Northland Power Income Fund
TSX : NPI.UN
TSX : NPI.DB

Northland Power Income Fund

May 08, 2008 19:03 ET

Northland Power Income Fund Announces Q1 Results

TORONTO, ONTARIO--(Marketwire - May 8, 2008) -

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Northland Power Income Fund (the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) reported its financial results today for the quarter ended March 31, 2008.



FINANCIAL AND OPERATING HIGHLIGHTS

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3 Months Ended March 31
2008 2007
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FINANCIAL (thousands, except per unit amounts)
Sales $52,351 $51,638
Net income $15,722 $16,840

Standardized distributable cash $21,638 $39,902
Distributable cash $23,271 $23,963

Distributions declared to Unitholders $16,835 $16,830

Units Outstanding at Quarter End 62,352 62,334
Average Number of Units Outstanding - basic 62,352 62,334
Average Number of Units Outstanding - diluted 64,916 64,761

Per Unit - basic
Standardized distributable cash $0.3470 $0.6401
Distributable cash $0.3732 $0.3844
Distributions declared to Unitholders $0.2700 $0.2700
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OPERATIONS
Electricity sales volume (megawatthours) 385,572 388,459
Steam sales volume (thousands of pounds) 380,993 451,958
Fuel consumption (thousands of gigajoules) 3,057 3,069
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Quarter Results

Consolidated sales of $52.4 million exceeded the first quarter of 2007 by $0.7 million while net income at $15.7 million was down $1.1 million due to several factors including an increase in the cost of gas associated with the escalation of natural gas contract prices, higher TransCanada PipeLines Limited ("TCPL") transportation tolls and lower investment income. Standardized distributable cash for the quarter at $21.6 million was $4.8 million higher than distributions paid to Unitholders but $18.3 million lower than 2007 due to a change in working capital. Distributable cash as determined by the Fund for the three months ended March 31st at $23.3 million was $0.7 million lower than the same period in 2007 but was $6.4 million higher than the distributions paid to Unitholders.

First quarter operating income at the Iroquois Falls plant was consistent with last year as higher contracted and incremental electricity sales were offset by an increase in the cost of gas consumed. Operating income from the Kingston facility was also similar to last year as higher electricity sales were offset by an increase in the cost of sales. Production at the Mont Miller wind farm was down due to lighter winds in January and March while the German wind farm results continued to exceed expectations and were in line with the same period last year. Management and administration costs were down $0.4 million largely due to one-time costs in 2007 related to the special Unitholder meeting held in the first quarter of 2007.

The Fund generated investment income of $2.1 million this quarter through a combination of interest and dividend payments, $0.5 million lower than the same period last year. During the quarter, the Fund recorded the following non-cash adjustments: (i) a $2.0 million loss on the change in fair value of the Kingston facility's interest rate swaps, (ii) an $0.8 million foreign exchange loss on the Fund's U.S. and Euro foreign exchange contracts not designated as part of a hedging relationship, and (iii) an offsetting foreign exchange gain of $2.5 million on the translation of the Panda senior loan balance to the quarter-end Canadian dollar / U.S. dollar exchange rate.

The factors described above resulted in income before income taxes for the first quarter of 2008 of $15.9 million being $0.6 million lower than last year. After the recovery of $0.5 million of current taxes and the $0.6 million provision for future income taxes, net income at $15.7 million was $1.1 million lower than last year.

Cash and cash equivalents of $26.9 million at March 31st decreased by $1.4 million since December 31, 2007 as $21.7 million of cash generated by operations was offset by $2.0 million of investing activities and by $21.4 million of financing activities. Cash used for investing activities reflected advances of $2.6 million on the loan to Thorold CoGen LP, partially offset by receipts of principal on the Panda senior loan while cash used for financing activities represented distributions to Unitholders of $16.8 million and long-term debt repayments of $4.6 million.

Outlook

The Fund's distributable cash in 2007 amounted to $1.46 per unit, or $1.28 per unit after backing out the one-time impact of the Calpine settlement related to its 2006 gas supply contract default. Distributable cash for 2008 is expected to be slightly lower than $1.28 per unit. Gross profit at Iroquois Falls will be adversely affected by the previously mentioned gas supply contract price re-opener that is 50% mitigated through higher payments from OEFC, while margins at both Iroquois Falls and Kingston will be compressed by significant jumps in TCPL transportation tariffs this year. On the upside, margins on natural gas sales at Kingston should improve due to higher gas prices - about 90% of projected 2008 sales are now subject to forward contracts. Also on the upside, selling prices under the Iroquois Falls power purchase agreement, which are indirectly related to the wholesale cost of electricity in Ontario, will be subject to upward pressure due to the impact of the entry into commercial operation of new power plants and wind farms contracted by the Ontario Power Authority, as well as Ontario Power Generation's success in having its administered rates increase. Distributable cash is expected to exceed distributions at the current annual rate of $1.08 per unit by a comfortable margin.

ABOUT THE FUND

Northland Power Income Fund indirectly owns interests in six power-generating facilities: three natural gas-fired combined-cycle cogeneration power plants that efficiently and cleanly produce electricity and steam for sale, and three wind farms. Two cogeneration plants are located in Ontario: the 120 megawatt ("MW") Iroquois Falls facility, and the 110 MW Kingston facility. Through its 19% equity interest in Panda Energy Corp (PEC) and loan to a PEC subsidiary, the Fund has an interest in the 230 MW Panda-Brandywine cogeneration power plant located just outside Washington, D.C. Electricity produced from the cogeneration plants is sold under long-term power purchase agreements (PPAs) with creditworthy entities to ensure revenue stability, and long-term contracts assure the supply and price of natural gas, which is the Fund's largest cost. The 54 MW Mont Miller wind farm in the Gaspesie region of Quebec supplies electricity to Hydro-Quebec under a long-term PPA while the Fund's two wind farms in Germany, with a combined capacity of 21.5 MW, sell electricity to regional power utilities under the provisions of German renewable energy legislation. The Fund has committed to provide $30 million as subordinated debt to Northland Power Inc.'s 265 MW Thorold Cogeneration Project that is under construction near the Town of Thorold, Ontario.

The Fund's trust units and convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN and NPI.DB respectively, are qualified investments for RRSPs and DPSPs under the Canadian Income Tax Act. The Fund has in place a distribution re-investment plan that allows unitholders who are residents of Canada to automatically have their monthly cash distributions reinvested in additional units. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.

FORWARD LOOKING STATEMENTS

Certain statements in this News Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Fund's and its subsidiaries' current expectations. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of the Fund's and its subsidiaries' for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon the Fund's Manager's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties, including those set out in the management's discussion and analysis section of the Fund's 2007 annual report and in the Fund's Annual Information Form dated March 28, 2008, certain of which are beyond the Manager's control. The Fund's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or what benefits, including the amount of distributions, the Fund and Unitholders will derive therefrom.

The forward-looking statements contained in this press release are made as of the date hereof for the purpose of providing readers with the Fund's expectations for the coming year. The forward-looking statements may not be appropriate for other purposes. Other than as specifically required by law, the Fund undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Contact Information

  • Northland Power Income Fund Management Inc.
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x156
    or
    Northland Power Income Fund Management Inc.
    Boris Balan
    Director of Communications
    (416) 962-6262 x116
    (416) 962-6266 (FAX)
    Email: info@NPIFund.com
    Website: www.NPIFund.com