February 11, 2010 - Financial releases
Favourable competitive position for natural gas and transportation segment contribute to good performance Montreal, February 11, 2010
“For several quarters now, natural gas has maintained its competitive advantage over all other energies in all market segments in Quebec and Vermont. Its economic appeal positions Gaz Métro favourably to sustain deliveries and attract new customers as the economic recovery will take hold. During the first quarter, natural gas deliveries were up 4% overall. In Quebec, the number of new contracts signed in the residential and commercial markets was nearly 15% higher than the same period last year, and surpassed by more than 2% the contracts signed in the first quarter of the 2008 fiscal year, which had been a record year in that regard for Gaz Métro”, said Sophie Brochu, President and Chief Executive Officer.
Gaz Métro today declared a distribution of $0.31 per unit, payable on April 1, 2010, to Partners of record at the close of business on March 15, 2010. The Partnership, which has already indicated it expected to pay distributions of $0.31 per unit in each quarter of the 2010 fiscal year, maintains this outlook.
Quebec Natural Gas Distribution (Gaz Métro-QDA)
Net income for Gaz Métro-QDA was up $3.8 million for the first quarter of the 2010 fiscal year. The main reasons for this are the 0.26% increase in the authorized rate of return for the 2010 fiscal year compared to 2009, including anticipated productivity gains, higher revenues from regular and short-term interruptible service sales because of the more favourable competitive position of natural gas in relation to heavy fuel oil, and the recognition of the entire $4.0 million performance incentive from the Global Energy Efficiency Plan, the annual objective having been achieved after only three months of operations ($1.0 million recognized in first quarter of previous fiscal year). However, this increase should reverse in the coming quarters, as it stems from a temporary timing difference between the revenue recognition profile, which follows the customer consumption profile, and that of costs.
Gaz Métro-QDA’s normalized natural gas deliveries during the first quarter of the 2010 fiscal year were 4.4% higher than the same period the previous fiscal year, the result of higher deliveries in the commercial and industrial markets. In the commercial market, the maturation of new sales and the impact of some economic recovery are the main reasons natural gas volumes were up 7.9% over the first quarter of the 2009 fiscal year. The main reason for the 3.4% increase in industrial volumes during the first quarter of the 2010 fiscal year is, among others, heavier consumption in the refinery, petrochemical and metallurgy sectors and higher short-term interruptible service sales.
Energy conservation initiatives are the main reason for the 3.0% reduction in natural gas volumes in the residential market during the first quarter of the fiscal year, partially offset by the maturation of new sales.
Energy Distribution in Vermont
Net income from the energy distribution activity in Vermont was $2.2 million2 lower during the first quarter of the 2010 fiscal year than the corresponding quarter the previous fiscal year. This is due to, among other things, the unfavourable impact of a timing difference in the recognition of revenues and costs for Green Mountain Power Corporation (GMP), and a weakening U.S. dollar in relation to the Canadian dollar, partially offset by an increase in GMP’s electricity rates.
Natural Gas Transportation
Net income from Gaz Métro’s natural gas transportation segment was $4.5 million higher for the first quarter of the 2010 fiscal year. This is mainly due to the recognition in the first quarter of the 2010 fiscal year of the $2.9 million favourable impact of a rate adjustment for the 2009 fiscal year the National Energy Board approved last October 29 for Trans Québec & Maritimes Pipeline Inc. (TQM). It is also attributable to an income tax recovery in Portland Natural Gas Transmission System (PNGTS) as well as lower financing costs.
Energy Services and Other
For the first quarter of the 2010 fiscal year, adjusted net income3 for the energy services and other segment was up $0.3 million, mainly due to the sale of all of the shares of Teldig Systems Inc. on November 16, which generated a gain of $0.8 million, and a reduction in financing costs, partially offset by lower profitability in Consulgaz Inc.
After receiving a decree from the government of Québec, Gaz Métro and its partner, Boralex Inc., are proceeding with the development of the two Seigneurie de Beaupré wind farms in accordance with the planned timetable. The farms, which will have total installed capacity of 272 megawatts, will be commissioned no later than December 1, 2013.
The Partnership will hold a telephone conference with financial analysts on Thursday, February 11, 2010, at 3:00 p.m. (Eastern time) to discuss its results for the first quarter ended December 31, 2009. Sophie Brochu, President and Chief Executive Officer, and Pierre Despars, Executive Vice President, Corporate Affairs and Chief Financial Officer, will be the main speakers. This will be followed by a question period. Media and other interested individuals are invited to listen in.
The conference can be accessed live by dialling 647-427-7450 or toll-free 1-888-231-8191. It will also be Webcast on Gaz Métro’s Web site (www.gazmetro.com/investors) in the “Webcasts” section.
Rebroadcasts can be accessed for 30 days by telephone at 416-849-0833 or toll-free at 1-800-642-1687 (access code: 52430915), and for 90 days on Gaz Métro’s Web site.
Gaz Métro Overview
With over $3.5 billion in assets, Gaz Métro is Quebec’s leading natural gas distributor. Operating in this regulated industry for over 50 years, Gaz Métro has become the trusted energy provider to some 180,000 customers in Quebec and 136,000 customers in Vermont while developing the skills and expertise needed to diversify beyond natural gas. Gaz Métro’s prudent growth strategy has been marked by the successful entry into electricity distribution in Vermont and development of wind power projects in Quebec. Offering historically strong and stable distributions and showing a competitive spirit, Gaz Métro is committed to its customers, Partners, employees and the community. Gaz Métro’s units are listed on the Toronto Stock Exchange under the symbol GZM.UN.www.gazmetro.com
Cautionary note regarding forward-looking statements
Certain statements in this press release may be forward-looking pursuant to applicable securities laws. Such forward-looking information reflects the intentions, plans, expectations and opinions of the management of Gaz Métro inc. (GMi), Gaz Métro’s general partner, and is based on information currently available to management and on assumptions with respect to future events. The words “plans”, “expects”, “estimates”, “forecasts”, “intends”, “anticipates” or “believes”, or similar expressions, including the negative of these terms and future or conditional forms, often identify forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties and other factors outside management’s control. A number of factors could cause actual results of Gaz Métro and GMi to differ materially from the results discussed in the forward-looking statements, including, but not limited to, terms of decisions rendered by regulatory bodies, general economic conditions, the competitiveness of natural gas in relation to other energy sources, the reliability of natural gas supplies, the integrity of the natural gas distribution system, exchange rates fluctuations and other factors described in the 2009 Annual Information Form of each of Gaz Métro and GMi under the item “Risks”, and in the Management’s Discussion and Analysis of each of Gaz Métro and GMi for the quarter ended December 31, 2009. Although the forward looking statements contained herein are based upon what management believes to be reasonable assumptions, including assumptions to the effect that no unforeseen changes in the legislative and regulatory framework of energy markets in Quebec and in the State of Vermont will occur, that no significant event occurring outside the ordinary course of business, such as a natural disaster or other calamity, will occur, and other assumptions described in the Management’s Discussion and Analysis of each of Gaz Métro and GMi for the quarter ended December 31, 2009, management cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of this date, and management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements.
Adjusted indicators not standardized in accordance with GAAP
In the view of Gaz Métro’s management, certain “adjusted” indicators, such as adjusted net income and adjusted net income per unit provide readers with information it considers useful for analyzing its financial results. However, they are not standardized in accordance with Canadian generally accepted accounting principles (GAAP) and should not be considered in isolation or as substitutes for other performance measures that are in accordance with GAAP. The results obtained might not be comparable with similar indicators used by other issuers and should therefore only be considered as complementary information.
1Adjusted net income excludes an unfavourable non-monetary adjustment of $1.0 million for the first quarter of the 2010 fiscal year and an unfavourable non-monetary adjustment of $0.7 million for the first quarter of the 2009 fiscal year, related to future income taxes.
2Net of financing costs
3Adjusted net income excludes non-monetary adjustments related to future income taxes.
Montreal, February 11, 2010– Gaz Métro Limited Partnership (“Gaz Métro”) (TSX: GZM.UN) ends its first quarter of the 2010 fiscal year with adjusted net income of $79.1 million, or $0.66 per unit, which is $7.9 million, or $0.07 per unit, higher than the first quarter of the previous fiscal year.1 The main reasons for this increase are the good results for the Quebec natural gas distribution activity and the natural gas transportation segment.
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