- Achieved commissioning of the Salvador 50 MW/250 MWh (5 hours) battery
storage project in Chile
- Closed a partnership with Crédit Agricole Assurances for a 30%
minority interest in Innergex's France portfolio to accelerate and fund
growth
- Achieved Tax Equity commitment for the 329.8 MW Boswell Springs
wind project in Wyoming, USA
- Revenues and Production Tax Credits were up 9%
All amounts are in
thousands of Canadian dollars, unless otherwise
indicated.
|
LONGUEUIL, QC, Nov. 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 third quarter ended
September 30, 2023.
"Our team's focus on execution is reflected in our ability to
close funding initiatives, bring projects to commercial operation
and advance solid potential projects. With the closing of both the
tax equity financing for the Boswell Springs project and the
partnership with Crédit Agricole Assurances in France, we are well positioned to continue to
invest in greenfield development across our markets," said
Michel Letellier, President and
Chief Executive Officer of Innergex. "We remain efficient in both
operating our facilities and growing our business. We continue to
adapt and improve our approach to develop sustainable, secure and
financially-sound projects to maximize our returns. The energy
transition is supported more evidently every day translating into
massive opportunities for Innergex. Our team continues to develop
proactively projects to not only seize but create the opportunities
that will strengthen our position as a leader in the renewable
energy sector."
The Corporation executed the commissioning of its Salvador battery storage project. The
Corporation also executed on two of its funding initiatives: the
closing of a US$322.7 million
($441.6 million) tax equity
commitment for its Boswell Springs wind facility and the completion
of its partnership agreement with Crédit Agricole Assurances for a
30% minority interest in Innergex's portfolio in France, representing a €129.5 million
($188.8 million) investment.
PROJECTS UNDER CONSTRUCTION
Name
(Location)
|
Type
|
Ownership
%
|
Gross
installed
capacity (MW)
|
Gross
estimated
LTA (GWh)
|
PPA term
(years)
|
Expected
COD
|
|
|
|
Innavik (QC,
Canada)
|
Hydro
|
50
|
|
7.5
|
|
54.7
|
|
40
|
|
2023
|
|
San Andrés Battery
Storage (Chile)
|
Storage
|
100
|
|
Note
|
3
|
—
|
|
—
|
|
2023
|
|
Hale Kuawehi (Hawaii,
U.S.)
|
Solar
|
100
|
|
30.0
|
1
|
87.4
|
2
|
25
|
|
2024
|
|
Boswell Springs
(Wyoming, U.S.)
|
Wind
|
100
|
|
329.8
|
|
1262.0
|
|
30
|
|
2024
|
|
1.
Solar project with a battery storage
capacity of 30 MW/120 MWh (4 hours).
|
2. PPA is a fixed
lump sum capacity payment for the availability of dispatchable
energy.
|
3. Battery
storage capacity of 35 MW/175 MWh (5 hours).
|
The Salvador battery energy
storage project was commissioned in October
2023, generating revenues from the sale of energy. It is
expected to be receiving capacity payments towards the end of the
year. An official inauguration event took place on site with
several Chilean government representatives. The Innavik hydro
project started delivering power to the Inuit community of
Inukjuak, Nunavik, Quebec, while commissioning activities are
ongoing. The San Andrés battery storage project is also advancing,
the interconnection was completed and the commissioning should
begin by the end of the year. At Boswell Springs, the construction
activities are ahead of schedule, while the site will be closing in
the coming days for the winter season. In Hawaii, the Hale Kuawehi amended PPA, with a
56% rate increase, executed with HECO was approved by the Public
Utility Commission and construction activities are
progressing.
PROSPECTIVE AND DEVELOPMENT PROJECTS
Regarding the Corporation's portfolio of prospective projects,
growth continues in all regions. The Canadian market development
team participated in the 1,500 MW request for proposals ("RFP") of
Hydro-Québec. Two projects for a total of 400 MW were proposed.
Retained projects are expected to be announced in the coming
months. Development activities in Canada have accelerated with many provinces
announcing their intention to secure renewable electricity in the
months to come. The US market also presents attractive
opportunities and significant progress were made with promising
greenfield projects. In Chile,
Innergex submitted an offer in the RFP launched by Codelco, the
main Chilean mining company, for a total of 250 GWh per year of
renewable energy production, from 2026 to 2040. In France, the team continues to move projects
forward through the administrative and social acceptance stages and
to initiate new potential wind and solar projects. During the
quarter, 587 MW of new prospective projects were added to the
Corporation's portfolio.
FUNDING INITIATIVES
Innergex closed a US$322.7 million
($441.6 million) tax equity
commitment ("Upfront Investment") with J.P. Morgan and Capital One
(the "Tax Equity Investors") for the 329.8 MW Boswell Springs Wind
Project located in Wyoming,
United States. The Tax Equity
Investors have committed to fund the Upfront Investment at
substantial completion and to make cash payments as production tax
credits are generated ("PAY-GO") over a 10-year period.
Innergex and Crédit Agricole Assurances, in collaboration with
Crédit Agricole Centre-Est, have concluded their long-term
partnership. The partnership allows Crédit Agricole Assurances to
gain a 30% minority interest in Innergex's portfolio in
France, representing a €129.5
million ($188.8 million) investment.
The proceeds were used to reduce Innergex's revolving credit
facilities and will fund the Corporation's development activities
over the coming years.
The Corporation made significant progress with the financing of
three unlevered Canadian hydro assets and still expects it to be
completed by the end of the year. The targeted proceeds from this
financing could total approximately $170
million.
The Corporation also intends to finance another three unlevered
Canadian hydro assets in 2024 for an additional approximate amount
of $80 million.
FINANCIAL HIGHLIGHTS
The lower water flows in British
Columbia, which suffered from an extremely dry summer, and
the lower wind regimes in Quebec
impacted the overall production of the Corporation, which reached
88% of the long-term average. Had production levels been equal to
their long-term average for these two specific items during the
three and nine months period ended on September 30, 2023, revenues could have been
higher by approximately $30.5 million and $60.3 million, respectively. The recent
acquisition of the three Sault Ste.
Marie solar facilities in Ontario and overall performance of the other
assets in Innergex's portfolio contributed to partly offset the
effect of these unusual weather events.
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 nine- months ended
September 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
September 30
|
Nine months
ended
September 30
|
2023
|
2022
|
2023
|
2022
|
Production
(MWh)
|
2,654,439
|
2,736,471
|
7,918,191
|
7,896,968
|
Production as a
percentage of LTA
|
88 %
|
91 %
|
88 %
|
92 %
|
|
|
|
|
|
Revenues and Production
Tax Credits
|
292,179
|
268,728
|
780,048
|
715,011
|
Operating
Income
|
99,778
|
108,002
|
256,069
|
269,870
|
Adjusted
EBITDA1
|
180,233
|
167,636
|
512,322
|
476,789
|
Net Earnings
(Loss)
|
4,381
|
20,980
|
16,150
|
(38,540)
|
Adjusted Net Earnings
(Loss)1
|
5,198
|
(465)
|
5,113
|
(5,034)
|
Net Earnings (Loss)
Attributable to Owners, $ per share - basic and diluted
|
0.04
|
0.11
|
0.06
|
(0.20)
|
Production
Proportionate (MWh)1
|
2,867,819
|
2,993,839
|
8,351,684
|
8,343,421
|
Revenues and Production
Tax Credits Proportionate1
|
316,848
|
296,612
|
826,430
|
764,182
|
Adjusted EBITDA
Proportionate1
|
201,177
|
191,554
|
548,814
|
515,484
|
|
|
|
|
|
|
|
Trailing twelve
months ended
September 30
|
|
|
|
2023
|
2022
|
Cash Flow from
Operating Activities
|
|
|
311,114
|
412,447
|
Free Cash
Flow1,2
|
|
|
121,200
|
186,327
|
Payout
Ratio1,2
|
|
|
121 %
|
78 %
|
Normalized Payout
Ratio1
|
|
|
75% - 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 SEPTEMBER 30,
2023
(compared with the same period last year unless
otherwise indicated)
Production for the three-month period ended
September 30, 2023, was 88% of LTA. Innergex's share of
production of joint ventures and associates1 was 87% of
LTA, translating into a Production Proportionate1 at 88%
of LTA.
Revenues and Production Tax Credits ("PTCs") were up 9%
at $292.2 million.
- Main contributors:
- The Sault Ste. Marie Acquisition, closed on March 9, 2023;
- Higher production at the Curtis Palmer facilities in
the United States;
- Favourable pricing at the Phoebe and Foard City facilities in
the United States;
- Higher production at the wind facilities in Chile, the United
States and France; and
- Higher revenues from new PPAs at wind facilities in
France.
- Main offsets:
- Lower production at the hydro facilities in British Columbia;
- Lower production at the Quebec
wind facilities; and
- Unfavourable pricing at the hydro facilities in Chile and the Griffin Trail facility in
the United States.
Revenues and PTCs Proportionate1 were up
7% at $316.8 million compared to the
same period last year.
NINE-MONTH PERIOD ENDED SEPTEMBER 30,
2023
(compared with the same period last year unless
otherwise indicated)
Production for the nine-month period ended
September 30, 2023, was 88% of LTA. Innergex's share of
production of joint ventures and associates1 was 96% of
LTA, translating into a Production Proportionate1 at 89%
of LTA.
Revenues and Production Tax Credits ("PTCs") were up 9%
at $780.0 million.
- Main contributors:
- The Aela and Sault Ste. Marie
acquisitions;
- Higher production at the Curtis Palmer hydro facilities;
- Favourable pricing at the Foard City facility;
- Higher wind regimes and revenues from new PPAs at wind
facilities in France;
- Higher selling prices at the Phoebe and Hillcrest solar
facilities.
- Main offsets:
- Lower production at the wind facilities in Quebec;
- The BC Hydro Curtailment Payment recorded in Q1 2022;
- Lower production at the hydro facilities in British Columbia;
- Lower production and unfavourable pricing at the Griffin Trail
facility; and
- Unfavourable pricing at the hydro facilities in Chile.
Revenues and PTCs Proportionate1 were up
8% at $826.4 million compared to the
same period last year.
CASH FLOW FROM OPERATING ACTIVITIES, FREE CASH
FLOW3 AND PAYOUT RATIO3
THREE-MONTH PERIOD ENDED SEPTEMBER 30,
2023
(compared with the same period last year unless
otherwise indicated)
Cash flows from operating activities decreased at
$103.0 million, compared with
$184.1 million.
- Main contributor:
- The realized gain on the settlement of the interest rate swaps
as part of Innergex's refinancing of the non-recourse debt of its
Chilean facilities in Q3 2022; and
- The decrease of the non-cash working capital mainly related to
timing.
- Main offsets:
- The decrease in finance costs paid, stemming mainly from the
timing of interest payments for certain project loans and the
interest paid upon refinancing of the former non-recourse debt in
Chile in 2022, while the interest
on the Chile Green Bonds is payable biannually in June and
December.
NINE-MONTH PERIOD ENDED SEPTEMBER 30,
2023
(compared with the same period last year unless
otherwise indicated)
Cash flows from operating activities decreased at
$217.5 million, compared with
$336.6 million.
- Main contributor:
- The realized gain on the settlement of the interest rate swaps
as part of Innergex's refinancing of the non-recourse debt of its
Chilean facilities in Q3 2022; and
- the increase in finance costs paid, stemming mainly from the
Chile Green Bonds, the Sault Ste. Marie Acquisition and the timing
of interest payments for certain project and corporate loans.
TRAILING TWELVE MONTHS ENDED SEPTEMBER
30, 2023
(compared with the same period last year
unless otherwise indicated)
Free Cash Flow2 decreased at $121.2 million, compared with $186.3 million.
- Main contributors:
- A 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, lower wind regimes for the wind facilities in
Quebec, and the BC Hydro
Curtailment Payment received in Q1 2022;
- An increase in the interest paid mainly stemming from the
refinancing of the non-recourse debt in Chile in Q3 2022 following the Aela
Acquisition, and from the recent Sault
Ste. Marie, Mountain Air and French acquisitions; and
- An increase in maintenance capital expenditures mainly stemming
from the recent acquisitions, from the recent weather-related
damages at the Foard City facility, and from major component
replacements at the wind facilities in Quebec.
- Main offsets:
- The 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;
- The increase in average merchant prices on certain USA and Chilean facilities; and
- A 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.
Payout Ratio2
For the trailing twelve months ended September 30, 2023, the
dividends on common shares declared by the Corporation amounted to
121% of Free Cash Flow2 compared with 78% for the
corresponding period last year.
Had production levels been equal to their long-term average
during the trailing twelve months ended
September 30, 2023, Free Cash Flow and Payout Ratio would
have been in a range of $180 million to $195 million and
75% to 82%, respectively.
SUBSEQUENT EVENTS
On October 19, 2023, the
Corporation has closed a US$322.7
million ($441.6 million) tax
equity commitment for the Boswell Springs wind project. The
proceeds will be received at substantial completion of the
construction of the project and used to repay the tax equity bridge
loan previously concluded.
On October 26, 2023, the
Corporation has completed the 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 €129.5 million
($188.8 million) investment. The
proceeds were used to reduce Innergex's revolving credit facilities
and will fund the Corporation's development activities over the
coming years.
DIVIDEND DECLARATION
The following dividends will be paid by the Corporation on
January 15, 2024:
Date of
announcement
|
Record
date
|
Payment
date
|
Dividend per
common share
|
Dividend per Series
A
Preferred
Share
|
Dividend
per Series C
Preferred Share
|
November 8,
2023
|
December 31,
2023
|
January 15,
2024
|
$0.1800
|
$0.2028
|
$0.3594
|
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.
|
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.
|
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
September 30, 2023
|
Three months ended
September 30, 2022
|
|
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
|
|
|
|
|
|
|
|
Revenues and
Production Tax Credits
|
|
292,179
|
24,669
|
316,848
|
268,728
|
27,884
|
296,612
|
|
|
|
|
|
|
|
|
Operating
income
|
|
99,778
|
16,919
|
116,697
|
108,002
|
19,690
|
127,692
|
Depreciation and
amortization
|
|
102,434
|
4,025
|
106,459
|
82,953
|
4,228
|
87,181
|
ERP
implementation
|
|
3,175
|
—
|
3,175
|
542
|
—
|
542
|
Realized loss on power
hedges
|
|
(25,154)
|
—
|
(25,154)
|
(23,861)
|
—
|
(23,861)
|
Adjusted
EBITDA
|
|
180,233
|
20,944
|
201,177
|
167,636
|
23,918
|
191,554
|
|
|
Nine months ended
September 30, 2023
|
Nine months ended
September 30, 2022
|
|
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
Consolidation
|
Share of
joint ventures
|
Proportionate
|
|
|
|
|
|
|
|
|
Revenues and
Production Tax Credits
|
|
780,048
|
46,382
|
826,430
|
715,011
|
49,171
|
764,182
|
|
|
|
|
|
|
|
|
Operating
income
|
|
256,069
|
24,281
|
280,350
|
269,870
|
26,049
|
295,919
|
Depreciation and
amortization
|
|
273,365
|
12,211
|
285,576
|
242,297
|
12,646
|
254,943
|
ERP
implementation
|
|
9,093
|
—
|
9,093
|
542
|
—
|
542
|
Realized loss on power
hedges
|
|
(26,205)
|
—
|
(26,205)
|
(35,920)
|
—
|
(35,920)
|
Adjusted
EBITDA
|
|
512,322
|
36,492
|
548,814
|
476,789
|
38,695
|
515,484
|
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
September 30
|
Nine months ended
September 30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
Net earnings
(loss)
|
4,381
|
20,980
|
16,150
|
(38,540)
|
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
|
(292)
|
(300)
|
(731)
|
(1,305)
|
Unrealized portion of
the change in fair value of financial instruments
|
678
|
48,026
|
(15,790)
|
116,523
|
Realized (gain) loss
on termination of interest rate swaps
|
—
|
(71,676)
|
(3,712)
|
(71,676)
|
ERP
implementation
|
3,175
|
542
|
9,093
|
542
|
Realized gain on
foreign exchange forward contracts
|
(344)
|
(2,040)
|
(378)
|
(3,214)
|
Income tax expense
(recovery) related to above items
|
(2,400)
|
4,003
|
481
|
(7,364)
|
Adjusted Net Earnings
(Loss)
|
5,198
|
(465)
|
5,113
|
(5,034)
|
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 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.
References to "Normalized Payout Ratio" are to dividends
declared on common shares divided by the estimated Free Cash Flow
had production levels been equal to their long-term average in all
jurisdictions, excluding Chile.
Innergex believes that this is a measure of its ability to sustain
current dividends as well as its ability to fund its growth, free
from circumstantial impacts on production. Normalized Payout Ratio
is used by investors in this regard.
Free Cash Flow and
Payout Ratio calculation
|
Trailing twelve
months ended
September 30
|
2023
|
2022
|
|
|
|
Cash flows from
operating activities1
|
311,114
|
412,447
|
Add (Subtract) the
following items:
|
|
|
Changes in non-cash
operating working capital items
|
39,913
|
24,525
|
Prospective projects
expenses
|
25,196
|
27,331
|
Maintenance capital
expenditures, net of proceeds from dispositions
|
(27,293)
|
(9,936)
|
Scheduled debt
principal payments
|
(174,507)
|
(167,578)
|
Free Cash Flow
attributed to non-controlling interests2
|
(30,230)
|
(39,811)
|
Dividends declared on
Preferred shares
|
(5,632)
|
(5,632)
|
Chile portfolio
refinancing - hedging impact4
|
5,214
|
765
|
Add (subtract) the
following specific items3:
|
|
|
Realized (gain) loss
on termination of interest rate swaps4
|
(59)
|
(72,053)
|
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
|
19,630
|
17,224
|
Realized gain on the
Phoebe basis hedge
|
—
|
(955)
|
Free Cash
Flow
|
121,200
|
186,327
|
|
|
|
Dividends declared on
common shares
|
147,024
|
144,862
|
Payout Ratio
|
121 %
|
78 %
|
1.
|
Cash flows from
operating activities for the trailing twelve months ended September
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.
|
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.
|
4.
|
The Free Cash Flow for
the trailing twelve months ended September 30, 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.
|
5.
|
The Free Cash Flow for
the trailing twelve months ended September 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 third 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
Thursday, November 9, 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://app.webinar.net/QNgY3ReanP4 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, which led to Innergex being recognized as Canada's best corporate citizen in 2023 by
Corporate Knights. 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 86
operating facilities with an aggregate net installed capacity of
3,580 MW (gross 4,226 MW) and an energy storage capacity of
409 MWh, including 40 hydroelectric facilities, 35 wind facilities,
9 solar facilities and 2 battery energy storage facilities.
Innergex also holds interests in 12 projects under development with
a net installed capacity of 747 MW (gross 849 MW) and an energy
storage capacity of 355 MWh, 4 of which are under
construction, as well as prospective projects at different stages
of development with an aggregate gross installed capacity totaling
9,939 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. To learn more, visit innergex.com or connect with us on
LinkedIn.
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 September 30, 2023.
SOURCE Innergex Renewable Energy Inc.