TORONTO, ON–(Marketwired – May 11, 2016) –  Polaris Infrastructure Inc. (TSX: PIF) (“Polaris Infrastructure” or the “Company”), a Toronto-based company engaged in the operation, acquisition and development of renewable energy projects in Latin America, is pleased to report its financial and operating results for the quarter ended March 31, 2016. This earnings release should be read in conjunction with Polaris Infrastructure’s Financial Statements and Management’s Discussion and Analysis (“MD&A”), which are available on the Company’s website at www.polarisinfrastructure.com and have been posted on SEDAR at www.sedar.com. The dollar figures below are denominated in US Dollars unless noted otherwise.

HIGHLIGHTS

San Jacinto-Tizate Project Highlights

• Continued stability with respect to power generation and revenue: The San Jacinto-Tizate Power Plant (the “San Jacinto project”) generated 105,599 MWh (net) (an average of 48.4 MW (net)), resulting in revenue of $12.6 million for the quarter ended March 31, 2016, versus revenue of $12.3 million on generation of 106,045 MWh (net) (an average of 48.8 MW (net)) in the prior year period.
• Record-high level of Adjusted EBITDA: The Company generated Adjusted EBITDA (a non-GAAP measure) of $10.4 million in the first quarter of 2016, a 9.5% increase from the same period in 2015, driven by increased San Jacinto project revenues combined with a reduction in general and administrative expenses and other operating costs. See Use of Non-GAAP Measures section below for reconciliation of Adjusted EBITDA to Total loss and comprehensive loss.
• Progress continues with 2015/2016 Drilling Program: The first new production well, SJ 6-3, is in the midst of thermal recovery and will be connected to the plant in the third quarter of 2016. We are confident that SJ 6-3 is a commercial well and will provide specific guidance as to estimated additional steam flows and hence MW contribution once production testing is complete. Drilling of the second new production well, SJ 14-1, was completed in late April 2016, and preliminary results are anticipated in June 2016. The first of four injection well workovers has been completed, with the balance to occur in May and June, 2016, at which point we will begin drilling SJ 9-4, our third new production well. A more detailed discussion of the 2015/2016 drilling program can be found in our MD&A.

Corporate Highlights

• Initial dividend: The Board of Directors of Polaris Infrastructure remains committed to the dividend policy announced in March 2016, namely a payout ratio of 40-60% of cash flow available for distribution. The previously declared first-ever dividend, a $0.10 quarterly dividend per outstanding common share, will be paid on May 30, 2016 to shareholders of record at the close of business on May 24, 2016. Polaris Infrastructure has designated all dividends paid by the Company as “eligible dividends” within the meaning of the Income Tax Act (Canada) and all provisions of provincial laws applicable to eligible dividends.
• Cost reductions: Management has successfully reduced corporate general and administrative expenses as well as other operating costs (associated with non-strategic North American properties) by approximately $1.1 million on an annualized basis, with additional savings anticipated. Specifically, the Company was successful in renewing insurance premiums with approximately a 30% reduction in premiums versus 2015.

FINANCIAL OVERVIEW

The financial results of Polaris Infrastructure for the three months ended March 31, 2016 and 2015 are summarized below:

For the three months ended March 31, 2016, the Company reported revenue of $12.6 million and Adjusted EBITDA of $10.4 million, compared to revenue of $12.3 million and Adjusted EBITDA of $9.5 million, for the same period in 2015. The increase in revenue resulted from the 3% annual tariff increase more than offsetting a minor decrease in power generation at the San Jacinto project. The increase in Adjusted EBITDA reflects continued cost control efforts, both at the Toronto-based head office as well as San Jacinto plant operations. See Use of Non-GAAP Measures section below for reconciliation of Adjusted EBITDA to Total loss and comprehensive loss.

For the quarter ended March 31, 2016, the Company had net operating cash inflows of $3.1 million, net investing cash outflows of $6.4 million and net financing cash outflows of $2.1 million. The Company expended $6.3 million with respect to the 2015/2016 San Jacinto drilling program. At March 31, 2016, the Company had cash of $56.1 million, of which $25.9 million was held for current use in the San Jacinto project.

“We are pleased with the operating results of the first quarter of 2016, as they demonstrate the continued ability of the existing plant and steamfield at the San Jacinto project to deliver strong, stable power generation,” said Marc Murnaghan, Chief Executive Officer of Polaris Infrastructure. “Combined with our significant efforts on overhead cost reduction, we are very pleased to report record level Adjusted EBITDA for Polaris Infrastructure of $10.4 million in the first quarter of 2016. Further, although slower than we would have liked, progress continues with respect to the San Jacinto drilling campaign and we remain optimistic that our production capacity will be enhanced as a result. Alongside our first quarterly dividend, to be paid on May 30, 2016, it is an exciting time for our Company, and we remain committed to delivering strong returns to our shareholders.”

About Polaris Infrastructure

Polaris Infrastructure is a Toronto-based company engaged in the operation, acquisition and development of renewable energy projects in Latin America. Currently, the Company operates a 72MW geothermal project located in Nicaragua.

USE OF NON-GAAP MEASURES

Certain measures in this document do not have any standardized meaning as prescribed by International Financial Reporting Standards (“IFRS”) and, therefore, are not considered generally accepted accounting principles (“GAAP”) measures. Where non-GAAP measures or terms are used, definitions are provided. In this document and in the Company’s consolidated financial statements, unless otherwise noted, all financial data is prepared in accordance with IFRS.

EBITDA is a non-GAAP metric used by many investors to compare companies on the basis of ability to generate cash from operations. The Company uses Adjusted EBITDA to assess its operating performance without the effects of (as applicable): current and deferred tax expense, finance costs, interest income, other gains and losses, impairment loss, depreciation and amortization of plant assets, share-based compensation and other non-recurring items. The Company adjusts for these factors as they may be non-cash, unusual in nature and are not factors used by management for evaluating the performance of the Company. The Company believes the presentation of this measure will enhance an investor’s understanding of its operating performance. Adjusted EBITDA is not intended to be representative of cash provided by operating activities or results of operations determined in accordance with GAAP. The table below reconciles between Adjusted EBITDA and Net loss and comprehensive loss, calculated in accordance with IFRS.

Cautionary Statements

This news release contains certain “forward-looking information” which may include, but is not limited to, statements with respect to future events or future performance, management’s expectations regarding the Company’s growth, results of operations, estimated future revenue, requirements for additional capital, revenue and production costs, future demand for and prices of electricity, business prospects and opportunities. In addition, statements relating to estimates of recoverable geothermal energy “reserves” or “resources” or energy generation are forward-looking information, as they involve implied assessment, based on certain estimates and assumptions, that the geothermal resources and reserves described can be profitably produced in the future. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “predicts”, “intends”, “targets”, “aims”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. A number of known and unknown risks, uncertainties and other factors may cause the actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current geothermal energy production, development and/or exploration activities and the accuracy of probability simulations prepared to predict prospective geothermal resources; changes in project parameters as plans continue to be refined; possible variations of production rates; failure of plant, equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the geothermal industry; political instability or insurrection or war; labor force availability and turnover; delays in obtaining governmental approvals or in the completion of development or construction activities, or in the commencement of operations; the ability of the Company to continue as a going concern and general economic conditions, as well as those factors discussed in the section entitled “Risk Factors” in the Company’s Annual Information Form. These factors should be considered carefully and readers of this news release should not place undue reliance on forward-looking information.

Although the forward-looking information contained in this news release is based upon what management believes to be reasonable assumptions, there can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The information in this news release, including such forward-looking information, is made as of the date of this news release and, other than as required by applicable securities laws, Polaris Infrastructure assumes no obligation to update or revise such information to reflect new events or circumstances.

Investor Relations
Polaris Infrastructure Inc.
Phone: +1 416-849-2587
Email: [email protected]