MONTREAL, May 11 /PRNewswire-FirstCall/ - Boralex Inc. ("Boralex" or the "Corporation") closed its first quarter 2010 with adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") (1) of $21.4 million, up 5.9% compared to $20.2 million for the same period in 2009.
"We are very satisfied with the first quarter results. Boralex is also pleased with its recent announced proposal to buy all of the issued and outstanding trust units of the Boralex Power Income Fund," said Patrick Lemaire, President and Chief Executive Officer of Boralex Inc. If Boralex acquires the Fund, it will add top quality assets to its portfolio, bringing its installed capacity to about 600 MW and reducing the Corporation's exposure to volatility in electricity prices in the United States. "From this standpoint we think this acquisition is entirely consistent with the Corporation's strategy to achieve 1,000 MW within the next four years" said Mr. Lemaire.
(in millions of dollars, except per share data)
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Three-month
periods ended
-----------------------
March 31, March 31,
2010 2009
-----------------------
Data as reported in the financial statements
Revenues from energy sales 51.0 57.2
EBITDA 17.6 21.0
Net earnings 1.3 7.2
per share (basic and diluted) $0.04 $0.19
Cash flows from operations 15.5 15.3
Adjusted data
Adjusted EBITDA 21.4 20.2
Adjusted net earnings 5.5 6.7
per share (basic and diluted) $0.15 $0.18
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Revenues from energy sales amounted to $51.0 million, down $6.2 million compared to the first quarter 2009. These results are mainly due to the rise in the Canadian dollar versus the U.S. dollar and the euro, and to lower electricity prices on the U.S. market. However, the decrease in results was offset by start-ups in the wind power segment. At a constant exchange rate, revenues would have risen 3.8%. The 5.9% increase in adjusted EBITDA stems mainly from lower fuel costs and the Corporation's expansion in installed capacity in the wind power and hydroelectric power segments over the past 12 months.
During the quarter, the refinancing of Boralex's loan for Phase I of the Thames River wind power site resulted in about $36 million in additional debt. In addition, the Corporation had to write off deferred financing expenses incurred for the first financing arrangement, which had an unfavourable impact of $2.7 million on first quarter 2010 results. Lastly, there was an amount of $3.7 million in asset impairments for the Dolbeau thermal power station, which belongs to the Fund. Excluding specific items net of income taxes for the first quarter of 2010 and 2009, net earnings would have been $5.5 million or $0.15 per share compared to net earnings of $6.7 million or $0.18 per share for the same period in 2009.
In the quarter ended March 31, 2010, the wind power segment generated revenue from energy sales of $11.4 million and EBITDA of $9.4 million, up 25.3% and 30.6% respectively over first quarter 2009 results. This increase is due mainly to the 48.6% increase in production volume from the start-up of 40 MW in Phase I of the Thames River wind farm.
The hydroelectric power stations reported revenue of $3.1 million, up 10.7%, and EBITDA of $1.9 million, up 11.8% over the first quarter 2009. These increases are primarily due to the contribution of the Ocean Falls power station.
The wood-residue segment felt the effects of a difficult economic context, marked by weak electricity prices in the U.S. and an unfavourable exchange rate, but it also benefited from a significant reduction in fuel costs thanks to greater efficiency and the new Biomass Crop Assistance Program. As a result, for the first quarter 2010, this segment generated revenue of $30.2 million versus $38.2 million in the same quarter in 2009 and the segment's EBITDA stood at $10.0 million compared to $11.8 million in 2009.
The natural gas plant ended the first quarter 2010 with revenue of $6.3 million, compared to $7.2 million a year ago, primarily due to currency fluctuations. Excluding this element, the lower average electricity price was offset by an increase of 5.4% in steam sales volume. EBITDA, at a constant exchange rate, rose 46.7% over the first quarter 2009.
Lastly, operating activities in the first quarter 2010 generated total cash flows of $22.3 million versus $14.3 million in the first quarter 2009. The Corporation has a solid cash balance of more than $66 million, which gives it significant financial flexibility for pursuing its growth strategy.
About Boralex
Boralex is a major independent power producer whose core business is the development and operation of power stations that generate renewable energy.
Employing over 300 people, the Corporation operates 28 power stations with a total installed capacity of 410 megawatts ("MW") in Canada, in the Northeastern United States and in France. In addition, the Corporation has, alone or with its European and Canadian partners, power projects under development that will add close to 300 MW of power, of which almost 100 MW will come online by the end of fiscal 2010. Boralex is distinguished by its diversified expertise and in-depth experience in three power generation segments - wind, hydroelectric and thermal. Boralex also holds a 23% interest in Boralex Power Income Fund, which has 10 power stations with a total installed capacity of 190 MW in Québec and the United States. These sites are managed by Boralex. Boralex shares are listed on the Toronto Stock Exchange (TSX) under the ticker symbol BLX. More information is available at www.boralex.com or www.sedar.com.
Certain statements contained in this press release, including those regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the general impact of economic conditions, raw material price increases and availability, currency fluctuations, fluctuations in electricity selling prices, the Company's financing capacity, adverse changes in general market and industry conditions, as well as other factors listed in the Company's filings with different securities commissions.
The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as Generally Accepted Accounting Principles of Canada (GAAP). To assess the operating performance of its assets and reporting segments, the Corporation uses earnings before interest, taxes, depreciation and amortization (EBITDA) and cash flows from operations as performance measurements. These measures are not defined under GAAP and do not have a standardized definition prescribed by GAAP. Therefore, they may not be comparable to similar measures presented by other companies. EBITDA corresponds to Operating income before amortization as defined in the summarized financial statements included with this press release. Cash flows from operations corresponds to cash flows from operating activities before changes in non-cash working capital items as disclosed in the consolidated statements of cash flows attached in this press release.
The following table reconciles EBITDA and net earnings as reported in the financial statements with adjusted EBITDA and net earnings:
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EBITDA for the *Net earnings for the
quarters ended quarters ended
-----------------------------------------------------
(in thousands March 31, March 31, March 31, March 31,
of dollars) 2010 2009 2010 2009
-------------------------------------------------------------------------
As reported in the
financial statements 17,632 20,952 1,348 7,212
Specific items:
Share of Boralex
in impairment of
property, plant
and equipment at
a power station
owned by the
Fund 3,721 - 2,739 -
Amortization of
balance of
deferred
financing costs
under former
financing for
Phase I of
Thames River - - 1,915 -
Gain on sale of
subsidiary - - (519) -
Gain on disposal
of investment in
subsidiary - (720) - (482)
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Adjusted data 21,353 20,232 5,483 6,730
* Impact net of
income taxes
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----------------------------------
(1) Non-GAAP performance measure, refer to the reconciliation table at
the end of this press release.
Consolidated Balance Sheets
As at As at
March 31, December 31,
(in thousands of dollars) (unaudited) 2010 2009
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ASSETS
CURRENT ASSETS
Cash and cash equivalents 66,388 37,821
Restricted cash 94,287 -
Accounts receivable 37,238 39,632
Future income taxes 471 422
Inventories 7,633 8,726
Prepaid expenses 3,216 2,537
Fair value of derivative financial instruments 10,226 -
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219,459 89,138
Investment 52,121 55,446
Property, plant and equipment 414,112 413,539
Power sales contracts 46,238 49,023
Other assets 44,486 56,621
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776,416 663,767
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LIABILITIES
CURRENT LIABILITIES
Bank loans and advances 7,794 12,291
Accounts payable and accrued liabilities 46,661 28,913
Income taxes 2,338 283
Current portion of long-term debt 18,121 24,273
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74,914 65,760
Long-term debt 321,571 206,116
Future income taxes 35,650 37,185
Fair value of derivative financial instruments 9,523 7,645
Non-controlling interests 7,299 7,031
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448,957 323,737
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SHAREHOLDERS' EQUITY
Capital stock 222,694 222,694
Contributed surplus 4,617 4,295
Retained earnings 161,248 159,900
Accumulated other comprehensive loss (61,100) (46,859)
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327,459 340,030
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776,416 663,767
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Consolidated Statements of Earnings
FOR THE QUARTERS
ENDED MARCH 31,
(in thousands of dollars, except per share
amounts and number of shares) (unaudited) 2010 2009
-------------------------------------------------------------------------
Revenues from energy sales 51,004 57,198
Renewable energy tax credits - 3,488
Operating costs 28,496 39,653
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22,508 21,033
Share in earnings of the Fund (1,461) 2,303
Management revenues from the Fund 1,755 1,380
Other income 300 1,504
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23,102 26,220
-------------------------------------------------------------------------
OTHER EXPENSES
Management and operation of the Fund 1,505 1,129
Administrative 3,965 4,139
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5,470 5,268
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OPERATING INCOME BEFORE AMORTIZATION 17,632 20,952
Amortization 7,699 6,465
Foreign exchange loss (gain) 876 (43)
Net gain on financial instruments (560) (115)
Financing costs 5,762 3,418
Gain on sale of subsidiary (774) -
-------------------------------------------------------------------------
13,003 9,725
-------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 4,629 11,227
Income taxes 3,001 3,956
-------------------------------------------------------------------------
1,628 7,271
Non-controlling interests (280) (59)
-------------------------------------------------------------------------
NET EARNINGS 1,348 7,212
Net earnings per Class A share (basic) 0.04 0.19
Net earnings per Class A share (diluted) 0.04 0.19
Weighted average number of Class A shares
outstanding (basic) 37,740,921 37,740,921
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Consolidated Statements of Retained Earnings
FOR THE QUARTERS
ENDED MARCH 31,
(in thousands of dollars) (unaudited) 2010 2009
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance - beginning of period 159,900 135,461
Net earnings for the period 1,348 7,212
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Balance - end of period 161,248 142,673
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Consolidated Statements of Comprehensive Income (Loss)
FOR THE QUARTERS
ENDED MARCH 31,
(in thousands of dollars) (unaudited) 2010 2009
-------------------------------------------------------------------------
Net earnings for the period 1,348 7,212
-------------------------------------------------------------------------
Other comprehensive income (loss)
TRANSLATION ADJUSTMENTS
Unrealized foreign exchange gain (loss) on
translation of financial statements of
self-sustaining foreign operations (9,300) 4,751
Reclassification to net earnings of a realized
foreign exchange loss (gain) related to the
reduction of net investment in self-sustaining
foreign operations 422 (65)
Share of cumulative translation adjustments of
the Fund (478) 539
Taxes 6 (127)
CASH FLOW HEDGES
Change in fair value of financial instruments (5,595) 6,726
Hedging items realized and recognized in net
earnings (1,219) (6,677)
Hedging items realized and recognized in
balance sheet 1,146 (1,097)
Taxes 777 (42)
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(14,241) 4,008
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Comprehensive income (loss) for the period (12,893) 11,220
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Consolidated Statements of Cash Flows
FOR THE QUARTERS
ENDED MARCH 31,
(in thousands of dollars) (unaudited) 2010 2009
-------------------------------------------------------------------------
Operating Activities
Net earnings 1,348 7,212
Distributions received from the Fund 1,721 2,409
Adjustments for non-cash items
Net gain on financial instruments (560) (115)
Share of earnings of the Fund 1,461 (2,303)
Amortization 7,699 6,465
Amortization of financing costs and
monetization program expenses 2,918 772
Renewable energy tax credits 907 (867)
Gain on sale of subsidiary (774) -
Future income taxes 51 2,143
Other 761 (395)
-------------------------------------------------------------------------
15,532 15,321
Change in non-cash working capital items 6,766 (1,040)
-------------------------------------------------------------------------
22,298 14,281
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property, plant and
equipment-projects under construction (16,188) (5,233)
Additions to property, plant and
equipment-power stations in operation (4,520) (1,530)
Change in restricted cash (94,287) -
Proceeds from sale of a subsidiary 878 -
Change in restricted funds 857 (21)
Development projects (45) (5,885)
Other 958 (3,324)
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(112,347) (15,993)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase (decrease) in bank loans and advances (4,427) 3,689
Increase in long-term debt 188,549 -
Payments on long-term debt (59,417) (6,691)
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124,705 (3,002)
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TRANSLATION ADJUSTMENT ON CASH AND CASH
EQUIVALENTS (6,089) (2,090)
-------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 28,567 (6,804)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 37,821 69,195
-------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD 66,388 62,391
-------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
CASH AND CASH EQUIVALENTS PAID FOR:
Interest 2,937 2,116
Income taxes 220 269
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SEGMENTED INFORMATION
The Corporation's power stations are grouped into four distinct segments: wind power, hydroelectric power, wood-residue thermal power and natural gas thermal power, and are engaged mainly in power generation. The classification of these segments is based on the different cost structures relating to each of the four types of power stations. The main accounting policies that apply to the operating segments are the same as those described in note 2 in the Fund's 2009 annual report.
The Corporation analyzes the performance of its operating segments based on the earnings before interest, taxes, depreciation and amortization ("EBITDA"). EBITDA is not a measure of performance under Canadian GAAP; however, management uses this measure to assess the operating performance of its segments. EBITDA corresponds to Operating income before amortization. Results for each segment are presented on the same basis as those of the Corporation.
The following table reconciles EBITDA with net earnings:
FOR THE QUARTERS
ENDED MARCH 31,
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
Net earnings 1,348 7,212
Non-controlling interests 280 59
Income taxes 3,001 3,956
Gain on sale of subsidiary (774) -
Financing costs 5,762 3,418
Net gain on financial instruments (560) (115)
Foreign exchange loss (gain) 876 (43)
Amortization 7,699 6,465
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EBITDA 17,632 20,952
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INFORMATION BY SEGMENT
FOR THE QUARTERS FOR THE QUARTERS
ENDED MARCH 31, ENDED MARCH 31,
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Revenues from energy
Power generation (MWh) sales
----------------------------------------------------
Wind farms 90,291 60,761 11,413 9,083
Hydroelectric power
stations 40,309 35,666 3,054 2,760
Wood-residue thermal
power stations 320,057 296,688 30,216 38,181
Natural gas thermal
power station 22,430 22,613 6,321 7,174
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473,087 415,728 51,004 57,198
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Additions to property,
EBITDA plant and equipment
----------------------------------------------------
Wind farms 9,419 7,215 19,342 5,141
Hydroelectric power
stations 1,873 1,709 215 -
Wood-residue thermal
power stations 10,028 11,803 984 1,459
Natural gas thermal
power station 2,038 1,511 3 22
Corporate and
eliminations (5,726) (1,286) 164 141
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17,632 20,952 20,708 6,763
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AS AT AS AT AS AT AS AT
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
2010 2009 2010 2009
-------------------------------------------------------------------------
Property, plant and
Total assets equipment
----------------------------------------------------
Wind farms 480,490 363,644 293,679 288,225
Hydroelectric power
stations 35,564 34,622 25,388 25,758
Wood-residue thermal
power stations 136,317 138,014 81,437 84,660
Natural gas thermal
power station 13,088 13,600 6,293 7,150
Corporate and
eliminations 110,957 113,887 7,315 7,746
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776,416 663,767 414,112 413,539
-------------------------------------------------------------------------
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INFORMATION BY GEOGRAPHIC SEGMENT
FOR THE QUARTERS FOR THE QUARTERS
ENDED MARCH 31, ENDED MARCH 31,
-------------------------------------------------------------------------
2010 2009 2010 2009
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Revenues from energy
Power generation (MWh) sales
----------------------------------------------------
United States 350,942 327,651 32,137 40,604
France 85,317 83,374 14,432 16,257
Canada 36,828 4,703 4,435 337
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473,087 415,728 51,004 57,198
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Additions to property,
EBITDA plant and equipment
----------------------------------------------------
United States 11,051 13,236 1,171 1,377
France 7,068 7,807 15,552 233
Canada (487) (91) 3,985 5,153
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17,632 20,952 20,708 6,763
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AS AT AS AT AS AT AS AT
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
2010 2009 2010 2009
-------------------------------------------------------------------------
Property, plant and
Total assets equipment
----------------------------------------------------
United States 173,884 179,494 86,152 89,889
France 234,782 254,142 176,902 190,797
Canada 367,750 230,131 151,058 132,853
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776,416 663,767 414,112 413,539
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SUBSEQUENT EVENT
On May 3, 2010, Boralex and the Fund jointly announced that they have entered into a definitive support agreement, pursuant to which Boralex, through one of its wholly-owned subsidiaries, has offered to acquire by way of a take-over bid (the "Offer") all of the issued and outstanding trust units in the capital of the Fund (the "Units") in exchange for $5 cash equivalent value per Unit in the form of 6.25% Convertible Unsecured Subordinated Debentures of Boralex (the "Debentures"). Boralex has agreed to offer holders of Units ("Unitholders") $100 principal amount of Debentures for each 20 units held.
The special committee of independent trustees of Boralex Power Trust (the "Special Committee") and the Board of Trustees have unanimously determined that the Offer is fair to Unitholders other than Boralex and is in the best interest of the Fund and such Unitholders.
A take-over bid circular containing the full details of the Offer and other related documents are expected to be mailed to Unitholders no later than May 21, 2010.
The Offer is conditional on the deposit in response to the Offer of at least 66 2/3% of the outstanding Units, and a majority of the Units not controlled by Boralex, the receipt of any necessary regulatory approvals and satisfaction or waiver of other customary conditions.
Under the terms of the support agreement, the Fund has agreed that it will not solicit or initiate any competing third-party proposals. In the event that the transaction is not completed in certain circumstances, the Fund has agreed to pay Boralex a termination fee of approximately $6,800,000.
This transaction will be described in more detail in the joint information circular which will be filed no later than May 21, 2010 with the regulatory authorities.
SOURCE BORALEX INC.
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