August 6, 2009 - Financial releases
Montreal, August 6, 2009 – Gaz Métro Limited Partnership (TSX: GZM.UN, Gaz Métro) ended the first nine months of its 2009 fiscal year with adjusted net income of $196.3 million, or $1.63 per unit, which is $3.5 million, or $0.03 per unit, higher than the same period for the previous year. For the third quarter of the 2009 fiscal year, Gaz Métro reports adjusted net income of $5.5 million, or $0.05 per unit, which is up slightly by $0.7 million compared to the third quarter of the previous fiscal year1.
"While the present economic situation is still impacting energy deliveries, the diversity of our operations coupled with rigorous management of our operating expenses continue to support our solid financial performance", said Sophie Brochu, President and Chief Executive Officer.
"In terms of our growth initiatives, an important milestone was reached in connection with our wind power projects: the government of Québec issued a decree for our two Seigneurie de Beaupré wind farms, which will have installed capacity of 272 MW. This decree, the first to be granted to a project in connection with Hydro-Québec’s call for tenders for 2,000 MW, is excellent news for Gaz Métro and its partner, Boralex, and clearly shows the environmental merit and social acceptability of the wind farms on the Seigneurie de Beaupré land, which is owned by the Séminaire de Québec. We are enthusiastic about moving ahead with this opportunity with a view to creating steady, long-term value for our unitholders", said Sophie Brochu.
Gaz Métro inc., as General Partner of Gaz Métro, today declared a distribution of $0.31 per unit, payable on October 1, 2009, to Partners of record at the close of business on September 15, 2009. Gaz Métro expects to maintain this $0.31 per unit distribution level for each quarter of the 2010 fiscal year.
Overall, the Energy Distribution segment, which includes the natural gas distribution activities in Quebec and the natural gas and electricity distribution activities in Vermont, reports net income of $3.6 million for the third quarter of the 2009 fiscal year, which is $0.4 million higher than for the third quarter of the 2008 fiscal year, and net income of $174.7 million for the first nine months of the present fiscal year, up $0.7 million over the same period the previous fiscal year.
In spite of the decrease in electricity deliveries by Green Mountain Power Corporation (GMP), net income for the energy distribution activity in Vermont is up $0.5 million in the third quarter and $5.3 million for the first nine months of the present fiscal year2. This solid performance is due, among other things, to the strengthening of the U.S. dollar in relation to the Canadian dollar, the increase in revenues from GMP’s interest in Vermont Transco LLC as well as the increase in natural gas deliveries by Vermont Gas Systems, Inc. (VGS) as a result of relatively colder temperatures than during the same periods the previous fiscal year.
This favourable contribution by the Vermont operations is partially offset by reductions of $0.1 million in the third quarter and $4.6 million for the first nine months of the present fiscal year in net income from the gas distribution activities in Quebec (Gaz Métro-QDA). For the first nine months of the present fiscal year, the increase in revenues attributable to rate increases in the different markets was mostly neutralized by the 12.1% decrease in normalized natural gas deliveries, particularly in the industrial market. As a result, it could not cover the increases in operating, maintenance and amortization expenses. The 20.3% decrease in Gaz Métro-QDA’s industrial volumes for the first nine months of the present fiscal year is mainly due to lighter consumption in the metallurgy and refining sectors, lower short-term interruptible service sales and the volume losses attributable to the substantial production cutback by TransCanada Energy Ltd since the end of the first quarter of the 2008 fiscal year. During the third quarter of the present fiscal year, Gaz Métro-QDA’s volumes are 5.9% lower than in the third quarter of the previous fiscal year.
In the Transportation of natural gas segment, Gaz Métro’s net income is up $0.5 million in the third quarter and $1.4 million for the first nine months of the present fiscal year, mainly on account of the recognition, in the second quarter, of the favourable retroactive impact of the $6.7 million rate adjustment the National Energy Board allowed Trans Québec & Maritimes Pipeline Inc. (TQM) on March 19 for its 2007 and 2008 fiscal years, as well as interest income of $0.8 million related to that rate adjustment during the third quarter. In the second quarter of the 2008 fiscal year, Gaz Métro had recorded a gain of $5.3 million (after tax) in Portland Natural Gas Transmission System (PNGTS) related to the partial settlement of the Calpine Corporation bankruptcy.
Gaz Métro’s adjusted net income3 from the Storage of natural gas segment is up $0.2 million in the third quarter and $1.0 million for the first nine months of the present fiscal year, mainly on account of a slight indexation of rates and a reduction in financing costs, which reflects lower interest rates.
The adjusted net loss for the Energy Services segment was up $0.4 million for the third quarter of the 2009 fiscal year and adjusted net income3 is up $1.5 million for the first nine months of the present fiscal year. Excluding the $1.6 million write-down of Aqua-Rehab Inc.’s goodwill during the third quarter of the present fiscal year, adjusted net income is up $1.2 million and $3.1 million for the first nine months of the present fiscal year. These gains are a result of an increase in net income earned by certain subsidiaries of Gaz Métro Plus Limited Partnership, including Consulgaz Inc., Climatisation et Chauffage Urbains de Montréal, s.e.c. and HydroSolution s.e.c.
In connection with its wind power projects, on July 7, 2009, Gaz Métro and its partner, Boralex Inc., obtained a decree issued by the government of Quebec authorizing the two Seigneurie de Beaupré wind farms for total installed capacity of 272 MW. Having successfully passed the key environmental approval stage, the consortium may now proceed with the other planned stages of the projects.
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 GMi and Gaz Métro 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 2008 Annual Information Form of each of Gaz Métro and GMi under the item "Risks", and in the Management’s Discussion and Analysis for the period ended June 30, 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 operating 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 for the period ended June 30, 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.
1 Adjusted net income excludes an unfavourable non-monetary adjustment of $0.2 million related to future income taxes for the third quarter of the 2009 fiscal year (no adjustment in the third quarter of the 2008 fiscal year) and an unfavourable non-monetary adjustment of $1.5 million for the first nine months of the 2009 fiscal year ($1.7 million favourable for the first nine months of the 2008 fiscal year).
2 Net of financing costs.
3 Adjusted net income (loss) excludes the non-monetary adjustments related to future income taxes.
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