Northland Power has a real good quarter
Northland Power reported it's first quarter of 2014 on May 12.It had a 87% increase in EBITDA and cash flow.It also began commercial operations on a new 10 MW solar project bringing total solar power to 80 MW. It's payout ratio went to 49% from 75%.It also completed and placed $286 million for it's new project Gemini in the North Sea.Northland says it completed $240 million of project financing for it's new ground-mounted solar projects.Lastly the wind project on Manitoulin Island was completed on time and on budget of which it owns 50% or 30 MW of new power.
Balancing projects
Northland has completed quite a few new projects and it has new power coming onstream in 2014.It had a positive effect on cash flow in this quarter but how will it fare for the rest of 2014?The wind project may start off slowly but the solar project should be accretive right away.The dividend seems safe because the payout ratio has come down to 49% and free cash flow has risen dramatically.But it has the new and massive project Gemini that has not been paid for.Northland says that only $167 million of the new $286 million placed for Gemini, has been funded. Also it has letters of credit for EUR 24 billion.In short Northland believes that as a result of its new capital expenditures the payout ratio may exceed 100% for periods of time until the project is completed in 2017.However they intend to pay the dividend regardless.
Guidance
In 2014 Northland expects to earn EBITDA of $345 to $355 million.This will not all work down to net income because of the new financing charges.But this will still exceed EBITDA for 2013(as the first quarter was up 87%);I expect EBITDA for the year to be ahead at least 75% in 2014.Northland also says that it expects EBITDA to be $380 to $400 million for 2015.An additional increase of 10 to 15% in 2015.This seems high for 2014 and for 2015 but Northland has already recorded EBITDA of $102 million in the first quarter of 2014.So it is well on track to meet and maybe beat guidance for 2014 .If it can continue to balance it's projects it might be able to beat guidance.The worry of course is the heavy capital commitments for it's new project Gemini which won't finish until 2017.
Definition Problems
Northland has grown quickly from 2009 to 2013 and is intending to grow again in a major way from 2014 until 2017.It has large capital requirements in this period of low interest rates.In fact in April 2013 it renewed a shelf prospectus for $500 million.This overhangs their stock price.They have not yet completed funding of their new $286 million for project Gemini.Investors need to know how much of this total capital commitment is going to be debt and how much equity.Are they going to have debentures and are they secured or unsecured or are they going to have a new preferred share issue.Once this is done investors can better decide on the stability of the stock price and get a better idea on how many new shares will be created and a better estimate of the share price in 2014.Until then Northland will likely move sideways or increase slightly because after all they had a real good quarter.
Balancing projects
Northland has completed quite a few new projects and it has new power coming onstream in 2014.It had a positive effect on cash flow in this quarter but how will it fare for the rest of 2014?The wind project may start off slowly but the solar project should be accretive right away.The dividend seems safe because the payout ratio has come down to 49% and free cash flow has risen dramatically.But it has the new and massive project Gemini that has not been paid for.Northland says that only $167 million of the new $286 million placed for Gemini, has been funded. Also it has letters of credit for EUR 24 billion.In short Northland believes that as a result of its new capital expenditures the payout ratio may exceed 100% for periods of time until the project is completed in 2017.However they intend to pay the dividend regardless.
Guidance
In 2014 Northland expects to earn EBITDA of $345 to $355 million.This will not all work down to net income because of the new financing charges.But this will still exceed EBITDA for 2013(as the first quarter was up 87%);I expect EBITDA for the year to be ahead at least 75% in 2014.Northland also says that it expects EBITDA to be $380 to $400 million for 2015.An additional increase of 10 to 15% in 2015.This seems high for 2014 and for 2015 but Northland has already recorded EBITDA of $102 million in the first quarter of 2014.So it is well on track to meet and maybe beat guidance for 2014 .If it can continue to balance it's projects it might be able to beat guidance.The worry of course is the heavy capital commitments for it's new project Gemini which won't finish until 2017.
Definition Problems
Northland has grown quickly from 2009 to 2013 and is intending to grow again in a major way from 2014 until 2017.It has large capital requirements in this period of low interest rates.In fact in April 2013 it renewed a shelf prospectus for $500 million.This overhangs their stock price.They have not yet completed funding of their new $286 million for project Gemini.Investors need to know how much of this total capital commitment is going to be debt and how much equity.Are they going to have debentures and are they secured or unsecured or are they going to have a new preferred share issue.Once this is done investors can better decide on the stability of the stock price and get a better idea on how many new shares will be created and a better estimate of the share price in 2014.Until then Northland will likely move sideways or increase slightly because after all they had a real good quarter.
Comments
Post a Comment