Valener and Gaz Metro Report Their Fiscal 2017 Second Quarter Results
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 05/11/17 -- Valener
Gaz Metro
Valener Inc. ("Valener") (TSX: VNR)(TSX: VNR.PR.A), the public investment vehicle in Gaz Metro Limited Partnership ("Gaz Metro"), today reported adjusted net income(1) attributable to common shareholders of $32.9 million for the second quarter of fiscal 2017, up $0.8 million or 2.5% from the second quarter of fiscal 2016. This resulted in an adjusted net income of $0.85 per common share for the second quarter of fiscal 2017 compared to $0.83 per common share for the second quarter of fiscal 2016.
Net income attributable to common shareholders was $31.5 million for the second quarter of fiscal 2017 compared to $28.4 million for the second quarter of fiscal 2016.
Normalized operating cash flows stood at $11.3 million ($0.29 per common share) in the second quarter of fiscal 2017, consistent with the second-quarter results of fiscal 2016.
In addition, Valener announced the extension, for four additional years, of the compound annual growth target of 4% on its common share dividends. "Given the quality of its underlying assets and their growing, predictable returns, not to mention the innovative non-regulated projects such as added capacity at the natural gas liquefaction plant in Montreal and the recent acquisition of Standard Solar in the United States, Valener will have increased, accordingly, its annual dividend for eight consecutive years from fiscal 2015 to fiscal 2022," said Pierre Monahan, Chairman of Valener's board of directors.
Gaz Metro's results
For the second quarter of fiscal 2017, net income attributable to the Partners of Gaz Metro totalled $142.5 million, a $2.0 million year-over-year increase owing mainly to higher net income generated by natural gas distribution activities in Quebec ("Gaz Metro-QDA") and Vermont.
In addition, Gaz Metro completed the construction of a second liquefaction train at its plant in Montreal East, effectively tripling its production capacity. "Our plant's annual liquefaction capacity now exceeds 9 billion cubic feet of LNG," said Sophie Brochu, President and Chief Executive Officer of Gaz Metro. "It's the only facility of its kind in Eastern Canada. Together with our partner, Investissement Quebec, we can now more than ever fully leverage LNG's potential to meet the energy needs of industries that operate far from the gas network and to serve customers in the heavy road and marine transportation sectors."
"What's more, by acquiring Standard Solar, Gaz Metro is positioning itself to capitalize on the projected growth in solar energy in the U.S.," she continued. "This acquisition reflects Gaz Metro's commitment to further establishing its presence in the renewable energy sector while continuing to grow its current operations."
Seigneurie de Beaupre Wind Farms 2 and 3 General Partnership ("Wind Farms 2 and 3") and Seigneurie de Beaupre Wind Farm 4 General Partnership ("Wind Farm 4") generated a combined 307,299 MWh of electricity in the second quarter of fiscal 2017, a year-over-year increase of 2,972 MWh, or 1.0%, owing to stronger winds than those of second-quarter 2016. The resulting operating cash flows for the second quarter of 2017 totalled $13.8 million, up $2.2 million from the same quarter in fiscal 2016.
Wind Farms 2 and 3 and Wind Farm 4 used these cash flows to pay distributions of $7.4 million and $1.3 million, respectively, in April 2017.
SEGMENT INFORMATION
Energy Distribution
In Quebec
For the second quarter of fiscal 2017, Gaz Metro-QDA's net income attributable to Partners totalled $114.4 million, a $1.5 million year-over-year increase that was mainly due to:
partly offset by lower distribution revenues as a result of an overall average price decrease following changes in customer consumption.
Given this recognition of the share in overearnings, Gaz Metro expects that the fiscal 2017 net income generated by the Quebec Energy Distribution segment will slightly exceed the earnings projected in the 2017 rate case.
Biomethanation
The project to purchase renewable natural gas ("RNG") from the city of Saint-Hyacinthe continues to move forward, with the first injections of RNG scheduled for June 2017. The city will produce up to 13 million cubic metres of RNG per year, most of which will be injected into Gaz Metro's gas network. Quebec's natural gas consumers will therefore gain access to a locally produced source of clean, renewable energy.
In Vermont
Through Green Mountain Power Corporation ("GMP") and Vermont Gas Systems ("VGS"), the Energy Distribution segment in Vermont recorded net income attributable to Partners of $22.4 million in the second quarter of fiscal 2017, a $1.9 million or 9.3% year-over-year increase that was mainly due to:
Addison project
On April 12, 2017, VGS completed construction and put into service the extension to its natural gas distribution system in Addison County. The project is viewed as beneficial for the State of Vermont given that, aside from its environmental advantages, natural gas is a competitive energy solution compared to other fossil fuels. A 0.6 km segment is currently the subject of legal proceedings before the Supreme Court of Vermont. In December 2016, the Supreme Court of Vermont authorized VGS to continue the work without ruling on the merits of the appeal. The hearings before the Supreme Court of Vermont took place in April 2017 and a decision is expected to follow this year.
Solar power
As part of its commercial goal of continuing to offer sources of renewable energy generation to Vermont residents, GMP submitted three new solar farm projects, each having a capacity of 5 MW, to the Vermont Public Service Board ("VPSB") in March 2017. Each farm will also have the capacity to store 2 MW of energy. Located in the State of Vermont, these projects will be held in partnership and represent an investment of approximately US$26 million for GMP. VPSB approvals are expected in early 2018 and construction is scheduled for autumn 2018.
Natural Gas Transportation
For the second quarter of fiscal 2017, the Natural Gas Transportation segment generated net income attributable to Partners of $6.7 million, down $0.7 million year over year mainly because of a decrease in volumes transported by Portland Natural Gas Transmission System (a Gaz Metro entity subject to significant influence) given fewer short-term contracts.
Electricity Production
The Electricity Production segment recorded net income attributable to Partners of $1.5 million in the second quarter of fiscal 2017, unchanged from the net income of $1.5 million generated in the same quarter of fiscal 2016.
Acquisition of Standard Solar
In April 2017, Gaz Metro, through one of its subsidiaries, made a strategic acquisition by acquiring all of the issued and outstanding common shares of Standard Solar for a net cash consideration of US$16.3 million. Based in the State of Maryland, Standard Solar is a U.S. leader in the solar power sector and provides development, engineering, supply management, construction and solar power systems operations and maintenance services in the commercial, industrial and institutional sectors. Standard Solar operates in many U.S. states and currently has a large portfolio of construction-ready projects for a total capacity of nearly 80 MW, a significant project-development portfolio, and over 100 MW of solar generation capacity under management. With this acquisition, Gaz Metro is growing its presence and expertise in the solar power sector-one of the fastest growing sectors in the United States. In keeping with Gaz Metro's strategic vision, this acquisition will deepen Gaz Metro's existing know-how in the solar power sector and build on its presence in the renewable energy segment, all while ensuring the long-term growth of its activities.
Energy Services, Storage and Other
For the second quarter of fiscal 2017, the Energy Services, Storage and Other segment recorded net income attributable to Partners of $1.6 million, a $0.7 million year-over-year increase that primarily reflects a $0.4 million favourable impact of acquiring an additional interest in CDH Solutions & Operations Limited Partnership ("CDH"), which owns Climatisation et Chauffage Urbains de Montreal, s.e.c.
LSR plant
In April 2017, Gaz Metro put into service new infrastructure at the LSR plant. The plant now has an annual production capacity of more than 9 billion cubic feet of liquefied natural gas. As a result, Gaz Metro can better meet the growing demand in road and marine transport markets and in areas located far from Gaz Metro-QDA's gas system, particularly the Nord-du-Quebec and Cote-Nord regions of Quebec and the Northeastern United States. As at March 31, 2017, Gaz Metro and its partner, Investissement Quebec, had invested $66.5 million and $48.2 million, respectively, in the project.
Corporate Affairs
The Corporate Affairs segment recorded a net loss of $4.1 million for the second quarter of fiscal 2017 compared to a net loss of $2.7 million for the second quarter of fiscal 2016, mainly because of higher development costs on various projects, in particular the Standard Solar acquisition.
Financial initiatives
On March 31, 2017, Gaz Metro issued 4,545,455 new units as part of a private placement for total proceeds of $100 million. The placement proceeds were used for general business purposes.
Valener subscribed to its proportional share of the outstanding units, i.e., 1,318,291 Gaz Metro units for approximately $29 million. Gaz Metro inc. also subscribed to its proportional share of these units.
Reconciliation of non-GAAP financial measures
For additional information on non-GAAP financial measures, refer to Valener's MD&A for the three-month and six-month periods ended March 31, 2017 and 2016.
Conference call
Valener will hold a conference call today at 11:00 am (Eastern Time) to discuss its results and those of Gaz Metro for the period ended March 31, 2017. The public is invited to join the call at 647-788-4922 or toll-free at 877-223-4471. A simultaneous webcast will also be available using the link provided under "Events and Presentations" in the "Investors" section of . A replay of the webcast will be archived on the Company's website for 365 days following the call; a phone replay will be available for 30 days by dialing 416-621-4642 or toll-free 800-585-8367 (access code: 5485664).
Overview of Valener
Valener is a widely held public company that serves as the investment vehicle in Gaz Metro. Through its investment in Gaz Metro, Valener offers its shareholders a solid investment in a diversified and largely regulated energy portfolio in Quebec and Vermont. As a strategic partner, Valener, on the one hand, contributes to Gaz Metro's growth, and on the other, invests in wind power production in Quebec alongside Gaz Metro. Valener favours energy sources and uses that are innovative, clean, competitive and profitable. Valener's common and preferred shares are listed on the Toronto Stock Exchange under the "VNR" symbol for common shares and the "VNR.PR.A" symbol for Series A preferred shares.
Overview of Gaz Metro
With more than $7 billion in assets, Gaz Metro is a leading energy provider. It is the largest natural gas distribution company in Quebec, where its network of over 10,000 km of underground pipelines serves more than 300 municipalities and over 205,000 customers. Gaz Metro is also present in Vermont, producing electricity and distributing electricity and natural gas to meet the needs of more than 315,000 customers. Gaz Metro is actively involved in the development and operation of innovative, promising energy projects, including natural gas as fuel and liquefied natural gas as a replacement to higher emission-producing energies, the production of wind and solar power, and the development of biomethane. Gaz Metro is a major energy sector player that takes the lead in responding to the needs of its customers, regions and municipalities, local organizations and communities while also satisfying the expectations of its Partners (Gaz Metro inc. and Valener) and employees.
Cautionary note regarding forward-looking statements
This press release may contain forward-looking information within the meaning of applicable securities laws. Such forward-looking information reflects the intentions, plans, expectations and opinions of the management of Gaz Metro inc. ("GMi"), in its capacity as General Partner of Gaz Metro, acting as manager of Valener ("the management of the manager"), and is based on information currently available to the management of the manager and assumptions about future events. Forward-looking statements can often be identified by words such as "plans," "expects," "estimates," "seeks," "targets," "forecasts," "intends," "anticipates" or "believes" or similar expressions, including the negative and conjugated forms of these words. Forward-looking statements involve known and unknown risks and uncertainties and other factors beyond the control of the management of the manager. A number of factors could cause the actual results of Valener or of Gaz Metro to differ significantly from historical results or current expectations, as described in the forward-looking statements, including but not limited to the general nature of the aforementioned, terms of decisions rendered by regulatory agencies, uncertainty that approvals will be obtained by Gaz Metro from regulatory agencies and interested parties to carry out all of its activities and the socio-economic risks associated with such activities, uncertainty related to the implementation of Quebec's 2030 Energy Policy, the competitiveness of natural gas in relation to other energy sources in the context of fluctuating global oil prices, the reliability or costs of natural gas supply and electricity supply, the integrity of the natural gas and electricity distribution systems, the evolution and profitability of Seigneurie de Beaupre Wind Farms 2 and 3 General Partnership ("Wind Farms 2 and 3") and Seigneurie de Beaupre Wind Farm 4 GP ("Wind Farm 4") and other development projects, Valener's ability to generate sufficient cash to support its anticipated target annual dividend growth rate on its common shares, the ability to complete attractive acquisitions and the related financing and integration aspects, the ability to complete new development projects, the ability to secure future financing, general economic conditions, exchange rate and interest rate fluctuations, weather conditions and other factors described in section E) Risk Factors Relating to Valener and in section R) Risk Factors Relating to Gaz Metro of Valener's MD&A for the fiscal year ended September 30, 2016 and in subsequent Valener quarterly MD&As that might address changes to these risks.Although the forward-looking statements contained herein are based on what the management of the manager believes to be reasonable assumptions, in particular assumptions that no unforeseen changes in the legislative and regulatory framework of energy markets in Quebec and in the United States will occur; that the applications filed with various regulatory agencies will be approved as submitted; that natural gas prices will remain competitive; that the supply of natural gas and electricity will be maintained or will be available at competitive costs; that no significant event will occur outside the ordinary course of business, such as a natural disaster or other calamity, or threat to cybersecurity (or cyberattack); that Gaz Metro can continue to distribute substantially all of its net income (excluding non-recurring items); that Wind Farms 2 and 3 and Wind Farm 4 will be able to make distribution payments to their partners; that Valener will be able to generate sufficient cash to support its anticipated target annual dividend growth rate on its common shares; that Green Mountain Power Corporation will be able to continue achieving efficiency gains and synergies from the merger with Central Vermont Public Service Corporation; that Valener and Gaz Metro will be able to present their information in accordance with U.S. GAAP beyond 2018 or, after 2018, will adopt International Financial Reporting Standards ("IFRS") that permit the recognition of regulatory assets and liabilities; that liquidity needs for Gaz Metro's development projects will be obtained through a combination of operating cash flows, borrowings on credit facilities, capital injections from partners, and issuances of debt securities; and that the subsidiaries will obtain the required authorizations and funds needed to finance their development projects. In addition to the other assumptions described in the Valener MD&A for the year ended September 30, 2016, the management of the manager cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of this date, and the management of the manager assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. These statements do not reflect the potential impact of any unusual item or any business combination or other transaction that may be announced or that may occur after the date hereof. Readers are cautioned to not place undue reliance on these forward-looking statements.
Photos, videos (b-roll) and logos are available in Gaz Metro's .
Contacts:
Investors and Analysts
Mariem Elsayed
Investor Relations
514-598-3253
Media
Marie-Christine Demers
Public Affairs and Communications
514-598-3449
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Datum: 11.05.2017 - 11:00 Uhr
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