Boralex: Major Rise in Operating Income in Second Quarter 2008



    MONTREAL, Aug. 8 /CNW Telbec/ - In the second quarter of 2008, Boralex
Inc. ("Boralex" or the "Corporation") benefited from higher electricity
selling prices and the expansion of its wind power segment, recording revenue
of $40.4 million, an increase of close to 25%.

    
    (in millions of dollars, except per share data)
    -------------------------------------------------------------------------
                                  Three months ended       Six months ended
                                ---------------------------------------------
                                 June 30,    June 30,    June 30,    June 30,
                                    2008        2007        2008        2007
                                ---------------------------------------------
    Revenue from energy sales       40.4        32.4        95.5        83.2
    EBITDA                          12.6         7.0        36.5        32.7
    Net earnings                     1.1         4.8        10.4        14.6
    Basic net earnings per share   $0.03       $0.15       $0.27       $0.47
    Cash flow from operations        9.4         6.7        30.2        26.8
    -------------------------------------------------------------------------

    In the second quarter ended June 30, 2008, earnings before interest,
taxes, depreciation and amortization (EBITDA) jumped 80% to $12.6 million.
This major increase is mainly due to the sharp rise in selling prices in the
United States and the sale of RECs. When revenue and EBITDA from the first
quarter are combined with that of the second, Boralex recorded a 15% increase
in revenue and close to a 12% increase in EBITDA in the first half of 2008.
    Boralex closed the second quarter of 2008 with net earnings of
$1.1 million ($0.03 per share) compared to net earnings of $4.8 million
($0.15 per share) for the same period a year earlier. The decrease stems
primarily from two non-recurring elements that had a positive impact on the
second quarter of 2007: a gain posted following termination of hedging
relations for interest rate swaps and favourable income tax adjustments. The
decrease in net earnings per share is also due to the increase in the weighted
average number of shares outstanding resulting from the June 2007 share issue.
Excluding the gain recorded in 2007 pursuant to the termination of the hedging
relationship, net earnings for the second quarter of 2008 would have risen
37.5% compared to the same period in 2007.
    Also, the increase in operating income translated in significant
liquidities as the Corporation generated $9.4 million of cash flows from
operations, a 40% increase over the amounts generated for the same period last
year. Accordingly, Boralex is proud to have access to $78 million of cash on
its balance sheet as at June 30, 2008, which ensures its financial
flexibility, enabling and facilitating future development projects.
    Patrick Lemaire, President and Chief Executive Officer, noted that "these
excellent results reflect the dynamic position of Boralex in the renewable
energy market and its vitality." He added that the "recent acquisition of a
generating station in British Columbia, the purchase of a 100 MW potential
wind power site in Ontario, plus, in partnership with Gaz Métro, the wining on
May 5th, 2008 of two wind power projects with a combined capacity of 272 MW in
Québec confirm the strategic choices and the leadership of Boralex."
    Revenue from energy sales in the wind power segment grew 38.8% to
$6.8 million for the second quarter of 2008. Growth in this segment stems
mainly from a 22.2% increase in power generation. Similarly, quarterly EBITDA
rose 30.8% to $5.1 million. This growth is due to the contribution from La
Citadelle wind farm, the expansion of the Avignonet-Lauragais site and
enhanced productivity at existing farms.
    The hydroelectric segment recorded revenue of $3.2 million and EBITDA of
$2.4 million in the second quarter of 2008, for respective increases of
$0.3 million and $0.2 million quarter over quarter.
    In the second quarter of 2008 the wood-residue segment posted revenue of
$27.8 million, up $5.0 million over the same quarter in 2007. The revenue
increase derives from the sale of RECs and the higher average electricity
selling price on the open market in the Northeastern United States. The same
circumstances explain the major 151.9% increase in EBITDA in the wood-residue
segment, which rose to $6.8 million in the second quarter of 2008 versus
$2.7 million for the same period in 2007. Note that as at June 30, 2008,
Boralex held firm commitments worth US$45 million for REC sales between
July 1, 2008 and December 31, 2012 in the Connecticut market. Furthermore, on
June 27, 2008, Boralex restarted its Stacyville power station to take
advantage of the high electricity prices in the United States and optimize
marketing of the RECs produced by the Ashland power station.

    About Boralex

    Boralex is a major private electricity producer whose core business is the
development and operation of power stations that run on renewable energy.
Employing close to 300 people, the Corporation owns and operates 21 power
stations with a combined installed capacity MW of 351 MW in Quebec, the
northeastern United States and France. The Corporation also has 240 MW of
contracted capacity for future production sites. Boralex is distinguished by
its leading expertise and long experience in three types of power generation -
wind, hydroelectric and thermal. The Boralex shares trade on the Toronto stock
exchange under the ticker symbol BLX. www.boralex.com
    In addition, Boralex holds a 23% interest in Boralex Power Income Fund
which owns 10 power stations in Quebec and the United States with an installed
capacity of close to 190 MW. Management of the Fund's assets is provided by
Boralex.

    Certain statements in this release, including statements regarding future
results and performance, are forward-looking statements based on current
expectations. The accuracy of such statements is subject to a number of risks,
uncertainties and assumptions that may cause actual results to differ
materially from those projected, including, but not limited to, the effect of
general economic conditions, decreased demand for Boralex's products,
increases in raw material costs, fluctuations in currency exchange rates,
fluctuations in sales prices and adverse changes in general market and
industry conditions. The summarized financial statements included in this
press release also contain certain financial measurements that are not
recognized as Generally Accepted Accounting Principles (GAAP).
    To assess the operating performance of its assets and reporting segments,
the Corporation uses Earnings before interest, taxes, depreciation and
amortization (EBITDA) and Cash flows from operations as performance
measurements. EBITDA and Cash flows from operations are not defined under GAAP
and do not have a standardized meaning prescribed by GAAP. Therefore, these
measures may not be comparable to similar measures presented by other
enterprises. EBITDA is defined in the summarized financial statements included
with this press release. Cash flows from operations corresponds to cash flow
from operating activities before changes in non-cash working capital balances
as disclosed in the consolidated statements of cash flows attached in this
press release.


    Consolidated Financial Statements

    Consolidated Balance Sheets
    (in thousands of dollars)
    (unaudited)
                                                         As at         As at
                                                      March 31,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------

    Assets

    Current assets
    Cash and cash equivalents                           77,903        79,195
    Accounts receivable                                 40,083        39,200
    Future income taxes                                  1,279         2,394
    Inventories                                          6,944         8,002
    Prepaid expenses                                     2,699         2,171
    -------------------------------------------------------------------------
                                                       128,908       130,962

    Investment                                          67,250        67,321
    Property, plant and equipment                      282,414       258,712
    Electricity sales contracts                         19,741        18,527
    Other assets                                        60,088        39,209
    -------------------------------------------------------------------------
                                                       558,401       514,731
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities            25,268        20,869
    Income taxes payable                                   915         1,481
    Current portion of long-term debt                   27,142        26,786
    -------------------------------------------------------------------------
                                                        53,325        49,136

    Long-term debt                                     156,942       148,747
    Future income taxes                                 24,265        23,430
    Fair value of derivative financial instruments      22,694         1,400
    Other liabilities                                    5,804         6,642
    Non-controlling interests                              737           607
    -------------------------------------------------------------------------
                                                       263,767       229,962
    Shareholders' equity
    Capital stock                                      223,257       221,557
    Contributed surplus                                  2,489         1,974
    Retained earnings                                  126,025       115,669
    Accumulated other comprehensive loss               (57,137)      (54,431)
    -------------------------------------------------------------------------
                                                       294,634       284,769
    -------------------------------------------------------------------------
                                                       558,401       514,731
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Earnings
    (in thousands of dollars, except per-share amounts and number of shares)
    (unaudited)
                                        For the                 For the
                                  three-month periods      six-month periods
                                     ended June 30,          ended June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue from energy sales     40,449      32,353      95,468      83,171
    Renewable energy tax credits   2,409       2,644       5,531       6,399
    Operating costs               29,310      26,231      63,722      57,329
    -------------------------------------------------------------------------
                                  13,548       8,766      37,277      32,241

    Share in earnings of the
     Fund                          1,790       1,181       5,038       4,659
    Management revenue from
     the Fund                      1,352       1,375       2,693       2,781
    Other revenue                    395          39         452       1,542
    -------------------------------------------------------------------------
                                  17,085      11,361      45,460      41,223
    -------------------------------------------------------------------------
    Other expenses
    Management and operation of
     the Fund                      1,039       1,153       1,977       2,313
    Administration costs           3,399       3,160       6,945       6,225
    -------------------------------------------------------------------------
                                   4,438       4,313       8,922       8,538
    -------------------------------------------------------------------------
    Operating earnings before
     amortization                 12,647       7,048      36,538      32,685
    -------------------------------------------------------------------------

    Amortization                   6,015       4,528      11,843      10,248
    Foreign exchange loss (gain)      56         361        (418)        308
    Financial instruments            785      (5,874)      1,104      (5,874)
    Financing costs                2,991       3,704       6,456       8,514
    -------------------------------------------------------------------------
                                   9,847       2,719      18,985      13,196
    -------------------------------------------------------------------------

    Earnings before income taxes   2,800       4,329      17,553      19,489
    Income tax expense             1,642        (506)      7,080       4,820
    -------------------------------------------------------------------------
                                   1,158       4,835      10,473      14,669
    Non-controlling interests        (23)          3        (117)        (54)
    -------------------------------------------------------------------------
    Net earnings                   1,135       4,838      10,356      14,615
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per Class A
     share (basic)
     (in dollars)                   0.03        0.15        0.27        0.47
    Net earnings per Class A
     share (diluted)
     (in dollars)                   0.03        0.15        0.27        0.46
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of Class A shares
     outstanding (basic)      37,818,503  32,526,623  37,692,735  31,300,863
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Retained Earnings
    (in thousands of dollars)
    (unaudited)
                                                               For the
                                                          six-month periods
                                                            ended June 30,
                                                          2008          2007
    -------------------------------------------------------------------------

    Balance - beginning of period                      115,669        97,649
    Issuance costs, net of related
     income taxes                                            -        (3,407)
    Net earnings for the period                         10,356        14,615
    -------------------------------------------------------------------------
    Balance - end of period                            126,025       108,857
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Comprehensive Income
    (in thousands of dollars)
    (unaudited)
                                        For the                 For the
                                  three-month periods      six-month periods
                                     ended June 30,          ended June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Net earnings for the period    1,135       4,838      10,356      14,615

    Other comprehensive income
     (loss):
      Translation adjustments
        Unrealized foreign
         exchange gains (losses)
         on translation of
         financial statements
         of self-sustaining
         foreign operations       (1,682)    (13,131)      7,409     (14,677)
        Share of cumulative
         translation adjustments
         of the Fund                (422)     (2,438)        169      (2,087)
        Taxes                         74         877          (4)        773
      Cash flow hedges
        Change in fair value of
         financial instruments   (15,874)      4,158     (16,337)      2,791
        Realized losses on
         hedging items recognized
         in net earnings           1,340        (413)      1,219      (1,124)
        Termination of hedging
         relationship                  -      (5,874)          -      (5,874)
        Taxes                      4,651         681       4,838       1,346
    -------------------------------------------------------------------------
                                 (11,913)    (16,140)     (2,706)    (18,852)
    -------------------------------------------------------------------------
    Comprehensive income (loss)
     for the period              (10,778)    (11,302)      7,650      (4,237)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Cash Flows
    (in thousands of dollars)
    (unaudited)
                                        For the                 For the
                                  three-month periods      six-month periods
                                     ended June 30,          ended June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Operating activities
    Net earnings                   1,135       4,838      10,356      14,615
    Distributions received
     from the Fund                 2,409       3,098       5,507       6,196
    Adjustments for non-cash
     items
      Share in earnings of
       the Fund                   (1,790)     (1,181)     (5,038)     (4,659)
      Amortization                 6,015       4,528      11,843      10,248
      Amortization of
       deferred financing
       costs                         724         509       1,432       1,419
      Renewable energy tax
       credits                      (395)       (953)     (1,488)     (2,283)
      Future income taxes            530         939       5,966       5,957
      Financial instruments          785      (5,874)      1,104      (5,874)
      Other                            4         784         483       1,161
    -------------------------------------------------------------------------
                                   9,417       6,688      30,165      26,780
    Change in non-cash working
     capital balances              9,140       3,406       3,926      (3,789)
    -------------------------------------------------------------------------
                                  18,557      10,094      34,091      22,991
    -------------------------------------------------------------------------
    Investing activities
    Purchase of property,
     plant and equipment          (9,231)    (11,693)    (13,558)    (12,192)
    Change in debt servicing
     reserves                        (25)      6,236         (54)      6,215
    Development projects          (1,481)       (187)    (15,708)       (269)
    Other                         (1,222)     (1,909)     (1,700)     (2,948)
    -------------------------------------------------------------------------
                                 (11,959)     (7,553)    (31,020)     (9,194)
    -------------------------------------------------------------------------
    Financing activities
    Increase in long-term debt         -     148,908           -     151,437
    Payments on long-term debt    (1,194)   (193,219)    (10,194)   (195,559)
    Financing costs                 (151)     (1,861)       (151)     (1,866)
    Net proceeds from share
     issuance                        238     105,180       1,704     105,307
    Other                              4        (240)          4        (494)
    -------------------------------------------------------------------------
                                  (1,103)     58,768      (8,637)     58,825
    -------------------------------------------------------------------------
    Translation adjustment on
     cash and cash equivalents     1,913      (1,932)      4,274      (2,028)
    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents                   7,408      59,377      (1,292)     70,594

    Cash and cash equivalents -
     beginning of period          70,495      25,116      79,195      13,899
    -------------------------------------------------------------------------

    Cash and cash equivalents -
     end of period                77,903      84,493      77,903      84,493
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    SUPPLEMENTAL INFORMATION
    Cash and cash equivalents
     paid for:
      Interests                    2,418       2,694       4,860       6,003
      Income taxes                   645         385         948       1,026
    -------------------------------------------------------------------------


    Segmented Information
    (tabular amounts in thousands of dollars, unless otherwise specified)
    (unaudited)

    The Corporation's power stations are grouped under four distinct segments:
wind power, hydroelectric power, wood-residue thermal power and natural gas
thermal power, and are engaged mainly in power generation. The classification
of these segments is based on the different cost structures relating to each
type of power station.
    The Corporation analyzes the performance of its operating segments based
on their EBITDA, which is defined as earnings before interest, taxes,
depreciation and amortization. EBITDA is not a measure of performance under
Canadian generally accepted accounting principles; however, management uses
this performance measure to assess the operating performance of its segments.
Earnings for each segment are presented on the same basis as those of the
Corporation.


    The following table reconciles
     EBITDA with net earnings:          For the                 For the
                                  three-month periods      six-month periods
                                     ended June 30,          ended June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Net earnings                   1,135       4,838      10,356      14,615
    Non-controlling interests         23          (3)        117          54
    Income tax expense             1,642        (506)      7,080       4,820
    Financing costs                2,991       3,704       6,456       8,514
    Financial instruments            785      (5,874)      1,104      (5,874)
    Foreign exchange loss (gain)      56         361        (418)        308
    Amortization                   6,015       4,528      11,843      10,248
    -------------------------------------------------------------------------
    EBITDA                        12,647       7,048      36,538      32,685
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information by operating
     segment
                                        For the                 For the
                                  three-month periods      six-month periods
                                     ended June 30,          ended June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    PRODUCTION (in MWh)
    Wind power stations           47,331      38,729     123,153     100,705
    Hydroelectric power
     stations                     32,322      32,589      75,702      66,170
    Wood-residue thermal power
     stations                    255,226     255,503     583,134     596,883
    Natural gas thermal power
     station                          76          28      22,569      22,202
    -------------------------------------------------------------------------
                                 334,955     326,849     804,558     785,960
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    REVENUE FROM ENERGY SALES
    Wind power stations            6,763       4,930      16,932      13,215
    Hydroelectric power
     stations                      3,200       2,859       6,989       5,938
    Wood-residue thermal power
     stations                     27,811      22,839      62,147      56,199
    Natural gas thermal power
     station                       2,675       1,725       9,398       7,819
    Corporate and eliminations         -           -           2           -
    -------------------------------------------------------------------------
                                  40,449      32,353      95,468      83,171
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA
    Wind power stations            5,115       3,863      13,619      10,922
    Hydroelectric power stations   2,391       2,191       5,425       4,273
    Wood-residue thermal power
     stations                      6,795       2,741      17,866      14,926
    Natural gas thermal power
     station                        (204)       (321)      1,117       1,780
    Corporate and eliminations    (1,450)     (1,426)     (1,489)        784
    -------------------------------------------------------------------------
                                  12,647       7,048      36,538      32,685
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    PURCHASE OF PROPERTY, PLANT
     AND EQUIPMENT
    Wind power stations            2,710      10,331       5,396      10,528
    Hydroelectric power stations       2          11           8         129
    Wood-residue thermal power
     stations                      5,726       1,281       6,926       1,326
    Natural gas thermal power
     station                          16           -          16           2
    Corporate and eliminations       777          70       1,212         207
    -------------------------------------------------------------------------
                                   9,231      11,693      13,558      12,192
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                         As at         As at
                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    ASSETS
    Wind power stations                                214,977       196,814
    Hydroelectric power stations                        17,644        12,427
    Wood-residue thermal power stations                137,882       130,728
    Natural gas thermal power station                   15,213        16,132
    Corporate and eliminations                         172,685       158,630
    -------------------------------------------------------------------------
                                                       558,401       514,731
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Ms. Patricia Lemaire, Director, Public Affairs
and Communications, Boralex Inc., (514) 985-1353,
patricia.lemaire@boralex.com


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