polaris infrastructure inc. tsx : pif...jun 07, 2018 · project overview 9 72 mw capacity turbines...
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POLARIS INFRASTRUCTURE INC.TSX : PIF
JUNE 2018WWW.POLARISINFRASTRUCTURE.COM
IMPORTANT NOTICE
This Presentation includes general background information with respect Polaris
Infrastructure Inc. (“Polaris”) and does not purport to be complete. It has been
prepared solely for informational purposes and is not to be considered a solicitation or
an offer to buy or sell any securities and should not be treated as investment advice.
The information contained in this Presentation is confidential and the property of
Polaris. It is made available strictly for the purposes referred to above. This
Presentation must not be disclosed, copied, published, reproduced or distributed in
whole or in part at any time without the prior written consent of Polaris and, by
accepting this Presentation, you agree not to do so. You also agree to return any
written copy of this Presentation to Polaris at the request of Polaris.
1
POLARIS
INFRASTRUCTURE
OVERVIEW
SNAPSHOT
3
Own and operate San Jacinto Geothermal power plant in Nicaragua
PPA with national grid – contractual price per MWh, with annual
escalator, to 2029
Recapitalized in May 2015
“Fixed” balance sheet
New Management and Board
Cash flow positive; init iated US$0.10 quarterly dividend in Q2 2016;
currently paying U$0.15 quarterly dividend (50% growth in 2 years)
Strong organic cash flow growth expected in next 12-18 months
CAPITAL MARKETS SNAPSHOT
4
* Int raday as of June 7 , 2018
S y m b o l : P I F
Price* (C$):
C$15.44
Shares Outstanding (FD):
15.7 mm
Market Cap. (C$):
242 mm
Market Cap (US$):
187 mm
Cash On Hand –Mar 31 (US$):
35 mm
Debt – Mar 31 (US$):
168 mm
Enterprise Value (US$):
320 mm
Trailing EBITDA (US$):
~ 50 mm
EV/EBITDA:
~ 6.4x
Dividend (US$):
$0.60
Dividend Yield:5.0%
CONTINUED IMPROVEMENT IN
FINANCIAL METRICS
5
EXECUTION & DELIVERY
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EBITDA ↑Growth of $24M (67%)
Debt ↓Repaid $33.7M
Dividends ↑Paid out $17.9M
Growth at San Jacinto project…
Return to Shareholders…
Strengthening balance sheet
7
Abil i ty to raise
dividend based
on both growth
in cash f low
and/or payout
rat io
DIVIDEND GROWTH COMMITMENT
* Calculated using management's estimated sustaining capital expenditure; adjustedto reflect impact of downtime for turbine maintenance for Q2/17 and Q2/18
Short-term goal
of U$1.00/year
SAN JACINTO
GEOTHERMAL PLANT
PROJECT OVERVIEW
9
72 MW capacity turbines – both onl ine s ince January 2013
PPA in US$ for up to 72MW net, to 2029
US$126/MWh in 2018 with 3% per annum pr ice escalator for 5 years;
1 .5% per annum thereafter ( to 2029)
13 production wel ls with productive capacity of approximately:
550-600 tph of steam and
1,800-2,000 tph of hot brine.
Current steam can result in power capacity of approx. 68-72 MW
(net of ~5 MW internal consumption)
7 Injection wells re -inject the hot br ine into the reservoir to create
a “closed loop” – renewable energy in l i teral sense
Plant re-certif ied for CO 2 credits - ~250,000 tons per year avai lable
SAN JACINTO
DRILLING PROGRAM
2017/2018 DRILLING PROGRAM
Three new productions wells
SJ 4-2: ~1.5 MW
SJ 12-4: ~4 to 6 MW
SJ 12-5: ~ 8 to 12 MW
One new injection well
SJ 11-2
Selected infrastructure investments:
Dri l l ing pads
New separation stat ion
Well connection piping etc.
Total project budget ~$30MM
12
Pending
update….
IMPACT OF DRILLING INVESTMENT
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$22 mil l ion (46%)
increase in
Revenue
$24 mil l ion (147%)
increase in
Discret ionary
Cash Flow
* D i s c r e t i o n a r y C a s h F l o w = E B I T D A l e s s F i n a n c e c o s t s a n d S u s t a i n i n g c a p e x
FUTURE GROWTH
OPTIONS
FUTURE GROWTH OPTIONS
Acquisitions / Project Development
Continued San Jacinto project growth
Binary Unit
Carbon Credits
Develop Western Sector
Casita – San Cristobal Geothermal Field
Development Project
Expect World Bank funding ($40 -45 mil l ion)
Target approval Q3 2018
15
ACQUISITIONS/DEVELOPMENT
Grid in Central America is small/fragmented and has a
signif icant number of renewable projects
Numerous – 25-100 MW projects in the region
Large power companies and infrastructure funds not act ive
Owners are small companies and / or high net worth
individuals
Implication is that:
Good targets for acquisit ions without signif icant competit ion
Much higher IRR projects avai lable to develop (i .e. 12-18%
IRR vs. 8-12% in North America)
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BINARY UNIT
Separate generating unit – generates power from hot geothermal f lu ids (brine) before reinject ing
Low r isk means of generating addit ional power
No explorat ion risk
Low technical r isk
Competit ive nature of OEM market wi l l result in attract ive pricing
Design f inal ized and EPC quotes received
Total cost of approximately $30 mil l ion
Est imate addit ional 8 – 10 MW
Equates to approx. $6 – 8 mil l ion addit ional cash f low
Approx. 4-5 year payback
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NEAR TERM GROWTH IMPACT
18
Possible further
growth in 2019
based upon
investment in
binary unit or
strategic M&A
(without rais ing
capital)
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NICARAGUA OVERVIEW
Daniel Ortega President – elected in 2007
▪ Ortega won national election in November 2016
Highest growth rate in central America
“Left Leaning ” pol it ical ly but open economically
Polaris project is a showcase project for the country
One of the largest fore ign investments in country to date
Renewable energy
World Bank and other g lobal development banks as lenders
RESEARCH ANALYST COVERAGE
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* as of June 6, 2018
SAN JACINTO PHOTOS
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