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

Northland Power Income Fund

August 07, 2008 17:15 ET

Northland Power Income Fund Announces Q2 Results

TORONTO, ONTARIO--(Marketwire - Aug. 7, 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 June 30, 2008.



FINANCIAL AND OPERATING HIGHLIGHTS

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3 Months Ended June 30 6 Months Ended June 30
2008 2007 2008 2007
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FINANCIAL (thousands, except
per unit amounts)
Sales $ 44,970 $ 42,865 $ 97,321 $ 94,503
Net income (loss) $ 11,240 ($76,926) $ 26,962 ($60,086)

Standardized distributable
cash $ 34,976 $ 18,834 $ 56,614 $ 58,736
Distributable cash $ 19,522 $ 17,898 $ 42,793 $ 41,861

Distributions declared to
Unitholders $ 16,835 $ 16,834 $ 33,670 $ 33,664

Units Outstanding at Quarter
End 62,353 62,352 62,353 62,352
Average Number of Units
Outstanding -- basic 62,353 62,341 62,353 62,338
Average Number of Units
Outstanding -- diluted 62,353 62,341 64,916 62,338

Per Unit -- basic
Standardized distributable
cash $ 0.5609 $ 0.3021 $ 0.9080 $ 0.9422
Distributable cash $ 0.3131 $ 0.2871 $ 0.6863 $ 0.6715
Distributions declared to
Unitholders $ 0.2700 $ 0.2700 $ 0.5400 $ 0.5400
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OPERATIONS
Electricity sales volume
(megawatthours) 300,211 311,063 685,783 699,522
Steam sales volume (thousands
of pounds) 271,928 306,553 652,921 758,511
Fuel consumption (thousands of
gigajoules) 2,556 2,538 5,613 5,607
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Quarter Results

Consolidated sales for the quarter of $45.0 million exceeded the second quarter of 2007 by $2.1 million while income before taxes at $10.2 million was up $5.1 million largely due to $1.1 million higher income from operations and lower non-cash foreign exchange losses.

Second quarter operating income at the Iroquois Falls plant was in line with last year while operating income from the Kingston facility was up due to higher electricity sales and lower plant operating costs. Production and revenue at both the Mont Miller and German wind farms were down due to lighter winds than last year.

The Fund generated investment income of $2.5 million this quarter through a combination of fees, interest and dividend payments, $0.3 million higher than in 2007. Non-cash adjustments of $1.3 million were recorded during the quarter largely due to a gain on the change in fair value of the Kingston facility's interest rate swaps partially offset by a foreign exchange loss 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 second quarter of 2008 of $10.2 million being $5.1 million higher than last year. After the recovery of $0.4 million of current income taxes and the $0.6 million recovery of future income taxes, net income at $11.2 million was $88.2 million higher than last year; a one-time, non-cash future income tax provision of $82.3 million was booked in the second quarter of 2007 as a result of the Federal Government's Bill C-52 Budget Implementation Act, 2007 which will apply income taxes to income trusts starting January 1, 2011.

Distributable cash as determined by the Fund was $19.5 million during the quarter and exceeded distributions paid to Unitholders by $2.7 million. Distributable cash per unit for the quarter was $0.31, compared to $0.29 in 2007. Readers should refer to the schedule of Distributions to Unitholders and Distributable Cash in the second quarter report for the calculation of distributable cash (a non-GAAP financial measure).

Distributions to Unitholders declared for the quarter totalled $0.27 per unit.

Cash and cash equivalents of $41.9 million at June 30th increased by $13.6 million since December 31, 2007 as a result of $56.7 million of cash generated by operations being offset by $4.8 million of investing activities and by $38.5 million of financing activities.

The Fund announced during the quarter that it has committed to provide a $34.8 million loan to Saint-Ulric Saint-Leandre Wind L.P. ("SUSL"), the developer and owner of the Jardin d'Eole wind project. SUSL is a wholly-owned subsidiary of Northland Power Inc., the parent of the Manager of the Fund. The Jardin d'Eole wind farm is being constructed on leased land, primarily agricultural, in the Gaspesie region of Quebec on the south shore of the St. Lawrence River close to the municipalities of Saint-Ulric and Saint-Leandre. SUSL signed a contract with Hydro-Quebec in February 2005 for the supply of up to 150 megawatts (MW) of electricity from the Jardin d'Eole wind farm that expires 20 years after commencement of commercial operations, which is expected in late 2009 or early 2010. SUSL also expects to receive payments under the federal government's EcoEnergy program. General Electric Canada is supplying 85 GE 1.5sle wind turbines, for a total initial capacity of 127.5 MW.

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 in the range of $1.28 per unit. Gross profit at Iroquois Falls will continue to 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 are being compressed by significant jumps of almost 40% in TCPL transportation tariffs this year. On the upside, margins on natural gas sales at Kingston should improve due to higher gas prices -- about 80% of projected sales for the balance of the year 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 upwards pressure in the long-term 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.

ABOUT THE FUND

Northland Power Income Fund is a Canadian income trust that indirectly owns equity interests in six power projects, which efficiently and cleanly produce electricity and steam for sale under long-term contracts. The Fund's combined-cycle cogeneration power plants and wind farms are located in Canada, the United States and Germany. The Fund is also providing $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 and $35 million to the Jardin d'Eole wind project under construction near Matane, Quebec.

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