MONTREAL, Nov. 12 /CNW Telbec/ - In the third quarter of 2008, Boralex Inc. ("Boralex" or the "Corporation") recorded a strong increase in all operating revenue, largely due to a bigger contribution from the wood residue segment and favourable hydrology.
(in millions of dollars, except per share data)
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Three months ended Nine months ended
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September September September September
30, 2008 30, 2007 30, 2008 30, 2007
----------------------------------------------
Revenue from
energy sales 48.8 34.3 142.9 117.4
EBITDA 16.8 9.9 53.3 42.6
Net earnings 5.7 1.0 16.0 15.6
Basic net earnings
per share $0.15 $0.03 $0.42 $0.47
Cash flows from operations 13.9 8.8 44.1 35.5
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For the three months ended September 30, 2008, revenue from energy sales totalled $48.8 million, up 42.3% over the same period in 2007. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $16.8 million in the third quarter compared to $9.9 million for the same quarter a year earlier. Boralex's revenues were all positively affected by higher REC sales, higher production volume in the wood residue and hydroelectric segments and higher energy selling prices. The Corporation closed the third quarter of 2008 with net earnings of $5.7 million ($0.15 per share), compared to $1.0 million ($0.03 per share) in 2007. The strong operating results have translated into cash assets. Cash flows from operations rose 58% to $13.9 million in the third quarter of 2008 compared to $8.8 million a year earlier. This clearly demonstrates the quality of the Corporation's assets and its solid financial position.
Patrick Lemaire, President and Chief Executive Officer, is pleased with this growth: "The diverse nature of Boralex's assets and its aggressive position in the wood-residue market, particularly with respect to RECs, proves once again that we have made the right strategic decisions which have led to these strong results."
In the wind power segment, wind conditions were less favourable in the third quarter of 2008. However, lower power generation was partly offset by the start-up of new wind farms, the rise in the euro, the sale of green certificates and price indexing. This segment thus recorded revenue of $5.9 million, slightly down from $6.0 million in 2007. EBITDA amounted to $4.4 million for the three months ended September 30, down $0.5 million compared to the same period in 2007.
The hydroelectric segment posted revenue of $1.9 million in the third quarter of 2008, close to three times the amount reported in the same quarter of 2007. With substantially better hydrology compared to 2007, production volume rose by 147.2% and EBITDA by $1.3 million, to $0.8 million in the third quarter of 2008.
Strengthened by increased participation in the Connecticut REC market, to which three of its wood-residue power stations now contribute, versus just one in 2007, the wood-residue segment recorded revenue of $37.9 million in the third quarter of 2008, up 47.5% over the same period in 2007. This segment's good performance also stems from higher production volume, mainly because the Stacyville power station is now operating again. EBITDA rose to $13.6 million in the third quarter of 2008 versus $7.5 million in 2007. Moreover, the natural gas cogeneration power station reported revenue of $3.2 million in the third quarter of 2008, up $1.3 million compared to the same period in 2007, with a negative EBITDA of $0.2 million, similar to that of a year earlier.
Mr. Lemaire stressed that: "Boralex is naturally concerned about the world economic slowdown, but we believe that the current financial crisis may also have some advantages and could lead to business opportunities for Boralex, which has always distinguished itself as an operator. The cash balance at the end of the third quarter amounted nearly $60 million, and thus reflects the capacity of Boralex to pursue its development."
Also, in early October, the Corporation started building four sites (10 MW each) in Ontario. These sites, fitted with Enercon turbines, should start generating power by the end of the second quarter of 2009. On October 28, 2008, in response to the Ontario RES III Request for Proposals, Boralex submitted the Merlin-Buxton wind power project with an installed capacity of 90 MW, slated for start-up in 2012. The results of the RFP should be released in the first quarter of 2009.
About Boralex
Boralex is a major private electricity producer whose core business is the development and operation of power stations that run on renewable energy. Employing close to 300 people, the Corporation owns and operates 21 power stations with a combined installed capacity MW of 351 MW in Quebec, the northeastern United States and France. The Corporation also has 228 MW of contracted capacity for future production sites. Boralex is distinguished by its leading expertise and long experience in three types of power generation - wind, hydroelectric and thermal. The Boralex shares trade on the Toronto stock exchange under the ticker symbol BLX. www.boralex.com
In addition, Boralex holds a 23% interest in Boralex Power Income Fund which owns 10 power stations in Quebec and the United States with an installed capacity of close to 190 MW. Management of the Fund's assets is provided by Boralex.
Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreased demand for Boralex's products, increases in raw material costs, fluctuations in currency exchange rates, fluctuations in sales prices and adverse changes in general market and industry conditions. The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as Generally Accepted Accounting Principles (GAAP).
To assess the operating performance of its assets and reporting segments, the Corporation uses Earnings before interest, taxes, depreciation and amortization (EBITDA) and Cash flows from operations as performance measurements. EBITDA and Cash flows from operations are not defined under GAAP and do not have a standardized meaning prescribed by GAAP. Therefore, these measures may not be comparable to similar measures presented by other enterprises. EBITDA is defined in the summarized financial statements included with this press release. Cash flows from operations corresponds to cash flow from operating activities before changes in non-cash working capital balances as disclosed in the consolidated statements of cash flows attached in this press release.
Notice to shareholders
These interim financial statements as at September 30, 2008 and 2007 have not been reviewed by our auditors PricewaterhouseCoopers LLP. These financial statements are the responsibility of the management of Boralex Inc. They have been reviewed and approved by its Board of Directors, as recommended by its Audit Committee.
The following financial informations were extracted from the interim consolidated financial statements of Boralex Inc.The complete interim financial statements were prepared conformingly with the Canadian generally accepted accounting principles (GAAP). They are available on the Boralex's website (www.boralex.com) and filed with SEDAR.
Consolidated Balance Sheets
AS AT AS AT
SEPTEMBER 30, DECEMBER 31,
(in thousands of dollars) (unaudited) 2008 2007
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ASSETS
CURRENT ASSETS
Cash and cash equivalents 58,711 79,195
Accounts receivable 42,658 39,200
Future income taxes 850 2,394
Inventories 8,491 8,002
Prepaid expenses 2,852 2,171
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113,562 130,962
Investment 66,722 67,321
Property, plant and equipment 287,149 258,712
Power sales contracts 23,917 18,527
Other assets 56,928 39,209
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548,278 514,731
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LIABILITIES
CURRENT LIABILITIES
Bank loans and advances 448 -
Accounts payable and accrued liabilities 18,952 20,869
Income taxes 1,215 1,481
Current portion of long-term debt 25,761 26,786
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46,376 49,136
Long-term debt 139,554 148,747
Future income taxes 34,186 23,430
Fair value of derivative financial instruments 256 1,400
Other liabilities 5,406 6,642
Non-controlling interests 729 607
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226,507 229,962
SHAREHOLDERS' EQUITY
Capital stock 223,160 221,557
Contributed surplus 2,746 1,974
Retained earnings 131,600 115,669
Accumulated other comprehensive loss (35,735) (54,431)
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321,771 284,769
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548,278 514,731
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Consolidated Statements of Earnings
(in thousands of dollars, FOR THE FOR THE
except per-share amounts THREE-MONTH PERIODS NINE-MONTH PERIODS
and number of shares) ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
(unaudited) 2008 2007 2008 2007
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Revenues from energy
sales 48,811 34,276 142,931 117,431
Renewable energy tax
credits 3,532 3,134 9,063 9,533
Operating costs 34,079 25,463 96,644 82,792
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18,264 11,947 55,350 44,172
Share of earnings
of the Fund 1,180 878 6,218 5,537
Management revenues from
the Fund 1,349 1,427 4,042 4,208
Other revenues 514 110 1,159 1,668
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21,307 14,362 66,769 55,585
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OTHER EXPENSES
Management and
operation of the
Fund 1,073 1,094 3,050 3,407
Administrative
expenses 3,469 3,344 10,414 9,569
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4,542 4,438 13,464 12,976
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OPERATING INCOME
BEFORE AMORTIZATION 16,765 9,924 53,305 42,609
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Amortization 6,377 5,895 18,221 16,143
Foreign exchange loss
(gain) (185) 296 (603) 604
Financial instruments (1,010) (369) 94 (6,243)
Financing costs 3,515 3,389 9,971 11,903
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8,697 9,211 27,683 22,407
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EARNINGS BEFORE
INCOME TAXES 8,068 713 25,622 20,202
Income tax expense
(recovery) 2,416 (146) 9,496 4,674
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5,652 859 16,126 15,528
Non-controlling
interests 5 158 (112) 104
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NET EARNINGS 5,657 1,017 16,014 15,632
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Net earnings per
Class A share - basic
(in dollars) 0.15 0.03 0.42 0.47
Net earnings per
Class A share - diluted
(in dollars) 0.15 0.03 0.42 0.46
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Weighted average
number of Class A
shares outstanding
(basic) 38,247,112 37,454,625 37,739,288 33,374,658
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Consolidated Statements of Retained Earnings
FOR THE NINE-MONTH PERIODS
ENDED SEPTEMBER 30,
(in thousands of dollars) (unaudited) 2008 2007
-------------------------------------------------------------------------
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Balance - beginning of period 115,669 97,649
Issuance costs, net of related taxes - (3,407)
Share redemption premium (83) -
Net earnings for the period 16,014 15,632
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Balance - end of period 131,600 109,874
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Consolidated Statements of Comprehensive Income
FOR THE FOR THE
THREE-MONTH PERIODS NINE-MONTH PERIODS
(in thousands of dollars) ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
(unaudited) 2008 2007 2008 2007
-------------------------------------------------------------------------
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Net earnings for the period 5,657 1,017 16,014 15,632
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Other comprehensive income
(loss):
TRANSLATION ADJUSTMENTS
Unrealized translation
gains (losses) on
translation of
financial statements
of self-sustaining
foreign operations 3,066 (9,087) 10,475 (23,912)
Share of cumulative
translation
adjustments of the
Fund 699 (744) 868 (2,831)
Taxes (224) 321 (228) 1,241
CASH FLOW HEDGES
Change in fair value
of financial
instruments 27,421 (847) 11,084 1,944
Hedging instruments
realized and
recognized in net
earnings (49) (580) 1,170 (1,704)
Hedging instruments
realized and
recognized in balance
sheet (1,106) - (1,106) -
Termination of hedging
relationships - - - (5,874)
Taxes (8,405) 457 (3,567) 1,804
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21,402 (10,480) 18,696 (29,332)
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Comprehensive income
(loss) for the period 27,059 (9,463) 34,710 (13,700)
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Consolidated Statements of Cash Flows
FOR THE FOR THE
THREE-MONTH PERIODS NINE-MONTH PERIODS
(in thousands of dollars) ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
(unaudited) 2008 2007 2008 2007
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OPERATING ACTIVITIES
Net earnings 5,657 1,017 16,014 15,632
Distributions received from
the Fund 2,410 3,097 7,917 9,293
Adjustments for non-cash
items
Share of earnings of
the Fund (1,180) (878) (6,218) (5,537)
Amortization 6,377 5,895 18,221 16,143
Amortization of financing
costs 712 639 2,144 2,058
Renewable energy tax
credits (1,507) (1,078) (2,996) (3,361)
Future income taxes 2,108 1 8,075 5,958
Financial instruments (1,010) (369) 94 (6,243)
Other 320 428 885 1,589
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13,887 8,752 44,136 35,532
Change in non-cash working
capital items (10,820) (2,707) (7,396) (6,496)
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3,067 6,045 36,740 29,036
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INVESTING ACTIVITIES
Business acquisitions (5,156) - (5,781) -
Additions to property,
plant and equipment (3,048) (4,081) (16,412) (16,273)
Change in debt servicing
reserves 26 1 (28) 6,216
Development projects (7,236) (2,346) (22,319) (2,615)
Other 372 267 (1,197) (2,681)
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(15,042) (6,159) (45,737) (15,353)
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FINANCING ACTIVITIES
Net change in bank loans
and advances 448 - 448 -
Increase in long-term debt - - - 151,437
Payments on long-term debt (7,462) (1,427) (17,657) (196,986)
Financing costs - (145) - (2,011)
Net proceeds from share
issuance 11 - 1,716 105,307
Share redemption (194) - (194) -
Other 3 (97) 5 (591)
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(7,194) (1,669) (15,682) 57,156
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TRANSLATION ADJUSTMENTS
ON CASH AND CASH
EQUIVALENTS (23) (826) 4,195 (2,854)
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NET CHANGE IN CASH AND
CASH EQUIVALENTS (19,192) (2,609) (20,484) 67,985
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 77,903 84,493 79,195 13,899
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CASH AND CASH EQUIVALENTS -
END OF PERIOD 58,711 81,884 58,711 81,884
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SUPPLEMENTAL INFORMATION
CASH AND CASH EQUIVALENTS
PAID FOR:
Interest 2,413 3,113 7,273 9,116
Income taxes 373 398 1,321 1,006
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Segmented information
(tabular amounts in thousands of dollars, unless otherwise specified)
(unaudited)
The Corporation's power stations are grouped under four distinct
segments-wind power, hydroelectric power, wood-residue thermal power and
natural gas cogeneration power-and are engaged mainly in power generation. The
classification of these segments is based on the cost structures relating to
each type of power station.
The Corporation analyzes the performance of its operating segments based
on their EBITDA, which is defined as earnings before interest, taxes,
depreciation and amortization. EBITDA is not a measure of performance under
Canadian generally accepted accounting principles. However, management uses
this measure to assess the operating performance of its segments. Earnings for
each segment are presented on the same basis as those of the Corporation.
The following table reconciles EBITDA to net earnings :
FOR THE FOR THE
THREE-MONTH PERIODS NINE-MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2008 2007 2008 2007
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Net earnings 5,657 1,017 16,014 15,632
Non-controlling interests (5) (158) 112 (104)
Income tax expense
(recovery) 2,416 (146) 9,496 4,674
Financing costs 3,515 3,389 9,971 11,903
Financial instruments (1,010) (369) 94 (6,243)
Foreign exchange
(gain) loss (185) 296 (603) 604
Amortization 6,377 5,895 18,221 16,143
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EBITDA 16,765 9,924 53,305 42,609
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INFORMATION BY OPERATING SEGMENT
FOR THE FOR THE
THREE-MONTH PERIODS NINE-MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2008 2007 2008 2007
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PRODUCTION (in MWh)
Wind power stations 40,665 47,413 163,818 148,118
Hydroelectric power
stations 21,522 8,705 97,224 74,875
Wood-residue thermal power
stations 354,560 318,323 937,694 915,206
Natural gas thermal power
station - - 22,569 22,202
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416,747 374,441 1,221,305 1,160,401
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REVENUES FROM ENERGY SALES
Wind power stations 5,859 5,977 22,601 19,176
Hydroelectric power
stations 1,920 677 8,909 6,615
Wood-residue thermal power
stations 37,866 25,689 98,856 81,888
Natural gas thermal power
station 3,165 1,933 12,564 9,752
Corporate and eliminations 1 - 1 -
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48,811 34,276 142,931 117,431
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EBITDA
Wind power stations 4,361 4,883 17,982 15,805
Hydroelectric power
stations 847 (489) 6,272 3,784
Wood-residue thermal power
stations 13,558 7,452 31,424 22,378
Natural gas thermal power
station (157) (225) 960 1,555
Corporate and eliminations (1,844) (1,697) (3,333) (913)
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16,765 9,924 53,305 42,609
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ADDITIONS TO PROPERTY,
PLANT AND EQUIPMENT
Wind power stations 155 2,330 5,260 12,858
Hydroelectric power stations 48 688 56 817
Wood-residue thermal power
stations 228 1,014 7,236 2,340
Natural gas thermal power
station 53 - 69 2
Corporate and eliminations 2,564 49 3,791 256
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3,048 4,081 16,412 16,273
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AS AT AS AT
SEPTEMBER 30, DECEMBER, 31,
2008 2007
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ASSETS
Wind power stations 209,758 196,814
Hydroelectric power stations 18,893 12,427
Wood-residue thermal power stations 154,951 130,728
Natural gas thermal power station 14,469 16,132
Corporate and eliminations 150,207 158,630
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548,278 514,731
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