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Boralex Power Income Fund: Financial Results for Second Quarter 2009

Posted on: Monday, 3 August 2009, 06:00 CDT

MONTREAL, Aug. 3 /PRNewswire-FirstCall/ - In the second quarter of 2009, Boralex Power Income Fund (the "Fund") reported lower revenue from energy sales and earnings before interest, taxes, depreciation and amortization (EBITDA), due primarily to a decrease in power generation by its wood-residue thermal power stations. Despite this performance, the net cash balance grew to $21.5 million.

For the second quarter ended June 30, 2009, consolidated revenue of $25.0 million was down from $25.6 million for the same quarter a year earlier and, year over year, EBITDA declined $2.4 million to reach $11.0 million. The Dolbeau power station was shut down completely during the quarter and steam production dropped significantly due to major shortages in the raw material supplied by AbitibiBowater ("Abitibi"). These events entirely annulled the impact of higher production by the hydroelectric power plants in the United States. The Fund reported net earnings of $1.0 million ($0.02 per trust unit) for the second quarter of 2009 compared to net earnings of $5.3 million ($0.09 per trust unit) for the corresponding quarter of 2008.

More specifically, the hydroelectric segment recorded revenue of $14.9 million and EBITDA of $13.0 million for the quarter ended June 30, 2009, an increase of $3.5 million and $3.2 million over the same quarter in 2008. Due to favourable hydrology, the U.S. power stations reported a 34% increase in production and exceeded their historical average by 17%.

The wood-residue thermal power segment posted revenue of $4.5 million in the second quarter of 2009, down $3.0 million year over year. The loss before interest, taxes, depreciation and amortization on earnings amounted to $2.3 million compared to EBITDA of $2.2 million for the same quarter in 2008. The decreases are related to the shut down of power generation at the Dolbeau power station due to the lack of wood-residue supplied mainly by Abitibi, the slowdown in this station's steam production in the second quarter and its complete shut down since June 20, 2009 for an indefinite period.

Representatives of the Fund and of Abitibi met during the last weeks to relaunch the negotiations to restart the operations at the Dolbeau power station. Although a number of scenarios have been considered, no agreement has yet been reached. The parties will pursue the discussions in the coming weeks. However, to date, and given Abitibi's cancellation of contracts as announced on July 8, 2009, the Fund maintains its decision to suspend operations at its cogeneration plant until an acceptable solution for the Fund is reached.

The Kingsey Falls natural gas cogeneration plant recorded revenue of $5.6 million and EBITDA of $2.0 million in the second quarter of 2009, down $1.1 million and $1.2 million respectively. Power generation was constant as compared to the second quarter 2008 and steam production was up 8% year over year. Higher steam volume added $0.2 million to revenue and EBITDA in this segment however, the overall decrease in revenue and EBITDA is largely due to lower steam prices, which are partially indexed to the price of oil.

Cash flows related to operating activities amounted to $14.2 million in the second quarter of 2009, compared to $17.1 million for the same quarter in 2008.

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 in the United States producing energy from different sources including wood-residue or natural gas 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 consolidated financial statements as at June 30, 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 June 30, December 31, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents 23,916 18,846 Accounts receivable 19,222 17,610 Inventories 2,587 2,953 Prepaid expenses 824 945 --------------------------- 46,549 40,354 --------------------------- Property, plant and equipment 361,070 376,316 Intangible assets 61,130 66,990 Other long-term assets 5,699 5,552 --------------------------- 474,448 489,212 --------------------------- Liabilities and unitholders' equity Current liabilities Short-term revolving credit facility 2,400 - Accounts payable and accrued liabilities 15,736 13,985 Income taxes payable 1,364 400 Distributions payable to unitholders 3,446 3,446 Current portion of obligation under capital lease - 20 --------------------------- 22,946 17,851 --------------------------- Future income tax liabilities 41,887 43,280 Fair value of derivative financial instruments - 233 Long-term debt 115,097 119,191 Long-term lease accruals 2,851 2,773 --------------------------- 182,781 183,328 --------------------------- Unitholders' equity Capital contribution 422,174 422,174 Capital contribution - exchangeable Class B units 112,867 112,867 Deficit (229,905) (220,137) Accumulated other comprehensive loss (13,469) (9,020) --------------------------- 291,667 305,884 --------------------------- 474,448 489,212 ------------------------------------------------------------------------- Consolidated Statements of Earnings For the (in thousands of dollars, For the quarters six-month periods except per unit amounts) ended June 30, ended June 30, (unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues 25,003 25,554 57,253 59,827 ------------------------------------------------ Expenses Operating 13,125 11,080 26,020 22,552 Administrative 839 1,037 1,463 2,160 ------------------------------------------------ 13,964 12,117 27,483 24,712 ------------------------------------------------ Operating income before amortization 11,039 13,437 29,770 35,115 Amortization of property, plant and equipment 5,004 4,669 10,087 9,256 Amortization of intangible assets 1,909 1,902 3,767 3,971 ------------------------------------------------ Operating income 4,126 6,866 15,916 21,888 Financing costs, net 1,986 1,742 3,876 3,576 Foreign exchange gain (103) (1,059) (136) (1,615) ------------------------------------------------ Earnings before income taxes 2,243 6,183 12,176 19,927 Income taxes (recovery) 1,223 927 1,270 (560) ------------------------------------------------ Net earnings for the period 1,020 5,256 10,906 20,487 ------------------------------------------------ Basic and diluted net earnings per trust unit (in dollars) 0.02 0.09 0.18 0.35 ------------------------------------------------ Weighted average number of trust units outstanding 59,067,992 59,067,992 59,067,992 59,067,992 ------------------------------------------------------------------------- Consolidated Statements of Deficit For the six-month periods ended June 30, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Deficit - beginning of period (220,137) (170,982) Net earnings for the period 10,906 20,487 Distributions to unitholders (20,674) (22,642) --------------------------- Deficit - end of period (229,905) (173,137) ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income (Loss) For the For the quarters six-month periods (in thousands of dollars) ended June 30, ended June 30, (unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net earnings for the period 1,020 5,256 10,906 20,487 Other comprehensive income (loss): Translation adjustments Unrealized foreign exchange gains (losses) on translation of financial statements of self- sustaining foreign operations (7,369) (802) (4,675) 2,525 Reclassification of accumulated foreign exchange losses on translation of financial statements of self- sustaining foreign operations following a reduction in net investment 5 (1) 98 14 Future income taxes (515) (54) (324) 175 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 1,261 96 658 (83) Hedging instruments realized and recognized in net earnings (147) (1,052) (211) (1,906) ------------------------------------------------ (6,765) (1,813) (4,454) 725 ------------------------------------------------ Comprehensive income (loss) for the period (5,745) 3,443 6,452 21,212 ------------------------------------------------------------------------- Consolidated Statements of Cash Flows For the For the quarters six-month periods (in thousands of dollars) ended June 30, ended June 30, (unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Operating activities Net earnings for the period 1,020 5,256 10,906 20,487 Items not affecting cash: Amortization of property, plant and equipment 5,004 4,669 10,087 9,256 Amortization of intangible assets 1,909 1,902 3,767 3,971 Amortization of deferred financing costs 99 82 208 169 Long-term lease accruals 109 99 226 196 Future income taxes (366) 327 (1,270) (2,811) Realized currency translation adjustments 4 (1) 97 14 Other - 115 - 115 ------------------------------------------------ 7,779 12,449 24,021 31,397 Net change in non-cash working capital balances 6,384 4,609 1,537 3,674 ------------------------------------------------ Cash flows related to operating activities 14,163 17,058 25,558 35,071 ------------------------------------------------ Investing activities Additions to property, plant and equipment (185) (1,054) (1,052) (1,222) Acquisition of other assets (19) (9) (26) (71) Other - (25) - (25) ------------------------------------------------ Cash flows related to investing activities (204) (1,088) (1,078) (1,318) ------------------------------------------------ Financing activities Net change in short-term revolving credit facility (1,300) (600) 2,400 (700) Repayment of capital lease obligation - (58) (20) (116) Distributions paid to unitholders (10,337) (10,337) (20,674) (23,627) Proceeds from sale of options on foreign exchange forward contracts - 191 - 337 ------------------------------------------------ Cash flows related to financing activities (11,637) (10,804) (18,294) (24,106) ------------------------------------------------ Translation adjustments on cash and cash equivalents (1,649) (62) (1,116) 400 ------------------------------------------------ Net change in cash and cash equivalents during the period 673 5,104 5,070 10,047 Cash and cash equivalents - beginning of period 23,243 15,683 18,846 10,740 ------------------------------------------------ Cash and cash equivalents - end of period 23,916 20,787 23,916 20,787 ------------------------------------------------ Supplemental information Interest paid 1,344 1,151 3,892 3,516 Income taxes paid 857 953 1,652 1,072 -------------------------------------------------------------------------

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 For the quarters six-month periods ended June 30, ended June 30, 2009 2008 2009 2008 ------------------------------------------------------------------------- Net earnings 1,020 5,256 10,906 20,487 Income taxes (recovery) 1,223 927 1,270 (560) Foreign exchange gain (103) (1,059) (136) (1,615) Financing costs, net 1,986 1,742 3,876 3,576 Amortization of intangible assets 1,909 1,902 3,767 3,971 Amortization of property, plant and equipment 5,004 4,669 10,087 9,256 ------------------------------------------------ EBITDA 11,039 13,437 29,770 35,115 ------------------------------------------------------------------------- Information by operating segment For the For the quarters six-month periods ended June 30, ended June 30, 2009 2008 2009 2008 ------------------------------------------------------------------------- PRODUCTION (in MWh) Hydroelectric power stations 167,186 140,538 284,318 283,583 Wood-residue thermal power stations 46,482 81,434 122,228 163,198 Natural gas thermal power station 45,801 45,471 106,991 105,844 ------------------------------------------------ 259,469 267,443 513,537 552,625 ------------------------------------------------------------------------- REVENUES Hydroelectric power stations 14,902 11,378 27,614 24,616 Wood-residue thermal power stations 4,473 7,492 15,617 19,052 Natural gas thermal power station 5,628 6,684 14,022 16,159 ------------------------------------------------ 25,003 25,554 57,253 59,827 ------------------------------------------------------------------------- EBITDA Hydroelectric power stations 13,007 9,773 23,973 21,208 Wood-residue thermal power stations (2,295) 2,186 2,859 8,433 Natural gas thermal power station 1,955 3,179 6,156 8,782 Corporate and eliminations (1,628) (1,701) (3,218) (3,308) ------------------------------------------------ 11,039 13,437 29,770 35,115 ------------------------------------------------------------------------- ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT Hydroelectric power stations 156 256 908 269 Wood-residue thermal power stations 11 776 106 831 Natural gas thermal power station 18 22 38 122 ------------------------------------------------ 185 1,054 1,052 1,222 ------------------------------------------------------------------------- As at As at June 30, December 31, 2009 2008 ------------------------------------------------------------------------- ASSETS Hydroelectric power stations 281,084 295,182 Wood-residue thermal power stations 147,568 149,868 Natural gas thermal power station 38,169 42,043 Corporate and eliminations 7,627 2,119 --------------------------- 474,448 489,212 -------------------------------------------------------------------------

SOURCE BORALEX POWER INCOME FUND

Source: PR Newswire

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