Innergex Renewable Energy Inc Q4 2019 Earnings Call Transcript

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

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : My first question just relates to your 2020 guidance. So the guidance does not include the potential acquisition of the 2 projects. So when you were talking about the free cash flow range, is it fair to assume that without the acquisitions, the free cash flow would be maybe close to 100% and with the 2 acquisitions, it's closer to 90%, obviously, depending on timing? 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. FEBRUARY 28, 2020 / 2:00PM, INE.TO - Q4 2019 Innergex Renewable Energy Inc Earnings Call

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : Okay. And then on that acquisition, so when you initially announced the strategic alliance with Hydro-QuTbec, I think Innergex would put in $275 million of equity into that acquisition. And then I presume -- is Hydro-QuTbec buying the -- like remaining portion? Like is this...

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : Joint investment? Or is it 100% being purchased by Innergex?

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : Got it. Okay. And then just moving to -- just a quick clarification on the Shannon and Flat Top comments earlier. So are you saying that, going forward, the revenues will reflect merchant prices? But then would you net off the, I guess, the realized hedging gains or losses like in the EBITDA line? Or how does that work?

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : Okay. got it. And then just one last question, and it's on Hillcrest solar. So I'm not sure if I'm doing the math right. But in general, you get a 30% tax credit on your project costs. So if I look at Hillcrest and compare the project costs, like after a 30% discount relative to the EBITDA, I get like a multiple of about 17x. Is that a fair way of thinking about it in terms of -- like are you building the project at roughly 17x 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. FEBRUARY 28, 2020 / 2:00PM, INE.TO - Q4 2019 Innergex Renewable Energy Inc Earnings Call

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : Okay. And then can you just -- I presume it'll be flat out similar to Phoebe in terms of tax equity, debt and equity. Do you have a rough split of the 3 components for Hillcrest?

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : $120 million of tax equity?

Question: Nelson Ng - RBC Capital Markets, Research Division - Analyst : Okay. That's great. And then you'll put project debt or holdco project debt in there as well, right?

Question: Benjamin Pham - BMO Capital Markets Equity Research - Analyst : I'm just wondering your dividend increase, I know you've been saying last few years, you want more of a consistent increase each year by inflation. But I guess like your payout ratio has been going up as well, and it doesn't look like it's getting any better than 90% to 100%. So how do you guys think about just, I guess, the rationale for raising the dividend when you guys have so much growth ahead in development activities? I guess that's my first question. And related to that, I mean, how do you think about then your access to capital then? I mean the last 3 years have been horrific in the market. I mean everyone's cost of capital's change. And so it's really -- to think about really if markets close here for you guys, can you guys grow in the same way that you thought maybe a week ago?