"The second quarter disapointing results do not affect in any way the growth prospects of Boralex. We continue to invest strongly in wind farm development of which 100 MW will be commissioned by December. These new assets will have a positive effect on our results over the coming years" says Mr. Patrick Lemaire, President and Chief Executive Officer.
With respect to the proposed acquisition of the Boralex Power Income Fund, Mr. Lemaire noted that "this transaction would bring greater diversification to Boralex’s assets, notably with additional hydroelectric assets, but also by, increasing the number of capacity under long-term contracts; this would provide greater stability and predictability to our results."
In the second quarter 2010, revenues were $36.7 million, down 12.2% compared to the same period in 2009. The decrease stems mainly from the rise in the Canadian dollar versus the U.S. dollar and the euro. At a constant exchange rate, revenues for the second quarter would have been up 1.0% over the same period in 2009.
Earnings before interest, taxes, depreciation and amortization (EBITDA) stood at $5.2 million for the second quarter, down $7.7 million versus the second quarter 2009. This decrease is partly due to non-recurring expenses incurred by Boralex in connection with the offer to acquire the Fund, and to currency fluctuations and the difficult environment in the wood-residue segment which has notably put pressure on energy prices.
All of these unfavourable elements eroded the contribution of $3.2 million to EBITDA from the new wind farms commissioned earlier in the year. The Corporation thus ended the second quarter 2010 with a net loss of $5.8 million ($0.15 per share, basic and diluted) compared to net earnings of $1.8 million ($0.05 per share, basic and diluted) for the same period in 2009.
Second quarter 2010 results for the wind power segment reflect the positive impact of Boralex’s expansion strategy, with the segment reporting revenue of $9.2 million from the sale of energy, and EBITDA of $7.1 million, up 15.0% and 14.5% respectively versus the same period in 2009.
The hydroelectric segment, for the quarter ended June 30, 2010, recorded revenues from the sale of energy of $2.3 million and EBITDA of $1.2 million, compared to $2.8 million and $1.8 million for the second quarter 2009. The decrease is partly due to less favourable hydrology for the U.S. power stations, which generated 22% less power in the second quarter of 2010 versus the same period in 2009 and was down 13% compared to historical averages.
As predicted by management, the less favourable business context in the U.S. wood-residue segment related in particular to the termination of the tax credit program for the production of renewable energy and fewer benefits than previous years from forward power sales contracts, combined with the unfavourable impact of the rise in the Canadian dollar, had a negative impact on results.
For the second quarter 2010, revenues from the sale of energy in the wood-residue segment amounted to $22.9 million, down 19.1% compared to the same quarter in 2009. EBITDA was $8.1 million in 2009 and $4.4 million in 2010. "We are confident that the tax credit program for the production of renewable energy will be extended by the U.S. Congress. This decision and the economic recovery in the United States should improve the contribution of the wood-residue sector to the results," said Patrick Lemaire.
Boralex is a major independent power producer whose core business is the development and operation of power stations that generate renewable energy. Employing over 300 people, the Corporation operates 28 power stations with a total installed capacity of 410 megawatts ("MW") in Canada, in the Northeastern United States and in France.
In addition, the Corporation has, alone or with its European and Canadian partners, power projects under development that will add more than 300 MW of power, of which almost 100 MW will come online by the end of fiscal 2010. Boralex is distinguished by its diversified expertise and in-depth experience in three power generation segments – wind power, hydroelectric and thermal. Boralex also holds a 23% interest in Boralex Power Income Fund, which has 10 power stations with a total installed capacity of 190 MW in Québec and the United States. These sites are managed by Boralex. Boralex shares are listed on the Toronto Stock Exchange under the ticker symbol BLX.