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Third Quarter Financial Results for Boralex Power Income Fund

Posted on: Wednesday, 4 November 2009, 06:00 CST

MONTREAL, Nov. 4 /PRNewswire-FirstCall/ - For its third quarter 2009, Boralex Power Income Fund (the "Fund") reported lower revenue from energy sales and earnings before interest, taxes, depreciation and amortization ("EBITDA") compared to the same quarter in 2008, primarily due to the fact that the Dolbeau power station was shut down. However, the decrease was largely offset by higher power generation by hydroelectric facilities in the United States and by the wood-residue power station in Senneterre.

The Fund reported $19.9 million in revenue from energy sales in the third quarter of 2009, compared to $23.5 million in the third quarter of 2008. EBITDA amounted to $9.7 million in the third quarter, versus $10.1 million in the corresponding period in 2008. The $3.6 million revenue shortfall stems in large part, as mentioned above, from the shutdown of electricity and steam production at Dolbeau throughout the quarter. These adverse items were partially offset by additional revenue of $1.4 million related to higher production levels at the hydroelectric power stations in the United States and at Senneterre. The Fund closed the third quarter of fiscal 2009 with a net loss of $0.7 million ($0.01 per trust unit), compared to net earnings of $2.8 million ($0.05 per trust unit) for the same period in 2008.

Revenue in the hydroelectric segment rose 9% to $10.6 million, versus $9.7 million for the same period in 2008. EBITDA grew 11% to $8.9 million in the third quarter of 2009. Revenue from this segment accounts for 53% of consolidated revenue for the quarter, whereas in the third quarter of 2008, revenue from this segment accounted for 41% of the Fund's consolidated revenue. Total production was up 24% over the historical average.

Wood residue thermal power stations reported revenue of $2.9 million in the third quarter of 2009, down $3.5 million from the same period in 2008. This segment reported a loss before interest, taxes, depreciation and amortization of $0.3 million compared to no loss or gain in the third quarter of 2008. These results stem mainly from the generally good performance as a result of increased production and selling prices at Senneterre, and the shutdown of power and steam production at Dolbeau for the entire quarter caused by wood-residue sourcing difficulties and the indefinite shutdown of the AbitibiBowater ("ABI") pulp and paper mill to which the Fund supplied steam.

The Fund has come to an agreement in principle with ABI to temporarily operate the Dolbeau power plant, from November 15, 2009 to April 15, 2010.

The Kingsey Falls natural gas cogeneration plant reported revenues of $6.3 million and EBITDA of $2.8 million, down $1.1 million and $1.0 million respectively versus the same period in 2008. These decreases are due to a 30% drop in the average price of steam, as a result of its indexation to oil prices.

Finally, taking into account the net change in non-cash working capital balances, cash flows related to operating activities amounted to $7.6 million in the third quarter of 2009, compared to $8.9 million for the same quarter in 2008. Accordingly, the Fund had a very satisfactory cash balance of $16.8 million as at September 30, 2009.

About Boralex Power Income Fund

Boralex Power Income Fund (the "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 on the Toronto Stock Exchange ("TSX") 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 on market and industry, increases in raw material costs, changes in the relative values of certain currencies, fluctuations in selling prices, and other factors listed in the Company's filings with different securities commissions.

The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as Generally Accepted Accounting Principles of Canada (GAAP). To assess the operating performance of its assets and reporting segments, the Fund uses earnings before interest, taxes, depreciation and amortization (EBITDA) and cash flows from operations as performance measurements. These measures are not defined under GAAP and do not have a standardized definition prescribed by GAAP. Therefore, they may not be comparable to similar measures presented by other companies. EBITDA is defined in the summarized financial statements included with this press release. Cash flows from operations corresponds to cash flows from operating activities before changes in non-cash working capital items as disclosed in the consolidated statements of cash flows attached in this press release.

Notice to Unitholders

These interim consolidated financial statements as at September 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 information was extracted from the interim consolidated financial statements of Boralex Power Income Fund (the "Fund"). The complete interim financial statements were prepared in accordance with Canadian generally accepted accounting principles. They are available on the Fund's website (www.boralex.com/trust) and filed with SEDAR.

Consolidated Balance Sheets As at As at September 30, December 31, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents 16,773 18,846 Accounts receivable 18,150 17,610 Income taxes receivable 356 - Inventories 2,720 2,953 Prepaid expenses 628 945 --------------------------- 38,627 40,354 --------------------------- Property, plant and equipment 347,567 376,316 Intangible assets 56,715 66,990 Other long-term assets 6,534 5,552 --------------------------- 449,443 489,212 --------------------------- Liabilities and unitholders' equity Current liabilities Short-term revolving credit facility 500 - Accounts payable and accrued liabilities 16,142 13,985 Income taxes payable - 400 Distributions payable to unitholders 3,446 3,446 Current portion of obligation under capital lease - 20 --------------------------- 20,088 17,851 --------------------------- Future income tax liabilities 41,529 43,280 Fair value of derivative financial instruments - 233 Long-term debt 108,924 119,191 Long-term lease accruals 2,730 2,773 --------------------------- 173,271 183,328 --------------------------- Unitholders' equity Capital contribution 422,174 422,174 Capital contribution - exchangeable Class B units 112,867 112,867 Deficit (240,951) (220,137) Accumulated other comprehensive loss (17,918) (9,020) --------------------------- 276,172 305,884 --------------------------- 449,443 489,212 ------------------------------------------------------------------------- Consolidated Statements of Earnings (in thousands of For the dollars, except For the quarters nine-month periods per unit amounts) ended September 30, ended September 30, (unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues 19,879 23,541 77,132 83,368 ----------------------------------------------------- Expenses Operating 9,339 12,666 35,359 35,218 Administrative 830 733 2,293 2,893 ----------------------------------------------------- 10,169 13,399 37,652 38,111 ----------------------------------------------------- Operating income before amortization 9,710 10,142 39,480 45,257 Amortization of property, plant and equipment 4,926 4,705 15,013 13,961 Amortization of intangible assets 1,443 1,579 5,210 5,550 ----------------------------------------------------- Operating income 3,341 3,858 19,257 25,746 Financing costs, net 1,907 1,840 5,783 5,416 Foreign exchange loss (gain) 1,945 (512) 1,809 (2,127) ----------------------------------------------------- Earnings (loss) before income taxes (511) 2,530 11,665 22,457 Income taxes (recovery) 198 (278) 1,468 (838) ----------------------------------------------------- Net earnings (loss) for the period (709) 2,808 10,197 23,295 ----------------------------------------------------- Basic and diluted net earnings (loss) per trust unit (in dollars) (0.01) 0.05 0.17 0.39 ----------------------------------------------------- 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 nine-month periods ended September 30, (in thousands of dollars) (unaudited) 2009 2008 ------------------------------------------------------------------------- Deficit - beginning of period (220,137) (170,982) Net earnings for the period 10,197 23,295 Distributions to unitholders (31,011) (32,979) --------------------------- Deficit - end of period (240,951) (180,666) ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income (Loss) For the (in thousands For the quarters nine-month periods of dollars) ended September 30, ended September 30, (unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net earnings (loss) for the period (709) 2,808 10,197 23,295 Other comprehensive income (loss): Translation adjustments Unrealized foreign exchange gains (losses) on translation of financial statements of self-sustaining foreign operations (6,753) 3,419 (11,428) 5,944 Reclassification of accumulated foreign exchange losses on translation of financial statements of self-sustaining foreign operations following a reduction in net investment 2,096 67 2,194 81 Future income taxes (521) 234 (845) 409 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 906 (151) 1,564 (234) Hedging instruments realized and recognized in net earnings (177) (568) (388) (2,474) ----------------------------------------------------- (4,449) 3,001 (8,903) 3,726 ----------------------------------------------------- Comprehensive income (loss) for the period (5,158) 5,809 1,294 27,021 ------------------------------------------------------------------------- Consolidated Statements of Cash Flows For the (in thousands of For the quarters nine-month periods dollars) ended September 30, ended September 30, (unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Operating activities Net earnings (loss) for the period (709) 2,808 10,197 23,295 Items not affecting cash: Amortization of property, plant and equipment 4,926 4,705 15,013 13,961 Amortization of intangible assets 1,443 1,579 5,210 5,550 Amortization of deferred financing costs 89 79 297 248 Long-term lease accruals 103 100 329 296 Future income taxes (211) 302 (1,481) (2,509) Realized currency translation adjustments 2,096 67 2,194 81 Other 49 (1) 48 114 ----------------------------------------------------- 7,786 9,639 31,807 41,036 Net change in non-cash working capital balances (233) (738) 1,304 2,936 ----------------------------------------------------- Cash flows related to operating activities 7,553 8,901 33,111 43,972 ----------------------------------------------------- Investing activities Additions to property, plant and equipment (427) (983) (1,479) (2,205) Acquisition of other assets (248) (15) (274) (86) Other - 23 - (2) ----------------------------------------------------- Cash flows related to investing activities (675) (975) (1,753) (2,293) ----------------------------------------------------- Financing activities Net change in short-term revolving credit facility (1,900) 1,200 500 500 Repayment of capital lease obligation - (58) (20) (174) Distributions paid to unitholders (10,337) (10,337) (31,011) (33,964) Proceeds from sale of options on foreign exchange forward contracts - 112 - 449 ----------------------------------------------------- Cash flows related to financing activities (12,237) (9,083) (30,531) (33,189) ----------------------------------------------------- Translation adjustments on cash and cash equivalents (1,784) 708 (2,900) 1,108 ----------------------------------------------------- Net change in cash and cash equivalents during the period (7,143) (449) (2,073) 9,598 Cash and cash equivalents - beginning of period 23,916 20,787 18,846 10,740 ----------------------------------------------------- Cash and cash equivalents - end of period 16,773 20,338 16,773 20,338 ----------------------------------------------------- Supplemental information Interest paid 2,432 2,347 6,324 5,863 Income taxes paid 2,139 144 3,791 1,216 -------------------------------------------------------------------------

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 or net loss:

For the For the quarters nine-month periods ended September 30, ended September 30, 2009 2008 2009 2008 ------------------------------------------------------------------------- Net earnings (loss) (709) 2,808 10,197 23,295 Income taxes (recovery) 198 (278) 1,468 (838) Foreign exchange loss (gain) 1,945 (512) 1,809 (2,127) Financing costs, net 1,907 1,840 5,783 5,416 Amortization of intangible assets 1,443 1,579 5,210 5,550 Amortization of property, plant and equipment 4,926 4,705 15,013 13,961 ----------------------------------------------------- EBITDA 9,710 10,142 39,480 45,257 ------------------------------------------------------------------------- Information by operating segment For the For the quarters nine-month periods ended September 30, ended September 30, 2009 2008 2009 2008 ------------------------------------------------------------------------- PRODUCTION (in MWh) Hydroelectric power stations 122,079 118,071 406,397 401,654 Wood-residue thermal power stations 53,700 46,636 175,928 209,834 Natural gas thermal power station 47,570 45,489 154,561 151,333 ----------------------------------------------------- 223,349 210,196 736,886 762,821 ------------------------------------------------------------------------- REVENUES Hydroelectric power stations 10,619 9,698 38,233 34,314 Wood-residue thermal power stations 2,928 6,402 18,545 25,454 Natural gas thermal power station 6,332 7,441 20,354 23,600 ----------------------------------------------------- 19,879 23,541 77,132 83,368 ------------------------------------------------------------------------- EBITDA Hydroelectric power stations 8,942 7,962 32,915 29,170 Wood-residue thermal power stations (319) (8) 2,540 8,425 Natural gas thermal power station 2,777 3,750 8,933 12,532 Corporate and eliminations (1,690) (1,562) (4,908) (4,870) ----------------------------------------------------- 9,710 10,142 39,480 45,257 ------------------------------------------------------------------------- ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT Hydroelectric power stations 400 52 1,308 321 Wood-residue thermal power stations - 13 106 844 Natural gas thermal power station 27 918 65 1,040 ----------------------------------------------------- 427 983 1,479 2,205 ------------------------------------------------------------------------- As at As at September 30, December 31, 2009 2008 ------------------------------------------------------------------------- ASSETS Hydroelectric power stations 271,532 295,182 Wood-residue thermal power stations 144,853 149,868 Natural gas thermal power station 36,518 42,043 Corporate and eliminations (3,460) 2,119 --------------------------- 449,443 489,212 -------------------------------------------------------------------------

SOURCE BORALEX POWER INCOME FUND

Source: PR Newswire

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