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BLX and BLX.DB.A – Toronto Stock Exchange September 2019 Disciplined Development in Key Markets Growth, Yield and Long-term Value Investor Presentation
BLX and BLX.DB.A – Toronto Stock Exchange
September 2019
Disciplined Development in Key MarketsGrowth, Yield and Long-term Value
Investor Presentation
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Disclaimer
Forward-looking statementsSome of the statements contained in this presentation including those regarding future results and performance strategic plan business model
growth strategy revenues diversification optimization development in the solar sector and storage expansion of targeted customers through
signature of contracts directly with companies consuming electricity sale of minority interests and 2023 financial objectives are forward-looking
statements based on current expectations within the meaning of securities legislation.
Boralex would like to point out that by their very nature forward-looking statements involve risks and uncertainties such that its results or the
measures it adopts could differ materially from those indicated by or underlying these statements or could have an impact on the degree of realization
of a particular forward-looking statement.
Unless otherwise specified by the Corporation the forward-looking statements do not take into account the possible impact on its activities
transactions non-recurring items or other exceptional items announced or occurring after the statements are made. There can be no assurance as to
the materialization of the results performance or achievements as expressed or implied by forward-looking statements. The reader is cautioned not to
place undue reliance on such forward-looking statements.
Unless required to do so under applicable securities legislation Boralex management does not assume any obligation to update or revise forward-
looking statements to reflect new information future events or other changes.
Combined basis – Non-IFRS measureThe combined information (“Combined”) presented above and in the MD&A of the Corporation resulted from the combination of the financial
information of Boralex Inc. (“Boralex” or the “Corporation”) under IFRS and the share of the financial information of the Interests. The Interests
represent significant investments by Boralex and although IFRS does not permit the consolidation of their financial information within that of Boralex
management considers that information on a Combined basis is useful data to evaluate the Corporation’s performance. In order to prepare the
Combined information Boralex first prepares its financial statements and those of the Interests in accordance with IFRS. Then the Interests in Joint
Ventures and associates Share in earnings of the Joint Ventures and associates and Distributions received from the Joint Ventures and associates
line items are replaced by Boralex’s respective share (ranging from 50% to 59.96%) in the financial statement items of the Interests (revenues
expenses assets liabilities etc.). See the Non- IFRS measures section in the Second Quarter 2019 Interim Report for more information.
Other non-IFRS measuresThis presentation contains certain financial measures that are not in accordance with International Financial Reporting Standard ("IFRS"). In order to
assess the performance of its assets and reporting segments Boralex uses the terms "EBITDA" "EBITDA(A)" " "cash flows from operations" "net
debt ratio" "discretionary cash flows" and "payout ratio" . For more information please refer to Boralex’s MD&A.
GeneralThe data expressed as a percentage is calculated using amounts in thousands of dollars.
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Agenda
Why Invest in Boralex?
1. A Unique Positioning in Key Markets.
2. A Strong Growth Profile.
3. A Well-Defined Strategic Plan with a Strong Development Pipeline.
4. Solid Financial Position and Predictable Cash Flows.
5. Attractive Valuation.
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1. A Unique Positioning in Key Markets
Capacity Breakdown by Geographic Segment
Capacity Breakdown by Operating Segment Target
Target
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Pursuing Development the Boralex Way
1. Success in developing small to mid-size projects.
2. Development focused in key markets with more complex processes
creating barriers to entry for larger players.
3. Boots-on-the-ground approach with development team actively involved
from day one.
4. Experience with strategic and financial partnerships as well as acquisitions.
5. Strong values and culture of respect for employees, communities and
environment (ESG-focused by nature).
1. A Unique Positioning in Key Markets
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Experienced Leadership Team
• Complementary backgroud, leadership style and experience.
• New CFO brings additional expertise in transactions and financing.
• Creation of new COO role to optimize operations and development activities.
• New Vice President and General Manager Boralex Europe brings additional expertise in sales development
operations and supplier relationships.
Marie-Josée ArsenaultVice President
Talent and Culture
Patrick DecostreVice President and
Chief Operating Officer
Patrick LemairePresident and
Chief Executive Officer
Julie CussonVice President
Public and
Corporate Affairs
Hugues GirardinVice President
Development
Bruno GuilmetteVice President
and Chief
Financial Officer
NicolasWolffVice President
and General Manager
Boralex Europe
PascalHurtubiseVice President
Chief Legal Officer and
Corporate Secretary
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Our Approach to ESG
1. ESG is part of our DNA: Boralex is by nature socially responsible and environmentally friendly.
2. We have also acquired a reputation of partner of choice for local municipalities and Indigenous
communities.
3. Our ESG framework: GRI and SASB.
4. 4,152 GWh of electricity produced in 2018 by Boralex is equivalent to a reduction of 214,000 tons
of CO₂ emissions.
5. Boralex adheres to Equator Principles and Universal Declaration of Human Rights.
6. Partnerships with universities & chairs to improve knowledge and reduce our environmental.
impacts: WWF, HEC Montreal, École nationale supérieure de paysage in France, Réseau CIVAM.
7. Employee Brand – A strong team of over 420 employees with many skills working for Boralex in
North America and Europe.
8. Strong focus on health and safety: 1 lost time incident on 700,000 worked hours in 2018.
9. Sustainable Procurement Charter.
10. Governance – Board:• 4 women out of 11 directors.
• Mix of long standing and new Members.
• Board Members bringing different skills.
• Board Members age:
- 6 below 60 years old.
- 4 between 60-69 years old.
• All independent Members, except for CEO; Chairman fully independent.
• Independent consultant for HR Committee.
• Code of ethics.
• Clawback policy adopted on Dec. 14, 2017.
1. A Unique Positioning in Key Markets
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2. A Strong Growth Profile
Compound
Annual Growth
Rate:
Installed Capacity:
16%
EBITDA(A): 24%
Market
Capitalization: 29%
Dividends: 26%
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A good balance between organic growth and acquisitions
YTD-2019
+ 429 MW organic
7% average yearly growth
2014
938 MW
2 003 MW
+1 065 MW40% organically
60% acquisitions
+ 636 MW acquisition
10% average yearly growth
2. A Strong Growth Profile
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3. Well Defined Strategic Plan
• Boralex’s strategic plan and financial objectives for 2023 sets out four main strategic
directions and three financial objectives.
• This plan is a continuation of the actions undertaken to date in sectors with high growth
potential and for which Boralex has developed solid expertise.
• The plan also includes complementary initiatives to diversify and optimize operations
and revenue sources.
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Attractive Market Growth in FranceSupported by the Energy Transition Law
Energy 2019 2023 2028
WIND Around 2 GW/year
15.3 GW 24.6 GW 35 GW
SOLAR PVAround 2 GW/year
9 GW 20 GW 37 GW
Massive nuclear power reduction till 2035. 50% of nuclear power by
2035 versus 75% today; 14 nuclear plants to be closed by 2035.
3. Well Defined Strategic Plan
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Targets and policy drivers
Mandate Previous policy Green New Deal*
% of renewables by 2030 50% 70%
Mandate 100% renewables n/a 2040
Onshore windDoubling new large-scale solar resources through the
CES. Expected 1,500 MW-2,000 MW to be procured by
NYSERDA each year until 2023.**Utility scale solar
Distributed solar 3,000 MW by 2023 6,000 MW by 2025
Battery storage 1,500 MW by 2025 3,000 MW by 2030
Offshore wind 2,400 MW by 2030 9,000 MW by 2035
** Under the previous CES order the target was for 800-1 000 MW/year although NYSERDA procured twice as much in the last two auctions.
Strong Market Potential in the New York Market
3. Well Defined Strategic Plan
* Since June 2019.
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New York is a good fit for
Boralex…
• Boralex already operates 7 power plants in New York and is well perceived in
the communities in which it operates;
• Proximity to Boralex’s development offices in Canada;
• Boralex can create value in using its experience in complex /
long development cycle projects;
• Growing market with strong social and political support;
• High electricity demand and barriers to entry;
• Boralex’s diversification goals to solar and storage are well aligned
with current and anticipated government policies;
• NY is one of the most populous and affluent US regions with a large number of
potential C&I energy users supporting Boralex’s goal to diversify its customer
base.
3. Well Defined Strategic Plan
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Source: 2019 LCOE (Levelized Cost of Energy) Update BloombergNEF.
Note: the global benchmark is country weighed-average using the latest annual capacity additions. The storage LCOE is reflective of a utility-scale Li-ion
battery storage system running at a daily cycle and includes charging costs assumed to be 60% of wholesale base power price in each country.
3. Well Defined Strategic Plan
• Costs are decreasing while installed capacities are booming.
• Storage is becoming much more affordable and suitable to complement wind and solar projects.
Renewable Energy Sector has a Strong Value-Added Proposition
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3. Well Defined Strategic Plan
Growth Path(1)
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3. Well Defined Strategic Plan
Targeted Market Potential: Specific interest for Boralex in size of announced Government programs from 2019 to 2023.Pipeline: Projects with land secured and grid connection verified.Pipeline Stages:
Early: 0-2 years into the development process.Middle: 2-4 years into the development process.Advanced: 4-6 years into the development process.
Boralex Objective for 2023: + 715MW in addition to growth path
Targeted market potential and pipeline
(in MW)
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Good Progress Year-to-date on the 3 financial objectives:
1. Generate between $140M - $150M in Discretionary cash flow by 2023
2. Maintain Dividend Payout Ratio between 40% to 60%
3. Increase Installed Capacity from 1,942 MW in 2018 to 2,800 MW by 2023
3. Well Defined Strategic Plan
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4. Solid Financial Position and Predictable
Cash Flows
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4. Solid Financial Position and Predictable
Cash Flows
Capacity Breakdown by Contracts Target
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5. Attractive Valuation
• Boralex trades at 14%
discount to peers using
2020E EV/EBITDA
ratio
• Analysts target an
average 7% increase
in stock price, on top of
3% dividend yield
Analysts ViewSeptember 16, 2019
BLX share price: $22.22
EBITDA(A) Target 20019E vs 2020E vs Target price vs
Institution Analyst 2018A 2019E 2020E Price 2018A 2019E Current price
Banque Nationale Rupert Merer 354 476 496 25,00 $ 34% 4% 13%
BMO Ben Pham 354 493 496 26,00 $ 39% 1% 17%
CIBC Mark Jarvi 354 484 505 23,50 $ 37% 4% 6%
Desjardins Bill Cabel 354 489 507 25,25 $ 38% 4% 14%
Industrielle Alliance Jeremy Rosenfield 354 466 476 23,00 $ 32% 2% 4%
Raymond James David Quezada 354 474 482 25,00 $ 34% 2% 13%
RBC Nelson NG 354 484 494 20,00 $ 37% 2% -10%
TD Sean Steuart 354 484 488 22,00 $ 37% 1% -1%
Average 354 481 493 23,72 $ 36% 2% 7%
High 354 493 507 26,00 $ 39% 4% 17%
Low 354 466 476 20,00 $ 32% 1% -10%
Source: Analysts Reports
EV/EBITDA(A)
Company Quote Exchange 2019E 2020E
Boralex BLX TSX 10,9 10,8
Brookfield Renewables BEP TSX 16,1 15,3
Innergex INE TSX 15,9 14,5
Northland Power NPI TSX 12,3 10,2
Transalta Renewables RNW TSX 10,1 10,0
Average (ex. Boralex) 13,6 12,5
Boralex vs average (%) -20% -14%
Source: Bloomberg
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5. Attractive Valuation
Results above expectations for 2 quarters in a row.
• Production 8%
over LTA.
• EBITDA(A)
13% over
consensus.
• Production 1%
over LTA.
• EBITDA(A) 6%
over
consensus.
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Conclusion
Boralex offers growth yield and long-term value!!
Boralex (BLX)
5 years CAGR stock price 11%
Dividend yield 3%
Shares outstanding 89.2M
Public float 71.4M
Daily trading volume Over 400K
Market capitalization $2B
Source: TSX Money
Stéphane MilotDirector - Investor Relations
(514) 213-1045
