Northland Power Inc. · TSX:NPI
Northland Power — Investor Day (September 2018)
48 slides from Northland Power's investor day presentation, Sep 19, 2018
Slide 1: Stability and Global Growth
Stability and Global Growth Northland Power Investor Day | Toronto September 19, 2018 TSX: NPI Northland Power Investor Day | September 2018 0
Slide 2: Welcome
Welcome James Speaker Temerty Name / Title Northland Power Investor Day | September 2018 1 Welcome Remarks
Slide 3: Northland Overview
Northland Overview Enterprise value of approximately $12 billion¹ 34% management ownership interest Executive team has 200+ years of collective power industry experience 1. As at September 11, 2018 Northland Power Investor Day | September 2018 2 Welcome Remarks
Slide 4: Northland Overview
Northland Overview Diversified 2,458 MW1 operating fleet of high-quality assets 1,300+ MW1 in advanced development or under construction 1. Gross capacity Northland Power Investor Day | September 2018 3 Welcome Remarks
Slide 5: Mike Crawley, Chief Executive Officer
Topic Mike Crawley, Chief Executive Officer Speaker Name / Title • Founder & CEO of AIM PowerGen • President of GDF Suez Canada • Former Board member of Ontario and BC Power Producers Association and Canadian Solar Industries Association • EVP Development at Northland Power 2015 to 2018 • 16-years i
Slide 6: Agenda
Strategic Overview – Mike Crawley Construction – Morten Melin Agenda Welcome Operations – Troy Patton Finance – Paul Bradley Speaker Name / Title Wrap Up – Mike Crawley Northland Power Investor Day | September 2018 5 Strategic Overview
Slide 7: Our Vision
Our Vision To be a top clean and green developer, constructor, owner, and operator of sustainable infrastructure assets, inspiring our people to achieve a sustainable and prosperous future for all of our stakeholders. Northland Power Investor Day | September 2018 6 Strategic Overview
Slide 8: Our Strategy
Our Strategy • Develop and acquire high-quality projects with long-term revenue contracts • Focus on renewable and sustainable energy sources • Seek technologies / jurisdictions as an “early mover” • Deliver projects on time, on budget • Inspire and equip our people to achieve excellence Northland P
Slide 9: Our promise to investors
Our promise to investors We remain focused on providing stability and growth to investors by: • Targeting a higher Total Shareholder Return relative to our peers • Ensuring stability through operational excellence • Achieving growth through a diversified, global development and acquisition strategy
Slide 10: Investor feedback
Investor feedback Met more than 30 investors in multiple cities in 2018. Topics commonly raised: • Near-term growth objectives and visible development pipeline • Impact of competition • Northland’s scale to compete • Impact of government policy change • Founder’s holdings • Dividend policy • Northla
Slide 11: Significant events since 2014 Investor Day
Significant events since 2014 Investor Day Date Significant Events Apr 2016 Grand Bend (100 MW) achieves commercial operation Jul 2016 Northland announces Strategic Review Apr 2017 Gemini (600 MW) in the Netherlands achieves commercial operation Aug 2017 Northland concludes Strategic Review Aug 2017
Slide 12: Business Plan provides for significant Adjusted EBITDA growth
Business Plan provides for significant Adjusted EBITDA growth Visible Growth Business Plan Deutsche Bucht 2020 Hai Long 2026 Additional Growth through ~60% 2026 ~30% Growth1 $860- Growth1 930M 2018 Forecast 2020 Forecast 2026 Forecast 1. The growth % is based on 2018E Adjusted EBITDA The above graph
Slide 13: Northland continues to deliver superior returns to shareholders
Northland continues to deliver superior returns to shareholders 3-Year 5-Year 10-Year 20% 2 18% 18% 2 16% 16% 2 14% 13% 12% 10% 8% 6% 4% 2% 0% Peer Group ¹ S&P/TSX Capped Utilities Index 1. Includes Algonquin Power, Boralex, Brookfield Renewable, Capital Power, Innergex, TransAlta, Pattern Energy 2.
Slide 14: Our track record speaks for itself
Our track record speaks for itself Total Total Gross Returns1 Northland has added 1,032 MW1 of September 11, 2018 1,113% Total Return Capacity (%) (MW) 2,458 MW Capacity1 1,200% operating capacity and delivered a 2,500 14% TSR2 since 2014 Investor Day 1,000% 2,000 July 16, 2009 800% Merger of NPI an
Slide 15: Where will we go from here?
Where will we go from here? • How is the power industry changing? • Where are the opportunities? • How is Northland positioning itself? Northland Power Investor Day | September 2018 14 Strategic Overview
Slide 16: Industry Overview
Industry Overview Opportunities: • Global shift towards renewable power • Offshore wind expansion to new markets • Large volume of power and infrastructure assets to be constructed globally Challenges: • Significant volume of capital chasing late stage projects • Long-term PPAs less prevalent • Glob
Slide 17: Northland's opportunity in Europe
Northland’s opportunity in Europe Opportunity Set – Totals US$ 1,900B1 Technology • Offshore wind • Onshore renewables London Rationale Office Hamburg • New emerging offshore Office wind markets • Leverage existing offshore wind platform • Decarbonization of electricity grid 1. Source: Bloomberg
Slide 18: Northland's opportunity in Asia
Northland’s opportunity in Asia Opportunity Set – Totals US$ 571B1 Technology • Offshore wind • Onshore renewables • Natural gas Rationale Seoul • Offshore wind opportunities Office due to land constraints • Denuclearization of electricity grid Taipei • Decarbonization of Office electricity grid
Slide 19: Northland's opportunity in Canada & US
Northland’s opportunity in Canada & US Opportunity Set – Totals US$ 1,162B1 Technology • Onshore renewables • Bulk storage • Offshore wind Rationale • Phase out of coal Toronto Office generation • Storage to optimize existing and new renewables • Canadian tax pools 1. Source: Bloomberg New Energy
Slide 20: Northland's opportunity in Latin America
Northland’s opportunity in Latin America Opportunity Set – Totals US$ 500+ B1 Technology • Onshore renewables • Natural gas Houston Office • Transmission Hydro • Mexico City Office Rationale • Power market liberalization • Economic growth and development • Significant investment in infrastructur
Slide 21: How we will sustain long-term, global growth
How we will sustain long-term, global growth Operational excellence of existing fleet Advance current projects • Complete Deutsche Bucht on time and on budget • Complete development and construction of Hai Long projects Execute business plan • Decentralize development to increase project pipeline •
Slide 22: Morten Melin, EVP – Construction
Morten Melin, EVP – Construction Topic Speaker Name / Title • Experience: 25+ offshore wind farms in addition to other renewable projects • VP, Project and Technology at Vestas Offshore • VP, EPC & Construction Management at Ørsted • Served on the Board of Directors at A2SEA and Inwind / Current Boa
Slide 23: Deutsche Bucht – continued offshore growth
Deutsche Bucht – continued offshore growth 2018 Progress: • No lost time injuries • First foundation installed on September 3, 2018 • Four foundations installed1 • 17 MW demonstrator project achieved Financial Close in August 2018 • Project on track for commercial operations by end-2019 1. As at Sep
Slide 24: Deutsche Bucht – project advancing on time, on budget
Deutsche Bucht – project advancing on time, on budget Financial Close Today Finish Aug 2017 Sep 2018 Dec 2019 Manufacturing Foundations Install Cable Installation Turbine Installation Commercial Ops Date Completed Outstanding • Illustrative timeline of Deutsche Bucht construction Northland Power Inv
Slide 25: Enhancing proficiency and leadership in offshore wind construction
Continued focus on enhancing our proficiency and leadership in offshore wind construction Learnings: • Optimize risk sharing • Utilize economies of scale in scheduling and procurements • Retaining in-house construction expertise • Design optimization • Mono buckets pilot Northland Power Investor Day
Slide 26: Hai Long offshore wind – early mover in Taiwan
Hai Long offshore wind – early mover in Taiwan Today Financial Close Finish 2018 2022 2026 Development Financial Close Construction Commissioning Commercial Ops Date Completed Outstanding • Illustrative timeline of Hai Long development and construction Northland Power Investor Day | September 2018 2
Slide 27: Troy Patton, Chief Operations Officer
Topic Troy Patton, Chief Operations Officer Speaker Name / Title • US Navy Nuclear program • Engineering Management, GE Power Systems • Senior VP of Engineering and Products at Vestas Wind Systems • CEO of Northern Power Systems • 24-years industry experience Northland Power Investor Day | September
Slide 28: Strong commitment to employee health & safety
Strong commitment to employee health & safety is key to top performance Strategy Track Record We have a strong track record, including zero critical injuries in Vision Global 2017 and 2018 YTD Requirements Global H&S Policy Global H&S Management Standards Program Designed and Maintained Regional Pol
Slide 29: Global diversified clean and green portfolio
Global diversified clean and green portfolio Canada Taiwan Quebec Ontario Saskatchewan Europe Germany Clean Gas and Biomass Facilities Offshore Wind Farms Onshore Wind Farms Solar Facilities Northland Power Investor Day | September 2018 28 Operations
Slide 30: Diversity by technology
Diversity by technology Key Highlights 2018 MW by Technology • Portfolio consists of Offshore 2.4+ GW of capacity Wind, 38% • 98% of revenue from long-term contracts • $1B of net project EBITDA (before corporate expenses) expected in 2018 Thermal, 40% Onshore Wind, 17% Solar, 5% Northland Power Inve
Slide 31: Continuous improvement leads to operational excellence
Continuous improvement leads to operational excellence Operations Philosophy • Strategic core operations performed in-house • Contract non-core operations • Manage long-term risk using service agreements Engaged Stakeholders • Encourage community involvement • Minimize environmental and compliance c
Slide 32: Financial stability achieved through long-term contracts
Financial stability achieved through long-term contracts MW Weighted Average MW Weighted Average PPA ~11.6 yrs1 PPA ~14.8 yrs1 • Stable long-term cash flows Remaining PPA Term (Excl. Hai Long) (Incl. Hai Long) from contracted revenues Thermal 12.1 years Thermal 12.1 years • MW weighted average PPA l
Slide 33: Enhancing profitability of existing assets through energy marketing
Enhancing the profitability of our existing assets through energy marketing Objectives and Benefits: • Retain margin currently captured by 3rd parties • Gain expertise to support future growth • Establish platform to originate PPAs • Manage merchant markets • Securing post-PPA revenue Northland Powe
Slide 34: Global operational excellence: getting smarter
Global operational excellence: getting smarter In-house Expertise • Leverage knowledge to support development and construction Improvements Through Use of Big Data • Analytical tools optimize production • Best practices improve maintenance scheduling • Implement snow removal at solar facilities Nort
Slide 35: Portfolio optimization opportunities
Portfolio optimization opportunities Optimizing Power Purchase Agreements • Enhanced Dispatch Contract for Iroquois Falls, explore similar options for Ontario assets Securing New Revenue Streams • New offtake opportunities for post PPA assets Energy Marketing • Greater margins by bringing in-house g
Slide 36: Paul Bradley, Chief Financial Officer
Topic Paul Bradley, Chief Financial Officer Speaker Name / Title • Appointed Chief Financial Officer at Northland in 2011 • Managing Director and Head of Power & Utilities at Macquarie • Vice President at Ontario Power Authority • Executive Director of Power & Utilities at CIBC • 28-years industry e
Slide 37: Our goal is to create long-term value for shareholders
Our goal is to create long-term value for shareholders • Strong financial growth and global diversification • Long-term sustainable cash flows • Prudent balance sheet management • Proactive risk management Northland Power Investor Day | September 2018 36 Finance
Slide 38: Continued growth in financial results since 2014
Continued growth in financial results since 2014 Adjusted EBITDA Free Cash Flow per Growth Share Growth Growth 110% Growth 30% 1,000 1.50 800 1.20 600 0.90 400 0.60 200 0.30 - - 2014 2015 2016 2017 2014 2015 2016 2017 Northland Power Investor Day | September 2018 37 Finance
Slide 39: Shareholder value is underpinned by strong financial management
Shareholder value is underpinned by strong financial management Snapshot 2018 • Increased monthly dividend to $0.10/sh (equivalent to $1.20/sh annually) Dividend Policy • Policy reviewed periodically • Gross payout ratio expected to be well below 100% in 2018 • Adjusted EBITDA $860M-$930M Financial
Slide 40: Strong access to capital to fund our growth strategy
Strong access to capital to fund our growth strategy Generated Cash Flows • Increasing annual operating cash flows • Dividend Reinvestment Program • Approximately $1B in deductible tax attributes Corporate Credit Facility • Increased corporate credit facility • Further support development and M&A op
Slide 41: Prudent use of leverage
Prudent use of leverage • Northland remains investment grade (S&P BBB Stable) • Strong S&P FFO1-to-Debt, well above minimum threshold • Healthy corporate debt level relative to IPP industry • Primarily use non-recourse project debt Corporate Debt Project Debt $0.4B utilized $6.9B drawn Corporate Cre
Slide 42: Project finance is a cornerstone of our capital plan
Project finance is a cornerstone of our capital plan • Ideal fit with Northland’s risk management mindset • Attractive leverage and low cost • Strong long term relationships with leading lenders • No cross-collateralization of project debt Approx. $10 billion of successful project financings / restr
Slide 43: Business Plan provides for significant Adjusted EBITDA growth
Business Plan provides for significant Adjusted EBITDA growth Visible Growth Business Plan Deutsche Bucht 2020 Hai Long 2026 Additional Growth through ~60% 2026 ~30% Growth1 $860- Growth1 930M 2018 Forecast 2020 Forecast 2026 Forecast 1. The growth % is based on 2018E Adjusted EBITDA The above graph
Slide 44: We remain disciplined and well-positioned
We remain disciplined and well-positioned • Robust financial results and continued growth through 2026 • Strong access to capital to fund growth • Continued prudent use of balance sheet • Proactive risk management throughout the organization Northland Power Investor Day | September 2018 43 Finance
Slide 45: Wrap Up
Wrap Welcome Up Mike Speaker Crawley Name / Title Northland Power Investor Day | September 2018 44 Wrap Up
Slide 46: We provide sector leading total shareholder return
We provide sector leading total shareholder return • Stability and global growth • Prudent financial and risk management • Diverse business plan to facilitate growth • Strong access to capital • Deliver projects on time and on budget Northland Power Investor Day | September 2018 45 Wrap Up
Slide 47: Forward-looking statements disclaimer
Forward-looking statements disclaimer This written and accompanying oral presentation contains certain forward-looking statements which are provided for the purpose of presenting information about management’s current expectations and plans. Readers are cautioned that such statements may not be appr
Slide 48: Investor relations contacts
Investor relations contacts Dhiraj Shangari Manager, Corporate Finance 647.288.5566 Barb Bokla Manager, Investor Relations 647.288.1438 i n v e s t o r r e l a t i o n s @ n o r t h l a n d p o w e r. c o m n o r t h l a n d p o w e r. c o m Northland Power Investor Day | September 2018 47