time of the acquisition of the Cartier Wind Farms and Operating Entities to add additional capacity of $100 million to be drawn as needed to provide greater flexibility. The maturity date remained October 2019. Should this additional amount be used, Innergex intends to repay the facility with the net proceeds of the sale of its equity interest in HS Orka.

Closing of the Financing for Foard City Wind Project
On May 8, 2019, the Corporation announced the closing of a construction loan and tax equity commitment for the Foard City wind project. The construction financing amounts to US$290.9 million (CAN$388.7 million), backed by a US$275.0 million (CAN$367.5 million) tax equity commitment and a US$23.3 million (CAN$31.1 million) 7-year term loan facility with a 10-year amortization period to be provided by lenders upon the commercial operation date.

DIVIDEND DECLARATION

The following dividends will be paid by the Corporation on July 15, 2019:

 







Date of
announcement

Record date

Payment date

Dividend per
common share

Dividend per
Series A

Preferred Share

Dividend per
Series C
Preferred Share

May 14, 2019

June 28, 2019

July 15, 2019

$0.1750

$0.2255

$0.359375

 

ADDITIONAL INFORMATION
Innergex's 2019 first quarter unaudited condensed interim consolidated financial statements, the notes thereto and the Management's Discussion and Analysis can be obtained on SEDAR at www.sedar.com and in the "Investors" section of the Corporation's website at www.innergex.com.

CONFERENCE CALL AND WEBCAST
The Corporation will hold a conference call and webcast on Wednesday May 15, 2019, at 9 AM (EDT). Investors and financial analysts are invited to access the conference by dialing 1 888 231-8191 or 647 427-7450 or via https://bit.ly/2Wa4PbK or the Corporation's website at www.innergex.com. Journalists as well as the public may access this conference call via a listen mode only. A replay of the conference call will be available after the event on the Corporation's website.

ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
The Corporation will hold its Annual and Special Meeting of Shareholders on Tuesday, May 14, 2019, at 4 PM (EDT). Shareholders are invited to attend the meeting at the Club St-James, 1145 Union Avenue, Montréal QC H3B 3C2 or to listen to the meeting via a webcast at https://bit.ly/2W3kPMK.

About Innergex Renewable Energy Inc.
The Corporation is an independent renewable power producer which develops, acquires, owns and operates hydroelectric facilities, wind farms and solar farms. As a global corporation, Innergex conducts operations in Canada, the United States, France and Chile. Innergex manages a large portfolio of assets currently consisting of interests in 66 operating facilities with an aggregate net installed capacity of 1,988 MW (gross 2,888 MW), including 37 hydroelectric facilities, 25 wind farms and four solar farms. Innergex also holds interests in seven projects under development with a net installed capacity of 870 MW (gross 948 MW), two of which are currently under construction and prospective projects at different stages of development with an aggregate gross capacity totaling 7,767 MW. Respecting the environment and balancing the best interests of the host communities, its partners, and its investors are at the heart of the Corporation's development strategy. Its approach for building shareholder value is to generate sustainable cash flows, provide an attractive risk-adjusted return on invested capital and to distribute a stable dividend. Innergex Renewable Energy Inc. is rated BBB- by S&P. The Corporation also owns an equity interest in two geothermal power generation plants in Iceland for which a sale agreement was reached in March 2019 and should be completed by the end of the second quarter of 2019.

Non-IFRS measures disclaimer
The unaudited condensed interim consolidated financial statements for the three-month period ended March 31, 2019, have been prepared in accordance with International Financial Reporting Standards ("IFRS"). However, some measures referred to in this press 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. Production Proportionate, Revenues Proportionate, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Proportionate, Free Cash Flow and Payout Ratio are not measures recognized by IFRS and have no standardized meaning prescribed by IFRS.

Revenues Proportionate
References in this document to "Innergex's share of Revenues of joint ventures and associates" are to Innergex's ownership interest in the equity or in the sponsors' equity when applicable of the Revenues of the joint ventures and associates. Readers are cautioned that Innergex's share of Revenues of joint ventures and associates should not be construed as an alternative to Revenues, as determined in accordance with IFRS.

References in this document to "Revenues Proportionate" are to Revenues plus Innergex's share of Revenues of the joint ventures and associates. Innergex believes that the presentation of this measure enhances the understanding of the Corporation's operating performance. Readers are cautioned that Revenues Proportionate should not be construed as an alternative to Revenues, as determined in accordance with IFRS.

 




Three months ended March 31


2019


2018




Restated1,2

Revenues

126,419


101,788

Innergex's share of Revenues of joint ventures and associates:




Toba Montrose (40%)3

536


228

Shannon (50%)3,5

2,124


3,094

Flat Top (51%)4,5

2,597


183

Dokie (25.5%)3

2,320


1,298

Jimmie Creek (50.99%)3

142


55

Umbata Falls (49%)

701


824

Viger-Denonville (50%)

1,992


1,683

Duqueco (50%)6

3,302


Guayacan (50%)6

603


Pampa Elvira (50%)6

492



14,809


7,365

Revenues Proportionate

141,228


109,153



1.

For more information on the restatement, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis of the first quarter of 2019.

2.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

3.

For the period from January 1, 2019 to March 31, 2019 and February 6, 2018, to March 31, 2018.

4.

For the period from January 1, 2019 to March 31, 2019 and March 23, 2018, to March 31, 2018.

5.

Ownership interest is in the sponsor equity of Shannon and Flat Top, however, tax equity partners hold 100% of the tax equity interests.

6.

Innergex owns a 50% interest in Energía Llaima which owns the Guayacan (69.47% interest) and the Pampa Elvira (55% interest) facilities and Duqueco which includes the Mampil (100% interest) and Peuchén (100% interest) facilities.

 

Adjusted EBITDA and Adjusted EBITDA Margin
References in this document to "Adjusted EBITDA" are to net earnings (loss) from continuing operations to which are added (deducted) provision (recovery) for income tax expenses, finance cost, depreciation and amortization, other net expenses, share of (earnings) loss of joint ventures and associates and unrealized net (gain) loss on financial instruments. Innergex believes that the presentation of this measure enhances the understanding of the Corporation's operating performance. Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to net earnings, as determined in accordance with IFRS.

References in this document to "Adjusted EBITDA Margin" are to Adjusted EBITDA divided by revenues. Innergex believes that the presentation of this measure enhances the understanding of the Corporation's operating performance.

 




Three months ended March 31


2019


2018




Restated1,2

Net loss from continuing operations

(4,420)


(9,695)

Recovery of income taxes

(4,078)


(1,987)

Finance costs

52,971


43,903

Depreciation and amortization

46,466


36,241

EBITDA

90,939


68,462

Other net expenses

726


3,888

Share of loss (earnings) of joint ventures and associates

6,890


(1,067)

Unrealized net (gain) loss on financial instruments

(5,312)


2,283

Adjusted EBITDA

93,243


73,566

Adjusted EBITDA margin

73.8%


72.3%



1.

For more information on the restatement, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis of the first quarter of 2019.

2.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

 

Adjusted EBITDA Proportionate
References in this document to "Innergex's share of Adjusted EBITDA of the joint ventures and associates" are to Innergex's ownership interest in the equity or in the sponsors' equity when applicable of the Adjusted EBITDA of the joint ventures and associates.

References in this document to "Adjusted EBITDA Proportionate" are to Adjusted EBITDA plus Innergex's share of Adjusted EBITDA of the joint ventures and associates. Innergex believes that the presentation of this measure enhances the understanding of the Corporation's operating performance. Readers are cautioned that Adjusted EBITDA Proportionate should not be construed as an alternative to net earnings, as determined in accordance with IFRS.

 




Three months ended March 31


2019


2018



Restated1,2

Adjusted EBITDA

93,243


73,566

Innergex's share of Adjusted EBITDA of joint ventures and associates:



Toba Montrose (40%)3

(988)


(91)

Shannon (50%)3,5

959


2,331

Flat Top (51%)4,5

730


(21)

Dokie (25.5%)3

1,793


1,024

Jimmie Creek (50.99%)3

(376)


(282)

Umbata Falls (49%)

426


704

Viger-Denonville (50%)

1,652


1,419

Duqueco (50%)6

1,579


Guayacan (50%)6

405


Pampa Elvira (50%)6

251



6,431


5,084

Adjusted EBITDA Proportionate

99,674


78,650



1.

For more information, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis of the first quarter of 2019.

2.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

3.

For the period from January 1, 2019 to March 31, 2019 and February 6, 2018, to March 31, 2018.

4.

For the period from January 1, 2019 to March 31, 2019 and March 23, 2018, to March 31, 2018.

5.

Ownership interest is in the sponsor equity of Shannon and Flat Top, however, tax equity partners hold 100% of the tax equity interests.

6.

Innergex owns a 50% interest in Energía Llaima which owns the Guayacan (69.47% interest) and the Pampa Elvira (55% interest) facilities and Duqueco which includes the Mampil (100% interest) and Peuchén (100% interest) facilities.

 

Adjusted Net Loss from continuing operations
References to "Adjusted Net Loss from continuing operations" are to net earnings or losses from continuing operations of the Corporation, to which the following elements are added (subtracted): unrealized net (gain) loss on financial instruments; realized (gain) loss on financial instruments; income tax expense (recovery) related to the above items; and the share of unrealized net (gain) loss on derivative financial instruments of joint ventures and associates, net of related tax. Innergex uses derivative financial instruments to hedge its exposure to various risks. Accounting for derivatives under IFRS requires that all derivatives are marked-to-market with changes in the mark-to-market of the derivatives for which hedge accounting is not applied being taken to the profit and loss account. The application of this accounting standard results in a significant amount of profit and loss volatility arising from the use of derivatives that are not designated for hedge accounting. The Adjusted Net Loss from continuing operations of the Corporation aims to eliminate the impact of the mark-to-market rules on derivatives on the profit and loss of the Corporation. Innergex believes that the analysis and presentation of net earnings or loss on this basis enhances understanding of the Corporation's operating performance. Readers are cautioned that Adjusted Net Loss from continuing operations should not be construed as an alternative to net earnings, as determined in accordance with IFRS.

 




Three months ended March 31

2019


2018




Restated1,2

Net loss from continuing operations

(4,420)


(9,695)

Add (Subtract):




Unrealized net (gain) loss on financial instruments

(5,312)


2,283

Realized gain on financial instruments


(828)

Income tax (recovery) expenses related to above items

(675)


2,647

Share of unrealized net gain on financial instruments of joint ventures and associates, net of related income tax

(619)


(4,623)

Adjusted Net Loss from continuing operations

(11,026)


(10,216)



1.

For more information, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis of the first quarter of 2019.

2.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

 

Free Cash Flow and Payout Ratio
References to "Free Cash Flow" are to cash flows from operating activities 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 or minus other elements that are not representative of the Corporation's long-term cash generating capacity, such as transaction costs related to realized acquisitions (which are financed at the time of the acquisition), realized losses or gains on derivative financial instruments used to hedge the interest rate on project-level debt or the exchange rate on equipment purchases. Innergex believes that presentation of this measure enhances the understanding of the Corporation's cash generation capabilities, its ability to sustain current dividends and dividend increases and its ability to fund its growth. Readers are cautioned that Free Cash Flow should not be construed as an alternative to cash flows from operating activities, as determined in accordance with IFRS.

References to "Payout Ratio" are to dividends declared on common shares divided by Free Cash Flow. Innergex believes that this is a measure of its ability to sustain current dividends and dividend increases as well as its ability to fund its growth.

 




Trailing twelve months ended March 31

2019


2018


Restated3,4


Restated3,4

Cash flows from operating activities

212,780


226,981

Add (Subtract) the following items:




Changes in non-cash operating working capital items

36,131


(44,857)

Maintenance capital expenditures net of proceeds from disposals

(10,405)


(5,210)

Scheduled debt principal payments

(97,643)


(70,809)

Free Cash Flow attributed to non-controlling interests1

(26,053)


(13,744)

Dividends declared on Preferred shares

(5,942)


(5,942)

Adjust for the following elements:




Transaction costs related to realized acquisitions

3,267


10,781

Realized loss (gain) on derivative financial instruments

6,920


(828)

Free Cash Flow

119,055


96,372





Dividends declared on common shares

91,080


76,234

Payout Ratio

77%


79%





Dividends declared on common shares and paid in cash2

83,534


70,368

Payout Ratio - after the impact of the DRIP

70%


73%





Free cash flow excluding prospective project expenses

138,970


110,420

Adjusted payout ratio excluding prospective project expenses after the impact of the DRIP

60%


64%



1.

The portion of Free Cash Flow attributed to non-controlling interests is subtracted, regardless of whether an actual distribution to non-controlling interests is made, in order to reflect the fact that such distributions may not occur in the period they are generated.

2.

These are dividends declared on Common Shares outstanding that were not registered in the DRIP at the time of the declaration; the dividends declared on Common Shares registered in the DRIP were paid in Common Shares.

3.

For more information, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis of the first quarter of 2019.

4.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

 

Production Proportionate
References in this document to "Innergex's share of Production of the joint ventures and associates" are to Innergex's ownership interest in the equity or in the sponsors' equity when applicable of the Production of the joint ventures and associates.

References in this document to "Production Proportionate" are to Production plus Innergex's share of Production of the joint ventures and associates. Innergex believes that the presentation of this measure enhances the understanding of the Corporation's operating performance.

 




Three months ended March 31

(in MWh)

2019


2018




Restated1,2

Production

1,308,505


944,108

Innergex's share of Production of joint ventures and associates:




Toba Montrose (40%)3

4,470


1,506

Shannon (50%)3,5

91,609


60,872

Flat Top (51%)4,5

115,676


10,015

Dokie (25.5%)3

16,576


10,122

Jimmie Creek (50.99%)3

765


313

Umbata Falls (49%)

9,244


9,642

Viger-Denonville (50%)

13,179


11,192

Duqueco (50%)6

19,800


Guayacan (50%)6

6,648


Pampa Elvira (50%)6

3,355



281,322


103,662

Production Proportionate

1,589,827


1,047,770



1.

For more information on the restatement, please refer to the "Accounting Changes" section of the Management's Discussion and Analysis of the first quarter of 2019.

2.

For more information, please refer to the "Discontinued Operations" section of the Management's Discussion and Analysis of the first quarter of 2019.

3.

For the period from January 1, 2019 to March 31, 2019 and February 6, 2018, to March 31, 2018.

4.

For the period from January 1, 2019 to March 31, 2019 and March 23, 2018, to March 31, 2018.

5.

Ownership interest is in the sponsor equity of Shannon and Flat Top, however, tax equity partners hold 100% of the tax equity interests.

6.

Innergex owns a 50% interest in Energía Llaima which owns the Guayacan (69.47% interest) and the Pampa Elvira (55% interest) facilities and Duqueco which includes the Mampil (100% interest) and Peuchén (100% interest) facilities.

 

Forward-Looking Information
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 "approximately", "may", "will", "could", "believes", "expects", "intends", "should", "would", "plans", "potential", "project", "anticipates", "estimates", "scheduled" or "forecasts", or other comparable terminology that state that certain events will or will not occur. It represents the projections and expectations of the Corporation relating to future events or results as of the date of this press release.

Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, such as expected production, projected revenues, projected Adjusted EBITDA and projected Adjusted EBITDA Proportionate, to inform readers of the potential financial impact of expected results, of the expected commissioning of Development Projects, of the potential financial impact of completed and future acquisitions and of the Corporation's ability to sustain current dividends and to fund its growth. Such information may not be appropriate for other purposes.

Forward-looking Information is based on certain key assumptions made by Innergex, including, without restrictions, assumptions concerning project performance, economic, financial and financial market conditions, expectations and assumptions concerning availability of capital resources and timely performance by third-parties of contractual obligations, receipt of regulatory approvals and the divestiture of select assets. Although Innergex believes that the expectations and assumptions on which such forward-looking information is based are reasonable, under the current circumstances, readers are cautioned not to rely unduly on this forward-looking information as no assurance can be given that they will prove to be correct. The forward-looking information contained in this press release is made as of the date hereof and Innergex 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 so required by law.

Since forward-looking information addresses future events and conditions, it is by its very nature subject to inherent risks and uncertainties. Forward-looking information involves risks and uncertainties that may cause actual results or performance to be materially different from those expressed, implied or presented by the forward-looking information. These include, but are not limited to, the risks associated with the ability of Innergex to execute its strategy for building shareholder value (including through the potential divestiture of selected assets), its ability to raise additional capital and the state of the capital markets, liquidity risks related to derivative financial instruments, variability in hydrology, geothermal resources, wind regimes and solar irradiation, uncertainties surrounding the development of new facilities, interest rate fluctuations and refinancing risks, financial leverage and restrictive covenants governing current and future indebtedness, failure to realize the anticipated benefits of such acquisitions, variability of installations performance and related penalties, foreign exchange fluctuations and the fact that revenues from certain facilities will vary based on the market (or spot) price of electricity.

There are also risks inherent to the sale of the wholly-owned subsidiary Magma Energy Sweden, A.B. which owns an equity interest of approximately 53.9% in HS Orka, including failure to satisfy the closing conditions; exercise of termination rights by Innergex or the purchaser; failure to obtain the requisite third party consents. Accordingly, there can be no assurance that the sale will occur, or that it will occur on the terms and conditions, or at the time, contemplated in this press release. The sale could be modified, restructured or terminated. There can also be no assurance that the strategic, operational or financial benefits and effects expected to result from the sale will be realized.

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

Expected production

For each facility, the Corporation determines a long-term average annual level of electricity
production ("LTA") over the expected life of the facility, based on engineers' studies that take
into consideration a number of important factors: for hydroelectricity, the historically
observed flows of the river, the operating head, the technology employed and the reserved
aesthetic and ecological flows; for wind energy, the historical wind and meteorological
conditions and turbine technology; for solar energy, the historical solar irradiation conditions,
panel technology and expected solar panel degradation and for geothermal power facilities,
the historical geothermal resources natural depletion of geothermal resources over time,
the technology used and the potential of energy loss to occur before delivery. Other factors
taken into account include, without limitation, site topography, installed capacity, energy
losses, operational features and maintenance. Although production will fluctuate from year
to year, over an extended period it should approach the estimated LTA. On a consolidated
basis, the Corporation estimates its LTA by adding together the expected LTAs of all the
facilities in operation, for the facilities that it consolidates. This consolidation excludes
however the facilities which are accounted for using the equity method (Dokie, East Toba,
Flat Top, Guayacan, Jimmie Creek, Mampil, Montrose Creek, Pampa Elvira, Peuchén,
Shannon, Umbata Falls and Viger-Denonville).

Improper assessment of water, wind, solar and
geothermal resources and associated electricity
production


 

Variability in hydrology, wind regimes, solar
irradiation and geothermal resources


 

Risks inherent in geothermal resource


 

Equipment supply risk, including failure or
unexpected operations and maintenance activity


 

Natural disasters and force majeure

 

Regulatory and political risks affecting production


 

Health, safety and environmental risks affecting
production


 

Variability of installation performance and related
penalties


 

Availability and reliability of transmission systems

Projected revenues

For each facility, expected annual revenues are estimated by multiplying the LTA by a price
for electricity stipulated in the PPA secured with a public utility or other creditworthy
counterparty mainly. In most cases these PPAs stipulate a base price for electricity produced
and, in some cases, a price adjustment depending on the month, day and hour of its
delivery. This excludes facilities, which receive revenues, based on the market (or spot)
price for electricity, including the Miller Creek hydroelectric facility, which receives a price
based on a formula using the Platts Mid-C pricing indices, the Horseshoe Bend hydroelectric
facility, for which 85% of the price is fixed and 15% is adjusted annually as determined by
the Idaho Public Utility Commission. Revenues at the HS Orka facilities also fluctuate with
the price of aluminum, as certain of those PPAs are linked to such price. In most cases,
power purchase agreements also contain an annual inflation adjustment based on a portion
of the Consumer Price Index. On a consolidated basis, the Corporation estimates annual
revenues by adding together the projected revenues of all the facilities in operation that it
consolidates This consolidation excludes however the facilities which are accounted for
using the equity method (Dokie, East Toba, Flat Top, Guayacan, Jimmie Creek, Mampil,
Montrose Creek, Pampa Elvira, Peuchén, Shannon, Umbata Falls and Viger-Denonville).

See principal assumptions, risks and uncertainties
identified under "Expected Production"

 

Reliance on various forms of PPAs

 

Revenues from certain facilities will vary based on
the market (or spot) price of electricity


 

Fluctuations affecting prospective power prices


 

Changes in general economic conditions

 

Ability to secure new Power Purchase Agreements
or Renew any Power
Purchase Agreement

Projected Adjusted EBITDA

For each facility, the Corporation estimates annual operating earnings by adding (deducting)
to net earnings (loss) provision (recovery) for income tax expenses, finance cost,
depreciation and amortization, other net expenses, share of (earnings) loss of joint ventures
and associates and unrealized net (gain) loss on financial instruments. The Adjusted
EBITDA consolidated excludes however the facilities which are accounted for using the
equity method (Dokie, East Toba, Flat Top, Guayacan, Jimmie Creek, Mampil, Montrose
Creek, Pampa Elvira, Peuchén, Shannon, Umbata Falls and Viger-Denonville). Innergex
believes that the presentation of this measure enhances the understanding of the
Corporation's operating performance. Readers are cautioned that Projected Adjusted
EBITDA should not be construed as an alternative to net earnings, as determined in
accordance with IFRS.

See principal assumptions, risks and uncertainties
identified under "Expected Production" and
"Expected Revenues"

 

Variability of facility performance and related
penalties


 

Unexpected maintenance expenditures

Estimated project costs, expected obtainment of permits, start of construction, work 
conducted and start of commercial operation for Development Projects or
Prospective Projects

For each Development Project and Prospective Project, the Corporation may provide
(where available) an estimate of potential installed capacity, estimated project costs, project
financing terms and each project's development and construction schedule, based on its
extensive experience as a developer, in addition to information directly related to incremental
internal costs, site acquisition costs and financing costs, which are eventually adjusted for
the projected costs and construction schedule provided by the engineering, procurement
and construction ("EPC") contractor retained for the project.


The Corporation provides indications based on assumptions regarding its current strategic
positioning and competitive outlook, as well as scheduling and construction progress, for its
Development Projects and its Prospective Projects, which the Corporation evaluates based
on its experience as a developer.

Uncertainties surrounding development of new
facilities

 

Performance of major counterparties, such as
suppliers or contractors

 

Delays and cost overruns in the design and
construction of projects

 

Ability to secure appropriate land


 

Obtainment of permits

 

Health, safety and environmental risks


 

Relationships with stakeholders

 

Equipment supply


 

Interest rate fluctuations and financing risk

 

Risks related to U.S. PTCs and ITCs, changes in
U.S. corporate tax rates and availability of tax
equity financing


 

Regulatory and political risks


 

Higher-than-expected inflation


 

Natural disaster


 

Foreign market growth and development risks


 

Outcome of insurance claims

Qualification for PTCs and ITC

For certain Development Projects in the United States, the Corporation has conducted on-
and off-site activities expected to qualify its Development Projects for PTCs or ITC at the
full rate and to obtain tax equity financing on such a basis. To assess the potential
qualification of a project, the Corporation takes into account the construction work
performed and the timing of such work. The expected Flip Point for tax equity investment is
determined according to the LTAs and revenues of each such project and is subject in
addition to the related risks mentioned above.

Risks related to U.S. PTCs and ITC, changes in
U.S. corporate tax rates and availability of tax
equity financing


 

Regulatory and political risks


 

Delays and cost overruns in the design and
construction of projects


 

Obtainment of permits

Expected closing of the sale of equity interest in HS Orka

The Corporation reasonably expects that the closing conditions will be completed within the
deadlines.

Satisfaction of closing conditions


 

Third party consents and right of first refusal

 

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 forward-looking statements contained in this press release are made as of the date hereof and Innergex undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

 

SOURCE Innergex Renewable Energy Inc.

View original content: http://www.newswire.ca/en/releases/archive/May2019/14/c0799.html

Copyright CNW Group 2019

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).