Boralex Steps up Profitability in the First Quarter

Growth strategy delivers upbeat results

MONTREAL, May 9, 2012 /PRNewswire/ - Boralex Inc. ("Boralex" or the "Corporation") recorded $57.5 million in revenues for the three-month period ended March 31, 2012 compared with $57.3 million in the first quarter of 2011. However, excluding the first quarter 2011 results of the Dolbeau, Québec thermal power station which ceased operations in the third quarter of 2011, revenues were up 7.7%. This improvement was driven by organic growth on the order of 13% in the output of the wind and hydroelectric power segments, higher average selling prices for Boralex and the contribution of the Corporation's first solar power station, commissioned in June 2011.

The same drivers fostered the growth in earnings before interest, taxes, depreciation and amortization ("EBITDA") which came in at $33.3 million, for a margin of 57.9% of revenues, up from $31.2 million and a margin of 54.5% for the first quarter of 2011. Excluding Dolbeau, EBITDA climbed 12.5%. The wind and hydroelectric power segments posted combined EBITDA growth of $3.4 million or 14.2%, while the solar power station contributed an additional $0.5 million. In addition to the strong performance of the wind, hydroelectric and solar power segments, which generated an EBITDA margin of 79.7%, the increase in the average margin reflected the larger weight in Boralex's energy portfolio of these three segments, in which nearly all energy assets are covered by long-term power sales contracts. Accordingly, following the asset acquisitions and disposals over the past three years, 96% of Boralex's energy portfolio currently in operation is covered by indexed fixed-price long-term power sales contracts—the cornerstone of the Corporation's development strategy going forward.

(in millions of Canadian dollars, except per share data and EBITDA margin)
  Three-month periods ended
March 31
Net earnings from continuing operations: 2012 2011
     
Revenues from energy sales 57.5 57.3
EBITDA 33.3 31.2
EBITDA margin 57.9% 54.5%
Net earnings from continuing operations* 4.8 3.9
  Per share (basic) $0.13 $0.11
Cash flows from operations 21.8 17.5
  Per share (basic) $0.58 $0.46
* Attributable to shareholders of Boralex.


Boralex ended the first quarter of 2012 with $4.8 million in net earnings from continuing operations attributable to shareholders or $0.13 per share (basic), compared with $3.9 million or $0.11 per share (basic) for the same period of fiscal 2011. Net earnings for the first quarter of 2011 notably included $1.7 million in net gains on the sale of assets, while net earnings for the first quarter of 2012 included $0.5 million in net asset impairment. Excluding these items not related to operations, adjusted net earnings from continuing operations attributable to shareholders surged 141.0%. Cash flows from operations amounted to $21.8 million or $0.58 per share, up 25%. Furthermore, under the terms of the December 2011 sale of the U.S. thermal power stations, the Corporation recognized $2.3 million in after-tax proceeds on the sale of the balance of the RECs generated by these power stations in 2011.

"Our first-quarter results show the decisive benefits of the strategic approach we've taken over the past three years to lay the foundation for superior, balanced and sustainable growth. To date, our strategic decisions have enhanced our portfolio asset value and profit margins, generated steadier, more predictable revenue and cash flow streams and reduced our business risk exposures," indicated Patrick Lemaire, Boralex President and CEO.

"Lastly, due to the sale of less strategic assets and to Boralex's self-financing capacity, we have approximately $160 million in available cash resources, providing a powerful lever for expansion in our key markets, particularly in the wind power segment. With the recent acquisition of a power sales contract covering a 50 MW wind power project to be developed in the Témiscouata area, 441 MW in additional wind power capacity will be commissioned in Québec by late 2015, of which Boralex owns 246 MW. In addition, we continue to keep a watchful eye on opportunities to acquire advanced-phase development projects in Canada and Europe," concluded Mr. Lemaire.

About Boralex
Boralex is a power producer whose core business dedicated to the development and the operation of renewable energy power stations. Currently, the Corporation operates an asset base with an installed capacity of nearly 500 MW in Canada, the Northeastern United States and France. Boralex is also committed under power development projects, both independently and with Canadian and European partners, to add approximately 450 MW of power. With more than 200 employees, Boralex is known for its diversified expertise and in-depth experience in four power generation types — wind, hydroelectric, thermal and solar. Boralex's shares and convertible debentures are listed on the Toronto Stock Exchange under the ticker symbols BLX and BLX.DB, respectively. 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, volatility in electricity selling prices, the company's financing capacity, negative changes in general market conditions and regulations affecting the industry, as well as other factors listed in the Company's filings with different securities commissions.

There can be no assurance as to the materialization of the results, performance or achievements as expressed or implied by forward-looking statements. The reader is cautioned not to place undue reliance on such forward-looking statements. Unless required to do so under applicable securities legislation, Boralex management does not assume any obligation to update or revise forward-looking statements to reflect new information, future events or other changes.

Excerpts from the unaudited interim financial statements included in this press release also contain certain non-GAAP financial measures. To assess the performance of its assets and reporting segments, the Corporation uses EBITDA, EBITDA margin, cash flows from operations, and cash flows from operations per share as performance measures, as defined in the accompanying financial statements. These non-GAAP measures have no standardized meaning under IFRS. As a result, these measures may not be comparable to similarly named measures used by other companies.

Consolidated Statements of Financial Position

(in thousands of Canadian dollars) (unaudited) As at
March 31
2012
As at
December 31
2011
ASSETS    
Cash and cash equivalents 157,417 144,703
Restricted cash 17,528 18,288
Trade and other receivables 39,515 50,500
Inventories 3,492 3,573
Available-for-sale financial asset 2,144 2,208
Prepaid expenses 2,566 2,137
CURRENT ASSETS 222,662 221,409
     
Property, plant and equipment 632,676 643,047
Energy sales contracts 96,000 97,705
Water rights 111,103 111,844
Goodwill 38,063 38,063
Other intangible assets 7,173 5,285
Interest in the Joint Venture 55,014 45,266
Other non-current assets 13,203 14,236
NON-CURRENT ASSETS 953,232 955,446
TOTAL ASSETS 1,175,894 1,176,855
LIABILITIES    
Trade and other payables 37,873 34,209
Current portion of debt 23,676 26,659
Current income tax liability 2,216 10,776
Other current financial liabilities 26,025 29,757
CURRENT LIABILITIES 89,790 101,401
     
Non-current debt 470,440 479,525
Convertible debentures 224,036 223,347
Deferred income tax liability 29,624 26,031
Other non-current financial liabilities 15,373 14,273
Other non-current liabilities 3,918 3,400
NON-CURRENT LIABILITIES 743,391 746,576
TOTAL LIABILITIES 833,181 847,977
EQUITY    
Equity attributable to shareholders 335,419 321,764
Non-controlling interests 7,294 7,114
TOTAL EQUITY 342,713 328,878
TOTAL LIABILITIES AND EQUITY 1,175,894 1,176,855


Consolidated Statements of Earnings

  Three-month periods
ended March 31
(in thousands of Canadian dollars, except per share amounts) (unaudited) 2012 2011
     
REVENUES    
Revenues from energy sales 57,451 57,266
Other income 150 152
  57,601 57,418
     
COSTS AND OTHER EXPENSES    
Operating expenses 19,464 21,331
Administrative 4,167 3,974
Development 671 884
Amortization 13,935 13,851
Other gains - (2,377)
Impairment of property, plant and equipment and intangible assets 823 -
  39,060 37,663
     
OPERATING INCOME 18,541 19,755
     
Financing costs 12,103 11,975
Foreign exchange loss 121 1,537
Net loss (gain) on financial instruments (337) 313
     
EARNINGS BEFORE THE FOLLOWING ITEMS 6,654 5,930
     
Share in earnings of the Joint Venture (43) -
Income tax expense 1,759 1,971
     
NET EARNINGS FROM CONTINUING OPERATIONS 4,938 3,959
Net earnings from discontinued operations 2,323 3,108
NET EARNINGS 7,261 7,067
     
NET EARNINGS ATTRIBUTABLE TO:    
  Shareholders of Boralex 7,149 7,011
  Non-controlling interests 112 56
NET EARNINGS 7,261 7,067
     
NET EARNINGS ATTRIBUTABLE TO SHAREHOLDERS OF BORALEX:    
  Continuing operations 4,826 3,903
  Discontinued operations 2,323 3,108
  7,149 7,011
     
BASIC NET EARNINGS PER SHARE ATTRIBUTABLE TO
SHAREHOLDERS OF BORALEX:
   
  Continuing operations $0.13 $0.11
  Discontinued operations $0.06 $0.08
  $0.19 $0.19
DILUTED NET EARNINGS PER SHARE ATTRIBUTABLE TO
SHAREHOLDERS OF BORALEX:
   
  Continuing operations $0.12 $0.10
  Discontinued operations $0.06 $0.08
  $0.18 $0.18


Consolidated Statements of Comprehensive Income

    Three-month periods
ended March 31
(in thousands of Canadian dollars) (unaudited) 2012 2011
NET EARNINGS 7,261 7,067
OTHER COMPREHENSIVE INCOME (LOSS)    
Translation adjustments    
  Unrealized foreign exchange gain (loss) on translation of financial statements of
self-sustaining foreign operations
(1,385) 347
Cash flow hedges    
  Change in fair value of financial instruments (1,548) 1,042
  Hedging items realized and recognized in net earnings 4,139 1,093
  Hedging items realized and recognized in statement of financial position - 120
  Taxes (413) (688)
Cash flow hedges - Joint Venture    
  Change in fair value of financial instruments 7,762 -
  Taxes (2,064) -
Available-for-sale financial asset    
  Change in fair value of an available-for-sale financial asset (64) 1,378
  Items realized and recognized in net earnings - (624)
Discontinued operations - (2,021)
Total other comprehensive income 6,427 647
COMPREHENSIVE INCOME 13,688 7,714
COMPREHENSIVE INCOME ATTRIBUTABLE TO:    
  Shareholders of Boralex 13,600 6,752
  Non-controlling shareholders 88 962
COMPREHENSIVE INCOME 13,688 7,714
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREHOLDERS OF BORALEX    
  Continuing operations 11,277 5,665
  Discontinued operations 2,323 1,087
  13,600 6,752


Consolidated Statements of Changes in Equity

                Three-month period
ended March 31
      2012
  Equity attributable to shareholders    
(in thousands of Canadian dollars) (unaudited) Capital
stock
Equity
component of
convertible
debentures
Contributed
surplus
Retained
earnings
Other
comprehensive
loss
Total Non-controlling
interests
Total
equity
Balance as at January 1, 2012 222,758 14,379 6,106 144,501 (65,980) 321,764 7,114 328,878
                 
Net earnings - - - 7,149 - 7,149 112 7,261
Other comprehensive income (loss) - - - - 6,451 6,451 (24) 6,427
Comprehensive income - - - 7,149 6,451 13,600 88 13,688
                 
Conversion of convertible debentures 5 - - - - 5 - 5
Stock option expense - - 50 - - 50 - 50
Contribution of non-controlling interest - - - - - - 92 92
Balance as at March 31, 2012 222,763 14,379 6,156 151,650 (59,529) 335,419 7,294 342,713
                 
                Three-month period
ended March 31
      2011
  Equity attributable to shareholders    
(in thousands of Canadian dollars) (unaudited) Capital
stock
Equity
component of
convertible
debentures
Contributed
surplus
Retained
earnings
Other
comprehensive
loss
Total Non-controlling
interests
Total
equity
Balance as at January 1, 2011 222,853 14,488 5,028 141,693 (24,705) 359,357 8,332 367,689
                 
Net earnings - - - 7,011 - 7,011 56 7,067
Other comprehensive income (loss) - - - - (259) (259) 906 647
Comprehensive income (loss) - - - 7,011 (259) 6,752 962 7,714
                 
Conversion of convertible debentures 17 - - - - 17 - 17
Stock option expense - - 161 - - 161 - 161
Balance as at March 31, 2011 222,870 14,488 5,189 148,704 (24,964) 366,287 9,294 375,581


Consolidated Statements of Cash Flows

  Three-month periods
ended March 31
(in thousands of Canadian dollars) (unaudited) 2012 2011
Net earnings attributable to shareholders of Boralex 7,149 7,011
Less: Net earnings from discontinued operations 2,323 3,108
Net earnings from continuing operations attributable to shareholders of Boralex 4,826 3,903
Financing costs 12,103 11,975
Interest paid (10,354) (12,402)
Income tax expense 1,759 1,971
Income taxes paid (1,696) (1,441)
Non-cash items in earnings:    
  Amortization 13,935 13,851
  Other gains - (2,377)
  Impairment of property, plant and equipment and intangible assets 823 -
  Net loss (gain) on financial instruments (337) 313
  Share in earnings of the Joint Venture (43) -
  Other 833 1,660
  21,849 17,453
Change in non-cash items related to operating activities 12,691 15,170
NET CASH FLOWS RELATED TO OPERATING ACTIVITIES 34,540 32,623
     
Additions to property, plant and equipment (1,495) (10,498)
Change in restricted cash 760 9,412
Increase in interest in the Joint Venture (1,858) -
Development projects (1,010) (593)
Other 68 47
NET CASH FLOWS RELATED TO INVESTING ACTIVITIES (3,535) (1,632)
     
Decrease in bank loans and overdraft - (201)
Net increase in non-current debt - 11,737
Repayments on non-current debt (12,076) (12,061)
Other 12 -
NET CASH FLOWS RELATED TO FINANCING ACTIVITIES (12,064) (525)
Cash from discontinued operations (5,713) 7,486
TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS (514) 666
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,714 38,618
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 144,703 92,650
CASH AND CASH EQUIVALENTS - END OF PERIOD 157,417 131,268


Segmented Information

The Corporation's power stations are grouped into four distinct operating segments—wind, hydroelectric, thermal and solar power. The Corporation operates under one reportable segment: power generation. The classification of these operating segments is based on the different cost structures relating to each of the four types of power stations. The same accounting rules are used for segmented information as apply to the consolidated accounts.

Following the sale of its five U.S. wood-residue thermal power stations, the Corporation redefined its operating segments. Previously, operations were grouped into five distinct segments. Wood-residue thermal power stations and natural gas thermal power stations have been combined in a single segment called Thermal Power Stations. The comparative data have been adjusted to reflect this change. In addition, the data related to discontinued operations have been excluded as they are reported on a separate line in the Consolidated Statement of Earnings.

The operating segments are presented according to the same criteria used to prepare the internal report submitted to the chief operating decision-maker, who allocates resources and assesses operating segment performance. The chief operating decision-maker is considered to be the President and Chief Executive Officer, who assesses segment performance based on production of electricity, revenues from energy sales, EBITDA and cash flows from operations.

EBITDA does not have a standardized meaning under IFRS; accordingly, it may not be comparable to similarly named measures used by other companies. Investors should not view EBITDA as an alternative measure to, for example, net earnings, or as a measure of operating results, which are IFRS measures.

EBITDA is reconciled to the most comparable IFRS measure, namely, net earnings attributable to shareholders of Boralex, in the following table:

  Three-month periods
ended March 31
(in thousands of Canadian dollars) (unaudited) 2012 2011
Net earnings attributable to shareholders of Boralex 7,149 7,011
Net earnings from discontinued operations (2,323) (3,108)
Non-controlling interests 112 56
Income tax expense 1,759 1,971
Net loss (gain) on financial instruments (337) 313
Foreign exchange loss 121 1,537
Financing costs 12,103 11,975
Impairment of property, plant and equipment and intangible assets 823 -
Other gains - (2,377)
Amortization 13,935 13,851
EBITDA 33,342 31,229


Investors should not consider cash flows from operations as an alternative measure to cash flows related to operating activities, which is an IFRS measure.

Cash flows from operations are reconciled to the most comparable IFRS measure, namely, cash flows related to operating activities in the following table:

  Three-month periods
ended March 31
(in thousands of Canadian dollars) (unaudited) 2012 2011
Net cash flows related to operating activities 34,540 32,623
Less:    
Change in non cash items related to operating activities 12,691 15,170
CASH FLOWS FROM OPERATIONS 21,849 17,453

Information by Operating Segment

  Three-month periods
ended March 31
(in thousands of Canadian dollars, unless otherwise specified) (unaudited) 2012 2011
Power production (MWh)    
Wind power stations 172,405 152,570
Hydroelectric power stations 163,095 145,004
Thermal power stations 118,323 175,046
Solar power station 1,329 -
  455,152 472,620
Revenues from energy sales    
Wind power stations 20,647 18,273
Hydroelectric power stations 13,986 12,732
Thermal power stations 22,242 26,261
Solar power station 576 -
  57,451 57,266
EBITDA    
Wind power stations 16,934 15,066
Hydroelectric power stations 10,644 9,076
Thermal power stations 8,395 11,532
Solar power station 495 -
Corporate and eliminations (3,126) (4,445)
  33,342 31,229
Additions to property, plant and equipment    
Wind power stations 347 8,119
Hydroelectric power stations 189 174
Thermal power stations 66 1,159
Solar power station 692 951
Corporate and eliminations 201 95
  1,495 10,498
     

As at
March 31
As at
December 31
(in thousands of Canadian dollars) (unaudited) 2012 2011
Total assets    
Wind power stations 535,120 528,521
Hydroelectric power stations 366,784 366,099
Thermal power stations 101,758 101,683
Solar power station 19,593 23,586
Corporate 152,639 156,966
  1,175,894 1,176,855
Total liabilities    
Wind power stations 386,466 392,611
Hydroelectric power stations 142,438 143,439
Thermal power stations 32,951 29,581
Solar power station 17,083 21,043
Corporate 254,243 261,303
  833,181 847,977

Information by Geographic Segment

  Three-month periods
ended March 31
(in thousands of Canadian dollars, unless otherwise specified) (unaudited) 2012 2011
Power production (MWh)    
Canada 226,953 266,747
United States 113,472 100,035
France 114,727 105,838
  455,152 472,620
Revenues from energy sales    
Canada 31,170 33,594
United States 8,403 7,786
France 17,878 15,886
  57,451 57,266
EBITDA    
Canada 17,327 17,091
United States 6,646 5,698
France 9,369 8,440
  33,342 31,229
Additions to property, plant and equipment    
Canada 365 6,962
United States 85 170
France 1,045 3,366
  1,495 10,498
     

As at
March 31
As at
December 31
(in thousands of Canadian dollars) (unaudited) 2012 2011
Total assets    
Canada 694,011 679,354
United States 200,573 209,003
France 281,310 288,498
  1,175,894 1,176,855
Non-current assets    
Canada 548,433 543,319
United States 151,782 156,631
France 253,017 255,496
  953,232 955,446
Total liabilities    
Canada 487,353 483,731
United States 111,980 122,827
France 233,848 241,419
  833,181 847,977

 

SOURCE BORALEX INC.



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