Investor Presentation

Transcription

1 Executing on Growth Investor Presentation September NPI.TO

2 Forward-Looking Statements Disclaimer This written and accompanying oral presentation contains certain forward-looking statements which are provided for the purpose of presenting information about management s current expectations and plans. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as expects, anticipates, plans, believes, estimates, intends, targets, projects, forecasts or negative versions thereof and other similar expressions, or future or conditional verbs such as may, will, should, would and could. These statements may include, without limitation, statements regarding future adjusted EBITDA or adjusted EBITDA, cash flows and dividend payments, the construction, completion, attainment of commercial operations, cost and output of development projects, plans for raising capital, and the future operations, business, financial condition, financial results, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. This information is based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, management s current plans, its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management s current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include, but are not limited to, construction risks, counterparty risks, operational risks, the variability of revenues from generating facilities powered by intermittent renewable resources and the other factors described in the Risks and Uncertainties section of Northland s 2014 Annual Report and 2014 Annual Information Form, which are both filed electronically at and Northland s website Northland s actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur. The forward-looking statements contained in this presentation are based on assumptions that were considered reasonable at time of delivery. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise. All figures are presented in Canadian dollars unless otherwise indicated. 1

3 Northland Overview Canadian-based Global Power Producer in business since 1987 Full lifecycle developers, owners, and operators of our facilities 1,332 MW* in operation (thermal, wind, and solar facilities) 1,042 MW (698 MW* net) under construction Stability Growth Commitment Well-diversified geographically and by technologies Generate long-term stable cash flows 98% of revenues from long-term power contracts Developing thermal, wind, and solar projects in North America, Europe, Mexico, and Latin America Management has a vested interest through a 35% ownership interest Northland maintains an annual dividend of $ * Represents Northland s economic interest

4 Diversification by Geography and Technology 1 Kirkland Lake 101 MW* 11 2 Iroquois Falls 120 MW 3 Kingston 110 MW 9 4 Kavelstorf 7 MW 8 5 EckolstIädt 15 MW Jardin d Éole 128 MW 7 Thorold 265 MW 8 Mont Louis 100 MW 9 Spy Hill 86 MW Roof-top solar 1 MW* 11 North Battleford 260 MW 12 Ground-Mount Solar 130 MW** 13 McLean s Mountain 30 MW* 14 Grand Bend 50 MW* 15 Gemini 360 MW* 16 Nordsee One 282 MW* In operation Under construction Thermal Wind Biomass Solar *Represents Northland s economic interest **Ground-mount solar: 120 MW in operations and 10 MW under construction. 3

5 Risk/Reward Long Term Focus Delivers Value Northland s full life cycle commitment Captures development profits and provides stable cash flows over the life of facilities to service the dividend Preferred by power off-takers and lenders Ensures quality projects are constructed to achieve performance and reliability origination feasibility confirmed signed PPA financial close commercial operations date Development and construction value Operations cashflow to create value to service dividends Initial risk Greatest exposure Diminishing risk IN DEVELOPMENT ADVANCED DEVELOPMENT UNDER CONSTRUCTION OPERATIONS Stage 4

6 Millions of $ Millions of $ Strong and Growing Financial Results $800 Revenues $500 Adjusted EBITDA $700 $600 $500 CAGR: 28% $400 $300 CAGR: 29% $400 $300 $200 $200 $100 $100 $ F $ F Prior Growth Initiatives Have Shown Results Expected to generate over $380 million of Adjusted EBITDA in

7 Development Our Pipeline 2015 Focus Development Pipeline > 2,200 MW Advanced Development Construction* 698 MW Operating Assets* 1,332 MW D E G R E E O F P R O J E C T C E R T A I N T Y L o w e s t Highest Evaluate and focus on opportunities that meet our investment criteria Power contracts in hand Finalizing supply agreements Financing Ensure projects are delivered on time, and on budget * Represents Northland s economic interest Operations and maintenance Thermal 943 MW* Wind 280 MW* Solar 109 MW* 6

8 Focus on Executing Construction Projects Gemini 600 MW offshore wind farm Nordsee One 332 MW offshore wind farm COD: % interest Grand Bend 100 MW onshore wind farm Offshore Wind Europe Project Costs: Over 4 billion Onshore Canada Renewables Project Costs: Over $400 million COD: End of % interest Ground Mounted Solar 1 x 10 MW solar farm COD: % interest COD: % interest Management focused on executing 1,042 MW of projects currently under construction. 7

9 Offshore Wind Projects Construction 60 kilometers apart Gemini ~85 kilometers from shore Two wind parks 75 turbines each Nordsee One ~40 kilometers from shore 54 turbines Project Component Gemini Nordsee One Cable Manufacturing Installation Turbine Foundations (Monopiles) Manufacturing Installation Offshore Substation Manufacturing Installation Turbines Manufacturing Installation 100% 90% + 100% 50% + 100% 100% Started 2016/2017 Started 2016 Started 2016/2017 Started 2016 To be started 2017 COD

10 Gemini Project Overview Location Capacity Capital Cost Northland interest Power contract Operations & maintenance Gemini North Sea, Netherlands 600 MW (2 sites x 300 MW) 2.8 billion 60% (360 MW) Fixed price; 15-year contract with the Dutch government Siemens (15 years) Partners Siemens (20%), Van Oord (10%), HVC (10%) COD 2017 Additional facts Will be largest wind farm in the North Sea and second largest offshore wind farm in the world. 9

11 Gemini Project Structure Two party EPC contracting strategy Clear contracting strategy that minimizes interface risk 10

12 Turbine height including foundation (225m, 68 story building) 1 Gemini Turbines 130m Airbus 380 Length of plane (73m) Wingspan (80m) Length of blade (63 m) Over twice as long as a new TTC streetcar Statue of Liberty (93 m) 11

13 Gemini Monopile Foundations Installation of 1 st Monopile on July 1,

14 Gemini Offshore Substation Jackets Installation of both jackets in August 13

15 Gemini Offshore substation installed on jacket Installation of offshore substation on jacket See appendix for more pictures 14

16 Nordsee One Project Overview Location Capacity Capital Cost Northland interest Power contract Operations & maintenance Nordsee One North Sea, Germany 332 MW 1.2 billion 85% (282 MW) A fixed price Feed-in-tariff subsidy for 10 years. Senvion (10 years) Partners RWE Innogy (15%) COD 2017 Additional facts Rights to develop two additional projects (Nordsee Two & Three) over the next decade. 15

17 Nordsee One Project Structure The grid connection will be already built and Nordsee interfaces with the Transmission System Operator TenneT at the substation Turbine Supply & Installation Nordsee I Substation & Installation Transmission System Operator Offshore Converter Station (TenneT) Onshore Substation Foundation Supply Cable Supply & Installation Foundation Installation Export Cables Export Cables Five experienced contractors with specialized expertise, with buffers between contracts 16

18 Grand Bend Wind Project Location Capacity Capital Cost Northland interest Power contract Onshore Wind Project Southern Ontario 100 MW COD 2016 Construction Progress $384 million 50/50 partnership with First Nations 20 years (Feed-In-Tariff) - Foundation/excavation work - Directional drilling, trenching, cable installation 17

19 Adjusted EBITDA Diversification Original NUGs 31% Onshore Wind 13% Solar 8% Thermal 18% Original NUGs Onshore Wind 7% Thermal 41% Solar 15% Offshore Wind 61% 0 *The above charts are illustrative of managements objectives. They are based upon Northland s operating facilities continuing to perform in a manner consistent with operations in 2014, with additions to Adjusted EBITDA from projects under construction or advanced development, and other adjustments resulting from power contract renewals primarily in Ontario all as described in our MD&A and 2014 AIF. The illustrations do not constitute a financial forecast, projection or guidance and are based upon assumptions that are subject to change. **Original NUGs refers to the Cochrane, Kirkland Lake, Kingston & Iroquois Falls power generating facilities. 18

20 Development Focus Larger projects Canada Latin America Europe Appropriate project return thresholds Stable High-Quality Projects with Attractive Returns Target specific markets Natural gas Wind Large solar Utilize preferred technologies Contracted power 19

21 Payout Ratio Payout Ratio Headroom on the Way Northland undertakes major capital programs that elevates its short-term payout ratio Last cycle included North Battleford, Spy Hill, and Ground-mounted Solar ( ) As Gemini and Nordsee One are constructed, the payout ratio will be elevated again by design until construction is completed in 2017 Both offshore wind projects reaching commercial operations will provide significant support to the long-term stability and future of Northland 600 MW Build-Out Program Off-shore Wind Build-Out Normal payout ratio level prior to servicing dividends for growth projects Cash Inflow from Build-Out Programs Nordsee One equity raise Headroo m Project Nordsee One and Gemini achieve COD 100% North Battleford & Ground- Gemini equity Mount Solar achieve COD raise Payout Ratio Payout Ratio Headroom 100% Payout Ratio This chart was compiled by management for illustrative purposes based on current financing expectations that are subject to change. The illustrations do not constitute a financial forecast, projection or guidance and are based upon assumptions that are subject to change 20

22 Summary Stability and Growth: The track record and ability to deliver high quality results and reliable returns Long-term focus: Delivering value for shareholders now and into the future by seizing opportunities that create attractive returns and sustainable growth Commitment: Management has a vested interest through a 35% ownership interest 21

23 Appendix 22

24 Reporting of Non-IFRS Financial Measures This investor presentation includes references to Northland s adjusted EBITDA and free cash flow, measures not prescribed by International Financial Reporting Standards (IFRS). Adjusted EBITDA and free cash flow, as presented, may not be comparable to other similarly-titled measures presented by other publicly-traded companies, as these measures do not have a standardized meaning under IFRS. These measures should not be considered in isolation or as alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. These measures are also not necessarily indicative of operating income or cash flows from operating activities as determined under IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of Northland s results of operations, and are used by management to evaluate the performance of the company for internal assessment purposes. Management believes that adjusted EBITDA and free cash flow are widely-accepted financial indicators used by investors to assess the performance of a company. These measures provide investors with additional information to assist them in understanding these critical components of the company s financial performance, including its ability to generate cash through its current operations. These measures have been applied consistently for all periods presented in this document. Adjusted EBITDA Adjusted EBITDA provides investors with an indication of Northland s capacity to generate income from operations and investments before taking into account management s financing decisions and the costs of consuming tangible and intangible capital assets, which vary according to asset type and management s estimate of their useful lives. Adjusted EBITDA is calculated as income (loss) before income taxes adjusted for depreciation of property, plant and equipment, amortization of contracts and other intangible assets, net finance costs, Gemini subordinated debt earned by Northland, fair value losses (gains) on derivative contracts, fair value losses (gains) on convertible shares, unrealized foreign exchange losses (gains), gain on the sale of chipping facility, writedown of Panda-Brandywine investment, elimination of non-controlling interests and finance lease and equity accounting. Free cash flow Free cash flow is calculated as cash flow provided by operating activities adjusted for net change in non-cash working capital balances, capital expenditures, interest paid, scheduled principal repayments on term loans, funds set aside for scheduled principal repayments and for asset purchases, restricted cash (funding) for major maintenance, write-off of deferred development costs, consolidation of managed facilities, income from equity accounted investments, proceeds from sale of assets, corporate credit facility renewal costs, and preferred share dividends. This measure, along with cash flow provided by operating activities, is considered to be a key indicator for investors to understand Northland s ability to generate cash flow from its current operations. Readers should refer to our MD&As accompanying our financial statements for an explanation of adjusted EBITDA and free cash flow, and for a reconciliation of Northland s reported adjusted EBITDA to its consolidated income (loss) before taxes and a reconciliation of Northland s free cash flow to its cash provided by operating activities. These are filed from time to time on our company s website APPENDIX 23 23

25 Producing and Maintaining Stable Cash Flows Long-term Focus Kirkland Lake* Kingston Iroquois Falls Germany Kingston Jardin Thorold Mont Louis Iroquois Falls Thorold Ground-Mount Solar Spy Hill North Battleford Cochrane* McLean s Mtn Spy Hill Grand Bend Kirkland* Mt Louis Germany Jardin Ground Mounted Solar** North Battleford** Remaining PPA Term for Each Operating Facility Gemini Nordsee Extension options** Weighted average 13.1 years^ (without extension options**) Weighted average 14.5 years** (with extension options**) *Represents Northland s economic interest in the facility ** Facilities with dashed bar graph represent option to extend the power contract for additional period ^The weighted average PPA life is weighted by respective MW capacity. The thickness of each bar represents each facilities respective overall contribution to 2018 forecasted Adjusted EBITDA

26 Operating Facilities Project Location Size Ownership Technology PPA Term Gas Term Thorold ON, CA 265 MW 100% Natural gas cogeneration Kingston ON, CA 110 MW 100% Natural gas combined cycle 2017* 2017 Iroquois Falls ON, CA 120 MW 100% Natural gas cogeneration 2021* 2021 Spy Hill SK, CA 86 MW 100% Natural gas peaking plant 2036 n/a^ Kirkland Lake ON, CA 132 MW 68%** Biomass and natural gas combined cycle and peaking 2015* 2015* Mont Louis QC, CA 100 MW 100% Wind 2031 n/a Jardin d Éole QC, CA 128 MW 100% Wind 2029 n/a Kavelstorf and Eckolstadt Germany 22 MW 100% Wind n/a*** n/a Roof-top Solar ON, CA 2 MW 75% Solar 2031 n/a North Battleford SK, CA 260 MW 100% Natural gas combined cycle 2033 n/a^ Ground-Mount Solar (Sites #1-12) ON, CA 120 MW 100% (90 MW) 62.5% (30 MW) Solar n/a McLean s Mountain ON, CA 60 MW 50% Wind 2034 n/a * Facilities have option to extend power contracts. KLPC s PPA contracts have been extended to 2030 pending signing of final agreement. The KLPC gas supply contract will be negotiated subsequent to the signing of the PPA contract. ** Northland has an effective 77% residual economic interest in these facilities *** German electricity production is purchased by local power utilities at predetermined prices as required by German legislation ^ SaskPower effectively assumes all natural gas-price risk under the long-term PPA 25 APPENDIX

27 Construction & Development Projects Under Construction Project Location Size Ownership Technology Expected COD PPA Term Expected Capital Cost Ground-Mount Solar (Site #13) ON, CA 10 MW 62.5% Solar years Under review Gemini Netherlands 600 MW 60% Offshore wind years 2.8 billion* Nordsee One Germany 332 MW 85% Offshore wind 2017 ~10 years 1.2 billion* Grand Bend ON, CA 100 MW 50% Wind years $384 million* *Represents full cost of the project (100%) APPENDIX 26

28 Financial Summary FINANCIAL SUMMARY Recent Share Price (TSX: NPI) $15.82 Shares (Common + Class A) 169 million Institutional Ownership ~29% Management Ownership ~35% Annual Dividend $1.08 Annual Dividend Yield 6.8% Total Debt, Net of Cash Convertible Debentures (NPI.DB.B, NPI.DB.C) Preferred Shares (NPI.PR.A, NPI.PR.C) Market Capitalization (Common + Class A) Enterprise Value Credit Rating (S&P) $3,549 million $243 million $261 million $2,680 million $6,890 million BBB Stable Outlook 27 APPENDIX