Etrion Releases Second Quarter 2016 Results

Etrion Corporation (“Etrion” or the “Company”) (TSX: ETX) (OMX: ETX), a solar independent power producer, today released its condensed consolidated interim financial statements and related management’s discussion and analysis (“MD&A”) for the three and six months ended June 30, 2016.

Operational Highlights

· Construction: The Company is progressing on the construction of the 24.7 megawatts (“MW”) Shizukuishi project in northern Japan. The project is on budget and on schedule, with estimated connection to the electricity grid by September 2016. In addition, pre-construction activities started for the 9.5 MW Aomori project in northern Japan, with estimated connection to the electricity grid by July 2017.

· Development: Advanced the backlog of two projects in Japan with a total capacity of 66 MW. Management expects to reach financial close for these backlog projects within the next 6-9 months. The Company is advancing the development of additional projects in Japan with a combined capacity of 190 MW.

· Production: Produced approximately 64.9 million kilowatt-hours (“kWh”) of electricity during the three months ended June 30, 2016, (2015: 72.5 million kWh), from the Company’s 139 MW portfolio comprising 23 solar power plants (2015: 136 MW comprising 21 solar plants) in Italy, Chile and Japan. When broken down by country, the Company produced 35.4 million kWh (2015: 36.7 million kWh) in Italy, 26.1 million kWh (2015: 35.1 million kWh) in Chile and 3.4 million kWh (2015: 0.6 million kWh) in Japan.

Financial Highlights

· Revenue: Generated revenues of US$16.6 million (2015: US$17.1 million) and US$26.5 million (2015: US$27.4 million) during the three and six months ended June 30, 2016, respectively.

· EBITDA: Recognized earnings before interest, taxes, depreciation and amortization (“EBITDA”) of US$12.8 million (2015: US$9.2 million) and US$17.3 million (US$14.7 million) during the three and six months ended June 30, 2016, respectively.

· Net results: Generated a net income of US$1.4 million (2015: net loss of US$10.1 million) during the three months ended June 30, 2016, mainly due to positive performance of the solar power plant in Japan and one-time foreign exchange gains recognized during the period.

· Cash and Working Capital: Closed the three months ended June 30, 2016 with a cash balance of US$66.6 million (December 2015: US$52.5 million), of which US$9.6 million is unrestricted cash at parent level and positive working capital of US$37.5 million (December 2015: US$1.5 million).

· Financing Italy: completed the debt restructuring of the Italian subsidiary Helios ITA, SpA (“Helios ITA”). The Helios ITA restructuring completes the management initiative to renegotiate the non-recourse project loans of its entire portfolio of solar assets in Italy. The Helios ITA restructuring included the extension of the final maturity, optimization of the debt repayment schedule and improvements to cash distributions going forward. · Financing Japan: reached financial close for a new solar project in Japan, securing an approximately US$29 million non-recourse facility with Sumitomo Mitsui Trust Bank (“SuMi Trust”) to finance the construction of the 9.5 MW Aomori project.

Management Comments

Marco A. Northland, the Company’s Chief Executive Officer, commented, “Japan continues to be a terrific market for Etrion. We are on track to reach over 100 MW of projects operating and/or under construction within the next 12 months with an additional nearly 200 MW in different stages of development. Our partnership with Hitachi continues to strengthen; we are very well positioned in this market and believe that Japan will continue to provide the highest value creation for our shareholders. At this point, we will continue to focus our resources on Japan.

I am delighted with the significant operational and financial improvements achieved this year in Italy, which have further enhanced the value from these best in-class assets. We are continuing to pursue our efforts for the recovery of certain tax benefits as well as the reversal of the Feed-in Tariff (“FiT”) cut. In Chile, we have significantly reduced our commercial activities until the electricity markets improve.”

Results

During the three months ended June 30, 2016, Etrion reported a net income of US$1.4 million (earnings per share of US$0.007) compared to a net loss of US$10.1 million (loss per share of US$0.028) for the comparable period in 2015. These positive results in the second quarter of 2016 were primarily attributable to the positive performance of the solar power plant in Japan and also due to significant foreign exchange gains recognized during the period.

During the six months ended June 30, 2016, Etrion reported a net loss of US$7.1 million (loss per share of US$0.015) compared to a net loss of US$12.5 million (loss per share of US$0.032) for the comparable period in 2015. The net results in the first half of 2016 were adversely impacted by lower than expected electricity production and market prices in Chile and Italy but largely offset by the performance of the Japanese assets.