Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the bottlenecks Inc. first quarter results conference call.
This time, all participants are no listen only mode. After the speakers presentation they'll be a question answer session to ask a question. During this session you'll need to press star one on your telephone. Please be advised that today's conference is being recorded if your acquire any further assistance. Please press star zero I would like to now hand, the conference over to your speaker today, if I know.
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[noise]. Thank you operator, and good morning, everyone. So welcome to bottlenecks first quarter results Conference call. Joining me on the line from home today, Our Patrick Let my Kids are then Chief Executive Officer, Patrick Decker, Vice President and Chief operating Officer doesn't know getting <unk>, Vice President and Chief Financial Officer.
Sure and other members of our management and finance team.
I thought I am I will begin with the comments about that highlights the first quarter and an update on our country decline relating to a copy of 19 afterwards, so that got wouldn't provide.
Comments on the operation and.
I've got met will carry on with financial highlights and then we will all be available to answer your question.
Do you know during this call we will discuss historical as well as forward looking information when talking about the future. There are a very risk factors that I've been lifted on different filings with securities regulators, which can materially change right.
These documents are available for a consultation on seed article.
Now what got a presentation documents.
That does close result are presented both on there.
And on a combined basis, unless otherwise stated all comments made in this presentation, we'll refer to somebody seems press release, the mdna to consolidated financial statements in a copy of today's presentation are all posted on their brolick slips hydroponics dot com on 30 Investor section.
If you wish to receive a copy of these documents. Please contact me and that I mean, so mr. long island now are would comment.
Go ahead.
Thank you Stan good morning, everyone.
For starting with my comments about the quarter I would like to think all lower production that maintenance employees working very hard in the field to maintain our operations, allowing us to continue producing electricity and essential service in all areas, where we have asset.
I would also like to thank all our administration and development employees working hard from home often with their kids around and with all the excitedly relating to the health of their parents and grandparents.
In this time of I'm uncertainty you really makes a difference and then all above elects to carry on with all aspects of our business.
Had a very strong started the year in January and February and you allow.
Oh, that's to maintain the pace in March you should all be pro.
I would like to highlight here for the investors and analysts that the transition was a challenge for sure but its went pretty smoothly for us given that were already out of flexible working I want to policy.
In a strong crisis management plan in place.
Within a day or you were fully operational from home.
Let's move through the quarter enough.
It wasn't another strong quarter for both projects would road in all our financial metrics.
Our when operation in France word the main driver to this overall growth in result, as production was 31% or do you have dissipated its production and 38% higher than their first quarter last year.
This growth came from exceptionally strong wind conditions and the contribution of asset Commission last year.
We also benefited from savings relating to the 2 billion.
Dollars in refinancing concluded last year.
On the development from we've made significant improvement in the quarter by winning or being selected for projects totaling 250 megawatt Dean riesen request for proposal.
I will now report our progress toward a four orientation of our strategic plan, starting with the growth orientation.
In the first quarter, we had good resolved without whereas submission in response to request for proposal in France, winning more than 70 megawatts in wind and solar projects.
As Patrick the cost will show you our growth path increased to 312 in the first quarter and now counts to a strong pipeline to reach our 2023 target of 2800 megawatts.
Switching now to our diversification orientation, we were selected for our hundred 80 megawatts bid in the U.S. solar and continue to develop this I grow potential market. Our development teams in the U.S. and friends are making really good progress with project in our pipeline even in the recent month.
[noise], there's been some adaptation to but the projects are advancing into the different phases of our portfolio project.
On the customer orientation, we signed our first corporate could be a with a large industrial group in friends on an existing wind farm with D.F. contract ending soon.
We also commission the two megawatts storage facility on the <unk>.
On the one of our is existing wind farm in France, it's small, but it will be a good pilot and learning experience.
In terms optimization initiatives, we have ongoing dogs for the potential refinancing of certain assets in Canada.
We are optimizing their shilohs wind farm in friends with our Repowering projects under construction and in our growth that we have three additional repowering projects for a totaled 87 megawatts to be optimized.
We also evident doesn't stop or the optimization nerve repair and maintenance work for certain assets in Canada.
In conclusion provide power to few words about grew up in 19 effect on Budick's.
We are not expecting material in back at this point in time as mentioned before we got rapidly put our consistent with the plan inaction.
After some adjustment made in the last few weeks to carry on construction work at our Shiloh South that projects. All reach required teams are now onsite working them. These projects.
This with all the result in a month or two delays, which has been reflected in our broke that.
In terms of finance.
As you have seen we continue to generate strong cash flow and had a solid balance sheet with over $250 million available on our credit revolver and letter of credit facility.
We remain confident for the rest of 22, when we have a solid and a giant management team dedicated employees and a clearer action plan on which will continue to execute.
Well. We are we are also preparing ourselves for the after crisis or the new reality.
And are confident a competent governments would come to do their investment in renewable energy in order to accelerate the energy transition underway.
I was all that Patrick cover development operations and optimization I will be about later for the question for you I think.
Thank you Patrick good morning, everyone.
As you know when is the biggest driver although were resins until this second quarter in a real friends production was significantly higher than anticipated production, which explains the vast majority of whole growth in the quarter.
Let's start with Canada as indicated on slide eight of our presentation.
Comparable wind production into first quarter decreased by 17% compared to last true and six person law were then anti she'd be production.
The decrease due to weaker when than anticipated meeting on Tar, you and western Quebec, when comparing to last true he's recall that the first quarter last year was quite strong for Canada.
Oh, we're moves league windfarm NBC is performing well, whose production 13 person how your than anticipated.
As mentioned before and trends when conditions were exceptionally good into quarter, resulting in 30% growth over last year on a comparable basis and 38% growth overall.
[noise] comparable production was also 31 person higher than anticipated and nowhere assets commissions in the past your general <unk> production 25 person higher than anticipated.
Overall total wind production for the quarter, combining Canada, and France was 9% hired and that's true and 12% higher than anticipated production.
Turning to hydro no.
When comparing to last year production in Canada with significantly higher due to the commissioning of yellow pools and on the reopening of Buckingham comparable production was seven person lower than last year.
When comparing to anticipated production. The good performance, although were assets Commission last year more than offset the lower than anticipated production you know were comparable corporations.
You S. I drew was down by 4% compare to the first quarter last year, but still 19 person how your than anticipated production.
In summary.
Total production for the quarter was 9% higher than last year and 11 person how your didn't anticipate.
Turning to dive Luqman, though.
Our portfolio of project.
Remains strong with some project that moved to the rules by during the quarter.
In France, we have a portfolio of wind power projects totaling 978 megawatts, which will continue to develop and bid in the upcoming already speeds.
The next RSP is scheduled for July.
250 megawatts, which would be followed by a 500 megawatts in November 20, 2900 within 25 megawatts IDN.
Off 20 twin.
Well there years 2021 to 2024, two Trenchers, Oh, 925 men 925 megawatts per year or expected.
You know are French solar power segment, we have a portfolio project I'd viremia stages of completion.
The capacity.
About 100, and each one megawatts, which will be bid in upcoming aristide's.
Our portfolio of wind project in North America recurs into 1074 megawatts.
Most of these projects could quickly moved through our development stage once renewable energy development programs, you know were targeted market our reactivated.
Note that many programs are on old due to political changes.
<unk> 19 crisis.
Go wherever lead to changes.
These situation governments will announce their economy recovery plan.
We also had a treat hundred 60 megawatt portfolio of who Dick you U.S. solar power segment, and we'll bid some project in the next obviously plan for the full.
Turning to overgrowth fast no.
12 wind farm project, representing 223 megawatts in addition capacity and solar project.
Paul we are projected to me 28, and they got what are the citizen.
She's isn't the advanced stage to be considered a secured and you are included in the gross that distribution.
Total increase of 84 megawatt compare with the end of fiscal 2019.
They school Jack resulted.
From a wins under a recent aristide in France.
Note that out of these 12 secured wind project suite, we are for the replacement of existing wind turbines by new turbines on asked it was energy sales contract expiring in the next few years. This is what we cool repowering projects.
These existing wind farms with.
36 megawatts of installed capacity will benefit from 16 megawatts increase for a total of 52 megawatts, which would be secured.
By New 20 years feeding premium contract with D.F. in France.
Also for French wind farms are either under construction or if completed all preliminary stages and no pain preconstruction approvals.
They are all subject to feed in premium contract.
At this story, we are anticipating slide you need do commissioning of these wind farms given the slow down in operations coast by the cool 19 crisis as mentioned by treating speech.
Commissioning of secured project and project under construction is expected to bring bottlenecks next capacity in SNET installed capacity to.
2352 megawatts to achieve our target, though 2800 megawatt project totaling 448 make out what we need to be added the growth five by 2023.
We already expect project after that then stage to add a total of 357 major one we are therefore confident to achieve our target by 2023.
In conclusion for my part over teams a multi lies to continue the operation and mentions of our assets and our development team is making good progress with the project we have in the pipeline.
I would also like to mention that upcoming our if or when or if the in France as being partly postpone to November and the solar Aristide in New York State as being postponed from summer two full.
These delays are reasonable even given the context.
And should not materially impact that we're developing.
This completes my part we knew that Bruno cover the financial Portioning movie team and we'd be back later for the question period.
Bruno.
Thank you Patrick.
Morning, everyone.
Let's start with Iridium <unk> progress made in light of our 2022 financial objectives.
Putting away asset pool, which increased by 59% in the first quarter.
And allowed us to reach 144 million in the last 12 months.
Please note.
That on top of the contribution from acquisitions and assets commissioning phase growth with mainly a chain biking exceptionally strong wind conditions in France in the last two quarters.
We just production to be anticipated production in France for these two quarters.
Last 12 months say AFFO would be at around $124 million.
Our dividend distribution ratio now stands at 43% still within our 40% to 60% target.
Our net installed capacity stands at.
2040 megawatts and with the growth pack and pipeline presented earlier by Patrick.
Confident that we will reach our 2020 tweak goal of 2800 megawatts.
First quarter revenues, followed pretty much the same pattern as production.
With growth compared to last here coming from the when sector.
And then be increased from 154 million in the first quarter of last year 269 million this year.
And they'd be able to win sector was 18 million or 12% higher than last year and I do I Didnt <unk> increased by 4 million or 42%.
Net earnings increased from 31 million in the first quarter last year.
The 37 million this year.
Moving to cash flow now, we generated 124 million of I Srs cash from operations in the first quarter.
Up by 23% compared to the same quarter last year.
Yes, I fully increased by 24 million or 59%.
Going from 44 million in the first quarter last year to 68 million this year.
Finally, our financial position remains solid with our net debt to total market cap ratio of 55% on March 31st.
Pair to 56% on December 31st 2090.
And as mentioned by Patrick earlier, we have over 250 million available on our revolver and a letter of credit facility.
In conclusion.
Production was higher than anticipated and friends in the last two quarters.
Yeah, well continue to significantly increase.
We are progressing well on the execution of our strategic plan and financial objectives.
Our teams are mobilized on the advancement of projects in that project portfolio and the growth path.
And do we had a solid balance sheet and are still looking for potential acquisitions our partnership.
If they represent added value or accretive to boil likes and our shareholders. Thank you for your attention.
We're now ready to take your question.
[noise] as you remind you to ask a question you want me to press Star one on your telephone to withdraw your question press the pound or hash key please standby only compiled acuity roster.
Jim and I mean, and put up he can put pushing just you know I peacefully twice you did you actually like have you seen if I Nick Yes, Dan My map on that can you comment on any questions.
Your first question comes from the line as Nelson Nate from RBC capital markets. Your line is now open.
Thanks, Good morning, everyone. Congratulations on a strong quarter.
Hi, good morning.
My first question relates to the a new York solar projects in terms of 180 megawatts could you just talk about the the next step.
On timing and when you expect the a completion date would be for those projects.
[noise] completions is a were rescheduling. These project, we need to 2020 to 2023.
And ER the knock out the what we'd have to do is finalizing the permitting process and also a in the process of signing the contract character. We were selected so that's where we stand, though so we don't see or [noise].
Sure it means that the government sorry about that ER.
Or different authorities are not that traffic they used to be because they're not they're working from the office anymore, but we don't see any major delays on that.
Okay got it and then.
In terms of the next RFP during the fall could use.
I guess some color on the size of or the RFP and also given that all of your projects for selected in the last round.
Is there like have you had developed a lot more solar projects and the state to us to participate and in the next round.
Olympic Dickason sort of this one.
Yeah, we had the.
As I mentioned that we have the pipeline, though for Threed 16, they got what the of a different stages for it for project, we would be the part of dish depending on what is possible true to finalize the during the next month's considering the situation, but ER, which we are still developing.
And come committed to this market since we have been though competitive.
On the first.
Okay and then my next question before I get back in the queue is the a French corporate P.P.A. in terms of the five year contract I'm can you just give some color as to how that SAR contract compares to the merchant power price today.
I presume, it's going to be lower I presume the contract.
Price is going to be lower than the P.A. price, but.
Can you tell me how it compares the merchant price and then the other thing is whether that five year period.
Can you give some color as to whether there's a preference for a longer term projects or a longer term contract.
And I was just wondering why five years versus versus a different term.
Okay, three to five Oh, sorry, Patrick.
What was it was you go go ahead, okay. So sort of a three to five years is reasonable isn't it's what we see in new markets before contracts or after.
Ah P. with the yes.
This is the first one of them duration. We're in generally speaking, we're not disclosing terms and condition Northcote track to I will not be schools the price, but I can tell you that it's a little bit higher than two days.
The quotation full 2021.
Which is around 43 full before you real can they get what all were in France.
Merchant price will to more rule is enough merchant prize pool mixture beetroots older market is expecting a recovery of the economy and that the price would go Oh, which.
But we're not going we are no more exposed to merchant price for the next five years for disaster. This is the most important.
And then sort of player. He then doesn't that for sure pasta longer that led to the corporate BPAC the better it is but like I.
I think just mentioned if we go what's available loved the markets.
Okay and the wind farm is gonna be about 15 years old next year I like the initial contracts 15 years, so you're adding another five years for that right.
Exactly yes.
Okay, Great I'll I'll get back in the Q.
Your next question comes online Sean Stewart from TD Securities. Your line is now open.
Thank you good morning.
A couple of questions for Bruno can you give us some context on the scale of the the potential Canadian refinancing opportunity that you referenced.
Oh, we're Uh huh.
Still a we're still in discussion and as you know this is Ah Ah.
I mean, it's a it's fairly significant assets are and what would bring an interesting and I'm sure else but.
We are we're cautious in our comments on this but because of the a and b existing situation.
We believe the the market is is open but that's you know a in these conditions. It it comes and goes and Ah such an operation takes a requires a few a few months of work. So we're we're cautious and we don't want to be too specific on just help extend anybody thats.
It's enough or.
For us to to pursue and and we still believe there would be benefits in doing this ah in occur in context.
Okay. Thanks for that and you referenced at the end of your comments.
Potential are being open to considering acquisitions or partnerships.
Two to.
Augment your growth.
Can you give us some detail on the potential opportunity set for either acquisitions or partnerships.
Well I can I can certainly give you a I mean.
In terms of our strategic plan and the targets. We are we set so last year.
There were a few sort of the smaller partnerships I included in that but no no major in any opportunity where were included in those targets. So we expect ER and hope that the current situation will provide us with so.
Potential opportunities, which were not part of our initial strategic plan, a and that's why we're increasing our.
Our watch on this and and our Oh.
Looking at all the potential markets I mean, ideally, we'd like to diversify bit more but if we see a good opportunity in ER in parts of the business, where we're already a strong I mean, it's it's gonna be really depending on the return and ER.
And the size of the opportunity so we'd like to to look at a.
Larger opportunity in ER and that's what really my comment was referring to.
And we'll be able and it'll be disciplined on that so.
Yeah.
Okay. Thanks for the detail that's all I have.
Thank you.
Your next question comes in line of Rupert Merer from National Bank. Your line is now open.
Good morning Accordingly.
Looking at the the French wind RFP. So Patrick I think you mentioned, you've got a couple of RF he's coming up.
This year and if I look at your your growth pipeline with God I believe under 37 megawatts of when that advanced stage.
And a little bit more it at mid stage or those mid stage projects are you comfortable.
Bidding those into the RFP, how how much.
Such do you think you have ready to to bid into the French RFP.
Oh, Okay. Thank you Rupert typically oh I see a it's a very sensitive question.
To remote competition.
Because you were all looking to do others and the French market. So we're not going to I would not give you details, but generally speaking at the criteria Oh, the oh acceptance to an RFP in France.
And our.
We're not bidding them.
Our no <unk> or not you know HM.
Come true.
Oh, sorry are not a nine was the criteria and so we will try to maintain the pace and we are we should we should do that too to continued to lean all the all the different doors, but yeah. It's it's very sensitive to give a figure.
Okay and with your current development cycle, how long would it take two new projects, probably mid stage to advance stage typically.
From meet stage to advance stage I would see between 18 to 20 to 36 months, depending on the project we need so it's variable.
But the this is this is typically a disappeared and depend it depend really off to the local acceptability of the project or or need to.
The challenge with the environment or things like this or sometimes also grid connection could be a challenge it's an area.
Okay. Thanks, and then secondly last year at your Investor Day you.
Walked us through plans to move more of your turbines to Ah self perform and you talked a little about.
Reducing operating costs in your prepared remarks wondering if you can give us some color on.
What percentage of your fleet do you think you can move to self perform over the next say a one in two years.
Okay and [laughter] generally speaking we are working on the.
So it just seemed didn't renew we're working on the on the significant assets in Canada for the moment, but did depend of yeah acceptance of the the finance in parts of the banks with assignments. The project, which we are we're confident on this and were working around the on some.
Assets or with a with the we charged to the sudden John assets in France that we both to the candy style or between the two years ago and showed this is a distress or rone.
I was just if I would come to you with the with the exact cigarette though I.
But we have something planned for Q2 in Q3 this year.
It's hard to also Rupert to give or specifics figure on what we are expecting because you know to put it simply I think we're looking at everything we could in source that would make sense, what we'll do it so.
But.
I I try to give you a cut back to you witnessed some sort of after and just the last point on the French part.
Before the refinancing.
We were stuck sometime oh with with the financing facilities no. We have the bus so that if you do negotiated because it's a it's in the refinancing or terms and condition and that's been Stephens said, we're doing the most weekend to do it but we need to have a commercial agreement with the Toby.
On supplier and ER and we're working indefinitely.
Thank you I'll leave it there thank you.
Again, if he would like to ask a question press star one on your telephone.
Your next question comes to line of Paul.
The only well from BMO capital markets. Your line is now open.
Hi, Good morning, guys. This is Paul stepping in for Ben Congrats on a great quarter.
No. So we were just curious or have any operating expense emerge post cove. It you know from working from home less corporate travel and its or are you able to quantify a run rate savings rate moving forward.
Oh I can answer that because I have I have asked that for a to start calculated we don't have figures as we speak but there will be glad to Matt.
I mentioned that if it's a let's say you are extensive enough to to be mention but ER for sure. There's there are some savings that will that happen during this.
Crisis period.
Hi, I cannot just one thing it it really depends on the length as well Oh the of this can find and period and ER and the travel band for example, so we'll know more in I mean, I hesitate to say a few weeks so a few months even but.
I think it so initially the first Ah first few weeks are we.
We add up.
<unk> that were really a fixed because they were already incurred but as funds go by Ah, we'll see potentially more savings.
Okay. That's helpful. I'm, just a the former question before getting back into queue here.
How are you thinking about the useful life of a wind farms now just post repowering.
Sure bit of color there.
[noise] post repowering.
You asked.
Yeah, just how you're thinking about the useful life of wind farms now.
You mean in general like.
Right and generates 25 years that we have a that to me, but even longer did this but when we do our estimation is a we base. It on 25 years, and sometimes 30, depending on the equipment. So.
So if we do a repowering your good for another 25 to 30 so.
So would it if resetting the clock to zero when we do have retiring it's brand new machines.
Okay. Thanks, guys.
Okay.
[noise] there no further questions at this time I will turn the call back over to the presenters.
Yes, thank you very much operator, and thank you everyone.
Beyond this call [laughter] so.
I would just like to mention to you that or if you have additional questions don't hesitate. Please call me I won four to one tree ones. There are four or five I'll make sure you. We quickly answer your question.
Our next event will be our after Htwo that AG I'm at 11 am today.
Our next conference call to announce second quarter results will be on Friday August seven.
And now that I hope you all remain healthy and half at Great day, I caught up or being part of this call.
Thank you ladies ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
She made up and that's something I said <unk> the Mednax machine.
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