Vermont Business Magazine Valener Inc, the public investment vehicle in Gaz Metro Limited Partnership, today reported normalized operating cash flows of $10.4 million for the first quarter of fiscal 2016, or $0.27 per common share, compared to $9.9 million or $0.26 per common share in the first quarter of 2015. The company also declared a quarterly dividend of $0.27 per share, in line with the plan announced in autumn 2015.The Energy Distribution segment in Vermont, through its subsidiaries Green Mountain Power Corporation (GMP) and Vermont Gas Systems Inc. (VGS), recorded net income attributable to Partners of $18.3 million for the first quarter of fiscal 2016, up $2.4 million or 15.1%, year over year.
Q1 2016 HIGHLIGHTS
Valener
- Normalized operating cash flows per common share (1) of $0.27, up 4% from
the same quarter of fiscal 2015;
- Adjusted net income (1) of $16.5 million, up 5% ($0.8 million), or $0.43
per common share, compared to $0.41 in the same quarter of fiscal 2015; and
- Declaration of a $0.27 dividend per common share, up 4% from the previous
quarter.
Gaz Metro
- Recurring net income (1) of $75.3 million, up 9% ($6.5 million); and
- $125 million of capital expenditures, in line with the investment plan. "Valener's financial position remains strong: our cash flows are stable and predictable, and our goal of raising the dividend over the next two years remains unchanged despite mounting pressure on energy prices and rising market volatility," said Pierre Monahan, Chairman of Valener's board of directors. "Our significant investment in Gaz Metro, a diversified and largely regulated energy portfolio, has helped insulate Valener from recent market turbulence."
For the first quarter of fiscal 2016, Valener recorded adjusted net income attributable to common shareholders of $16.5 million ($0.43 per common share) compared to $15.7 million ($0.41 per common share) in the same quarter of fiscal 2015. This increase of $0.8 million ($0.02 per common share) stems from an increase in Gaz Metro's recurring net income, partly offset by a decrease in the net income generated by the wind farms.
(1) Non-U.S.-GAAP financial measure.
A reconciliation of non-U.S.-GAAP financial measures is presented below.
Summary of Valener's results
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For the quarters ended December 31
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(in millions of dollars, unless otherwise indicated) 2015 2014
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Consolidated net income 40.2 15.7
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Net income attributable to common shareholders 39.1 14.6
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Adjusted net income attributable to common shareholders (1) 16.5 15.7
Per common share(in $) 0.43 0.41
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Normalized operating cash flows (1) 10.4 9.9
Per common share(in $) 0.27 0.26
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(1) These measures are non-U.S.-GAAP financial measures. A reconciliation of
non-U.S.-GAAP financial measures is presented below.
As mentioned in the valener inc. and gaz metro limited partnership section of Valener's MD&A for the first quarter ended December 31, 2015, Valener and Gaz Metro have retrospectively adopted U.S. GAAP. Therefore, the MD&A and interim consolidated financial statements of Valener and Gaz Metro for the three-month periods ended December 31, 2015 and 2014 have been prepared in accordance with U.S. GAAP. The comparative financial information and the information presented in this press release have also been adjusted to comply with U.S. GAAP.
Seigneurie de Beaupre wind farms - Valener and Gaz Metro
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Installed
Phase Wind Farms capacity In service date Valener Gaz Metro
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I 2 and 3 272 MW Dec. 2013 24.5% 25.5%
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II 4 68 MW Dec. 2014
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The Seigneurie de Beaupre wind farm operations were affected by less favourable wind conditions than in the same period last year, a risk inherent to this type of business activity. This impact was partly offset by the fact that Wind Farm 4 was in operation throughout the entire first quarter of fiscal 2016 compared to only one month in the same quarter of 2015.
In total, the Seigneurie de Beaupre wind farms generated operating cash flows of $31.0 million in the first quarter of fiscal 2016 compared to $12.9 million in the first quarter of fiscal 2015. This increase was partly due to a $12.9 million payment received from Hydro-Quebec in the first quarter of fiscal 2016 relating to a note receivable for the reimbursement of certain construction costs.
Wind Farms 2 and 3 produced 208,915 megawatthours (MWh) during the first quarter of fiscal 2016 compared to 234,656 MWh in the same quarter of last year, a difference of 11.0%. Wind Farm 4 produced 52,141 MWh during the first quarter of fiscal 2016 versus 15,627 MWh in its single month of operation during the first quarter of fiscal 2015.
Gaz Metro's results
Excluding non-recurring items, net income attributable to the Partners of Gaz Metro totalled $75.3 million in the first quarter of fiscal 2016, an increase of $6.5 million, or 9.4%. This increase was due to the favourable impact of the appreciation of the U.S. dollar against the Canadian dollar, a timing difference between revenue and cost recognition, and higher capitalized interest on non-rate-base investments in Gaz Metro-QDA. The increase was partly offset by lower natural gas and electricity deliveries due to warmer temperatures and lower liquefied natural gas (LNG) sales.
Gaz Metro is pursuing its investment plan, with $485 million in capital expenditures earmarked for fiscal 2015-2016. "We deploy our capital carefully to ensure the integrity and development of our gas and electricity networks and to further establish our presence in the promising LNG market. We submitted our expansion projects for the Bellechasse and Asbestos regions to the Regie de l'energie du Quebec, and we continue to support our U.S. subsidiaries in bolstering and extending their gas and electricity distribution infrastructures in Vermont. And we are investing to increase the liquefaction capacity at our LSR plant in Montreal. To that effect, we entered into a major commercial agreement with National Grid, one of the main natural gas distributors in the Northeastern United States, to supply its storage facilities in New England," said Sophie Brochu, President and Chief Executive Officer of Gaz Metro. "Despite current economic headwinds in the energy sector, we remain con fident moving forward thanks to our robust business model that shields us from major earnings fluctuations."
Gaz Metro's segment results - Net income attributable to Partners,
excluding non-recurring items
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For the quarters ended December 31
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(in millions of dollars) 2015 2014 Change
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Energy Distribution
Gaz Metro-QDA 53.4 48.7 4.7
Impact of the regulatory treatment related
to other postretirement benefits (Gaz Metro-
QDA) 79.3 - 79.3
GMP and VGS (1) 18.3 15.9 2.4
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151.0 64.6 86.4
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Natural Gas Transportation (1) 4.5 3.9 0.6
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Energy Production (1) 0.5 0.9 (0.4)
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Energy Services, Storage and Other (1) 1.0 1.5 (0.5)
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Corporate Affairs (1) (2.4) (2.1) (0.3)
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Net income attributable to Partners 154.6 68.8 85.8
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Non-recurring items (79.3) - (79.3)
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Net income attributable to Partners, excluding
non-recurring items (2) 75.3 68.8 6.5
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(1)Net of financing costs of investments in this segment. These costs
consist of interest on long-term debt incurred by Gaz Metro to finance
investments in subsidiaries, joint ventures and entities subject to
significant influence in each of these segments.
(2) This measure is a non-U.S.-GAAP financial measure. A reconciliation of
non-U.S.-GAAP financial measures is presented below.
SEGMENT INFORMATION
Energy Distribution
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Natural gas distribution in Quebec (Gaz Metro-QDA)
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Distribution
Rate base Authorized return network Customers
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$2.0B 8.90% 10,000 km 195,000
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Excluding non-recurring items, Gaz Metro-QDA recorded first quarter net income attributable to Partners of $53.4 million, a $4.7 million or 9.7% year-over-year increase that was mainly due to:
-- a timing difference between revenue and cost recognition. This
difference, anticipated in the 2016 rate case, is expected to reverse at
the end of fiscal 2016; and
-- higher capitalized interest on non-rate-base investments.
This increase was tempered somewhat by a decrease in deliveries, particularly due to adverse economic conditions and warmer weather; specifically, in Gaz Metro-QDA's service area, temperatures were 29% warmer than normal in November and December 2015.
As a result of applying U.S. GAAP, Gaz Metro recorded a $79.3 million one-time regulatory asset related to employee future benefits. Under U.S. GAAP, this regulatory asset could not be recognized on the opening balance sheet (October 1, 2014) and was therefore written off through an adjustment to deficit. Regulatory treatments were changed in December 2015 following a decision by the Regie, resulting in the recognition of the regulatory asset and a one-time increase in Gaz Metro's net income (non-recurring item). Regulatory treatments are now aligned with U.S. GAAP and such impacts on net income are unlikely to occur in the future.
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Energy distribution in Vermont
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Authorized Distribution
Rate base return network Customers
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GMP US$1.3B 9.44% 21,100 km(1) 265,000
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VGS US$200M 10.09% 1,300 km 50,000
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(1) GMP's system consists of over 1,500 km of overhead transmission lines,
18,000 km of overhead distribution lines and 1,600 km of underground
distribution lines, mostly located in Vermont but also extending into
New Hampshire and New York.
The Energy Distribution segment in Vermont, through its subsidiaries Green Mountain Power Corporation (GMP) and Vermont Gas Systems Inc. (VGS), recorded net income attributable to Partners of $18.3 million for the first quarter of fiscal 2016, up $2.4 million or 15.1%, year over year. This increase was mainly due to:
-- the favourable impact of the appreciation of the U.S. dollar against the
Canadian dollar; and
-- an increase in the average rate base of both entities;
partly offset by lower electricity revenues, mainly due to warmer weather.
On January 8, 2016, VGS obtained a reconfirmation of the Certificate of Public Good by the Vermont Public Service Board (VPSB) further to a memorandum of understanding, reached last October between VGS and the Vermont Department of Public Service (VDPS), that placed a cap of US$134.0 million on the total amount of the Addison project's Phase I costs that can be recovered through rates.
The Addison project, which consists of extending the natural gas distribution service by 66 km to serve the Vermont communities of Vergennes and Middlebury, will continue to be developed as planned. In February 2016, the first 17 km were gassed up, and most of the next phase's construction work is scheduled to be completed by the end of the year.
Natural Gas Transportation
The Natural Gas Transportation segment generated net income attributable to Partners of $4.5 million compared to $3.9 million for the first quarter of fiscal 2015. This increase was mainly due to:
-- the favourable impact of the appreciation of the U.S. dollar against the
Canadian dollar; and
-- lower financial expenses due to the final repayment, in the second
quarter of fiscal 2015, of amounts owed to PNGTS customers in accordance
with a decision made by the Federal Energy Regulatory Commission.
Energy Production
For the first quarter of fiscal 2016, the Energy Production segment generated net income attributable to Partners of $0.5 million, down from $0.9 million in the first quarter of last year. The decrease was mainly due to less favourable wind conditions during autumn 2015, partly offset by the operation of Wind Farm 4 throughout the entire first quarter of fiscal 2016 compared to only one month of operation during the first quarter of fiscal 2015.
Energy Services, Storage and Other
The Energy Services, Storage and Other segment generated net income attributable to Partners of $1.0 million for the first quarter of fiscal 2016, down $0.5 million from the first quarter of fiscal 2015. This decrease was mainly the result of a significant short-term contract executed in the first quarter of fiscal 2015, partly offset by improved profitability at Gaz Metro Plus and Transport Solutions.
Reconciliation of non-U.S.-GAAP financial measures
Valener Inc.
Reconciliation of normalized operating cash flows
For the quarters ended December 31 (in millions of dollars) 2015 2014 =========================================================================== Cash flows related to operating activities 11.5 11.0 Dividends paid to preferred shareholders (1.1) (1.1) --------------------------------------------------------------------------- Normalized operating cash flows 10.4 9.9 ===========================================================================
Valener Inc.
Reconciliation of adjusted net income attributable to common shareholders
For the quarters ended December 31 (in millions of dollars) 2015 2014 ============================================================================ Net income 40.2 15.7 Non-recurring items of Valener (0.1) 1.5 Share in the non-recurring items of Gaz Metro (23.0) - Income taxes on the non-recurring items of Valener and on the share in the non-recurring items of Gaz Metro - (0.4) Deferred income taxes related to the outside-basis temporary difference on the interest in Gaz Metro 0.5 - ---------------------------------------------------------------------------- Net income, excluding the non-recurring items of Valener, the share in the non-recurring items of Gaz Metro, net of income taxes, and deferred income taxes related to the outside-basis temporary difference on the interest in Gaz Metro 17.6 16.8 Cumulative dividends on Series A preferred shares (1.1) (1.1) ---------------------------------------------------------------------------- Adjusted net income attributable to common shareholders 16.5 15.7 ============================================================================
Gaz Metro Limited Partnership
Reconciliation of net income attributable to Partners, excluding non-recurring items
For the quarters ended December 31 (in millions of dollars) 2015 2014 ============================================================================ Net income attributable to Partners 154.6 68.8 Non-recurring items (79.3) - ---------------------------------------------------------------------------- Net income attributable to Partners, excluding non- recurring items 75.3 68.8 ============================================================================
Conference call
Valener will hold a conference call today at1:00 pm(Eastern Time) to discuss its results and those of Gaz Metro for the quarter ended December 31, 2015. The public is invited to join the call at647-788-4922or toll-free at877-223-4471. A simultaneous webcast will also be available using the link provided under "Events and Presentations" in the "Investors" section ofwww.valener.com. A replay of the webcast will be archived on the Company's website for 365 days following the call; a phone replay will be available for 30 days by dialing416-621-4642or toll-free800-585-8367(access code: 11202711).
Valener
Valener Inc. is a widely held public company that serves as the investment vehicle in Gaz Metro. Through its investment in Gaz Metro, Valener offers its shareholders a solid investment in a diversified and largely regulated energy portfolio in Quebec and Vermont. As a strategic partner, Valener, on the one hand, contributes to Gaz Metro's growth and, on the other, invests in wind power production in Quebec alongside Gaz Metro. Valener favours energy sources and uses that are innovative, clean, competitive and profitable. Valener's common and preferred shares are listed on the Toronto Stock Exchange under the "VNR" symbol for common shares and the "VNR.PR.A" symbol for Series A preferred shares.www.valener.com
Gaz Metro
With nearly $7 billion in assets, Gaz Metro is a leading energy provider. It is the largest natural gas distribution company in Quebec, where its network of over 10,000 km of underground pipelines serves more than 300 municipalities and over 195,000 customers. Gaz Metro is also present in Vermont, producing and transporting electricity and distributing electricity and natural gas to meet the needs of more than 310,000 customers. Gaz Metro is actively involved in the development and operation of innovative, promising energy projects, including natural gas as fuel and liquefied natural gas as a replacement for higher emission-producing energies, the production of wind power, and the development of biomethane. Gaz Metro is a major energy sector player that takes the lead in responding to the needs of its customers, regions and municipalities, local organizations and communities while also satisfying the expectations of its Partners (Gaz Metro inc. and Valener) and employees.www.gazmetro.com
MONTREAL, QUEBEC--(Marketwired -February 12, 2016) - Valener Inc. (TSX:VNR)(TSX:VNR.PR.A) -