INNERGEX REPORTS FOURTH QUARTER AND FISCAL YEAR 2023 RESULTS
Strategy Execution
- Increased portfolio diversification and added complementary storage capabilities via a 60 MW solar portfolio acquisition in
Ontario and the deployment ofInnergex's first battery energy storage project inChile - Advanced on the construction of the 330
MW Boswell Springs wind project inWyoming - Demonstrated ability to grow in core markets by signing a long-term PPA with Hydro-
Québec for a 102 MW wind project, and subsequent to the quarter end, being selected by Hydro-Québec for 400 MW of wind capacity - Started delivering power at the 7.5 MW Innavik hydro project in the north of
Quebec , adding a key hydroelectric asset to the portfolio
Funding Initiatives
- Executed partnership with Crédit Agricole Assurances for a 30% non-controlling interest in the portfolio in
France . This transaction allowed to crystallize value for shareholders and was a validation of the Corporation's growth strategy, bringing in a long-term strategic partner to accelerate development inFrance and increase financial flexibility - Closed on the financing of the 330
MW Boswell Springs wind project, allowingInnergex to continue executing on its organic growth strategy - Concluded the financing of three unlevered hydro assets, which represents a new attractive internal funding lever to support growth
Capital Allocation Strategy Update
- Announced updated capital allocation strategy to accelerate organic growth (see press release issued on
February 21, 2024 )
Q4 2023 Financial Results (compared to prior year results)
- Production Proportionate was at 94% of LTA, up from 82%
- Adjusted EBITDA Proportionate1 reached
$186.4 million , up 30%
Fiscal year 2023 Financial Results (compared to prior year results)
- Production Proportionate was at 90% of LTA, flat compared to the prior year
- Adjusted EBITDA Proportionate1 reached
$735.3 million , up 12%
2025 Targets and 2024 Financial Guidance
- As a result of recent macroeconomic trends,
Innergex is withdrawing its previously provided 2025 financial targets - Full year 2024 Adjusted EBITDA Proportionate1 is expected to be in the range of
$725.0 million to$775.0 million - Full year 2024 Free Cash Flow per share1 is expected to be in the range of
$0.70 to$0.85
Appointment to the Board of Directors
- Marc-André Aubé joined the Board as of
December 1, 2023
All amounts are in thousands of Canadian dollars, unless otherwise indicated. |
"We took proactive steps to strengthen our financial position and ensure that we have the necessary financial flexibility required to execute our growth strategy. With the financing for the
FINANCIAL HIGHLIGHTS
|
Three months ended |
Year ended |
||
2023 |
2022 |
2023 |
2022 |
|
Production (MWh) |
2,703,285 |
2,357,039 |
10,621,478 |
10,254,005 |
Production as a percentage of LTA |
94 % |
81 % |
90 % |
90 % |
|
|
|
|
|
Revenues and Production Tax Credits |
261,526 |
220,212 |
1,041,574 |
935,223 |
Operating Income |
(36,494) |
(6,504) |
219,575 |
263,366 |
Adjusted EBITDA1 |
175,421 |
135,376 |
687,743 |
612,165 |
Net Loss |
(121,964) |
(52,575) |
(105,814) |
(91,115) |
Adjusted Net Loss1 |
(7,166) |
(27,469) |
(2,052) |
(32,503) |
Net Loss Attributable to Owners, $ per share - basic and diluted |
(0.57) |
(0.23) |
(0.51) |
(0.43) |
Production Proportionate (MWh)1 |
2,808,877 |
2,448,629 |
11,160,580 |
10,792,064 |
Revenues and Production Tax Credits Proportionate1 |
276,225 |
231,576 |
1,102,655 |
995,758 |
Adjusted EBITDA Proportionate1 |
186,447 |
143,399 |
735,261 |
658,883 |
|
|
|
|
|
|
|
Year ended |
||
|
|
|
2023 |
2022 |
Cash Flow from Operating Activities |
|
|
297,853 |
430,243 |
Free Cash Flow1,2 |
|
|
214,930 |
171,988 |
Payout Ratio1,2 |
|
|
68 % |
85 % |
Normalized Payout Ratio1 |
|
|
69% - 75% |
|
Note: On |
|
1. |
These measures are not recognized measures under IFRS and therefore may not be comparable to those presented by other issuers. Production and Production Proportionate are key performance indicators for the Corporation that cannot be reconciled with an IFRS measure. Please refer to the section 6- NON-IFRS MEASURES for more information. |
2. |
For more information on the calculation and explanation, please refer to 4- CAPITAL AND LIQUIDITY | Free Cash Flow and Payout Ratio of the MD&A. |
OPERATING PERFORMANCE
FOURTH QUARTER 2023
Production for the quarter was marked by higher levels reached by the hydro facilities, partially offset by below average wind and solar resources. The increase in Revenues and Production Tax Credits compared to the same period last year was mainly due to higher production in the hydro segment in
FISCAL YEAR 2023
Overall production for the year ended on
TRAILING TWELVE MONTHS CASH FLOW FROM OPERATING ACTIVITIES, FREE CASH FLOW1 AND PAYOUT RATIO1
Cash flows from operating activities decreased to
Free Cash Flow1 Increased to
The dividends on common shares declared by the Corporation amounted to 68% of Free Cash Flow1, compared with 85% for the corresponding period last year.
Had production levels been equal to their long-term average during the year ended
PROJECTS UNDER CONSTRUCTION
(Location) |
Type |
Ownership |
Gross |
Gross |
PPA term |
Expected |
|
||||
|
|||||||||||
|
|||||||||||
San Andrés Battery Energy Storage ( |
Storage |
100 |
|
Note |
3 |
— |
|
— |
|
2024 |
|
Lazenay ( |
Wind |
25 |
|
9.0 |
|
27.8 |
|
— |
|
2024 |
|
Hale Kuawehi ( |
Solar and storage |
100 |
|
30.0 |
1 |
87.4 |
2 |
25 |
|
2024 |
|
|
Wind |
100 |
|
329.8 |
|
1,262.0 |
|
30 |
|
2024 |
|
1. Solar project with a battery storage capacity of 30 MW/120 MWh (4 hours). |
2. PPA is a fixed lump sum capacity payment for the availability of dispatchable energy. |
3. Battery storage capacity of 35 MW/175 MWh (5 hours). |
CAPITAL ALLOCATION STRATEGY
On
- Calibrating Innergex's target dividend payout ratio to 30% to 50% of Free Cash Flow1 to support its long-term growth objectives
- Based on the annual dividend for 2024 of
$0.36 per common share, the Corporation expects to free up approximately$75 million annually for reinvestment purposes - Increasing investments in greenfield development and prioritizing organic growth in
Innergex's four markets, with specific focus onNorth America - Capital allocation choices designed to enable self-funding of organic investments while delivering sustainable growth
2025 TARGETS AND 2024 GUIDANCE
As a result of recent macroeconomic trends,
SUBSEQUENT EVENTS
On
DIVIDEND DECLARATION
On
The following dividends will be paid by the Corporation on
Date of |
Record date |
Payment date |
Dividend per |
Dividend per Series A Preferred Share |
Dividend per Series C |
|
|
|
|
$0.2028 |
|
APPOINTMENT TO THE BOARD OF DIRECTORS
"We are pleased to welcome
1. |
This is not a recognized measure 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. |
2. |
These assumptions are based on information currently available to the Corporation and this list of assumptions is not exhaustive. Please refer to the Section 5 - OUTLOOK | 2024 Growth Targets of the MD&A for more information. |
NON-IFRS MEASURES
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.
Revenues and Production Tax Credits Proportionate, Adjusted EBITDA and Adjusted EBITDA Proportionate
Changes in the Non-IFRS measures effective
On
As a result of these changes to the consolidated statements of earnings, certain Non-IFRS measures have been amended as follows:
- PTCs are presented directly in Revenues and Production Tax Credits (a subtotal presented in the primary financial statements of the Corporation, thus excluded from the Non-IFRS Measures);
- PTCs are presented directly in Adjusted EBITDA, along with the realized portion of the change in fair value of power hedges;
- Other income related to PTCs has been retreated from the Revenues Proportionate and Adjusted EBITDA Proportionate measures; and
- Proportionate measures include only
Innergex's share of Revenues and Production Tax Credits, and Adjusted EBITDA, of the joint ventures and associates.
The comparative figures have also been adjusted to conform with the revised measures. The above amendments seek to improve the clarity of the measures, and to enhance comparability with current industry practices. In addition, the inclusion of the realized portion of the change in fair value of power hedges to the Adjusted EBITDA measure enhances comparability of the Corporation's performance over time.
Description of the measures
References in this document to "Revenues and Production Tax Credits Proportionate" are to Revenues and Production Tax Credits, plus
References in this document to "Adjusted EBITDA" are to operating income, to which are added (deducted) depreciation and amortization, ERP implementation, impairment charges, and the realized portion of the change in fair value of power hedges. References in this document to "Adjusted EBITDA Proportionate" are to Adjusted EBITDA, plus
Below is a reconciliation of the non-IFRS measures to their closest IFRS measures:
|
|
Three months ended |
Three months ended |
||||
|
|
Consolidation |
Share of joint |
Proportionate |
Consolidation |
Share of joint |
Proportionate |
|
|
|
|
|
|
|
|
Revenues and Production Tax Credits |
|
261,526 |
14,699 |
276,225 |
220,212 |
11,364 |
231,576 |
|
|
|
|
|
|
|
|
Operating income |
|
(36,494) |
6,681 |
(29,813) |
(6,504) |
3,870 |
(2,634) |
Depreciation and amortization |
|
87,927 |
4,345 |
92,272 |
93,756 |
4,153 |
97,909 |
ERP implementation |
|
3,558 |
— |
3,558 |
1,815 |
— |
1,815 |
Impairment of long-term assets |
|
118,857 |
— |
118,857 |
47,868 |
— |
47,868 |
Realized loss on power hedges |
|
1,573 |
— |
1,573 |
(1,559) |
— |
(1,559) |
Adjusted EBITDA |
|
175,421 |
11,026 |
186,447 |
135,376 |
8,023 |
143,399 |
|
|
Year ended |
Year ended |
||||
|
|
Consolidation |
Share of joint |
Proportionate |
Consolidation |
Share of joint |
Proportionate |
|
|
|
|
|
|
|
|
Revenues and Production Tax Credits |
|
1,041,574 |
61,081 |
1,102,655 |
935,223 |
60,535 |
995,758 |
|
|
|
|
|
|
|
|
Operating income |
|
219,575 |
30,962 |
250,537 |
263,366 |
29,919 |
293,285 |
Depreciation and amortization |
|
361,292 |
16,556 |
377,848 |
336,053 |
16,799 |
352,852 |
ERP implementation |
|
12,651 |
— |
12,651 |
2,357 |
— |
2,357 |
Impairment of long-term assets |
|
118,857 |
— |
118,857 |
47,868 |
— |
47,868 |
Realized loss on power hedges |
|
(24,632) |
— |
(24,632) |
(37,479) |
— |
(37,479) |
Adjusted EBITDA |
|
687,743 |
47,518 |
735,261 |
612,165 |
46,718 |
658,883 |
Adjusted Net Loss
References to "Adjusted Net Loss" are to net earnings or losses of the Corporation, to which the following elements are added (subtracted): unrealized portion of the change in fair value of derivative financial instruments, realized loss on the termination of interest rate swaps, realized gain on foreign exchange forward contracts, impairment charges, items that are outside of the normal course of the Corporation's cash generating operations, the net income tax expense (recovery) related to these items, and the share of loss (earnings) of joint ventures and associates related to the above items, net of related income tax.
The Adjusted Net Loss seeks to provide a measure that eliminates the earnings impacts of certain derivative financial instruments and other items that are outside of the normal course of the Corporation's cash generating operations, which do not represent the Corporation's operating performance.
Below is a reconciliation of Adjusted Net Loss to its closest IFRS measure:
|
Three months ended |
Year ended |
||
|
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
Net loss |
(121,964) |
(52,575) |
(105,814) |
(91,115) |
Add (Subtract): |
|
|
|
|
Share of unrealized portion of the change in fair value of financial instruments of joint ventures and associates, net of related income tax |
(1,186) |
(76) |
(1,917) |
(1,381) |
Unrealized portion of the change in fair value of financial instruments |
6,141 |
25,336 |
(9,649) |
141,859 |
Impairment of long-term assets |
118,857 |
47,868 |
118,857 |
47,868 |
Realized gain on settlement of foreign exchange forwards (French Acquisition) |
— |
(43,458) |
— |
(43,458) |
Realized loss (gain) on termination of interest rate swaps |
2,405 |
(59) |
(1,307) |
(71,735) |
ERP implementation |
3,558 |
1,815 |
12,651 |
2,357 |
Realized gain on foreign exchange forward contracts |
(71) |
— |
(449) |
(3,214) |
Income tax (recovery) expense related to above items |
(14,906) |
(6,320) |
(14,424) |
(13,684) |
Adjusted Net loss |
(7,166) |
(27,469) |
(2,052) |
(32,503) |
Free Cash Flow and Payout Ratio
C
hanges in the Non-IFRS measures effective
On
On
The amendments are aimed at increasing relevance of the measure, allowing investors to understand how the operations contribute to funding the Corporation's growth and its dividend. The revised measure also enhances comparability with current industry practices.
Description of the measures
References to "Free Cash Flow" are to cash flows from operating activities before changes in non-cash operating working capital items, less prospective projects expenses, maintenance capital expenditures net of proceeds from dispositions, scheduled debt principal payments, the portion of Free Cash Flow attributed to non-controlling interests, preferred share dividends declared, and gains realized on strategic transactions, plus or minus other elements that are not representative of the Corporation's long-term cash-generating capacity, such as gains and losses on the Phoebe basis hedge due to their limited occurrence, realized gains and losses on contingent considerations related to past business acquisitions, transaction costs related to realized acquisitions, expenses related to the implementation of a cloud-based ERP solution, realized losses or gains on refinancing of certain borrowings or derivative financial instruments used to hedge the interest rate on certain borrowings or the exchange rate on equipment purchases, and tax payments related to fiscal strategies for the purpose of improving the long-term cash generating capacity of
Free Cash Flow is a measure of the Corporation's ability to pay a dividend and its ability to fund its growth from its cash generating operations, in the normal course of business, and through strategic transactions.
References to "Payout Ratio" are to dividends declared on common shares divided by Free Cash Flow.
References to "Normalized Payout Ratio" are to dividends declared on common shares divided by the estimated Free Cash Flow had production levels been equal to their long-term average in all jurisdictions, excluding
Free Cash Flow and Payout Ratio calculation |
Year ended |
|
2023 |
2022 |
|
|
|
|
Cash flows from operating activities1 |
297,853 |
430,243 |
Add (Subtract) the following items: |
|
|
Changes in non-cash operating working capital items |
33,401 |
14,518 |
Prospective projects expenses |
27,162 |
24,740 |
Maintenance capital expenditures, net of proceeds from dispositions |
(25,316) |
(11,051) |
Scheduled debt principal payments |
(186,458) |
(156,862) |
Free Cash Flow attributed to non-controlling interests2 |
(38,377) |
(29,271) |
Dividends declared on Preferred shares |
(5,632) |
(5,632) |
|
4,578 |
2,578 |
Add (subtract) the following specific items3: |
|
|
Realized loss on contingent considerations |
— |
— |
Realized (gain) loss on termination of interest rate swaps4 |
2,405 |
(71,735) |
Realized gain on termination of foreign exchange forwards5 |
— |
(43,458) |
Principal and interest paid related to pre-acquisition period |
1,312 |
— |
Acquisition, integration and ERP implementation expenses |
15,948 |
17,918 |
Realized gain on the Phoebe basis hedge |
— |
— |
Gain on disposition of non-controlling interests6 |
88,054 |
— |
Free Cash Flow |
214,930 |
171,988 |
|
|
|
Dividends declared on common shares |
147,058 |
146,957 |
Payout Ratio |
68 % |
85 % |
Normalized Payout Ratio1 |
69% - 75% |
|
1. |
Cash flows from operating activities for the year ended |
2. |
The portion of Free Cash Flow attributed to non-controlling interests is subtracted, regardless of whether an actual distribution to non-controlling interests is made, in order to reflect the fact that such distributions may not occur in the period they are generated. |
3. |
Certain items are excluded from the Free Cash Flow and Payout Ratio calculations as they are deemed not representative of the Corporation's long-term cash-generating capacity, and include items such as gains and losses on the Phoebe basis hedge due to their limited occurrence (maturity attained on |
4. |
The Free Cash Flow for the year ended |
5. |
The Free Cash Flow for the year ended |
6. |
The Free Cash Flow for the year ended |
ADDITIONAL INFORMATION
CONFERENCE CALL AND WEBCAST
The Corporation will hold a conference call and webcast on
About
For over 30 years,
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 growth targets, 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
Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, including information regarding the Corporation's targeted production, the estimated targeted revenues and production tax credits, targeted Revenues and Production Tax Credits Proportionate, targeted Adjusted EBITDA and targeted Adjusted EBITDA Proportionate, targeted Free Cash Flow, targeted 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
Forward-Looking Information is based on certain key assumptions made by the Corporation, including, without restriction, those concerning hydrology, wind regimes and solar irradiation; performance of operating facilities, acquisitions and commissioned projects; availability of capital resources and timely performance by third parties of contractual obligations; favourable economic and financial market conditions; average merchant spot prices consistent with external price curves and internal forecasts; no material changes in the assumed
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 year ended
SOURCE