Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boralex Inc (BRLXF, Financial) increased its EBITDA by 11%, operating income by 21%, and net earnings by 41% in the first half of 2024.
- The company has 851 megawatts of projects in secured, ready-to-build, and construction phases progressing as planned.
- Boralex Inc (BRLXF) closed its first financing in the UK and is set to start construction on the Hagersville and Tilbury battery projects, expected to be commissioned in 2025.
- The company signed a three-year PPA with Statkraft in the UK, securing pricing on a portion of wind farm production.
- Boralex Inc (BRLXF) improved its position among the best Canadian corporate citizens, climbing from 21st to 15th in the Corporate Knights ranking, and raised its ESG corporate rating from B- to B+ with prime status.
Negative Points
- Production was lower than expected due to unfavorable weather conditions and increased curtailments in France, mainly due to negative market electricity prices.
- Total production for the quarter was 1% higher than last year but 8% lower than anticipated.
- Combined revenues were down 12% compared to last year, mostly due to lower prices in France.
- Solar production was 8% lower than the same quarter last year and 25% lower than anticipated, mainly due to curtailment requests in California.
- The company is facing challenges with curtailments in France and California, impacting overall production and revenue.
Q & A Highlights
Q: You mentioned that you can be looking to accelerate development of projects in the UK. Can you just expand a little bit on what your expectations are for this market over the coming years?
A: (Patrick Decostre, President, Chief Executive Officer, Director) With the new government lifting the ban on wind projects in England and increasing the budget for onshore wind, there are significant opportunities. We are well-positioned with our first financing and contract with Statkraft, and we expect to do more in the UK in the coming years.
Q: Can you comment on energy and their resources? What more would you have to add to that team in order to really take advantage of this opportunity?
A: (Patrick Decostre, President, Chief Executive Officer, Director) We have dedicated a member of our executive team to the UK, working with the local team and bringing in additional resources from our French team. We are also hiring locally and exploring potential acquisitions of fully consented projects.
Q: Are you able to share how many projects you submitted and what types of projects you're submitting in the UK right now?
A: (Patrick Decostre, President, Chief Executive Officer, Director) We have submitted two projects totaling 115 megawatts. We are taking a disciplined approach to bidding, with the possibility of bidding in future rounds if necessary.
Q: Can you comment on the expectations of higher clearing prices in the UK and how returns compare to other markets?
A: (Patrick Decostre, President, Chief Executive Officer, Director) Returns in the UK are better than in France. We have a strategy to optimize prices through contracts like the one with Statkraft, and we have secured attractive financing terms.
Q: When do you think you'd have clarity on the sharing split for investment tax credits in Canada?
A: (Bruno Guilmette, Chief Financial Officer, Executive Vice President) It will evolve as we sign different contracts. For projects like Tilbury, we have already taken the ITC into account in our pricing.
Q: Can you give us a sense of any expected incremental progress on optimizing selling prices in France over the next few quarters?
A: (Patrick Decostre, President, Chief Executive Officer, Director) We have a strategy to fix prices with off-takers and avoid exposure to spot markets. We have a clear policy to fix a certain percentage of prices in advance to ensure stability.
Q: Can you explain the bills of exchange that helped bolster your liquidity position this quarter?
A: (Bruno Guilmette, Chief Financial Officer, Executive Vice President) It's a trade financing facility with a French bank, separate from our other financing sources, which helps finance equipment purchases.
Q: Can you give us some color on the scale of the opportunity with the current round of RFPs in New York?
A: (Patrick Decostre, President, Chief Executive Officer, Director) We bid three projects totaling 590 megawatts. We have taken into account factors like tariffs on Chinese imports and incentives for domestic content to optimize our bids.
Q: How are you thinking about curtailments and the potential for installing batteries or storage alongside your systems?
A: (Patrick Decostre, President, Chief Executive Officer, Director) The causes of curtailments vary by region. In France, it's due to high hydro generation and low demand, while in California, it's a contractual issue. We are focusing on signing the right contracts and enforcing existing ones.
Q: Can you expand on your comments around looking at acquisitions?
A: (Bruno Guilmette, Chief Financial Officer, Executive Vice President) We are looking for strategic and sizable opportunities in North America and Europe, focusing on markets like the US and UK. We aim to add value through our expertise and are interested in both operating assets and development projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
