Valener and Gaz Metro Report Their Fiscal 2017 Third Quarter Results
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 08/09/17 -- 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 $2.5 million for the third quarter of fiscal 2017, up $0.8 million from the third quarter of fiscal 2016. Adjusted net income per common share was $0.06 for the third quarter of fiscal 2017 compared to $0.04 per common share for the third quarter of fiscal 2016.
Net income attributable to common shareholders was $1.8 million for the third quarter of fiscal 2017 compared to a net loss of $3.8 million for the third quarter of fiscal 2016.
Normalized operating cash flows stood at $14.4 million ($0.37 per common share) in the third quarter of fiscal 2017, up $0.5 million compared to the third quarter of fiscal 2016.
In addition, in line with its compound annual growth target for its common share dividends, Valener announced a dividend increase. "In accordance with our goal of achieving compound annual growth of 4% until 2022, we are raising Valener's quarterly dividend from $0.28 to $0.29 per share," said Pierre Monahan, Chairman of Valener's board of directors. "This increase, the fourth in less than three years, can be credited to the quality and profitability of Valener's underlying assets."
Decision regarding Series A preferred shares
On August 8, 2017, Valener's board of directors decided that it was in its interest, based on the conditions applicable to the Series A preferred shares, to not exercise the redemption option coming into effect on October 15, 2017.
Summary of Valener's results
Gaz Metro's results
For the third quarter of fiscal 2017, net income attributable to the Partners of Gaz Metro totalled $11.1 million, a $1.3 million year-over-year increase owing mainly to higher net income generated by natural gas distribution activities in Quebec ("Gaz Metro-QDA") and Vermont.
"Gaz Metro's solid results for this third quarter-a quarter typically affected by the seasonal nature of our operations-are testament to the quality and skillful management of our assets," said Sophie Brochu, President and Chief Executive Officer of Gaz Metro. "What's more, our earnings and distributions growth confirm the soundness of the geographical and commercial diversification strategy we adopted ten years ago and that continues today with our recent acquisition of Standard Solar, a leader in the U.S. solar power industry. With this acquisition, we have positioned ourselves to further invest in the United States and have entered into the highly promising area of solar energy, which complements our current renewable energies offering."
Seigneurie de Beaupre wind farms - Valener and Gaz Metro
In the third quarter of fiscal 2017, 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 239,409 MWh of electricity, a year-over-year increase of 17,322 MWh, or 7.2%, resulting from stronger winds than those of the third quarter of fiscal 2016. The resulting operating cash flows for the third quarter of fiscal 2017 totalled $19.2 million, up $2.7 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 $10.3 million in the third quarter of fiscal 2017. In the third quarter of fiscal 2016, the wind farms had paid a total of $89.0 million in distributions, specifically, $9.0 million in regular distributions and an $80.0 million return-of-capital distribution as a result of the refinancing of the long-term debt of Wind Farms 2 and 3.
Gaz Metro's segment results - Adjusted net income (loss) attributable to Partners(1)
Increase in quarterly distribution
Gaz Metro announced an increase to its quarterly distribution starting with its next distribution on October 2, 2017. "Given the success of our strategic plan and sustained growth of our regulated activities, we're able to raise the distributions to our partners, including Valener, for the second time in two years," said Sophie Brochu. "The distributions will be raised from $0.29 to $0.30 per unit, an increase of 3.4%."
SEGMENT INFORMATION
Energy Distribution
In Quebec
Gaz Metro-QDA recorded a net loss attributable to Partners of $0.5 million compared to a net loss of $3.6 million in the third quarter of fiscal 2016, a $3.1 million year-over-year improvement that was mainly due to:
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 exceed the earnings projected in the 2017 rate case by more than $5.0 million.
Renewable natural gas
The project to purchase renewable natural gas (RNG) produced by the city of Saint-Hyacinthe and inject it into our distribution network continues to move forward. The city will produce up to 13 million cubic metres of RNG per year, most of which will be injected into Gaz Metro's network. Quebec's natural gas consumers will in turn gain access to a locally produced source of renewable energy.
2030 Energy Policy and network extensions
In July 2017, the Quebec government announced that a financial contribution would be allocated to three different projects to extend the distribution network. This financial support, for a maximum amount of $27.4 million, will help connect the municipalities of Saint-Ephrem-de-Beauce, Saint-Marc-des-Carrieres located in the Portneuf RCM and various sectors in the Appalaches RCM.
In Vermont
Through Green Mountain Power Corporation ("GMP") and Vermont Gas Systems Inc. ("VGS"), the Energy Distribution segment in Vermont recorded adjusted net income attributable to Partners of $12.4 million in the third quarter of fiscal 2017, a $0.9 million or 7.8% year-over-year increase owing mainly to a weaker Canadian dollar and to an increase in GMP's rate base, partly offset by a timing difference between the revenue and expense recognition profiles.
In the third quarter of fiscal 2016, a $5.0 million net loss attributable to Partners had been recorded given the recognition of a before-tax US$20.6 million impairment of noncurrent assets (C$26.5 million before taxes) in connection with the Addison project, the effect of which was a $16.5 million unfavourable impact on net income.
Hydroelectricity
In May 2017, GMP completed its project to acquire small hydroelectric power plants located mainly in New England. These plants have a total capacity of 14 MW and are valued at US$16.3 million.
Natural Gas Transportation
For the third quarter of fiscal 2017, the Natural Gas Transportation segment generated net income attributable to Partners of $1.9 million, down $1.1 million year over year, mainly because of:
Electricity Production
The Electricity Production segment posted a net loss attributable to Partners of $0.7 million in the third quarter of fiscal 2017 compared to a net loss attributable to Partners of $0.2 million in the third quarter of last year. This change was essentially the result of concentrated efforts to develop a new business model for Standard Solar Inc. ("Standard Solar"), a leading solar power company acquired by Gaz Metro in April 2017, partly offset by a 7.2% increase in wind power production given favourable wind conditions in 2017.
As a result of Standard Solar's efforts since the acquisition, we expect solar power development projects with a capacity of more than 20 MW will move into construction phase by September 30, 2017, representing approximately US$50 million in investments in property, plant and equipment. As of June 30, 2017, 10 MW were already under construction.
In addition, on July 28, 2017, Gaz Metro and Boralex submitted three bids in response to a request for proposals issued on March 31, 2017 by the State of Massachusetts. The proposed project, named SBx, is a 300 MW wind power project located on the private land of Seigneurie de Beaupre that would be entirely developed, financed, built and operated by Gaz Metro and Boralex. The proposals submitted by Gaz Metro and Boralex would provide the State of Massachusetts with a long-term supply of clean, stable, and sustainable energy. The selected projects are expected to be announced in early 2018.
Energy Services, Storage and Other
For the third quarter of fiscal 2017, the Energy Services, Storage and Other segment recorded net income attributable to Partners of $0.6 million compared to $1.4 million in the third quarter of fiscal 2016.
Sale of liquefied natural gas
On April 24, 2017, the new infrastructure aimed at tripling the production capacity of the liquefaction, storage and regasification plant came into service. The results of this operation, which had previously been reported entirely in the financial statements of Gaz Metro, will now be reflected in a proportion of 58%, which corresponds to Gaz Metro's ownership interest in the project. Our partner, Investissement Quebec, owns 42%.
Financial initiatives
On May 16, 2017, Gaz Metro inc. completed a $200 million private placement of first mortgage bonds bearing interest at an annual rate of 3.53% and maturing on May 16, 2047. The issuance proceeds were loaned to Gaz Metro at similar conditions and were used to repay existing debt and for general business purposes.
GMP issued, by way of private placement, first mortgage bonds for an aggregate principal amount of US$80.0 million, comprised of a series of US$15.0 million issued in April 2017 and a series of US$65.0 million issued in June 2017. These series of bonds, which will mature in April 2047 and June 2029, bear interest at annual rates of 4.17% and 3.45%, respectively.
During the third quarter of fiscal 2017, TQM refinanced a $100 million debt that bore interest at 4.25%, replacing it with a debt bearing interest at 2.57%.
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 nine-month periods ended June 30, 2017 and 2016.
Valener Reconciliation of normalized operating cash flows
Valener Reconciliation of adjusted net income attributable to common shareholders
Gaz Metro Limited Partnership Reconciliation of adjusted net income attributable to Partners
Conference call
Valener will hold a conference call today at 1 pm (Eastern Time) to discuss its results and those of Gaz Metro for the period ended June 30, 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: 51052297).
Overview of Valener
Valener is a public company held entirely by its shareholders and 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 and electricity supply, the integrity of the natural gas and electricity distribution and transportation 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 any other type of calamity, a major service interruption, or a threat to cybersecurity (or cyberattack); that Gaz Metro can continue to distribute substantially all of its net income; 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 quarter ended June 30, 2017, 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 not to 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: 09.08.2017 - 11:15 Uhr
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