50
Investor Presentation March 2017
Investor Presentation
March 2017
2
Cautionary Note
Certain statements contained in this presentation may be forward-looking within the meaning of applicable securities laws. Such
forward-looking statements reflect the intentions, plans, expectations and opinions of the management of Gaz Métro inc., acting in its
capacity as General Partner of Gaz Métro Limited Partnership (“Gaz Métro”), acting as manager of Valener Inc. (“Valener”) (the
“Management”) and are based on information currently available to Management and assumptions about future events. Forward-
looking statements involve known and unknown risks and uncertainties and other factors beyond Management’s control. A number of
factors could cause actual results of Gaz Métro and Valener to differ materially from the current expectations as expressed in the
forward-looking statements.
Although these forward-looking statements are based upon what Management believes to be reasonable assumptions, Management
cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements
are made as of the date of this presentation, and Management assumes no obligation to update or revise them to reflect new events or
circumstances, except as required pursuant to applicable securities laws. You are cautioned not to place undue reliance on these
forward-looking statements. The complete version of the cautionary note regarding forward-looking statements as well as a description
of the relevant assumptions and risk factors likely to affect Gaz Métro’s and Valener’s actual results are included in the Management’s
Discussion and Analysis (MD&A) of Valener for the fiscal year ended September 30, 2016 and is available on SEDAR under Valener’s
profile at www.sedar.com
Non-GAAP Financial Measures
In the opinion of Management, certain financial measures provide readers with information considered useful for analyzing Valener's
and Gaz Métro’s financial performance. However, certain financial measures are not defined by GAAP and should not be considered
in isolation or as substitutes for other financial measures that are in accordance with GAAP. The results obtained might not be
comparable with similar measures used by other issuers and should therefore be considered only as complementary information.
Valener - HighlightsCreated October 1, 2010 to replace the Gaz Métro Limited partnership public investment vehicle (TSX: GZM.UN-T)
Steady, rising dividend
Feb 12, 2015: annualized dividend increased from $1.00 to $1.04 per share and dividend growth target of ~4% announced for the next 3 fiscal years
Nov 27, 2015: annualized dividend increased from $1.04 to $1.08 per share
Nov 24, 2016: annualized dividend increased from $1.08 to $1.12 per share and growth target of ~4% reaffirmed for one more year
3
38.8 million common shares outstanding (as of February 6, 2017)
4.0 million Series A preferred shares outstanding (as of February 6, 2017)
C$838 million market cap (as of March 13, 2017)
Strategy: to support Gaz Métro in its growth objectives
VNR dividends paid, per fiscal year
TSX: VNR
TSX: VNR.PR.A
4
Caisse de dépôt et placement du Québec (“CDPQ”)
• 25.9% indirect ownership in Gaz Métro
Enbridge Inc.
• 27.6% indirect ownership in Gaz Métro
Valener (TSX: VNR)
Publicly-traded company whose main
assets consist of a:
o 29.0% direct interest in Gaz Métro, providing Gaz Métro with potential accessto public equity markets as required
o 24.5% interest in the Seigneurie de Beaupré Wind Farms (340 MW contracted)
* CDPQ is Trencap’s GP and majority unitholder (59.64%)
Corporate Structure
100%
100%
61.11%
100%
38.89%
71%
29%
25.5%
24.5%
TRENCAP
NOVERCO
GAZ MÉTRO INC. (THE ISSUER)
PUBLIC
SEIGNEURIE DE BEAUPRÉ WIND
FARMS (ELECTRICITY PRODUCTION)
ENERGY
DISTRIBUTION
TRANSPORTATION OF
NATURAL GAS
ENERGY SERVICES,
STORAGE & OTHER
*
(THE GUARANTOR)
Principal Interest Owners
Ownership Structure
Gaz Métro – Quick Facts
Founded in 1957
Now $7 billion in assets
#1 natural gas distributor in Québec
Sole natural gas distributor and largest electricity distributor in Vermont
Over 520,000 distribution customers
Over 2,000 employees
5
Overview of main activities in Québec and Vermont
Data as of December 31, 2016
MORE THAN
JUST A NATURAL
GAS COMPANY
Energy
Distribution
Natural Gas
Transportation
Energy Services,
Storage and OtherElectricity Production
(1) Since December 21, 2016. Previously 50% ownership.
RegulatedNon-regulated
except for Intragaz
100%
100%
100% 100%
100%
100%
100%
58% and
100%
100% (1)
40% to 60%
50%
38.3%
25.5%
Gaz Métro’s Business: Stable and Predictable
6
20 yr contracts with
Hydro-Québec
Asset Base Diversification since 2006
7
2006 2016
Natural gas distribution in Québec
Natural gas distribution in Vermont
Natural gas transportation
Energy services, storage and Other
Natural gas distribution in Québec
Natural gas and electricity
distribution in Vermont
Natural gas transportation
Electricity production
Energy services, storage and Other
Data for fiscal years ended September 30, 2006 and 2016
$7.4 billion in assets
Over 520,000 customers
$2.8 billion in assets
Over 200,000 customers
INCREASING
EXPOSURE TO
U.S. ENERGY
DISTRIBUTION
Asset exposure to U.S. energy distribution up
from 5% in 2006 to 50% in 2016
Regulated assets increased from 95% in 2006 to 97% in 2016
Gaz Métro adjusted net income attributable to Partners (1)(in millions of CAN$)
Fiscal year
Strong Financial Performance
8
(2)
(1) Non GAAP financial measure. Refer to Appendix D for additional information and a reconciliation with GAAP financial measures.
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for
fiscal 2014 and prior years are presented in Canadian GAAP. Refer to the 2016 annual report for additional information on the impacts of the
conversion to U.S. GAAP.
(2)
NEW 2016
RECORD
9
Diversification and expansion along the value chain, both upstream and downstream
UPSTREAM: electricity generation CORE: energy distribution DOWNSTREAM: customer-focused
Limited Partnership
Diversification Strategy
(pending)
10
An integrated energy company
Sustaining the core business and strengthening business development
Increasing complementarity between businesses, beyond simple financial logic
Partner of integrated energy solutions to U.S. and Canadian communities and a more sustainable economy
Tomorrow
Logic of value creationthrough complementary
businesses and integrated offers
A diversified operator
Multi-energy: gas and electricity
Two regions and regulators: Québec and Vermont
Multiple businesses: generation, transportation, distribution and services
Today
Financial logic of rate of return and risk diversification
Yesterday
A gas distributor
Distribution network
Storage
Gas pipeline
Logic of regulated return
QC
VT
Envisioned position
Our 4 businesses
Generator Distributor
TransporterServices provider
Gaz Métro’s Evolution
Acquisition of Standard Solar
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Expands Gaz
Métro’s presence
and expertise in
the rapidly
growing U.S. solar
energy industry
Commercial, industrial and institutional solar developer,
engineering, procurement and construction management, as well
as operations and maintenance services provider
Current operations in multiple states including California, Connecticut,
Maryland, Massachusetts, New Mexico, New York, North Carolina,
and Washington D.C.
Portfolio of 80 MW of construction-ready projects and a
significant development pipeline
Seasoned and highly competent management team with a
sterling reputation and outstanding track record
US$ 17 million acquisition
100 MW of solar capacity under management services
ANNOUNCED MARCH 7, 2017
Target of 100 MW/year (+/- US$ 200 million/year)
* Closing is subject to a regulatory approval and is expected by the end of April.
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(1) Energy Distribution – Vermont Gas Systems (“VGS”)
(2) Energy Distribution – natural gas distribution in Québec (“Gaz Métro-QDA ”)
(3) Energy Services, Storage and Other
(4) Energy Distribution – Green Mountain Power (“GMP”)
(5) Energy Distribution – Gaz Métro-QDA (renewable natural gas to be injected into Gaz Métro-QDA’s network)
Note: all dates presented on a calendar basis
= expected commissioning
Project Updates
St-Hyacinthe
biomethanation
project on track to
begin this spring
GASSED UP
GASSED UP
COMPLETED
AUTOMATIC
STAY LIFTED
Two private placements of first mortgage bonds for an aggregate of $225M (Gaz Métro inc.)
both issuances are secured and rated A and A+ by DBRS and S&P, respectively
proceeds were used to pay down part of Gaz Métro’s debt and for general corporate
purposes
March 31, 2017
Gaz Métro to issue $100M of equity through a private placement
Valener to subscribe to 29%
(1) Includes interests in entities subject to significant influence and other investments
(2) Excludes interests in entities subject to significant influence and other investments
(3) Includes 50% of the capital expenditures expected for TQM, reflecting Gaz Métro’s interest in the natural gas transportation company.
(4) Represents Gaz Métro’s 58% interest in the project.
Cash and Liquidity
13
(in millions of CAN$)
Gaz Métro – 2017EGaz Métro – 2016
$530M in cash flows from operating
activities
$575M invested in capex (1), above the
$480M expected, as a result of:
an additional $39M U.S. dollar
investment by GMP in Transco
a stronger U.S. dollar
GMP’s investment in 5 solar parks
2016 – 2017 Financing Activities
Financial Highlights
14
GAZ MÉTRO VALENER
Adjusted EBITDA1 $754.2 M n/a
Adjusted funds from operations1 n/a $61.2 M
Net income attributable to Partners $ 224.3 M n/a
Net income attributable to common shareholders n/a $ 50.4 M
Adjusted net income1 $228.3 M $53.7 M
Adjusted EPS1 n/a $1.39
Cash flows related to operating activities $ 549.8 M $58.5 M
Normalized operating cash flows1 n/a $54.2 M
Normalized operating cash flows per common share1 n/a $1.40
Payout ratio1,2,3 85.1% 77.3%
Long-term debt interest coverage ratio/interest coverage ratio1 5.8x 34.0x
Total debt $3,707.6 M $90.3 M
Debt/total capitalization1 66.0% 10.5%
Unused portion of credit facilities $415.1 M $108.7 M
S&P corporate credit rating A n/a
DBRS corporate credit rating A n/a
1) Non-GAAP financial measures. Refer to Appendix D for additional information and reconciliation with GAAP financial measures.
2) Based on distributions and dividends paid over adjusted net income.
3) Includes value of shares issued under Valener’s dividend reinvestment plan.
Note: data presented in accordance with U.S. GAAP
For the twelve months ended December 31, 2016
STRONG CREDIT
RATING
AMPLE LIQUIDITY
Energy Distribution
1 Projected rate base in the 2017 rate case filed with the Régie de l’énergie. 2 Approved ROE for fiscal 2017.
Distributes ≈ 97%of natural gas in
Québec
Over 10,000 km
of pipeline
300 municipalities
served
Over 205,000customers
Regulated assets: ≈ $2.0billion1
Authorized ROE: 8.90%2
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Natural Gas Distribution in Québec
1 Fiscal year 2016
RESIDENTIAL COMMERCIAL INDUSTRIAL
Customers 140,245 70.0% Customers 52,141 26.1% Customers 7,871 3.9%
Volume 19.72 Bcf 9.9% Volume 60.37 Bcf 30.1% Volume 120.06 Bcf 60.0%
% of distribution revenues ≈ 19,0% % of distribution revenues ≈ 43,5% % of distribution revenues ≈ 37,5%
17
Natural Gas Distribution: Our Customers 1
18
(1) For the natural gas distribution activity in Québec. Based on prices as at January 1, 2017.(2) Using high-efficiency equipment.
MARKET COMPETING ENERGY SAVINGS (1)
Industriale.g. large companies in petrochemical and
metallurgical industries
#6 fuel oil up to 19%
Commercial and institutionale.g. hospitals, schools, restaurants
Electricity36% (small business)
52% (large business)
#2 fuel oil37% (small business)
53% (large business)
Residential heating (2)
Electricity 13% to 23%
#2 fuel oil 18% to 27%
Natural Gas in Québec – Current Competitive Position
19
(1) Based on 2017 rate case as approved by Vermont Public Service Board (VPSB)
Energy Distribution in VermontGREEN MOUNTAIN POWER (GMP)
Acquisition of GMP in 2007
Acquisition of Central Vermont
Public Service (CVPS) in 2012
≈ 70% of electricity distribution
market in Vermont
≈ 265,000 customers
Regulated assets: ≈ US$1.35B(1)
Authorized ROE: 9.02%(1)
20
Wholly-owned since 1986
Sole gas distributor in Vermont with over 50,000
customers
1 Based on the MOU entered into with the Vermont Department of Public Service. VGS’s 2017 rate
case is currently under review by the Vermont Public Service Board.
Project to extend the distribution network to service
Vergennes and Middlebury
1st segment, consisting of 17km, was completed
and gassed up in February 2016
The 2nd segment, consisting of the remaining 49km,
is expected to be completed by April 2017
Estimated project costs: US$165.6M, of which
US$134M will ultimately be included in VGS’s rate
base
Regulated assets: ≈ US$202M1
Authorized ROE: 8.50%1
Energy Distribution in VermontVERMONT GAS SYSTEMS (VGS)
Natural Gas Transportation
• Wholly-owned
• Operates two pipelines totalling 98 km that cross the Ontario border and
supply Gaz Métro-QDA’s distribution network in northwest Québec
• Regulated by the NEB(3)
• 38.3% interest in PNGTS
• Operates a 489 km pipeline that starts at the Québec border and
extends into the suburbs of Boston
• Regulated by the FERC(2)
• 50% interest in TQM
• Operates a 575 km gas pipeline in Québec that connects:
upstream with TCPL
downstream with PNGTS and the Gaz Métro-QDA network
• Regulated by the NEB(1)
1 National Energy Board (Canada)2 Federal Energy Regulatory Commission (United States)3 With respect to revenue determination, tolls, construction and the operation of its network
22
Natural Gas Transportation
Electricity Production
24
(1) Including financing costs. Non-recourse financing in place for both wind farms.
A QUÉBEC CONSORTIUM
Gaz Métro (25.5%) / Valener (24.5%) and Boralex Inc.
(50%)
Developed on the Seigneurie de Beaupré’s private
property
20-year lease with Séminaire de Québec
Very good wind regime
Long-term cash flows supported by 20-year PPAs
with Hydro-Québec
20-year firm price with indexation
Expected annual distributable cash of $30M to
$35M (100%)
May 2016
Refinancing of
Wind Farms 2 and 3
In May 2016: closing of a $617.5M refinancing for Wind Farms 2 and 3
Special distribution of $80M was paid to the partners
Gaz Métro and Valener received $20.4M and $19.6M, respectively
INSTALLED CAPACITY NUMBER OF TURBINES INVESTMENT START-UP
Wind Farms 2 & 3 272 MW 126 ≈ $750M(1) Dec. 2013
Wind Farm 4 68 MW 28 ≈ $190M(1) Dec. 2014
TOTAL 340 MW 154 ≈ $940M
Seigneurie de Beaupré Wind Farms
Energy Services, Storage and Other
• Québec’s leader in alternative fuel, in both an advisory role to
clients and with respect to its deployment of refueling stations
o Now 10 refueling stations on the Blue Road, a natural gas
refueling network for heavy transportation vehicles in
Québec and Ontario
• Created to develop the market for natural gas (both compressed
and liquefied) as a fuel in the heavy transport market and as a
cleaner alternative to diesel fuel
• Partnership with Government of Quebec through Investissement
Québec (IQ)
o ~$120M investment in which IQ will contribute up to $50M
• Project to triple the liquefaction capacity of Gaz Métro’s LSR(1)
plant located in Eastern Montreal
• February 2017: substantial completion
(1) Gaz Métro’s natural gas liquefaction, storage and re-gasification plant
26
• Created to ensure LNG storage, treatment and regasification to
meet the peak energy needs of the TransCanada Energy power
plant in Bécancour and similar projects
Liquefied Natural Gas
Supplying LNG to a
Stornoway diamond
mine over 1,000km
from Montreal
• Main activity consists of underground natural gas storage
• 40 to 60% partnership between Gaz Métro and ENGIE (formerly GDF SUEZ)
• Regulated by the Régie de l’Énergie
• Wholly-owned since December 21, 2016
• Previously 50-50 partnership between Gaz Métro and Dalkia
• Owns and operates three distinct steam, hot water and cold water networks used
to heat and cool commercial buildings
• 3km network serving the energy needs of 1.8 million square meters of
commercial space in downtown Montréal
• Leader in supplying energy products and services
• Services include installation, sale, rental, maintenance and repair of natural gas
equipment
• Active in the residential, commercial and institutional markets
27
Other Activities
Regulatory Framework
APPENDIX A
29
Regulatory Authorities
Natural gas distribution
and storage activities in
Quebec
Régie de l’énergie (Gaz Métro-QDA and Intragaz)
Natural gas transportation
activities in Canada that
cross provincial
boundaries
National Energy Board (Trans Québec & Maritimes Pipeline and
Champion Pipe Line) and activities of Gaz Métro’s primary
transportation supplier (TransCanada PipeLines)
Natural gas and electricity
distribution and
transportation activities in
the United States
Federal Energy Regulatory Commission (Portland Natural Gas
Transmission System)
Vermont Public Service Board (Vermont Gas Systems and Green
Mountain Power)
Transportation activities in
Ontario of one of Gaz
Métro’s suppliers,
i.e.; Union Gas
Ontario Energy Board
Capital
structureAnnual rate
Weighted
rate*
Total debt 54.0% 4.79 % 2.59%
Preferred equity 7.5% 5.36% 0.40%
Common equity 38.5% 8.90% 3.43%
Deemed capital structure 100.0% 6.42%
* Source: 2017 rate case, approved by the Régie de l’énergie on Oct. 14, 2016 (D-2016-156)
30
Gaz Métro-QDA’s Deemed Weighted Average Cost of Capital
31
Source: 2017 rate case, approved by the Régie de l’énergie on Oct. 14, 2016 (D-2016-156)
Note: some differences due to rounding
RATE BASE
NON-RATE BASE
$2.0 B
$432 M
38.5%
38.5%
Deemed commonequity (fixed)
8.90%
8.90%
Authorized base ROE
Regulatedincome on
common equity
$70.0 M
$14.8 M
*
*
*
*
=
=
Gaz Métro-QDA’s Regulated Income on Common Equity
32
Based on 2017 rate case as approved by the Régie de l’énergie on Oct. 14, 2016 (D-2016-156).
Regulated incomeon common
equity
$70.0 M(rate base)
$14.8 M(non-rate base)
Dividends on deemed
preferred equity
$9.1 M
Deemed incometaxes
$42.4 M
Base authorizednet income
$136.3 M+ + =
Gaz Métro-QDA’s Authorized Net Income
(1) Gaz Métro-QDA’s authorized ROE includes 0.79% in productivity gain
(2) VGS’s 2017 rate case is currently under review by the Vermont Public Service Board (VPSB). GMP’s ROE for fiscal 2017 as
approved by VPSB in September 2016.
33
9.69%
8.90% 8.90% 8.90% 8.90% 8.90%
9.93%
8.84%
9.58% 9.60% 9.44%9.02%
10.25%
9.75%
10.26% 10.20% 10.09%
8.50%
2012 2013 2014 2015 2016 2017
Gaz Métro-QDA GMP VGS
FISCAL YEAR
(2)
(1)
Authorized ROE on Common Equity
Energy Distribution Segment Outlook
(2)
Dividends & Distributions
APPENDIX B
35
New Previous New Previous
Distributions & Dividends
Nov 27 2015:
increase in
Gaz Métro’s
distribution
announced
Nov 24 2016:
3rd increase in
Valener’s dividend
announced
Quarterly Dividends
36
Dividend
per shareRecord date Payable
DRIP
Discount
Common
shares $0.28 March 31, 2017 April 17, 2017
2% on newly
issued shares
Series A
preferred
shares
$0.271875 April 7, 2017 April 17, 2017 Not applicable
Dividends declared February 8, 2017New annualized
dividend of $1.12
per common
share
Target of $1.16 per
common share
per year for 2018
37
Target annualized
level: $1.16
Current annualized
level: $1.12
Fiscal year
(1) Based on dividends paid.
Dividend per Common Share
Wind Farms
APPENDIX C
100%
(in millions of CAN$, unless otherwise
indicated)
Wind Farms 2 and 3 Wind Farm 4
2016 2015 2016 2015
Production (MWh) 809,283 903,431 206,768 180,214
Utilization factor (1) (%) 33.9 37.9 34.6 36.3
Cash flows relating to operating
activities50.1 60.0 23.3 5.4
Total distributions paid 103.0 40.6 5.3 17.6
2016 2015
Revenues from power sales 109.4 116.7
EBITDA (4) 93.7 101.9
EBITDA (4) margin (%) 85,6 87.3
39
(1) Utilization factor is calculated as electricity produced divided by installed capacity (in MWh)
(2) Includes a $12.9 million payment received from Hydro-Québec related to a note receivable for the reimbursement of certain construction
costs.
(3) Includes the $80 million return of capital from Beaupré Éole received on May 4, 2016 as a result of the refinancing of Wind Farms 2 and 3.
(4) EBITDA is a non-U.S. GAAP financial measure. Valener defines it as income (loss) before interest on long-term debt, income taxes,
depreciation and amortization. Management considers EBITDA to be useful for measuring the financial performance of the wind farms, as
this measure is commonly used in the industry and focuses on operational performance.
(2)
(3)
Wind Farms Update
VALENER : 24.5% GAZ MÉTRO : 25.5%
100%
(in millions of CAN$, unless otherwise
indicated)
Wind Farms 2 and 3 Wind Farm 4
Q1 2017 Q1 2016 Q1 2017 Q1 2016
Production (MWh) 213,312 208,915 55,232 52,141
Utilization factor (1) (%) 35.5 34.8 36.8 34.8
Cash flows relating to operating
activities13.5 15.2 2.3 15.8
Total distributions paid - - 0.7 -
Q1 2017 Q1 2016
Revenues from power sales 28.9 28.0
EBITDA (3) 25.8 24.2
EBITDA (3) margin (%) 89.3 86.4
40
(1) Utilization factor is calculated as electricity produced divided by installed capacity (in MWh)
(2) Includes a $12.9 million payment received from Hydro-Québec related to a note receivable for the reimbursement of certain construction
costs.
(3) EBITDA is a non-U.S. GAAP financial measure. Valener defines it as income (loss) before interest on long-term debt, income taxes,
depreciation and amortization. Management considers EBITDA to be useful for measuring the financial performance of the wind farms, as
this measure is commonly used in the industry and focuses on operational performance.
VALENER : 24.5% GAZ MÉTRO : 25.5%
Wind Farms Update
(2)
Reconciliation of non-GAAP measures
APPENDIX D
42
For the fiscal years ended September 30,
(in millions of CAN$) LTM 2016 2015 2014 2013 2012 2011
Net income attributable to Partners 224.3 277.5 181.0 174.7 180.4 143.8 164.0
Impact of recognizing regulatory assets related to
employee future benefits- (79.3) - - - - -
Impairment of noncurrent assets recorded for VGS’s
Addison project16.5 16.5 8.0 - - - -
Gain on remeasuring CDH following the acquisition (12.5) - - - - - -
Net gain on the disposal of the interest in HydroSolution - - - - (14.7) - -
Costs related to the CVPS acquisition - - - - - 7.8 1.8
Gain on the sale of MTO - - - - - - (17.5)
Loss on the sale of Aqua Data - - - - - - 0.2
Corporate reorganization expenses - - - - - - 0.1
Gain realized by Gaz Métro Éole on the sale of 49% of
its interest in the Seigneurie projects- - - - - - (1.1)
Adjusted net income attributable to Partners 228.3 214.7 189.0 174.7 165.7 151.6 147.5
Adjusted net income attributable to Partners: is the net income attributable to Partners, net of specific items identified by management as being outside Gaz Métro’s ongoing
operations. The Partnership uses this measure to assess Gaz Métro’s profitability based on its ongoing operations and to exclude items that could alter analyses of its
performance.
(1) LTM refers to last twelve months ended December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years are
presented in Canadian GAAP.
* Differences due to rounding
Reconciliation of adjusted net income attributable to Partners(2)(2)
Gaz Métro
(1,2)
43
Reconciliation of adjusted EBITDA
Adjusted EBITDA: is income (loss) before amortization, interest on long-term debt, financial and other expenses, and income taxes, and excludes specific
items identified by management as being outside of Gaz Métro’s ongoing operations.
(1) LTM refers to last twelve months ended December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014
and prior years are presented in Canadian GAAP.
* Differences due to rounding
For the fiscal years ended September 30,
(in millions of CAN$) LTM 2016 2015 2014
Net income 226.9 279.8 185.9 173.8
Income taxes 44.0 41.6 45.2 47.9
Interest on long-term debt 130.4 129.6 132.9 155.7
Amortization (includes amortization in direct costs) 340.2 334.7 282.0 247.8
Financial and other expenses (1.3) (0.9) 2.9 (5.6)
Impact of recognizing regulatory assets related to
employee future benefits- (79.3) - -
Impairment on non-current assets 26.5 26.5 13.5 -
Gain on remeasuring CDH following the acquisition (12.5) - - -
Adjusted EBITDA 754.2 732.0 662.4 619.6
(2) (2)
Gaz Métro
(1,2)
44
As at September 30,
(in millions of CAN$, unless otherwise indicated) LTM 2016 2015
Adjusted EBITDA 754.2 732.0 662.4
Interest on long-term debt 130.4 129.6 132.9
Long-term debt interest coverage ratio 5.8x 5.6x 5.0x
Long-term debt interest coverage ratio: is obtained by dividing total interest on long-term debt by adjusted EBITDA, as previously defined.
(1) LTM refers to last twelve months ended December 31, 2016
Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP.
* Differences due to rounding
Reconciliation of long-term debt interest coverage ratio
Gaz Métro
(1)
45
As at September 30,
(in millions of CAN$, unless otherwise indicated) Q1 2016 2015 2014
Bank loans 66.1 15.8 29.0 -
Current portion of long-term debt 10.4 10.1 9.8 27.0
Long-term debt 3,631.1 3,464.4 3,101.4 3,140.8
Total debt 3,707.6 3,490.3 3,140.2 3,167.8
Total equity 1,911.6 1,810.3 1,728.2 1,482.4
Total capitalization 5,619.2 5,300.6 4,868.4 4,650.2
Debt / total capitalization ratio 66.0% 65.8% 64.5% 68.1%
Total debt to capitalization ratio: This ratio consists of total debt divided by total capitalization. Total debt is the sum of bank loans, long-term debt and the current
portion of long-term debt. Total capitalization is the sum of total debt and total equity. The Partnership uses this ratio to measure its accessibility to debt financing that
enables it to seize future growth opportunities.
(1) Q1 refers to data as at December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior
years are presented in Canadian GAAP.
* Differences due to rounding
Reconciliation of debt to total capitalization ratio
(2)(2)
Gaz Métro
(1,2)
46
For the fiscal years ended September 30,
(in millions of CAN$) LTM 2016 2015 2014 2013 2012
Distributions received from equity-accounted
interests63.3 62.1 64.2 49.1 54.6 47.7
General and administrative expenses (2.1) (2.1) (2.1) (2.5) (2.1) (2.0)
Adjusted funds from operations 61.2 60.0 62.1 46.6 52.5 45.7
Adjusted funds from operations: is actual distributions received from equity-accounted interests, net of general and administrative expenses and excluding any
distribution received on the preferred shares.
(1) LTM refers to last twelve months ended December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and
prior years presented in Canadian GAAP.
Reconciliation of Adjusted funds from operations
(1,2) (2)
Valener
(2)
Adjusted net income attributable to common shareholders: The net income (loss) attributable to common shareholders, net of the specific items identified by the management of the manager
as not being part of the ongoing operations of Valener and of Gaz Métro. These adjustments consist of (i) the gains or losses on derivative financial instruments (net of the related income taxes),
(ii) the share in the adjustments to the net income of Gaz Métro (net of the related income taxes), and (iii) the deferred income tax expense (benefit) related to the outside-basis temporary
difference on the interest in Gaz Métro which is the difference between the carrying value of the interest in Gaz Métro and the tax basis assuming a disposal of the investment on the balance
sheet date. The management of the manager believes this assumption is not reflective of Valener’s mission given the permanency of its investment in Gaz Métro.
This measure is used by the management of the manager to measure Valenerʼs profitability from ongoing operations and to exclude items that could alter analyses of its business performance.
Adjusted net income attributable to common shareholders, per common share: The adjusted net income attributable to common shareholders, divided by the basic and diluted weighted
average number of common shares outstanding of Valener. This measure is used by the management of the manager to measure Valenerʼs profitability from ongoing operations and to exclude
items that could alter analyses of business performance.
(1) LTM refers to last twelve months ended December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years presented in
Canadian GAAP.
47
For the fiscal years ended September 30,
(in millions of CAN$, except per share amounts) LTM 2016 2015 2014 2013 2012
Net income 50.4 66.5 49.1 41.0 41.5 29.6
Loss on derivative financial instrument 3.9 4.6 4.0 - - -
Income taxes related to the loss on derivative financial instruments (1.0) (1.2) (1.1) - - -
Share in the adjustments to the net income of Gaz Métro 1.2 (18.2) 2.3 - (4.3) 2.3
Deferred income taxes related to the outside-basis temporary difference on the
interest in Gaz Métro2.8 2.5 (4.8) - - -
Income taxes related to the adjustments in the net income of Gaz Métro 0.7 - - - 1.1 (0.1)
Cumulative dividends on Series A preferred shared (4.3) (4.3) (4.3) (4.3) (4.3) (1.6)
Adjusted net income attributable to common shareholders 53.7 49.9 45.2 36.7 34.0 30.2
Basic and diluted weighted average number of common shares outstanding (in
millions)38.6 38.5 38.2 37.9 37.7 37.5
Adjusted net income attributable to common shareholders, per common
share$1.39 $1.30 $1.18 $0.97 $0.90 $0.81
Reconciliation of adjusted net income attributable to common shareholders
(2) (2)
Valener
(1,2)
Normalized operating cash flows: Normalized operating cash flows corresponds to cash flows related to operating activities less cumulative dividends paid to preferred
shareholders. This measure is used by the management of the manager to evaluate the Company’s financial performance and ability to pay dividends to common
shareholders.
Normalized operating cash flows per common share: Normalized operating cash flows per common share corresponds to normalized operating cash flows divided by
the weighted average number of common shares outstanding of Valener. This measure is used by the management of the manager to evaluate the Company’s financial
performance and ability to pay dividends to common shareholders.
(1) LTM refers to last twelve months ended December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior
years presented in Canadian GAAP.
For the fiscal years ended September 30,
(in millions of CAN$, except per share amounts) LTM 2016 2015 2014 2013 2012
Cash flows related to operating activities 58.5 56.7 62.9 43.1 45.2 23.8
Dividends to preferred shareholders (4.3) (4.3) (4.3) (4.3) (4.8) -
Normalized operating cash flows 54.2 52.4 58.6 38.8 40.4 23.8
Weighted average number of common shares outstanding (in millions) 38.6 38.5 38.2 37.9 37.7 37.5
Normalized operating cash flows per common share $1.40 $1.36 $1.53 $1.02 $1.07 $0.63
Reconciliation of normalized operating cash flows per common
share
(2) (2)
48
Valener
(1,2)
49
Interest coverage ratio: is obtained by dividing total interest on long-term debt by adjusted funds from operations.
(1) LTM refers to last twelve months ended December 31, 2016
Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP.
Reconciliation of interest coverage ratio
As at September 30,
(in millions of CAN$, unless otherwise indicated) LTM 2016 2015
Distributions received from equity-accounted interests 63.3 62.1 64.2
General and administrative expenses (2.1) (2.1) (2.1)
Adjusted funds from operations 61.2 60.0 62.1
Interest on long-term debt 1.8 1.9 1.6
Interest coverage ratio 34.0x 31.6x 38.8x
Valener
(1)
50
Debt / total capitalization ratio: is the total amount of long-term debt, divided by total capitalization. Total capitalization is equal to the total amount of long-term debt
and total equity. The management of the manager uses this ratio to measure Valener’s accessibility to debt financing that enables it to participate in Gaz Métro’s
development and seize future growth opportunities.
(1) Q1 refers to data as at December 31, 2016
(2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior
years presented in Canadian GAAP.
Reconciliation of debt / total capitalization ratio
As at September 30,
(in millions of CAN$, unless otherwise indicated) Q1 2016 2015 2014
Long-term debt 90.3 85.2 121.0 66.8
Total equity 770.5 744.2 718.5 713.5
Total capitalization 860.8 829.4 839.5 780.3
Debt / total capitalization ratio 10.5% 10.3% 14.4% 8.6%
(2)(2)
Valener
(1,2)
