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Innergex: Generating Solid Results Through Expertise and Leadership

Press Release

  • Revenues from continuing operations up 23% to $142.8 million in Q3 2019 compared with Q3 2018.
  • Revenues Proportionate up 19% to $179.8 million in Q3 2019 compared with Q3 2018.
  • Adjusted EBITDA for continuing operations rose 28% to $107.4 million in Q3 2019 compared with Q3 2018.
  • Adjusted EBITDA Proportionate rose 24% to $135.8 million in Q3 2019 compared with Q3 2018.
  • Commissioning of the Foard City wind farm.
  • Ramp-up of sales at the Phoebe solar project ahead of full commissioning.

LONGUEUIL, Quebec, November 12, 2019 – Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) today released its operating and financial results for the third quarter ended September 30, 2019. The increases in revenues and Adjusted EBITDA for continuing operations are mainly due to the acquisition of the remaining 62% in the Cartier Wind Farms in October 2018.

“We completed the commissioning of our largest wind farm to-date in less than a year and are poised to commission the largest solar project in Texas for which sales of energy have already begun. Additionally, construction activities have commenced at the Innavik hydroelectric site in northern Quebec that will provide renewable energy to this remote Inuit community for at least 40 years,” said Michel Letellier, President and Chief Executive Officer of Innergex. “With our strong financial position and large portfolio of development and prospective projects, we remain on track to continue pursuing our growth organically as well as through acquisition opportunities.”

OPERATING RESULTS

On May 23, 2019, Innergex announced completion of the sale of its wholly owned subsidiary Magma Energy Sweden A.B. (“Magma Sweden”) which owns an equity interest of approximately 53.9% in HS Orka hf (“HS Orka”), owner of two geothermal facilities in operations, one hydro project in development and prospective projects in Iceland, which are now treated as discontinued operations. As a result, the comparative figures have been restated. The figures presented in this press release are for the continuing operations unless otherwise indicated.

Three months ended Nine months ended
Amounts shown are in thousands of Canadian dollars except as noted September 30 September 30
2019 2018 2019 2018
otherwise.
Restated 2,3 Restated 2,3
Production (MWh) 1,665,362 1,236,722 4,715,820 3,689,774
Long-term average (MWh) (“LTA”) 1,765,093 1,390,458 4,835,085 3,897,904
Revenues 142,814 116,464 413,926 343,166
Adjusted EBITDA1 107,351 83,683 305,842 248,909
Net earnings (loss) from continuing operations 9,896 5,989 (4,977) 7,399
Net earnings 9,703 9,456 16,194 11,477
Net earnings (loss) from continuing operations
attributable to owners, $ per share – basic and diluted 0.10 0.06 (0.04) 0.09
Net earnings attributable to owners, $ per share – basic 0.09 0.07 0.10 0.10
and diluted
Production Proportionate (MWh)1 2,149,151 1,652,413 4,603,304
5,875,960
Revenues Proportionate1 179,816 151,151 490,830 402,651
Adjusted EBITDA Proportionate1 135,796 109,553 356,311 291,311
Trailing twelve months ended
September 30
2019 2018
Restated 2 Restated 2
Free Cash Flow1 100,455 98,502
Payout Ratio1 93% 87%
  1. Please refer to the Non-IFRS Measures Disclaimer for the definition of Production Proportionate, Revenues Proportionate, Adjusted EBITDA, Adjusted EBITDA Proportionate, Free Cash Flow and Payout Ratio.
  2. For more information on the restatement, please refer to the “Accounting Changes” section of the Management’s Discussion and Analysis of the third quarter of 2019.
  3. 3. For more information, please refer to the “Discontinued Operations” section of the Management’s Discussion and Analysis of the third quarter of 2019.

Three-month period ended September 30, 2019

Production increased 35% and Production Proportionate increased 30% compared with the same quarter last year.

  • Production was 94% of the LTA:
  • Hydroelectric facilities: 87% of their LTA;
  • Wind farms: 104% of their LTA; and
  • Solar farms: 101% of their LTA.

The 23% increase in revenues and 28% in Adjusted EBITDA mainly stem from the contribution of the 62% remaining interest in the Cartier Wind Farms acquired in October 2018, the higher revenues at the French facilities and to ramp-up of production at the Phoebe solar project.

The Adjusted EBITDA Margin increased from 71.9% to 75.2% for the three-month period due mainly to a higher margin in the hydro segment due to lower operating costs at most facilities and higher revenues in British Columbia and a higher margin in the wind segment explained mainly by lower operating costs.

The 19% increase in Revenues Proportionate and 24% increase in Adjusted EBITDA Proportionate are mainly due to higher revenues from the British Columbia and Chile facilities stemming from higher production, partly offset by lower revenues at the Shannon and Flat Top wind facilities in Texas.

For the three-month period ended September 30, 2019, the Corporation recorded net earnings from continuing operations of $9.9 million (basic and diluted net earnings from continuing operations of $0.10 per share), compared with net earnings from continuing operations of $6.0 million (basic and diluted net earnings from continuing operations of $0.06 per share) for the corresponding period in 2018. The $3.9 million variation can be explained by a $23.7 million increase in Adjusted EBITDA, a $5.0 million increase in the share of earnings of joint ventures and associates and a $4.2 million increase in other net revenues. These items were partly offset by a $12.1 million increase in depreciation and amortization, a $11.5 million increase in finance costs, a $4.1 million unfavourable variation in unrealized net loss (gain) on financial instruments and a $1.3 million increase in income tax expenses.

Nine-month period ended September 30, 2019

Production increased 28% and Production Proportionate increased 28% compared with the same quarter last year.

  • Production was 98% of the LTA:
  • Hydroelectric facilities: 91% of their LTA;
  • Wind farms: 104% of their LTA; and
  • Solar farms: 100% of their LTA.

The 21% increase in revenues and 23% in Adjusted EBITDA mainly stem from the contribution of the 62% remaining interest in the Cartier Wind Farms acquired in October 2018, higher production at the Mesgig Ugjusn facility and ramp – up of production at the Phoebe solar project.

The Adjusted EBITDA Margin increased from 72.5% to 73.9% for the nine-month period mainly explained by changes in the mix of segments as wind generation now represents a higher proportion of Adjusted EBITDA. Wind activities typically have a better return on revenues than hydro due to lower operating costs. The increase can also be explained by a higher margin from the Quebec wind facilities explained mainly by lower operating costs. These items were partly offset by a lower margin from the French facilities.

The 22% increase in Revenues Proportionate and 22% increase in Adjusted EBITDA Proportionate are mainly due to the investment in Energía Llaima and to higher revenues from the British Columbia facilities.

For the nine-month period ended September 30, 2019, the Corporation recorded a net loss from continuing operations of $5.0 million (basic and diluted net loss from continuing operations of $0.04 per share), compared with net earnings from continuing operations of $7.4 million (basic and diluted net earnings from continuing operations of $0.09 per share) for the corresponding period in 2018. The $12.4 million variation can be explained by a $32.6 million increase in depreciation and amortization, a $29.9 million increase in finance costs, a $13.1 million unfavourable variation in unrealized net loss (gain) on financial instruments, a $1.1 million increase in the share of loss of joint ventures and associates and a $0.6 million increase in income tax expenses. These items were partly offset by a $56.9 million increase in Adjusted EBITDA and a $8.0 million increase in other net revenues.

Free Cash Flow and Payout Ratio

For the trailing twelve-month period ended September 30, 2019, the Corporation generated Free Cash Flow of $100.5 million, compared with $98.5 million for the corresponding period last year. The increase in Free Cash Flow is due mainly to higher cash flows from operating activities before changes in non-cash working capital items and the income tax paid towards the taxable gain realized following an intercompany transaction related to the introduction of a tax equity investor in the Phoebe solar project; and the recovery of maintenance capital expenditures and prospective project expenses, net of attribution to non-controlling interests. These items were partly offset by greater scheduled debt principal payments, mainly from the acquisition of the Cartier Wind Farms and the French projects that reached term conversion in 2018.

For the trailing twelve-month period ended September 30, 2019, the dividends on common shares declared by the Corporation amounted to 93% of Free Cash Flow, compared with 87% for the corresponding period last year. This change results mainly from higher dividend payments as a result of the issuance of 24,327,225 shares on February 6, 2018, related to the Alterra acquisition; an increase in the quarterly dividend and additional shares issued under the Dividend Reinvestment Plan (“DRIP”). This item was partly offset by a $2.0 million increase in Free Cash Flow.

Read More: https://www.innergex.com/wp-content/uploads/2019/11/INE_Q32019_EN.pdf

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