Northland Power Inc. (
“Northland” or the
“Company”) (TSX:
NPI) reported
today financial results for the three months and year ended
December 31, 2024. All dollar amounts set out herein are in
thousands of Canadian dollars, unless otherwise stated.
Highlights
- Delivered strong
operating results achieving the high end of 2024 financial
guidance.
- Appointed
Christine Healy as President, Chief Executive Officer
(“CEO”) and Director, who started on January 20,
2025.
- Continued to
make significant progress on the 2.4 GW of construction projects,
Baltic Power, Hai Long, and Oneida.
- Completed the 23
MW upgrade of the Thorold natural gas facility on time and on
budget.
- Positioned for
growth with a robust balance sheet and available liquidity of $1.1
billion.
- Issued 2025
financial guidance with Adjusted EBITDA expected to increase to
$1.3 to $1.4 billion, and Adjusted Free Cash Flow and Free Cash
Flow expected to be $1.30 to $1.50 and $1.10 to $1.30 per share,
respectively.
- Announced a
change in the Dividend Reinvestment Plan (“DRIP”)
by eliminating the discount to 0% (previously 3%). The DRIP will be
sourced on the market by purchasing shares instead of treasury
issuances.
Financial Results
- Revenue
from energy sales of $572 million in the fourth quarter of
2024 decreased from $626 million in 2023. Revenue from energy sales
increased on a full-year basis to $2,346 million from $2,233
million in 2023.
- Net
income increased in the fourth quarter of 2024 to $150
million from a net loss of $268 million in 2023 and increased on a
full-year basis to $371 million from a net loss of $96 million in
2023.
- Adjusted
EBITDA (a non-IFRS measure) decreased in the fourth
quarter to $312 million from $389 million in 2023 and increased on
a full-year basis to $1,262 million from $1,240 million in
2023.
- Adjusted
Free Cash Flow per share (a non-IFRS measure) decreased in
the fourth quarter to $0.31 from $0.75 in 2023 and decreased on a
full-year basis to $1.53 from $1.97 in 2023.
- Free
Cash Flow per share (a non-IFRS measure) decreased in the
fourth quarter to $0.22 from $0.75 in 2023 and decreased on a
full-year basis to $1.27 from $1.68 in 2023.
“We are pleased with our fourth quarter and
full-year results, achieving the high end of our 2024 financial
guidance,” said Christine Healy, Northland’s President and CEO. “We
have made excellent progress on our construction projects in
Poland, Taiwan, and Canada. Some of these projects are expected to
start contributing to Northland’s earnings in 2025, continuing
through 2026, with full realization in 2027. Our growth outlook for
energy transition and demand for power is stronger than ever. A
globally diversified portfolio across multiple technologies and a
long-term contract asset base position us well for the future. I
look forward to Northland continuing to deliver on its
commitments.”
Significant Events and Updates
Growth Updates:
- Thorold
Natural Gas Facility Upgrade – In November 2024, Northland
completed a 23 MW capacity upgrade on time and on budget;
demonstrating Northland’s continued technical expertise and ability
to deliver on natural gas assets. In the second quarter of 2023,
Northland secured an amended PPA for the Thorold Co-Generation
facility located in Ontario, Canada. This agreement allows for an
increase in generating capacity and a five-year extension of the
contract. The extension of the PPA remains conditional upon the
successful completion of an upgrade test scheduled for 2025.
-
Construction Update on Hai Long, Baltic Power and
Oneida – The Hai Long project has completed over 50% of
construction. During the fourth quarter of 2024, fabrication of key
components that are required for the 2025 installation campaign
progressed. For the full year, the project completed the
installation of pin piles and turbine jacket foundations at
approximately half of the turbine locations, which are ready for
turbine installation in 2025. The fabrication of turbine components
continues, including completion of the first sets of towers,
generators and nacelles. On August 20, 2024, an incident occurred
at the onshore substation due to a leak of carbon dioxide from the
fire suppression system, which resulted in three fatalities. The
onshore substation construction work was suspended during the
investigation of the incident by the local authorities. Upon
completion of the investigation, the work on the onshore substation
resumed safely according to recovery plans. First power is expected
in the second half of 2025. The project is on track to achieve full
commercial operations expected in 2027 with overall project cost
aligned with original expectations.The Baltic Power project
continues to make progress on fabrication of onshore and offshore
substations, foundations, export cables, multiple turbine
components and inter-array cables. Major in-water construction
activity commenced in January 2025 with the first monopile
foundation installation. The offshore substation installation
commenced and the first load of transition pieces have been
delivered to the project. Construction of the onshore substation
and the operations and management building are progressing
according to the plan. The project is on track to achieve full
commercial operations expected in the latter half of 2026 with
overall project cost aligned with original expectations.The Oneida
project is being commissioned with all major construction
activities completed. The project is on track to achieve full
commercial operations expected in the first half of 2025 with
overall project cost aligned with original expectations.
- Other
Growth Activity – Following the signing of the 15-year
revenue offtake agreement, the 80 MW Jurassic BESS project in
Alberta signed its key equipment supplier and construction
contracts, and received a key permit to begin construction.
Balance Sheet:
- Changes
to Dividend Reinvestment Plan – In February 2025,
Northland approved a change in the discount on DRIP issuances from
3% to 0% and confirmed the intention to source shares through
secondary market purchases rather than treasury issuances. Such
changes will be effective from and as of April 15, 2025 and for the
dividend payable thereon to shareholders of record on March 31,
2025. Pursuant to the terms of the DRIP, Northland has the
discretion, from time to time, to change the applicable discount
and source of shares. If the applicable discount or the source of
shares is altered in the future, Northland will include information
regarding such change in a press release prior to the effectiveness
of the change. Participation in the DRIP is optional. For
additional information on the DRIP, see: Dividend Reinvestment
Plan.
-
Refinancing of EBSA’s Credit Facility – In
November 2024, Northland extended the maturity of the non-recourse
credit facility associated with EBSA (the “EBSA
Facility”) to November 2027 and upsized the facility by
$35 million. The financing marginally improved debt terms, and the
proceeds were largely used to fund capital investments in EBSA and
settle foreign currency maturity hedges.
Other:
-
Executive Updates – Christine Healy started as
President, Chief Executive Officer and Director on January 20,
2025.
- La Lucha
Solar Facility Sale – During the fourth quarter of 2024,
Northland received the entire amount relating to a value added
tax claim of $42 million (equivalent to MXN 604 million).
Fourth Quarter and Full-Year 2024 Financial
Results
Northland successfully ended 2024 achieving the
higher end of its 2024 financial guidance for both Adjusted EBITDA
and Free Cash Flow per share. Northland exceeded the guidance for
Adjusted Free Cash Flow per share.
On a year-over-year basis, financial results for
the three months ended December 31, 2024 were lower compared to the
same quarter of 2023, primarily due to gains from the partial
sell-down of the Hai Long offshore wind project in 2023 and lower
offshore wind resource. This decrease was partially offset by lower
unpaid curtailments related to negative prices and grid outages at
our German offshore wind facilities, higher operating results from
onshore renewable facilities, and higher revenue from EBSA due to
growth in asset base and rate escalations.
Adjusted EBITDA for the year ended December 31,
2024 was higher, compared to 2023, primarily due to higher wind
resource across all offshore wind facilities, higher operating
results from onshore renewable facilities which includes full year
contribution from New York onshore wind projects, higher revenue
from EBSA due to growth in the asset base and foreign exchange
changes as well as rate escalations. The results also reflect lower
development expenditures due to disciplined spending on priority
development activities, as planned. Note that 2023 results included
gains from partial sell-down of development assets. Despite these
higher operating results, Adjusted Free Cash Flow and Free Cash
Flow for the year ended December 31, 2024 were lower, compared to
2023, primarily due to lower foreign exchange and interest rate
hedge settlements and higher income taxes.
The following table presents key IFRS and
non-IFRS financial measures and operational results. Sales, gross
profit, operating income and net income, as reported under IFRS,
include consolidated results of entities not wholly owned by
Northland, whereas Northland’s non-IFRS financial measures include
only Northland’s proportionate ownership interest.
|
Summary of Consolidated Results |
|
|
|
|
|
|
| (in thousands of
dollars, except per share amounts) |
Three months ended December 31, |
|
Year ended December 31, |
|
|
|
2024 |
2023 |
|
2024 |
|
|
2023 |
|
|
FINANCIALS |
|
|
|
|
|
|
|
|
|
Revenue from energy sales |
$ |
571,867 |
|
$ |
626,221 |
|
|
$ |
2,346,264 |
|
$ |
2,232,779 |
|
| |
Operating income |
|
216,571 |
|
|
56,633 |
|
|
|
812,892 |
|
|
577,988 |
|
| |
Net income (loss) |
|
150,469 |
|
|
(267,918 |
) |
|
|
371,389 |
|
|
(96,132 |
) |
| |
Net income (loss) attributable
to shareholders |
|
128,294 |
|
|
(285,595 |
) |
|
|
271,825 |
|
|
(175,194 |
) |
| |
Adjusted EBITDA (a non-IFRS
measure) (2) |
|
312,139 |
|
|
388,658 |
|
|
|
1,261,951 |
|
|
1,239,871 |
|
| |
|
|
|
|
|
|
|
|
| |
Cash provided by operating
activities |
|
359,631 |
|
|
161,354 |
|
|
|
1,028,968 |
|
|
810,699 |
|
| |
Adjusted Free Cash Flow (a
non-IFRS measure) (2) |
|
80,650 |
|
|
191,289 |
|
|
|
394,420 |
|
|
497,978 |
|
| |
Free Cash Flow (a non-IFRS
measure) (2) |
|
57,596 |
|
|
191,448 |
|
|
|
327,579 |
|
|
423,744 |
|
| |
Cash dividends paid |
|
49,284 |
|
|
51,740 |
|
|
|
200,488 |
|
|
205,072 |
|
| |
Total dividends declared
(1) |
$ |
77,832 |
|
$ |
76,368 |
|
|
$ |
309,024 |
|
$ |
303,469 |
|
| |
|
|
|
|
|
|
|
|
| Per
Share |
|
|
|
|
|
|
|
| |
Weighted average number of
shares — basic and diluted (000s) |
|
259,166 |
|
|
254,368 |
|
|
|
257,300 |
|
|
252,710 |
|
| |
Net income (loss) attributable
to common shareholders — basic and diluted |
$ |
0.49 |
|
$ |
(1.13 |
) |
|
$ |
1.03 |
|
$ |
(0.72 |
) |
| |
Adjusted Free Cash Flow —
basic (a non-IFRS measure) (2) |
$ |
0.31 |
|
$ |
0.75 |
|
|
$ |
1.53 |
|
$ |
1.97 |
|
| |
Free Cash Flow — basic (a
non-IFRS measure) (2) |
$ |
0.22 |
|
$ |
0.75 |
|
|
$ |
1.27 |
|
$ |
1.68 |
|
| |
Total dividends declared |
$ |
0.30 |
|
$ |
0.30 |
|
|
$ |
1.20 |
|
$ |
1.20 |
|
| |
|
|
|
|
|
|
|
|
| ENERGY
VOLUMES |
|
|
|
|
|
|
|
|
|
Electricity production in gigawatt hours
(GWh) |
|
2,836 |
|
|
3,353 |
|
|
|
11,046 |
|
|
10,380 |
|
| (1) Represents
total dividends paid to common shareholders, including dividends in
cash or in shares under Northland’s dividend reinvestment
plan. |
|
(2) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
Fourth Quarter Results Summary
Offshore wind facilities
Electricity production for the three months
ended December 31, 2024 decreased 12% or 172 GWh compared to the
same quarter of 2023, primarily due to lower offshore wind
resource, partially offset by lower unpaid curtailments related to
negative prices and grid outages at our German offshore wind
facilities.
Revenue from energy sales of $280 million for
the three months ended December 31, 2024 decreased 18% or $61
million, compared to the same quarter of 2023, primarily due to the
lower production by $32 million, and P&I factor adjustment and
various other items by $29 million.
Adjusted EBITDA of $181 million for the three
months ended December 31, 2024 decreased 17% or $37 million
compared to the same quarter of 2023, due to the same factors noted
above.
Onshore renewable facilities
Electricity production at the onshore renewable
facilities for the three months ended December 31, 2024 was 7% or
55 GWh higher than the same quarter of 2023, primarily due to
higher wind and solar resource at the Canadian and New York onshore
renewable facilities, partially offset by lower wind resource at
the Spanish onshore renewable facilities.
Revenue from energy sales of $124 million for
the three months ended December 31, 2024 increased 19% or $20
million compared to the same quarter of 2023, primarily due to
higher revenue from the Canadian, New York and Spanish onshore
renewable facilities. Please refer to the Management’s Discussion
and Analysis for the year ended December 31, 2024, dated
February 26, 2025 (“MD&A”) for a further
breakdown of Spanish portfolio revenue by component.
Adjusted EBITDA of $83 million was 21% or $14
million higher than the same quarter of 2023, primarily due to the
same factors noted above.
Natural gas facilities
Electricity production of 764 GWh for the three
months ended December 31, 2024 decreased 21% or 197 GWh compared to
the same quarter of 2023, primarily due to lower operating
availability because of outages at the natural gas facilities
including the planned capacity upgrade at Thorold.
Revenue from energy sales of $79 million for the
three months ended December 31, 2024 decreased 11% or $9 million as
compared to the same quarter of 2023, primarily due to lower
operating availability because of outages at the natural gas
facilities.
Adjusted EBITDA of $46 million for the three
months ended December 31, 2024 was largely in line with the same
quarter of 2023.
Utility
Revenue from energy sales of $92 million for the
three months ended December 31, 2024 increased 8% or $6 million
compared to the same quarter of 2023, primarily due to the growth
in asset base and rate escalations.
Adjusted EBITDA of $41 million for the three
months ended December 31, 2024 increased 27% or $9 million compared
to the same quarter of 2023, primarily due to the same factors
noted above.
Consolidated statement of income (loss)
General and administrative (“G&A”) costs of
$27 million in the fourth quarter decreased $11 million compared to
the same quarter of 2023, primarily due to restructuring of
operating and corporate functions, and La Lucha solar project
entering commercial operations in 2023.
Development costs of $20 million decreased $8
million compared to the same quarter of 2023, primarily due to
disciplined spending on priority development activities, as
planned, and timing of the expenditures.
Finance costs of $97 million decreased 29% or
$39 million compared to the same quarter of 2023, primarily due to
one-time debt modification loss resulting from optimization of
Spanish portfolio debt agreement in 2023 and scheduled principal
repayments on facility-level loans.
Fair value gain on financial instruments was $10
million, primarily due to net movement in the fair value of
derivatives related to interest rate and foreign exchange
contracts.
Foreign exchange loss of $6 million in the
fourth quarter was primarily due to fluctuations in the foreign
exchange rates.
Share of profit from joint ventures of $23
million in the fourth quarter was primarily due to gain on fair
value of derivatives at the joint ventures.
Other income was $129 million lower than the
same quarter of 2023, primarily due to the gain on partial
sell-down of Hai Long offshore wind projects in 2023, partially
offset by the proceeds relating to Deutsche Bucht construction.
Net income of $150 million in the fourth quarter
of 2024 compared to a net loss of $268 million in the same quarter
of 2023, was primarily as a result of the factors described
above.
Adjusted EBITDA
The following table reconciles net income (loss)
to Adjusted EBITDA:
|
|
Three months ended December 31, |
|
Year ended December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Net income (loss) |
$ |
150,469 |
|
|
$ |
(267,918 |
) |
|
$ |
371,389 |
|
|
$ |
(96,132 |
) |
| Adjustments: |
|
|
|
|
|
|
|
|
Finance costs, net |
|
79,758 |
|
|
|
111,113 |
|
|
|
320,634 |
|
|
|
321,812 |
|
|
Provision for (recovery of) income taxes |
|
66,615 |
|
|
|
(55,577 |
) |
|
|
192,167 |
|
|
|
39,129 |
|
|
Depreciation of property, plant and equipment |
|
148,796 |
|
|
|
156,619 |
|
|
|
615,343 |
|
|
|
595,600 |
|
|
Amortization of contracts and intangible assets |
|
14,734 |
|
|
|
14,510 |
|
|
|
58,384 |
|
|
|
57,015 |
|
|
Fair value (gain) loss on derivative contracts |
|
(11,333 |
) |
|
|
187,830 |
|
|
|
87,592 |
|
|
|
294,544 |
|
|
Foreign exchange (gain) loss |
|
6,353 |
|
|
|
(3,570 |
) |
|
|
(716 |
) |
|
|
(39,732 |
) |
|
Impairment of non-financial assets / Fair value adjustment relating
to disposal group classified as held for sale |
|
— |
|
|
|
163,169 |
|
|
|
43,884 |
|
|
|
163,169 |
|
|
Elimination of non-controlling interests |
|
(62,892 |
) |
|
|
(71,813 |
) |
|
|
(267,108 |
) |
|
|
(258,202 |
) |
|
Finance lease (lessor) |
|
(1,053 |
) |
|
|
(1,291 |
) |
|
|
(4,577 |
) |
|
|
(5,609 |
) |
|
Share of (profit) loss from joint ventures |
|
(23,105 |
) |
|
|
265,599 |
|
|
|
(43,734 |
) |
|
|
279,849 |
|
|
Others (1) |
|
(56,203 |
) |
|
|
(110,013 |
) |
|
|
(111,307 |
) |
|
|
(111,572 |
) |
|
Adjusted EBITDA (2) |
$ |
312,139 |
|
|
$ |
388,658 |
|
|
$ |
1,261,951 |
|
|
$ |
1,239,871 |
|
|
(1) Others primarily include Northland’s share of Adjusted EBITDA
from equity accounted investees, gain on sale of La Lucha solar
facility, proceeds relating to Deutsche Bucht construction, Gemini
interest income and other expenses (income). |
|
(2) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
Adjusted EBITDA of $312 million for the three
months ended December 31, 2024 decreased 20% or $77 million
compared to the same quarter of 2023. The significant factors
decreasing Adjusted EBITDA include:
- $74 million in
gains from the partial sell-down of Hai Long offshore wind project
in 2023; and
- $37 million
decrease in operating results at the offshore wind facilities,
primarily due to lower offshore wind resource, partially offset by
lower unpaid curtailments related to negative prices and grid
outages at our German offshore wind facilities, as described
above.
The factor partially offsetting the decrease in
the Adjusted EBITDA was:
- $23 million
increase due to higher operating results from onshore renewable
facilities and EBSA, as described above.
Adjusted Free Cash Flow and Free Cash Flow
The following table reconciles cash flow from
operations to Adjusted Free Cash Flow and Free Cash Flow:
|
|
Three months ended December 31, |
|
Year ended December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Cash provided by operating activities |
$ |
359,631 |
|
|
$ |
161,354 |
|
|
$ |
1,028,968 |
|
|
$ |
810,699 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
Net change in non-cash working capital balances related to
operations |
|
(43,309 |
) |
|
|
205,865 |
|
|
|
305,084 |
|
|
|
440,828 |
|
|
Non-expansionary capital expenditures |
|
(1,789 |
) |
|
|
(1,947 |
) |
|
|
(5,272 |
) |
|
|
(3,215 |
) |
|
Restricted funding for major maintenance, debt and decommissioning
reserves |
|
(8,532 |
) |
|
|
(8,200 |
) |
|
|
(20,677 |
) |
|
|
(11,435 |
) |
|
Interest |
|
(61,913 |
) |
|
|
(142,890 |
) |
|
|
(263,499 |
) |
|
|
(325,841 |
) |
|
Scheduled principal repayments on facility debt |
|
(340,184 |
) |
|
|
(323,800 |
) |
|
|
(714,051 |
) |
|
|
(705,119 |
) |
|
Funds set aside (utilized) for scheduled principal repayments |
|
148,788 |
|
|
|
158,020 |
|
|
|
— |
|
|
|
— |
|
|
Preferred share dividends |
|
(1,500 |
) |
|
|
(1,573 |
) |
|
|
(6,162 |
) |
|
|
(6,103 |
) |
|
Consolidation of non-controlling interests |
|
(19,810 |
) |
|
|
(22,194 |
) |
|
|
(93,254 |
) |
|
|
(87,380 |
) |
|
Investment income (1) |
|
6,791 |
|
|
|
7,374 |
|
|
|
26,888 |
|
|
|
29,685 |
|
|
Others (2) |
|
19,423 |
|
|
|
159,439 |
|
|
|
69,554 |
|
|
|
281,625 |
|
|
Free Cash Flow (3) |
$ |
57,596 |
|
|
$ |
191,448 |
|
|
$ |
327,579 |
|
|
$ |
423,744 |
|
|
Add back: Growth expenditures |
|
23,054 |
|
|
|
26,635 |
|
|
|
66,841 |
|
|
|
112,786 |
|
|
Less: Historical growth expenditures’ recovery due
to sell-down |
|
— |
|
|
|
(26,794 |
) |
|
|
— |
|
|
|
(38,552 |
) |
|
Adjusted Free Cash Flow (3) |
$ |
80,650 |
|
|
$ |
191,289 |
|
|
$ |
394,420 |
|
|
$ |
497,978 |
|
|
(1) Investment income includes Gemini interest income and repayment
of Gemini subordinated debt. |
|
(2) Others mainly include the effect of foreign exchange rates and
hedges, interest rate hedge, Nordsee One interest on shareholder
loans, share of joint venture project development costs,
acquisition costs, lease payments, interest income, Northland’s
share of Adjusted Free Cash Flow from equity accounted investees,
gain on sale of La Lucha solar facility, interest on
corporate-level debt raised to finance capitalized growth projects
and other non-cash expenses adjusted in working capital excluded
from Free Cash Flow in the period. |
|
(3) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
Adjusted Free Cash Flow of $81 million for the
three months ended December 31, 2024 was 58% or $111 million lower
than the same quarter of 2023.
The significant factors decreasing Adjusted Free
Cash Flow were:
- $53 million
decrease in Adjusted EBITDA (gross of growth expenditures)
primarily due to the factors described above;
- $36 million
decrease from foreign exchange and interest rate hedges, and other
settlements; and
- $23 million
increase in scheduled debt repayments on facility-level loans,
mainly at Spanish portfolio.
Free Cash Flow, which is reduced by growth
expenditures, totaled $58 million for the three months ended
December 31, 2024, and was $134 million lower than the same quarter
of 2023, due to the same factors as Adjusted Free Cash Flow.
The following table reconciles Adjusted EBITDA
to Adjusted Free Cash Flow:
|
|
Three months ended December 31, |
|
Year ended December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Adjusted EBITDA (2) |
$ |
312,139 |
|
|
$ |
388,658 |
|
|
$ |
1,261,951 |
|
|
$ |
1,239,871 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
Scheduled debt repayments |
|
(151,576 |
) |
|
|
(129,002 |
) |
|
|
(578,563 |
) |
|
|
(579,445 |
) |
|
Interest expense |
|
(48,611 |
) |
|
|
(52,309 |
) |
|
|
(193,575 |
) |
|
|
(195,328 |
) |
|
Current taxes |
|
(47,131 |
) |
|
|
(46,558 |
) |
|
|
(175,112 |
) |
|
|
(137,460 |
) |
|
Non-expansionary capital expenditure |
|
(2,015 |
) |
|
|
(1,938 |
) |
|
|
(5,078 |
) |
|
|
(3,016 |
) |
|
Utilization (funding) of maintenance and decommissioning
reserves |
|
(7,845 |
) |
|
|
(6,816 |
) |
|
|
(18,716 |
) |
|
|
(10,044 |
) |
|
Lease payments, including principal and interest |
|
(2,908 |
) |
|
|
(2,365 |
) |
|
|
(12,586 |
) |
|
|
(8,677 |
) |
|
Preferred dividends |
|
(1,500 |
) |
|
|
(1,574 |
) |
|
|
(6,162 |
) |
|
|
(6,103 |
) |
|
Foreign exchange hedge gain (loss) |
|
(307 |
) |
|
|
5,873 |
|
|
|
12,584 |
|
|
|
36,908 |
|
|
Others (1) |
|
7,350 |
|
|
|
37,479 |
|
|
|
42,836 |
|
|
|
87,038 |
|
|
Free Cash Flow (2) |
$ |
57,596 |
|
|
$ |
191,448 |
|
|
$ |
327,579 |
|
|
$ |
423,744 |
|
|
Add Back: Growth expenditures |
|
23,054 |
|
|
|
26,635 |
|
|
|
66,841 |
|
|
|
112,786 |
|
|
Less: Historical growth expenditures’ recovery due
to sell-down |
|
— |
|
|
|
(26,794 |
) |
|
|
— |
|
|
|
(38,552 |
) |
|
Adjusted Free Cash Flow (2) |
$ |
80,650 |
|
|
$ |
191,289 |
|
|
$ |
394,420 |
|
|
$ |
497,978 |
|
|
(1) Others mainly include repayment of Gemini subordinated debt,
gain on sale of La Lucha solar facility, interest rate and foreign
currency hedge settlements, and interest received on third-party
loans to partners. |
|
(2) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
2025 Financial Outlook
2025 is a year of delivering key milestones on
three large construction projects: Baltic Power, Hai Long and
Oneida. Cash generation from some of these projects will be a
significant milestone for Northland and is expected to start
contributing to Northland’s earnings in 2025, continuing through
2026, with full realization in 2027.
Northland anticipates generating pre-completion
revenue from Hai Long in the second half of this year. However,
this cash flow is used to fund the construction of the Hai Long
project and will not be included in Adjusted Free Cash Flow or Free
Cash Flow metrics until the project reaches commercial operations,
expected in 2027. Additionally, Northland incurs development
expenditures in pursuit of its 10 GW development pipeline. These
expenditures will reduce near-term Free Cash Flow until the
projects achieve commercial operations but are expected to deliver
accretive long-term growth in earnings and cash flow in future
years.
Adjusted EBITDA
For 2025, management expects Adjusted EBITDA to
be in the range of $1.30 billion to $1.40 billion, with the
guidance mid-point being higher than 2024 Adjusted EBITDA of $1.26
billion. The major factors expected to increase Adjusted EBITDA
include (all amounts are approximate):
- Adjusted EBITDA
contributions from Hai Long’s pre-completion revenues, expected in
the second half of 2025, and Oneida energy storage project
achieving the commercial operations in the first half of 2025
($80 million);
- Higher Adjusted
EBITDA for onshore renewables excluding Spain ($20 million);
and
- Other various
items ($25 million).
Increase in Adjusted EBITDA is expected to be
partially offset by:
- Lower band
revenue adjustments at Spain from lower posted regulatory price
($30 million); and
- Lower
contributions from Nordsee One following a scheduled step down in
its power contracts, partially offset by impact from the Gemini
cable issue and TenneT outage in 2024 ($25 million).
Adjusted Free Cash Flow and Free Cash
Flow
In 2025, management expects Adjusted Free Cash
Flow to be in the range of $1.30 to $1.50 per share, with the
guidance mid-point being lower than 2024 Adjusted Free Cash Flow of
$1.53 per share. The major factors expected to decrease Adjusted
Free Cash flow include (all amounts are approximate):
- Decreased
regulatory feed in tariffs at Nordsee One following a scheduled
step down in its power contracts and lower band adjustment at Spain
($45 million); and
- Impact from
prior year’s La Lucha operating results including the gain on its
sale and other items ($25 million).
Decrease in Adjusted Free Cash Flow is expected
to be partially offset by:
- Higher
contribution from natural gas facilities and utilities performance
and lower net debt service and taxes across existing assets ($30
million); and
- Contribution
from Oneida battery storage project and onshore renewable assets
excluding Spain ($10 million).
Corporate G&A costs are expected to be
approximately $70 million in 2025, compared to $85 million in
2024.
Northland has assumed development expenditures
will be approximately $60 million.
Management expects 2025 Free Cash Flow, which
includes growth expenditures, to be in the range of $1.10 to $1.30
per share, consistent with last year’s guidance. Free Cash Flow
reflects the level of spending on growth initiatives and the equity
capital raised for our projects currently under construction, for
which material corresponding cash flows will not be received until
2026 and 2027. The development expenditures would include offshore
wind opportunities in Europe and Asia and a further allocation
towards onshore renewable projects, and natural gas power
development opportunities.
In addition, any gains from the future sell-down
of ownership interests in development assets would be included in
Adjusted EBITDA, Adjusted Free Cash Flow and Free Cash Flow as they
relate to capturing development profits at key milestones.
Currently, the 2025 financial outlook does not incorporate any
sell-down proceeds and as such, net proceeds from any sell-down
would increase reported Adjusted EBITDA, Adjusted Free Cash Flow,
and Free Cash Flow in the event they occur in 2025.
Northland continues to implement a selective
partnership strategy to sell interests in certain development
projects on or before financial close. In certain situations,
Northland may decide to exit certain markets or reduce development
activities within certain jurisdictions. Northland will assess each
opportunity individually and intends to remain a long-term owner of
the renewable power assets it develops.
Over the longer term, Northland remains
positioned to achieve substantial growth in Adjusted EBITDA and
Adjusted Free Cash Flow by 2027, upon achieving targeted commercial
operations of Oneida, Baltic Power and Hai Long, each with
long-term contracted revenues of between 20 to 30 years.
Once the projects under construction, including
Hai Long, Baltic Power, and Oneida battery storage, are fully
completed, they are collectively expected to deliver on a five-year
annual average basis, approximately $570 million to $615 million of
Adjusted EBITDA and $185 million to $210 million of Adjusted Free
Cash Flow by 2027.
Northland management expects that the Company
will continue to pay dividends annually at the rate of $1.20 per
share.
With over 3 gigawatts (GW) of current gross
operating capacity, 2.4 GW under construction and a pipeline under
development of approximately 10 GW, the Company is well-positioned
to deliver on the global energy transition. Northland intends to be
selective and pursue only projects within its pipeline that meet
its strategic objectives and targeted returns and closely monitor
macroeconomic conditions. Management continues to assess its
development pipeline as projects move through their development
cycles.
The information in this Outlook constitutes
forward-looking information within the meaning of applicable
Canadian securities laws, is based on several assumptions and is
subject to risks and uncertainties. See Forward-Looking Statements
herein as well as the Risk Factors in Northland’s Annual
Information Form for the year ended December 31, 2024, dated
February 26, 2025 (“2024 AIF”).
Fourth-Quarter Earnings Conference Call
Northland will hold an earnings conference call
on February 27, 2025, to discuss its fourth quarter 2024
results. The call will be hosted by Northland’s Senior Management,
who will discuss the Company’s financial results and developments
as well as answering questions from analysts.
Conference call details are as follows:
Thursday, February 27, 2025, 10:00 a.m. ET
Participants wishing to join the call and ask
questions must register using the following URL below:
https://register.vevent.com/register/BI9fc40d4b1d9d4e0ebcbef3b53626dd1c
For all other attendees, the call will be
broadcast live on the internet, in listen-only mode and can be
accessed using the following link:
Webcast URL:
https://edge.media-server.com/mmc/p/wo2vc2pb
For those unable to attend the live call, an
audio recording will be available on northlandpower.com on Friday,
February 28, 2025.
Northland’s audited consolidated financial
statements for the year ended December 31, 2024, and related
MD&A can be found on SEDAR+ at www.sedarplus.ca under
Northland’s profile and on northlandpower.com.
ABOUT NORTHLAND POWER
Northland Power is a Canadian-owned global power
producer dedicated to accelerating the global energy transition.
Founded in 1987, with almost four decades of experience, Northland
has a long history of developing, owning and operating a
diversified mix of energy infrastructure assets including offshore
and onshore wind, solar, battery energy storage, and natural gas.
Northland also supplies energy through a regulated utility.
Headquartered in Toronto, Canada, with global
offices in seven countries, Northland owns or has an economic
interest in 3.2 GW of gross operating generating capacity, 2.4 GW
under construction and a significant inventory of early to
mid-stage development opportunities encompassing approximately 10
GW of potential capacity.
Publicly traded since 1997, Northland's Common
Shares, Series 1 and Series 2 Preferred Shares trade on the Toronto
Stock Exchange under the symbols NPI, NPI.PR.A and NPI.PR.B,
respectively.
NON-IFRS FINANCIAL MEASURES
This press release includes references to the
Company’s adjusted earnings before interest, income taxes,
depreciation and amortization (“Adjusted EBITDA”),
Adjusted Free Cash Flow, Free Cash Flow and applicable payout
ratios and per share amounts, which are measures not prescribed by
International Financial Reporting Standards
(“IFRS”), and therefore do not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other companies. Non-IFRS financial
measures are presented at Northland’s share of underlying
operations. These measures should not be considered alternatives to
net income (loss), cash flow from operating activities or other
measures of financial performance calculated in accordance with
IFRS. Rather, these measures are provided to complement IFRS
measures in the analysis of Northland’s results of operations from
management’s perspective. Management believes that Northland’s
non-IFRS financial measures and applicable payout ratio and per
share amounts are widely accepted and understood financial
indicators used by investors and securities analysts to assess the
performance of a company, including its ability to generate cash
through operations.
FORWARD-LOOKING STATEMENTS
This press release contains statements that
constitute forward-looking information within the meaning of
applicable securities laws (“forward-looking statements”) that are
provided for the purpose of presenting information about
management’s current expectations and plans. Readers are cautioned
that such statements may not be appropriate for other purposes.
Northland’s actual results could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, the events anticipated by the forward-looking
statements may or may not transpire or occur. Forward-looking
statements include statements that are not historical facts and are
predictive in nature, depend upon or refer to future events or
conditions, or include words such as “expects,” “anticipates,”
“plans,” “predicts,” “believes,” “estimates,” “intends,” “targets,”
“projects,” “forecasts” or negative versions thereof and other
similar expressions or future or conditional verbs such as “may,”
“will,” “should,” “would” and “could”. These statements may
include, without limitation, statements regarding future Adjusted
EBITDA, Adjusted Free Cash Flow and Free Cash Flow, including
respective per share amounts, dividend payments and dividend payout
ratios, the timing for and attainment of the Hai Long and Baltic
Power offshore wind, Oneida energy storage projects and other
renewables growth activity and the anticipated contributions
therefrom to Adjusted EBITDA, Adjusted Free Cash Flow and Free Cash
Flow, the expected generating capacity of certain projects,
guidance, anticipated dates of full commercial operations,
forecasts as to overall project costs, the completion of
construction, acquisitions, dispositions, whether partial or full,
investments or financings and the timing thereof, the timing for
and attainment of financial close and commercial operations for
each project, the potential for future production from project
pipelines, cost and output of development projects, the
implementation of the DRIP changes, the all-in interest cost for
debt financing, the impact of currency and interest rate hedges,
litigation claims, anticipated results from the optimization of the
Thorold Co-Generation facility and the timing related thereto,
future funding requirements, and the future operations, business,
financial condition, financial results, priorities, ongoing
objectives, strategies and the outlook of Northland, its
subsidiaries and joint ventures.
These statements are based upon certain material
factors or assumptions that were applied in developing the
forward-looking statements, including the design specifications of
development projects, the provisions of contracts to which
Northland or a subsidiary is a party, management’s current plans
and its perception of historical trends, current conditions and
expected future developments, the ability to obtain necessary
approvals, satisfy any closing conditions, satisfy any project
finance lender conditions to closing sell-downs or obtain adequate
financing regarding contemplated construction, acquisitions,
dispositions, investments or financings, as well as other factors,
estimates and assumptions that are believed to be appropriate in
the circumstances. Although these forward-looking statements are
based upon management’s current reasonable expectations and
assumptions, they are subject to numerous risks and uncertainties.
Some of the factors that could cause results or events to differ
from current expectations include, but are not limited to, risks
associated with further regulatory and policy changes in Spain
which could impair current guidance and expected returns, risks
associated with merchant pool pricing and revenues, risks
associated with sales contracts, the emergence of widespread health
emergencies or pandemics, Northland’s reliance on the performance
of its offshore wind facilities at Gemini, Nordsee One and Deutsche
Bucht for over 50% of its Adjusted EBITDA, counterparty and joint
venture risks, contractual operating performance, variability of
sales from generating facilities powered by intermittent renewable
resources, wind and solar resource risk, unplanned maintenance
risk, offshore wind concentration, natural gas and power market
risks, commodity price risks, operational risks, recovery of
utility operating costs, Northland’s ability to resolve
issues/delays with the relevant regulatory and/or government
authorities, permitting, construction risks, project development
risks, integration and acquisition risks, procurement and supply
chain risks, financing risks, disposition and joint-venture risks,
competition risks, interest rate and refinancing risks, liquidity
risk, inflation risks, commodity availability and cost risk,
construction material cost risks, impacts of regional or global
conflicts, credit rating risk, currency fluctuation risk,
variability of cash flow and potential impact on dividends,
taxation, natural events, environmental risks, climate change,
health and worker safety risks, market compliance risk, government
regulations and policy risks, utility rate regulation risks,
international activities, cybersecurity, data protection and
reliance on information technology, labour relations, labour
shortage risk, management transition risk, geopolitical risk in and
around the regions Northland operates in, large project risk,
reputational risk, insurance risk, risks relating to co-ownership,
bribery and corruption risk, terrorism and security, litigation
risk and legal contingencies, and the other factors described in
the “Risks Factors” section of Northland’s MD&A and 2024 AIF,
which can be found at www.sedarplus.ca under Northland’s profile
and on Northland’s website at northlandpower.com.
Northland has attempted to identify important
factors that could cause actual results to materially differ from
current expectations; however, there may be other factors that
cause actual results to differ materially from such expectations.
Northland’s actual results could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, and Northland cautions you not to place undue reliance upon
any such forward-looking statements.
The forward-looking statements contained in this
release are, unless otherwise indicated, stated as of the date
hereof and are based on assumptions that were considered reasonable
as of the date hereof. Other than as specifically required by law,
Northland undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after such date or to
reflect the occurrence of unanticipated events, whether as a result
of new information, future events or results, or otherwise.
Certain forward-looking information in this
release and the MD&A may also constitute a “financial outlook”
within the meaning of applicable securities laws. Financial outlook
involves statements about Northland’s prospective financial
performance, financial position or cash flows and is based on and
subject to the assumptions about future economic conditions and
courses of action and the risk factors described above in respect
of forward-looking information generally, as well as any other
specific assumptions and risk factors in relation to such financial
outlook noted in this release and the MD&A. Such assumptions
are based on management’s assessment of the relevant information
currently available and any financial outlook included in this
release and the MD&A is provided for the purpose of helping
readers understand Northland’s current expectations and plans.
Readers are cautioned that reliance on any financial outlook may
not be appropriate for other purposes or in other circumstances and
that the risk factors described above or other factors may cause
actual results to differ materially from any financial outlook. The
actual results of Northland’s operations will likely vary from the
amounts set forth in any financial outlook and such variances may
be material.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/df2897ad-3cfd-4fd9-ad3a-80e945a33b9e
For further information, please
contact:
Dario Neimarlija, Vice President, FP&A and
Investor Relations
647-288-1019
investorrelations@northlandpower.com
northlandpower.com
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