Northland Power Inc. (“
Northland” or the
“
Company”) (TSX:
NPI) today
reported financial results for the three and six months ended June
30, 2022. All dollar amounts set out herein are in thousands of
Canadian dollars, unless otherwise stated.
“Our financial and operating performance in the
second quarter has been stronger than expected and as a result, we
are revising our 2022 full year financial guidance upwards this
quarter due largely to higher market prices in Europe and solid
operational performance,” said Mike Crawley, Northland’s President
and Chief Executive Officer. “Energy security is now a top priority
in Europe. We are pleased to be part of the solution as our 1.2GW
Baltic Power project development advances and we added another
225MW project, Godewind, to our now over 1.5GW Nordsee Offshore
Wind Cluster project. We continue to explore other ways to create
additional renewable power capacity in Europe. With our Asian
development activities, we achieved an important milestone at our
Hai Long Offshore Wind project in Taiwan subsequent to the
quarter-end. The project signed a 20-year corporate offtake
agreement for production from the Hai Long 2B and 3A projects and
commenced bank launch to secure long-term non-recourse funding as
the project progresses towards financial close targeted for 2022.
In North America, our New York Onshore Wind projects are
progressing as planned with the first turbines being erected at the
Bluestone project in July and Ball Hill getting ready to receive
first turbines in September.”
Second Quarter Highlights
Financial Results
-
Sales increased to $557 million from $408 million
in 2021 and Gross profit increased to $485 million
from $368 million in 2021.
- Adjusted
EBITDA (a non-IFRS measure) increased to $335 million from
$203 million in 2021.
- Adjusted
Free Cash Flow per share (a non-IFRS measure) increased to
$0.70 from $0.10 in 2021.
- Free
Cash Flow per share (a non-IFRS measure) increased to
$0.63 from $0.03 in 2021.
- Net
income increased to $268 million from net loss of $6
million in 2021.
- 2022
Financial Guidance Update management is providing an
update to its 2022 financial guidance, increasing its expectations
for Adjusted EBITDA, Adjusted Free Cash Flow per share and Free
Cash Flow per share. Refer to the Outlook section for additional
information.
Sales, gross profit and net income, as reported
under IFRS, include consolidated results of entities not wholly
owned by Northland, whereas non-IFRS financial measures include
Northland’s proportionate ownership interest.
Summary of Consolidated Results |
|
|
|
|
|
|
(in thousands of
dollars, except per share amounts) |
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
FINANCIALS |
|
|
|
|
|
|
|
|
Sales |
$ |
556,792 |
|
$ |
408,321 |
|
|
$ |
1,251,846 |
|
$ |
1,021,087 |
|
Gross profit |
|
484,951 |
|
|
367,688 |
|
|
|
1,120,715 |
|
|
916,435 |
|
Operating income |
|
231,584 |
|
|
117,846 |
|
|
|
605,291 |
|
|
424,152 |
|
Net income (loss) |
|
267,866 |
|
|
(6,370 |
) |
|
|
555,446 |
|
|
145,019 |
|
Adjusted EBITDA (a non-IFRS
measure) |
|
335,192 |
|
|
202,883 |
|
|
|
755,341 |
|
|
562,687 |
|
|
|
|
|
|
|
|
|
|
Cash provided by operating
activities |
|
312,337 |
|
|
361,076 |
|
|
|
758,956 |
|
|
769,530 |
|
Adjusted Free Cash Flow (a
non-IFRS measure) |
|
162,010 |
|
|
22,401 |
|
|
|
353,995 |
|
|
169,690 |
|
Free Cash Flow (a non-IFRS
measure) |
|
145,543 |
|
|
5,545 |
|
|
|
319,918 |
|
|
139,993 |
|
Cash dividends paid |
|
48,442 |
|
|
43,386 |
|
|
|
95,835 |
|
|
83,339 |
|
Total dividends declared
(1) |
$ |
69,957 |
|
$ |
67,642 |
|
|
$ |
138,454 |
|
$ |
128,382 |
|
|
|
|
|
|
|
|
|
Per
Share |
|
|
|
|
|
|
|
|
Weighted average number of
shares - basic (000s) |
|
232,321 |
|
|
220,182 |
|
|
|
230,019 |
|
|
211,284 |
|
Net income (loss) - basic |
$ |
1.01 |
|
$ |
(0.06 |
) |
|
$ |
2.01 |
|
$ |
0.40 |
|
Adjusted Free Cash Flow -
basic (a non-IFRS measure) |
$ |
0.70 |
|
$ |
0.10 |
|
|
$ |
1.54 |
|
$ |
0.80 |
|
Free Cash Flow - basic (a
non-IFRS measure) |
$ |
0.63 |
|
$ |
0.03 |
|
|
$ |
1.39 |
|
$ |
0.66 |
|
Total dividends declared |
$ |
0.30 |
|
$ |
0.30 |
|
|
$ |
0.60 |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
ENERGY
VOLUMES |
|
|
|
|
|
|
|
|
Electricity production in gigawatt hours
(GWh) |
|
2,082 |
|
|
1,533 |
|
|
|
5,003 |
|
|
4,114 |
(1) Represents
total dividends paid to common shareholders including dividends in
cash or in shares under the DRIP. |
Significant Events and Updates
Balance Sheet:
- Kirkland
Lake Refinancing – On June 2, 2022, Northland restructured
and upsized its Kirkland Lake credit facility resulting in
Northland receiving management fee income of $34 million
($0.14 per share), net of closing costs. The net proceeds from the
restructuring are consistent with expectations and have been
included in Northland’s 2022 financial guidance.
- Sale of
Efficient Natural Gas Facilities – On April 7, 2022,
Northland completed the sale of its Iroquois Falls and Kingston
efficient natural gas facilities in Ontario. The two facilities had
a combined operating capacity of 230MW and the sale resulted in a
24% reduction in Northland’s gas-fired capacity. Both facilities
had operated under long-term power purchase agreements with the
provincial system operator, which expired at the end of 2021 and
2017, respectively. The net proceeds from the sale have been
included in Northland’s Adjusted Free Cash Flow and Free Cash Flow
in the second quarter.
-
At-The-Market Equity Program – On March 1, 2022,
Northland established an at-the-market equity (“ATM
program”) that allows Northland to issue up to $500
million of common shares from treasury, at Northland’s discretion.
The program provides Northland with an additional source of
financing flexibility to fund its growth initiatives. As at
August 11, 2022, Northland has issued a total of 7,918,000
common shares for gross proceeds of $315 million under the ATM
program.
Renewables Growth:
- New York
Onshore Wind Projects Update – Construction activities at
the Ball Hill and Bluestone onshore wind projects in New York State
are progressing on schedule. The projects are expected to complete
construction activities and commence commercial operations by the
end of 2022. The total capital costs for the two projects are
expected to be US$600 million. The projects were previously awarded
20-year indexed REC agreements with the New York State Energy
Research and Development Authority.
- Hai Long
Offshore Wind Project Update – Progress continues at Hai
Long to advance the project towards financial close. Subsequent to
quarter end, Northland announced the signing of a Corporate Power
Purchase Agreement (CPPA) that covers 100 percent
of the power generated from Hai Long 2B and 3, which have a
combined capacity of 744MW. The agreement is with an investment
grade counterparty (S&P: AA-) and is for a 20-year period at a
fixed-price, commencing once Hai Long reaches full commercial
operations in late 2026. The contracted price under the CPPA is
more favourable than the fixed auction rate originally awarded in
2018 and is a key accomplishment as Northland progresses Hai Long
towards financial close. In addition, the PPAs with Taipower are
not affected by the signing of the CPPA and provide a backstop to
the CPPA. With the CPPA signed, the Company is focused on securing
non-recourse project level debt financing. While securing financing
terms are still subject to several macro factors, there is
currently strong lender interest from various global and local
financial institutions in lending to the project for the long
term.
- Nordsee
Offshore Wind Cluster – In January 2022, Northland and its
German partner, RWE Renewables GmbH (RWE),
announced the formation of a 1,333MW Nordsee Offshore Wind Cluster
partnership (the “Cluster”) encompassing Nordsee
Two (433MW), Nordsee Three (420MW) and Nordsee Delta (480MW). To
further enhance the size and scale of the cluster and to realize
additional synergies, Northland and RWE agreed to include a fourth
project, resulting in the total size of the Cluster growing to over
1.5GW. The fourth project, Godewind, which is now included in the
Cluster, will have production capacity of 225MW and is within
proximity to the remaining projects. The transaction is pending
formal closing. The projects are expected to be developed and
managed on a joint basis by both parties and are expected to
achieve commercial operations between 2026 and 2028. Northland
holds a 49% interest in the Cluster with RWE holding 51%.
- Colombian Solar
Projects – Development progress at the 130MW Suba solar
projects in Colombia continues, with the project team working to
secure agreements and contracts needed as the projects move towards
the financial close. The solar projects will benefit from 15-year
offtake agreements with multiple energy distribution and commercial
entities in Colombia. Northland has a 50% interest in the projects
alongside its partner, EDF Renewables, with commercial operations
expected in second half of 2023.
Other:
- Executive Changes
– Northland announces a change in its executive team with the
departure of Morten Melin, Executive Vice President, Construction
effective August 12, 2022. Management thanks Mr. Melin for all of
his contributions and wishes him all the best for the future.
Second Quarter Results Summary
Offshore wind facilities
Electricity production increased 15% or 103GWh
compared to the same quarter of 2021 primarily due to higher wind
resource and fewer unpaid curtailments related to negative prices
in Germany, partially offset by higher uncompensated grid outages
at the German facilities.
Sales of $246 million increased 20% or $41
million compared to the same quarter of 2021 primarily due to
higher market prices at our offshore wind facilities, most notably
at our Gemini facility and higher production across all facilities.
The continued strength in energy prices across Europe resulted in
the APX exceeding the SDE for Gemini, allowing for the realization
of $21 million of higher revenues in the quarter. These higher
revenues were partially offset by foreign exchange rate
fluctuations, which reduced sales by $22 million compared to the
same quarter of 2021. Adjusted Free Cash Flow and Free Cash Flow
are largely hedged and were therefore unaffected by foreign
exchange movements. The final revenues realized for 2022 will
depend on the average APX market price over the course of the year,
which is currently estimated at €266/MWh as at June 30, 2022,
excluding P&I costs.
Adjusted EBITDA of $141 million increased 24% or
$28 million compared to the same quarter of 2021 primarily due to
higher wind resource across all three facilities, higher APX at
Gemini and fewer unpaid curtailments related to negative prices in
Germany, partially offset by higher uncompensated outages at the
German facilities and foreign exchange rate fluctuations.
An important indicator for the offshore wind
facilities is the historical average of the power production of
each offshore wind facility, where available. The following table
summarizes actual electricity production and the historical
average, high and low for the applicable operating periods of each
offshore facility:
Three months ended June 30, |
2022 (1) |
|
2021 (1) |
|
HistoricalAverage (2) |
|
Historical High
(2) |
|
Historical Low
(2) |
Electricity production (GWh) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gemini |
444 |
|
385 |
|
440 |
|
493 |
|
385 |
Nordsee One |
190 |
|
150 |
|
186 |
|
220 |
|
150 |
Deutsche Bucht |
170 |
|
165 |
|
159 |
|
170 |
|
141 |
Total |
804 |
|
700 |
|
|
|
|
|
|
(1) Includes GWh
produced and attributed to paid curtailments. |
(2) Represents the
average historical power production for the period since the
commencement of commercial operation of the respective facility
(2017 for Gemini and Nordsee One and 2020 for Deutsche Bucht) and
excludes unpaid curtailments. |
Onshore renewable facilities
Electricity production was 96% or 285GWh higher
than the same quarter of 2021 due to the contribution from the
Spanish portfolio acquired in August 2021 and higher production
from the Canadian onshore wind facilities partially offset by lower
solar resource.
Sales of $131 million were 125% or $73 million
higher than the same quarter of 2021 primarily due to the
contribution from the Spanish portfolio and taking into account the
150% increase in 2022 posted pool prices in the current regulatory
period in Spain. These regulatory amendments, effective
retrospectively from January 1, 2022, are pending governmental
approval and are expected to result in higher merchant revenue
exposure for 2022 as a result of an increase in the posted pool
price from €49/MWh to €122/MWh, thus allowing generation facilities
to realize higher sales in the current year.
Adjusted EBITDA of $107 million was higher than
the same quarter of 2021. Excluding the contribution from the
Spanish portfolio, production, sales and Adjusted EBITDA in the
second quarter would have been 11%, 4% and 5% higher, respectively,
compared to the same quarter of 2021, primarily due to a higher
wind resource at the Canadian wind facilities, partially offset by
lower solar resource.
Efficient natural gas facilities
Electricity production increased 30% or 161GWh
compared to the same quarter of 2021 due to the effect of a planned
maintenance outage last year at North Battleford and partially
offset by the effect of Kirkland Lake operating under an enhanced
dispatch contract (EDC) compared to a baseload PPA
for the same periods last year.
Sales and Adjusted EBITDA of $103 million and
$88 million, respectively, increased 24% or $20 million and 74% or
$38 million compared to the same quarter of 2021 primarily due to
higher production at North Battleford and Thorold and also from
Kirkland Lake’s management fee. The increases were partially offset
by the sale of Iroquois Falls.
Utilities
Sales and Adjusted EBITDA of $70 million and $29
million, respectively, increased 33% or $18 million and 38% or $8
million compared to the same quarter of 2021 largely due to rate
escalations, driven by a producer price index increases, positively
affecting EBSA’s 2022 financial performance.
In December 2021, Northland restructured and
upsized EBSA’s long-term, non-recourse financing (the “EBSA
Facility”), resulting in $84 million of incremental cash
proceeds to Northland, net of closing costs. The upsizing of the
EBSA Facility was completed on the basis of growth in EBSA’s
projected EBITDA growth for 2022, based on increases in the rate
base. Net upsizing proceeds, in excess of EBSA’s expansionary
capital expenditure needs, of $17 million are included in Adjusted
Free Cash Flow and Free Cash Flow for the first six months of
2022.
Consolidated statement of income (loss)
General and administrative
(G&A) costs of $20 million in the second
quarter increased 34% or $5 million compared to the same quarter of
2021 primarily due to higher personnel and other costs supporting
Northland’s global growth, in line with management’s
expectations.
Development costs of $15 million are in line
with the same quarter of 2021.
Net finance costs of $77 million in the second
quarter increased 3% or $2 million compared to the same quarter of
2021 primarily due to an increase in debt associated with the
acquisition of the Spanish portfolio, partially offset by the
scheduled repayments on facility-level loans.
Fair value gain on derivative contracts was $235
million in the second quarter primarily due to net movement in the
fair value of derivatives related to commodity, interest rates and
foreign exchange contracts.
Foreign exchange loss of $35 million in the
second quarter was primarily due to unrealized losses from
fluctuations in the closing foreign exchange rates.
Net income of $268 million in the second quarter
increased by $274 million compared to the same quarter of 2021
primarily due to the factors described above, partially offset by
$91 million higher tax expense.
Adjusted EBITDA
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
$ |
267,866 |
|
|
$ |
(6,370 |
) |
|
$ |
555,446 |
|
|
$ |
145,019 |
|
Adjustments: |
|
|
|
|
|
|
|
Finance costs, net |
|
77,483 |
|
|
|
75,530 |
|
|
|
159,240 |
|
|
|
162,620 |
|
Gemini interest income |
|
3,749 |
|
|
|
4,025 |
|
|
|
7,456 |
|
|
|
8,006 |
|
Share of joint venture project development costs |
|
2,639 |
|
|
|
(3,102 |
) |
|
|
5,434 |
|
|
|
(3,857 |
) |
Acquisition costs |
|
137 |
|
|
|
714 |
|
|
|
618 |
|
|
|
2,333 |
|
Provision for (recovery of) income taxes |
|
85,708 |
|
|
|
(5,780 |
) |
|
|
186,262 |
|
|
|
46,485 |
|
Depreciation of property, plant and equipment |
|
144,614 |
|
|
|
145,137 |
|
|
|
292,029 |
|
|
|
290,437 |
|
Amortization of contracts and intangible assets |
|
15,545 |
|
|
|
9,703 |
|
|
|
25,603 |
|
|
|
19,643 |
|
Fair value (gain) loss on derivative contracts |
|
(239,730 |
) |
|
|
13,077 |
|
|
|
(373,175 |
) |
|
|
(41,906 |
) |
Foreign exchange (gain) loss |
|
34,575 |
|
|
|
16,365 |
|
|
|
66,949 |
|
|
|
46,031 |
|
Impairment loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29,981 |
|
Elimination of non-controlling interests |
|
(40,964 |
) |
|
|
(46,930 |
) |
|
|
(141,818 |
) |
|
|
(141,432 |
) |
Finance lease (lessor) |
|
(1,614 |
) |
|
|
(2,408 |
) |
|
|
(3,278 |
) |
|
|
(4,263 |
) |
Other adjustments |
|
(14,816 |
) |
|
|
2,922 |
|
|
|
(25,425 |
) |
|
|
3,590 |
|
Adjusted EBITDA |
$ |
335,192 |
|
|
$ |
202,883 |
|
|
$ |
755,341 |
|
|
$ |
562,687 |
|
Adjusted EBITDA of $335 million in the second
quarter, increased 65% or $132 million compared to the same quarter
of 2021. The significant factors increasing Adjusted EBITDA
include:
- $65 million
contribution from the Spanish portfolio of onshore wind and solar
facilities, including regulatory changes retrospective to January
1, 2022 accounted for $22 million higher Adjusted EBITDA;
- $42 million
increase in contribution from a management fee from Kirkland Lake
that followed the restructuring and upsizing of its credit facility
completed during the quarter and other operating
optimizations;
- $26 million
increase in operating results at Gemini primarily due to higher APX
and higher wind resource; and
- $10 million
increase in operating results primarily due to rate escalations at
EBSA and higher wind resource at Canadian renewable
facilities.
The factors partially offsetting the increase in
Adjusted EBITDA include:
- $17 million
decrease in operating results due to loss in contribution as a
result of the expiry of the PPA and subsequent sale of Iroquois
Falls in April 2022; and
- $3 million
increase in G&A costs and growth expenditures to support global
growth.
Adjusted Free Cash Flow and Free Cash Flow
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash provided by operating activities |
$ |
312,337 |
|
|
$ |
361,076 |
|
|
$ |
758,956 |
|
|
$ |
769,530 |
|
Adjustments: |
|
|
|
|
|
|
|
Net change in non-cash working capital balances related to
operations |
|
25,630 |
|
|
|
(87,077 |
) |
|
|
40,992 |
|
|
|
(102,126 |
) |
Non-expansionary capital expenditures |
|
(18,480 |
) |
|
|
(8,656 |
) |
|
|
(31,310 |
) |
|
|
(17,614 |
) |
Restricted funding for major maintenance, debt and decommissioning
reserves |
|
(6,004 |
) |
|
|
(7,638 |
) |
|
|
(11,098 |
) |
|
|
(9,171 |
) |
Interest |
|
(75,454 |
) |
|
|
(101,490 |
) |
|
|
(148,033 |
) |
|
|
(151,382 |
) |
Scheduled principal repayments on facility debt |
|
(307,944 |
) |
|
|
(300,713 |
) |
|
|
(348,385 |
) |
|
|
(334,523 |
) |
Funds set aside (utilized) for scheduled principal repayments |
|
125,152 |
|
|
|
135,579 |
|
|
|
(16,926 |
) |
|
|
3,910 |
|
Preferred share dividends |
|
(2,741 |
) |
|
|
(2,698 |
) |
|
|
(5,441 |
) |
|
|
(5,397 |
) |
Consolidation of non-controlling interests |
|
4,644 |
|
|
|
2,527 |
|
|
|
(41,804 |
) |
|
|
(39,213 |
) |
Investment income (1) |
|
4,222 |
|
|
|
5,098 |
|
|
|
8,398 |
|
|
|
10,263 |
|
Proceeds under NER300 and warranty settlement at Nordsee One |
|
21,164 |
|
|
|
9,343 |
|
|
|
38,876 |
|
|
|
17,109 |
|
Other (2) |
|
63,017 |
|
|
|
194 |
|
|
|
75,693 |
|
|
|
(1,393 |
) |
Free Cash Flow |
$ |
145,543 |
|
|
$ |
5,545 |
|
|
$ |
319,918 |
|
|
$ |
139,993 |
|
Add back: Growth expenditures |
|
16,467 |
|
|
|
16,856 |
|
|
|
34,077 |
|
|
|
29,697 |
|
Adjusted Free Cash Flow |
$ |
162,010 |
|
|
$ |
22,401 |
|
|
$ |
353,995 |
|
|
$ |
169,690 |
|
(1) Investment
income includes Gemini interest income. |
(2) Other mainly
includes net proceeds from sale of two efficient natural gas
facilities, EBSA refinancing, effect of foreign exchange rate
hedges, Nordsee One interest on shareholder loans, equity
accounting, acquisition costs and non-cash expenses adjusted in
working capital excluded from Free Cash Flow in the period. |
Adjusted Free Cash Flow of $162 million for the
three months ended June 30, 2022, was 623% or $140 million higher
than the same quarter of 2021.
The significant factors increasing Adjusted Free
Cash Flow were:
- $33 million
contribution from the Spanish portfolio of onshore wind and solar
facilities, including regulatory changes retrospective to January
1, 2022 accounted for $22 million higher Adjusted Free Cash
Flow;
- $33 million
increase in contribution from a management fee from Kirkland Lake
that followed the restructuring and upsizing of its credit facility
completed during the quarter and other operating
optimizations;
- $31 million
increase in overall contribution across all other facilities
primarily due to better operating results, as described above in
Adjusted EBITDA; and
- $8 million
decrease in net interest costs as a result of scheduled principal
repayments on facility-level loans.
The factor partially offsetting the increase in
Adjusted Free Cash Flow was:
- $19 million
increase in current taxes primarily at the offshore wind facilities
as a result of better operating results.
Free Cash Flow, which includes growth
expenditures, totaled $146 million for the three months ended June
30, 2022, and was $140 million higher than the same quarter of 2021
due to the same factors as Adjusted Free Cash Flow.
The following table reconciles Adjusted EBITDA
to Adjusted Free Cash Flow.
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted EBITDA |
$ |
335,192 |
|
|
$ |
202,883 |
|
|
$ |
755,341 |
|
|
$ |
562,687 |
|
Adjustments: |
|
|
|
|
|
|
|
Scheduled debt repayments |
|
(147,853 |
) |
|
|
(127,567 |
) |
|
|
(295,554 |
) |
|
|
(256,196 |
) |
Interest expense |
|
(60,023 |
) |
|
|
(60,034 |
) |
|
|
(121,304 |
) |
|
|
(121,697 |
) |
Income taxes paid |
|
(32,725 |
) |
|
|
(5,197 |
) |
|
|
(89,109 |
) |
|
|
(35,836 |
) |
Non-expansionary capital expenditure |
|
(15,749 |
) |
|
|
(7,700 |
) |
|
|
(26,668 |
) |
|
|
(16,299 |
) |
Utilization (funding) of maintenance and decommissioning
reserves |
|
(5,574 |
) |
|
|
(7,162 |
) |
|
|
(10,230 |
) |
|
|
(8,235 |
) |
Lease payments, including principal and interest |
|
(116 |
) |
|
|
(1,825 |
) |
|
|
(3,123 |
) |
|
|
(4,050 |
) |
Preferred dividends |
|
(2,741 |
) |
|
|
(2,698 |
) |
|
|
(5,441 |
) |
|
|
(5,397 |
) |
Foreign exchange hedge gain (loss) |
|
32,929 |
|
|
|
9,737 |
|
|
|
48,091 |
|
|
|
12,181 |
|
Proceeds under NER300 and warranty settlement at Nordsee One |
|
17,989 |
|
|
|
7,942 |
|
|
|
33,044 |
|
|
|
14,543 |
|
EBSA Refinancing proceeds, net of growth capital expenditures |
|
3,953 |
|
|
|
— |
|
|
|
16,777 |
|
|
|
— |
|
Other (1) |
|
20,261 |
|
|
|
(2,834 |
) |
|
|
18,094 |
|
|
|
(1,708 |
) |
Free Cash Flow |
$ |
145,543 |
|
|
$ |
5,545 |
|
|
$ |
319,918 |
|
|
$ |
139,993 |
|
Add Back: Growth expenditures |
|
16,467 |
|
|
|
16,856 |
|
|
|
34,077 |
|
|
|
29,697 |
|
Adjusted Free Cash Flow |
$ |
162,010 |
|
|
$ |
22,401 |
|
|
$ |
353,995 |
|
|
$ |
169,690 |
|
(1) Other mainly includes Gemini interest income, net proceeds from
sale of two efficient natural gas facilities, shareholder loan to
Kirkland Lake and interest received on third-party loans to
partners. |
Refer to Northland’s 2021 Annual Report for
additional information on sources of liquidity in addition to
Adjusted Free Cash Flow.
2022 Financial Outlook
With the strong financial performance
experienced through the first six months of the year, including the
realized gains from the sale of two of the Company’s efficient
natural gas assets, along with the continued strength in European
power prices, management is revising its stated financial guidance
for 2022, for Adjusted EBITDA, Adjusted Free Cash Flow, and Free
Cash Flow per share.
For 2022, Adjusted EBITDA is now expected to be
in a range of $1.25 billion to $1.35 billion ($1.15 billion to
$1.25 billion previously), Adjusted Free Cash Flow per share is now
expected to be in the range of $1.85 to $2.05 ($1.65 to $1.85
previously) and Free Cash Flow per share is now expected to be in
the range of $1.40 to $1.60 ($1.20 to $1.40 previously).
These ranges factor in higher expected debt
repayments on certain European facilities, pending successful
completion of refinancings, that are currently in progress and
targeted to be completed later in 2022. The revised guidance ranges
may be subject to further upside should power prices in Europe
continue to trade at elevated levels for the remainder of 2022,
particularly as it relates to Northland’s offshore wind
facilities.
Northland’s financial position continues to be
strong, and the Company remains well positioned to fund its growth
objectives. Northland expects to be able to refinance any material
maturities due in the next five years, moreover, over 95% of total
debt is non-recourse to the Company. Northland also has access to a
$807 million undrawn corporate revolving credit facility with
approximately $1.0 billion of total available liquidity as of
August 11, 2022, which can be utilized to fund growth projects
that ultimately advance to financial close. Borrowings under the
credit facilities are revolving, such that they are ultimately
repaid from project financings at financial close, corporate and/or
project-level financing optimizations and/or sell downs at or
before financial close.
Northland’s Adjusted Free Cash Flow finances
growth expenditures, and corporate costs that support growth and
new initiatives. With a focus on its BBB (Stable) credit rating
from S&P and Fitch, Northland considers it preferable to employ
low-cost corporate credit to fund investments in its capitalized
growth projects, most of which are targeted for financial close in
either 2022 or 2023. To the extent there is excess Adjusted Free
Cash Flow generated by the Company through financial and
operational outperformance, these additional cash flows will be
used fund capitalized growth projects, thereby reducing the need
for corporate debt or equity funding.
Northland also intends to execute a selective
sell-down strategy of partial interests of certain of its
development projects on or before financial close to allow the
Company to: (i) manage jurisdictional exposures, (ii) crystallize
some development profit prior to construction as a result of the
de-risking of the project; (iii) enhance our Adjusted Free Cash
Flow and liquidity position; and (iv) increase project returns,
amongst other considerations. The Company will assess each
opportunity individually and intends to remain a long-term owner in
the renewable projects it develops. The Company’s first notable
development asset sell-down may occur as early as 2022, pending
satisfactory terms to Northland.
The following table summarizes Northland’s
additional sources of liquidity that have been sourced by
management:
For the year to date period ended |
June 30, 2022 |
|
December 31, 2021 |
Dividend Reinvestment Program (DRIP) |
$ |
41,757 |
|
$ |
88,975 |
Proceeds from asset optimizations, debt service reserves and net
proceeds from asset sales (1) |
|
54,441 |
|
|
197,282 |
Total Liquidity Generated Before Equity
Issuances |
$ |
96,198 |
|
$ |
286,257 |
Equity
issuances (net proceeds) (2) |
|
294,683 |
|
|
950,421 |
Total Liquidity Generated After Equity
Issuances |
$ |
390,881 |
|
$ |
1,236,678 |
(1) 2021 figure
includes EBSA refinancing and Canadian credit facility
upsizing. |
(2) 2022 net proceeds
resulting from activity under the ATM program. |
Pauline Alimchandani, Northland’s Chief
Financial Officer said, “we continue to take steps to further
strengthen Northland’s financial position and enhance our available
capital and liquidity. Through the execution of optimization
activities across our operating portfolio, we have been able to
generate significant liquidity and improve our financial
flexibility to help fund our growth initiatives. During the first
six months of the year, we have raised $54 million of proceeds
through asset and financing optimizations. Including net proceeds
raised from our equity programs, we have raised nearly $400
million, thereby enhancing our financial flexibility to fund our
projects expected to achieve financial close. In addition, we
continue to evaluate additional refinancing and sell-down
opportunities within our portfolio that could be executed within
the next 12 months, to generate both additional value and cash
flows to Northland.”
Second-Quarter Earnings Conference Call
Northland will hold an earnings conference call
on August 12, 2022, to discuss its 2022 second quarter
results. The call will be hosted by Northland’s Senior Management,
who will discuss the financial results and company developments as
well as answering questions from analysts.
Conference call details are as follows:
Friday, August 12, 2022, 10:00 a.m. ET
Participants wishing to join the call and ask
questions must register using the following URL below:
https://register.vevent.com/register/BI87900eeca7df4feb9fc00fbad31d431a
For all other attendees, the call will be
broadcast live on the internet, in listen-only mode and can be
accessed using the following link:
Webcast URL:
https://edge.media-server.com/mmc/p/ker5vfnp
For those unable to attend the live call, an
audio recording will be available on northlandpower.com on August
15, 2022.
Northland’s unaudited interim condensed
consolidated financial statements for the three months ended June
30, 2022, and related Management’s Discussion and Analysis can
be found on SEDAR at www.sedar.com under Northland’s profile and on
northlandpower.com.
ABOUT NORTHLAND POWER
Northland Power is a global power producer
dedicated to helping the clean energy transition by producing
electricity from clean renewable resources. Founded in 1987,
Northland has a long history of developing, building, owning and
operating clean and green power infrastructure assets and is a
global leader in offshore wind. In addition, Northland owns and
manages a diversified generation mix including onshore renewables,
efficient natural gas energy, as well as supplying energy through a
regulated utility.
Headquartered in Toronto, Canada, with global
offices in eight countries, Northland owns or has an economic
interest in 3.0GW (net 2.6GW) of operating capacity. The Company
also has a significant inventory of projects in construction and in
various stages of development encompassing over 14GW of potential
capacity.
Publicly traded since 1997, Northland's common
shares, Series 1, Series 2 and Series 3 preferred shares trade on
the Toronto Stock Exchange under the symbols NPI, NPI.PR.A,
NPI.PR.B and NPI.PR.C, respectively.
NON-IFRS FINANCIAL MEASURES
This press release includes references to the
Company’s adjusted earnings before interest, income taxes,
depreciation and amortization (“Adjusted EBITDA”),
Adjusted Free Cash Flow, Free Cash Flow and applicable payout
ratios and per share amounts, measures not prescribed by
International Financial Reporting Standards
(IFRS), and therefore do not have any standardized
meaning under IFRS and may not be comparable to similar measures
presented by other companies. Non-IFRS financial measures are
presented at Northland’s share of underlying operations. These
measures should not be considered alternatives to net income
(loss), cash flow from operating activities or other measures of
financial performance calculated in accordance with
IFRS. Rather, these measures are provided to complement IFRS
measures in the analysis of Northland’s results of operations from
management’s perspective. Management believes that Northland’s
non-IFRS financial measures and applicable payout ratio and per
share amounts are widely accepted and understood financial
indicators used by investors and securities analysts to assess the
performance of a company, including its ability to generate cash
through operations.
FORWARD-LOOKING STATEMENTS
This press release contains statements that
constitute forward-looking information within the meaning of
applicable securities laws (“forward-looking statements”)that are
provided for the purpose of presenting information about
management’s current expectations and plans. Readers are cautioned
that such statements may not be appropriate for other purposes.
Northland’s actual results could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, the events anticipated by the forward-looking
statements may or may not transpire or occur. Forward-looking
statements include statements that are not historical facts and are
predictive in nature, depend upon or refer to future events or
conditions, or include words such as “expects,” “anticipates,”
“plans,” “predicts,” “believes,” “estimates,” “intends,” “targets,”
“projects,” “forecasts” or negative versions thereof and other
similar expressions or future or conditional verbs such as “may,”
“will,” “should,” “would” and “could.” These statements may
include, without limitation, statements regarding future Adjusted
EBITDA, Adjusted Free Cash Flow and Free Cash Flow, respective per
share amounts, dividend payments and dividend payout ratios,
guidance, the timing for the completion of construction,
acquisitions, dispositions, investments or financings, attainment
of commercial operations, the potential for future production from
project pipelines, cost and output of development projects,
litigation claims, plans for raising capital, and the future
operations, business, financial condition, financial results,
priorities, ongoing objectives, strategies and the outlook of
Northland and its subsidiaries. These statements are based upon
certain material factors or assumptions that were applied in
developing the forward-looking statements, including the design
specifications of development projects, the provisions of contracts
to which Northland or a subsidiary is a party, management’s current
plans and its perception of historical trends, current conditions
and expected future developments, as well as other factors,
estimates and assumptions that are believed to be appropriate in
the circumstances. Although these forward-looking statements are
based upon management’s current reasonable expectations and
assumptions, they are subject to numerous risks and uncertainties.
Some of the factors include, but are not limited to, risks
associated with sales contracts, Northland’s reliance on the
performance of its offshore wind facilities at Gemini, Nordsee One
and Deutsche Bucht for approximately 50% of its Adjusted EBITDA,
counterparty risks, contractual operating performance, variability
of sales from generating facilities powered by intermittent
renewable resources, offshore wind concentration, natural gas and
power market risks, operational risks, recovery of utility
operating costs, Northland’s ability to resolve issues/delays with
the relevant regulatory and/or government authorities, permitting,
construction risks, project development risks, acquisition risks,
financing risks, disposition and joint-venture risks, interest rate
and refinancing risks, liquidity risk, inflation risks, impact of
regional or global conflicts, credit rating risk, currency
fluctuation risk, variability of cash flow and potential impact on
dividends, taxation, natural events, environmental risks, health
and worker safety risks, market compliance risk, government
regulations and policy risks, utility rate regulation risks,
international activities, reliance on information technology,
labour relations, reputational risk, insurance risk, risks relating
to co-ownership, bribery and corruption risk, legal contingencies,
and the other factors described in the “Risks Factors” section of
Northland’s Management’s Discussion and Analysis and Annual
Information Form for the year ended December 31, 2021, which can be
found at www.sedar.com under Northland’s profile and on Northland’s
website at northlandpower.com. Northland has attempted to identify
important factors that could cause actual results to materially
differ from current expectations, however, there may be other
factors that cause actual results to differ materially from such
expectations. Northland’s actual results could differ materially
from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurances can be given that any of
the events anticipated by the forward-looking statements will
transpire or occur and Northland cautions you not to place undue
reliance upon any such forward-looking statements.
The forward-looking statements contained in this
release are, unless otherwise indicated, stated as of the date
hereof and are based on assumptions that were considered reasonable
as of the date hereof. Other than as specifically required by law,
Northland undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after such date or to
reflect the occurrence of unanticipated events, whether as a result
of new information, future events or results, or otherwise.
For further information, please
contact:
Mr. Wassem Khalil, Senior Director, Investor
Relations647-288-1019investorrelations@northlandpower.comnorthlandpower.com
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