Edmonton, Alberta – Capital Power Corporation (Capital Power, or the Company) (TSX: CPX) today released its financial results for the quarter ended March 31, 2013. Funds from operations were $103 million in the first quarter of 2013, down 11%, on a comparable basis, from $116 million in the first quarter of 2012. Cash flow per share for the quarter was $1.04 compared with $1.19 for the same quarter of the previous year. Net income attributable to shareholders in the first quarter of 2013 was $34 million, or $0.44 per share, compared with $40 million, or $0.66 per share, in the comparable period of 2012. Normalized earnings attributable to common shareholders in the first quarter of 2013, after adjusting for one-time items and fair value adjustments, were $25 million, or $0.36 per share, compared with $27 million, or $0.46 per share, in the first quarter of 2012.
“The strong operating performance of our facilities, with average plant availability of 94 per cent, was the highlight of the first quarter,” said Brian Vaasjo, President and CEO of Capital Power. “We were particularly pleased to achieve high availability in the 90 per cent range across the fleet, with the exception of the Tiverton facility, which had lower availability due to a planned outage.”
“Normalized earnings per share of $0.36 in the first quarter, which were modestly below Management’s expectations, have Capital Power on track to meet its annual financial targets including achieving normalized earnings per share of $1.20 to $1.40 per share,” said Mr. Vaasjo. “We saw a slight improvement in Alberta power prices in the first quarter, with spot prices averaging $65 per megawatt hour (MWh) compared to $60 per MWh for the same period last year. We realized a captured price of $69 per MWh in the first quarter, higher than spot prices but lower than the exceptional performance of our portfolio optimization team in the first quarter of 2012, when the captured price was $83 per MWh.”
“Capital Power’s Port Dover and Nanticoke wind project in Ontario is on track for completion in the fourth quarter of this year and will contribute to our financial performance this year,” added Mr. Vaasjo. The project will add 105 megawatts of wind generation to our fleet and provide contracted cash flows from its 20-year power purchase arrangement with the Ontario Power Authority.”
|Operational and Financial Highlights(1) (unaudited)||Three months ended March 31 |
|(millions of dollars except per share and operational amounts)||2013||2012|
|Electricity generation (excluding acquired Sundance PPA) (GWh)||4,142||4,222|
|Generation plant availability (excluding acquired Sundance PPA) (%)||94%||97%|
|Revenues and other income||$365||$376|
|Net income attributable to shareholders||$34||$40|
|Basic earnings per share||$0.44||$0.66|
|Diluted earnings per share||$0.44||$0.64|
|Dividends declared per common share||$0.315||$0.315|
|Normalized earnings attributable to common shareholders(2)||$25||$27|
|Normalized earnings per share(2)||$0.36||$0.46|
|Funds from operations(2)||$103||$116|
|Cash flow per share(2)||$1.04||$1.19|
|Discretionary cash flow (2)||$52||$67|
(1) The operational and financial highlights in this press release should be read in conjunction with Management’s Discussion and Analysis and the unaudited Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2013.
(2) Earnings before finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange losses, and gains on disposals (adjusted EBITDA), funds from operations, cash flow per share, discretionary cash flow, normalized earnings attributable to common shareholders, and normalized earnings per share are non-GAAP financial measures and do not have standardized meanings under GAAP and are, therefore, unlikely to be comparable to similar measures used by other enterprises. See Non-GAAP Financial Measures. Reconciliations of these non-GAAP financial measures to net income attributable to shareholders and net cash flows from operating activities are included in the Company’s Management’s Discussion and Analysis dated April 25, 2013, which is available under the Company’s profile on SEDAR atwww.SEDAR.com.
$200 milion offering of 4.50% Cumulative Rate Reset Preference Shares
On March 14, 2013, Capital Power Corporation issued 8 million Cumulative Rate Reset Preference Shares, Series 5 (Series 5 Shares) at $25 per share for aggregate gross proceeds of $200 million on a bought deal basis with a syndicate of underwriters.
The Series 5 Shares will pay fixed cumulative preferential dividends of $1.125 per share per annum, yielding 4.50% per annum, payable on the last business day of March, June, September and December each year, as and when declared by the Board of Directors of Capital Power Corporation, for the initial period ending June 30, 2018. The Series 5 Shares are subject to specified redemption, conversion and reset rights.
Standard & Poor’s (a division of the McGraw Hill Companies, Inc.) (S&P) has assigned a rating of P-3 and DBRS Limited (DBRS) has assigned a rating of Pfd-3 (low) for these Series 5 Shares.
Purchase of interest in Shepard Energy Centre
The Company has entered into a series of agreements with ENMAX Corporation (ENMAX) to purchase a 50% interest in the 800 MW natural-gas-fuelled Shepard Energy Centre (Shepard) located on the eastern limits of the City of Calgary. Construction is scheduled for completion in the first quarter of 2015. On February 28, 2013, the purchase of the first tranche of the Company’s interest in Shepard closed. Upon close of this transaction, the Company paid $237 million and acquired a 25% interest in Shepard. The total amount incurred by the Company to the date of close was $287 million compared with the total anticipated capital cost of $860 million. The second tranche, expected to close in the first quarter of 2014, will result in the Company’s acquisition of an additional 25% interest in Shepard bringing its total ownership interest to 50%. Subsequent to the close of the first tranche, and prior to the close of the second tranche, all decisions related to Shepard will require unanimous approval by the Company and ENMAX. As a result, the Company jointly controls Shepard with ENMAX upon close of the first tranche. Based on the terms of the Shepard agreements, the Company will account for the Shepard joint arrangement, under the new accounting standard for joint arrangements, as a joint operation.
Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on April 29, 2013 at 11:00 AM (ET) to discuss first quarter results. The conference call dial-in numbers are:
(604) 681-8564 (Vancouver)
(403) 532-5601 (Calgary)
(416) 623-0333 (Toronto)
(514) 687-4017 (Montreal)
(855) 353-9183 (toll-free from Canada and USA)
Participant access code for the call: 21543#
A replay of the conference call will be available following the call at: (855) 201-2300 (toll-free) and entering conference reference number 956204# followed by participant code 21543#. The replay will be available until midnight on July 29, 2013.
Interested parties may also access the live webcast on the Company’s website at www.capitalpower.com with an archive of the webcast available following the conference call.
Non-GAAP Financial Measures
The Company uses (i) adjusted EBITDA, (ii) funds from operations, (iii) cash flow per share, (iv) discretionary cash flow, (v) normalized earnings attributable to common shareholders, and (vi) normalized earnings per share as financial performance measures. These terms are not defined financial measures according to GAAP and do not have standardized meanings prescribed by GAAP, and are, therefore, unlikely to be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to gross income, net income, net income attributable of Shareholders of the Company, net cash flows from operating activities or other measures of financial performance calculated in accordance with GAAP. Rather, these measures are provided to complement GAAP measures in the analysis of the Company’s results of operations from management’s perspective. Reconciliations of adjusted EBITDA to net income, funds from operations to net cash flows from operating activities and normalized earnings attributable to common shareholders to net income attributable to common shareholders are contained in the Company’s Management’s Discussion and Analysis dated April 25, 2013 for the three months ended March 31, 2013 which is available under the Company’s profile on SEDAR at www.SEDAR.com.
Forward-looking information or statements included in this press release are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.
Material forward-looking information in this press release includes information with respect to (i) expectations regarding future earnings; and (ii) expectations regarding the timing of, funding of, and costs for development projects and acquisitions.
These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity and other energy prices, (ii) performance, (iii) business prospects and opportunities including expected growth and capital projects, (iv) status and impact of policy, legislation and regulation, and (v) effective tax rates.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity prices in markets in which the Company operates, (ii) changes in commodity prices in markets in which the Company operates and use of derivatives, (iii) regulatory and political environments including changes to environmental, financial reporting and tax legislation, (iv) power plant availability and performance including maintenance expenditures, (v) ability to fund current and future capital and working capital needs, (vi) acquisitions and developments including timing and costs of regulatory approvals and construction, (vii) changes in market prices and availability of fuel, and (vii) changes in general economic and competitive conditions. See Risks and Risk Management in the Company’s December 31, 2012 annual Management’s Discussion and Analysis for further discussion of these and other risks.