Boralex Power Income Fund Profits From Excellent Hydrology in Third Quarter 2008
MONTREAL, Nov. 4 /PRNewswire-FirstCall/ — In the third quarter of 2008, Boralex Power Income Fund (the “Fund”) recorded a significant rise in revenue from energy sales and earnings before interest, taxes, depreciation and amortization (EBITDA), largely due to favourable hydrology for its hydroelectric power stations.
For the third quarter ended September 30, 2008, consolidated revenue grew to $23.5 million, up 18.7% over the same quarter a year earlier. EBITDA increased to $10.1 million in the third quarter of 2008, compared to $9.8ÂÂÂ million for the same period in 2007. These increases are due to higher steam prices, since steam is partially indexed to the price of oil, and a positive volume effect resulting from higher levels of power generation by the Fund’s hydroelectric power stations in the United States and Canada. The Fund recorded net earnings of $2.8 million ($0.05 per trust unit) for the quarter ended September 30, 2008, compared to $1.5 million ($0.03 per trust unit) for the third quarter of 2007.
The hydroelectric segment’s good performance is due to favourable hydrology in the third quarter of 2008. Production volume in the United States was up 65.2% and in Canada 42.8% during the third quarter compared to the same period in 2007. Revenue for this segment amounted to $9.7 million for the three months ended September 30, 2008, versus $6.0 million for the same period a year earlier, a jump of 61.7%. Revenue in the hydroelectric segment accounted for 41.3% of consolidated revenue for the third quarter of 2008.
Revenue from the wood residue segment stood at $6.4 million for the thirdÂÂÂ quarter of 2008, down $1.7 million compared to the third quarter of 2007. EBITDA for the three months ended September 30, 2008 was zero, down $4.0ÂÂÂ million compared to the same quarter in 2007. The decrease stems mainly from the downtime at Senneterre since September 21 and the cease of electricity generation at Dolbeau since July 4. Those cease are currently due to the closure of several sawmills and the resulting difficulty in obtaining sufficient wood-residue supplies. Both are expected to be producing again by the end of November and the Fund expects they will operate continuously during the capacity premium period, which runs from December to March, to optimize the Fund’s cash flow during that period. The Fund is keeping a close eye on the activities of certain sawmills.
The natural gas cogeneration power station recorded revenue of $7.4 million and EBITDA of $3.8 million in the third quarter of 2008, for increases of 29.8% and 26.7% respectively compared to the third quarter of 2007. The increases stem from the indexing of electricity selling prices and higher steam prices.
Lastly, cash flows related to operating activities were up $1.3 million or 17% to $8.9 million versus the same quarter in 2007. This increase is due mainly to third quarter 2008 operating results. As at September 30, 2008, the Fund had a balance in cash and cash equivalents of $20.3 million, double that at December 31, 2007. The Fund therefore considers its current financial position favourable for maintaining stable distributions within a reasonable horizon. Furthermore, the Fund took advantage of the recent weakness in the value of the Canadian dollar to cover close to 65% of the cash assets generated by its U.S. operations to the end of the third quarter of 2010.
About Boralex Power Income Fund
Boralex Power Income Fund is an unincorporated open-ended trust that indirectly owns ten power generating stations located in the province of Quebec and the United States producing energy from different sources including wood-residue or natural gas-fired thermal and cogenerating facilities as well as hydroelectric power stations. In total, these power stations have an installed capacity of 190 MW. The Fund’s units are listed for trading on The Toronto Stock Exchange under the symbol BPT.UN.
Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreased demand for the Fund’s products, increases in raw material costs, fluctuations in currency exchange rates, fluctuations in sales prices and adverse changes in general market and industry conditions. The financial statements included in this press release also contain certain financial measurements that are not recognized as generally accepted accounting principles (GAAP).
The Fund uses EBITDA, among other measures, as a performance measure with respect to its operations. This term is not a defined financial measure according to Canadian generally accepted accounting principles (GAAP) and it does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not be comparable to similar measures presented by other enterprises. EBITDA is defined in the excerpts from the financial statements accompanying this press release.
Notice to Unitholders
These interim financial statements as at September 30, 2008 and 2007 have not been reviewed by our auditors Ernst & Young LLP. The financial statements are the responsibility of the Manager of Boralex Power Income Fund, and have been reviewed and approved by Boralex Power Trust’s trustees and the members of its audit committee.
The following financial informations were extracted from the interim consolidated financial statements of Boralex Power Income Fund (the “Fund”). The complete interim financial statements were prepared conformingly with the Canadian generally accepted accounting principles (“GAAP”). They are available on the Fund’s website (http://www.boralex.com/trust) and filed with SEDAR.
Consolidated Balance Sheets (in thousands of dollars) (unaudited) As at As at September 30, December 31, 2008 2007 ————————————————————————- Assets Current assets Cash and cash equivalents 20,338 10,740 Accounts receivable 12,355 13,333 Income taxes receivable – 1,949 Inventories 2,791 2,405 Prepaid expenses 1,122 1,248 ———————- 36,606 29,675 Property, plant and equipment 362,959 367,474 Intangible assets 80,793 83,690 Goodwill 16,243 16,243 Other long-term assets 5,991 8,594 ———————- 502,592 505,676 ———————- Liabilities and unitholders’ equity Current liabilities Short-term revolving credit facility 2,800 2,300 Accounts payable and accrued liabilities 9,345 8,909 Income taxes payable 16 – Distributions payable to unitholders 3,446 4,430 Current portion of obligation under capital lease 79 233 ———————– 15,686 15,872 Future income tax liabilities 46,250 48,817 Fair value of derivative financial instruments 5 5 Long-term debt 107,714 102,529 Long-term lease accruals 2,300 1,858 ———————– 171,955 169,081 ———————– Unitholders’ equity Capital contribution 422,174 422,174 Capital contribution – exchangeable Class B units 112,867 112,867 Deficit (180,666) (170,982) Accumulated other comprehensive loss (23,738) (27,464) ———————– 330,637 336,595 ———————– 502,592 505,676 ————————————————————————- ————————————————————————- Consolidated Statements of Earnings (in thousands of dollars, except amounts per unit) (unaudited) For the nine-month For the quarters periods ended ended September 30, September 30, 2008 2007 2008 2007 ————————————————————————- Revenues 23,541 19,806 83,368 77,624 ———————————————– Expenses Operating 12,666 8,983 35,218 31,938 Administrative 733 1,050 2,893 2,837 ———————————————– 13,399 10,033 38,111 34,775 ———————————————– Operating income before amortization 10,142 9,773 45,257 42,849 Amortization of property, plant and equipment 4,705 3,637 13,961 11,450 Amortization of intangible assets 1,579 1,378 5,550 5,476 ———————————————– Operating income 3,858 4,758 25,746 25,923 Financial expenses, net 1,840 1,620 5,416 5,058 Foreign exchange loss (gain) (512) 2,448 (2,127) 2,855 Change in fair value of derivative financial instruments – – – (31) ———————————————– Earnings before income taxes 2,530 690 22,457 18,041 Income taxes (recovery) (278) (818) (838) 48,192 ———————————————– Net earnings (loss) for the period 2,808 1,508 23,295 (30,151) ————————————————————————- Basic and diluted net earnings (loss) per trust unit (in dollars) 0.05 0.03 0.39 (0.51) Weighted average number of trust units outstanding 59,067,992 59,067,992 59,067,992 59,067,992 ————————————————————————- ————————————————————————- Consolidated Statements of Deficit (in thousands of dollars) (unaudited) For the nine-month periods ended September 30, 2008 2007 ————————————————————————- Deficit – beginning of period (170,982) (82,128) Net earnings (loss) for the period 23,295 (30,151) Distributions to unitholders (32,979) (39,871) Deficit – end of period (180,666) (152,150) ————————————————————————- ————————————————————————- Consolidated Statements of Comprehensive Income (in thousands of dollars) (unaudited) For the nine-month For the quarters periods ended ended September 30, September 30, 2008 2007 2008 2007 ————————————————————————- Net earnings (loss) for the period 2,808 1,508 23,295 (30,151) Other comprehensive income (loss): Translation adjustments Unrealized foreign exchange gain (losses) on translation of the financial statements of self-sustaining foreign operations 3,419 (6,346) 5,944 (16,869) Reclassification of accumulated foreign exchange losses on translation of financial statements of self-sustaining foreign operations following a reduction in net investment 67 3,173 81 4,920 Future income taxes 234 (385) 409 (971) Hedging of net investment in self-sustaining foreign operations Change in fair value of derivative instruments designated as hedges of the net investment in self-sustaining foreign operations (123) 885 (276) 2,207 Hedging instruments realized and recognized in net earnings (596) (520) (2,432) (1,556) —————————————— 3,001 (3,193) 3,726 (12,269) —————————————— Comprehensive income (loss) for the period 5,809 (1,685) 27,021 (42,420) ————————————————————————- ————————————————————————- Consolidated Statements of Cash Flows (in thousands of dollars) (unaudited) For the nine-month For the quarters periods ended ended September 30, September 30, 2008 2007 2008 2007 ————————————————————————- Operating activities Net earnings (loss) for the period 2,808 1,508 23,295 (30,151) Items not affecting cash: Amortization of property, plant and equipment 4,705 3,637 13,961 11,450 Amortization of intangible assets 1,579 1,378 5,550 5,476 Amortization of deferred financing costs 79 101 248 317 Long-term lease accruals 100 105 296 331 Future income taxes 302 312 (2,509) 47,137 Realized currency translation adjustments 67 3,173 81 4,920 Other (1) 12 114 186 ——————————————- 9,639 10,226 41,036 39,666 Net change in non-cash working capital balances (738) (2,625) 2,936 (2,821) ——————————————- Cash flows related to operating activities 8,901 7,601 43,972 36,845 ——————————————- Investing activities Additions to property, plant and equipment (983) (550) (2,205) (2,464) Acquisition of other assets (15) (12) (86) (199) Other 23 (61) (2) (72) ——————————————- Cash flows related to investing activities (975) (623) (2,293) (2,735) ——————————————- Financing activities Distributions paid to unitholders (10,337) (13,290) (33,964) (39,871) Net change in short-term revolving credit facility 1,200 (2,200) 500 (1,800) Repayment of capital lease obligation (58) (57) (174) (178) Proceeds from sale of options on foreign ex- change forward contracts 112 113 449 454 ——————————————- Cash flows related to financing activities (9,083) (15,434) (33,189) (41,395) ——————————————- Translation adjustments on cash and cash equivalents 708 (1,113) 1,108 (3,811) ——————————————- Net change in cash and cash equivalents during the period (449) (9,569) 9,598 (11,096) Cash and cash equivalents – beginning of period 20,787 24,350 10,740 25,877 ——————————————- Cash and cash equivalents – end of period 20,338 14,781 20,338 14,781 ——————————————- Supplemental information Interest paid 2,347 2,420 5,863 6,359 Income taxes paid 144 544 1,216 4,393 ————————————————————————- ————————————————————————- Segmented information
The Fund’s power stations are grouped into three distinct segments-hydroelectric power, wood-residue thermal power and natural gas thermal power-and are engaged mainly in power generation. The classification of these segments is based on the different cost structures relating to each type of power station. The Fund allocates its revenues by geographical region based on the point of delivery of the power.
The Fund analyzes the performance of its operating segments based on their EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is not a measure of performance under Canadian generally accepted accounting principles; however, management uses this performance measure to assess the operating performance of its reportable segments. Results for each segment are presented on the same basis as those of the Fund. In the consolidated statement of earnings, EBITDA is represented by Operating income before amortization.
The following table reconciles EBITDA with net earnings or loss: For the nine-month For the quarters periods ended ended September 30, September 30, 2008 2007 2008 2007 ————————————————————————- Net earnings (loss) 2,808 1,508 23,295 (30,151) Income taxes (recovery) (278) (818) (838) 48,192 Change in fair value of derivative financial instruments – – – (31) Foreign exchange loss (gain) (512) 2,448 (2,127) 2,855 Financial expenses, net 1,840 1,620 5,416 5,058 Amortization of intangible assets 1,579 1,378 5,550 5,476 Amortization of property, plant and equipment 4,705 3,637 13,961 11,450 ——————————————— EBITDA 10,142 9,773 45,257 42,849 ————————————————————————- ————————————————————————- Information by operating segment For the nine-month For the quarters periods ended ended September 30, September 30, 2008 2007 2008 2007 ————————————————————————- PRODUCTION (in MWh) Hydroelectric power stations 118,071 77,554 401,654 350,138 Wood-residue thermal power stations 46,636 98,464 209,834 283,628 Natural gas power station 45,489 46,324 151,333 146,923 ——————————————– 210,196 222,342 762,821 780,689 ————————————————————————- REVENUES Hydroelectric power stations 9,698 6,040 34,314 31,537 Wood-residue thermal power stations 6,402 8,062 25,454 27,288 Natural gas power station 7,441 5,704 23,600 18,799 ——————————————– 23,541 19,806 83,368 77,624 ————————————————————————- EBITDA Hydroelectric power stations 7,962 4,826 29,170 26,345 Wood-residue thermal power stations (8) 3,999 8,425 13,647 Natural gas power station 3,750 3,039 12,532 9,065 Corporate and eliminations (1,562) (2,091) (4,870) (6,208) ——————————————– 10,142 9,773 45,257 42,849 ————————————————————————- ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT Hydroelectric power stations 52 230 321 353 Wood-residue thermal power stations 13 260 844 329 Natural gas power station 918 60 1,040 1,782 ——————————————– 983 550 2,205 2,464 ————————————————————————- ————————————————————————- As at As at September 30, December 31, 2008 2007 ————————————————————————- ASSETS Hydroelectric power stations 274,472 262,881 Wood-residue thermal power stations 183,790 190,541 Natural gas power station 41,768 47,003 Corporate and eliminations 2,562 5,251 ————————— 502,592 505,676 ————————————————————————- ————————————————————————-
BORALEX POWER INCOME FUND
CONTACT: Ms. Patricia Lemaire, Director, Communications, Boralex PowerInc., (514) 985-1353, patricia.lemaire@boralex.com