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Boralex Power Income Fund: Financial Results for the First Quarter 2009

Posted on: Monday, 4 May 2009, 06:00 CDT

MONTREAL, May 4 /PRNewswire-FirstCall/ - In the first quarter of 2009, Boralex Power Income Fund (the "Fund") recorded operating income of $32.3 million, down 6% from the same period in 2008, stemming from less favourable hydrology and difficulties with the wood-residue supply.

The lower volume of power generation at the hydroelectric power stations and the Dolbeau wood-residue thermal power station, combined with higher wood-residue costs and reduced steam selling price at Kingsey Falls plant, had a negative impact on earnings before interest, taxes, depreciation and amortization (EBITDA), which, in the first quarter 2009, stood at $18.7 million, versus $21.7 million for the same quarter in 2008. The Fund's net earnings amounted to $9.9 million ($0.17 per trust unit) for the three-month period ended March 31, 2009, compared to net earnings of $15.2 million ($0.26 per trust unit) for the same period in 2008.

More specifically, in the first quarter 2009, revenue and EBITDA in the hydroelectric segment amounted to $12.7 million and $11.0 million respectively, a decrease of $0.5 million and $0.4 million compared to the same period in 2008. This decrease stems mainly from less favourable hydrology, which resulted in a 23% drop in production volume at the U.S. power stations compared to the first quarter 2008, and a decrease of 6% compared to their historical average. Overall, the Canadian power stations were affected to a lesser degree, with a 5% drop in volume compared to the first quarter 2008 and an increase of 4% over their historical average.

The wood-residue thermal power stations recorded revenue of $11.1 million for the quarter ended March 31, 2009, down 4% from the first quarter 2008. At $5.2 million, EBITDA was down 16% from the first quarter 2008. The wood-residue supply problems had a direct impact on production volume and results for this segment. The Senneterre power station is currently operating and unless there is a significant interruption in its fuel supplies, should continue to operate in the coming months. As for Dolbeau plant, due to the problems with the wood-residue supply, the Fund was obliged to shut down power generation on April 1, 2009. This interruption is expected to continue to the end of the third quarter. Steam production will, however, continue during this period.

Furthermore, Mister Claude Boivin, chairman of the Board of Trustees, noted that "since AbitibiBowater received court protection from its creditors, the Fund has not been able to determine the impact of this event on the operation of Dolbeau plant, nor on the dispute between the two organizations."

The Kingsey Falls natural gas cogeneration plant recorded revenue of $8.4 million and EBITDA of $4.2 million in the first quarter 2009, for respective decreases of $1.1 million and $1.4 million compared to the first quarter 2008. These results are largely due to the 33% drop in steam prices (which are indexed to the price of oil).

Mr. Boivin also noted that "thanks to our careful management and the diversification of our sources of production, the Fund is capable of showing significant liquidity and net cash balance of close to $20 million, in spite of a particularly difficult economic context for our wood-residue sector."

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, availability of raw materials and increases in their cost, hydrology, 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 GAAP of Canada 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 appended to this press release.

Notice to Unitholders

These interim financial statements as at March 31, 2009 and 2008 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 (www.boralex.com/trust) and filed with SEDAR.

Consolidated Balance Sheets As at As at March 31, December 31, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents 23,243 18,846 Accounts receivable 19,206 17,610 Inventories 2,770 2,953 Prepaid expenses 1,590 945 --------------------------- 46,809 40,354 --------------------------- Property, plant and equipment 375,694 376,316 Intangible assets 66,367 66,990 Other long-term assets 5,424 5,552 --------------------------- 494,294 489,212 --------------------------- Liabilities and unitholders' equity Current liabilities Short-term revolving credit facility 3,700 - Accounts payable and accrued liabilities 10,809 13,985 Income taxes payable 768 400 Distributions payable to unitholders 3,446 3,446 Current portion of obligation under capital lease - 20 --------------------------- 18,723 17,851 --------------------------- Future income tax liabilities 42,382 43,280 Fair value of derivative financial instruments 703 233 Long-term debt 121,765 119,191 Long-term lease accruals 2,972 2,773 --------------------------- 186,545 183,328 Unitholders' equity Capital contribution 422,174 422,174 Capital contribution - exchangeable Class B units 112,867 112,867 Deficit (220,588) (220,137) Accumulated other comprehensive loss (6,704) (9,020) --------------------------- 307,749 305,884 --------------------------- 494,294 489,212 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Earnings For the three-month periods (in thousands of dollars, ended March 31, except per unit amounts) (unaudited) 2009 2008 ------------------------------------------------------------------------- Revenues 32,250 34,272 --------------------------- Expenses Operating 12,895 11,471 Administrative 624 1,122 --------------------------- 13,519 12,593 --------------------------- Operating income before amortization 18,731 21,679 Amortization of property, plant and equipment 5,083 4,587 Amortization of intangible assets 1,858 2,069 --------------------------- Operating income 11,790 15,023 Financing costs, net 1,890 1,835 Foreign exchange gain (33) (556) --------------------------- Earnings before income taxes 9,933 13,744 Income taxes (recovery) 47 (1,487) --------------------------- Net earnings for the period 9,886 15,231 --------------------------- Basic and diluted net earnings per trust unit (in dollars) 0.17 0.26 Weighted average number of trust units outstanding 59,067,992 59,067,992 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Deficit For the three-month periods ended March 31, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Deficit - beginning of period (220,137) (170,982) Net earnings for the period 9,886 15,231 Distributions to unitholders (10,337) (12,306) --------------------------- Deficit - end of period (220,588) (168,057) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income For the three-month periods ended March 31, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Net earnings for the period 9,886 15,231 Other comprehensive income: Translation adjustments Unrealized foreign exchange gains on translation of financial statements of self-sustaining foreign operations 2,694 3,327 Reclassification of accumulated foreign exchange losses on translation of financial statements of self-sustaining foreign operations following a reduction in net investment 93 15 Future income taxes 191 229 Hedging of net investment in self-sustaining foreign operations Change in fair value of derivatives designated as hedges of net investment in self-sustaining foreign operations (603) (179) Hedging instruments realized and recognized in net earnings (64) (854) --------------------------- 2,311 2,538 --------------------------- Comprehensive income for the period 12,197 17,769 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Cash Flows For the three-month periods ended March 31, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Operating activities Net earnings for the period 9,886 15,231 Items not affecting cash: Amortization of property, plant and equipment 5,083 4,587 Amortization of intangible assets 1,858 2,069 Amortization of deferred financing costs 109 87 Long-term lease accruals 117 97 Future income taxes (904) (3,138) Realized currency translation adjustments 93 15 --------------------------- 16,242 18,948 Net change in non-cash working capital balances (4,847) (935) --------------------------- Cash flows related to operating activities 11,395 18,013 --------------------------- Investing activities Additions to property, plant and equipment (867) (168) Acquisition of other assets (7) (62) --------------------------- Cash flows related to investing activities (874) (230) --------------------------- Financing activities Net change in short-term revolving credit facility 3,700 (100) Repayment of capital lease obligation (20) (58) Distributions paid to unitholders (10,337) (13,290) Proceeds from sale of options on foreign exchange forward contracts - 146 --------------------------- Cash flows related to financing activities (6,657) (13,302) --------------------------- Translation adjustments on cash and cash equivalents 533 462 --------------------------- Net change in cash and cash equivalents during the period 4,397 4,943 Cash and cash equivalents - beginning of period 18,846 10,740 --------------------------- Cash and cash equivalents - end of period 23,243 15,683 --------------------------- Supplemental information Interest paid 2,548 2,365 Income taxes paid 795 119 ------------------------------------------------------------------------- -------------------------------------------------------------------------

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 earnings before interest, taxes, depreciation and amortization ("EBITDA"). EBITDA is not a measure of performance defined under Canadian GAAP; however, management uses this 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: For the three-month periods ended March 31, 2009 2008 ------------------------------------------------------------------------- Net earnings 9,886 15,231 Income taxes (recovery) 47 (1,487) Foreign exchange gain (33) (556) Financing costs, net 1,890 1,835 Amortization of intangible assets 1,858 2,069 Amortization of property, plant and equipment 5,083 4,587 --------------------------- EBITDA 18,731 21,679 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Information by operating segment For the three-month periods ended March 31, 2009 2008 ------------------------------------------------------------------------- PRODUCTION (in MWh) Hydroelectric power stations 117,132 143,045 Wood-residue thermal power stations 75,746 81,764 Natural gas thermal power station 61,190 60,373 --------------------------- 254,068 285,182 ------------------------------------------------------------------------- REVENUES Hydroelectric power stations 12,712 13,237 Wood-residue thermal power stations 11,144 11,560 Natural gas thermal power station 8,394 9,475 --------------------------- 32,250 34,272 ------------------------------------------------------------------------- EBITDA Hydroelectric power stations 10,966 11,435 Wood-residue thermal power stations 5,154 6,247 Natural gas thermal power station 4,201 5,604 Corporate and eliminations (1,590) (1,607) --------------------------- 18,731 21,679 ------------------------------------------------------------------------- ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT Hydroelectric power stations 752 13 Wood-residue thermal power stations 95 55 Natural gas thermal power station 20 100 --------------------------- 867 168 ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at March 31, December 31, 2009 2008 ------------------------------------------------------------------------- ASSETS Hydroelectric power stations 288,514 295,182 Wood-residue thermal power stations 151,231 149,868 Natural gas thermal power station 40,571 42,043 Corporate and eliminations 13,978 2,119 --------------------------- 494,294 489,212 ------------------------------------------------------------------------- -------------------------------------------------------------------------

SOURCE BORALEX POWER INCOME FUND

Source: PR Newswire

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