Northland Power Inc. (“
Northland” or the
“
Company”) (TSX:
NPI) reported
today financial results for the three months ended March 31, 2023.
All dollar amounts set out herein are in thousands of Canadian
dollars, unless otherwise stated.
“We are off to a good start in 2023 with first
quarter results largely in line with expectations,” said Mike
Crawley, Northland’s President and Chief Executive Officer.
Strategically, we executed our second asset level sell-down with
the sale of a 24.5% interest in our ScotWind offshore wind
development projects in Scotland to ESB, a leading Irish energy
company. For 2023, our focus remains primarily on advancing our
committed projects expected to reach financial close this year.
Longer-term, our focus centers on advancing our 20GW pipeline. Our
large pipeline allows us to be selective with respect to which
projects we ultimately advance.
First Quarter Highlights
Financial results for the three months ended March 31, 2023,
were lower compared to the same quarter of 2022 primarily due to
the non-recurrence of the unprecedented spike in market prices
realized in the first quarter of 2022 at Gemini and the Spanish
portfolio.
Financial Results
-
Sales decreased to $622 million from $695 million
in 2022.
- Gross
Profit decreased to $569 million from $636 million in
2022.
- Adjusted
EBITDA (a non-IFRS measure) decreased to $352 million from
$420 million in 2022.
- Adjusted
Free Cash Flow per share (a non-IFRS measure) decreased to
$0.72 from $0.84 in 2022.
- Free
Cash Flow per share (a non-IFRS measure) decreased to
$0.62 from $0.77 in 2022.
- Net
income decreased to $107 million from $288 million in
2022.
Sales, gross profit, operating income and net
income, as reported under IFRS, include consolidated results of
entities not wholly owned by Northland, whereas Northland’s
non-IFRS financial measures include only Northland’s proportionate
ownership interest.
Summary of Consolidated Results |
|
|
(in thousands of
dollars, except per share amounts) |
Three months ended March 31, |
|
|
2023 |
|
|
2022 |
FINANCIALS |
|
|
|
Sales |
$ |
621,721 |
|
$ |
695,054 |
Gross profit |
|
568,903 |
|
|
635,764 |
Operating income |
|
272,542 |
|
|
363,396 |
Net income (loss) |
|
107,137 |
|
|
287,580 |
Net income (loss) attributable
to common shareholders |
|
69,894 |
|
|
229,142 |
Adjusted EBITDA (a non-IFRS
measure) (2) |
|
351,701 |
|
|
420,149 |
|
|
|
|
Cash provided by operating
activities |
|
297,062 |
|
|
446,618 |
Adjusted Free Cash Flow (a
non-IFRS measure) (2) |
|
180,071 |
|
|
191,985 |
Free Cash Flow (a non-IFRS
measure) (2) |
|
154,693 |
|
|
174,375 |
Cash dividends paid |
|
50,047 |
|
|
47,393 |
Total dividends declared
(1) |
$ |
75,316 |
|
$ |
68,496 |
|
|
|
|
Per
Share |
|
|
|
Weighted average number of
shares — basic and diluted (000s) |
|
250,793 |
|
|
227,691 |
Net income (loss) attributable
to common shareholders — basic and diluted |
$ |
0.27 |
|
$ |
0.99 |
Adjusted Free Cash Flow —
basic (a non-IFRS measure) (2) |
$ |
0.72 |
|
$ |
0.84 |
Free Cash Flow — basic (a
non-IFRS measure) |
$ |
0.62 |
|
$ |
0.77 |
Total dividends declared |
$ |
0.30 |
|
$ |
0.30 |
|
|
|
|
ENERGY
VOLUMES |
|
|
|
Electricity production in gigawatt hours
(GWh) |
|
2,831 |
|
|
2,923 |
(1) Represents
total dividends paid to common shareholders including dividends in
cash or in shares under the DRIP. |
(2) See
Forward-Looking Statements and Non-IFRS Financial Measures
below. |
|
First Quarter Results Summary
Offshore wind facilities
Electricity production for the three months
ended March 31, 2023, was largely in line with the same quarter of
2022.
Sales of $346 million for the three months ended
March 31, 2023, decreased 13% or $51 million compared to the same
quarter of 2022, primarily due to the non-recurrence of the
unprecedented spike in market prices realized in the first quarter
of 2022. This decline was partially offset by higher turbine
availability at Nordsee One following the completion of the rotor
shaft assembly (“RSA”) replacement campaign in
2022 and the effect of foreign exchange fluctuations due to the
strengthening of the Euro.
Adjusted EBITDA of $226 million for the three
months ended March 31, 2023, decreased 14% or $36 million compared
to the same quarter of 2022, due to the same factors as noted
above.
An important indicator for performance of
offshore wind facilities is the current and historical average
power production of the facility. The following tables summarize
actual electricity production and the historical average, high and
low for the applicable operating periods of each offshore
facility:
Three months ended March 31, |
2023 (1) |
|
2022 (1) |
|
Historical Average (2) |
|
Historical High
(2) |
|
Historical Low
(2) |
Electricity production (GWh) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gemini |
744 |
|
722 |
|
710 |
|
826 |
|
629 |
Nordsee One |
347 |
|
357 |
|
347 |
|
408 |
|
312 |
Deutsche Bucht |
308 |
|
322 |
|
314 |
|
348 |
|
279 |
Total |
1,399 |
|
1,401 |
|
|
|
|
|
|
(1) Includes GWh produced and attributed to paid curtailments. |
(2) Represents the 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. |
|
Regulatory Market Price Cap Changes
Effective from December 1, 2022, to June 30, 2023
In response to the unprecedented surge in energy
prices across Europe for most of 2022, in September 2022, the EU
Council established a cap on market revenues on renewable energy
producers effective from December 1, 2022, to June 30, 2023 (the
“EU price cap”). Following the implementation of
the EU price cap, any revenue above the contracted power purchase
price for each facility was capped. Within Northland’s annual
guidance, we have not projected any revenue in excess of the
contracted Dutch SDE or German EEG price for each facility.
Onshore renewable facilities
Electricity production was 4% or 28GWh lower
than the same quarter of 2022, due to lower wind resource across
the Canadian onshore facilities, partially offset by higher wind
and solar resource at the Spanish facilities.
Sales of $115 million were 10% or $13 million
lower than the same quarter of 2022, primarily driven by lower
production at the Canadian Onshore facilities and lower pool prices
in Spain.
Adjusted EBITDA of $83 million was 17% or $17
million lower than the same quarter of 2022, due to the same
factors as above.
Efficient natural gas facilities
Electricity production decreased 7% or 64GWh
compared to the same quarter of 2022, due to lower market demand
for dispatchable power during the comparatively mild Ontario
winter.
Sales of $95 million decreased 6% or $6 million
compared to the same quarter of 2022, primarily due to lower energy
tariffs as a result of lower natural gas prices.
Adjusted EBITDA of $56 million was largely in
line with the same quarter of 2022.
Utility
Sales and gross profit of $65 million and $43
million for the three months ended March 31, 2023, remained in line
with the same quarter of 2022.
Adjusted EBITDA of $25 million decreased 8% or
$2 million compared to the same quarter of 2022, primarily due to
higher operating costs and the foreign exchange fluctuations due to
the weakening of the Colombian Peso, partially offset by higher
market demand and rate escalations.
Consolidated statement of income (loss)
General and administrative
(“G&A”) costs of $23 million in the first
quarter increased $3 million compared to the same quarter of 2022,
primarily due to personnel and other costs supporting Northland’s
global growth, in-line with management’s expectations and annual
financial guidance.
Development costs of $24 million increased $7
million compared to the same quarter of 2022, primarily due to
timing of spending to advance early to mid-stage development
projects.
Net finance costs of $67 million in the first
quarter decreased $14 million compared to the same quarter of 2022,
primarily due to scheduled repayments on facility-level loans and
higher loan repayments related to loan restructurings that occurred
in 2022.
Fair value loss on derivative contracts was $83
million in the first quarter, primarily due to net movement in the
fair value of derivatives related to commodity, interest rate and
foreign exchange contracts.
Foreign exchange gain of $29 million in the
first quarter was primarily due to unrealized gain from
fluctuations in the closing foreign exchange rates.
Net income of $107 million in the first quarter
decreased by $180 million compared to the same quarter of 2022,
primarily as a result of the factors described above.
Adjusted EBITDA
The following table reconciles net income (loss)
to Adjusted EBITDA:
|
Three months ended March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) |
$ |
107,137 |
|
|
$ |
287,580 |
|
Adjustments: |
|
|
|
Finance costs, net |
|
67,214 |
|
|
|
81,504 |
|
Gemini interest income |
|
2,099 |
|
|
|
3,707 |
|
Provision for (recovery of) income taxes |
|
38,855 |
|
|
|
100,554 |
|
Depreciation of property, plant and equipment |
|
145,175 |
|
|
|
147,415 |
|
Amortization of contracts and intangible assets |
|
13,700 |
|
|
|
10,058 |
|
Fair value (gain) loss on derivative contracts |
|
80,939 |
|
|
|
(133,445 |
) |
Foreign exchange (gain) loss |
|
(29,174 |
) |
|
|
32,374 |
|
Elimination of non-controlling interests |
|
(78,967 |
) |
|
|
(100,854 |
) |
Finance lease (lessor) |
|
(1,458 |
) |
|
|
(1,664 |
) |
Others (1) |
|
6,181 |
|
|
|
(7,080 |
) |
Adjusted EBITDA (2) |
$ |
351,701 |
|
|
$ |
420,149 |
|
(1) Others primarily include share of results from equity
investments, acquisition costs and other expenses (income). |
(2) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
|
Adjusted EBITDA of $352 million for the three
months ended March 31, 2023, decreased 16% or $68 million compared
to the same quarter of 2022. The significant factors decreasing
Adjusted EBITDA include a $36 million decrease in operating results
at the offshore wind facilities and an $11 million decrease in the
contribution from the Spanish renewables portfolio primarily due to
the factors described above.
Adjusted Free Cash Flow and Free Cash Flow
The following table reconciles cash flow from
operations to Adjusted Free Cash Flow and Free Cash Flow:
|
Three months ended March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Cash provided by operating activities |
$ |
297,062 |
|
|
$ |
446,618 |
|
Adjustments: |
|
|
|
Net change in non-cash working capital balances related to
operations |
|
79,855 |
|
|
|
15,109 |
|
Non-expansionary capital expenditures |
|
(485 |
) |
|
|
(12,830 |
) |
Restricted funding for major maintenance, debt and decommissioning
reserves |
|
4,158 |
|
|
|
(5,094 |
) |
Interest |
|
(42,265 |
) |
|
|
(72,511 |
) |
Scheduled principal repayments on facility debt |
|
(51,485 |
) |
|
|
(40,441 |
) |
Funds set aside (utilized) for scheduled principal repayments |
|
(112,182 |
) |
|
|
(142,078 |
) |
Preferred share dividends |
|
(1,482 |
) |
|
|
(2,700 |
) |
Consolidation of non-controlling interests |
|
(44,983 |
) |
|
|
(46,448 |
) |
Investment income (1) |
|
7,515 |
|
|
|
4,176 |
|
Proceeds under NER300 and warranty settlement at Nordsee One |
|
— |
|
|
|
17,712 |
|
Others (2) |
|
18,985 |
|
|
|
12,862 |
|
Free Cash Flow (3) |
$ |
154,693 |
|
|
$ |
174,375 |
|
Add back: Growth expenditures |
|
25,378 |
|
|
|
17,610 |
|
Adjusted Free Cash Flow (3) |
$ |
180,071 |
|
|
$ |
191,985 |
|
(1) Investment income includes Gemini interest income and repayment
of Gemini subordinated debt. |
(2) Others mainly include the effect of foreign exchange rates and
hedges, interest rate hedge, Nordsee One interest on shareholder
loans, share of joint venture project development costs,
acquisition costs, lease payments, interest income, and other
non-cash expenses adjusted in working capital excluded from Free
Cash Flow in the period. |
(3) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
|
Adjusted Free Cash Flow of $180 million for the
three months ended March 31, 2023, was 6% or $12 million lower than
the same quarter of 2022.
The significant factor decreasing Adjusted Free
Cash Flow was $68 million decrease in contribution from offshore
wind and onshore renewable facilities leading to lower Adjusted
EBITDA.
The factors partially offsetting the decrease in
Adjusted Free Cash Flow were:
- $20 million
increase primarily from foreign exchange hedge settlements;
and
- $17 million
decrease in net finance costs primarily due to scheduled repayments
on facility-level loans and higher loan repayments related to loan
restructurings at Gemini and the Spanish portfolio in 2022.
Free Cash Flow, which is reduced by growth
expenditures, totaled $155 million for the three months ended March
31, 2023, and was 11% or $20 million lower than the same quarter of
2022, due to the same factors as Adjusted Free Cash Flow.
The following table reconciles Adjusted EBITDA
to Adjusted Free Cash Flow.
|
Three months ended March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted EBITDA (2) |
$ |
351,701 |
|
|
$ |
420,149 |
|
Adjustments: |
|
|
|
Scheduled debt repayments |
|
(139,336 |
) |
|
|
(147,701 |
) |
Interest expense |
|
(44,416 |
) |
|
|
(61,281 |
) |
Current taxes |
|
(46,996 |
) |
|
|
(56,384 |
) |
Non-expansionary capital expenditure |
|
(307 |
) |
|
|
(10,919 |
) |
Utilization (funding) of maintenance and decommissioning
reserves |
|
3,702 |
|
|
|
(4,656 |
) |
Lease payments, including principal and interest |
|
(3,065 |
) |
|
|
(3,007 |
) |
Preferred dividends |
|
(1,482 |
) |
|
|
(2,700 |
) |
Foreign exchange hedge gain (loss) |
|
23,458 |
|
|
|
15,162 |
|
Proceeds under NER300 and warranty settlement at Nordsee One |
|
— |
|
|
|
15,055 |
|
EBSA Refinancing proceeds, net of growth capital expenditures |
|
— |
|
|
|
12,824 |
|
Others (1) |
|
11,434 |
|
|
|
(2,167 |
) |
Free Cash Flow (2) |
$ |
154,693 |
|
|
$ |
174,375 |
|
Add Back: Growth expenditures |
|
25,378 |
|
|
|
17,610 |
|
Adjusted Free Cash Flow (2) |
$ |
180,071 |
|
|
$ |
191,985 |
|
(1) Others mainly include Gemini interest income, repayment of
Gemini subordinated debt, interest rate hedge settlement and
interest received on third-party loans to partners. |
(2) See Forward-Looking Statements and Non-IFRS Financial Measures
below. |
|
Refer to Northland’s 2022 Annual Report for additional
information on sources of liquidity in addition to Adjusted Free
Cash Flow.
Significant Events and Updates
Northland’s global activities are exposed to
general economic and business conditions, including elevated
inflation levels, higher interest rates and increases in capital
costs, fluctuations in currency, economic conditions in the
countries and regions in which the Company conducts business, and
potential interruptions to the global supply chains. The Company’s
activities are also subject to regulatory risks and changes in
regulation or legislation affected by political developments and by
national and local laws and regulations. This could include
restrictions on production, changes in taxes, and other amounts
payable to governments or governmental agencies, price or rate
controls that result in changes to market prices for power
generated, reduced revenues or cash flows for operating assets,
higher cost of operations, and the introduction of legal and
administrative hurdles. The Company’s ability to execute on large
development projects is also dependent on its ability to secure
project and corporate financing, which may not always be available
or available on terms acceptable to Northland. Should one or more
of these risks or uncertainties materialize, or should any of the
Company’s assumptions prove incorrect, actual results may vary in
material respects from those projected in the forward-looking
statements.
The Company continues to monitor these and other
developments and is taking actions intended to manage exposure to
and impact of these events. These actions include, but are not
limited to, conducting targeted debt refinancing for existing
operating facilities to enhance cash flows and corporate liquidity,
and implementing hedging strategies on development assets to
provide greater certainty to costs and to actively manage economic
returns of the projects. In addition, the Company consistently
looks for opportunities to optimize its portfolio to create value,
manage risk, enhance financial flexibility and drive enhanced
performance in line with its strategic objectives.
Balance Sheet:
-
Extension of EBSA’s Credit Facility – As part of
its long-term financing strategy for EBSA, Northland extended the
maturity date of EBSA’s non-recourse credit facility (the
“EBSA Facility”) from December 15, 2024, to March
30, 2026, at effectively the same interest rate. The EBSA Facility
is denominated in Canadian dollars, and Northland has hedged the
principal amount 100% against changes in the Colombian peso. As
part of the extension, the Company realized a hedge settlement gain
of $22 million, which offset a weaker Colombian peso since the loan
was originally restructured in December 2021. The gain will be
equally recognized in Northland’s Adjusted Free Cash Flow and Free
Cash Flow over the four quarters of 2023 and was included within
Northland’s 2023 financial guidance.
-
Redemption of Series 3 Preferred Shares – On
January 3, 2023, Northland completed the previously announced
redemption of all 4,800,000 of its issued and outstanding
Cumulative Rate Reset Preferred Shares, Series 3 (the
“Series 3 Preferred Shares”) at a price of $25.00
per Series 3 Preferred Share together with all accrued and unpaid
dividends of $0.3175 per Series 3 Preferred Share for an aggregate
total of $121.5 million.
-
At-The-Market Equity Program – During the first
quarter, Northland took a more moderate approach to the use of its
at-the-market equity program (“ATM program”),
taking into consideration its financial close capital requirements
in 2023 and the current share price. Year-to-date as at May 9,
2023, the Company issued a total of 1,210,537 common shares for
gross proceeds of $42 million at an average price of $34.43
per share. The proceeds raised to date are intended to be used to
fund projects that are expected to achieve financial close in
2023.
-
Sustainability Report – Northland released its
sixth annual Sustainability Report, showcasing achievements in 2022
relating to its Environmental, Social and Governance
(“ESG”) objectives and targets, as well as the
establishment of its 2040 Net Zero target. The report is available
at northlandpower.com.
Renewables Growth:
- ScotWind
Partnership – Following a competitive process in 2022 to
secure a partner to join the development of the ScotWind offshore
wind projects. On May 9, 2023, Northland signed definitive
agreements with ESB, a leading Irish energy company for a 24.5 %
interest in both projects. The partnership with ESB demonstrates
the strong interest in ScotWind and in developing offshore wind in
Scotland and provides an opportunity to bring in a strong,
long-term partner to share in the costs and help advance the
development process.
- Oneida
Battery Storage Project – The project successfully
executed a 20-year Energy Storage Facility Agreement
(“ESFA”) with the Independent Electricity System
Operator (“IESO”) that offers monthly capacity
payments. The remainder of the revenue will come from operating the
battery on the wholesale market. The project also finalized a
battery supply agreement, and a long-term service agreement with
Tesla Inc., to supply key components and services, and an EPC
agreement with Aecon Group Inc. for designing, engineering and
constructing the facility. On March 30, 2023, Northland and its
partners signed a credit agreement with an external lender, subject
to final closing conditions, that will allow the project to access
approximately $700 million in senior and subordinated debt
financing in connection with achieving financial close. Financial
close for the project is expected in 2023, with full commercial
operations to commence in 2025.
- Hai Long
Offshore Wind Project – The Hai Long early construction
works program and fabrication of key components continue to
progress. The project received its major construction permit as
planned. The project financing is progressing towards financial
close in 2023, albeit slower and under more challenging conditions
than expected due to market specific factors. The final credit
approval process was launched in March 2023 to secure the necessary
funding commitments from local and international lenders and Export
Credit Agencies (“ECAs”) to achieve financial
close. Furthermore, in the quarter, Northland signed an amendment
to the Corporate Power Purchase Agreement (the
“CPPA”) that resulted in the extension of the CPPA
tenor by two years from 20 to 22 years.
- Baltic
Power Offshore Wind Project – The project continues to
advance toward financial close, expected in 2023. Baltic Power is
in the process of finalizing contracts with suppliers for key
components. The continued inflationary price environment is
expected to result in the total project cost being in excess of the
previously expected range of $5 billion to $6 billion. The increase
in project costs is expected to be almost fully funded by
non-recourse debt. The project’s 25-year Contract for Difference
(“CfD”) offtake agreement, which was initially
denominated in Polish Zloty will now be denominated in Euros at
effectively the same rate and inflation indexation will commence
with a base year of 2021 (from 2022 previously), providing
offsetting benefits to the higher inflationary price pressures
experienced. Northland’s equity funding expectations and returns
remain in line with prior disclosures.
- New York
Onshore Wind Projects – Construction activities at the
112MW Bluestone project and the 108MW Ball Hill project continue,
with all of the turbines at Bluestone having been installed and
pre-commissioned and installation of the turbines at Ball Hill
progressing. Once installation and commissioning of all turbines
are completed, commercial operations are expected to occur in
2023.
- South
Korean Offshore Wind Project – Electricity Business
Licenses (“EBLs”) for the full 1,000MW capacity at
Dado Ocean have been secured, providing exclusivity on the leases
for the project. In addition, Northland’s second project, the 600MW
Bobae project, has been awarded EBLs for approximately 400MW, and
work continues on securing EBLs for the remaining 200MW. Other
development activities for the projects are continuing to
advance.
- La Lucha
Mexican Solar Project - Northland continues to work to
achieve commercial operations at its 130MW La Lucha solar project
in Mexico. The project was connected to the Mexican grid and
energized. The project is now coordinating with the relevant
authorities on the final procedures to achieve full commercial
operations, which is expected in 2023.
Facility Optimizations:
- Thorold upgrade –
As part of the Ontario government’s energy transition and security
policies, and consistent with Northland’s strategy to optimize
existing operating facilities to enhance value and performance,
Northland plans to carry out an upgrade of its 265MW Thorold
Co-Generation facility in Ontario, Canada. The optimization will
result in an increase to the electricity generating capacity of the
facility by 23MW, an expected improvement in the facility’s heat
rate, which could decrease overall emissions intensity at the
facility, without impacting Northland’s 2040 carbon neutral targets
and will provide an additional fixed contract revenue stream for
Northland. The upgrade is expected to be in service by the end of
2024. On April 24, 2023, as part of our optimization of the
facility, Northland was awarded a 5-year extension of the PPA for
Thorold by IESO from 2030 to 2035. Concurrently, Northland
completed the restructuring of Thorold’s project debt with (i)
additional debt of $26 million to finance the upgrade; (ii) a
decrease in all-in interest rate to 6.4% (previously 6.7%); and
(iii) reduction of certain LC requirements. Thorold will continue
to operate under a dispatch model.
Sustainability Report
The 2022 sustainability report provides enhanced
disclosures on Northland’s sustainability efforts. It includes
metrics and information related to its supply chain (including
contractor health & safety, scope three greenhouse gas
emissions and supplier management) as well as additional detail on
human capital and talent development and engagement. Additional
information on Northland’s 2040 Net Zero target is also available
within the report. The report has been prepared in accordance with
the Global Reporting Initiative (“GRI”) Standards
core option and alignment with the Sustainability Accounting
Standards Board (“SASB”) recommendations and the
Taskforce for Climate-Related Financial Disclosures
(“TCFD”). To read the report in full, visit
northlandpower.com.
Funding Strategy
In 2023, Northland’s focus is on achieving
financial close on the Baltic Power and Hai Long offshore wind
projects as well as the Oneida battery storage project in Ontario,
Canada. The project finance process for each of the three projects
is currently progressing and is estimated to aggregate to a
requirement for $12.5 billion of project finance debt. They are
presently in active workstreams with resources and efforts focused
on securing all necessary milestones and conditions precedent to
achieve financial close. Collectively the project finance processes
are being supported by a diverse group of Northland’s project
partners, lenders, including global financial institutions, local
lenders, export credit agencies (“ECAs"),
government infrastructure lenders and multi-lateral agencies. At
this time, Northland intends to utilize non-recourse project-level
financing as the primary source of funding, with Northland’s equity
requirements expected to be supported by cash on hand, proceeds
from sell-downs, asset sales, the use of corporate hybrid debt and
to a lesser extent equity issuances under its ATM program. At this
time and based on current market conditions, management believes
the Company will have access to the necessary capital required to
achieve financial close of the three aforementioned projects.
2023 and Long-term Outlook
As of May 9, 2023, management’s 2023 financial
outlook remains unchanged from prior guidance. Adjusted EBITDA in
2023 is expected to be in the range of $1.2 billion to $1.3
billion, Adjusted Free Cash Flow per share in 2023 is expected to
be in the range of $1.70 to $1.90 and Free Cash Flow per share in
2023 is expected to be in the range of $1.30 to $1.50. Adjusted
Free Cash Flow excludes approximately $100 million (approximately
$0.40 per share) in growth expenditures that support growth and new
initiatives. These growth expenditures are expected to support
secured projects, including, ScotWind, the South Korean projects,
and the recently acquired Alberta solar portfolio, in addition to
other Canadian and US opportunities.
Northland has access to $580 million of
available liquidity, including $74 million of cash on hand and
approximately $506 million of capacity on its corporate revolving
credit facility as at March 31, 2023, which can be utilized to fund
growth projects as they ultimately advance to financial close. As
expected, available liquidity has decreased by approximately $400
million, as compared to December 31, 2022, primarily due to capital
investments in the Hai Long and Baltic Power offshore wind projects
to advance the projects.
Northland continues to implement a selective
partnership strategy to sell interests in certain development
projects on or before financial close. The Company will assess each
opportunity individually and intends to remain a long-term owner of
the majority of the renewable projects it develops. Any gains (or
losses) from the future sell-down of ownership interests in
development assets would be included in Adjusted Free Cash Flow and
Free Cash Flow as they relate to capturing development profits at
key milestones.
In 2023, Northland’s focus is on achieving
financial close on the Baltic Power and Hai Long offshore wind
projects as well as the Oneida battery storage project in Ontario,
Canada. Over the longer term, as previously disclosed at our 2023
investor day in February 2023, Northland remains positioned to
achieve substantial growth in Adjusted EBITDA by 2027, upon
achieving targeted commercial operations of Baltic Power and Hai
Long. With 3 gigawatts (GW) of gross operating capacity and a
robust development pipeline of nearly 20GW, the Company is well
positioned for an accelerating global energy transition. Northland
intends to be selective and pursue only the projects within its
pipeline that meet its strategic objectives and targeted
returns.
First-Quarter Earnings Conference Call
Northland will hold an earnings conference call
on May 10, 2023, to discuss its 2023 first quarter results.
The call will be hosted by Northland’s Senior Management, who will
discuss the Company’s financial results and developments as well as
answering questions from analysts.
Conference call details are as follows:
Wednesday, May 10, 2023, 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/BIca19226ebfb844e19b7429fb0cecd68d
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/on2b8jq3
For those unable to attend the live call, an
audio recording will be available on northlandpower.com on May 11,
2023.
Northland’s unaudited interim condensed
consolidated financial statements for the three months ended March
31, 2023, and related Management’s Discussion and Analysis can
be found on SEDAR at www.sedar.com under Northland’s profile and on
northlandpower.com.
Annual Meeting of Shareholders
Northland Power will hold its Annual Meeting of
Shareholders (“Meeting”) on Thursday, May 18, 2023, at 11:00 a.m.
ET. Northland Power’s Annual meeting of shareholders will be held
in a virtual-only meeting format. Shareholders will not be able to
attend the meeting physically.
Shareholders can attend the Meeting online, vote
their shares electronically and submit questions during the
Meeting, by
visiting www.virtualshareholdermeeting.com/NPI2023
Instructions are available
at https://www.northlandpower.com/en/investor-centre/annual-general-meeting.aspx
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 20GW of potential
capacity.
Publicly traded since 1997, Northland's common
shares, Series 1 and Series 2 preferred shares trade on the Toronto
Stock Exchange under the symbols NPI, NPI.PR.A and NPI.PR.B,
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, which are 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 completion of construction, acquisitions,
dispositions, investments or financings and the timing thereof,
attainment of financial close and commercial operations, the
potential for future production from project pipelines, cost and
output of development projects, litigation claims, statements
regarding Northland’s sustainability and environmental, social, and
governance goals, including its 65% reduction of its greenhouse gas
emissions intensity by 2030 (from 2019 baseline), plans for raising
capital, and the future operations, business, financial condition,
financial results, priorities, ongoing objectives, strategies and
the outlook of Northland, its subsidiaries and joint ventures.
There is a risk that delays in closing the financings, failure to
obtain the anticipated level of finance commitments and failure to
close one or more financings could affect construction schedules
and/or Northland’s cash or credit position and capital funding
needs. 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, the ability to obtain necessary approvals,
satisfy any closing conditions, or obtain adequate financing
regarding contemplated construction, acquisitions, dispositions,
investments or financings, 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, the emergence of widespread health emergencies or
pandemics, 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,
commodity price 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,
procurement and supply chain risks, financing risks, disposition
and joint-venture risks, competition risks, interest rate and
refinancing risks, liquidity risk, inflation risks, impacts 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, climate
change, health and worker safety risks, market compliance risk,
government regulations and policy risks, utility rate regulation
risks, international activities, cybersecurity, data protection and
reliance on information technology, labour relations, reputational
risk, insurance risk, risks relating to co-ownership, bribery and
corruption risk, terrorism and security, 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, 2022, 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
Relations
647-288-1019
investorrelations@northlandpower.com
northlandpower.com
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