Skip to main content

Market Overview

Innergex 2020: A Year Marked by Strategic Growth and Construction Activities

Share:
  • Revenues Proportionate up 12% to $781.5 million in 2020 compared with 2019.
  • Adjusted EBITDA Proportionate up 8% to $560.3 million in 2020 compared with 2019.
  • Attractive growth perspectives with $457.8 million in available liquidity.
  • Creation of the Strategic Alliance between Hydro-Québec and Innergex.
  • Four projects under construction and three project financings closed during 2020 for the Hillcrest solar project, the Innavik hydro project and the Griffin Trail wind project.
  • Two acquisitions completed in Chile and Idaho, United States.

 

All amounts are in thousands of Canadian dollars, unless otherwise indicated and are for continuing operations unless otherwise indicated.

LONGUEUIL, QC, Feb. 25, 2021 /CNW Telbec/ - Innergex Renewable Energy Inc. (TSX: INE) ("Innergex" or the "Corporation") today released its operating and financial results for the fourth quarter and year ended December 31, 2020.

"I am proud of the work achieved by the Innergex team this year. Successfully managing four projects under construction while developing numerous others, completing two acquisitions, and all while operating 75 sites across four countries is quite an endeavour," said Michel Letellier, President and Chief Executive Officer of Innergex. "For more than 30 years, we have been at the forefront of adopting a sustainable business model that balances environmental, social and governance factors. We are pleased to see the investment community finally recognize that this is the best model to benefit our planet. This movement positions Innergex to achieve the substantial growth it projects in the years to come."

FINANCIAL HIGHLIGHTS


Three months ended
December 31


Year ended December 31


2020

2019

Change

2020

2019

Change

Production (MWh)

2,186,961


1,793,803


22

%

8,073,914


6,509,622


24

%

Long-term average (MWh) ("LTA")

2,072,720


1,935,082


7

%

8,397,057


6,770,170


24

%

Revenues

167,927


143,116


17

%

613,207


557,042


10

%

Adjusted EBITDA1

117,830


103,333


14

%

422,109


409,175


3

%

Adjusted EBITDA Margin1

70.2

%

72.2

%


68.8

%

73.5

%


Net earnings (loss) from continuing operations

11,894


(48,049)



(29,111)


(53,026)



Net earnings (loss)

11,894


(47,405)



(29,111)


(31,211)



Net earnings (loss) attributable to owners, $ per share - basic and diluted

0.06


(0.36)



(0.23)


(0.25)



Production Proportionate (MWh)1

2,573,358


2,145,799


20

%

9,590,140


8,021,758


20

%

Revenues Proportionate1

211,355


187,947


12

%

781,466


698,001


12

%

Adjusted EBITDA Proportionate1

152,930


141,284


8

%

560,328


516,819


8

%

Adjusted EBITDA Proportionate Margin1

72.4

%

75.2

%


71.7

%

74.0

%













Year ended December 31






2020

2019

Change

Cash flow from operating activities




235,108


240,065


(2)

%

Free Cash Flow1




93,260


93,311


%

Payout Ratio1




135

%

102

%




1.

Adjusted EBITDA, Adjusted EBITDA Margin, Production Proportionate, Revenues Proportionate, Adjusted EBITDA Proportionate, Adjusted EBITDA Proportionate Margin, Free Cash Flow and Payout ratio are not recognized measures under IFRS and therefore may not be comparable to those presented by other issuers. Please refer to the "Non-IFRS Measures" section for more information.

OPERATING PERFORMANCE
Innergex benefits from geographic diversification and the complementarity of hydroelectric, wind and solar power generation.

For the year ended December 31, 2020, Production Proportionate was 97% of the LTA and up 20% over last year. Revenues Proportionate increased 12% compared to last year mainly due to a higher contribution from the hydroelectric power generation segment which posted higher revenues in British Columbia despite curtailment imposed by BC Hydro. The increase is also due to the wind power generation segment due to the Foard City facility commissioned in 2019 and the Production Tax Credits ("PTC") it generated and the Mountain Air Acquisition completed in July 2020, partly offset by lower revenues at the Quebec facilities. The solar power generation segment also contributed to the increase with the commissioning of the Phoebe facility in 2019 and the Salvador Acquisition completed in May 2020. Adjusted EBITDA was up 3% compared to last year at $422.1 million and the Adjusted EBITDA Proportionate increased by 8% at $560.3 million. General and administrative expenses increased by $6.4 million, stemming mainly from an increase in salaries and professional fees to support the Corporation's growth.

In the fourth quarter of 2020, the hydroelectric power generation segment generated $53.9 million in Adjusted EBITDA Proportionate, representing a 48% increase from the $36.5 million generated in the same period last year, mainly due to a higher contribution from the facilities in British Columbia and to higher production at the Quebec facilities. The increase was also due to a higher contribution from the joint ventures' and associates' hydroelectric facilities. Revenues Proportionate for the segment were up 46% at $74.4 million. Production Proportionate was up 56%.

For the three-month period ended December 31, 2020, the wind power generation segment posted $103.2 million in Adjusted EBITDA Proportionate, representing a 5% decrease over the $108.7 million generated in the same period last year. This decrease is mainly attributable to a lower contribution from the joint ventures' and associates' wind facilities mainly from the Shannon and Flat Top facilities. Revenues Proportionate for the segment increased by 1% to $127.0 million. Production Proportionate was up 5%.

The solar power generation segment generated $8.4 million in Adjusted EBITDA Proportionate in the quarter, representing an 8% decrease from the $9.1 million posted in the same period last year due mainly to a lower contribution from the Phoebe solar facility due to lower net selling prices, partly offset by lower operational expenses and by the Salvador Acquisition. Revenues Proportionate for the segment decreased by 8% to $10.0 million. Production Proportionate was up 39%.

Innergex's financial position remains strong and has no material debt maturities prior to 2023. The focus continues to be on developing, acquiring and operating renewable energy facilities that generate sustainable cash flows and provide an attractive risk-adjusted return on invested capital.

FREE CASH FLOW AND PAYOUT RATIO
The following table summarizes elements to add or subtract to derive a normalized Free Cash Flow and Payout Ratio:


Year ended December 31, 2020

(in millions of Canadian dollars)

Free Cash Flow

Dividends

Payout Ratio

Free Cash Flow and Payout Ratio

93

126

135

%

Add (subtract) the following items:




BC Hydro curtailment

15


Decrease in corporate revolving facilities interest payment

(15)


Hydro-Québec additional dividend

(25)


Free Cash Flow and Payout Ratio - Normalized

93

101

109

%

The Corporation considers the Payout Ratio of 135% not to represent the current cash-generating capacity.

The above table normalizes the Free Cash Flow and Payout Ratio for an unfavourable impact on the Adjusted EBITDA Proportionate stemming from the BC Hydro imposed curtailment during 2020 and an increase in quarterly dividends mainly related to the issuance of 34,636,823 common shares following the Hydro-Québec Private Placement, while a large portion of the funds have yet to be invested in cash-generating projects, or have been used toward recent acquisitions whose contributions to the Corporation's Free Cash Flow have not yet fully materialized. These items were partly offset by a decrease in the corporate revolving facilities interest expense concurrent with the Hydro-Québec Private Placement.

UPDATE ON DEVELOPMENT
(As at February 25, 2021)

On February 6, 2020, the Corporation announced that it formed a Strategic Alliance with Hydro-Québec which committed an initial $500 million to be entirely and exclusively dedicated to co-investment projects with Innergex. Hydro-Québec also made a $660.9 million investment in Innergex, through a private placement of Innergex common shares.

The Corporation also completed the acquisition of the 68 MW PV Salvador SpA solar photovoltaic facility in Chile (the "Salvador Acquisition"), as well as 11-year demand-based power purchase agreements covering a total electricity generation of 54.6 GWh/year on May 14, 2020. The Corporation also completed the acquisition of all Class B shares of a portfolio of six operating wind farms in Elmore County, Idaho in the United States on July 15, 2020 (the "Mountain Air Acquisition").

Construction Activities in the Quarter: 
The Hillcrest solar project (Ohio) is approximately 90% complete and all major work activities are well underway with over 400 total personnel on site. Commissioning work started in December 2020 and full commercial operation is scheduled for Q2 2021.

Residential bi-energy conversion program engineering is completed and the preparation of RFP is advanced at the Innavik hydro project (Quebec). Bridge to give access to the south shore was delivered and its installation is almost completed. Construction and long-term credit agreement of $92.8 million was entered into on November 4, 2020.

The three wind turbines have been fully installed and their commissioning is ongoing. Full commercial operation is targeted for March 2021 at the Yonne II wind project (France).

Construction progressed well on site in Q4 at the Griffin Trail wind project (Texas), with significant progress on roads, turbine foundations and the operations and maintenance building. The contractor has over 200 personnel on site performing the work. Turbine deliveries are scheduled to commence in January and to be completed in April 2021. Project financing was completed at the end of December. Commercial operation is scheduled for Q3 2021.

SUBSEQUENT EVENT

Weather Conditions in Texas, United States
On February 17, 2021, the Corporation reported that the recent unprecedented extreme winter weather conditions in Texas had an impact on its ability to produce electricity at its Flat Top wind facility in Mills County, which resumed to normal operations on February 20, 2021. As for the Shannon wind facility in Clay County, Foard City wind facility in Foard County and the Phoebe solar facility located in Winkler County, while some power generation has continued, the combined effect of supply interruptions, abnormal market pricing conditions and contractual obligations to supply a predetermined daily generation under the power hedges, have had both positive and negative financial impacts depending on varying conditions at different times.

While the higher market price environment has had a net favourable impact on the consolidated revenues and Adjusted EBITDA, the Corporation estimated the adverse financial impact of the weather events on a consolidated basis to be approximately $80.0 million, due to the unfavourable impact from the realized losses on the power hedges, and from the Corporation's share of loss of joint ventures and associates also related to realized losses on the power hedges. Force majeure and other mitigating possibilities are being evaluated.

DIVIDEND DECLARATION
The Board of Directors has decided to maintain the annual dividend at $0.72 per common share for 2021, in light of the foreseeable growth plan both in terms of acquisitions and greenfield development.

The following dividends will be paid by the Corporation on April 15, 2021:

Date of
announcement

Record date

Payment date

Dividend per
common share

Dividend per
Series A
Preferred Share

Dividend per
Series B
Preferred Share

Dividend per
Series C
Preferred Share

February 25, 2021

March 31, 2021

April 15, 2021

$0.1800

$0.2027

$0.181875

$0.359375

PROJECTED FINANCIAL PERFORMANCE

The Corporation makes projections using certain assumptions to provide readers with an indication of its business activities and operating performance. For 2021, projections are based on the commissioning of Yonne II wind farm in the first quarter of 2021, the commissioning of Hillcrest solar project in the second quarter of 2021 and the commissioning of the Griffin Trail wind project in the third quarter of 2021. It does not take into consideration potential acquisitions that could be achieved in 2021 nor the potential  impact of the recent weather event in Texas nor the potential impact of future waves of COVID-19.


2021

2020

2019


Projected

Actual1

Projected

Actual1

Production (GWh)

approx.

+15

%

8,074


+24

%

+25

%

6,510


+12

%

Revenues

approx.

+12

%

613,207


+10

%

+10

%

557,042


+4

%

Adjusted EBITDA

approx.

+12

%

422,109


+3

%

+5

%

409,175


+10

%

Adjusted EBITDA Proportionate

approx.

+12

%

560,328


+8

%

+10

%

516,819


+15

%

Number of facilities in operation

78


75




68



Net installed capacity (MW)

3,172


2,742




2,588


















ADDITIONAL INFORMATION
Innergex's 2020 year end audited consolidated financial statements, the notes thereto and the Management's Discussion and Analysis can be obtained on SEDAR at www.sedar.com and in the "Investors" section of the Corporation's website at www.innergex.com.

CONFERENCE CALL AND WEBCAST
The Corporation will hold a conference call and webcast on Friday, February 26, 2021 at 11 AM (EST). Investors and financial analysts are invited to access the conference by dialing 1 888 231-8191 or 647 427-7450 or via https://bit.ly/2YaLE4e or the Corporation's website at www.innergex.com. Journalists as well as the public may access this conference call via a listen mode only. A replay of the conference call will be available after the event on the Corporation's website.

About Innergex Renewable Energy Inc.
For over 30 years, Innergex has believed in a world where abundant renewable energy promotes healthier communities and creates shared prosperity. As an independent renewable power producer which develops, acquires, owns and operates hydroelectric facilities, wind farms, solar farms and energy storage facilities, Innergex is convinced that generating power from renewable sources will lead the way to a better world. Innergex conducts operations in Canada, the United States, France and Chile and manages a large portfolio of high-quality assets currently consisting of interests in 75 operating facilities with an aggregate net installed capacity of 2,742 MW (gross 3,694 MW) and an energy storage capacity of 150 MWh, including 37 hydroelectric facilities, 32 wind farms and six solar farms. Innergex also holds interests in 10 projects under development, four of which are under construction, with a net installed capacity of 556 MW (gross 630 MW) and an energy storage capacity of 329 MWh, as well as prospective projects at different stages of development with an aggregate gross capacity totaling 6,875 MW. Its approach to building shareholder value is to generate sustainable cash flows, provide an attractive risk-adjusted return on invested capital and to distribute a stable dividend.

Cautionary Statement Regarding Forward-Looking Information
To inform readers of the Corporation's future prospects, this press release contains forward-looking information within the meaning of applicable securities laws ("Forward-Looking Information"), including the Corporation's projected financial performance, power production, prospective projects, successful development, construction and financing (including tax equity funding) of the projects under construction and the advanced-stage prospective projects, sources and impact of funding, project acquisitions, execution of non-recourse project-level financing (including the timing and amount thereof), and strategic, operational and financial benefits and accretion expected to result from such acquisitions, business strategy, future development and growth prospects (including expected growth opportunities under the Strategic Alliance with Hydro-Québec), business integration, governance, business outlook, objectives, plans and strategic priorities, and other statements that are not historical facts. Forward-Looking Information can generally be identified by the use of words such as "approximately", "may", "will", "could", "believes", "expects", "intends", "should", "would", "plans", "potential", "project", "anticipates", "estimates", "scheduled" or "forecasts", or other comparable terms that state that certain events will or will not occur. It represents the projections and expectations of the Corporation relating to future events or results as of the date of this press release.

Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, including information regarding the Corporation's expected production, the estimated project costs, projected revenues, projected Adjusted EBITDA and projected Adjusted EBITDA Proportionate, Projected Free Cash Flow, Projected Free Cash Flow per Share and intention to pay dividend quarterly, the estimated project size, costs and schedule, including obtainment of permits, start of construction, work conducted and start of commercial operation for Development Projects and Prospective Projects, the Corporation's intent to submit projects under Requests for Proposals, the qualification of U.S. projects for PTCs and ITCs and other statements that are not historical facts. Such information is intended to inform readers of the potential financial impact of expected results, of the expected commissioning of Development Projects, of the potential financial impact of completed and future acquisitions and of the Corporation's ability to sustain current dividends and to fund its growth. Such information may not be appropriate for other purposes.

Forward-looking Information is based on certain key assumptions made by Innergex, including, without restrictions, assumptions concerning  project performance, economic, financial and financial market conditions, expectations and assumptions concerning availability of capital resources and timely performance by third-parties of contractual obligations, receipt of regulatory approvals and the divestiture of select assets. Although Innergex believes that the expectations and assumptions on which such forward-looking information is based are reasonable, under the current circumstances, readers are cautioned not to rely unduly on this forward-looking information as no assurance can be given that they will prove to be correct. The forward-looking information contained in this press release is made as of the date hereof and Innergex does not undertake any obligation to update or revise any forward-looking information, whether as a result of events or circumstances occurring after the date hereof, unless so required by law.

For more information on the risks and uncertainties that may cause actual results or performance to be materially different from those expressed, implied or presented by the forward-looking information or on the principal assumptions used to derive this information, please refer to the "Forward-Looking Information" section of the Management's Discussion and Analysis for the three- and twelve-month periods ended December 31, 2020.

Cautionary Statement Regarding Non-IFRS measures
The audited consolidated financial statements for the three- and twelve-month periods ended December 31, 2020, have been prepared in accordance with International Financial Reporting Standards ("IFRS"). However, some measures referred to in this press release are not recognized measures under IFRS and therefore may not be comparable to those presented by other issuers. Innergex believes that these indicators are important, as they provide management and the reader with additional information about the Corporation's production and cash generation capabilities, its ability to sustain current dividends and dividend increases and its ability to fund its growth. These indicators also facilitate the comparison of results over different periods. Innergex's share of Revenues of joint ventures and associates, Revenues Proportionate, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Proportionate, Adjusted EBITDA Proportionate Margin, Innergex's share of Adjusted EBITDA of joint ventures and associates, Adjusted Net Earnings (Loss) from Continuing Operations, Free Cash Flow, Adjusted Free Cash Flow, Payout Ratio and Adjusted Payout Ratio are not measures recognized by IFRS and have no standardized meaning prescribed by IFRS. Please refer to the "Non-IFRS Measures" section of the Management's Discussion and Analysis for the three- and twelve-month periods ended December 31, 2020.

SOURCE Innergex Renewable Energy Inc.

Cision View original content: http://www.newswire.ca/en/releases/archive/February2021/25/c0200.html

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com