Q3 2019 Earnings Call

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Good morning, My name is Simon and I will be your conference operator today at this time I would like to welcome everyone to the Boralex, Inc. Third quarter results Conference call.

Nine seven placed on you to to prevent any background noise.

After the speakers are marks there will be a question and answer session.

If you would like to ask a question. During this time simply press start the number one on your telephone keypad.

If you'd like to withdraw your question. Please press the pound key thank you.

You may begin your conference.

Well thank you.

Good morning, everyone.

Sorry.

<unk> Conference calls joining me today.

President and Chief Executive Officer.

That cost Vice President and Chief operating Officer.

Vice President and Chief Financial Officer, and other members of our management and finance deeds.

So.

Begin with comments about the key elements of the quarter after word that Mr. Given that.

<unk> financially and then we'll be available to answer your questions.

During just call we will discuss it.

Forward looking information.

Docking about the future.

T of risk factors that has been listed in our different filings with securities regulators.

Which can materially change our estimated results. These documents are all available for consultation.

Dot com.

In our web cast to disclose their results are presented both on their I.F.R.S. and on a combined basis.

Do you use of combined basis as being explained previously as well as their reasons.

Why we use it.

Unless otherwise stated all comments made in this presentation will refer to combine basis figures.

The press release, the M.B., a need to consolidated financial statements and a copy of today's presentations are all.

Posted it on a barn x. website at <unk> Dot com on Dirty Investor Tab, if you wish to receive a cup you have these documents please contact me.

I wouldn't know start with comments. Please go ahead, but.

Good morning, everyone.

Third quarter was another strong quarter in terms of growth, but also in the development of projects.

Sectors of activities.

Comparing to the same quarter last year production was 28%.

8% sales, 22% <unk>, 39%.

The main driver.

Sick during friends with the 57% increase in production.

30 per cent growth in comparable productions.

<unk>, 7% decrease.

Comparable when production due to weaker wouldn't condition than this year.

Well now report on what progress for words are for invasion, the Lord strategic plan, starting with the growth orientations.

The third quarter, you 133 megawatt out of the 50.

Object submitted indeed.

And in France, So far just sure it's more than 100 Mega what we have one indie action process in France.

No that the next auctions schedule for December 2nd.

Phone by Monday January 2020.

We also recently added to 12 Mega went project the group bass.

For 2021, so far just your we bad two projects.

27, Meg Meg I went through our group that and there was more to come with projects advanced stages.

You continue to make good progress with the line killed project following the Green light we got from the start this government affords a 90 mega what when from project next quarter.

Switching now two hour diversification orientation.

Development team in potential projects are growing more rapidly than expected in the U.S. soldiers sector.

Pipeline as nearly doubled going from 200 Mega wet in June the close to 400 and they got <unk> right now.

During the quarter you bid hundred 80, Mega wet solar projects in the state of New York in the U.S., you're expecting results to be announced by the end of the year.

Well not cover progress made in recent months.

Regarding our optimization filler.

Terms of optimization initiative as mentioned before.

You powering is a good way to optimize the output at specific site.

Shortly after the end of the third quarter. We start we started production that I wore Buckingham hydro power station to back.

Mentioned before capacity double at this facility going from 10 to 20, Meg I went and adding about 5 million annual <unk>.

You shouldn't be.

Finally, we continue to make good progress on the optimization of our capital structure.

<unk>, we completed the retention of my work convertible Debentures', 94% of 243.7 million outstanding abound was converted by holders of debenture.

<unk> into 6.9 million shares of button clicks, bringing our total numbers of share issued an outstanding do 93.6 million 96.3 million sorry.

7.9 million principle, the amount of debentures', whereas redeemed for cash Crusades.

Still on the optimization from we are also making good progress on our.

Refinancing project in France.

In conclusion, we are happy with your to date result in progress, we are making and execution of our plan. We remain confident that the rest of 2019 in terms of development and continued growth of our results I will all that you know covered a financial portion in more details and it will be back for the question.

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Thank you Patrick.

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I will start with a review of the progress made in light of our 2023 financial objectives.

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You know given the seasonal nature of our business.

Quarter is not our strongest Florida in terms of casual generation. Nevertheless, we improved our yes, it full by 9 million.

Water versus last year.

Here today, Yes, I full went from 15 and 2018 252 in 2019.

37 million increase.

Mm.

Are given a distribution racial now stands at 61%, which is almost in line with our 40 to 60 per cent targets.

Production capacity stands at 2006.

On September 30th.

Starting now to production on slides and have your presentation.

Canada.

Wink production in the third quarter increase by 18% due to acquisitions.

Was 4% lower than anticipated production.

Comparable production was 7% lower than last year, and 2% Lord N.D. anticipated production.

The production of the new citing loose lake was lower than anticipated also do two week or wind conditions anticipate.

In France.

Conditions were better than your net third quarter last year, resulting in 30 per cent growth over last year on that comparable basis, and 57% growth overall, although production was lower than anticipated.

We observed debt in week when quarters like the third quarter relationship between average wind speed and production.

Not necessarily the same as in stronger quarters like the first and last quarter's a year.

Yes variation in a correlation makes it harder to predict production using only average wind speed.

<unk> further evidence like a data collected by our T.V.

French grid operator.

Which shows that are when production foot quarters.

For this quarter attract the overall production of all French wind farms.

Overall total when production for the quarter, combining Canada in France was 33 per cents higher than last year in total and 8% higher.

Basis.

Going to slide 11.

And eating an ideal production was 2% higher than last year, but 10% Lord anticipated.

U.S. hydro was up by 25% over last year, but 14% lower than anticipated.

Summary, total production for the quarter.

<unk>, 28% higher than last year.

In 10 per cent Lord anticipated.

I won't cover in detail year to date production, but I would like to highlight on flights routine.

Despite the quarterly volatility year to date production.

He's in line with anticipated production and up by 34% over last year.

Revenues presented on flights 14, followed pretty much pattern s. production with girls compared to last year coming from the wind sector.

They d. on slide 15.

Increased from 51 million and a third quarter of last year to seven.

Mail again this year.

D for the when sector was 21 million or 36% higher than last year and I do I bet D. was up 1 million or if it's 8% compared to last year.

Moving to cash flow non flights 16, we generated 35 million I.F.R.S. cash build some operations in the third quarter up by 64%.

<unk> same quarter last year.

I know, we asked presented on the slide 17.

Our financial position remains solid with our net get to total market cap racial down from 64% on December 31st.

Two 257% on September 30th.

In conclusion.

We delivered strong growth compared to last year.

Production was below anticipation and a quarter, but remains in line with anticipated production you to date.

We continue to make good progress in the execution of our strategic plan and our financial objectives.

Teams are focused on growing out pipeline and strategic sleeping projects and auctions.

And we are still looking for a creative transactions in technology and regions, we know well, while maintaining financial discipline.

Thank you very much for your attention.

We are now ready to take your questions.

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I would like to remind everyone that in order to ask a question. Please press dark then the number one on your telephone keypad.

What passed for just a moment <unk> roster.

Your first question, but plenty of kids still comes from the line of David <unk> with Raymond James Your line is open putting into left.

Thinks morning, everyone. My my first question here just on the solar pipeline in the U.S. So it sounds like things are developing really while they're I'm. Just wondering if you could give us some comments on.

What the driven that that faster than expected process than if you change your thoughts at all in the potential size of that opportunity.

Yeah asking.

Because it's going faster to our developments going faster.

Yeah sector.

Okay. It's no we we we see a lot of interest.

Hmm demands owners. So initially we always have in mind to see a racial absurd C.S. and when we see landowners and the the success rate is we hire or so then anticipated. So we're very pleased by that.

Reason why we're we're had tomorrow.

Passover land lease and all that for a for a bigger ones.

Okay, great. Thank you and then the question.

Yeah, Yeah. Thank sounds good color.

And then just switching to France, I I believe the most recent French wind auction was oversubscribed I'm wondering if you could just discuss whether that was due to maybe a less onerous permitting requirements. There you know what maybe what drove that that better procurement and then sounds like a bit higher.

On average so any any commentary you can provide there.

Oh, Yeah, you have a chance or so.

Criteria or it's.

Permitting on the.

Where to permitting just needs to be before submitting it that that process. So that's a that's the criteria compared to a thing was the second option that wasn't very restricted in Florida, let's see on the on the permitting or <unk> almost all the permits. So this is why.

That one was there were some stripes with the government has opened up.

So it's either level of development.

Great. Thank you very much I'll get back in the Kim.

Thank you.

Your next question for push and guess young comes from the line of Nelson Ng with RBC capital markets. Your line is open putting it to us.

Great. Thanks, good morning, everyone.

Just a quick question in terms of.

You have in terms of projects awarded.

Versus the I guess identified growth.

Growth path so.

As of today.

Like roughly how many megawatts.

Have you been awarded.

Yeah.

As of yet to be added to the growth path I presume thats the.

Roughly 100 megawatts of French wind.

That should be completed 2022 is that.

How should look at.

Either because.

As the previous question the level of development into last sorry.

So it's not as high as you just one so ah so.

Some projects that could happen to be 2023, but my answer would be by 22, when you do want when you.

When we get one just project gets fully understood.

You said.

Got the P. already.

So 100 megawatts.

It was the number.

Okay got it and then just back to the solar projects in New York State.

You mentioned that Theres a lot of.

Interest from landowners I was just wondering if.

If you are like like for the projects that don't get a contract is there any opportunity for you to do.

What you're trying to do in Scotland in terms of I get a corporate PA or or are the projects being awarded.

Given some type of a special subsidy.

It's always possible driver corporate <unk>.

I have to project being.

The only revenues being the corporate <unk> happening in that.

Let's see Didnt, your <expletive> and its wouldn't happen more and more into future.

But but I'm just wondering on.

On that point and what what its solar and New York State. They would the I usually a lot of the corporate P. pays are done.

At or below market price I'm, just wondering whether.

The required prices.

It's close to grid parity or not.

Oh, just would you would need to be close to quit otherwise so why should or should the let's see an extra should you usually see consumer would or would go with a with a corporate <unk>. So you would yeah. You would you would see himself, let's see getting piece.

So so for sure.

I will always be a discount compared to let's say the power.

Our forecast the price forecasts.

So that is the case in New York State is that what you're suggesting.

Good question.

So in New York State like Solar in New York State.

Is that grid parity I based on what you're looking at in terms of Europe the projects they're developing.

And therefore.

Like a corporate HCA would be competitive.

Now as we speak Nelson or we would a we're looking at getting Rex, which which again, let's be part of it.

Yes.

You are your guarantee you didn't come for a part of your income.

The next income would be to get a corporate <unk> to add on.

So in that way your first of all there would be a it would be easier to finance also with the Rick.

ER and also the corporate <unk>.

So that's okay. So we were looking at is now and we'll see I will see later on if we go through the 200% corporate <unk>.

Okay, and then just one last question Thats related.

Like are you play like you don't have any particular awarded yet, but I guess, obviously the deadline for the ITC is as the end of this year I'm just wondering whether you have a plan to.

Essentially make a big solar deposit to some manufacturer to.

ITC qualify.

Potential solar projects going forward and in the U.S.

So we're doing a little bit the safe harbor for part of the project submissions.

Okay. Thanks facility, there and start because this is what you need you need to do safe Harbor twos locks and see a tax next level of Oh 2019 projects and it's dropping to next year next year, it's going to be less.

Your goes so we have locked on the little bit Safe Harbor.

Okay. Thanks.

Your next question first question I guess still comes on the line of Sean Stewart with TD Securities. Your line is open when they get away.

Thank you good morning.

A couple of questions [noise].

You touched on the the one RFP in France being pushed to January from December .

Can you give us a sense of.

Forthcoming RFP is in France, and what you anticipate in terms of scale beyond the the January RFP.

I mean, we've mentioned in the past its in the range of 2000 Mega what is your so so a and not to forget though.

They want to have another 10000 megawatt bites when you 23 or something like this so it all that the figures in front of me, but its 2000 megawatt at your.

Looking at as much a that's here for solar and wind so a small ones. We see you see or let's say a this is going on and on for the next few years, so and it's a great opportunity for us to deploy our thousand megawatt that pipeline that we have over there.

And.

And but the only thing is we know from one dollarsthree together is the criteria in Egypt order level of development that did the government is changing.

But we see them and being a let's see a.

Lower lets the level of development then the the second RFP because.

It was mentioned earlier. This one was undersubscribed I've mentioned earlier it was undersubscribed so to be more competitive and to get the best rate for sure did so they need to.

He's a the said the a de Mega wept objective of an order.

Thanks for that on the short cycle right. Just on that are on that short term basis. There's just one or planned for January and the next after is June .

So just that that we already know for next year.

Okay. Thanks for that.

You guys noted good progress at lime Kim <unk>.

<unk>, maybe some context on is that your soul focus in that market or their broader development opportunities in the UK beyond that.

Well, we'll still let's working on our in that part partnership Oh.

Our partner become so if you remember there was a 300 megawatts in total a partnership with into energy. So so we're still developing and just will give us opportunities in the future and this is the first 90 megawatts that is coming out despite line and a we see some coming out in the new years becomes.

Okay.

That's all I have thanks very much.

Thank you.

[noise] OCC also visited them I guess, so they can you let twice this like heavy California.

And if he would like to ask a question. Please press Star then there number one on your telephone keypad.

Next question, but question I guess don't comes to the line of Hassan Khan with National Bank Financial Your line is open putting it to that.

Good morning, I'm, calling on behalf of Rupert and how we notice that project called soil the Pope on.

It was changed to a 20 year contracts. We have 15 years can we get some color what happened with it.

So.

How much was Ah you know initially.

Yeah, What's 15 years and was went to 2020 and switch to 2021 instead of 2020, yes, we do okay. A this is a good question so.

Because there is RFP and you know there was there there are there our previous program that 2016 into 2017 and what we do a if were eligible to the 16 or 17, and we see the RFP.

An upcoming RFP we.

We submit projects a accident on an arbitrage, let's say a vision that the if we can better to return in the in there in an RFP from a project that is scheduled for 2016 2017 or not scheduled but eligibles the 2016 and 17 program.

We submit them. So did this is to better the return of these projects.

And if we can even if we don't win because we cannot be the lowest rate.

So if we don't when we always out to fall back on the two programs I was talking about.

And just Susan I returned improvement process.

Right.

Just another question with Barnhill attractive can we get some more color on her efforts to refinance your friends that portfolio.

Well the yeah refinancing process in a in France is evolving while.

We expect right.

Touchwood, because these things you never know, but yeah.

With respect to like you announce something before the end of the here.

So.

Staterooms.

Right that's all for me.

Other improve our Oh.

Our financial strength.

For the next year's growth.

Good luck.

Thank you for the car that's all from my end.

Thank you.

Okay.

Yes, I guess your wants Mama there are no further questions at this time presenters I turn the call back over to you.

Right. So thank you everyone and thank you for the attention. If you have any additional questions that please call me as five on four to one three ones are all four five I'll make sure.

The answer all your questions rapidly. So our next event will be the fourth quarter and year end results conference call on Friday February 28.

Our next year at 11 am so other good day, everyone. Thank you.

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But that Mississippi I understand echostar several things will prevent now coffee, ladies and gentlemen. This concludes today's conference call you may now disconnect.