HAMILTON, BERMUDA--(Marketwire - Aug. 7, 2012) - Brookfield Renewable Energy Partners L.P. (TSX:BEP.UN) -
Investors, analysts and other interested parties can access Brookfield Renewable's 2012 second quarter results as well as the Letter to Unitholders and Supplemental Information on the web site under the Investor Relations section at www.brookfieldrenewable.com.
The 2012 second quarter results conference call can be accessed via webcast on August 7, 2012 at 9:00 a.m. ET at www.brookfieldrenewable.com or via teleconference at 1-800-319-4610 toll free in North America. For overseas calls please dial 1-604-638-5340, at approximately 8:50 a.m. ET. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 (password: 1557#) until midnight on September 7, 2012.
All amounts in U.S. dollars unless stated otherwise
Brookfield Renewable Energy Partners L.P. ("Brookfield Renewable") today announced its results for the three and six months ended June 30, 2012.
While warm and dry summer conditions across much of North America impacted results, Brookfield Renewable made significant progress on its growth initiatives and its capital markets and funding strategy in the second quarter. With 477 MW of hydroelectric generation in the acquisition or construction stages, the business is poised to increase its hydro capacity in the next two years by approximately 12% prior to additional growth opportunities. Since the beginning of the year, Brookfield Renewable has also enhanced its financial position and its ability to fund growth by increasing liquidity to more than $1 billion and strategically reducing the costs of its borrowings.
Financial Results
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
| Unaudited US$ millions (except per unit amounts) |
Pro forma Basis |
Pro forma Basis (LTA) |
Pro forma Basis |
Pro forma Basis (LTA) |
||||||||
| 2012 | 2011(1) | 2012 | 2012 | 2011(1) | 2012 |
|||||||
| Generation (GWh) | 4,101 | 4,491 | 4,998 | 8,918 | 8,415 | 9,555 | ||||||
| Revenues | $ | 337 | $ | 381 | $ | 431 | $ | 763 | $ | 703 | $ | 829 |
| Adjusted EBITDA(2) | $ | 221 | $ | 286 | $ | 309 | $ | 539 | $ | 525 | $ | 602 |
| Funds from operations (FFO)(2) | $ | 87 | $ | 158 | $ | 171 | $ | 262 | $ | 280 | $ | 326 |
| FFO per unit | $ | 0.33 | $ | 0.60 | $ | 0.65 | $ | 1.00 | $ | 1.07 | $ | 1.24 |
| (1) | Pro forma results reflect new contracts and contract amendments, along with tax implications of the combination, as if each had occurred as of January 1, 2011. |
| (2) | Non-IFRS measure. Refer to "Cautionary Statement Regarding Use of Non-IFRS Accounting Measures". |
"The second quarter was a successful one for the continued growth of Brookfield Renewable," said Richard Legault, President and Chief Executive Officer. "During the quarter, we entered into an agreement with our partners to acquire a 378 MW hydroelectric portfolio in the United States with significant long-term value creation potential. We have also started construction on our 45 MW hydro facility in British Columbia and continued to advance two hydro projects in Brazil with a combined capacity of 48 MW. These additions to our portfolio will strengthen our position as the leading pure-play renewable power business with the largest and most attractive hydroelectric portfolio globally."
Review of Operations
Generation for the second quarter of 2012 was 4,101 GWh as compared with 4,491 GWh in the same quarter of 2011 and a long-term average of 4,998 GWh. The decrease in hydroelectric generation is largely attributable to the low precipitation levels and inflows experienced in the eastern regions of Canada and the United States. Despite the shortfall, reservoir levels on a portfolio basis are in line with long-term average levels for this time of year.
Generation from wind facilities was considerably higher than in the prior year primarily due to contributions from recently commissioned and acquired wind facilities in California and New England and the addition of a wind facility in Ontario commissioned in the fourth quarter of 2011.
For the second quarter of 2012, funds from operations were $87 million ($0.33 per unit) as compared with $158 million ($0.60 per unit) on a 2011 pro forma basis, reflecting the lower generation levels discussed above. The decrease in generation affected assets in markets where power purchase agreement prices are higher than our average price, which had a disproportionate impact on revenue and funds from operations.
For the first six months of 2012, generation of 8,918 GWh was 6% higher than the first half of 2011 and 7% below the long term average. Funds from operations were $262 million ($1.00 per unit) as compared with $280 million ($1.07 per unit) on a pro forma basis.
The tables below summarize generation by segment and region:
| Generation (GWh) | Variance of Results | |||||||
For the three months ended June 30 |
Actual 2012 |
Actual 2011 |
LTA 2012 |
Actual vs. LTA |
Actual vs. Prior Year |
|||
| Hydroelectric generation | ||||||||
| United States | 1,619 | 2,193 | 2,075 | (456 | ) | (574 | ) | |
| Canada | 986 | 1,244 | 1,407 | (421 | ) | (258 | ) | |
| Brazil(1) | 811 | 778 | 811 | - | 33 | |||
| 3,416 | 4,215 | 4,293 | (877 | ) | (799 | ) | ||
| Wind Energy | ||||||||
| Canada | 246 | 151 | 292 | (46 | ) | 95 | ||
| United States | 221 | - | 310 | (89 | ) | 221 | ||
| Other | 218 | 125 | 103 | 115 | 93 | |||
| Total generation(2) | 4,101 | 4,491 | 4,998 | (897 | ) | (390 | ) | |
| (1) | In Brazil, assured generation levels are used as a proxy for long-term average. |
| (2) | Includes 100% of generation from equity-accounted investments. |
| Generation (GWh) | Variance of Results | |||||||
For the six months ended June 30 |
Actual 2012 |
Actual 2011 |
LTA 2012 |
Actual vs. LTA |
Actual vs. Prior year |
|||
| Hydroelectric generation | ||||||||
| United States | 3,577 | 3,891 | 3,958 | (381 | ) | (314 | ) | |
| Canada | 2,294 | 2,270 | 2,565 | (271 | ) | 24 | ||
| Brazil(1) | 1,678 | 1,586 | 1,686 | (8 | ) | 92 | ||
| 7,549 | 7,747 | 8,209 | (660 | ) | (198 | ) | ||
| Wind Energy | ||||||||
| Canada | 614 | 314 | 616 | (2 | ) | 300 | ||
| United States | 311 | - | 410 | (99 | ) | 311 | ||
| Other | 444 | 354 | 320 | 124 | 90 | |||
| Total generation(2) | 8,918 | 8,415 | 9,555 | (637 | ) | 503 | ||
| (1) | In Brazil, assured generation levels are used as a proxy for long-term average. |
| (2) | Includes 100% of generation from equity-accounted investments. |
Growth Initiatives
During the second quarter, Brookfield Renewable and its institutional partners announced an agreement to acquire a 378 MW hydroelectric generating portfolio consisting of four generating stations located in Tennessee and North Carolina. The facilities benefit from power purchase agreements through June 2014 and are expected to generate 1.4 million MWh of electricity annually. The transaction is expected to close in the fourth quarter of 2012.
In Brazil, the construction of two hydroelectric facilities totaling 48 MW of capacity is progressing on scope, schedule and budget. The facilities are expected to enter commercial operations in the first quarter of 2013.
Construction is underway at the 45 MW hydroelectric project on the Kokish River in British Columbia. At quarter-end, access roads to the intake site and a new bridge across the Kokish River had been completed. In the third quarter, excavations for foundation construction will be undertaken at the powerhouse site, at the intake site and along the penstock route. The facility benefits from a 40-year power purchase agreement and is expected to enter commercial operation in 2014.
Subsequent to quarter end, Brookfield Renewable and its institutional partners completed the acquisition of a 6 MW hydroelectric facility located in Brazil. The facility benefits from a purchase price agreement expiring in 2019.
Financial Position and Liquidity
During the quarter, Brookfield Renewable refinanced indebtedness associated with its hydroelectric pumped storage facility in New England (in which it owns a 50% interest), through a $125 million loan for a term of 5 years.
As at June 30, 2012, total liquidity was approximately $1 billion, consisting of $235 million of cash and cash equivalents and $770 million of undrawn amounts from our revolving credit facilities. In May 2012, these facilities were increased by $90 million to $990 million.
Distribution Declaration
The Board of Directors has declared a quarterly distribution in the amount of US$0.345 per unit, payable on October 31, 2012 to limited partnership unitholders of record as at the close of business on September 30, 2012. The regular quarterly dividend on the Brookfield Renewable Power Preferred Equity Inc. preferred shares has also been declared.
Information on the limited partnership unit distributions and preferred share dividends can be found on Brookfield Renewable's website at www.brookfieldrenewable.com under Investor Relations.
Distribution Reinvestment Plan
Brookfield Renewable maintains a Distribution Reinvestment Plan ("DRIP") which allows holders of its limited partnership units who are resident in Canada to acquire additional units by reinvesting all or a portion of their cash distributions without paying commissions. Information on the DRIP, including details on how to enrol, is available on Brookfield Renewable's website at www.brookfieldrenewable.com/DRIP.
Additional Information
The Letter to Unitholders and the Supplemental Information for the period ended June 30, 2012 contain further information on Brookfield Renewable's strategy, operations and financial results. Unitholders are encouraged to read these documents, which are available at www.brookfieldrenewable.com.
Brookfield Renewable Energy Partners (TSX:BEP.UN) operates one of the largest publicly-traded, pure-play renewable power platforms globally. Its portfolio is primarily hydroelectric and totals approximately 5,000 megawatts of installed capacity. Diversified across 67 river systems and 10 power markets in the United States, Canada and Brazil, the portfolio generates enough electricity from renewable resources to power two million homes on average each year. With a virtually fully-contracted portfolio of high-quality assets and strong growth prospects, the business is positioned to generate stable, long-term cash flows supporting regular and growing cash distributions to unitholders. For more information, please visit www.brookfieldrenewable.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENT
This news release contains forward-looking statements and information, within the meaning of Canadian securities laws, concerning the business and operations of Brookfield Renewable. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements in this news release include statements regarding the quality of Brookfield Renewable's assets and the resiliency of the cash flow they will generate, Brookfield Renewable's anticipated financial performance, future commissioning of assets, the future growth prospects and distribution profile of Brookfield Renewable, the expected completion of acquisitions and Brookfield Renewable's access to capital. Forward-looking statements can be identified by the use of words such as "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "believes", "potentially", "tends", "continue", "attempts", "likely", "primarily", "approximately", "endeavours", "pursues", "strives", "seeks", "targets" or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information in this news release are based upon reasonable assumptions and expectations, we cannot assure you that such expectations will prove to have been correct. You should not place undue reliance on forward-looking statements and information as such statements and information involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: changes to hydrology at our hydroelectric stations or in wind conditions at our wind energy facilities; the risk that counterparties to our contracts do not fulfill their obligations, and as our contracts expire, we may not be able to replace them with agreements on similar terms; increases in water rental costs (or similar fees) or changes to the regulation of water supply; our operations being highly regulated and exposed to increased regulation which could result in additional costs; the risk that our concessions and licenses will not be renewed; increases in the cost of operating our plants; our failure to comply with conditions in, or our inability to maintain, governmental permits; equipment failure; dam failures and the costs of repairing such failures; force majeure events; exposure to uninsurable losses; adverse changes in currency exchange rates; our inability to access interconnection facilities and transmission systems; occupational, health, safety and environmental risks; disputes and litigation; losses resulting from fraud, other illegal acts, inadequate or failed internal processes or systems, or from external events; general industry risks relating to the North American and Brazilian power market sectors; advances in technology that impair or eliminate the competitive advantage of our projects; newly developed technologies in which we invest not performing as anticipated; labour disruptions and economically unfavourable collective bargaining agreements; risks related to operating in Brazil; our inability to finance our operations; the operating and financial restrictions imposed on us by our loan, debt and security agreements; changes in our credit ratings; changes to government regulations that provide incentives for renewable energy; our inability to identify and complete sufficient investment opportunities; the growth of our portfolio; our inability to develop existing sites or find new sites suitable for the development of greenfield projects; risks associated with the development of our generating facilities and the various types of arrangements we enter into with communities and joint venture partners; Brookfield Asset Management's election not to source acquisition opportunities for us and our lack of access to all renewable power acquisitions that Brookfield Asset Management identifies; our lack of control over all our operations; our obligations to issue equity or debt for future acquisitions and developments; and foreign laws or regulation to which we become subject as a result of future acquisitions in new markets.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our views as of the date of this news release and should not be relied upon as representing our views as of any date subsequent to August 7, 2012, the date of this news release. While we anticipate that subsequent events and developments may cause our views to change, we disclaim any obligation to update the forward-looking statements, other than as required by applicable law. For further information on these known and unknown risks, please see "Risk Factors" included in our Annual Information Form.
CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS ACCOUNTING MEASURES
This news release contains references to Adjusted EBITDA, funds from operations and net asset value which are not generally accepted accounting measures in accordance with IFRS and therefore may differ from definitions of Adjusted EBITDA, funds from operations and net asset value used by other entities. We believe that Adjusted EBITDA, funds from operations and net asset value are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by our operating portfolio. None of Adjusted EBITDA, funds from operations and net asset value should be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS. As a result of the Combination, we have presented these measurements on a pro forma basis.
A reconciliation of Adjusted EBITDA and funds from operations to net income is presented in our Management's Discussion and Analysis related to our interim consolidated financial statements.
References to Brookfield Renewable are to Brookfield Renewable Energy Partners L.P. together with its subsidiary and operating entities unless the context reflects otherwise.
| (1) | The unaudited pro forma financial results have been prepared based on currently available information and assumptions deemed appropriate by management. They are provided for information purposes only and may not be indicative of the results that would have occurred had the combination been effected on the date indicated. |
| (2) | Adjusted EBITDA means 100% of revenues less direct costs (including energy marketing costs), plus our share of cash earnings from equity-accounted investments, before interest, current income taxes, depreciation, amortization and management service costs. Funds from operations is defined as Adjusted EBITDA less interest, current income taxes and management service costs, which is then adjusted for non-controlling interests. A reconciliation of net income to funds from operations is available in Brookfield Renewable's Supplemental Information for the second quarter of 2012 at www.brookfieldrenewable.com. |
| (3) | Average number of units outstanding on a fully diluted weighted average basis for the three and six months June 30, 2012 was approximately 262.5 million (2011 - 262.5 million). |
EBITDA and Funds from Operations
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||
| Pro forma Basis |
Pro forma Basis (LTA) |
Pro forma Basis |
Pro forma Basis (LTA) |
|||||||||||||||
| (millions, except as noted) | 2012 | 2011(1) | 2012 | 2012 | 2011(1) | 2012 | ||||||||||||
| Generation (GWh) | 4,101 | 4,491 | 4,998 | 8,918 | 8,415 | 9,555 | ||||||||||||
| Revenues | $ | 337 | $ | 381 | $ | 431 | $ | 763 | $ | 703 | $ | 829 | ||||||
| Other income | 5 | 6 | 5 | 10 | 10 | 10 | ||||||||||||
| Share of cash earnings from equity-accounted investments | 4 | 6 | 4 | 8 | 12 | 8 | ||||||||||||
| Direct operating costs | (125 | ) | (107 | ) | (131 | ) | (242 | ) | (200 | ) | (245 | ) | ||||||
| Adjusted EBITDA(2) | 221 | 286 | 309 | 539 | 525 | 602 | ||||||||||||
| Interest expense - borrowings | (104 | ) | (103 | ) | (104 | ) | (214 | ) | (200 | ) | (214 | ) | ||||||
| Management service costs | (8 | ) | (6 | ) | (8 | ) | (15 | ) | (11 | ) | (15 | ) | ||||||
| Current income taxes | (7 | ) | (2 | ) | (7 | ) | (13 | ) | (6 | ) | (13 | ) | ||||||
| Cash portion of non-controlling interests | (15 | ) | (17 | ) | (19 | ) | (35 | ) | (28 | ) | (34 | ) | ||||||
| Funds from operations(2) | $ | 87 | $ | 158 | $ | 171 | $ | 262 | $ | 280 | $ | 326 | ||||||
| (1) | Pro forma results reflect new contracts and contract amendments, along with the tax implications of the Combination, as if each had occurred as of January 1, 2011. |
| (2) | Non-IFRS measure. Refer to "Cautionary Statement Regarding Use of Non-IFRS Accounting Measures". |
Net Asset Value
The following table presents our net asset value on a consolidated basis:
| Total | Per Share | ||||||||||||
| (millions, except as noted) | Jun 30 2012 | Dec 31 2011 |
Jun 30 2012 | Dec 31 2011 |
|||||||||
| Property, plant and equipment, at fair value | |||||||||||||
| Hydroelectric(1) | $ | 12,211 | $ | 12,463 | $ | 46.51 | $ | 47.47 | |||||
| Wind energy | 2,337 | 1,480 | 8.90 | 5.64 | |||||||||
| Other | 87 | 86 | 0.33 | 0.33 | |||||||||
| 14,635 | 14,029 | 55.74 | 53.44 | ||||||||||
| Development assets | 367 | 378 | 1.40 | 1.44 | |||||||||
| Working capital and other, net | 202 | 380 | 0.77 | 1.45 | |||||||||
| Long-term debt and credit facilities | (5,873 | ) | (5,519 | ) | (22.37 | ) | (21.02 | ) | |||||
| Participating non-controlling interests | (724 | ) | (629 | ) | (2.76 | ) | (2.40 | ) | |||||
| Preferred equity | (242 | ) | (241 | ) | (0.92 | ) | (0.92 | ) | |||||
| Net asset value(2) | $ | 8,365 | $ | 8,398 | $ | 31.86 | $ | 31.99 | |||||
| (1) | Includes $311 million of equity-accounted investments (2011: $405 million) and $52 million of intangible assets (2011: $57 million). |
| (2) | Non-IFRS measure. Refer to "Cautionary Statement Regarding Use of Non-IFRS Accounting Measures". |
Contact Information:
Zev Korman
Director, Investor Relations
416-359-1955
zev.korman@brookfield.com
www.brookfieldrenewable.com