“Northland continued to deliver healthy, sustainable results in the quarter with a 14% increase in adjusted EBITDA and free cash flow per share over last year,” noted
Third Quarter Highlights:
Financial Results
- Sales increased 8% to
$378 million from$350 million in the third quarter of 2018 and gross profit increased 11% to$356 million from$321 million . - Adjusted EBITDA (a non-IFRS measure) increased 14% to
$224 million from$197 million in the third quarter of 2018. - Free cash flow per share (a non-IFRS measure) increased 14% to
$0.41 from$0.36 in the third quarter of 2018. - Net income increased 19% to
$111 million from$93 million in the third quarter of 2018.
Sales, gross profit 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.
Construction and Development Update
- Acquisition of EBSA – On
September 9, 2019 , Northland announced it entered into an agreement to purchase a 99.2% interest in a Colombian regulated utility, Empresa de Energía de Boyacá (“EBSA”), for approximately$1.05 billion , including existing debt ofCOP 550 billion (approximately$215 million ), subject to certain purchase price adjustments (the “Acquisition”). Closing of the Acquisition is expected in the fourth quarter and, under the terms of the purchase agreement, the final purchase price will take into account EBSA’s rate tariff for the 2019-2023 period, which is expected to be approved by the Colombian energy and utility regulator (Comisión de Regulación de Energía y Gas or “CREG”) in the fourth quarter. - La Lucha – 130 MW solar project,
Durango, Mexico – InMay 2019 , Northland announced the final investment decision followed by the commencement of the construction of its 100%-owned La Lucha 130 MW solar project in theState of Durango, Mexico , which Northland originated as part of its broaderMexico development strategy. The project is progressing according to schedule and on budget. Total capital cost for the project is approximately$190 million with project completion expected in the second half of 2020. - Deutsche Bucht – 269 MW offshore wind project,
North Sea ,Germany – The construction of Northland’s Deutsche Bucht offshore wind project remains on budget and all 31 monopile foundation turbines were installed by the end ofAugust 2019 , ahead of schedule, and generating power by the end ofSeptember 2019 . Installation of the two turbines utilizing mono bucket foundations is expected to begin in the fourth quarter of 2019; however, full completion may extend into the first quarter of 2020 due to delays in the manufacturing of the mono bucket foundations resulting from supplier disruptions and the potential for adverse weather. The total estimated project cost remains at approximately €1.4 billion (CAD$2.0 billion ). Hai Long – 1,044 MW offshore wind project,Taiwan Strait – Since the execution of a 20-year power purchase agreement (PPA) with Taipower for the Hai Long 2A 300 MW offshore wind project inFebruary 2019 , Northland remains engaged in developingHai Long 2B andHai Long 3 sub-projects and expects to execute their respective PPAs with Taipower in 2019.- Addition to Northland’s Executive Team – In
October 2019 ,David Povall joined Northland as the Executive Vice President, Development. David will be based out of theToronto office and will be responsible for leading the company’s development initiatives in key markets around the globe. David brings to Northland more than 20 years of experience in the international power generation industry, including greenfield project development spanning multiple jurisdictions and technologies. Most recently, he served as Chief Executive Officer of Acacia Renewables, a Macquarie-owned developer focused on the Japanese market.
Summary of Consolidated Results | ||||||||||||||||
(in thousands of dollars, except per share amounts) | Three months ended |
Nine months ended |
||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
FINANCIALS | ||||||||||||||||
Sales | $ | 378,437 | $ | 350,175 | $ | 1,220,799 | $ | 1,174,724 | ||||||||
Gross profit | 355,945 | 320,985 | 1,136,871 | 1,090,236 | ||||||||||||
Operating income | 176,900 | 149,889 | 610,433 | 562,162 | ||||||||||||
Net income (loss) | 110,621 | 93,278 | 391,085 | 340,257 | ||||||||||||
Adjusted EBITDA (1) | 224,312 | 196,797 | 712,021 | 670,209 | ||||||||||||
Cash provided by operating activities | 241,554 | 193,274 | 890,789 | 842,724 | ||||||||||||
Free cash flow (1) | 74,112 | 63,948 | 251,125 | 248,964 | ||||||||||||
Cash dividends paid to common and class A shareholders | 54,119 | 40,219 | 162,243 | 119,458 | ||||||||||||
Total dividends declared (2) |
54,122 | 53,122 | 162,265 | 158,815 | ||||||||||||
Per share information | ||||||||||||||||
Net income (loss) - basic | $ | 0.42 | $ | 0.38 | $ | 1.48 | $ | 1.28 | ||||||||
Free cash flow - basic (1) | $ | 0.41 | $ | 0.36 | $ | 1.39 | $ | 1.40 | ||||||||
Total dividends declared (2) | $ | 0.30 | $ | 0.30 | $ | 0.90 | $ | 0.90 | ||||||||
ENERGY VOLUMES | ||||||||||||||||
Electricity production in gigawatt hours (GWh) | 2,058 | 1,777 | 6,394 | 5,895 | ||||||||||||
(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 dividend re-investment plan (DRIP). For 2019, cash dividends equal total dividends since shares under the DRIP are sourced from the secondary market. | ||||||||||||||||
Third Quarter Results Summary
Offshore wind facilities
Electricity production, including pre-completion production, increased 33% or 214 GWh compared to the same quarter of 2018 primarily due to pre-completion production from Deutsche Bucht and higher wind resource in the
Thermal facilities
Electricity production increased 7% or 58 GWh compared to the same quarter of 2018 primarily due to an increase in off-peak production and new incremental capacity at
Sales of
On-shore renewable facilities
Electricity production was 3.4% or 9 GWh higher than the same quarter of 2018 largely due to higher wind resource. Sales of
General and administrative (G&A) costs
G&A costs of
Finance costs
Net finance costs of
Net income
Net income of
Adjusted EBITDA
Adjusted EBITDA of
$16 million increase as a result of net pre-completion revenues at Deutsche Bucht;$8 million increase in operating results from Gemini due to higher production as well as lower insurance costs; and$4 million increase in operating results from Nordsee One primarily due to higher production as well as lower costs from operating efficiencies.
Factors partially offsetting the increase in adjusted EBITDA include:
$4 million increase in corporate items in adjusted EBITDA primarily due to the timing of expenditures related to project development activities.
Free Cash Flow
Free cash flow of
Factors increasing free cash flow include:
$15 million net increase in overall earnings primarily due to the factors affecting adjusted EBITDA except net pre-completion revenues from Deutsche Bucht, which are excluded from free cash flow; and$8 million decrease in net interest expense due to declining interest costs as a result of scheduled principal repayments on facility-level loans, lower outstanding balance on corporate credit facilities and redemption of convertible debentures inDecember 2018 .
Factors partially offsetting the increase in free cash flow include:
$7 million increase in current taxes related to the offshore wind facilities; and$4 million increase in corporate G&A primarily due to the timing of expenditures related to project development activities.
As at
Outlook
Northland aims to increase shareholder value by creating high-quality projects underpinned by revenue arrangements that deliver predictable cash flows. Management actively seeks to invest in technologies and jurisdictions where Northland can benefit from an early-mover advantage and establish a meaningful presence while striving for excellence in managing Northland’s operating facilities by enhancing their performance and value.
As of
Earnings Conference Call
Northland will hold an earnings conference call on
Conference call details are as follows: |
|
Toll free ( |
(844) 284-3434 |
Toll free (International): | (949) 877-3040 |
The call will also be broadcast live on the internet, in listen-only mode and may be accessed on northlandpower.com. For those unable to attend the live call, an audio recording will be available on northlandpower.com on
ABOUT
The Company owns or has an economic interest in 2,429 MW (net 2,014 MW) of operating generating capacity and 399 MW of generating capacity under construction, representing the Deutsche Bucht offshore wind project in the
Northland’s common shares, subscription receipts, Series 1, Series 2, and Series 3 preferred shares and Series C convertible debentures trade on the
NON-IFRS FINANCIAL MEASURES
This press release includes references to Northland’s adjusted earnings before interest, income taxes, depreciation and amortization (“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, SECTION 4.5: Free Cash Flow and SECTION 5: CHANGES IN FINANCIAL POSITION of the current Management’s Discussion and Analysis, which can be found on SEDAR at www.sedar.com under Northland’s profile and on northlandpower.com, for an explanation of these terms and for reconciliations to the nearest IFRS measure.
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, revenue contracts, counterparty risks, contractual operating performance, variability of revenue from generating facilities powered by intermittent renewable resources, offshore wind concentration, natural gas and power market risks, operational risks, permitting, construction risks, project development risks, financing risks, interest rate and refinancing risks, liquidity risk, credit rating risk, currency fluctuation risk, variability of cash flow and potential impact on dividends, taxation, natural events, environmental, health and worker safety risks, market compliance risk, government regulations and policy risks, international activities, reliance on information technology, labour relations, reputational risk, insurance risk, risks relating to co-ownership, bribery and corruption risk, legal contingencies, and the other factors described in the “Risks Factors” section of Northland’s 2018 Annual Information Form dated
The forward-looking statements contained in this release are based on assumptions that were considered reasonable on
For further information, please contact:
Mr.
investorrelations@northlandpower.com
northlandpower.com
Source: Northland Power Inc.