Marc Jasmin - Director, Investor Relations Patrick Lemaire - President and Chief Executive Officer Jean-François Thibodeau - Vice President and Chief Financial Officer Guy D'aoust - Vice President, Finance

Rupert Mayer - National Bank Financial Sean Steuart - TD Securities Nelson Ng - RBC Capital Markets Ben Pham - BMO Bryan Fast - Raymond James Jeremy Rosenfield - Industrielle Alliance

[Foreign Language] Good morning. My name is Jessa and I will be your conference operator today. At this time, I would like to welcome everyone to the Boralex Inc. First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Marc Jasmin, Director, Investor Relations, you may begin your conference.

Thank you, operator. Good morning, ladies and gentlemen. Welcome to the Boralex First Quarter Results conference call. Joining me today are Mr. Patrick Lemaire, President and CEO; Mr. Jean-François Thibodeau, Vice President and CFO, Mr. Guy D'aoust, Vice President Finance and [indiscernible] Corporate Controller. Mr. Lemaire will begin with his comments, and afterwards Mr. Thibodeau will carry on with some financial highlights. During this call, we will discuss historical as well as forward-looking matters. When we talk about the future, there are a variety of risk factors that have been listed in our different filings with securities regulators, which can materially change our actual results. These documents are all available for consultation at sedar.com. In our webcast, the disclosed results are presented both under IFRS and on a proportionate consolidation basis. The particularities of proportionate consolidation have been explained previously, as well as the reason why we use it. The press release, the MD&A, the consolidated financial statements and a copy of today’s presentation are all posted on the Boralex website at boralex.com. If you wish to receive a copy of either of these documents, please do not hesitate communicating with us. Finally, take note that we will take questions only from sell-side financial analysts, who currently have an active coverage on Boralex. Also, given our Annual General Meeting will be held this morning at 11 am, we will take the last question of this call at 9:45 sharp. Our AGM is held at the Beverly Webster Rolph room of the Musée d’art contemporain located at 185 Ste-Catherine West in Montréal. All are welcome to attend. Mr. Lemaire will now begin with his comments. Patrick?

Thank you, Marc. Good morning, everyone. For the first quarter, Boralex reports its best ever quarterly production revenues from energy sales and EBITDA that were driven higher by the contribution of assets, which were either acquired or commissioned during the last 12 months, which more than compensated for the less favorable wind condition in France and an unfavorable evolution of the euro. Over and above reaching these new highs, we continue growing rapidly while creating shareholders value as we completed the largest acquisition of our history, namely the 230 megawatt Niagara Region Wind Farm project representing an enterprise value of over $1 billion. This transaction significantly enhance Boralex profile as it increase capacity by more than 20% while providing a strong base of long-term cash flows. As part of the financing of this accretive transaction, we issued 10.4 million new shares, which increase the total shares outstanding by 16% to 75.8 million. As a consequence of this improved liquidity and float size, we’ve achieved in March another important milestone as we got included in the Standard & Poor's TSX Composite Index, one of the most important benchmark for a Canadian institutional portfolio manager. We are proud of this achievement, which will surely draw the interest of additional shareholders going forward. As can be seen on Slide 5, over and above the Niagara acquisition, we recently added other projects to our growth plan. In fact, I confirm today the addition of another 110 megawatt of projects with this list including 79 megawatt of greenfield French wind projects set to be commissioned in 2018. These projects namely the Côteaux du Blaiseron, Hauts de Combles and Inter Deux Bos projects will all benefit from 15 years contracts at fixed prices. Over and above these greenfield projects we’ve acquired during the quarter, a majority stake in the Otter Creek wind project set be commissioned in 2019. Accordingly, we now consider in our growth plan 100% of the project or 50 megawatt compared to 19 megawatt previously. Considering these announcement and other projects expected to be announced in the future, I reiterate our 2020 year-end guidance of 2,000 megawatt, which represents a 10% CAGR from where we stand today. I will now turn the conference over to our CFO, Jean-François Thibodeau, to further discuss our results and review our operation and financial situation. I will be back later for the closing remarks and the question period. Jean-François? Jean-François Thibodeau: Thank you, Patrick. Good morning, everyone. For the first quarter of 2017 fiscal year, in comparison with 2016 on a proportionate consolidation basis, as seen on the right side of Slide 8, Boralex reports a 9% decrease in production, a 11% increase in revenues, and a 8% increase in EBITDA. However, cash flows from operation were relatively stable. Accordingly, revenues came in at $136 million and EBITDA stood at $97 million representing margins of 72%. As for cash flows from operations, they totaled $69 million, compared with $70 million last year. Basic net earnings attributable to Boralex shareholders stands at $16 million or $0.22 per share, which compares to $21 million or $0.32 per share in 2016. The difference in net earnings between both years is mostly explained by the fact that the increase in EBITDA did not compensate for higher depreciation and financial expenses. As you can see on Slide 9, with the quarterly comparative EBITDA by sector, despite weaker wind conditions in France, especially early in the quarter, wind and thermal were better, hydro and solar were stable, while corporate sector was slightly lower. I will later provide further details on individual segments. Moving forward to Slide 10, with the review of the quarterly $7 million positive EBITDA variance. The commissioning and acquisition of new assets provided an additional $20 million contribution. One of this amount, $18 million came from the Niagara site following the acquisition close on January 18. However, the positive impact of new assets was offset by lower volumes totaling $10 million, which is explained almost entirely by lower French wind regimes. I would like to remind you that we have exceptionally high winds last year in France and that we were 20% above our expectations in the first quarter of 2016. Finally, the unfavorable year-over-year evolution of the euro explains another $3 million negative variance. Moving to Slide 11, let’s look at the wind contribution. Taking into account the newly acquired or commissioned assets, wind production increased by 10%. In Canada, it was up by 42%, while in France it decreased by 17%. On a comparable basis, excluding the contribution of commissioned sites, production decreased by 11%. In France, it was 21% lower, while it was stable in Canada. If we look at it from the perspective of wind factors, expectations were for a 40% capacity factor in Canada and a 31% factor in France for a blended 36%. In reality, the overall blended capacity factor came in at 34% considering Canada achieved a 38% factor and France achieved a 29% factor. The contribution of the newly commissioned sites had a favorable impact on revenues and EBITDA of $25 million and $20 million respectively. As explained earlier, these numbers were mostly driven by the contribution of the Niagara site. Besides its positive contribution, we however had an unanticipated surprise at the Niagara site. As upon a request from [indiscernible] we were imposed curtailment to perform maintenance work on the transmission line. This translated into lost production during the quarter, which impacted EBITDA by some $2 million. This maintenance work continued till April and we estimate the EBITDA impact at around $6 million for the second quarter. However, in order to better manage this risk in the future, we intent to put in place a contingency plan and are also reviewing our contractual rights to see if we can recuperate this amount or some [indiscernible]. To conclude the sector review, as outlined earlier, the fluctuation of the euro and a negative year-over-year impact of $4 million on revenues and $3 million on EBITDA, in view of the above mentioned items, revenues increased by 11% to $105 million while EBITDA increased by 8% from $80 million to $86 million representing margins of 83%. Moving on to Hydro on slide 12, this quarter’s overall production was 1% higher compared to last year. It was 6% higher in Canada and 1% lower in the U.S. In comparison with historical averages, blended production was 12% higher, 11% higher in Canada and 12% higher in the U.S. As a result, quarterly revenues and EBITDA were stable at $17 million and $13 million respectively. As for margins, we stood at 77% slightly above of what was achieved last year. We have no specific comments on the thermal and solar sectors for which we provided the details in the appendix section – details that you have on production, revenue and EBITDA. As you can see, consider together they generated $7 million of EBITDA compared to $5 million last year, this being the result of the increased production. I will now comment on the corporate sector on slide 13. Development expenses totaled $3 million, up slightly from last year. Administrative expenses within the corporate sector stood at $5 million compared with $4 million in Q1 2016 reflecting the company’s growth. Finally, other expenses decreased from $2 million to $1 million offsetting the increase in administrative expense. Considering all of the above, corporate EBITDA came in at negative $9 million in line with expectations. I will now discuss cash flow generation and our financial position as seen on slides 14 and 15. Quarterly cash flow from operations before changes in non-cash items came in at $69 million down from $71 million in 2016. Despite better EBITDA, cash flows remain relatively stable as a result of the increase in interest paid. During the quarter, we spent a total amount of $121 million on investing activities. To be more precise, we invested $230 million for the Niagara site and $56 million on property, plant and equipment. These investments were offset by $166 million – transfer from reserve cash mainly following the issuance of the subscription receipts in December. Financing activities provided a minimum of $60 million. More specifically, we drew $82 million on the revolver, $55 million on new project related debt, and reimbursed $57 million of such existing debt. Over and above, we received $1 million following the exercise of stock options, paid $11 million in dividends to our shareholders or $0.15 per share considering the recent increase of 7.1%. Finally, we incurred $4 million of expenses relating to our most recent equity rates. This being said, cash stood at $108 million at the end of the year in addition to $44 million in restricted cash. As of today, our total cash flexibility at the corporate level stands at around $100 million considering covenants, financial instruments, mark-to-market and outstanding letters of credit. For the remainder of the year, 312 megawatt of projects identified in our growth path on slide 5, we expect to spend another $375 million in property, plant and equipment. These investments will be financed by additional debt drawdown of approximately $350 million, an equity injection by Boralex of approximately $20 million and an estimated $5 million from our minority shareholders. For the remainder of 2017, project debt reimbursement should amount to approximately $95 million. Now, a discussion on our payout ratio, for the last 12 month period, our ratio stands at 115% way outside of our target ratio of 40% to 60% of discretionary cash flows. This higher ratio is due to the soft result of the last 12 months mainly caused by weak wind condition in France during the last three quarters of 2016. Thank you for your attention. I will now turn the conference over to Patrick for a few closing remarks before the question period. Patrick?

To conclude I would like to mention that despite the slightly weaker than expected quarter, we continue reaching new highs in terms of production, revenues and EBITDA. Overall, we remain in a great position to provide our shareholders with a balanced mix of growth and the return on capital going forward. With a strong cash flow generation profile, a solid and flexible capital structure, we clearly identified an extending growth pattern. We have everything we need to continue creating long-term sustainable value for our shareholders. Thank you for your attention. Operator, we'll now take question from the participants.

[Operator Instructions] Your first question comes from Rupert Mayer from National Bank Financial. Please go ahead.

Good morning. This is Ryan filling in for Rupert.

Good morning.

My first question here is I’m just wondering, how do you think the results of the French election will actually impact your business, whether its Macron winning or Le Pen winning.

From public knowledge I’m going to say that it was during the election, if Macron is the new President over there, there won’t be much changes and I think he even intend to push more for renewable, and Le Pen we will see, doesn’t seem for what she said publicly that she would be favorable. But I compare this a little bit like in the States when Trump was saying he is going to shutdown all renewable, he hasn’t done much because there is too much people that work on this type of business. So that’s why, its election time, so people are saying many things and when time comes to execute we will see them. But from what we know actually all the surveys put Macron on top, so all this going to stay likely. Jean-François Thibodeau: Let’s not forget the year that the fundamentals of the renewable business have been improving so much over the last few years. We are not talking a subsidized business anymore. We are talking a grid parity business and even lower, so fundamentally economic sense should prevail over the next few years but that’s my view.

We will know shortly. There is only a few days left. Jean-François Thibodeau: Yes.

Okay, perfect. Thank you for the color. And my next question here is I think on the last conference call you were talking about improving the economics of some of the projects in the construction pipeline. I’m just wondering if the economics have improved and if so, are those the same projects that have been moved to the growth plan?

To recall if we are talking about improving the economics, I think it’s for future RFPs that we need to improve let’s say the economies of our projects. For the actual projects, what was announced, the three projects that we just announced that we’re going to realize next year to be commissioned by the end of 2018, the returns are the same, the cost of those projects are similar where it was before and even lower. And like I was saying the returns on these projects in France are nothing lined on what we hear in the market today. It’s in line with the high returns that Boralex has been providing its shareholders since years, so it’s low to mid-teens because I cannot recall exactly for the reason why we – it was probably for Denmark, the offshore business over there, the price are going lower, even lower for people that followed the business. This quarter, we’ve heard that Dong won an RFP at 44 euros per megawatt. So for sure seeing this, costs are going down on turbines, on BOP contracts so we will follow that closely.

Okay, thanks. That’s great. I’ll get back in the queue here.

Okay.

Your next question comes from Sean Steuart of TD Securities. Please go ahead.

Thanks. Good morning everyone. Wondering if you can give us any update on the 200 megawatts wind project in Quebec with the Innu Group. Any updates you can give us on advancing that project along?

Not really, it’s moving along and we are doing the environmental survey and the location of the turbine, but it’s – I’m going to see little longer process than that we thought to achieve that. So as soon as we know more, we’ll inform our shareholders and people following us but that’s about – so we are still moving ahead on let’s say the formalities for that project but we still have discussion with the Innu and also with the government and Hydro-Québec.

Thanks for that. And further to that, wind projects on the East Coast in the U.S. more detail on what you’re looking at for growth there? Whether it’s operating projects or development opportunities, any contacts you can provide there? Jean-François Thibodeau: Our initial focus is going to be on development project because that’s where we can get better return. But we could see the two at the same time, so acquiring a small portfolio of operating assets with the pipeline. So viewing the pipeline to development pipeline to generate better return for our shareholders because as we all know operating asset are very low return and we see acquisition being made in United States and even more than the States little bit everywhere.

Okay, thanks for that detail. That’s all I have for now.

Our next question comes from Nelson Ng of RBC Capital Markets. Please go ahead.

Okay, thanks. I was just looking at the Otter Creek, can I just confirm or clarify that your ownership interest increased to 64% and also do you have right to buy the rest of the project at a later stage? Jean-François Thibodeau: We confirm that we are at 64%. For the rights to buy anything, we’ll look at it in the future. But we cannot confirm that we will buy the rest of the project over the term but it’s always a possibility.

Okay. And then just on the development pipeline, the 79 megawatts of new projects identified in France, I think two of them were from the Ecotera portfolio. I guess over the next quarter or two, is it your expectation that identifying additional projects with the completion dates in France like potentially from the Ecotera portfolio and elsewhere?

We don’t want to confirm that every quarter. We will announce a few projects. But as we always said, in our pipeline we will announce overtime projects that get the full permitting and also interconnections. So, for sure I’m going to say, from our general guidelines that we say that we will do a good portion of our French pipeline, so that’s what I can say. So, yes, there will be, but to tell you, it’s going to be extra amount every quarter. I won’t stick my head up to that.

Okay, got it. And then just one last question before I get back in the queue. I think you re-contracted two facilities in Québec, the Beauport and Forestville facilities.

Yeah, yeah.

Was it on the same terms as the previous contract or did you have to reduce the power price a little bit?

You are referring to which contract? The previous…?

I think you had – I think in the commentary, you entered into two new…

Yeah, what you’re saying – yeah, I was trying to recall. [indiscernible] no, no, but the previous contract which is [indiscernible] that was – let’s say, that was done three years ago, I think. So, I’m going to say it’s in that range, but slightly lower.

Okay, got it. All right. Thanks. I will get back in the queue.

[Foreign Language] Ben Pham, BMO. Please go ahead.

Okay, thanks. Good morning. You had some commentary about the declining cost of wind power and we certainly are seeing that, but I’m just curious going forward though and looking at how that cost could trend overtime. Do you anticipate some of that to be reflected in lower returns for you guys over time?

It’s going to be challenging to maintain the same return as we did in the past because we saw – if we go back a few years, there were feed-in tariff in Ontario. So we could get high returns. There was a feed-in tariff in France, so we got predictable return. And once you go through RFPs you need to challenge – the challenge is to bid a low price to win. So, for sure, we will need to stretch our returns. Jean-François Thibodeau: We are not talking about stretching as people are calling or talking about with what we’ve seen in the market right now, but – our goal is still to maintain higher returns than the financial players and everyone. But as Patrick mentioned, it should be challenging, that’s why we are looking for niche projects also. It depends on the scheme [indiscernible]. France is still generating above average returns, let’s not forget that and we are in that position for a while.

Okay, great. And then commentary about your impact to the euro on your results, I think you mentioned $3 million, but did that impact cash at all, just wanted to confirm what that was relating to? Jean-François Thibodeau: No, it’s purely result oriented. In terms of cash flow, we have hedges in place for the – how can I say? – there is a residual cash that we bring from France, it’s already hedged and we are talking in north of 1.5, 1.4 something like that. So it’s not a cash, it’s just a translation impact on results.

Okay, great. Okay. Thanks for taking my questions.

[Operator Instructions] [Foreign Language] Bryan Fast, Raymond James. Please go ahead.

Yeah, thank you. Can you give us your updated view on the Scotland wind market and just if you see the potential there for new developments? In addition, can you give an update on how current developments in the country are going?

Okay. So, regarding Scotland, as we publicly announced when we did the acquisition, it was around 150 megawatts of different staged development project and we are finalizing. Actually there is 70 megawatts of that 150 megawatts that we are going to submit permitting and the process of permitting – Scottish process of permitting, which take a few months. So, we should know – I’m going to say, not know exactly how the – all the delays that can happen in a process in Scotland within, let’s say, a few months, five, six months from now, we should know where we stand on these two projects totaling again 70 megawatt. And after this, if we get all the permitting we need to either grow on the market – let’s say, on spot market or get PPAs with local consumers, which is possible over there in Scotland. So this is what is going to happen for that country. So, it’s still a new step for us and we are confident we will be able to finalize and do construction. We must not forget that Scotland has very high objectives on the renewable, so to increase its renewable content in its portfolio to be 100% by the next few years. So that’s why we have some confidence there. And the other part of your question is what?

Just – I think you provided pretty good picture there. That should be it for me. Thanks.

Okay.

[Foreign Language] Nelson NG, RBC Capital Markets. Please go ahead.

Great, thanks. I just have a quick follow-up. For Niagara wind, can you just talk a bit more about the provinces ability to curtail, like – you mentioned that you’re curtailed because of transmission maintenances, but if there is like oversupply in the grid or other reasons, are they allowed to curtail and do they need to compensate you for that?

Yeah, we have – in our contract, we could be curtailed and we have a penalty of 25 hours for the year. So, once this 25 hours for the year is over or has been – or we’ve been penalized by 25 hours, they are going to compensate for any losses of curtailment over and above that. But this is over [indiscernible] curtailment. When the grid is maxed out, they can shut us down. So – and this is the 25 hours. The curtailment that is happening now is something different. There’s some work being done on the transmission and the transformer station – substation, whatever of the – where we connect to the grid and this is where the work is being done. And that’s the reason why we’ve been curtailed to around 30 megawatts from our 230 megawatts capacity. So, for – like Jean-François mentioned earlier, a few days in March and most of April.

I think you might also be curtailed later in the year as well, did they not finish the work?

Yeah, but this – we are working to find a solution with them and for us that to be curtailed that low or even none. So it could involve a small investment from Boralex or subsidize an investment on the [indiscernible] for us to be able to operate on higher output. So, we are working with them on that. So at the next, let’s say, curtailment, if we can come up with agreements, we would or they would install equipment for us to be able to operate more for future work on the line, so – line or a substation.

Okay. Thanks a lot.

[Foreign Language] Jeremy Rosenfield, Industrielle Alliance. Please go ahead.

Thanks. Just a couple of questions to clarify. Just on the three new wind projects in France, the 79 megawatts, was that from the previously identified bucket of about 87 megawatts with contracts that you have talked about in the past?

Yeah, that was part of it.

Okay. And then, correct me if I’m wrong. There is still further about 235 or so megawatts that you kind of have contract for and you are looking for permitting, are you in the process of permitting right now? Is that right?

Yeah, it is right.

Okay. And then what’s the timeline or how long can you go through the permitting for those 235 megawatts before they have to either go into construction or go into servicing, are there deadlines basically for that – for those prospects?

Usually you have to build your site inside three years of the issuance of the permit. So once we have contract – when contract are confirmed the price and the permits, we have three years, that’s why we are very confident that a big chuck of that will be build before the end of 2020, which is inside our objectives. But to put the precise day when it will start, we are not there, but the goal is to build inside three years from the issuance of the permits.

Right. Okay. So, by 2020 at the latest?

Yeah. Jean-François Thibodeau: Yeah.

Okay. And then just one…

I’m not say that full 235 will be build. I’m saying that a big chunk of it will be build.

Right, right. I think previously you had mentioned that some of those may or may not get build depending on as it goes through the permitting process, et cetera and what the results are there.

Exactly.

Okay. Just want to turn quickly to Alberta specifically, can you just comment in terms of the request for expressions of interest that has gone through right now and now the request for qualification that were in, has everything progressed on that site in line so far with, I think, what your expectations are for where the market is going into RFP process overall?

Yeah, yeah, for sure, that we are submitting our partnership with the local developer over there to quality for that initial RFP and we will answer to the RFP when all the bells and whistle will be know because it’s not – there is not everything that is confirmed yet. So, but for sure we are aiming at this to be another, let’s say, growth platform talking about partnership and also a growth province for Boralex.

Okay, perfect. Thank you.

[Foreign Language] There are no further questions at this time. I turn the call back over to the presenters.

Thank you for your attention. A recording of the call is available until May 11 and feel free to join us to our AGM later this morning. Thank you.

[Foreign Language] This concludes today’s conference call. You may now disconnect.