Innergex Renewable Energy Inc Q2 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Just a quick question on the solar panel deposit. So you provided a LC, but in terms of cash out the door what eventually be $50 million later this year, is that how we should think about this?

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Okay. And that might be in December, I guess right, given that you probably want to deploy it as late as possible?

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Okay. And then it's safe to say that you don't have any PTC-qualified wind turbines, right? So I was just wondering going forward in the U.S., obviously, you're pursuing solar, and you mentioned wind as well. So if you get any I guess near-term wind projects, would they be kind of post-PTC runoffs type of periods for the completion dates? Or how should we think about what the strategy is if you get awarded a wind RFP in the U.S.?

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Okay. And you're saying the main hurdle now is to get the FAA permit?

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Okay. And this is a greenfield project from the Alterra development pipeline?

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Okay. Got it. And then just switching gears, I might have missed it earlier. But in the commentary in the MD&A, you mentioned a higher OpEx in the BC Hydro facilities. Could you just clarify what some of the factors were?

Question: Nelson Ng - RBC Capital Markets, LLC, Research Division - Analyst : Okay. Perfect. And then just one last question, I can take it offline if you want. But I noticed that there was like $8.2 million line item. Regarding -- in terms of calculating the payout ratio, there's a recovery of maintenance CapEx and prospective project expenses. That's like $8.2 million. Can you just clarify what this reflects? And is your payout ratio now excluding development costs?

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Maybe just a couple follow-up questions. That Nelson Ng's question on the $8 million, I understand what's going on there. I'm just curious, when you guys set the 10% growth guidance, did you contemplate that having that in there?

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Yes.

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Okay. All right. And then when you think about the first half, I mean, productions generally in line, a bunch of moving parts, but it just shows diversification again. But I guess, like when [you talk about EBITDA, you mentioned BC. Are you kind of tracking in line of what you were thinking your budget first half EBITDA? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 14, 2019 / 2:00PM, INE.TO - Q2 2019 Innergex Renewable Energy Inc Earnings Call

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Okay. So it sounds like if second half's in line, you basically end the year a little bit soft but then when you booked the $8 million, I mean, it looks like you could be on track to hitting your guidance regardless?

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Yes. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 14, 2019 / 2:00PM, INE.TO - Q2 2019 Innergex Renewable Energy Inc Earnings Call

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Yes. I don't want to intend that it's a negative thing because its commodity exposure is pretty small, if you look at you guys overall. But I guess, I'm just -- I just wanted to clarify the $14 million EBITDA guidance, are you saying 25% of that is -- of EBITDA is spot revenues?

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Okay. And then I guess like when -- sorry to get nitpicky here but like when you guys look at your guidance last quarter, it looks like you're only growing with the EBITDA just a little bit, but then your CapEx went up probably $15 million, your EBITDA is up $1 million, so that -- it looks like you guys are just probably being a bit conservative on the spot power price?

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : Okay. That's just great. Yes. A couple of different changes there, just wanted to follow that. And then...

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : My last question on just on the solar ITC, kind of makes a lot of sense for you guys. I'm just kind of looking at just your development backlog on the solar side, and I think it's like 500 megawatts or so. So are you basically thinking that your development pipeline is going to grow to the 7.7 gigawatts? Or is there some maybe opportunity to look at acquisitions or something to -- guys that may need this benefit?