May 8, 2009 - Financial releases
Montreal, May 8, 2009 – Gaz Métro Limited Partnership (TSX: GZM.UN, Gaz Métro) ends the first six months of its 2009 fiscal year with adjusted net income of $190.8 million, or $1.58 per unit, which is $2.8 million, or $0.02 per unit, higher than the same period for the previous year. For the second quarter of the 2009 fiscal year, Gaz Métro reports adjusted net income of $119.6 million, or $0.99 per unit, which is down slightly by $1.0 million, or $0.01 per unit, from the adjusted net income for the second quarter of the previous fiscal year1.
Results were positively impacted by the National Energy Board’s (NEB) favourable decision on Trans Québec & Maritimes Pipeline Inc.’s (TQM) rate application, the contribution of the Vermont energy distribution activity and the improved profitability of the Energy Services segment.
“The most notable event in this second quarter was the NEB’s favourable decision on March 19 on TQM’s request for a new methodology for determining its return on capital and its transportation rates. This decision, which covers TQM’s 2007 and 2008 fiscal years and for which the favourable retroactive impact totalling $6.7 million has been included in Gaz Métro’s results, represents significant progress in Canadian regulatory thinking and re-establishes the criteria of a fair and reasonable rate of return for the energy infrastructure industry”, said Sophie Brochu, President and Chief Executive Officer.
“Even though the present recession had an impact on energy deliveries during the first six months of the current fiscal year, Gaz Métro’s financial performance was nevertheless solid, which highlights the benefits associated with the operational and geographic diversity of our activities”, added Sophie Brochu.
Net income from the Vermont energy distribution activity was up $3.0 million in the second quarter and $4.8 million for the first six months because of the strengthening of the U.S. dollar in relation to the Canadian dollar and the higher natural gas deliveries as a result of relatively colder temperatures than during the same periods the previous year.
This favourable contribution by the Vermont operations is offset by reductions of $6.5 million in the second quarter and $4.5 million in the first six months in the net income from the natural gas distribution activities in Quebec (Gaz Métro-QDA). Higher revenues as a result of the rate increases in various markets, which were completely offset by the decrease in normalized deliveries, were therefore unable to cover the increase in operating, maintenance and amortization expenses. The 9.0% decrease in Gaz Métro-QDA’s volumes in the second quarter of the present fiscal year is due to the impact of the economic situation, customers’ energy conservation initiatives, which Gaz Métro fosters, lighter consumption in the metallurgy and refining sectors as well as lower short-term interruptible service sales.
As a result, net income from the Energy Distribution segment, which includes Gaz Métro-QDA and the natural gas (Vermont Gas Systems, Inc. – VGS) and electricity (Green Mountain Power Corporation – GMP) distribution activities in Vermont, was $104.3 million for the second quarter of the 2009 fiscal year, $3.5 million lower than the second quarter of the 2008 fiscal year, and $171.1 million for the first six months of the current fiscal year, $0.3 million higher than the first six months of the previous fiscal year.
In the Transportation of natural gas segment, Gaz Métro’s net income was up $2.0 million for the second quarter and $0.9 million for the first six months of the present fiscal year on account of the recognition, in the second quarter, of the favourable retroactive impact of a $6.7 million rate adjustment the NEB allowed TQM on March 19 for its 2007 and 2008 fiscal years. In the second quarter of the 2008 fiscal year, Gaz Métro had recorded a non-recurring $5.3 million gain realized by Portland Natural Gas Transmission System (PNGTS) in connection with the partial settlement of the Calpine Corporation bankruptcy.
Adjusted net income for the Energy Services segment was $3.1 million for the second quarter of the 2009 fiscal year and $4.5 million for the first six months, which is respectively $0.4 million and
$1.9 million higher than the same periods for the previous fiscal year. The reasons for these gains are higher earnings of some subsidiaries of Gaz Métro Plus Limited Partnership, including Consulgaz Inc. and Climatisation et Chauffage Urbains de Montréal, s.e.c.
Gaz Métro inc., as the General Partner of Gaz Métro, today declared a distribution of $0.31 per unit, payable on July 2, 2009, to Partners of record at the close of business on June 15, 2009. Gaz Métro expects to maintain this $0.31 per unit distribution level for the remainder of the 2009 fiscal year.
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 $0.6 million for the second quarter of the 2009 fiscal year ($1.3 million unfavourable for the first six months of the 2009 fiscal year) and an unfavourable non-monetary adjustment of $0.5 million for the second quarter of the 2008 fiscal year ($1.7 million favourable for the first six months of the 2008 fiscal year), related to future income taxes.
2 Net of financing costs
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