- Revenues up 4% to $150.5 million in Q2 2020 compared with Q2 2019.
- Revenues Proportionate up 9% to $192.0 million in Q2 2020 compared with Q2 2019.
- Adjusted EBITDA stable at $105.3 million in Q2 2020 compared with Q2 2019.
- Adjusted EBITDA Proportionate up 10% to $140.0 million in Q2 2020 compared with Q2 2019.
- On May 14, 2020, Innergex completed the acquisition of a 68 MW solar farm in Chile.
- On July 15, 2020, Innergex completed the acquisition of six wind farms in Idaho, United States totalling 138 MW.
- Eight projects at an advanced development stage, including the new 225.6 MW wind project in Texas and a stand-alone 9 MWh battery storage project in France.
LONGUEUIL, Quebec, August 4, 2020 – Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) today released its operating and financial results for the second quarter ended June 30, 2020. The recent commissionings in the wind and solar segments contributed to posting increased results this quarter compared to the same period last year, despite the curtailment imposed by BC Hydro in the hydroelectric power generation segment.
“Along with the continued construction of Hillcrest and the good news that work resumed at Innavik, the past months were also very exciting in terms of development, with significant progress for our prospective and development projects,” said Michel Letellier, President and Chief executive Officer of Innergex. “We made huge strides with our Griffin Trail wind project in Texas following the extension of the Production Tax Credit program. We also qualified two new solar and battery projects in the second Hawaii RFP, and we are rapidly progressing with multiple other promising projects in the Northeast and other parts of the United States. Our development efforts in France are beginning to pay off with the construction of the Yonne II wind farm, the development of our first stand-alone battery storage project and the advancement of other prospective projects. We are very optimistic for our future, which will combine our own development efforts with strategic acquisitions that will further solidify our balanced portfolio of assets. We recently completed two acquisitions that should have a positive impact on cash available for distribution and reduce pressure on our payout ratio.”
Update on COVID-19
Innergex took numerous measures to protect employees, suppliers and business partners from COVID-19.
Power production activities have continued in all segments as they have been deemed essential service in every region where we operate.
BC Hydro sent curtailment notices for some hydro facilities for the period from May 22, 2020 and to July 20, 2020. BC Hydro cites the current COVID-19 pandemic and related governmental measures taken in response to it as constituting a “force majeure” event under the electricity purchase agreements (“EPAs”), and resulting in a situation in which BC Hydro is unable to accept or purchase energy under the EPAs. Innergex disputes that the current pandemic and related governmental measures in any way prevent BC Hydro from fulfilling its obligations to accept and purchase energy under the EPAs or enable it to invoke “force majeure” provisions under the EPAs to suspend these obligations. Innergex complied with BC Hydro’s curtailment request, but did so under protest and will seek to enforce its rights under the EPAs.
Our renewable power production is sold mainly through power purchase agreements, which include sufficient protection to prevent for material reduction in demand, to solid counterparts and no credit issues are anticipated. As such, we do not intend to make any changes to our workforce and we intend to maintain salaries and benefits.
Construction activities at our Hillcrest solar project continued without interruption while construction activities for the Innavik hydro project and Yonne II wind project have resumed in July 2020.
Support to Surrounding Communities
To support communities surrounding our facilities and projects in all segments, the Corporation launched the “Time for Solidarity” campaign in March 2020.
The Corporation distributed $255,000 in total to local charities such as food banks, women shelters and relief organizations to alleviate the effects of the COVID-19 crisis. Employees were also invited to make personal donations to these charities and proudly raised $37,225. Such relief organizations included Centraide United Way, Ressort Gaspésie-Iles-de-la-Madeleine, BC First Nations Health Authority, BC Society of Transition Houses, Women in Need, BCAAFC – British Columbia Association of Aboriginal Friendship Centres, Moisson Montréal and Regroupement des centres d’amitié autochtones du Québec in Canada, the Wichita Falls Feeding America Food Bank, United Way and Hope Emergency Services in the United States, Restos du Coeur in France, and Red de Alimentos and Banco de Alimentos Bìobìo Solidario in Chile.
The figures presented in this press release are for the continuing operations unless otherwise indicated.
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:
Trailing twelve months ended June 30, 2020
|(in millions of Canadian dollars)||Free Cash Flow||Dividends||Payout Ratio|
|Free Cash Flow and Payout Ratio||74||111||150 %|
|Add (subtract) the following items:|
|BC Hydro curtailment||11||—|
|Timing of interest payments||13||—|
|Decrease in corporate revolving facilities interest payment||(5)||—|
|Hydro-Québec additional dividend||—||(13)|
|Free Cash Flow and Payout Ratio – Normalized||93||98||105 %|
The Corporation considers the $73.8 million Free Cash Flow not to represent the current cash-generating capacity of its operations.
For the trailing twelve months ended June 30, 2020, the dividends on common shares declared by the Corporation amounted to 150% of Free Cash Flow, compared with 79% for the corresponding period last year. When normalizing for unfavourable one-off or non-recurrent items and timing of certain interest payments, the Corporation estimates its Payout Ratio to be 105% of its generated Free Cash Flow. These items include an unfavourable impact on the Adjusted EBITDA Proportionate stemming from the BC Hydro imposed curtailment during 2020, the timing of certain project loan interest payments which resulted in the Corporation having made 5 quarterly payments during the trailing four quarters, and an increase in quarterly dividends mainly related to the issuance of 34,636,823 common shares to Hydro-Québec under the private placement, while a large portion of the funds have yet to be invested in cash generating projects, or have been used towards recent acquisitions whose contributions to the Corporation’s Free Cash Flow has not yet fully materialized. These items were partly offset by a concurrent decrease in the corporate revolving facilities interest expense related to the private placement by Hydro-Québec.
For the trailing twelve months ended June 30, 2020, the Corporation generated Free Cash Flow of $73.8 million, compared with $115.7 million for the corresponding period last year. The unfavourable variance in Free Cash Flow is due mainly to a decrease in Free Cash Flow attributable to discontinued operations, including the recovery of maintenance capital expenditures, following the sale of HS Orka in the second quarter of 2019, an unfavourable impact to Adjusted EBITDA Proportionate stemming from the BC Hydro imposed curtailment during 2020, timing of certain project loan interest payments which resulted in the Corporation having made 5 quarterly payments during the trailing four quarters and lower generation due to unfavourable weather conditions. These items were partly offset by the Free Cash Flow contribution of recently acquired and commissioned projects and lower interest payment on the corporate revolving facilities concurrent with the Hydro-Québec Private Placement.
On a forward-looking basis, when taking into account a full-year contribution of the two recently announced acquisitions, the full effect of the annualized dividend following the Hydro-Québec Private Placement and adding back the above described normalized items, the Corporation anticipates the Payout Ratio for the next twelve months to be around 100%.
“Considering the current outlook of the Corporation and the additional cash-generating capacity to be unlocked from our growth strategy combining acquisitions and project development using the untapped funds from the private placement of Hydro-Québec and current excess cash capacity, we are confident to attain a Payout Ratio below 100% in a near future,” said Michel Letellier.