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POLARIS RENEWABLE ENERGY INC. (:PIF) Polaris Infrastructure Announces Q4 2021 Results

Directive transparence : information réglementée

24/02/2022 14:00

TORONTO, ON / ACCESSWIRE / February 24, 2022 / Polaris Infrastructure Inc. (TSX:PIF) ("Polaris Infrastructure" or the "Company"), is pleased to report its financial and operating results for the three- and twelve-month period ended December 31, 2021. This earnings release should be read in conjunction with Polaris Infrastructure's consolidated financial statements and management's discussion and analysis, which are available on the Company's website at www.polarisinfrastructure.com and have been posted on SEDAR at www.sedar.com. The dollar figures below are denominated in US Dollars unless noted otherwise.

HIGHLIGHTS

  • Annual consolidated energy production of 643,523 MWh (net) for the year ended December 31, 2021, of which 465,935 MWh (net) was contributed by the Company's geothermal facility in Nicaragua, the San Jacinto facility ("San Jacinto"), and an aggregate of 177,588 MWh (net) was contributed by the Company's hydroelectric facilities in Peru, being the Canchayllo facility ("Canchayllo"), the El Carmen facility ("El Carmen") and the 8 de Agosto facility ("8 de Agosto").
  • The Company generated $59.5 million in revenue from energy sales for the year ended December 31, 2021, compared to $74.7 million in the same period in 2020. The impact was mainly the result of the amended power purchase agreement's ("PPA") price in respect of San Jacinto, which was the largest contributor to the decline in revenue. The lower PPA price was part of the broader negotiation with the Government of Nicaragua, which included an extension of the concession period and inclusion of the additional Binary Unit, which is currently expected to be completed by the fourth quarter of 2022.
  • Net earnings attributable to owners was $0.5 million or $0.03 per share - basic for the year ended December 31, 2021, compared to net earnings of $28.8 million or $1.84 per share - basic in 2020. Net earnings were lower due to lower revenue as discussed above, higher depreciation and an impairment reversal of $24.5 million recognized in the comparative period in 2020. Adjusted EBITDA(1) was $43.8 million for the year ended December 31, 2021, compared to Adjusted EBITDA(1) of $58.7 million in the same period in 2020, principally as a result of lower revenue as described above.
  • In December 2021, the Company signed a definitive financing agreement with three Development Financial Institutions for a Senior Debt Facility totalling $110.0 million for the Company's wholly owned geothermal subsidiary in Nicaragua (the "Debt Re-Financing"). This Senior Debt Facility replaces the existing Senior and Subordinated project loans in Nicaragua. Further to the December 2020 extension of Nicaragua's PPA to 2039, and consistent with the Company's strategy, the Debt Re-Financing now aligns the amortization of the debt with the extended PPA. The settlement of the existing obligation and funding of the Debt Re-financing was completed on February 11, 2022.
  • For year ended December 31, 2021, the Company generated $41.1 million in net cash flow from operating activities, ending with a strong cash position of $101.8 million(2).
  • The Company remains focused on maintaining a quarterly dividend. For the year ended December 31, 2021, the Company declared and paid $11.1 million in dividends. The Company will pay the twenty-fourth consecutive quarterly dividend of $0.15 per outstanding common share on February 25, 2022.
  • The Company continued to advance its environmental, social and governance ("ESG") initiatives as part of its core strategy while continuing to maintain an excellent health and safety record. Readers are encouraged to refer to the Company's ESG annual report, which is available on the Company's website for additional details.
  • Despite the unprecedented challenges faced as a result of the Covid-19 global pandemic ("COVID-19") and related variants, all facilities remained in operation and continue to operate to date. Over 99% of our employees in all locations are fully vaccinated.
  1. A Non-GAAP measure used by the Company. A cautionary note regarding non-GAAP performance measures and their respective reconciliations is included in Section 11: Non-GAAP Performance Measures in the Company's MD&A for the three and twelve months ended December 31, 2021. A cautionary note regarding non-GAAP performance measures is included in the 'Non-GAAP Performance Measures' section below.
  2. Includes Restricted cash the increase of which relates to a Letter of Credit relating to the Binary Unit in San Jacinto.

OPERATING AND FINANCIAL OVERVIEW

Three Months Ended Year Ended
December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
Energy production
Consolidated Power (MWh) net
162,543 171,933 643,523 662,893
Financials
Revenue
$14,871 $18,471 $59,517 $74,720
Net (loss)/earnings attributable to owners
$(921) $24,185 $501 $28,842
Adjusted EBITDA (i)
$11,067 $14,082 $43,766 $58,687
Net cash flow from operating activities
$41,129 $40,312
Per share
Net (loss)/earnings attributable to owners - basic
$(0.05) $1.54 $0.03 $1.84
Net (loss)/earnings attributable to owners - diluted
$(0.05) $1.48 $0.03 $1.70
Adjusted EBITDA (i) - basic
$0.57 $0.90 $2.33 $3.74

Balance Sheet
As at
December 31,
2021
As at
December 31,
2020
Cash
$97,930 $60,058
Restricted cash
$3,835 $1,785
Total current assets
$110,143 $81,716
Total assets
$502,700 $489,993
Current and Long-term debt (ii)
$169,686 $189,295
Total liabilities
$241,876 $263,224
  1. A Non-GAAP measure used by the Company. A cautionary note regarding non-GAAP performance measures is included in the 'Non-GAAP Performance Measures' section below.
  2. Net of transaction costs.

During the three months ended December 31, 2021 quarterly consolidated power production was lower than the same period in 2020, mainly from lower production from Nicaragua.

For Nicaragua, fourth quarter 2021 production averaged 51.36 MWs (net), compared to 57.89 MWs (net) in the fourth quarter of 2020. This was largely the result of temporary instability with cycling wells, primarily 9-3 and 6-2. Since the beginning of 2022, both wells have exhibited more stability in line with historical averages.

Consolidated production in Peru for the three months ended December 31, 2021 was higher than the comparative period in 2020 due to higher water availability at both El Carmen and 8 de Agosto. These increases were partly offset by the decrease in production at Canchayllo due to lower water volume during the period and a shutdown of one unit due to import delays on spare parts for maintenance.

During the twelve months ended December 31, 2021, power production was 643,523 MWh (net) compared to 662,893 MWh (net) in the twelve months ended December 31, 2020, due to the decrease in production from San Jacinto, partly offset by an increase in production the Company's Peru facilities.

"With the strong financial position built further during 2021, significant cash balances and increasing projected cash flows, the Company remains fully funded to execute on its growth initiatives such as the Binary Unit and strategic acquisitions. In addition, the closing of the refinancing will add further financial flexibility in order to accelerate the diversification strategy, while continuing to return capital to shareholders through dividends." noted Marc Murnaghan, Chief Executive Officer of Polaris Infrastructure.

About Polaris Infrastructure

Polaris Infrastructure is a Toronto-based company engaged in the operation, acquisition and development of renewable energy projects in Latin America. Currently, the Company operates a 72 MW average (net) geothermal project located in Nicaragua and three run-of-river hydroelectric facilities in Peru, with approximately 20 MW average (net), 8 MW average (net), and 5 MW average (net) of capacity.

Investor Relations

Polaris Infrastructure Inc.

Phone: +1 416-849-2587Email: info@polarisinfrastructure.com

Cautionary Statements

This news release contains certain "forward-looking information" within the meaning of applicable Canadian securities laws, which may include, but is not limited to, financial and other projections as well as statements with respect to future events or future performance, management's expectations regarding the Company's growth, results of operations and business prospects and opportunities. In addition, statements relating to estimates of recoverable energy "resources" or energy generation capacities are forward-looking information, as they involve implied assessment, based on certain estimates and assumptions, that electricity can be profitably generated from the described resources in the future. Such forward-looking information reflects management's current beliefs and is based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "estimates", "goals", "intends", "targets", "aims", "likely", "typically", "potential", "probable", "projects", "continue", "strategy", "proposed", or "believes" or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved.

A number of known and unknown risks, uncertainties and other factors may cause the actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. Such factors include, among others: failure to discover and establish economically recoverable and sustainable resources through exploration and development programs; imprecise estimation of probability simulations prepared to predict prospective resources or energy generation capacities; variations in project parameters and production rates; defects and adverse claims in the title to the Company's properties; failure to obtain or maintain necessary licenses, permits and approvals from government authorities; the impact of changes in foreign currency exchange and interest rates; changes in government regulations and policies, including laws governing development, production, taxes, labour standards and occupational health, safety, toxic substances, resource exploitation and other matters; availability of government initiatives to support renewable energy generation; increase in industry competition; fluctuations in the market price of energy; impact of significant capital cost increases; unexpected or challenging geological conditions; changes to regulatory requirements, both regionally and internationally, governing development, geothermal or hydroelectric resources, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, project safety and other matters; economic, social and political risks arising from potential inability of end-users to support the Company's properties; insufficient insurance coverage; inability to obtain equity or debt financing; fluctuations in the market price of Shares and Warrants; impact of issuance of additional equity securities on the trading price of Shares and Warrants; inability to retain key personnel; the risk of volatility in global financial conditions, as well as a significant decline in general economic conditions; uncertainty of political stability in countries in which the Company operates; uncertainty of the ability of Nicaragua and Peru to sell power to neighbouring countries; economic insecurity in Nicaragua and Peru; and other development and operating risks, as well as those factors discussed in the section entitled "Risks and Uncertainties" in this news release. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. These factors are not intended to represent a complete list of the risk factors that could affect us. These factors should be carefully considered, and readers of this news release should not place undue reliance on forward-looking information.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein is provided as at the date of this news release and the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, except as required by applicable laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information due to the inherent uncertainty therein.

Additional information about the Company, including the Company's AIF for the year ended December 31, 2021 is available on SEDAR at www.sedar.com and on the Company's website at www.polarisinfrastructure.com.

Non-GAAP Performance Measures

Certain measures in this MD&A do not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS") and, therefore, are not considered generally accepted accounting principles ("GAAP") measures. Where non-GAAP measures or terms are used, definitions are provided. In this document and in the Company's consolidated financial statements, unless otherwise noted, all financial data is prepared in accordance with IFRS.

This news release includes references to the Company's adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") and adjusted EBITDA per share which are non-GAAP measures. These measures should not be considered in isolation or as an alternative to net earnings (loss) attributable to the owners of the Company or other measures of financial performance calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of Polaris Infrastructure's results since the Company believes that the presentation of these measures will enhance an investor's understanding of Polaris Infrastructure's operating performance. Management's determination of the components of non-GAAP performance measures are evaluated on a periodic basis in accordance with its policy and are influenced by new transactions and circumstances, a review of stakeholder uses and new applicable regulations. When applicable, changes to the measures are noted and retrospectively applied.

Descriptions and reconciliations of the above noted non-GAAP performance measures are included in Section 11: Non-GAAP Performance Measures in the Company's MD&A for the three and twelve months ended December 31, 2021 and in the Company's website www.polarisinfrastructure.com/Non-GAAP.

SOURCE: Polaris Infrastructure Inc.



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