Northland Power Income Fund
TSX : NPI.UN
TSX : NPI.DB
TSX : NPI.DB.A
TSX : NPP.PR.A

Northland Power Income Fund

November 10, 2010 17:58 ET

Northland Power Income Fund Announces Results for the Third Quarter of 2010

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2010) -

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Northland Power Income Fund (Northland) (TSX:NPI.UN)(TSX:NPI.DB)(TSX:NPI.DB.A)(TSX:NPP.PR.A) reported its financial results today for the quarter ended September 30, 2010.

FINANCIAL AND OPERATING HIGHLIGHTS

  3 Months Ended Sept. 30   9 Months Ended Sept. 30  
  2010   2009   2010   2009  
FINANCIAL (thousands, except per unit amounts)                
  Sales $78,974   $45,233   $219,884   $142,796  
  Income from operations $20,907   $12,213   $67,280   $48,215  
  EBITDA(1) $34,649   $19,312   $104,316   $70,506  
  Net income (loss) ($50,864 ) ($4,640 ) ($39,362 ) $9,176  
                   
  Standardized distributable cash ($99,785 ) ($101,677 ) ($129,075 ) ($60,137 )
  Distributable cash $10,371   $10,348   $51,809   $49,976  
                   
  Cash distributions declared to Unitholders $19,598   $17,459   $58,175   $51,130  
                 
                 
Per Trust Unit – basic                
  Standardized distributable cash ($1.3846 ) ($1.5822 ) ($1.8017 ) ($0.9546 )
  Distributable cash $0.1439   $0.1610   $0.7232   $0.7933  
  Cash distributions declared to Unitholders $0.2700   $0.2700   $0.8100   $0.8100  
OPERATIONS                
  Electricity sales volume (megawatthours) 663,400   390,354   1,798,161   1,128,196  
  Steam sales volume (thousands of pounds) 341,770   156,614   1,108,938   760,216  
  Fuel consumption (thousands of gigajoules) 4,898   3,187   12,869   9,018  
(1)Earnings before interest, taxes, depreciation and amortization

Consolidated sales for the third quarter of 2010 were $79 million and income from operations was $20.9 million. All Northland facilities operated well during the quarter. Light winds in both Quebec and Germany negatively affected wind farm output and revenues this quarter.

Compared with the third quarter of 2009, operating income benefited from the inclusion of operating results for the Thorold and Jardin d'Éole facilities.

Net income was $46.2 million lower than for the same quarter last year, largely due to recognition of a non-cash $69 million loss in the fair value of Northland's interest rate swaps and the recognition of previously capitalized interest expense on construction debt at Thorold CoGen L.P. and Saint-Ulric Saint-Léandre Wind LP. The mark-to-market loss on the interest rate swaps has no impact on the cash obligations of Northland's projects and will reverse over time. 

Distributions

Distributions to Unitholders for the quarter totalled $0.27 per trust unit ("Unit"), representing a payout ratio of 187% of distributable cash. The high ratio reflected funding costs on projects in development and under construction, the write-off of a receivable from AbitibiBowater Inc., higher scheduled principal payments on Kingston's project debt and the third quarter being a seasonally low quarter for distributable cash. Distributable cash was $10.4 million for the quarter, in line with the same period in 2009.

Development

Mont Louis Project: Construction is on schedule and on budget, with financial close on approximately $106 million of non-recourse project debt expected in late November and the start of full commercial operations by the third quarter of 2011, subject to the completion of interconnection facilities by Hydro-Québec.

North Battleford Project: On August 30, Northland announced it had raised $580 million in non-recourse project debt financing for its wholly-owned 260 megawatt North Battleford project in Saskatchewan. Construction on the $700 million project commenced in June and is moving forward both on schedule and within budget. Completion is scheduled for June 2013.

Spy Hill Project: Construction continued during the quarter on the 86 MW peaking plant. This project remains on schedule and within budget for anticipated start-up in October 2011.

Significant events

$150 Million Preferred Share Offering: An offering of preferred shares by Northland Power Preferred Equity Inc. ("Prefco"), an indirect, wholly-owned subsidiary of the Fund, closed on July 28. Prefco issued a total of 6 million Cumulative Rate Reset Preferred Shares at $25.00 per share for net proceeds of $144.8 million. The shares trade on the TSX under the symbol NPP.PR.A with payment of dividends guaranteed by the Fund. Dividends of $0.2301 per share were paid on September 30.

New Web Site: Northland's new web site went live on July 27 at www.northlandpower.ca. In addition to providing information for investors and other stakeholders, the site illustrates Northland's positive impact on the communities where it operates, the stakeholders with whom it interacts and the environment around its facilities.

Overview and Outlook

Northland management views the third quarter operating results as well-aligned with the company's business strategy of stable operations and disciplined growth. The Thorold facility has been integrated into our facilities' portfolio and is operating largely as expected. North Battleford, Spy Hill and Mont Louis, Northland's 445 MW of projects in construction, are all on budget and on schedule.

Northland's 216 MW of awarded feed-in tariff or "FIT" projects are in advanced development, with 140 MW expected to move into construction and financing in 2011. Northland continues to grow its development pipeline, pursuing opportunities that offer the prospect of long term PPAs with creditworthy entities.

Following conversion to a corporation on December 31, 2010, we intend to maintain the current level of distributions in the form of dividends to shareholders at $1.08 per year, payable monthly.

ABOUT THE FUND

Northland is a Canadian income trust that has ownership or economic interests in 10 power projects totalling over 1,100 MW (net 872 MW). Northland's assets comprise natural-gas-fired plants which efficiently and cleanly produce electricity and steam as well as facilities generating renewable energy from wind and biomass. Sales are made almost entirely under long-term contracts with a current weighted average duration of 14 years. Northland's plants are located in Canada, the United States and Germany. In addition, Northland has the 86 MW Spy Hill project, 260 MW North Battleford project and 100 MW Mont Louis wind farm in construction, and 216 MW of wind, solar and run-of-river hydro projects awarded under the Ontario Power Authority's feed-in-tariff program in advanced stages of development. Northland also has a diverse development portfolio of high-quality 'Clean and Green' energy projects, including wind, solar, natural gas, and hydro assets that supports its strategy of sustainable growth primarily through internally developed opportunities.

The Fund's trust units, two series of convertible debentures, and Northland Power Preferred Equity Inc.'s preferred shares, which trade on the Toronto Stock Exchange under the symbols NPI.UN, NPI.DB, NPI.DB.A, and NPP.PR.A 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 Northland'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 Northland'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 management'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 Northland's 2009 annual report, Northland's Annual Information Form dated March 31, 2010, and Northland Power Preferred Equity Inc.'s prospectus dated July 19, 2010, certain of which are beyond management's control. Northland'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, Northland and Unitholders will derive therefrom.

The forward-looking statements contained in this quarterly report are made as of the date hereof for the purpose of providing readers with Northland's expectations for the coming year. The forward-looking statements may not be appropriate for other purposes. Other than as specifically required by law, Northland 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.

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