- US$803.1 million (CAN$1.032
billion) refinancing of the non-recourse debt of its portfolio of
wholly owned assets in Chile with
the issuance of US$710.0 million
(CAN$912.6 million) green bonds in Q3 2022
- Long-term Power Purchase Agreement concluded for the Boswell
Springs wind project located in the State
of Wyoming in Q3 2022
- Acquisition of the remaining 30.45% minority interest in its
France wind portfolio in Q4 2022
adding net 98.7 MW
- Appointment of Radha D. Curpen
on the board of directors in Q4 2022
- First Task Force for Climate-related Financial Disclosure
("TCFD") aligned report issued on November
7, 2022
All amounts are in
thousands of Canadian dollars, unless otherwise
indicated.
|
|
LONGUEUIL, QC, Nov. 7, 2022 /CNW Telbec/ - Innergex
Renewable Energy Inc. (TSX: INE) ("Innergex" or the
"Corporation") today released its operating and financial results
for the third quarter ended September 30, 2022.
"Our initiatives concluded throughout the third quarter allowed
us to unlock additional value for our portfolio of assets both in
Chile and France and further our progress in
the United States. All of our
recent acquisitions and growth initiatives combined contributed
significantly to our 40% growth in revenues and 48% increase in
Adjusted EBITDA recorded in the quarter as well as to sustainably
improving our payout ratio," said Michel
Letellier, President and Chief Executive Officer at
Innergex. "We continue to advance our portfolio of prospective and
development projects which will contribute to successfully reaching
our growth and financial targets. I am very proud of the work of
our team who continue to seize opportunities to improve our
business while leading the transition to a clean economy."
UPDATE ON GROWTH INITIATIVES
On July 22, 2022, Innergex
completed the full commissioning of the 9 MW/9 MWh (1 hour)
Tonnerre battery energy storage system ("BESS") 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. The
facility will provide grid stability and help balance and secure
the French power transmission system. 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.
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 ("PPA") of its intention to cancel the agreement. The
project will sell its electricity on a merchant price basis. The
cancellation is effective since November 1,
2022.
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 August 5, 2022, the Corporation
completed a US$803.1 million
(CAN$1.032 billion) refinancing of the non-recourse debt of its
portfolio of wholly owned assets in Chile with the issuance of US$710.0 million (CAN$912.6 million) green
bonds maturing in 2036 (with a balloon payment of US$139.0 million (CAN$178.7 million)) and a
US$93.1 million
(CAN$119.7 million) letter of credit facility. The refinanced
portfolio is composed of a combination of solar, wind and hydro
assets as well as battery energy storage systems assets wholly
owned by Innergex. Overall, the Chilean portfolio of assets
received an investment grade rating, and the green bonds were
priced at competitive levels in the
United States Treasury.
On August 16, 2022, the
Corporation signed a 30-year, 320 MW power purchase agreement with
PacifiCorp, a Berkshire Hathaway subsidiary, for the electricity to
be produced by the Boswell Springs wind project located in eastern
Wyoming. The commercial operation
date is scheduled during Q4 2024.
On September 28, 2022, the
Corporation announced that it has entered into an agreement to
acquire the remaining 30.45% minority interest in its wind
portfolio of 16 assets in France,
of which Innergex currently owns the majority interests, for a
total consideration of CAN$96.4 million. The transaction was
subsequently completed on October 4,
2022.
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.
FINANCIAL HIGHLIGHTS
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
February
2021 Texas
Events
(9 days) 3
|
2021
Normalized
|
Change
|
Production
(MWh)
|
2,736,471
|
2,290,086
|
19 %
|
7,896,968
|
6,472,058
|
—
|
6,472,058
|
22 %
|
Long-Term Average (MWh)
("LTA")
|
3,017,929
|
2,580,250
|
17 %
|
8,568,119
|
7,075,759
|
—
|
7,075,759
|
21 %
|
Revenues
|
258,389
|
184,564
|
40 %
|
666,858
|
544,820
|
(54,967)
|
489,853
|
36 %
|
Operating, general,
administrative and prospective projects expenses
|
77,231
|
62,042
|
24 %
|
202,302
|
156,494
|
—
|
156,494
|
29 %
|
Adjusted
EBITDA1
|
181,158
|
122,522
|
48 %
|
464,556
|
388,326
|
(54,967)
|
333,359
|
39 %
|
|
|
|
|
|
|
|
|
|
Net Earnings
(Loss)
|
20,980
|
(23,464)
|
189 %
|
(38,540)
|
(191,137)
|
64,219
|
(126,918)
|
70 %
|
Adjusted Net (Loss)
Earnings1
|
(1,007)
|
11,905
|
(108) %
|
(5,576)
|
3,023
|
—
|
3,023
|
(284) %
|
Net Earnings (Loss)
Attributable to Owners, $ per share - basic and diluted
|
0.11
|
(0.10)
|
|
(0.20)
|
(1.09)
|
0.36
|
(0.73)
|
|
Production
Proportionate (MWh)1
|
2,993,839
|
2,538,645
|
18 %
|
8,343,421
|
7,177,192
|
—
|
7,177,192
|
16 %
|
Revenues
Proportionate1
|
296,612
|
221,960
|
34 %
|
764,182
|
682,096
|
(95,273)
|
586,823
|
30 %
|
Adjusted EBITDA
Proportionate1
|
215,413
|
155,938
|
38 %
|
551,404
|
510,791
|
(95,273)
|
415,518
|
33 %
|
|
|
|
|
|
|
|
|
|
|
Trailing twelve
months ended June 30
|
Trailing twelve months
ended September 30
|
|
|
|
|
2022
|
2021
|
February
2021 Texas
Events
(9 days)
3
|
2021
Normalized
|
Change
|
Cash Flow from
Operating Activities
|
|
|
|
412,447
|
267,354
|
17,093
|
284,447
|
45 %
|
Free Cash
Flow1,2
|
|
|
|
158,996
|
91,211
|
15,789
|
107,000
|
49 %
|
Payout
Ratio1,2
|
|
|
|
91 %
|
141 %
|
(20) %
|
121 %
|
|
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 nine-month periods ended September 30,
2022 for more information.
|
2.
|
For more information on
the calculation and explanation, please refer to the "Free Cash
Flow and Payout Ratio" section of the Management's Discussion and
Analysis for the three- and nine-month periods ended
September 30, 2022 for more information.
|
3.
|
For the periods ended
September 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
issuers. Please refer to the "February 2021 Texas Events" section
of the Management's Discussion and Analysis for the three- and
nine-month periods ended September 30, 2022 for more
information.
|
OPERATING PERFORMANCE
Production for the three-month period ended
September 30, 2022 was 91% of LTA. Innergex's share of
production of joint ventures and associates1 was 105% of
LTA, translating into a Production Proportionate1 at 92%
of LTA. Revenues were up 40% at $258.4 million compared with the same period last
year. This increase is mainly explained by higher selling prices at
the Phoebe solar facility, the commissioning of the Griffin Trail
wind facility in Texas in
July 2021, the acquisition of Aela
Generación S.A. and Aela Energía SpA (together "Aela") in
Chile in June 2022, the acquisition of the Curtis Palmer
hydroelectric portfolio in New
York in October 2021, the
acquisition of the remaining 50% interest in Energía Llaima in
Chile in July 2021, for which results are now included in
Innergex's consolidated revenues, by higher production at the hydro
facilities in British Columbia due
to the temporary shutdown at the Kwoiek Creek facility due to the
wildfire that damaged the facility's transmission line in 2021 and
the increase in revenues from the new PPAs negotiated at some
facilities in France and to the
acquisition of the San Andrés solar facility in January 2022 in Chile. These items were partly offset by lower
revenues at the Salvador solar
facility in Chile due to lower
selling prices and by lower revenues from the wind facilities in
France due to lower wind regimes
and unfavourable exchange rates. Revenues Proportionate1
increased by 34% to $296.6 million over the same period last
year.
For the three-month period ended September 30, 2022,
Operating, general, administrative and prospective projects
expenses were up 24% at $77.2 million compared with the same period
last year. The increase is mainly attributable to the Aela
Acquisition, higher maintenance expenses at some facilities in
British Columbia, the Curtis
Palmer Acquisition, the commissioning of the Hillcrest solar
facility and the San Andrés Acquisition, partly offset by reduced
operating costs at some wind facilities in the United States. The Adjusted
EBITDA1 was 48% higher at $181.2
million for the three-month period ended September
30, 2022, compared with the same period last year. The
Adjusted EBITDA Proportionate1 reached $215.4 million, a 38% increase compared with the
same period last year.
The Corporation recorded net earnings of $21.0 million ($0.11 net earnings per share - basic and diluted)
for the three-month period ended September 30, 2022, compared
with a net loss of $23.5 million
($0.10 net loss per share - basic and
diluted) for the corresponding period in 2021. In addition to the
hydroelectric, wind and solar segments' respective operating
performance previously discussed, the $44.4 million increase in net earnings
mainly stems from a favourable $15.2
million change in the fair value of financial instruments,
mainly related to the favourable change in foreign exchange forward
curves in 2022 compared with the same period last year; a
$30.7 million decrease in impairment
of long-term assets following the impairment charges recognized in
2021 on the Phoebe solar facility and to a minority equity
investment in France and a
$12.9 million decrease in income tax
expense mainly due to a decrease in the tax attributes being
allocated to tax equity investors, largely attributable to the
accelerated tax depreciation taken in 2021 on the Griffin Trail
facility, partly offset by an increase in income tax expense due to
a favourable change in fair value of financial instruments and the
non-recognition of some tax losses in Chile. These items were partly offset by a
$27.3 million decrease in other net
income, mainly due to a decrease in the tax attributes being
allocated to tax equity investors, largely attributable to the
accelerated tax depreciation taken in 2021 on the Griffin Trail
facility; a $23.9 million increase in
finance costs mainly related to the Aela acquisition, the Griffin
Trail and Hillcrest facilities, and an increase in inflation
compensation interests on the Harrison Hydro real return bonds and
a $23.1 million increase in
depreciation and amortization, mainly attributable to Aela and Curtis Palmer acquisitions, and the
Griffin Trail and Hillcrest commissionings in 2021.
Production for the nine-month period ended
September 30, 2022 was 92% of LTA.
Innergex's share of production of joint ventures and
associates1 was 99% of LTA, translating into a
Production Proportionate1 at 93% of LTA. Revenues
were up 36% at $666.9 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
Curtis Palmer Acquisition, the acquisition of the remaining 50%
interest in Energía Llaima, higher revenues at the Phoebe solar
facility due to higher selling prices, the commissioning of the
Griffin Trail wind facility, the Aela Acquisition, the BC Hydro
Curtailment Payment2, higher production at the hydro
facilities in British Columbia due
to the temporary shutdown at the Kwoiek Creek facility due to the
wildfire that damaged the facility's transmission line in 2021,
higher revenues at the wind facilities in Quebec due to higher production and the San
Andrés Acquisition. These items were partly offset by lower
revenues from the wind facilities in France due to lower wind regimes and
unfavourable exchange rates, from the Salvador facility due to lower selling prices
and lower production. Revenues Proportionate1 increased
by 30% to $764.2 million over
the same period last year, for which Revenues were normalized to
exclude the February 2021 Texas
Events.
For the nine-month period ended September 30, 2022,
Operating, general, administrative and prospective projects
expenses were up 29% at $202.3 million compared with the same period
last year. The increase is mainly attributable to the Aela
Acquisition, higher expenses at two facilities in British Columbia following floods that occured
at the end of 2021, the Curtis Palmer Acquisition, the acquisition
of the remaining 50% interest in Energía Llaima, the commissioining
of the Hillcrest and Griffin Trail facilities and the San Andrés
Acquisition. These items were partly offset by lower variable
expenses due to lower revenues at the Foard City facility and lower expenses in
France due to unfavourable
exchange rates. The Adjusted EBITDA1 was 39% higher at
$464.6 million for the
nine-month period ended September 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 $551.4 million, a 33% increase compared with
the same period last year, for which the Adjusted EBITDA
Proportionate1 was normalized to exclude the
February 2021 Texas Events.
The Corporation recorded a net loss of $38.5 million ($0.20 net loss per share - basic and diluted) for
the nine-month period ended September 30, 2022, compared
with a net loss of $191.1 million
($1.09 net loss per share - basic and
diluted) for the corresponding period in 2021. In addition to the
hydroelectric, wind and solar segments' respective operating
performance previously discussed, the $152.6 million
decrease in net loss mainly stems from a $205.3 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 this MD&A 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 and a
favourable $26.8 million change in
the fair value of financial instruments, mainly related to the net
unfavourable impact of the February
2021 Texas Events in 2021 and the favourable change in
foreign exchange forward curves in 2022 compared with the same
period last year, partly offset by the increase in merchant power
curves for the Phoebe power hedge; and a $37.0 million decrease in impairment of long-term
assets following the impairment charges recognized in 2021 on the
Phoebe solar facility, the Energia Llaima investment following the
purchase of the remaining equity interests, and a minority equity
investment in France. These items
were partly offset by a $69.8 million
increase in income tax expense, mainly related to the impacts of
the February 2021 Texas Events, the
Flat Top and Shannon impairment charges in 2021, and the
non-recognition of deferred tax assets on projects classified as
assets held for sale, partly offset by a decrease in income tax
expense due to the to the accelerated tax depreciation taken in
2021 on the Griffin Trail facility; a $64.4
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 $49.1
million increase in finance costs mainly related to the
Energía Llaima and Aela acquisitions, an increase in inflation
compensation interests on the Harrison Hydro real return bonds and
to the Griffin Trail and Hillcrest facilities commissioned in
2021.
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 nine-month
period ended September 30, 2022 for more information).
|
CASH FLOW FROM OPERATING ACTIVITIES, FREE CASH
FLOW3 AND PAYOUT RATIO3
For the three-month period ended September 30, 2022, cash
flows from operating activities totalled $184.1 million, compared with $80.1 million in the same period last year. The
increase relates primarily to the contribution from the Curtis
Palmer, San Andrés and Aela acquisitions, the Hillcrest and Griffin
Trail commissionings and the realized gain on financial instruments
following the settlement of the interest rate swap as part of
Innergex's refinancing of the non-recourse debt of its Chilean
facilities, partly offset by an increase in realized losses on the
Phoebe power hedge due to increased merchant prices.
For the nine-month period ended September 30, 2022, cash
flows from operating activities totalled $336.6 million, compared with $189.7 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, the
Hillcrest and Griffin Trail commissionings, and the BC Hydro
Curtailment Payment. The realized gain on financial instruments
following the settlement of the interest rate swap as part of
Innergex's refinancing of the non-recourse debt of its Chilean
facilities and the net unfavourable impact of the February 2021 Texas Events in 2021 also
contributed to increase cash flows from operating activities. These
items were partly offset by an increase in finance costs paid
mainly related related to the Griffin Trail and Hillcrest
facilities commissioned in 2021 and to the Aela Acquisition, and by
the distribution received from Energía Llaima in the second quarter
of 2021.
The following table summarizes the Free Cash Flow3
and Payout Ratio3 normalized for the trailing twelve
months ended September 30, 2021 to
exclude the impacts of the February
2021 Texas Events.
Free Cash Flow and
Payout Ratio calculation1
|
Trailing twelve months
ended September 30
|
2022
|
2021
|
February 2021
Texas Events
(9 days)2
|
2021
Normalized2
|
Free Cash
Flow1,2,3
|
158,996
|
91,211
|
15,789
|
107,000
|
|
|
|
|
|
Dividends declared on
common shares
|
144,862
|
129,005
|
—
|
129,005
|
Payout
Ratio1,2
|
91 %
|
141 %
|
(20) %
|
121 %
|
Adjusted Payout
Ratio1,2
|
78 %
|
96 %
|
— %
|
96 %
|
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 September 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 nine-month periods ended September 30,
2022 for more information.
|
3.
|
Free Cash Flow for the
three-month period ended September 30, 2022 includes the
one-time BC Hydro Curtailment Payment received during the first
quarter of 2022.
|
For the trailing twelve months ended September 30, 2022,
the dividends on common shares declared by the Corporation amounted
to 91% of Free Cash Flow3 compared with 141% for the
corresponding period last year. Excluding the impacts from the
February 2021 Texas Events (refer to
the "February 2021 Texas Events"
section of the Management's Discussion and Analysis for the three-
and nine-month periods ended September
30, 2022 for more information), the dividends on common
shares declared by the Corporation for the corresponding period
last year amounted to 121% 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 nine-month periods ended September
30, 2022 for more information.
|
SUBSEQUENT EVENTS
On October 5, 2022, as part of the
financing of the acquisition of the remaining interests in its wind
portfolio in France, Innergex
monetized its Euro/CAD foreign exchange forward contracts for a
total gain of $43.5 million and
concurrently amended the Euro/CAD foreign exchange forward
contracts for a total notional amount of $115.3 million amortizing until 2043 and
allowing conversion at a fixed rate of CAD
1.4838/Euro.
On October 10, 2022, to take
advantage of the currently favourable energy pricing environment in
France, Innergex entered into two
power purchase agreements for its Bois d'Anchat and Beaumont wind facilities (the "New PPAs"),
which are to take effect on January 1,
2023, concurrently with the early termination of the current
power purchase agreements. In addition, the New PPAs effectively
increase the contracted period of the facilities to December 31, 2032.
APPOINTMENT TO THE BOARD OF DIRECTORS
Innergex is pleased to announce on November 7, 2022, the appointment of Radha D. Curpen on its board of directors,
effective December 1, 2022. Ms.
Curpen is vice chair, Vancouver
managing partner, national leader of ESG Strategy and Solutions,
and co-head of the Environmental Law practice at Bennett Jones LLP.
With over 30 years of business and legal experience, Ms. Curpen
brings to Innergex a solid experience in environment, First Nations
and other ESG matters as well as in regulatory compliance and
climate change and adaptation. Ms. Curpen serves on the board of
governors of the Business Council of British Columbia and is the chair of the
Greater Vancouver Board of Trade.
Ms. Curpen is a member of the ESG Advisory Council to the Minister
of Finance (British Columbia) and
a member of the board of directors at Bennett Jones. She is a
member of the ESG Industry Working Group for the Canadian
Association of Pension Supervisory Authorities (CAPSA) for the
development of an ESG Guide for pension fund investment and pension
plan administrators.
"We are pleased to welcome Ms. Curpen to our board of
directors," said Mr. Daniel
Lafrance, Chairman of the board of directors of Innergex.
"Her solid legal, environmental and ESG knowledge and experience
will contribute to deepening our team's expertise and to guide
Innergex's management team as they achieve their mission to build a
better world with renewable energy."
DIVIDEND DECLARATION
The following dividends will be paid by the Corporation on
January 16, 2023:
Date of
announcement
|
Record date
|
Payment date
|
Dividend per
common share
|
Dividend per Series
A
Preferred
Share
|
Dividend per Series
C
Preferred Share
|
November 7,
2022
|
December 31,
2022
|
January 16,
2023
|
$0.180
|
$0.202750
|
$0.359375
|
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, Innergex's share of
Adjusted EBITDA of joint ventures and associates, Adjusted EBITDA
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 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. 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
September 30, 2022
|
Three months ended
September 30, 2021
|
|
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
258,389
|
27,884
|
10,339
|
296,612
|
184,564
|
26,698
|
10,698
|
221,960
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
20,980
|
—
|
—
|
20,980
|
(23,464)
|
—
|
—
|
(23,464)
|
Income tax
expense
|
|
8,821
|
—
|
—
|
8,821
|
21,741
|
—
|
—
|
21,741
|
Finance
costs
|
|
90,418
|
4,495
|
—
|
94,913
|
66,519
|
4,536
|
—
|
71,055
|
Depreciation and
amortization
|
|
82,953
|
4,227
|
—
|
87,180
|
59,838
|
4,245
|
—
|
64,083
|
Impairment of long-term
assets
|
|
—
|
—
|
—
|
—
|
30,660
|
—
|
—
|
30,660
|
EBITDA
|
|
203,172
|
8,722
|
—
|
211,894
|
155,294
|
8,781
|
—
|
164,075
|
Other net expense
(income), before PTCs
|
|
3,768
|
(46)
|
—
|
3,722
|
(23,129)
|
(136)
|
—
|
(23,265)
|
Production tax credits
("PTCs")
|
|
(10,339)
|
—
|
10,339
|
—
|
(10,698)
|
—
|
10,698
|
—
|
Share of earnings of
joint ventures and associates
|
|
(15,654)
|
15,654
|
—
|
—
|
(14,311)
|
14,311
|
—
|
—
|
Change in fair value of
financial instruments
|
|
211
|
(414)
|
—
|
(203)
|
15,366
|
(238)
|
—
|
15,128
|
Adjusted
EBITDA
|
|
181,158
|
23,916
|
10,339
|
215,413
|
122,522
|
22,718
|
10,698
|
155,938
|
|
|
Nine months ended
September 30, 2022
|
Nine months ended
September 30, 2021
|
|
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
Consolidation
|
Share of joint
ventures
|
PTCs
|
Proportionate
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
666,858
|
49,171
|
48,153
|
764,182
|
544,820
|
99,662
|
37,614
|
682,096
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(38,540)
|
—
|
—
|
(38,540)
|
(191,137)
|
—
|
—
|
(191,137)
|
Income tax expenses
(recovery)
|
|
6,405
|
—
|
—
|
6,405
|
(63,398)
|
(31)
|
—
|
(63,429)
|
Finance
costs
|
|
233,978
|
13,395
|
—
|
247,373
|
184,838
|
18,841
|
—
|
203,679
|
Depreciation and
amortization
|
|
242,297
|
12,646
|
—
|
254,943
|
177,892
|
18,810
|
—
|
196,702
|
Impairment of long-term
assets
|
|
—
|
—
|
—
|
—
|
36,974
|
112,609
|
—
|
149,583
|
EBITDA
|
|
444,140
|
26,041
|
—
|
470,181
|
145,169
|
150,229
|
—
|
295,398
|
Other net expense
(income), before PTCs
|
|
2,470
|
(235)
|
—
|
2,235
|
(23,476)
|
1,734
|
—
|
(21,742)
|
Production tax credits
("PTCs")
|
|
(48,153)
|
—
|
48,153
|
—
|
(31,580)
|
(6,034)
|
37,614
|
—
|
Share of (earnings)
loss of joint ventures and associates
|
|
(14,668)
|
14,668
|
—
|
—
|
190,680
|
(190,680)
|
—
|
—
|
Change in fair value of
financial instruments
|
|
80,767
|
(1,779)
|
—
|
78,988
|
107,533
|
129,602
|
—
|
237,135
|
Adjusted
EBITDA
|
|
464,556
|
38,695
|
48,153
|
551,404
|
388,326
|
84,851
|
37,614
|
510,791
|
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 do not
reflect the operations of Innergex.
Innergex believes that the presentation of this measure enhances
the understanding of the Corporation's operating performance.
Adjusted Net (Loss) Earnings is used by investors to evaluate and
compare Innergex's profitability before the impacts of 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
September 30
|
Nine months ended
September 30
|
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Net earnings
(loss)
|
20,980
|
(23,464)
|
(38,540)
|
(191,137)
|
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
|
(300)
|
(178)
|
(1,305)
|
20,603
|
Unrealized portion of
the change in fair value of financial instruments
|
48,026
|
15,572
|
116,523
|
34,253
|
Impairment of
long-term assets
|
—
|
30,660
|
—
|
36,974
|
Realized (gain) loss
on termination of interest rate swaps
|
(71,676)
|
—
|
(71,676)
|
2,885
|
Realized gain on the
Phoebe basis hedge
|
—
|
(1,345)
|
—
|
(1,591)
|
Realized gain on
foreign exchange forward contracts
|
(2,040)
|
(1,133)
|
(3,214)
|
(1,881)
|
Income tax expense
(recovery) related to above items
|
4,003
|
(8,207)
|
(7,364)
|
(89,678)
|
Adjusted Net (Loss)
Earnings
|
(1,007)
|
11,905
|
(5,576)
|
3,023
|
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 September 30
|
2022
|
2021
|
February 2021
Texas Events
(9 days)4
|
2021
Normalized4
|
|
|
|
|
|
Cash flows from
operating activities5
|
412,447
|
267,354
|
17,093
|
284,447
|
Add (Subtract) the
following items:
|
|
|
|
|
Changes in non-cash
operating working capital items
|
24,525
|
(2,754)
|
—
|
(2,754)
|
Maintenance capital
expenditures, net of proceeds from disposals
|
(9,936)
|
(5,455)
|
—
|
(5,455)
|
Scheduled debt
principal payments
|
(167,578)
|
(155,072)
|
—
|
(155,072)
|
Free Cash Flow
attributed to non-controlling interests1
|
(39,811)
|
(13,787)
|
—
|
(13,787)
|
Dividends declared on
Preferred shares
|
(5,632)
|
(5,710)
|
—
|
(5,710)
|
Chile portfolio
refinancing - hedging impact2
|
765
|
—
|
—
|
—
|
Add (subtract) the
following specific items3:
|
|
|
|
|
Realized loss on
contingent considerations
|
—
|
3,568
|
—
|
3,568
|
Realized (gain) loss
on termination of interest rate swaps
|
(72,053)
|
2,885
|
—
|
2,885
|
Acquisition,
integration and restructuring costs
|
17,224
|
1,640
|
—
|
1,640
|
Realized gain on the
Phoebe basis hedge
|
(955)
|
(1,458)
|
(1,304)
|
(2,762)
|
Free Cash
Flow4
|
158,996
|
91,211
|
15,789
|
107,000
|
|
|
|
|
|
Dividends declared on
common shares
|
144,862
|
129,005
|
—
|
129,005
|
Payout
Ratio4
|
91 %
|
141 %
|
(20) %
|
121 %
|
|
|
|
|
|
Adjust for the
following items:
|
|
|
|
|
Prospective projects
expenses
|
27,331
|
|
|
21,266
|
Adjusted Free Cash
Flow
|
186,327
|
|
|
128,266
|
|
|
|
|
|
Adjusted Payout
Ratio
|
78 %
|
|
|
96 %
|
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.
|
The Free Cash Flow for
the trailing twelve months ended September 30, 2022 excludes the
gains realized on settlement of the interest rate hedges entered
into to manage the Corporation's exposure to the risk of increasing
interest rates during the negotiations surrounding the refinancing
of the non-recourse debt assumed in the Aela Acquisition and at
Innergex's existing Chilean projects. Instead, the gain is
amortized in the Free Cash Flow using the effective interest rate
method over the period covered by the unwound hedging
instruments.
|
3.
|
These items are
excluded from the Free Cash Flow and Payout Ratio calculations as
they are deemed not representative of the Corporation's long-term
cash-generating capacity, and include items such as gains and
losses on the Phoebe basis hedge due to their limited occurrence
(maturity attained on December 31, 2021), realized gains and losses
on contingent considerations related to past business acquisitions,
transaction costs related to realized acquisitions, realized losses
or gains on refinancing of certain borrowings or derivative
financial instruments used to hedge the interest rate on certain
borrowings or the exchange rate on equipment purchases, and tax
payments related to fiscal strategies for the purpose of improving
the long-term cash generating capacity of Innergex.
|
4.
|
For the trailing twelve
months ended September 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 nine-month periods ended September 30, 2022 for more
information.
|
5.
|
Cash flows from
operating activities for the trailing twelve months ended September
30, 2022 include the one-time BC Hydro Curtailment Payment received
during the first quarter of 2022.
|
INNERGEX'S FIRST TCFD REPORT
Innergex is proud to launch today its first Task Force for
Climate-related Financial Disclosure (TCFD) aligned assessment
report. The Report can be found in the "Sustainability" section of
the Corporation's website at www.innergex.com.
ADDITIONAL INFORMATION
Innergex's 2022 third 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
Tuesday, November 8, 2022 at
9 AM (EST). Investors and financial
analysts are invited to access the conference by dialing 1 888
390-0605 or 416 764-8609 or via
https://bit.ly/3zYctLx 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
3,582 MW (gross 4,184 MW) and an energy storage capacity of
159 MWh, including 40 hydroelectric facilities, 35 wind facilities,
8 solar facilities 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
8,513 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 nine-month periods ended September 30, 2022.
SOURCE Innergex Renewable Energy Inc.