- Acquisition of the remaining interest in the wind portfolio in
France in Q4 2022 (adding net 99
MW)
- Acquisition of the remaining interest in the Mountain Air wind
facilities in Idaho in Q4 2022
(adding net 52 MW)
- Agreement to acquire three solar facilities in Ontario in Q1 2023 (to add 60 MW)
- 30-year, 320 MW power purchase agreement effective for the
Boswell Springs wind project in Wyoming
All amounts are in
thousands of Canadian dollars, unless otherwise
indicated.
|
LONGUEUIL, QC, Feb. 22,
2023 /CNW/ - Innergex Renewable Energy Inc.
(TSX: INE) ("Innergex" or the "Corporation") today released
its operating and financial results for the fourth quarter and year
ended December 31, 2022.
"In 2022, we vigorously continued to pursue the objectives laid
out in our 2020-2025 Strategic Plan and I am extremely proud of our
team and all they accomplished this year. In addition to concluding
four acquisitions, we commissioned our first stand-alone battery
energy storage facility in France,
advanced two battery storage projects in Chile, improved efficiency at our operation
sites, and completed the procurement agreement for our first 5 MW
electrolyser for green hydrogen production. More than ever, we
remain committed in our strategy to create long-term, sustainable
wealth by continuing to follow our four objectives to grow
responsibly, build expertise, optimize operations, and diversify
activities," said Michel Letellier,
President and Chief Executive Officer at Innergex. "As the world
rapidly evolves and climate change impacts are being increasingly
experienced across the globe, we remain convinced in our mission
and that Innergex will play an important role in leading the energy
transition that is long overdue. With our long-term vision, our
sustainable business model, and our approach of technology and
geographical diversification, we remain well equipped to seize the
opportunities that lay ahead and deliver strong results."
RECENT DEVELOPMENTS
On October 4, 2022, the
Corporation successfully completed the previously announced
acquisition of the remaining 30.45% minority interest in its wind
portfolio of 16 assets in France
(the "French Acquisition") for a total consideration of
$96.4 million.
On October 5, 2022, concurrent
with the closing of the French Acquisition, Innergex monetized its
Euro/CAD foreign exchange forward contracts for a total gain of
$43.5 million and simultaneously
amended the Euro/CAD foreign exchange forward contracts for a total
notional amount of $115.3 million
amortizing until 2043 and allowing conversion at a fixed rate of
CAD 1.4838/Euro.
On October 10, 2022, to take
advantage of the currently favourable energy pricing environment in
France, Innergex entered into two
power purchase agreements for its Bois d'Anchat and Beaumont wind facilities (the "New PPAs"),
which took effect on January 1,
2023, concurrently with the early termination of the current
power purchase agreements. In addition, the New PPAs effectively
increase the contracted period of the facilities to December 31, 2032.
On December 14, 2022, the
Corporation acquired all the Class A shares of its 138 MW Mountain
Air wind portfolio in Idaho,
United States (the "Mountain Air
Acquisition"), for a total consideration of US$47.5 million ($64.4
million) from its tax equity partner. These shares represent
the remaining 37.75% of the outstanding shares of the portfolio not
already owned by Innergex.
During 2022, the Corporation added 5 net new Prospective
Projects for a total of 188 MW. Its portfolio now aggregates 79
projects for a total of 8,701 MW, with 15 projects currently at an
advanced stage, for a total 1,093 MW of installed
capacity.
FINANCIAL HIGHLIGHTS
|
Three months ended
December 31
|
Year ended December
31
|
2022
|
2021
|
Change
|
2022
|
2021
|
February
2021 Texas
Events
(9 days)3
|
2021 Normalized
|
Change
|
Production
(MWh)
|
2,357,039
|
2,583,157
|
(9) %
|
10,254,005
|
9,055,215
|
—
|
9,055,215
|
13 %
|
Long-Term Average (MWh)
("LTA")
|
2,899,620
|
2,584,077
|
12 %
|
11,452,101
|
9,659,836
|
—
|
9,659,836
|
19 %
|
Revenues
|
203,636
|
202,388
|
1 %
|
870,494
|
747,208
|
(54,967)
|
692,241
|
26 %
|
Operating, general,
administrative and prospective
projects expenses
|
83,277
|
65,077
|
28 %
|
285,579
|
221,571
|
—
|
221,571
|
29 %
|
Adjusted
EBITDA1
|
120,359
|
137,311
|
(12) %
|
584,915
|
525,637
|
(54,967)
|
470,670
|
24 %
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Earnings
|
(52,575)
|
5,743
|
1015 %
|
(91,115)
|
(185,394)
|
64,219
|
(121,175)
|
(25) %
|
Adjusted Net
Loss1
|
(29,284)
|
(9,974)
|
(194) %
|
(34,860)
|
(6,951)
|
—
|
(6,951)
|
(402) %
|
Net (Loss) Earnings
Attributable to Owners, $ per share -
basic and diluted
|
(0.23)
|
(0.02)
|
|
(0.43)
|
(1.09)
|
0.35
|
(0.74)
|
|
Production
Proportionate (MWh)1
|
2,448,626
|
2,676,157
|
(9) %
|
10,792,047
|
9,853,366
|
—
|
9,853,366
|
10 %
|
Revenues
Proportionate1
|
231,580
|
231,051
|
— %
|
995,758
|
913,147
|
(95,273)
|
817,874
|
22 %
|
Adjusted EBITDA
Proportionate1
|
144,960
|
162,954
|
(11) %
|
696,362
|
673,745
|
(95,273)
|
578,472
|
20 %
|
|
|
|
|
|
|
|
|
|
|
|
Trailing twelve months
ended December 31
|
|
|
|
|
2022
|
2021
|
February
2021 Texas
Events (9
days)3
|
2021 Normalized
|
Change
|
Cash Flow from
Operating Activities
|
|
|
|
430,243
|
265,498
|
17,093
|
282,591
|
52 %
|
Free Cash
Flow1,2
|
|
|
|
147,248
|
92,315
|
15,789
|
108,104
|
36 %
|
Payout
Ratio1,2
|
|
|
|
100 %
|
143 %
|
(21) %
|
122 %
|
|
|
1.
|
These measures are not
recognized measure under IFRS and therefore may not be comparable
to those presented by other issuers. Production and Production
Proportionate are key performance indicators for the Corporation
that cannot be reconciled with an IFRS measure. Please refer to the
"Non-IFRS Measures" section of the Management's Discussion and
Analysis for the three-month period and year ended December 31,
2022 for more information.
|
2.
|
For more information on
the calculation and explanation, please refer to the "Free Cash
Flow and Payout Ratio" section of the Management's Discussion and
Analysis for the three-month period and year
ended December 31, 2022.
|
3.
|
For the year ended
December 31, 2021, the operating results, the Cash Flow From
Operating Activities, Free Cash Flow and Payout Ratio are
normalized to exclude the impacts of the February 2021 Texas
Events. Normalized measures are not recognized measures under IFRS
and therefore may not be comparable to those presented by other
issuers. Please refer to the "February 2021 Texas Events" section
of the Management's Discussion and Analysis for the three-month
period and year ended December 31, 2022 for more
information.
|
OPERATING PERFORMANCE
THREE-MONTH PERIOD ENDED DECEMBER 31,
2022
Production was 81% of LTA. Innergex's share of
production of joint ventures and associates1 was 105% of
LTA, translating into a Production Proportionate1 at 82%
of LTA. Revenues were up 1% at $203.6
million compared with the same period last year. The
increase is mainly explained by the acquisition of Aela in
Chile in June 2022; higher
spot prices from the Chilean hydro facilities; favourable market
prices from the US wind facilities; increased revenues from the new
PPAs in place at some wind facilities in France; the commissioning of the Amazon Solar
Farm Ohio - Hillcrest ("Hillcrest") facility in 2021; higher
average selling prices at the Phoebe solar facility in the United States; and the acquisition of the
San Andrés solar facility in Chile
in January 2022. These items were
partly offset by exceptionally low production at the hydro
facilities in British Columbia and
at Curtis Palmer due to drier weather; and lower selling prices at
the Salvador facility in
Chile. Revenues
Proportionate1 were stable at $231.6 million compared to the same period
last year.
Operating, general, administrative and prospective projects
expenses were up 28% at $83.3 million compared with the same period
last year. The increase is mainly attributable to the Aela
Acquisition, the commissioning of the Hillcrest solar facility and
the impact of the 2022 Supplementary Budget Act in France on French facilities; the San Andrés
Acquisition and the higher expenses following the Curtis Palmer
Acquisition in October 2021. The
increase was partly offset by lower maintenance costs at some hydro
facilities in British Columbia.
The Adjusted EBITDA1 was down 12% at $120.4 million compared with the same period last
year. The Adjusted EBITDA Proportionate1 was down 11% at
$145.0 million compared with the same
period last year.
The Corporation recorded a net loss of $52.6 million ($0.23 net loss per share - basic and diluted) for
the three-month period ended December 31, 2022, compared with
net earnings of $5.7 million
($0.02 net earnings per share - basic
and diluted) for the corresponding period in 2021. In addition to
the hydroelectric, wind and solar segments' respective operating
performance, the $58.3 million
increase in net loss mainly stems from a $47.9 million increase in impairment of long-term
assets following the impairment charges recognized in 2022 on the
Hawaiian projects and on the safe harbor solar modules; a
$16.4 million increase in finance
costs mainly related to the Aela Acquisition and the Griffin Trail
and Hillcrest facilities; and a $16.0
million increase in depreciation and amortization, mainly
attributable to the Aela and San Andrés acquisitions.
YEAR ENDED DECEMBER 31,
2022
Production was 90% of LTA. Innergex's share of production
of joint ventures and associates1 was 100% of LTA,
translating into a Production Proportionate1 at 90% of
LTA. Revenues were up 26% at $870.5
million compared with last year, for which Revenues were
normalized to exclude the February
2021 Texas Events. The increase is mainly due to the
acquisition of Aela in Chile in
June 2022; the acquisition of the
Curtis Palmer hydroelectric portfolio in New York in October
2021; the acquisition of the remaining 50% interest in
Energía Llaima in Chile in
July 2021, for which results are now
included in Innergex's consolidated revenues; the commissioning of
the Griffin Trail wind facility in Texas in July
2021; higher selling prices at the Phoebe solar facility;
the BC Hydro Curtailment Payment2; higher production
from the wind facilities in Quebec; the acquisition of the Licán hydro
facility in Chile in
August 2021; the acquisition of the San Andrés solar facility
in Chile in January 2022; and the commissioning of the
Tonnerre storage facility in France in July
2022. These factors were partly offset by exceptionally low
production at the facilities in British
Columbia due to drier weather. Revenues
Proportionate1 increased by 22% to $995.8 million over last year.
Operating, general, administrative and prospective projects
expenses were up 29% at $285.6
million compared with last year. The increase is mainly
attributable to the Aela Acquisition; the commissioning of the
Hillcrest solar facility; the Curtis Palmer Acquisition; the impact
of the 2022 Supplementary Budget Act in France on French facilities; higher
maintenance costs at some facilities in British Columbia following the floods that
occurred at the end of 2021; the commissioning of the Griffin Trail
wind facility in Texas; and the
acquisition of the remaining 50% interest in Energía Llaima and of
Licán. The Adjusted EBITDA1 was up 24% at $584.9 million compared with last year. The
Adjusted EBITDA Proportionate1 was up 20% at
$696.4 million compared with last
year.
Innergex recorded a net loss of $91.1
million ($0.43 net loss per
share - basic and diluted) for the year ended December
31, 2022, compared with a net loss of $185.4 million ($1.09 net loss per share - basic and diluted) for
the corresponding period in 2021. In addition to the hydroelectric,
wind and solar segments' respective operating performance
previously discussed, the decrease in net loss, this is explained
by the impacts of the February 2021
Texas Events in 2021 and by the recognition of an aggregate
$112.6 million share of impairment
charges in the Flat Top and Shannon joint ventures in 2021
recognized during the same year. These items were partly offset by
an $80.4 million increase in
depreciation and amortization and a $65.6
million increase in finance costs, mainly attributable to
the recent acquisitions and commissionings and a $10.9 million increase in impairment of long-term
assets following the impairment charges recognized in 2022 on the
Hawaiian projects and on the safe harbor solar modules, partly
offset by the impairment charges recognized in 2021.
1.
|
This is not a
recognized measure under IFRS and therefore may not be comparable
to those presented by other issuers. Please refer to the "Non-IFRS
Measures" section for more information.
|
2.
|
The BC Hydro
Curtailment Payment refers to the curtailment notices sent by BC
Hydro in May 2020 for six hydro facilities which were disputed by
the Corporation on the basis that, under its Electricity Purchase
Agreements with BC Hydro, BC Hydro can exercise this right but is
required to compensate Innergex for energy that would have been
produced at the facilities in the absence of the curtailment. For
the period from May 22, 2020 to July 20, 2020, actual eligible
energy revenue that would have been produced at the facilities in
the absence of the curtailment amounts to $12.5 million ($14.2
million on a Revenues Proportionate1 basis). The dispute
was settled in the first quarter of 2022 to Innergex's satisfaction
(please refer to the "Capital and Liquidity" section of the
Management's Discussion and Analysis for the three-month period and
year ended December 31, 2022 for more information).
|
CASH FLOW FROM OPERATING ACTIVITIES, FREE CASH
FLOW3 AND PAYOUT RATIO3
For the three-month period ended December 31, 2022, cash
flows from operating activities totalled $93.6 million, compared with $75.8 million in the same period last year. The
increase relates primarily to the realized gain on financial
instruments following the monetization of the foreign exchange
forward contracts concurrent with the closing of the French
Acquisition, to the Aela and San Andrés acquisitions, and to the
timing of interest payments for certain BC project debts in
Q4 2022, partly offset by an increase in finance costs paid
relative to the Green Bonds issued as part of a refinancing of the
non-recourse debt in Chile
following the Aela Acquisition.
For the year ended December 31, 2022, cash flows from
operating activities totalled $430.2
million, compared with $265.5 million in the same period last year.
The increase relates primarily to the contribution from the Energía
Llaima, Licán, Curtis Palmer, San Andrés and Aela acquisitions, the
Hillcrest and Griffin Trail commissionings, and the BC Hydro
Curtailment Payment. The realized gain on financial instruments
following the settlement of both the interest rate swaps, as part
of Innergex's refinancing of the non-recourse debt of its Chilean
facilities, the foreign exchange forward contract concurrent with
the closing of the French Acquisition, net unfavourable impact of
the February 2021 Texas Events, and
the timing of interest payments for certain BC project debts in Q4
2022, also contributed to increased cash flows from operating
activities. These items were partly offset by an increase in
finance costs paid mainly related to the Griffin Trail and
Hillcrest facilities commissioned in 2021 and to the Green Bonds
issued as part of a refinancing of the non-recourse debt in
Chile following the Aela
Acquisition and from the unfavourable difference between sales at
the Phoebe node and purchases at the ERCOT South hub.
The following table summarizes the Free Cash Flow3
and Payout Ratio3 normalized for the year ended
December 31, 2021 to exclude the impacts of the
February 2021 Texas Events.
Free Cash Flow and
Payout Ratio calculation1
|
Year ended December
31
|
2022
|
2021
|
February
2021 Texas
Events
(9 days)2
|
2021 Normalized2
|
Free Cash
Flow1,2,3
|
147,248
|
92,315
|
15,789
|
108,104
|
|
|
|
|
|
Dividends declared on
common shares
|
146,957
|
132,229
|
—
|
132,229
|
Payout
Ratio1,2
|
100 %
|
143 %
|
(21) %
|
122 %
|
Adjusted Payout
Ratio1,2
|
85 %
|
|
|
98 %
|
1.
|
Free Cash Flow, Payout
Ratio and Adjusted Payout Ratio are not recognized measures under
IFRS and therefore may not be comparable to those presented by
other issuers. Please refer to the "Non-IFRS Measures" section for
more information.
|
2.
|
For the year ended
December 31, 2021, the Free Cash Flow, Payout Ratio and Adjusted
Payout Ratio are normalized to exclude the impacts of the February
2021 Texas Events. Normalized measures are not recognized measures
under IFRS and therefore may not be comparable to those presented
by other issuers. Please refer to the "February 2021 Texas Events"
section of the Management's Discussion and Analysis for the
three-month period and year ended December 31, 2022 for more
information.
|
3.
|
Free Cash Flow for the
year ended December 31, 2022 includes the one-time BC Hydro
Curtailment Payment received during the first quarter of
2022.
|
For the year ended December 31, 2022, the dividends on
common shares declared by the Corporation amounted to 100% of Free
Cash Flow3 compared with 143% for the corresponding
period last year. Excluding the impacts from the February 2021 Texas Events (refer to the
"February 2021 Texas Events" section
of the Management's Discussion and Analysis for the three-month
period and year ended December 31,
2022 for more information), the dividends on common shares
declared by the Corporation for the corresponding period last year
amounted to 122% of Normalized Free Cash Flow3,4.
3.
|
This is not a
recognized measure under IFRS and therefore may not be comparable
to those presented by other issuers. Please refer to the "Non-IFRS
Measures" section for more information.
|
4.
|
Normalized measures are
not recognized measures under IFRS and therefore may not be
comparable to those presented by other issuers. Please refer to the
"February 2021 Texas Events" section of the Management's Discussion
and Analysis for the three-month period and the year ended December
31, 2022 for more information.
|
SUBSEQUENT EVENTS
On January 23, 2023, the
Corporation announced that it has entered into an agreement to
acquire the 60 MW Sault Ste. Marie solar portfolio located in
northwestern Ontario for a
purchase price of $50.2 million,
along with the assumption of $169.5
million of existing debt. The portfolio is composed of the
Sault Ste. Marie 1 (20 MW),
Sault Ste. Marie 2 (30 MW) and
Sault Ste. Marie 3 (10 MW) solar
facilities. The acquisition is expected to close in Q1 2023
and is subject to certain regulatory approvals in Canada, key third party consents and other
customary closing conditions.
On February 1, 2023, Innergex has
completed the refinancing of the subordinated unsecured term loan
with a non-revolving term credit facility of $75.0 million bearing interest at a fixed rate of
6.25% and maturing on February 1,
2025, and a non-revolving term credit facility of
$75.0 million bearing interest at a
variable rate of 4.87%, based on the bankers' acceptance rates plus
a spread of 1.85% which depends on leverage ratio, maturing on
February 1, 2025. Concurrently, the
Corporation concluded an interest rate swap to hedge a $50.0 million portion of the credit facility
notional that is subject to variable interest rates.
DIVIDEND DECLARATION
The following dividends will be paid by the Corporation on
April 17, 2023:
Date of
announcement
|
Record date
|
Payment date
|
Dividend per
common share
|
Dividend per Series
A Preferred Share
|
Dividend per Series
C
Preferred Share
|
February 22,
2023
|
March 31,
2023
|
April 17,
2023
|
$0.180
|
$0.202750
|
$0.359375
|
2022 GUIDANCE ACHIEVEMENTS
In 2022, the Corporation partly met its 2022 Growth Targets.
|
2022
|
2021
|
|
Actual1
|
Target4
|
Actual
Normalized3
|
Production
(GWh)2
|
10,254
|
+13 %
|
+22 %
|
9,055
|
Revenues
|
870,494
|
+26 %
|
+25 %
|
692,241
|
Operating, general,
administrative and prospective projects expenses
|
285,579
|
+29 %
|
+27 %
|
221,571
|
Adjusted
EBITDA2
|
584,915
|
+24 %
|
+25 %
|
470,670
|
Adjusted EBITDA
Proportionate2
|
696,362
|
+20 %
|
+21 %
|
578,472
|
Free Cash Flow per
Share2
|
0.72
|
|
0.75
|
0.6
|
Number of facilities in
operation
|
84
|
|
84
|
79
|
Net installed capacity
(MW)
|
3,634
|
|
3,484
|
3,101
|
1.
|
Results from continuing
operations unless otherwise indicated.
|
2.
|
These measures are not
recognized measures under IFRS and therefore may not be comparable
to those presented by other issuers. Production is a key
performance indicator for the Corporation that cannot be reconciled
with an IFRS measure. Please refer to the "Non-IFRS Measures"
section of the MD&A for the three-month period and year ended
December 31, 2022 for more information.
|
3.
|
For the year ended
December 31, 2021, the Financial Performance and Operating Results
are normalized to exclude the impacts of the February 2021 Texas
Events. Please refer to the "February 2021 Texas Events" section
for more information.
|
4.
|
Target revised in
August 2022. Please refer to the MD&A for the period ended June
30, 2022.
|
The Production target was not met mainly due to:
- Exceptionally low hydrology levels in British Columbia during the later part of
2022;
- Lower generation from the US facilities; and
- Other weather-related events.
The financial targets were partly met due to the following
factors:
- Exceptionally low hydrology levels in British Columbia during the later part of
2022;
- The enactment of the new 2022 Supplementary Budget Act in
France, which aims to share
additional revenues recognized for certain power purchase
agreements with the French government.
- Partly mitigated by higher prices at the Chilean and US
facilities.
NON-IFRS MEASURES
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 these
indicators are important, as they provide management and the reader
with additional information about Innergex's production and cash
generation capabilities, its ability to sustain current dividends
and its ability to fund its growth. These indicators also
facilitate the comparison of results over different periods.
Innergex's share of Revenues of joint ventures and associates,
Revenues Proportionate, Adjusted EBITDA, Innergex's share of
Adjusted EBITDA of joint ventures and associates, Adjusted EBITDA
Proportionate, Adjusted Net Loss, Free Cash Flow, Adjusted Free
Cash Flow, Payout Ratio and Adjusted Payout Ratio are not measures
recognized by IFRS and have no standardized meaning prescribed by
IFRS.
Revenues Proportionate, Adjusted EBITDA and Proportionate
measures
References in this document to "Revenues Proportionate" are to
Revenues, plus Innergex's share of Revenues of the joint ventures
and associates, other income related to PTCs, and Innergex's share
of the operating joint ventures' and associates' other income
related to PTCs.
References in this document to "Adjusted EBITDA" are to net
earnings (loss), to which are added (deducted) income tax expense
(recovery), finance costs, depreciation and amortization,
impairment charges, other net income, share of (earnings) loss of
joint ventures and associates, and change in fair value of
financial instruments. 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, other
income related to PTCs, and Innergex's share of other income
related to PTCs of the joint ventures and associates.
Innergex believes that the presentation of these measures
enhances the understanding of the Corporation's operating
performance. Adjusted EBITDA is used by investors to evaluate the
operating performance and cash generating operations, and to derive
financial forecasts and valuations. Revenues Proportionate and
Adjusted EBITDA Proportionate measures are used by investors to
evaluate the contribution of the joint ventures and associates to
the Corporation's operating performance and cash generating
operations, and the contribution of such for financial forecasts
and valuations purposes. In addition, Revenues Proportionate and
Adjusted EBITDA Proportionate measures help investors seize the
relative importance of PTCs generated by the operations, and
evaluate their contribution to the Corporation's operating
performance, as PTCs form an important part of certain wind
projects' economics in the United
States. Readers are cautioned that Revenues Proportionate,
should not be construed as an alternative to Revenues, as
determined in accordance with IFRS. Readers are also cautioned that
Adjusted EBITDA and Adjusted EBITDA Proportionate, should not be
construed as an alternative to net earnings, as determined in
accordance with IFRS. Please refer to the "Financial Performance
and Operating Results" section for more information.
Below is a reconciliation of the non-IFRS measures to their
closest IFRS measures:
|
|
Three months ended
December 31, 2022
|
Three months ended
December 31, 2021
|
|
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
203,636
|
11,368
|
16,576
|
231,580
|
202,388
|
12,259
|
16,404
|
231,051
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
(52,575)
|
—
|
—
|
(52,575)
|
5,743
|
—
|
—
|
5,743
|
Income tax
expense
|
|
(12,982)
|
—
|
—
|
(12,982)
|
37,158
|
—
|
—
|
37,158
|
Finance
costs
|
|
83,864
|
4,362
|
—
|
88,226
|
67,417
|
4,541
|
—
|
71,958
|
Depreciation and
amortization
|
|
93,756
|
4,155
|
—
|
97,911
|
77,748
|
4,241
|
—
|
81,989
|
Impairment of long-term
assets
|
|
47,868
|
—
|
—
|
47,868
|
12
|
—
|
—
|
12
|
EBITDA
|
|
159,931
|
8,517
|
—
|
168,448
|
188,078
|
8,782
|
—
|
196,860
|
Other net expense
(income), before PTCs
|
|
(6,660)
|
(105)
|
—
|
(6,765)
|
(18,161)
|
219
|
—
|
(17,942)
|
Production tax credits
("PTCs")
|
|
(16,576)
|
—
|
16,576
|
—
|
(16,404)
|
—
|
16,404
|
—
|
Share of earnings of
joint ventures and
associates
|
|
286
|
(286)
|
—
|
—
|
(791)
|
791
|
—
|
—
|
Change in fair value of
financial instruments
|
|
(16,622)
|
(101)
|
—
|
(16,723)
|
(15,411)
|
(553)
|
—
|
(15,964)
|
Adjusted
EBITDA
|
|
120,359
|
8,025
|
16,576
|
144,960
|
137,311
|
9,239
|
16,404
|
162,954
|
|
|
Year ended December
31, 2022
|
Year ended December
31, 2021
|
|
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
870,494
|
60,535
|
64,729
|
995,758
|
747,208
|
111,921
|
54,018
|
913,147
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(91,115)
|
—
|
—
|
(91,115)
|
(185,394)
|
—
|
—
|
(185,394)
|
Recovery of Income
tax
|
|
(6,577)
|
—
|
—
|
(6,577)
|
(26,240)
|
(31)
|
—
|
(26,271)
|
Finance
costs
|
|
317,842
|
17,757
|
—
|
335,599
|
252,255
|
23,382
|
—
|
275,637
|
Depreciation and
amortization
|
|
336,053
|
16,801
|
—
|
352,854
|
255,640
|
23,051
|
—
|
278,691
|
Impairment of long-term
assets
|
|
47,868
|
—
|
—
|
47,868
|
36,986
|
112,609
|
—
|
149,595
|
EBITDA
|
|
604,071
|
34,558
|
—
|
638,629
|
333,247
|
159,011
|
—
|
492,258
|
Other net expense
(income), before PTCs
|
|
(4,190)
|
(342)
|
—
|
(4,532)
|
(41,637)
|
1,947
|
—
|
(39,690)
|
Production tax credits
("PTCs")
|
|
(64,729)
|
—
|
64,729
|
—
|
(47,984)
|
(6,034)
|
54,018
|
—
|
Share of (earnings)
loss of joint ventures and associates
|
|
(14,382)
|
14,382
|
—
|
—
|
189,889
|
(189,889)
|
—
|
—
|
Change in fair value of
financial instruments
|
|
64,145
|
(1,880)
|
—
|
62,265
|
92,122
|
129,055
|
—
|
221,177
|
Adjusted
EBITDA
|
|
584,915
|
46,718
|
64,729
|
696,362
|
525,637
|
94,090
|
54,018
|
673,745
|
Adjusted Net Loss
References to "Adjusted Net Loss" are to net earnings or losses
of the Corporation, to which the following elements are added
(subtracted): unrealized portion of the change in fair value of
derivative financial instruments, realized portion of the Phoebe
basis hedge, realized loss on the termination of interest rate
swaps, realized gain on foreign exchange forward contracts,
impairment charges, items that are outside of the normal course of
the Corporation's cash generating operations such as the
February 2021 Texas Events, the net
income tax expense (recovery) related to these items, and the share
of loss (earnings) of joint ventures and associates related to the
above items, net of related income tax.
The Adjusted Net Loss seeks to provide a measure that eliminates
the earnings impacts of certain derivative financial instruments
and other items that are outside of the normal course of the
Corporation's cash generating operations, which do not represent
the Corporation's operating performance. Innergex
uses derivative financial instruments to hedge its
exposure to various risks. Accounting for derivatives requires that
all derivatives are marked-to-market. When hedge accounting is not
applied, changes in the fair value of the derivatives is recognized
directly in net earnings (loss). Such unrealized changes have no
immediate cash effect, may or may not reverse by the time the
actual settlements occur and do not reflect the Corporation's
business model toward derivatives, which are held for their
long-term cash flows, over the whole life of a project. In
addition, the Corporation uses foreign exchange forward contracts
to hedge its net investment in its French subsidiaries. Management
therefore believes realized gains (losses) on such contracts do not
reflect the operations of Innergex.
Innergex believes that the presentation of this measure enhances
the understanding of the Corporation's operating performance.
Adjusted Net (Loss) Earnings is used by investors to evaluate and
compare Innergex's profitability before the impacts of the
unrealized portion of the change in fair value of derivative
financial instruments and other items that are outside of the
normal course of the Corporation's cash generating operations.
Readers are cautioned that Adjusted Net Loss should not be
construed as an alternative to net earnings, as determined in
accordance with IFRS. Please refer to the "Operating Results"
section for reconciliation of the Adjusted Net Loss.
Below is a reconciliation of Adjusted Net Loss to its closest
IFRS measure:
|
Three months ended
December 31
|
Year ended
December 31
|
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Net (loss)
earnings
|
(52,575)
|
5,743
|
(91,115)
|
(185,394)
|
Add
(Subtract):
|
|
|
|
|
February 2021 Texas
Events:
|
|
|
|
|
Revenues
|
—
|
—
|
—
|
(54,967)
|
Power hedge
|
—
|
—
|
—
|
70,756
|
Share of loss of Flat
Top and Shannon
|
—
|
—
|
—
|
64,197
|
Share of impairment of
Flat Top and Shannon
|
—
|
—
|
—
|
112,609
|
Share of unrealized
portion of the change in fair value of financial instruments of
joint ventures
and
associates, net of related income tax
|
(76)
|
(377)
|
(1,381)
|
20,226
|
Unrealized portion of
the change in fair value of financial instruments
|
25,336
|
(15,751)
|
141,859
|
18,502
|
Impairment of
long-term assets
|
47,868
|
12
|
47,868
|
36,986
|
Realized gain on
settlement of foreign exchange forwards
|
(43,458)
|
—
|
(43,458)
|
—
|
Realized (gain) loss
on termination of interest rate swaps
|
(59)
|
(377)
|
(71,735)
|
2,508
|
Realized gain on the
Phoebe basis hedge
|
—
|
(955)
|
—
|
(2,546)
|
Realized gain on
foreign exchange forward contracts
|
—
|
(2,193)
|
(3,214)
|
(4,074)
|
Income tax recovery
related to above items
|
(6,320)
|
3,924
|
(13,684)
|
(85,754)
|
Adjusted Net
loss
|
(29,284)
|
(9,974)
|
(34,860)
|
(6,951)
|
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, the portion of Free
Cash Flow attributed to non-controlling interests, and preferred
share dividends declared, plus or minus other elements that are not
representative of the Corporation's long-term cash-generating
capacity, such as gains and losses on the Phoebe basis hedge due to
their limited occurrence, realized gains and losses on contingent
considerations related to past business acquisitions, transaction
costs related to realized acquisitions, realized losses or gains on
refinancing of certain borrowings or derivative financial
instruments used to hedge the interest rate on certain borrowings
or the exchange rate on equipment purchases, and tax payments
related to fiscal strategies for the purpose of improving the
long-term cash generating capacity of Innergex.
The Payout Ratio is a measure of the Corporation's ability to
sustain current dividends as well as its ability to fund its growth
from its cash generating operations, in the normal course of
business. The Payout Ratio level reflects the Corporation's
decision to invest yearly in advancing the development of its
Prospective Projects, for which investments must be expensed as
incurred. The Corporation considers such investments essential to
its long-term growth and success, as it believes that the
greenfield development of renewable energy projects offers the
greatest potential internal rates of return and represents the most
efficient use of management's expertise and value-added skills.
Innergex believes that the presentation of this measure enhances
the understanding of the Corporation's cash generation
capabilities, its ability to sustain current dividends and its
ability to fund its growth. Free Cash Flow is used by investors in
this regard. 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. Please refer to
the "Free Cash Flow and Payout Ratio" section for the
reconciliation of Free Cash Flow.
References to "Adjusted Free Cash Flow" are to Free Cash Flow
excluding prospective project expenses. Adjusted Free Cash Flow is
used by investors to evaluate the Corporation's cash generation
capabilities and its ability to sustain current dividends, before
the impacts of the Corporation's decision to invest yearly in its
growth through investing in the development of its Prospective
Projects.
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 as well as its
ability to fund its growth. Payout Ratio is used by investors in
this regard.
References to "Adjusted Payout Ratio" are to dividends declared
on common shares divided by Adjusted Free Cash Flow. Adjusted
Payout Ratio is used by investors to evaluate the Corporation's
ability to sustain current dividends, before the impacts of the
Corporation's decision to invest yearly in its growth through
investing in the development of its Prospective Projects.
Free Cash Flow and
Payout Ratio calculation
|
Year ended December
31
|
2022
|
2021
|
February
2021 Texas
Events
(9 days)6
|
2021 Normalized6
|
2020
|
|
|
|
|
|
|
Cash flows from
operating activities1
|
430,243
|
265,498
|
17,093
|
282,591
|
235,108
|
Add (Subtract) the
following items:
|
|
|
|
|
|
Changes in non-cash
operating working capital items
|
14,518
|
21,455
|
—
|
21,455
|
7,765
|
Maintenance capital
expenditures, net of proceeds from disposals
|
(11,051)
|
(8,029)
|
—
|
(8,029)
|
(2,828)
|
Scheduled debt
principal payments
|
(156,862)
|
(160,973)
|
—
|
(160,973)
|
(151,623)
|
Free Cash Flow
attributed to non-controlling interests2
|
(29,271)
|
(25,076)
|
—
|
(25,076)
|
(13,491)
|
Dividends declared on
Preferred shares
|
(5,632)
|
(5,632)
|
—
|
(5,632)
|
(5,942)
|
Chile portfolio
refinancing - hedging impact3
|
2,578
|
—
|
—
|
—
|
—
|
Add (subtract) the
following specific items4:
|
|
|
|
|
|
Realized loss on
contingent considerations
|
—
|
547
|
—
|
547
|
3,021
|
Realized (gain) loss
on termination of interest rate swaps3
|
(71,735)
|
2,508
|
—
|
2,508
|
1,664
|
Realized (gain) loss
on termination of foreign exchange forwards5
|
(43,458)
|
—
|
—
|
—
|
—
|
Acquisition,
integration and restructuring costs
|
17,918
|
4,563
|
—
|
4,563
|
—
|
Realized gain on the
Phoebe basis hedge
|
—
|
(2,546)
|
(1,304)
|
(3,850)
|
19,586
|
Free Cash
Flow6
|
147,248
|
92,315
|
15,789
|
108,104
|
93,260
|
|
|
|
|
|
|
Dividends declared on
common shares
|
146,957
|
132,229
|
—
|
132,229
|
125,543
|
Payout
Ratio6
|
100 %
|
143 %
|
(21) %
|
122 %
|
135 %
|
|
|
|
|
|
|
Adjust for the
following items:
|
|
|
|
|
|
Prospective projects
expenses
|
24,740
|
|
|
27,367
|
16,708
|
Adjusted Free Cash
Flow
|
171,988
|
|
|
135,471
|
109,968
|
|
|
|
|
|
|
Adjusted Payout
Ratio
|
85 %
|
|
|
98 %
|
114 %
|
1.
|
Cash flows from
operating activities for the year ended December 31, 2022 include
the one-time BC Hydro Curtailment Payment received during the first
quarter of 2022.
|
2.
|
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.
|
3.
|
The Free Cash Flow for
the year ended December 31, 2022 excludes the $71.7 million
realized gain on settlement of the interest rate hedges entered
into to manage the Corporation's exposure to the risk of increasing
interest rates during the negotiations surrounding the refinancing
of the non-recourse debt assumed in the Aela Acquisition and at
Innergex's existing Chilean projects. Instead, the gain is
amortized in the Free Cash Flow using the effective interest rate
method over the period covered by the unwound hedging
instruments.
|
4.
|
These items are
excluded from the Free Cash Flow and Payout Ratio calculations as
they are deemed not representative of the Corporation's long-term
cash-generating capacity, and include items such as gains and
losses on the Phoebe basis hedge due to their limited occurrence
(maturity attained on December 31, 2021), realized gains and losses
on contingent considerations related to past business acquisitions,
transaction costs related to realized acquisitions, realized losses
or gains on refinancing of certain borrowings or derivative
financial instruments used to hedge the interest rate on certain
borrowings or the exchange rate on equipment purchases, and tax
payments related to fiscal strategies for the purpose of improving
the long-term cash generating capacity of Innergex.
|
5.
|
For the year ended
December 31, 2022, the Free Cash Flow for the twelve months ended
December 31, 2022 excludes the $43.5 million realized gain on
settlement of the foreign exchange forward contracts concurrent
with the closing of the French Acquisition.
|
6.
|
For the year ended
December 31, 2021, the Free Cash Flow and Payout Ratio are
normalized to exclude the impacts of the February 2021 Texas
Events. Normalized measures are not recognized measures under IFRS
and therefore may not be comparable to those presented by other
issuers. Please refer to the "February 2021 Texas Events" section
of the Management's Discussion and Analysis for the three-month
period and year ended December 31, 2022, for more
information.
|
ADDITIONAL INFORMATION
Innergex's 2022 fourth quarter and year-end audited 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
Thursday, February 23, 2023 at
9 AM (EST). Investors and financial
analysts are invited to access the conference by dialing 1 888
390-0605 or 416 764-8609 or via
https://bit.ly/3IHMgXT 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.
About Innergex Renewable Energy Inc.
For over 30 years, Innergex has believed in a world where
abundant renewable energy promotes healthier communities and
creates shared prosperity. As an independent renewable power
producer which develops, acquires, owns and operates hydroelectric
facilities, wind farms, solar farms and energy storage facilities,
Innergex is convinced that generating power from renewable sources
will lead the way to a better world. Innergex conducts operations
in Canada, the United States, France and Chile and manages a large portfolio of
high-quality assets currently consisting of interests in 84
operating facilities with an aggregate net installed capacity of
3,634 MW (gross 4,184 MW) and an energy storage capacity of
159 MWh, including 40 hydroelectric facilities, 35 wind facilities,
8 solar facilities and 1 battery energy storage facility.
Innergex also holds interests in 11 projects under development with
a net installed capacity of 696 MW (gross 733 MW) and an energy
storage capacity of 605 MWh, 5 of which are under
construction, as well as prospective projects at different stages
of development with an aggregate gross installed capacity totaling
8,701 MW. Its approach to building shareholder value is to
generate sustainable cash flows, provide an attractive
risk-adjusted return on invested capital and to distribute a stable
dividend.
Cautionary Statement Regarding 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"), including the Corporation's growth targets, power
production, prospective projects, successful development,
construction and financing (including tax equity funding) of the
projects under construction and the advanced-stage prospective
projects, sources and impact of funding, project acquisitions,
execution of non-recourse project-level financing (including the
timing and amount thereof), and strategic, operational and
financial benefits and accretion expected to result from such
acquisitions, business strategy, future development and growth
prospects (including expected growth opportunities under the
Strategic Alliance with Hydro-Québec), business integration,
governance, business outlook, objectives, plans and strategic
priorities, and other statements that are not historical facts.
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 terms 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, including information regarding the Corporation's targeted
production, the estimated targeted revenues, targeted Revenues
Proportionate, targeted Adjusted EBITDA and targeted Adjusted
EBITDA Proportionate, targeted Free Cash Flow, targeted Free Cash
Flow per Share and intention to pay dividend quarterly, the
estimated project size, costs and schedule, including obtainment of
permits, start of construction, work conducted and start of
commercial operation for Development Projects and Prospective
Projects, the Corporation's intent to submit projects under
Requests for Proposals, the qualification of U.S. projects for PTCs
and ITCs and other statements that are not historical facts. Such
information is intended 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 the Corporation, including, without restriction, those
concerning hydrology, wind regimes and solar irradiation;
performance of operating facilities, acquisitions and commissioned
projects; project performance; availability of capital resources
and timely performance by third parties of contractual obligations;
favourable market conditions for share issuance to support growth
financing; favourable economic and financial market conditions; the
Corporation's success in developing and constructing new
facilities; successful renewal of PPAs; sufficient human resources
to deliver service and execute the capital plan; no significant
event occurring outside the ordinary course of business such as a
natural disaster, pandemic or other calamity; continued maintenance
of information technology infrastructure and no material breach of
cybersecurity. Please refer to Section 5 - OUTLOOK | Strategic Plan
2020-2025 of the 2022 Annual Report regarding the assumptions used
with respect to the 2025 growth targets.
For more information on the 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 or on the principal assumptions used to derive this
information, please refer to the "Forward-Looking Information"
section of the Management's Discussion and Analysis for the three-
and twelve-month periods ended December 31, 2022.
SOURCE Innergex Renewable Energy Inc.