SIGNIFICANT PROGRESS ON GREENFIELD DEVELOPMENT
AND FUNDING INITIATIVES
- Signed an agreement to form a partnership with Crédit Agricole
Assurances for a 30% minority interest in Innergex's France portfolio to accelerate its growth
- Closed two construction financings for a total of US$583.1 million ($770.5
million) for the 330 MW Boswell Springs wind project and the
35 MW/175 MWh (5 hours) San Andrés battery energy storage
project
- Signed a 30-year power purchase agreement with Hydro-Québec for
the 102 MW Mesgi'g Ugju's'n 2 wind project
- Awarded first place in the Corporate Knights magazine's 2023
ranking of Best 50 Corporate Citizens in Canada
- Revenues and Production Tax Credits were up 13%
__________
|
All amounts are in
thousands of Canadian dollars, unless otherwise
indicated.
|
LONGUEUIL, QC, Aug. 8, 2023
/CNW/ - Innergex Renewable Energy Inc. (TSX: INE) ("Innergex"
or the "Corporation") provides today an update on its funding
initiatives, its development activities and its operating and
financial results for the second quarter ended
June 30, 2023.
The Corporation reached important milestones with many of its
projects under construction and development and executed on its
three funding initiatives to provide more financial flexibility and
support its profitable growth strategy.
- Closed the construction financing of the 330 MW Boswell Springs
wind project closed on July 14, 2023.
A portion of US$534 million
($704 million) will be applied
towards Innergex's revolving credit facilities to repay the
US$103 million ($136 million) already invested by the
Corporation. The process of securing a tax equity commitment is
well advanced and expected to close in Q3 2023.
In addition, the Corporation closed a US$49.5 million ($66.7
million) 2-year non-recourse construction financing for the
San Andrés battery energy storage project in Chile. This construction bridge loan is
expected to be repaid with the proceeds from a future long-term
non-recourse financing after the facility reaches commercial
operation. The remaining US$12.4
million ($16.7 million) that
makes up the total construction costs of the facility will be
financed from Innergex's revolving credit facilities.
- Signed an agreement to form a long-term partnership with Crédit
Agricole Assurances for a 30% minority interest in Innergex's
portfolio of operating facilities and projects under various stages
of development in France. This
€128.0 million ($188.4 million)
investment, together with the partner's additional equity
commitment will support Innergex's development strategy and growth
in France and reduce its revolving
credit facilities. The transaction is expected to close in the
second half of 2023.
- The financing of three unlevered Canadian hydro assets is
progressing well and is expected to be completed in the second half
of 2023.
In addition to these funding initiatives, the Corporation is
pleased with the progress made at its five construction projects,
three of which to be commissioned in 2023 as planned.
PROJECTS UNDER CONSTRUCTION
Name
(Location)
|
Type
|
Ownership %
|
Gross
installed
capacity
(MW)
|
Gross
estimated
LTA1 (GWh)
|
PPA term
(years)
|
Expected
COD
|
|
|
|
Innavik (QC,
Canada)
|
Hydro
|
50
|
|
7.5
|
|
54.7
|
|
40
|
|
2023
|
|
Salvador Battery
Storage (Chile)
|
Storage
|
100
|
|
Note
|
4
|
—
|
|
—
|
|
2023
|
|
San Andrés Battery
Storage (Chile)
|
Storage
|
100
|
|
Note
|
5
|
—
|
|
—
|
|
2023
|
|
Hale Kuawehi (Hawaii,
U.S.)
|
Solar
|
100
|
|
30.0
|
2
|
87.4
|
3
|
25
|
|
2024
|
|
Boswell Springs
(Wyoming, U.S.)
|
Wind
|
100
|
|
329.8
|
|
1262.0
|
|
30
|
|
2024
|
|
1.
|
This information is
intended to inform readers of the projects' potential impact on the
Corporation's results. Actual results may vary. These estimates are
up-to-date as at the date of this press release.
|
2.
|
Solar project with a
battery storage capacity of 30 MW/120 MWh (4
hours).
|
3.
|
PPA is a fixed lump sum
capacity payment for the availability of dispatchable
energy.
|
4.
|
Battery storage
capacity of 50 MW/250 MWh (5 hours).
|
5.
|
Battery storage
capacity of 35 MW/175 MWh (5 hours).
|
During the second quarter, the official ground-breaking ceremony
was held for the Boswell Springs project in Wyoming, USA, and the contractor is mobilized
on-site. The commissioning is anticipated in the fourth quarter of
2024. The amendment to the power purchase agreement ("PPA") to
increase the selling prices by 56% for the Hale Kuawehi solar
and battery storage project was approved by the Public Utilities
Commission in Hawaii and limited
construction activities resumed on site. The Corporation also made
significant advancements with its projects under development,
including signing a 30-year PPA for the Mesg'ig Ugju's'n 2 ("MU2")
wind project in Quebec, Canada,
owned in a 50-50 partnership, and successfully replaced its PPA for
the Auxy Bois Régnier wind project in France at more favourable pricing conditions
in July 2023.
Regarding the Corporation's portfolio of prospective projects,
growth continues in all regions. The Canadian market teams are
preparing for the request for proposals ("RFPs") with Hydro-Québec
due in September and advancing other projects for the upcoming
additional RFPs expected to commence in 2024. The province of
British Columbia also announced
their intention to launch an RFP process in Spring 2024 to procure
3,000 GWh per year of new clean or renewable generation to be
online in Fall 2028 reinvigorating Innergex's initiatives to
secure new prospective projects in the area.
"Our team continued to execute on operating, developing and
prospecting renewable energy projects efficiently and in-line with
our strategy. As expected, we delivered on the milestone of closing
of the construction financing of our Boswell Springs wind project,
concluded an agreement to form a long-term partnership with a new
financial investor in our French activities and progressed with the
financing of our portfolio of three Canadian hydro assets. The
arrival of a solid and recognized financial partner in France confirms the value of our assets as
well as of the development portfolio we have advanced, whose
progress will be propelled by our partner's financial support and
the French government's promises to accelerate the deployment of
renewable energy projects in the country. It also provides us with
greater flexibility to pursue our growth initiatives across all our
markets," said Michel Letellier,
President and Chief Executive Officer of Innergex. "We will remain
focussed on delivering the financing of the hydro assets, on
commissioning our assets under construction planned in 2023 and on
participating in the upcoming RFPs in our markets with strong and
profitable projects. We are well positioned to pursue our
greenfield development strategy as the energy transition continues
to unveil growing demand for our product."
FINANCIAL HIGHLIGHTS
The second quarter benefited from the contribution of the
acquisitions recently executed, namely the three solar facilities
in Sault Ste. Marie, Ontario,
completed in Q1 2023 and the three Aela wind farms in Chile completed in Q2 2022, the higher
production and revenues from the French wind facilities and
increased production and revenues from the hydro facilities in
British Columbia. Quarterly
production was below the long-term average but compensated by
higher prices.
On January 1, 2023, the
Corporation amended the presentation of its consolidated statements
of earnings (refer to Section 7- Significant Accounting Policies of
the Management's Discussion and Analysis for the three- and six-
months ended June 30, 2023
("MD&A") for more information). Concurrently,
certain Non-IFRS measures have been amended (refer to Section
5- Non-IFRS Measures of the MD&A for more information).
|
Three months ended
June 30
|
Six months ended
June 30
|
2023
|
2022
|
2023
|
2022
|
Production
(MWh)
|
2,951,098
|
2,855,891
|
5,263,754
|
5,160,494
|
Production as a
percentage of LTA
|
90 %
|
92 %
|
89 %
|
93 %
|
|
|
|
|
|
Revenues and Production
Tax Credits
|
269,541
|
238,513
|
487,869
|
446,283
|
Operating
Income
|
93,322
|
92,526
|
156,291
|
161,868
|
Adjusted
EBITDA1
|
186,989
|
159,310
|
332,089
|
309,153
|
Net Earnings
(Loss)
|
24,805
|
(59,520)
|
11,769
|
(59,520)
|
Adjusted Net Earnings
(Loss)1
|
11,260
|
(1,546)
|
(85)
|
(3,882)
|
Net Earnings (Loss)
Attributable to Owners, $ per share - basic and diluted
|
0.10
|
(0.13)
|
0.02
|
(0.31)
|
Production
Proportionate (MWh)1
|
3,123,901
|
2,991,550
|
5,483,869
|
5,349,579
|
Revenues and Production
Tax Credits Proportionate1
|
285,127
|
251,457
|
509,582
|
467,571
|
Adjusted EBITDA
Proportionate1
|
199,194
|
168,750
|
347,637
|
323,930
|
|
|
|
|
|
|
|
Trailing twelve months
ended June 30
|
|
|
|
2023
|
2022
|
Cash Flow from
Operating Activities
|
|
|
392,250
|
308,384
|
Free Cash
Flow1,2
|
|
|
115,342
|
173,640
|
Payout
Ratio1,2
|
|
|
127 %
|
82 %
|
1.
|
These measures are not
recognized measures 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 section 5- Non-IFRS Measures for more
information.
|
|
2.
|
For more information on
the calculation and explanation, please refer to Section 4- CAPITAL
AND LIQUIDITY | Free Cash Flow and Payout Ratio of the
MD&A.
|
OPERATING PERFORMANCE
THREE-MONTH PERIOD ENDED JUNE 30,
2023
(compared with the same period last year unless
otherwise indicated)
Production for the three-month period ended
June 30, 2023, was 90% of LTA. Innergex's share of
production of joint ventures and associates1 was 110% of
LTA, translating into a Production Proportionate1 at 91%
of LTA.
Revenues and Production Tax Credits ("PTCs") were up 13%
at $269.5 million.
- Main contributors:
-
- The Sault Ste. Marie and Aela
acquisitions, closed respectively on March
9, 2023 and June 9, 2022;
- Higher production at hydro facilities in British Columbia and at the Curtis Palmer
facilities;
- Higher wind regimes and revenues from new PPAs at wind
facilities in France;
- Favourable pricing at the Foard City facility; and
- Higher production and selling prices at the wind facilities in
Quebec.
- Main offsets:
-
- Lower production and nodal prices at the Griffin Trail
facility; and
- Lower selling prices at the Phoebe facility.
Revenues and PTCs Proportionate1 were up
13% at $285.1 million compared to the
same period last year.
SIX-MONTH PERIOD ENDED JUNE 30,
2023
(compared with the same period last year unless
otherwise indicated)
Production for the six-month period ended
June 30, 2023, was 89% of LTA. Innergex's share of
production of joint ventures and associates1 was 107% of
LTA, translating into a Production Proportionate1 at 89%
of LTA.
Revenues and Production Tax Credits ("PTCs") were up 9%
at $487.9 million.
- Main contributors:
-
- The Aela and Sault Ste. Marie
acquisitions;
- Higher production at the Curtis Palmer hydro facilities;
- Higher spot prices from the Chilean hydro facilities;
- Higher wind regimes and revenues from new PPAs at wind
facilities in France; and
- Favourable pricing at the Foard City facility.
- Main offsets:
-
- Lower production due to lower wind regimes in Quebec;
- The BC Hydro Curtailment Payment2 recorded in Q1
2022;
- Lower production and nodal prices at the Griffin Trail
facility; and
- Lower irradiation, economic curtailment and lower selling
prices at the Phoebe, Salvador and
San Andrés facilities.
Revenues and PTCs Proportionate1 were up
9% at $509.6 million compared to the
same period last year.
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.
|
CASH FLOW FROM OPERATING ACTIVITIES, FREE CASH
FLOW3 AND PAYOUT RATIO3
THREE-MONTH PERIOD ENDED JUNE 30,
2023
(compared with the same period last year unless
otherwise indicated)
Cash flows from operating activities decreased at
$61.2 million, compared with
$67.6 million.
- Main contributor:
-
- Increase in finance costs related to the refinancing of the
non-recourse debt in Chile in Q3
2022 following the Aela Acquisition.
- Main offsets:
-
- Contribution to cash flows from operating activities stemming
from the Aela and Sault Ste. Marie
acquisitions; and
- Decrease in realized loss mainly related to the decrease in the
merchant power curves for the Phoebe power hedge.
SIX-MONTH PERIOD ENDED JUNE 30,
2023
(compared with the same period last year unless
otherwise indicated)
Cash flows from operating activities decreased at
$114.5 million, compared with
$152.5 million.
- Main contributor:
-
- Increase in finance costs related to the refinancing of the
non-recourse debt in Chile in Q3
2022 following the Aela Acquisition.
- Main offsets:
-
- Contribution to cash flows from operating activities stemming
from the Aela and Sault Ste. Marie
acquisitions; and
- Decrease in realized loss mainly related to the decrease in the
merchant power curves for the Phoebe power hedge.
TRAILING TWELVE MONTHS ENDED JUNE 30,
2023
(compared with the same period last year unless
otherwise indicated)
Free Cash Flow3 decreased at $115.3 million, compared with $173.6 million.
- Main contributors:
-
- Decrease in cash flows from operating activities before changes
in non-cash operating working capital items stemming from the
exceptionally low production in British
Columbia in Q4 2022 and Q1 2023 due to drier weather, and
the BC Hydro Curtailment Payment received in Q1 2022;
- Increase in the interest paid mainly related to the refinancing
of the non-recourse debt in Chile
in Q3 2022 following the Aela Acquisition, from the recent
Sault Ste. Marie, Mountain Air and
French acquisitions, and from the construction activities;
- Increase in maintenance capital expenditures mainly due to
recent acquisitions and from the recent weather-related damages at
the Foard City facility; and
- Decrease in cash flows from operating activities before changes
in non-cash operating working capital items from the Phoebe
facility, due mostly to an unfavourable difference between sales at
the Phoebe node and purchases at the ERCOT South hub.
- Main offsets:
-
- Contribution to cash flows from operating activities before
changes in non-cash operating working capital items from the Aela,
Curtis Palmer and Sault Ste. Marie
acquisitions;
- Increase in merchant prices on certain USA and Chilean facilities;
- Decrease in Free Cash Flow attributed to non-controlling
interests of the British Columbia
hydro facilities, following exceptionally low production in
British Columbia in Q4 2022 and Q1
2023, partly offset by an increase attributed to the Curtis Palmer
Acquisition; and
- Decrease in scheduled debt principal payments stemming from the
Pay-go contribution from the Tax Equity Investors at Griffin
Trail.
Payout Ratio3
For the trailing twelve months ended June
30, 2023, the dividends on common shares declared by the
Corporation amounted to 127% of Free Cash Flow3 compared
with 82% for the corresponding period last year.
Assuming a normalized LTA, excluding the Chilean operations, the
payout ratio would have been ranging from 75% to 80% for the
trailing twelve-months.
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.
|
SUBSEQUENT EVENTS
On August 7, 2023, the Corporation
entered into an agreement to form a long-term partnership with
Crédit Agricole Assurances, in connection with Crédit Agricole
Centre-Est, for a 30% minority interest in Innergex's portfolio in
France, representing a €128.0
million ($188.4 million) investment,
subject to customary closing adjustments. The proceeds will be used
to immediately reduce Innergex's revolving credit facilities at
closing and to fund the Corporation's development activities over
the coming years. The transaction is expected to close in the
second half of 2023.
On July 17, 2023, the Corporation
disposed of the 6 MW Kokomo and 10.5 MW Spartan solar facilities
for a nominal amount. No significant income or expense were
recognized pursuant to these transactions.
On July 14, 2023, the Corporation
closed the construction financing of the Boswell Springs wind
project totalling US$533.6 million
($703.8 million) bearing interest at
1-month SOFR + 1% maturing in 2025, which includes a construction
loan of US$207.0 million
($273.0 million) and a tax equity
bridge loan of US$326.6 million
($430.8 million), and a
US$49.2 million ($64.9 million) letter of credit facility bearing
interest at 1.31%. The construction loan will be repaid by a
US$203.3 million ($268.1 million) 10-year non-recourse loan bearing
interest at SOFR 180 days + 1.375% and it is expected that the tax
equity bridge loan will be repaid with the proceeds from a Tax
Equity Investor.
On July 17, 2023, the Corporation
concluded three interest rate swaps to hedge a US$152.5 million ($201.9
million) portion of the construction financing that is
subject to variable interest rates, for a total hedged notional of
US$265.8 million ($351.9 million), including the interest rate
swaps previously entered into.
DIVIDEND DECLARATION
The following dividends will be paid by the Corporation on
October 16, 2023:
Date of
announcement
|
Record date
|
Payment date
|
Dividend per
common share
|
Dividend per Series
A
Preferred
Share
|
Dividend per Series
C
Preferred Share
|
August 8,
2023
|
September 30,
2023
|
October 16,
2023
|
$0.1800
|
$0.2028
|
$0.3594
|
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.
Revenues and Production Tax Credits Proportionate, Adjusted EBITDA,
Adjusted EBITDA Proportionate, Adjusted Net Loss, Free Cash Flow
and Payout Ratio are not measures recognized by IFRS and have no
standardized meaning prescribed by IFRS.
Revenues and Production Tax Credits Proportionate, Adjusted
EBITDA and Adjusted EBITDA Proportionate
References in this document to "Revenues and Production Tax
Credits Proportionate" are to Revenues and Production Tax Credits,
plus Innergex's share of Revenues and Production Tax Credits of the
joint ventures and associates.
References in this document to "Adjusted EBITDA" are to
operating income, to which are added (deducted) depreciation and
amortization, ERP implementation, impairment charges, and the
realized portion of the change in fair value of power hedges.
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 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 and Production Tax
Credits 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. Readers are cautioned
that Revenues and Tax Credits Proportionate, should not be
construed as an alternative to Revenues and Production Tax Credits,
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 operating income, as determined
in accordance with IFRS. Please refer to Section 3- Financial
Performance and Operating Results of the MD&A for more
information.
Below is a reconciliation of the non-IFRS measures to their
closest IFRS measures:
|
|
Three months ended
June 30, 2023
|
Three months ended
June 30, 2022
|
|
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
|
|
|
|
|
|
|
|
Revenues and
Production Tax Credits
|
|
269,541
|
15,586
|
285,127
|
238,513
|
12,944
|
251,457
|
|
|
|
|
|
|
|
|
Operating
income
|
|
93,322
|
8,136
|
101,458
|
92,526
|
5,218
|
97,744
|
Depreciation and
amortization
|
|
93,594
|
4,069
|
97,663
|
79,113
|
4,222
|
83,335
|
ERP
implementation
|
|
3,349
|
—
|
3,349
|
—
|
—
|
—
|
Realized loss on power
hedges
|
|
(3,276)
|
—
|
(3,276)
|
(12,329)
|
—
|
(12,329)
|
Adjusted
EBITDA
|
|
186,989
|
12,205
|
199,194
|
159,310
|
9,440
|
168,750
|
|
|
Six months ended
June 30, 2023
|
Six months ended
June 30, 2022
|
|
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
|
|
|
|
|
|
|
|
Revenues and
Production Tax Credits
|
|
487,869
|
21,713
|
509,582
|
446,283
|
21,288
|
467,571
|
|
|
|
|
|
|
|
|
Operating
income
|
|
156,291
|
7,362
|
163,653
|
161,868
|
6,359
|
168,227
|
Depreciation and
amortization
|
|
170,931
|
8,186
|
179,117
|
159,344
|
8,418
|
167,762
|
ERP
implementation
|
|
5,918
|
—
|
5,918
|
—
|
—
|
—
|
Realized loss on power
hedges
|
|
(1,051)
|
—
|
(1,051)
|
(12,059)
|
—
|
(12,059)
|
Adjusted
EBITDA
|
|
332,089
|
15,548
|
347,637
|
309,153
|
14,777
|
323,930
|
Adjusted Net Earnings (Loss)
References to "Adjusted Net Earnings (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 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, 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 Earnings (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 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 Earnings (Loss) should not
be construed as an alternative to net earnings, as determined in
accordance with IFRS. Please refer to the section 3 - Adjusted Net
Loss section of the MD&A for reconciliation of the Adjusted Net
Earnings (Loss).
Below is a reconciliation of Adjusted Net Earnings (Loss) to its
closest IFRS measure:
|
Three months ended
June 30
|
Six months ended
June 30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
Net earnings
(loss)
|
24,805
|
(24,590)
|
11,769
|
(59,520)
|
Add
(Subtract):
|
|
|
|
|
Share of unrealized
portion of the change in fair value of financial instruments of
joint ventures
and associates, net of related income tax
|
(315)
|
(345)
|
(439)
|
(1,005)
|
Unrealized portion of
the change in fair value of financial instruments
|
(16,812)
|
27,712
|
(16,468)
|
68,497
|
Realized gain on
foreign exchange forward contracts
|
(1)
|
—
|
(34)
|
(487)
|
Income tax expense
related to above items
|
3,946
|
(4,323)
|
2,881
|
(11,367)
|
Adjusted Net Earnings
(Loss)
|
11,260
|
(1,546)
|
(85)
|
(3,882)
|
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 prospective projects expenses, 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, expenses related to the implementation of a
cloud-based Enterprise Resource Planning solution, 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. Free Cash Flow
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.
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 section 4- Free Cash Flow and Payout Ratio section of the
MD&A for the reconciliation of Free Cash Flow.
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.
Free Cash Flow and
Payout Ratio calculation
|
Trailing twelve months
ended June 30
|
2023
|
2022
|
|
|
|
Cash flows from
operating activities1
|
392,250
|
308,384
|
Add (Subtract) the
following items:
|
|
|
Changes in non-cash
operating working capital items
|
4,231
|
45,659
|
Prospective projects
expenses
|
26,333
|
24,652
|
Maintenance capital
expenditures, net of proceeds from disposals
|
(18,649)
|
(9,095)
|
Scheduled debt
principal payments
|
(167,262)
|
(161,411)
|
Free Cash Flow
attributed to non-controlling interests2
|
(28,652)
|
(35,900)
|
Dividends declared on
Preferred shares
|
(5,632)
|
(5,632)
|
Chile portfolio
refinancing - hedging impact3
|
4,830
|
—
|
Add (subtract) the
following specific items4:
|
|
|
Realized (gain) loss
on termination of interest rate swaps3
|
(71,735)
|
(377)
|
Realized (gain) loss
on termination of foreign exchange forwards5
|
(43,458)
|
—
|
Principal and interest
paid related to pre-acquisition period
|
1,312
|
—
|
Acquisition and
integration costs
|
21,774
|
9,660
|
Realized gain on the
Phoebe basis hedge
|
—
|
(2,300)
|
Free Cash
Flow
|
115,342
|
173,640
|
|
|
|
Dividends declared on
common shares
|
146,993
|
142,824
|
Payout Ratio
|
127 %
|
82 %
|
1.
|
Cash flows from
operating activities for the trailing twelve months ended
June 30, 2022 include the one-time BC Hydro Curtailment
Payment received during Q1 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 trailing twelve months ended June 30, 2023 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.
|
The Free Cash Flow for
the trailing twelve months ended June 30, 2023 excludes the $43.5
million realized gain on settlement of the foreign exchange forward
contracts concurrent with the closing of the French
Acquisition.
|
ADDITIONAL INFORMATION
Innergex's 2023 second quarter 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, August 9, 2023 at
9 AM (EDT). Investors and financial
analysts are invited to access the conference by dialing 1 888
390-0605 or 416 764-8609 or via
https://app.webinar.net/GRxvVx0V4oJ or the Corporation's website at
www.innergex.com. Journalists, as well as the public, can 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 85
operating facilities with an aggregate net installed capacity of
3,676 MW (gross 4,226 MW) and an energy storage capacity of
159 MWh, including 40 hydroelectric facilities, 35 wind facilities,
9 solar facilities and 1battery energy storage facility.
Innergex also holds interests in 13 projects under development with
a net installed capacity of 760 MW (gross 849 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
9,352 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 and production tax
credits, targeted Revenues and Production Tax Credits
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.
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
months ended June 30, 2023.
SOURCE Innergex Renewable Energy Inc.