Northland Power's Second Quarter Results -- Waiting for Q4

 On August 7 Northland Power released it's second quarter results and there was little growth over Q2 2018.That is because Northland's two big projects are not yet completed but there is some good news.There is a rainbow with a pot of  gold behind this story. Firstly all Northland Power's financial and performance 

indicators are ahead of Q2 in 2018.But more importantly NPI is nearing completion on it's North Sea wind farm called Deutsche Bucht.And it has started construction on it's first  solar project in Mexico called La Lucha;Northland says there will be others  to follow in Mexico.Lastly it is developing sub projects for it's offshore Taiwan wind farms and will be ready to execute power purchase agreements in late 2019. These matters were discussed in an earlier Workathon blog dated February,14,2019 

Second Quarter Highlights

Most financial indicators were up in Q2 but only slightly so.Revenues were ahead by 2% over Q2 in 2018.While adjusted EBITDA was up by 6%.Lastly free cash flow per share decreased by 5% -- from $.21 to $.20 per share.And net income increased by 10% to $76 million.NPI also adds that La Lucha has started construction and will be finished in the second half of 2020.In addition, 25 of 33 turbines have been installed in the North Sea and DeBu has generated it's first KWH of pre-completion revenue already.Perhaps there will be  a substantial amount of pre- completion North Sea off shore revenue by September 30.

                     Totals for the 6 months were a little better as revenues were up to  $842 million.While net income moved to $280 million from $245 million in 2018.And adjusted EBITDA was ahead by 3% over 2018 to $488 million.Northland says that this is on track to hit

 EBITDA of $1200-$1300 million for 2019. 

Good Growth for last 4 years 

Northland showed only modest growth this quarter.And will have only little increase in Q3.Investors will have to wait until Q4 for their reward.But investors have been rewarded well over the last four years.Revenues have doubled from $728 million to$1555 million in 2018.Operating income almost tripled as it went from $383 million to $1134 million.In addition, net income showed tremenduous gains as it went from $27 million to $405 million in 2018.True, the dividend only increased slightly over the four year period.But Northland Power has made some large and very profitable investments in the North Sea.   

Comparison to Emera 

 This blog considers Emera one of,if not the best run,and most stable Canadian utilities.At first glance these two utilities seem like David and Goliath.Emera has certainly been around for longer and has grown it's dividend quite well but Northland Power has made tremenduous gains recently.In 2018 NPI's revenues were only about 25% of Emera revenues  but at the same time they made up almost 55% of Emera net income.This with two big projects schedule to finish by Q2 of 2020 and one of these in Q4 2019.Northland constructs quite large projects (Deutsche Bucht is a $1.4 billion project).So this blog sees that Northland's net income may be 60% of Emera net income by Q2 of 2020.Emera is trading at $56 to $58 per share so why shouldn't Northland trade at 60%  of this value or at least $30 per share.    https://www.brookfield.com/https://www.omers.com/