- Acquisition of the Aela wind facilities in Chile in Q2 2022 adding net 332 MW
- Launch of construction at the 50 MW/250 MWh Salvador battery
storage project in Chile in Q2
2022
- Commissioning of the 9 MW/9 MWh Tonnerre battery storage
facility in France in Q3 2022
All amounts are in
thousands of Canadian dollars, unless otherwise
indicated.
|
LONGUEUIL, QC, Aug. 3, 2022
/CNW Telbec/ - Innergex Renewable Energy Inc. (TSX: INE)
("Innergex" or the "Corporation") today released its operating and
financial results for the second quarter ended June
30, 2022.
"The past few months were fruitful for Innergex with the
completion of a significant acquisition of three wind farms in
Chile, the commissioning of our
first stand-alone battery energy storage project in France and the launch of construction of our
first battery energy storage project coupled with solar in
Chile," said Michel Letellier, President and Chief Executive
Officer of Innergex. "Our strong and diversified portfolio of
prospective projects along with all of our projects currently at an
advanced stage of development or in construction bode well for the
future growth of Innergex. We continue to work diligently to
improve our payout ratio and to develop our business in a
sustainable manner by continuing to seize and create the
opportunities the clean energy transition brings in all of our
markets."
FINANCIAL HIGHLIGHTS
Three months ended June
30
|
Six months ended
June 30
|
|
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
February
2021 Texas
Events (9
days)
3
|
2021
Normalized
|
Change
|
Production
(MWh)
|
2,855,891
|
2,396,027
|
19 %
|
5,160,494
|
4,181,975
|
—
|
4,181,975
|
23 %
|
Long-Term Average (MWh)
("LTA")
|
3,100,388
|
2,543,061
|
22 %
|
5,534,553
|
4,489,951
|
—
|
4,489,951
|
23 %
|
Revenues
|
219,746
|
170,605
|
29 %
|
408,469
|
360,256
|
(54,967)
|
305,289
|
34 %
|
Operating, general,
administrative and prospective
projects
expenses
|
66,874
|
47,920
|
40 %
|
125,071
|
94,452
|
—
|
94,452
|
32 %
|
Adjusted
EBITDA1
|
152,872
|
122,685
|
25 %
|
283,398
|
265,804
|
(54,967)
|
210,837
|
34 %
|
Net (Loss)
Earnings
|
(24,590)
|
50,199
|
(149) %
|
(59,520)
|
(167,673)
|
64,219
|
(103,454)
|
(42) %
|
Adjusted Net
Loss1
|
(1,546)
|
18,658
|
(108) %
|
(3,882)
|
(8,882)
|
—
|
(8,882)
|
(56) %
|
Net (Loss) Earnings
Attributable to Owners, $ per share -
basic and
diluted
|
(0.13)
|
0.23
|
|
(0.31)
|
(1.01)
|
0.37
|
(0.64)
|
|
Production
Proportionate (MWh)1
|
2,991,550
|
2,588,928
|
16 %
|
5,349,579
|
4,638,549
|
—
|
4,638,549
|
15 %
|
Revenues
Proportionate1
|
251,457
|
198,400
|
27 %
|
467,571
|
460,135
|
(95,273)
|
364,862
|
28 %
|
Adjusted EBITDA
Proportionate1
|
181,079
|
145,962
|
24 %
|
335,989
|
354,853
|
(95,273)
|
259,580
|
29 %
|
|
|
|
|
|
|
|
|
|
|
|
Trailing twelve months
ended June 30
|
|
|
|
|
|
|
|
2022
|
2021
|
February
2021 Texas
Events
(9 days)
3
|
2021
Normalized
|
Change
|
Cash Flow from
Operating Activities
|
|
|
|
308,384
|
252,213
|
(16,801)
|
235,412
|
31 %
|
Free Cash
Flow1,2
|
|
|
|
148,988
|
76,702
|
15,789
|
92,491
|
61 %
|
Payout
Ratio1,2
|
|
|
|
96 %
|
164 %
|
(28) %
|
136 %
|
|
|
|
|
|
|
|
|
|
|
1.
|
These measures are not
a recognized measure 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
"Non-IFRS Measures" section of the Management's Discussion and
Analysis for the three- and six-month periods ended June 30, 2022
for more information.
|
2.
|
For more information on
the calculation and explanation, please refer to the the "Free Cash
Flow and Payout Ratio" section of the Management's Discussion and
Analysis for the three- and six-month periods ended June 30, 2022
for more information.
|
3.
|
For the periods ended
June 30, 2021, the operating results, the Cash Flow From Operating
Activities, Free Cash Flow and Payout Ratio are normalized to
exclude the impacts of the February 2021 Texas Events. Normalized
measures are not recognized measures under IFRS and therefore may
not be comparable to those presented by other issuer. Please refer
to the "February 2021 Texas Events" section of the Management's
Discussion and Analysis for the three- and six-month periods ended
June 30, 2022 for more information.
|
OPERATING PERFORMANCE
Production for the three-month period ended June
30, 2022 was 92% of LTA. Innergex's share of production of
joint ventures and associates1 was 86% of LTA,
translating into a Production Proportionate1 at 92% of
LTA. Revenues were up 29% at $219.7
million compared with the same period last year. This
increase is mainly explained by the contribution of the Curtis
Palmer Acquisition, the acquisition of the remaining 50% interest
in Energía Llaima, for which results are now included in Innergex's
consolidated revenues, the commissioning of the Griffin Trail wind
facility in Texas, higher selling
prices at the Phoebe solar facility in Texas, the acquisition of Aela Generación S.A.
and Aela Energía SpA (together "Aela") in Chile, higher revenues from the Quebec wind facilities resulting mainly from
higher production, the acquisition of the San Andrés solar facility
in Chile and the commissioning of
the Amazon Solar Farm Ohio - Hillcrest ("Hillcrest") facility.
These items were partly offset by lower revenues from the hydro
facilities in British Columbia
from lower water flows due to cooler weather delaying the melting
season ("freshet"), from lower wind regimes and lower exchange rate
at the wind facilities in France
and lower selling prices at the Salvador solar facility. Revenues
Proportionate1 increased by 27% to $251.5 million over the same period last
year.
For the three-month period ended June 30, 2022,
Operating, general, administrative and prospective projects
expenses were up 40% at $66.9
million compared with the same period last year. The
increase is mainly attributable to higher maintenance costs at some
of the hydro facilities in British
Columbia, the commissioning of the Griffin Trail wind
facility, the acquisition of the remaining 50% interest in Energía
Llaima, the Aela Acquisition, the Curtis Palmer Acquisition and the
commissioning of the Hillcrest solar facility. The Adjusted
EBITDA1 was 25% higher at $152.9
million for the three-month period ended June 30, 2022,
compared with the same period last year. The Adjusted EBITDA
Proportionate1 reached $181.1
million, a 24% increase compared with the same period last
year.
Innergex recorded a net loss of $24.6 million ($0.13 loss per share - basic and diluted) for the
quarter ended June 30, 2022, compared
with net earnings of $50.2
million ($0.23 net earnings
per share - basic and diluted) for the corresponding period in
2021. This was mainly due to a $45.2
million decrease in recovery of income tax stemming from the
reversal of deferred tax liabilities in 2021 related to the Flat
Top and Shannon joint venture facilities, due to the projects'
assets and liabilities being classified as disposal groups held for
sale; an unfavourable $25.6 million
unrealized change in the fair value of financial instruments,
mainly related to the increase in merchant power curves for the
Phoebe power hedge and an unfavourable change in foreign exchange
forward curves, and partly offset by a favourable change in
interest rate curves, compared with the same period in 2021; a
$19.9 million increase in
depreciation and amortization; an $18.4
million increase in finance costs, mainly attributable to
the Energía Llaima, Aela and Curtis
Palmer acquisitions, and the Griffin Trail and Hillcrest
commissioning in 2021 and and an unfavourable $10.0 million realized change in the fair value
of financial instruments, mainly related to higher merchant prices
in 2022 affecting the Phoebe power hedge. The increase in net loss
is also explained by an unfavourable change in the mark to market
of financial instruments and in the power hedge settlements, due to
higher merchant prices. These items were partly offset by a
$9.7 million increase in other
net income, mainly related to the production tax credits and tax
attributes allocated to the tax equity investors at the Griffin
Trail wind facility, following its commissioning during the third
quarter of 2021.
Production for the six-month period ended
June 30, 2022 was 93% of LTA.
Innergex's share of production of joint ventures and
associates1 was 92% of LTA, translating into a
Production Proportionate1 at 93% of LTA. Revenues
were up 34% at $408.5 million
compared with the same period last year, for which Revenues were
normalized to exclude the February
2021 Texas Events. This increase is mainly explained by the
contribution of the Curtis Palmer Acquisition, the acquisition of
the remaining 50% interest in Energía Llaima, for which results are
now included in Innergex's consolidated revenues, the commissioning
of the Griffin Trail wind facility, the BC Hydro Curtailment
Payment2, higher revenues from the Quebec wind facilities resulting mainly from
higher production, higher selling prices at the Phoebe solar
facility in Texas, the
commissioning of the Hillcrest facility and the acquisition of the
Aela wind farms and the San Andrés solar facility in Chile. These items were partly offset by lower
revenues from lower average selling prices at the Foard City facility, from lower water flows
due to cooler weather delaying freshet at the hydro facilities in
British Columbia and from lower
wind regimes and lower exchange rate at the wind facilities in
France. Revenues
Proportionate1 increased by 28% to $467.6 million over the same period last
year, for which Revenues were normalized to exclude the
February 2021 Texas Events.
For the six-month period ended June 30, 2022, Operating,
general, administrative and prospective projects expenses were
up 32% at $125.1 million
compared with the same period last year. The increase is mainly
attributable to the acquisition of the remaining 50% interest in
Energía Llaima, the commissioning of the Griffin Trail wind
facility, higher maintenance costs at some of the hydro facilities
in British Columbia, the Curtis
Palmer Acquisition, the commissioning of the Hillcrest solar
facility, the Aela Acquisition, and to the San Andrés Acquisition.
These items were partly offset by lower variable expenses following
lower revenues at the Foard City
facility. The Adjusted EBITDA1 was 34% higher at
$283.4 million for the six-month
period ended June 30, 2022, compared with the same period
last year, for which the Adjusted EBITDA1 was normalized
to exclude the February 2021 Texas
Events. The Adjusted EBITDA Proportionate1 reached
$336.0 million, a 29% increase
compared with the same period last year, for which the Adjusted
EBITDA Proportionate1 was normalized to exclude the
February 2021 Texas Events.
Innergex recorded a net loss of $59.5 million ($0.31 loss per share - basic and diluted) for the
six-month period ended June 30, 2022,
compared with a net loss of $167.7
million ($1.01 loss per share
- basic and diluted) for the corresponding period in 2021. This was
mainly due to a $204.0 million
decrease in the share of loss of joint ventures and associates,
mainly related to the recognition of $112.6
million in impairment charges through the Corporation's
share of loss of the Flat Top and Shannon joint venture facilities
in 2021, the February 2021 Texas
Events, resulting in a net unfavourable impact of $64.2 million on the Flat Top and Shannon joint
venture facilities in 2021 (refer to the "February 2021 Texas Events" section of the
Management's Discussion and Analysis for the three- and six-month
periods ended June 30, 2022 for more
information), the recognition of a $26.9
million mark-to-market loss through the Corporation's share
of loss of the Flat Top and Shannon joint venture facilities in
2021, compared to nil in 2022; a favourable $61.4 million realized change in the fair value
of financial instruments, mainly stemming from the net unfavourable
impact of the February 2021 Texas
Events in 2021, partly offset by higher merchant prices in 2022
affecting the Phoebe power hedge; and a $17.9 million increase in other net income,
mainly related to the production tax credits and tax attributes
allocated to the tax equity investors at the Griffin Trail wind
facility, following its commissioning during the third quarter of
2021. These items were partly offset by an $82.7 million decrease in recovery of income tax,
mainly related to the impacts of the February 2021 Texas Events, the Flat Top and
Shannon impairment charges in 2021 and the reversal of
deferred tax liabilities related to the Flat Top and Shannon joint
venture facilities, due to the projects' assets and liabilities
being classified as disposal groups held for sale; an unfavourable
$49.8 million unrealized change
in the fair value of financial instruments, mainly related to the
increase in merchant power curves for the Phoebe power hedge and an
unfavourable movement in the unrealized portion of the change in
fair value on the Phoebe basis hedge following its maturity in
2021, partly offset by a favourable change in interest rate curves,
compared with the same period in 2021; a $41.3 million increase in depreciation and
amortization, mainly attributable to the Energía Llaima,
Aela and Curtis Palmer acquisitions
and the Griffin Trail and Hillcrest commissionings in 2021 and a
$25.2 million increase in finance
costs mainly related to the Griffin Trail and Hillcrest facilities
commissioned in 2021, the Energía Llaima and Aela acquisitions, and
an increase in inflation compensation interests on the Harrison
Hydro real return bonds.
1.
|
This is not a
recognized measure under IFRS and therefore may not be comparable
to those presented by other issuers. Please refer to the "Non-IFRS
Measures" section for more information.
|
2.
|
The BC Hydro
Curtailment Payment refers to the curtailment notices sent by BC
Hydro in May 2020 for six hydro facilities which were disputed by
the Corporation on the basis that, under its Electricity Purchase
Agreements with BC Hydro, BC Hydro can exercise this right but is
required to compensate Innergex for energy that would have been
produced at the facilities in the absence of the curtailment. For
the period from May 22, 2020 to July 20, 2020, actual eligible
energy revenue that would have been produced at the facilities in
the absence of the curtailment amounts to $12.5 million ($14.2
million on a Revenues Proportionate1 basis). The dispute was
settled in the first quarter of 2022 to Innergex's satisfaction
(please refer to the "Capital and Liquidity" section of the
Management's Discussion and Analysis for the three- and six-month
period ended June 30, 2022 for more information).
|
CASH FLOW FROM OPERATING
ACTIVITIES, FREE CASH FLOW2 AND PAYOUT
RATIO2
For the three-month period ended June 30, 2022, cash flows
from operating activities totalled $67.6
million, compared with $49.6
million in the same period last year. The increase relates
primarily to the contribution from the Energía Llaima, Licán,
Curtis Palmer, San Andrés and Aela
acquisitions, and the Hillcrest and Griffin Trail commissionings.
These items were partly offset by the distribution received from
Energía Llaima in the second quarter of 2021.
For the six-month period ended June 30, 2022, cash flows
from operating activities totalled $152.5
million, compared with $109.6
million in the same period last year. The increase relates
primarily to the contribution from the Energía Llaima, Licán,
Curtis Palmer, San Andrés and Aela
acquisitions, and the Hillcrest and Griffin Trail commissionings,
and the BC Hydro Curtailment Payment. These items were partly
offset by the distribution received from Energía Llaima in the
second quarter of 2021, and the February
2021 Texas Events, which contributed to a $16.8 million increase in cash flows from
operating activities in the comparative period, as the Phoebe solar
facility's $33.9 million net payable
related to the February 2021 Texas
Events remained unpaid until July 19,
2021.
The following table summarizes the Free Cash Flow3
and Payout Ratio3 normalized for the trailing twelve
months ended June 30, 2022 and
June 30, 2021 to exclude the impacts
of the February 2021 Texas
Events.
Free Cash Flow and
Payout Ratio calculation1
|
Trailing twelve months
ended June 30
|
|
2022
|
2021
|
February
2021
Texas Events
(9
days)2
|
2021
Normalized2
|
Free Cash
Flow1,2,3
|
148,988
|
76,702
|
15,789
|
92,491
|
|
|
|
|
|
Dividends declared on
common shares
|
142,824
|
125,711
|
—
|
125,711
|
Payout
Ratio1,2
|
96 %
|
164 %
|
(28) %
|
136 %
|
Adjusted Payout
Ratio1,2
|
82 %
|
111 %
|
— %
|
111 %
|
|
|
|
|
|
1.
|
Free Cash Flow, Payout
Ratio and Adjusted Payout Ratio are not recognized measures 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.
|
For the trailing twelve
months ended June 30, 2021, the Free Cash Flow, Payout Ratio and
Adjusted Payout Ratio are normalized to exclude the impacts of the
February 2021 Texas Events. Normalized measures are not recognized
measures under IFRS and therefore may not be comparable to those
presented by other issuers. Please refer to the "February 2021
Texas Events" section of the Management's Discussion and Analysis
for the three- and six-month periods ended June 30, 2022 for more
information.
|
3.
|
Free Cash Flow for the
trailing twelve months ended June 30, 2021 includes the one-time BC
Hydro Curtailment Payment received during the first quarter of
2022.
|
For the trailing twelve months ended June 30, 2022, the
dividends on common shares declared by the Corporation amounted to
96% of Free Cash Flow3, compared with 164% for the
corresponding period last year. Excluding the impacts from the
February 2021 Texas Events (please
refer to the "February 2021 Texas
Events" section of of the Management's Discussion and Analysis for
the three- and six-month periods ended June
30, 2022 for more information), the dividends on common
shares declared by the Corporation for the corresponding period
last year amounted to 136% of Normalized Free Cash
Flow3,4.
3.
|
This is not a
recognized measure under IFRS and therefore may not be comparable
to those presented by other issuers. Please refer to the "Non-IFRS
Measures" section for more information.
|
4.
|
Normalized measures are
not recognized measures under IFRS and therefore may not be
comparable to those presented by other issuers. Please refer to the
"February 2021 Texas Events" section of the Management's Discussion
and Analysis for the three- and six-month periods ended June 30,
2022 for more information.
|
UPDATE ON GROWTH
INITIATIVES
(As at August 3,
2022)
On April 29, 2022, to take
advantage of the currently favourable energy pricing environment in
France, Innergex entered into
three power purchase agreements for its Antoigné, Porcien and
Vallottes wind facilities (the "New PPAs"), in effect since
August 1, 2022, concurrently with the
cancellation of the current power purchase agreements. In addition,
the New PPAs effectively increase the contracted period of the
facilities to December 31, 2025.
On May 10, 2022, the Corporation
amended its existing revolving term credit facility, extending the
term from 2023 to 2027 and increasing the borrowing limit to
$950.0 million.
On May 10, 2022, Innergex
announced that it has awarded Mitsubishi Power an order for two
utility-scale battery energy storage systems ("BESS") in
Chile. These projects will be
colocated with solar energy and enable peak shifting by storing
excess solar energy during the day and dispatching at night.
Innergex's 68 MW Salvador solar photovoltaic facility will add
50 MW/250 MWh (5 hours) of energy storage, and its 50.6
MW San Andrés solar photovoltaic facility will add 35
MW/175 MWh (5 hours) of energy storage.
The Salvador Battery Storage project with a 50 MW/250 MWh
(5 hours) capacity was promoted to the construction phase with an
expected Commercial Operation Date (''COD'') in 2023.
On May 18, Innergex received
approval from the TSX to proceed with a normal course issuer bid on
its common shares, Series A Preferred Shares, and Series C
Preferred Shares.
On June 9, 2022, Innergex
completed its previously announced acquisition of all of the
ordinary shares of Aela, a 332 MW portfolio of three newly-built
operating wind assets in Chile,
for a cash consideration of US$324.3
million ($408.2 million), and
the assumption of the existing non-recourse debt.
The Prospective Projects' pipeline will allow several
opportunities in the years to come, with 12 projects currently at
an advanced stage, for a total of 908 MW of installed capacity.
SUBSEQUENT EVENTS
On July 22, 2022, Innergex
completed the full commissioning of the 9 MW/9 MWh (1 hour)
Tonnerre battery energy storage system in France. Tonnerre has been awarded a 7-year
contract for difference offering a fixed-price contract for
capacity certificate. The facility will generate additional
revenues that will vary based on prevailing energy pricing. Being
Innergex's first stand-alone battery project, the commissioning of
Tonnerre is a considerable achievement in term of technological
knowledge earned for future development opportunities. The market
for battery energy storage systems will continue to increase to
bring more reliability to the grids as more renewable energy
projects are being developed.
As part of Innergex's refinancing of the non-recourse debt of
its Chilean facilities, the interest rate swaps, previously entered
into to mitigate the risk of interest rate fluctuations during the
negotiation process, were settled on July
25, 2022 in favour of Innergex, for US$ 41.2 million
($53.1 million).
On July 25, 2022, to take
advantage of the currently favourable energy pricing environment in
France, Innergex notified the
counterpart to the Longueval wind project's power purchase
agreement of it's intention to cancel the agreement. The project
will sell its electricity on a merchant price basis. The
cancellation will take effect on November 1, 2022.
DIVIDEND DECLARATION
The following dividends will be paid by the Corporation on
October 17, 2022:
Date of
announcement
|
Record date
|
Payment date
|
Dividend per
common share
|
Dividend per Series
A
Preferred
Share
|
Dividend per Series
C
Preferred
Share
|
August 3,
2022
|
September 30,
2022
|
October 17,
2022
|
$0.180
|
$0.202750
|
$0.359375
|
2022 GROWTH TARGETS
The Corporation makes targets using certain assumptions to
provide readers with an indication of its business activities and
operating performance. For 2022, targets were based on the
commissioning of the Tonnerre battery storage project in the first
quarter of 2022 and the Innavik hydro facility in the fourth
quarter of 2022. The Tonnerre battery storage project reached COD
in the third quarter of 2022 and the Corporation now expects the
Innavik hydro facility to be in operation in 2023. It did not take
into consideration potential acquisitions that could be achieved in
2022.
Since the Corporation made these assumptions at the beginning of
the year, the targets were revised in August 2022 to take into
consideration the acquisition of the San Andrés solar facility on
January 28, 2022, and the acquisition
of the Aela wind farms on June 9,
2022. The targets were also revised to take into
consideration below-average water flows, wind regimes and solar
irradiation at some facilities during the first six-month period of
2022. The Corporation did not revise any other assumptions from the
initial 2022 Growth Targets presented in the 2021 Annual Report
with the exception of a lower assumed Euro to Canadian dollar
exchange rate.
The following table summarizes the revised targets for 2022:
|
February
2022
|
August 2022
|
|
Target
|
Revised
Target
|
Production
(GWh)1
|
≈
|
+18 %
|
≈
|
+22 %
|
|
|
|
|
|
Revenues
|
≈
|
+16 %
|
≈
|
+25 %
|
|
|
|
|
|
Operating, general,
administrative and prospective projects expenses
|
≈
|
+18 %
|
≈
|
+27 %
|
|
|
|
|
|
Adjusted
EBITDA1
|
≈
|
+15 %
|
≈
|
+25 %
|
|
|
|
|
|
Adjusted EBITDA
Proportionate1
|
≈
|
+14 %
|
≈
|
+21 %
|
|
|
|
|
|
Free Cash Flow per
Share1
|
≈
|
0.73
|
≈
|
0.75
|
|
|
|
|
|
Number of facilities in
operation
|
|
82
|
|
84
|
|
|
|
|
|
Net installed capacity
(MW)
|
|
3,156
|
|
3,484
|
|
|
|
|
|
1.
|
These measures are not
recognized measures under IFRS and therefore may not be comparable
to those presented by other issuers. Production is a key
performance indicator for the Corporation that cannot be reconciled
with an IFRS measure. Please refer to the "Non-IFRS Measures"
section of the three- and six-month periods ended June 30, 2022 for
more information.
|
These assumptions are based on information available to the
Corporation and the list of assumptions is not exhaustive. These
assumptions, although considered reasonable by the Corporation on
August 3, 2022, may prove to be
inaccurate. Important risks and uncertainties may cause actual
results or performance to be materially different from the
Corporation's expectations as set forth in this section. The risks
and uncertainties are referred to in the "Risks and Uncertainties"
section of the 2021 Annual Report.
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.
Innergex's share of Revenues of joint ventures and associates,
Revenues Proportionate, Adjusted EBITDA, Adjusted EBITDA Margin,
Innergex's share of Adjusted EBITDA of joint ventures and
associates, Adjusted EBITDA Proportionate, Adjusted EBITDA Margin
Proportionate, Adjusted Net Loss, Free Cash Flow, Adjusted Free
Cash Flow, Payout Ratio and Adjusted Payout Ratio are not measures
recognized by IFRS and have no standardized meaning prescribed by
IFRS.
Revenues Proportionate, Adjusted
EBITDA, and corresponding Margin and Proportionate
measures
References in this document to "Revenues Proportionate" are to
Revenues, plus Innergex's share of Revenues of the joint ventures
and associates, other income related to PTCs, and Innergex's share
of the operating joint ventures' and associates' other income
related to PTCs.
References in this document to "Adjusted EBITDA" are to net
earnings (loss), to which are added (deducted) income tax expense
(recovery), finance costs, depreciation and amortization,
impairment charges, other net income, share of (earnings) loss of
joint ventures and associates, and change in fair value of
financial instruments. 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, other
income related to PTCs, and Innergex's share of other income
related to PTCs 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 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. In addition, Revenues Proportionate and
Adjusted EBITDA Proportionate measures help investors seize the
relative importance of PTCs generated by the operations, and
evaluate their contribution to the Corporation's operating
performance, as PTCs form an important part of certain wind
projects' economics in the United
States. Adjusted EBITDA Margin and Adjusted EBITDA Margin
Proportionate are used by investors to understand the relative
weight of certain jurisdictions, which are subject to various
competitive and energy pricing environments, to the Corporation's
and its reportable segments' operating performance. Readers are
cautioned that Revenues Proportionate, should not be construed as
an alternative to Revenues, 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 net
earnings, as determined in accordance with IFRS. Please refer to
the "Financial Performance and Operating Results" section for more
information.
Below is a reconciliation of the non-IFRS measures to their
closest IFRS measures:
|
|
Three months ended June
30, 2022
|
Three months ended June
30, 2021
|
|
|
|
|
|
|
Consolidation
|
Share of
joint
ventures
|
PTCs
|
Proportionate
|
Consolidation
|
Share of
joint
ventures
|
PTCs
|
Proportionate
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
219,746
|
12,944
|
18,767
|
251,457
|
170,605
|
18,302
|
9,493
|
198,400
|
|
|
|
|
|
|
|
|
|
|
Net loss
(earnings)
|
|
(24,590)
|
—
|
—
|
(24,590)
|
50,199
|
—
|
—
|
50,199
|
Income tax expense
(recovery)
|
|
1,354
|
—
|
—
|
1,354
|
(43,856)
|
(804)
|
—
|
(44,660)
|
Finance
costs
|
|
77,159
|
4,476
|
—
|
81,635
|
58,719
|
5,210
|
—
|
63,929
|
Depreciation and
amortization
|
|
79,113
|
4,222
|
—
|
83,335
|
59,169
|
5,610
|
—
|
64,779
|
Impairment of long-term
assets
|
|
—
|
—
|
—
|
—
|
6,314
|
—
|
—
|
6,314
|
EBITDA
|
|
133,036
|
8,698
|
—
|
141,734
|
130,545
|
10,016
|
—
|
140,561
|
Other net income
(expense), before PTCs
|
|
(216)
|
(14)
|
—
|
(230)
|
168
|
2
|
—
|
170
|
Production tax credits
("PTCs")
|
|
(18,767)
|
—
|
18,767
|
—
|
(9,493)
|
—
|
9,493
|
—
|
Share of losses of
joint ventures and associates
|
|
(1,222)
|
1,222
|
—
|
—
|
(2,993)
|
2,993
|
—
|
—
|
Change in fair value of
financial instruments
|
|
40,041
|
(466)
|
—
|
39,575
|
4,458
|
773
|
—
|
5,231
|
Adjusted
EBITDA
|
|
152,872
|
9,440
|
18,767
|
181,079
|
122,685
|
13,784
|
9,493
|
145,962
|
|
|
Six months ended June
30, 2022
|
Six months ended June
30, 2021
|
|
|
|
|
|
|
Consolidation
|
Share of
joint
ventures
|
PTCs
|
Proportionate
|
Consolidation
|
Share of
joint
ventures
|
PTCs
|
Proportionate
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
408,469
|
21,288
|
37,814
|
467,571
|
360,256
|
72,963
|
26,916
|
460,135
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(59,520)
|
—
|
—
|
(59,520)
|
(167,673)
|
—
|
—
|
(167,673)
|
Income tax
recovery
|
|
(2,416)
|
—
|
—
|
(2,416)
|
(85,139)
|
(31)
|
—
|
(85,170)
|
Finance
costs
|
|
143,560
|
8,900
|
—
|
152,460
|
118,319
|
14,305
|
—
|
132,624
|
Depreciation and
amortization
|
|
159,344
|
8,418
|
—
|
167,762
|
118,054
|
14,565
|
—
|
132,619
|
Impairment of long-term
assets
|
|
—
|
—
|
—
|
—
|
6,314
|
112,609
|
—
|
118,923
|
EBITDA
|
|
240,968
|
17,318
|
—
|
258,286
|
(10,125)
|
141,448
|
—
|
131,323
|
Other net income,
before PTCs
|
|
(1,298)
|
(189)
|
—
|
(1,487)
|
(347)
|
1,870
|
—
|
1,523
|
Production tax credits
("PTCs")
|
|
(37,814)
|
—
|
37,814
|
—
|
(20,882)
|
(6,034)
|
26,916
|
—
|
Share of losses of
joint ventures and associates
|
|
986
|
(986)
|
—
|
—
|
204,991
|
(204,991)
|
—
|
—
|
Change in fair value of
financial instruments
|
|
80,556
|
(1,366)
|
—
|
79,190
|
92,167
|
129,840
|
—
|
222,007
|
Adjusted
EBITDA
|
|
283,398
|
14,777
|
37,814
|
335,989
|
265,804
|
62,133
|
26,916
|
354,853
|
Adjusted Net (Loss)
Earnings
References to "Adjusted Net (Loss) Earnings" 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 portion of the Phoebe
basis hedge, 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 such as the
February 2021 Texas Events, 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 (Loss) Earnings 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 whole 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 does
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 is used by investors to evaluate and compare
Innergex's profitability before the impacts of 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 (Loss) Earnings should not be construed as an
alternative to net earnings, as determined in accordance with IFRS.
Please refer to the "Operating Results" section for reconciliation
of the Adjusted Net (Loss) Earnings.
Below is a reconciliation of Adjusted Net (Loss) Earnings to its
closest IFRS measure:
|
Three months ended June
30
|
Six
months ended June 30
|
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Net (loss)
earnings
|
(24,590)
|
50,199
|
(59,520)
|
(167,673)
|
Add
(Subtract):
|
|
|
|
|
February 2021 Texas
Events:
|
|
|
|
|
Revenues
|
—
|
|
—
|
(54,967)
|
Power hedge
|
—
|
|
—
|
70,756
|
Share of loss of Flat
Top and Shannon
|
—
|
|
—
|
64,197
|
Share of impairment of
Flat Top and Shannon
|
—
|
|
—
|
112,609
|
Share of unrealized
portion of the change in fair value of financial instruments of
joint ventures
and associates, net of related income tax
|
(345)
|
344
|
(1,005)
|
20,781
|
Unrealized portion of
the change in fair value of financial instruments
|
27,712
|
2,158
|
68,497
|
18,681
|
Impairment of
long-term assets
|
—
|
6,314
|
—
|
6,314
|
Realized loss on
termination of interest rate swaps
|
—
|
—
|
—
|
2,885
|
Realized gain on the
Phoebe basis hedge
|
—
|
(1,445)
|
—
|
(246)
|
Realized gain on
foreign exchange forward contracts
|
—
|
(433)
|
(487)
|
(748)
|
Income tax recovery
related to above items
|
(4,323)
|
(38,479)
|
(11,367)
|
(81,471)
|
Adjusted Net (Loss)
Earnings
|
(1,546)
|
18,658
|
(3,882)
|
(8,882)
|
Below is a reconciliation of Adjusted Net (Loss) Earnings
adjustments to each line item of the consolidated statements of
earnings:
|
Three months ended June
30
|
Six months ended June
30
|
|
2022
|
2021
|
2022
|
2021
|
|
IFRS
|
Adj.
|
Non-IFRS
|
IFRS
|
Adj.
|
Non-IFRS
|
IFRS
|
Adj.
|
Non-IFRS
|
IFRS
|
Adj.
|
Non-IFRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
219,746
|
—
|
219,746
|
170,605
|
—
|
170,605
|
408,469
|
—
|
408,469
|
360,256
|
(54,967)
|
305,289
|
Operating
expenses
|
50,546
|
—
|
50,546
|
30,163
|
—
|
30,163
|
90,584
|
—
|
90,584
|
61,156
|
—
|
61,156
|
General and
administrative expenses
|
10,540
|
—
|
10,540
|
11,023
|
—
|
11,023
|
24,679
|
—
|
24,679
|
20,773
|
—
|
20,773
|
Prospective projects
expenses
|
5,788
|
—
|
5,788
|
6,734
|
—
|
6,734
|
9,808
|
—
|
9,808
|
12,523
|
—
|
12,523
|
Adjusted
EBITDA
|
152,872
|
—
|
152,872
|
122,685
|
—
|
122,685
|
283,398
|
—
|
283,398
|
265,804
|
(54,967)
|
210,837
|
Finance
costs
|
77,159
|
—
|
77,159
|
58,719
|
—
|
58,719
|
143,560
|
—
|
143,560
|
118,319
|
—
|
118,319
|
Other net
income
|
(18,983)
|
—
|
(18,983)
|
(9,325)
|
433
|
(8,892)
|
(39,112)
|
487
|
(38,625)
|
(21,229)
|
748
|
(20,481)
|
Depreciation and
amortization
|
79,113
|
—
|
79,113
|
59,169
|
—
|
59,169
|
159,344
|
—
|
159,344
|
118,054
|
—
|
118,054
|
Impairment of long-term
assets
|
—
|
—
|
—
|
6,314
|
(6,314)
|
—
|
—
|
—
|
—
|
6,314
|
(6,314)
|
—
|
Share of (earnings)
losses of joint
ventures and associates
|
(1,222)
|
469
|
(753)
|
(2,993)
|
(472)
|
(3,465)
|
986
|
1,367
|
2,353
|
204,991
|
(203,072)
|
1,919
|
Change in fair value of
financial
instruments
|
40,041
|
(27,712)
|
12,329
|
4,458
|
(713)
|
3,745
|
80,556
|
(68,497)
|
12,059
|
92,167
|
(92,076)
|
91
|
Income tax expense
(recovery)
|
1,354
|
4,199
|
5,553
|
(43,856)
|
38,607
|
(5,249)
|
(2,416)
|
11,005
|
8,589
|
(85,139)
|
86,956
|
1,817
|
Net (loss)
earnings
|
(24,590)
|
23,044
|
(1,546)
|
50,199
|
(31,541)
|
18,658
|
(59,520)
|
55,638
|
(3,882)
|
(167,673)
|
158,791
|
(8,882)
|
Free Cash Flow and Payout
Ratio
References to "Free Cash Flow" are to cash flows from operating
activities before changes in non-cash operating working capital
items, less 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, 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.
The Payout Ratio 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. The Payout Ratio level reflects the Corporation's
decision to invest yearly in advancing the development of its
Prospective Projects, for which investments must be expensed as
incurred. The Corporation considers such investments essential to
its long-term growth and success, as it believes that the
greenfield development of renewable energy projects offers the
greatest potential internal rates of return and represents the most
efficient use of management's expertise and value-added skills.
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 "Free Cash Flow and Payout Ratio" section for the
reconciliation of Free Cash Flow.
References to "Adjusted Free Cash Flow" are to Free Cash Flow
excluding prospective project expenses. Adjusted Free Cash Flow is
used by investors to evaluate the Corporation's cash generation
capabilities and its ability to sustain current dividends, before
the impacts of the Corporation's decision to invest yearly in its
growth through investing in the development of its Prospective
Projects.
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 "Adjusted Payout Ratio" are to dividends declared
on common shares divided by Adjusted Free Cash Flow. Adjusted
Payout Ratio is used by investors to evaluate the Corporation's
ability to sustain current dividends, before the impacts of the
Corporation's decision to invest yearly in its growth through
investing in the development of its Prospective Projects.
Free Cash Flow and
Payout Ratio calculation
|
Trailing twelve months
ended June 30
|
2022
|
2021
|
February
2021
Texas Events
(9
days)3
|
2021
Normalized3
|
|
|
|
|
|
Cash flows from
operating activities4
|
308,384
|
252,213
|
(16,801)
|
235,412
|
Add (Subtract) the
following items:
|
|
|
|
|
Changes in non-cash
operating working capital items
|
45,659
|
596
|
33,894
|
34,490
|
Maintenance capital
expenditures, net of proceeds from disposals
|
(9,095)
|
(4,921)
|
—
|
(4,921)
|
Scheduled debt
principal payments
|
(161,411)
|
(155,540)
|
—
|
(155,540)
|
Free Cash Flow
attributed to non-controlling interests1
|
(35,900)
|
(18,506)
|
—
|
(18,506)
|
Dividends declared on
Preferred shares
|
(5,632)
|
(5,787)
|
—
|
(5,787)
|
Add (subtract) the
following specific items2:
|
|
|
|
|
Realized loss on
contingent considerations
|
—
|
3,568
|
—
|
3,568
|
Realized (gain) loss
on termination of interest rate swaps
|
(377)
|
2,885
|
—
|
2,885
|
Transaction costs
related to realized acquisitions
|
9,660
|
1,696
|
—
|
1,696
|
Realized (gain) loss
on the Phoebe basis hedge
|
(2,300)
|
498
|
(1,304)
|
(806)
|
Free Cash
Flow3
|
148,988
|
76,702
|
15,789
|
92,491
|
|
|
|
|
|
Dividends declared on
common shares
|
142,824
|
125,711
|
—
|
125,711
|
Payout
Ratio3
|
96 %
|
164 %
|
(28) %
|
136 %
|
|
|
|
|
|
Adjust for the
following items:
|
|
|
|
|
Prospective projects
expenses
|
24,652
|
|
|
20,830
|
Adjusted Free Cash
Flow
|
173,640
|
|
|
113,321
|
|
|
|
|
|
Adjusted Payout
Ratio
|
82 %
|
|
|
111 %
|
|
|
|
|
|
1.
|
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.
|
2.
|
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.
|
3.
|
For the trailing twelve
months ended June 30, 2021, the Free Cash Flow and Payout Ratio are
normalized to exclude the impacts of the February 2021 Texas
Events. Normalized measures are not recognized measures under IFRS
and therefore may not be comparable to those presented by other
issuers. Please refer to the "February 2021 Texas Events" section
of the Management's Discussion and Analysis for the three- and
six-month periods ended June 30, 2022 for more
information.
|
4.
|
Cash flows from
operating activities for the trailing twelve months ended June 30,
2022 include the one-time BC Hydro Curtailment Payment received
during the first quarter of 2022.
|
ADDITIONAL INFORMATION
Innergex's 2022 second quarter unaudited 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, August 4, 2022 at
9 AM (EDT). Investors and financial
analysts are invited to access the conference by dialing 1 888
390-0605 or 416 764-8609 or via https://bit.ly/3xJN1bC or the
Corporation's website at www.innergex.com. Journalists as well as
the public may access this conference call via a listen mode only.
A replay of the conference call will be available after the event
on the Corporation's website.
About Innergex Renewable Energy
Inc.
For over 30 years, Innergex has believed in a world where
abundant renewable energy promotes healthier communities and
creates shared prosperity. As an independent renewable power
producer which develops, acquires, owns and operates hydroelectric
facilities, wind farms, solar farms and energy storage facilities,
Innergex is convinced that generating power from renewable sources
will lead the way to a better world. Innergex conducts operations
in Canada, the United States, France and Chile and manages a large portfolio of
high-quality assets currently consisting of interests in 84
operating facilities with an aggregate net installed capacity of
3,484 MW (gross 4,184 MW) and an energy storage capacity of
159 MWh, including 40 hydroelectric facilities, 35 wind farms,
8 solar facilities and and 1 battery energy storage facility.
Innergex also holds interests in 13 projects under development with
a net installed capacity of 731 MW (gross 768 MW) and an energy
storage capacity of 745 MWh, 3 of which are under
construction, as well as prospective projects at different stages
of development with an aggregate gross installed capacity totaling
7,495 MW. Its approach to building shareholder value is to
generate sustainable cash flows, provide an attractive
risk-adjusted return on invested capital and to distribute a stable
dividend.
Cautionary Statement Regarding Forward-Looking
Information
To inform readers of the Corporation's future
prospects, this press release contains forward-looking information
within the meaning of applicable securities laws ("Forward-Looking
Information"), including the Corporation's growth targets, power
production, prospective projects, successful development,
construction and financing (including tax equity funding) of the
projects under construction and the advanced-stage prospective
projects, sources and impact of funding, project acquisitions,
execution of non-recourse project-level financing (including the
timing and amount thereof), and strategic, operational and
financial benefits and accretion expected to result from such
acquisitions, business strategy, future development and growth
prospects (including expected growth opportunities under the
Strategic Alliance with Hydro-Québec), business integration,
governance, business outlook, objectives, plans and strategic
priorities, and other statements that are not historical facts.
Forward-Looking Information can generally be identified by the use
of words such as "approximately", "may", "will", "could",
"believes", "expects", "intends", "should", "would", "plans",
"potential", "project", "anticipates", "estimates", "scheduled" or
"forecasts", or other comparable terms that state that certain
events will or will not occur. It represents the projections and
expectations of the Corporation relating to future events or
results as of the date of this press release.
Forward-Looking Information includes future-oriented financial
information or financial outlook within the meaning of securities
laws, including information regarding the Corporation's targeted
production, the estimated targeted revenues, targeted Revenues
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. Please refer to Section 1 - Highlight of the
Management's Discussion and Analysis for the three- and six-month
period ended June 30, 2022 for
details regarding the assumptions used with respect to the 2022
growth targets and to Section 5 - Outlook of the Annual Report for
the 2020-2025 Strategic Plan outlook.
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-and six-month periods ended June 30, 2022.
Innergex Renewable Energy Inc.
www.innergex.com
SOURCE Innergex Renewable Energy Inc.