Northland Power -very busy but still on track

On November13,2014 Nothland Power released it's third quarter results and their key financial indicators are still growing.Northland intends to take a 60% interest in a 2.8 billion Euro capital cost project called Gemini in  the North Sea. $286 million was already raised in Q2 and more was raised in Q3.Now it announces that it is taking a 85% interest in another large project just offshore of Germany called Nordsee One,Two And Three.There is going to be construction starting in early 2015.These are two big projects and have already raised Northland's payout ratio from 63%  in 2013 to 82% in the present quarter.
 This aside their financial performance figures look good.There is a 13% increase in revenue from Q3 2013 and 11% increase in profits.There is also a 15% increase in adjusted EBITDA in Q3 2014 over Q3 2013.However there is a  10% decrease in quarterly cash flow as debt payments are kicking in for two solar projects-one is in North Battleford.Conversely the increase in revenues is largely due to these two new installations.In addition, free cash flow is reduced because of the newly started debt payments on the two new installations.
     New projects
  Adjusted EBITDA is up by 15% or by $11.1 million because of new projects that were started in the first nine months of 2013.There are four of them and all have been built on Canadian soil.Profit will likely even increase in Q4 from these new Canadian projects.In addition, more financing has  been arranged for the large Gemini project and costs incurred here.More will be incurred in Q4 but they will be offset by revenues from the new projects..Gemini will not be completed until 2016 and revenues will not likely come in until 2017.This will likely raise the payout ratio again in 2015.Northland Power(NPI) does have the liquidity to keep the dividend as it is.The payout ratio has been higher in the past temoroarily and NPI does intend to keep the dividend as it is.
    On track
   N orthland intends that there will be a continued increase of profit and EBITDA  coming in from their pipeline of new projects for the rest of the year.This will create an increase in EBITDA for the fourth quarter as well.Also some more capital will likely be raised for Gemini although construction will not start yet.Nevertheless NPI is on track to produce EBITDA in Q4 of about $100 million;this will bring annual EBITDA to $365 to $375 million.NPI will only say that it will meet it's guidance of $350 to $360 million for 2014 and $380 to $400 million for 2015.It will certainly meet guidance for 2014 fairly easily and that will create earnings per share of about $2.50 per share and a price/earnings ratio of less than 7. This should bring Northland Power's share price close to the $19 level by the end of Q4.