TORONTO, ON--(Marketwired - May 11, 2016) -
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Northland Power Inc. ("Northland" or "the Company") (TSX: NPI)(TSX: NPI.PR.A) (TSX: NPI.PR.B) (TSX: NPI.PR.C) (TSX: NPI.DB.B) (TSX: NPI.DB.C) today reported financial results for the three months ended March 31, 2016.
"Northland's first quarter results reflect continued progress in several key areas," said John Brace, Chief Executive Officer. "We delivered our Grand Bend project into operations, while continuing to make significant advancements on both of our offshore wind projects currently under construction. We were pleased to see the Ontario Court of Appeal uphold the original decision relating to the price escalators for power sold under our affected power purchase agreements. Our adjusted EBITDA continues to increase, and we have reaffirmed our 2016 guidance in anticipation of another successful year. We remain well-positioned to continue growing the company while delivering robust returns to our shareholders."
First Quarter Highlights:
Financial
Construction
Other
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS | 3 Months Ended March 31 | ||||
2016 | 2015 | ||||
FINANCIALS (in thousands of dollars, except per share and energy unit amounts) | |||||
Sales | 178,128 | 201,596 | |||
Gross profit | 129,342 | 130,157 | |||
Adjusted EBITDA(1) | 103,937 | 97,133 | |||
Operating income | 67,024 | 74,316 | |||
Net loss | (91,651) | (30,616) | |||
Free cash flow(1) | 44,866 | 50,245 | |||
Cash Dividends paid to Common and Class A Shareholders | 36,466 | 30,112 | |||
Total Dividends declared to Common and Class A Shareholders(2) | 46,168 | 42,340 | |||
Per Share | |||||
Free cash flow – basic | 0.26 | 0.33 | |||
Dividends declared to Shareholders(2) | 0.27 | 0.27 | |||
Energy Volumes | |||||
Electricity sales volume (megawatt hours) | 1,409,723 | 1,550,176 | |||
(1) See "Non-IFRS measures" for a detailed description. | |||||
(2) Total dividends to Common and Class A Shareholders represent cash dividends plus share dividends issued as part of Northland's dividend reinvestment plan. | |||||
First Quarter Results - Summary
Thermal facilities
Electricity production during the first quarter of 2016 was approximately 11% lower than the same quarter of 2015 primarily due to a decrease in production at Thorold as a result of fewer economic production periods and dispatch requests. These results were partially offset by increases in production at Spy Hill and North Battleford due to higher dispatch requests than the same quarter of 2015. However, the quantity of electricity produced at those three facilities had a minimal impact on gross profit given the nature of their PPAs. Gross profit at $84.9 million was $6.1 million higher than the same period in 2015 primarily due to the Iroquois Falls' contribution ($5.4 million), associated with the price escalation court decision with the OEFC, as well as a one-time charge of $2.3 million incurred by Thorold in the first quarter of 2015 related to a settlement for plant start-up costs. As a result of the above factors, operating income and adjusted EBITDA were $5.6 million and $5.4 million higher, than the first quarter of 2015.
Renewable facilities
Electricity production during the three months ended March 31, 2016 was 1,664 MWh lower than the same period in 2015 primarily due to a net 10,485 MWh decrease in production at the wind facilities caused by lower wind resources. This decrease was partially offset by an additional 8,821 MWh of production from the ground-mounted solar sites due to the additional solar facilities in operation compared to the first quarter of 2015. Sales during the first quarter of 2016 of $34.9 million were 10% higher than the first quarter of 2015 primarily due to the incremental contribution from the additional ground-mounted solar sites in operation. Plant operating costs during the first quarter of 2016 of $5.3 million were $0.7 million higher than the first quarter of 2015, primarily due to the incremental costs associated with the additional ground-mounted solar sites in operation.
Operating income was $2.3 million lower than the first quarter of 2015 largely due to the inclusion of depreciation on the additional ground-mounted solar facilities while adjusted EBITDA was $1.8 million higher than the same quarter of 2015 largely due to contributions from the additional ground-mounted solar facilities in operation.
Management and administration costs
Management and administration costs were $1.3 million higher than the first quarter of 2015 largely due to higher project development costs.
Finance costs, net
Finance costs, net (primarily interest expense), increased by $4.6 million from the first quarter of 2015 due to the inclusion of interest on the final four ground-mounted solar project debt.
Non-cash fair value losses
Non-cash fair value loss of $142.3 million in the first quarter of 2016 (compared to an $84.3 million loss in the first quarter of 2015) is comprised of a $140.0 million loss in the fair value of Northland's financial derivative contracts combined with a $2.3 million unrealized foreign exchange loss.
Net Loss
The factors described above, combined with a $1.4 million provision for current taxes and a $26.4 million recovery of deferred income taxes, resulted in a net loss of $91.7 million for the first quarter of 2016, compared to a net loss of $30.6 million for the first quarter of 2015.
Adjusted EBITDA
Northland's adjusted EBITDA for the three months ended March 31, 2016 was $6.8 million higher than the first quarter of 2015. Significant factors increasing and decreasing adjusted EBITDA for the comparative quarter are described below:
These favourable results were partially offset by:
Free Cash Flow, Payout Ratio and Dividends to Shareholders
Free cash flow of $44.9 million for the first quarter of 2016 was $5.4 million lower than the corresponding period in 2015. Significant factors increasing or decreasing free cash flow are described below:
Factors decreasing free cash flow were:
Factors increasing free cash flow were:
For the three months ended March 31, 2016, common share and Class A Share dividends declared for the quarter totalled $0.27 per share. The decrease in quarterly free cash flow from 2015, described above, was the primary reason for the increase in the quarterly free cash flow payout ratio to 81% or 103% if all dividends were paid out in cash (i.e. excluding the effect of dividends re-invested through Northland's DRIP).
Outlook
Northland actively pursues new power development opportunities that encompass a range of clean technologies, including natural gas, wind, solar and hydro.
During the first three months of 2016 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 but not limited to, North America, Europe, and Mexico. Northland has identified a number of opportunities in these jurisdictions, in addition to several projects already under development. Northland's 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.
Management continues to expect adjusted EBITDA in 2016 to be approximately $500 to $530 million. This adjusted EBITDA guidance includes Northland's share of pre-completion revenues from Gemini (EUR80 to EUR90 million at an assumed average rate of CA$1.48/euro) but excludes the lump-sum retroactive payments to Northland from the amounts owed by the OEFC pursuant to the Global Adjustment decision which is estimated at $90 million. The settlement is pending a decision by the OEFC to appeal with the Supreme Court of Canada as previously described.
In 2016, commensurate with adjusted EBITDA guidance, management continues to estimate the free cash flow per share range guidance of $0.93 to $1.08 per share. This free cash flow per share guidance includes $28 million of expected proceeds from the sale of 37.5% of four ground-mounted solar projects that is subject to meeting certain conditions. Similar to adjusted EBITDA guidance, free cash flow per share guidance excludes the impact from the expected lump-sum retroactive payments pursuant to the Global Adjustment settlement.
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 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, free cash flow payout ratio, free cash flow per share and adjusted EBITDA which are not measures prescribed by International Financial Reporting Standards (IFRS). Free cash flow, free cash flow payout ratio, free cash flow per share and adjusted EBITDA, do not have any standardized meaning under IFRS and 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, free cash flow payout ratio, free cash flow per share, 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 operations.
Earnings Conference Call
Northland will hold an earnings conference call on May 12 at 10:00 am EDT to discuss its first quarter financial results. John Brace, Northland's Chief Executive Officer, Paul Bradley, Northland's Chief Financial Officer and Mike Crawley, Northland's Executive Vice President, Business Development and 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: Thursday, May 12, 2016
Start Time: 10:00 a.m. EDT
Phone Number: Toll free within North America: 1-844-284-3434
For those unable to attend the live call, an audio recording will be available on Northland's website at (www.northlandpower.ca) from the afternoon of May 12 until May 26, 2016.
ABOUT NORTHLAND
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 1,388 MW of operating generating capacity and 932 MW (642 MW net to Northland) of generating capacity under construction, including a 60% equity stake in Gemini, a 600 MW offshore wind project, and an 85% equity stake in Nordsee One, a 332 MW offshore wind project, both located in the North Sea.
Northland's cash flows are diversified over four geographically separate regions and regulatory jurisdictions in Canada and Europe.
Northland's common shares, Series 1, Series 2 and Series 3 preferred shares and Series B and Series C convertible debentures trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A, NPI.PR.B, NPI.PR.C, NPI.DB.B, and NPI.DB.C, respectively.
FORWARD-LOOKING STATEMENTS
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 future adjusted EBITDA, free cash flows, free cash flow payout ratio, free cash flow per share, dividend payment and dividend payout ratios, the construction, completion, attainment of commercial operations, cost and output of development projects, the resolution of the arbitration claims, plans for raising capital, and the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. These statements are based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, 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, construction risks, counterparty risks, operational risks, foreign exchange rates, regulatory risks, maritime risks for construction and operation, 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 2015 Annual Report and Annual Information Form, both of which can be found at www.sedar.com under Northland's profile and on Northland's website www.northlandpower.ca. 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.
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For further information:
Barb Bokla
Manager, Investor Relations
647-288-1438
Adam Beaumont
Director of Finance
647-288-1929
Fax: (416) 962-6266
E-Mail: [email protected]
Website: www.northlandpower.ca
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