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09:05 AM EST, 02/04/2021 (MT Newswires) -- Northland Power Inc. (NPI.TO) on Thursday provided an update on its long-term plans and objectives, including its 2021 financial outlook, which, it said, will be further discussed at the company's virtual investor day later today. Pauline Alimchandani, Northland's Chief Financial Officer, said "Northland continues to position itself for future growth and expects its strategy will continue to generate growing shareholder value over the coming years. The next growth inflection point for Northland offers the opportunity to deploy at least $15 to $20 billion of gross capital investment into new renewable projects over the next five years, anchored by identified offshore wind projects that are currently in active development. These projects have the potential to more than double our adjusted EBITDA from current levels, once commercially operational. In addition, we are targeting new opportunities in onshore renewables, utilities and transmission as well as establishing a position in renewable fuels and energy storage. Our allocation to utilities and transmission is targeted to account for approximately 10 to 15% of our adjusted EBITDA over time. This should enable Northland to maintain solid and diversified cash flows thereby supporting a strong balance sheet and credit rating to fund expenditures related to our core focus of securing and developing offshore wind development assets." Offshore wind is expected to account for over 60% of its 2020 adjusted EBITDA. One of the company's strategies is to augment its existing pipeline of offshore opportunities by securing interests in early stage projects in key markets in Asia and Europe. In Asia, several markets have demonstrated strong sovereign support for de-carbonization through renewables development. Current development activities are focused on advancing the 1,044 MW Hai Long, the 600 MW Chiba and the 1,000 MW Dado Ocean projects in Taiwan, Japan and South Korea, respectively. Northland is pursuing feasibility-stage development in the markets above and is considering additional market entry. Northland has also built a robust pipeline of opportunities in offshore wind with the potential to add an incremental 12 GW of gross capacity. Successful execution of these projects will deliver significant incremental contracted cash flows starting in the latter half of this decade and is expected to further bolster Northland's long-term business sustainability, extending into the 2040s and 2050s. Onshore Renewable Power Northland expects to advance shorter-term development and explore acquisition opportunities in the onshore renewable segment that can achieve commercial operations within the next few years. Northland's focus is on markets in Canada, the United States, Mexico, Colombia, and Eastern and Southern Europe. Additional markets in Southeast Asia and Latin America are also under consideration. Current advanced development and under-construction projects encompass the 300 MW onshore wind projects in New York State, the 130 MW La Lucha solar project in Mexico and the 16 MW Helios solar project originating from EBSA in Colombia that will soon commence construction. FINANCIAL STRATEGY The company has approximately $0.6 billion of total available liquidity, and an investment grade balance sheet that has no material maturities over the next five years and over 95% of total debt being non-recourse to Northland. It is pursuing additional options to expand its funding sources. These sources are expected to include green financing instruments, partial sell-down of ownership interests in development assets and other tools. Green Financings Effective today, Northland is launching a Green Financing Framework, that focuses on greening and optimizing its balance sheet to secure green corporate and project financings starting in 2021. The financings will be required to meet internal eligibility criteria that align with the Green Bond Principles (GBP), Green Loan Principles (GLP), and EU Taxonomy. Green capital issuances will capitalize on strong investor demand for renewable power investments, diversifying funding sources, and optimizing liquidity (through green corporate bond instruments). 2021 FINANCIAL OUTLOOK Adjusted EBITDA -- between $1.1 billion to $1.2 billion. Adjusted EBITDA is expected to remain consistent relative to 2020 guidance levels. In 2021, management expects Free Cash Flow to be between $1.30 to $1.50 per share. lower than the revised 2020 guidance of $1.60 to $1.0 per share which is mainly due to the higher project development and corporate costs to support growth. Starting with the Q4 2020 results, Northland intends to disclose a new Adjusted Free Cash Flow, which will exclude growth expenditures as management deems them to be investment related. These growth expenditures are incurred for the purposes of generating future cash flow. Adjusting for growth expenditures in relation to 2021 cash flow guidance would result in Northland's Adjusted Free Cash Flow for 2021 to be in the range of $1.80 to $2.00 per share and in management's view, allow for a better representation of cash flow generated from the business before investment-related decisions. LONG-TERM OUTLOOK AND GROWTH IN ADJUSTED EBITDA Northland is at an inflection point given the accelerating global trend towards de-carbonization and electrification, and its extensive portfolio of offshore wind development. The company has advanced and secured the rights to a number of offshore projects, which if successful will increase Northland's installed gross capacity by at least 4 to 5 GW and require approximately $15 to $20 billion ($10 to $14 net) of total gross capital investment over the next five years. These projects, once operational by the latter half of the decade, are expected to more than double the company's adjusted EBITDA. Price: 48.65, Change: +0.69, Percent Change: +1.44 |