TORONTO, Aug. 08, 2018 (GLOBE NEWSWIRE) -- Northland Power Inc. (“Northland” or the “Company”) (TSX:NPI) today reported financial results for the three and six months ended June 30, 2018.
“We continue to make great progress on our 2018 priorities,” said Mike Crawley, Chief Executive Officer. “In addition to the 300 MW allocated to the Hai Long offshore wind project in April under Taiwan’s Feed-In-Tariff program, Northland and its partner were allocated an additional 744 MW in June under Taiwan’s offshore wind auction program, increasing the projects’ total allocation to 1,044 MW. We continue to advance the Hai Long projects toward securing PPAs. Furthermore, we entered into a new $1.25 billion corporate credit facility and secured 17 MW of additional capacity on our Deutsche Bucht offshore wind project, which is advancing on schedule and on budget. These achievements, together with our second quarter financial results, reflect our ongoing commitment to balancing significant growth with stable returns.”
Second Quarter Highlights:
Financial
Sales and net income, as reported under IFRS, include consolidated results of entities not wholly-owned by Northland, whereas the above non-IFRS measures, adjusted EBITDA and free cash flow only include Northland’s proportionate interest.
Development and Construction
Project | Awarded | MW Procured (Gross) | MW Procured (Net) (1) | Year of Grid Connection | Type of Procurement |
Hai Long 2A | April 2018 | 300 | 180 | 2024 | FIT |
Hai Long 2B | June 2018 | 232 | 139 | 2025 | Auction |
Hai Long 3 | June 2018 | 512 | 307 | 2025 | Auction |
Total | 1,044 | 626 | |||
(1) Represents Northland’s 60% economic interest. |
Other
Summary of Consolidated Results | ||||||||||||
(in thousands of dollars, except per share amounts) | Three months ended June 30, | Six months ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
FINANCIALS | ||||||||||||
Sales | $ | 338,177 | $ | 322,351 | $ | 824,549 | $ | 686,402 | ||||
Gross profit | 314,694 | 283,603 | 769,251 | 606,685 | ||||||||
Operating income | 130,532 | 144,527 | 411,686 | 332,159 | ||||||||
Net income (loss) | 69,024 | 61,733 | 246,979 | 161,845 | ||||||||
Adjusted EBITDA (1) | 182,991 | 168,158 | 473,412 | 366,275 | ||||||||
Cash provided by operating activities | 343,320 | 142,155 | 633,085 | 418,860 | ||||||||
Free cash flow (1) | 36,969 | 99,717 | 185,016 | 141,265 | ||||||||
Cash dividends paid to common and class A shareholders | 40,108 | 33,298 | 79,239 | 66,853 | ||||||||
Total dividends declared (2) | 52,938 | 46,964 | 105,693 | 93,769 | ||||||||
Per share information | ||||||||||||
Net income (loss) - basic | $ | 0.29 | $ | 0.19 | $ | 0.90 | $ | 0.49 | ||||
Free cash flow - basic (1) | $ | 0.21 | $ | 0.57 | $ | 1.05 | $ | 0.81 | ||||
Total dividends declared (2) | $ | 0.30 | $ | 0.27 | $ | 0.60 | $ | 0.54 | ||||
ENERGY VOLUMES | ||||||||||||
Electricity production in gigawatt hours (GWh) (3) | 1,790 | 1,431 | 4,117 | 3,325 | ||||||||
(1) Refer to the Non-IFRS Financial Measures section of this press release for additional information. | ||||||||||||
(2) Represents total dividends declared to common and class A shareholders including dividends in cash or in shares under the DRIP. | ||||||||||||
(3) For 2017, includes Gemini and Nordsee One pre-completion production volumes. Refer to SECTION 4.1 Operating Facilities’ Results of the Management’s Discussion and Analysis for the three and six months ended June 30, 2018, for additional information. | ||||||||||||
Second Quarter Results Summary
Offshore wind facilities
Electricity production, including pre-completion production, increased 172 GWh or 33% compared to the same quarter last year primarily due to all of Nordsee One’s turbines producing power during the quarter, whereas the project was under construction last year, partially offset by lower wind resource in the North Sea.
Sales and adjusted EBITDA of $192.6 million and $103.7 million, respectively, increased $31.9 million and $21.1 million compared to the same quarter last year as a result of Nordsee One having reached full commercial operations in December 2017, partially offset by lower wind resource in the North Sea. Foreign exchange rate fluctuations resulted in $11.0 million higher revenue compared to the same quarter last year.
Thermal facilities
Electricity production increased 160 GWh or 27% compared to the same quarter last year primarily due to higher production at Thorold and higher on-peak production at North Battleford, partially offset by a longer scheduled maintenance outage at Kirkland Lake.
Sales of $84.7 million decreased $21.6 million compared to the same quarter last year primarily due to lower natural gas resales at Iroquois Falls due to the expiration of a natural gas contract in October 2017 ($11.5 million) and a reduced rate escalation estimate from the system operator under the Enhanced Dispatch Contract (EDC) at Iroquois Falls (including a $4.1 million adjustment related to 2017). A longer scheduled maintenance outage at Kirkland Lake ($3.3 million), and lower flow-through natural gas costs at North Battleford ($3.9 million) also contributed to lower sales. Operating income and adjusted EBITDA of $36.1 million and $51.1 million, respectively, decreased $7.9 million and $6.4 million primarily as a result of lower gross profit.
On-shore renewable facilities
Electricity production increased 27 GWh or 9% compared to the same quarter last year primarily due to higher wind and solar resources at most facilities, partially offset by lower wind resource at Grand Bend and the sale of the German wind farms in November 2017. Sales of $60.9 million increased $5.6 million compared to the same quarter last year as a result of the same factors. Similarly, operating income and adjusted EBITDA for the renewable facilities was $5.6 million and $4.9 million, respectively, higher than the same quarter last year.
General and administrative (“G&A”) costs
Corporate G&A costs (previously reported as management and administration costs) of $20.5 million increased $4.9 million compared to the same quarter last year primarily due to the higher early-stage development activities ($2.0 million) and higher personnel costs ($2.0 million). Facilities G&A costs decreased $0.4 million primarily as a result of certain non-recurring costs incurred in the same quarter last year at Gemini and Nordsee One.
Finance costs
Finance costs, net, increased $6.3 million compared to the same quarter of last year primarily due to interest costs at Nordsee One no longer being capitalized following completion of construction activities in December 2017 as well as costs incurred on entering into the new corporate credit facility.
Fair value gain on derivative contracts
Fair value gain on derivative contracts was $48.5 million compared to a $0.1 million gain in the same quarter of last year primarily due to the movement in the fair value of interest rate swaps and foreign exchange contracts.
Foreign exchange loss
Foreign exchange loss of $7.5 million is primarily due to unrealized losses from fluctuations in the closing foreign exchange rate.
Net income
The factors described above resulted in net income of $69.0 million for the second quarter of 2018, compared to $61.7 million for the second quarter of 2017.
Adjusted EBITDA
Adjusted EBITDA of $183.0 million for the second quarter of 2018 was $14.8 million higher than the second quarter of 2017. The significant factors increasing adjusted EBITDA were:
Factors partially offsetting the increase in adjusted EBITDA include:
Free Cash Flow
Free cash flow of $37.0 million for the second quarter of 2018 was $62.7 million lower than the second quarter of 2017 primarily due to several one-time items related to the completion of Gemini and Nordsee One.
Significant factors decreasing free cash flow were:
Factors partially offsetting the decrease in free cash flow include:
As at June 30, 2018, the rolling four quarter free cash flow net payout ratio was 48.9%, calculated on the basis of cash dividends paid, and 66.7% calculated on the basis of total dividends, compared to 46.4% and 63.7%, respectively, last year. The increase in the free cash flow payout ratios from last year was primarily due to the impact of the one-time cash distribution from Gemini in the second quarter of 2017 and due to Nordsee One making its first principal repayment this quarter.
Outlook
Northland actively pursues new power development opportunities that encompass a range of clean technologies, including natural gas, wind, solar and hydro.
As of August 8, 2018, Northland continues to expect adjusted EBITDA in 2018 to be in the range of $860 to $930 million and free cash flow per share in 2018 to be in the range of $1.70 to $2.00.
As a result of the financial close of the Deutsche Bucht demonstrator project in July 2018, once the construction of the offshore wind project is completed and is fully operational in 2020, management expects Deutsche Bucht to generate adjusted EBITDA of approximately €165 to €185 million annually, up from the range disclosed in the 2017 Annual Report of €155 to €175 million annually.
Refer to the Management’s Discussion and Analysis included in Northland’s 2017 Annual Report for additional information on Northland’s outlook for 2018.
Non-IFRS Measures
This press release includes references to Northland’s adjusted EBITDA and free cash flow and applicable payout ratio and per share amounts, which are not measures prescribed by International Financial Reporting Standards (IFRS). Adjusted EBITDA and free cash flow and applicable payout ratio and per share amounts do not have any standardized meaning under IFRS and, as presented, may not be comparable to similar measures presented by other companies. These measures should not be considered alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of Northland’s results of operations from management’s perspective. Management believes that adjusted EBITDA and free cash flow and applicable payout ratio and per share amounts are widely accepted financial indicators used by investors to assess the performance of a company and its ability to generate cash through operations. Refer to the SECTION 1: Overview, SECTION 4.4: Adjusted EBITDA and SECTION 4.5: Free Cash Flow of the current Management’s Discussion and Analysis, which can be found on SEDAR at www.sedar.com under Northland’s profile and on Northland’s website at www.northlandpower.com, for an explanation of these terms and for reconciliations to the nearest IFRS measure.
Earnings Conference Call
Northland will hold an earnings conference call on August 9, 2018 at 10:00 am ET to discuss its 2018 second quarter results. Mike Crawley, Northland’s Chief Executive Officer, and Paul Bradley, Northland’s Chief Financial Officer, will discuss the financial results and company developments before opening the call to questions from analysts and shareholders.
Conference call details are as follows:
Date: Thursday, August 9, 2018
Start Time: 10:00 a.m. ET
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.com from August 10 until August 24, 2018.
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 an economic interest in 2,458 MW (net 2,029 MW) of operating generating capacity and 269 MW of generating capacity under construction, representing the Deutsche Bucht offshore wind project in the North Sea, in addition to its 60% equity stake in the 1,044 MW Hai Long projects under development in Taiwan.
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 press release contains certain forward-looking statements that 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,” “predicts,” “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, dividend payments and dividend payout ratios; the construction, completion, attainment of commercial operations, cost and output of development projects; litigation claims; plans for raising capital; and the future operations, business, financial condition, financial results, 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 and 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, contract, contract counterparties, operating performance, variability of renewable resources and climate change, offshore wind concentration risk, market power prices, fuel supply, transportation and price, operations and maintenance, permitting, construction, development prospects and advanced stage development projects, financing, interest rates, refinancing, liquidity, credit rating, currency fluctuations, variability of cash flows and potential impact on dividends, taxes, natural events, environmental, health and safety, government regulations and policy, international activities, relationship with stakeholders, reliance on information technology, reliance on third parties, labour relations, insurance, co-ownership, bribery and corruption, legal contingencies, and the other factors described in the “Risks Factors” section of Northland’s 2017 Annual Information Form dated February 22, 2018, which can be found at www.sedar.com under Northland’s profile and on Northland’s website at www.northlandpower.com. Northland’s actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur.
The forward-looking statements contained in this release are based on assumptions that were considered reasonable on August 8, 2018. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.
For further information, please contact:
Barbara Bokla, Manager, Investor Relations, (647) 288-1438
[email protected]
www.northlandpower.com
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