EDMONTON, Alberta – Capital Power Corporation (Capital Power, or the Company) (TSX: CPX) today released its results for the third quarter ended September 30, 2011. Normalized earnings attributable to common shareholders, after adjusting for one-time items and fair value adjustments was $21 million, or $0.43 per share, in the third quarter of 2011, compared with $14 million, or $0.64 per share, in the comparable period in 2010. Funds from operations, excluding non-controlling interests in Capital Power Income L.P. (CPILP), totaled $116 million in the third quarter of 2011, up 33% from $87 million in the third quarter of 2010. For the nine-month period ending September 30, 2011, normalized earnings attributable to common shareholders was $35 million, or $0.87 per share. Funds from operations excluding non-controlling interests in CPILP totaled $264 million compared with $199 million in the nine-month period ending September 30, 2010.
“Third quarter consolidated financial performance was in line with our expectations”, said Brian Vaasjo, President and CEO of Capital Power. “Alberta spot power prices averaged $95 per megawatt hour in the third quarter, which resulted in higher than anticipated margins for the Alberta commercial plants and portfolio optimization segment and higher availability incentive revenue for the Alberta contracted plants. However, this was offset by lower earnings contributions from our three New England plants due to lower than expected power prices in that region.”
“The operating performance of our plants was excellent in the third quarter”, added Mr. Vaasjo. “Average plant availability, excluding CPILP plants, was 97 per cent and electricity generation reached nearly 5,520 gigawatt hours. The quarter was highlighted by the commercial operation launch on September 1 of the 495 megawatt (MW) Keephills 3 generating plant with our joint partner TransAlta Corporation. Keephills 3 is the most technologically advanced coal-fired plant in Canada and it increases our generation portfolio to more than 1,700 megawatts in Alberta’s attractive power market. We also announced a limited partnership agreement for our K2 Wind Ontario project, a 270 MW wind power project, with Samsung Renewable Energy Inc. and Pattern Renewal Holdings Canada. The addition of K2 will increase Capital Power’s geographically diversified wind portfolio to approximately 525 megawatts.”
|Operational and Financial Highlights(1)(unaudited)||Three months ended September 30||Nine months ended September 30|
|(millions of dollars except per share and operational amounts)||2011||2010||2011||2010|
|Electricity generation (GWh)||5,515||3,635||13,467||10,351|
|Generation plant availability (excluding CPILP plants) (%)||97%||93%||94%||90%|
|Revenues and other income||433||513||1,363||1,327|
|Earnings before interest, taxes, depreciation and amortization (EBITDA)(2)||132||83||279||289|
|Normalized earnings attributable to common shareholders(2)||21||14||35||26|
|Normalized earnings per share(2)||$0.43||$0.64||$0.87||$1.19|
|Net income (loss) attributable to shareholders||15||16||(7)||20|
|Earnings (loss) per share||$0.29||$0.74||$(0.27)||$0.92|
|Dividends declared per share||$0.315||$0.315||$0.95||$0.95|
|Funds from operations(2)||144||112||334||276|
|Funds from operations excluding non-controlling interests in CPILP(2)||116||87||264||199|
|Cash flow per share(2)||$1.21||$1.11||$3.01||$2.53|
|Dividend coverage ratio(2)||3.4||3.2||2.5||2.2|
- 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 nine months ended September 30, 2011.
- Earnings before interest, taxes, depreciation and amortization (EBITDA), Normalized earnings attributable to common shareholders, Normalized earnings per share, Funds from operations, Funds from operations excluding non-controlling interests in Capital Power Income L.P. (CPILP), Cash flow per share, and Dividend coverage ratio are non-IFRS financial measures and do not have standardized meanings under IFRS, and therefore, may not be comparable to similar measures used by other enterprises. See Non-IFRS Financial Measures. Reconciliations of these non-IFRS financial measures to Net income attributable to shareholders, Earnings per share and Cash provided by operating activities are included in the Company’s Management’s Discussion and Analysis dated October 25, 2011, which is available under the Company’s profile on SEDAR at www.SEDAR.com.
$231 million common share offering
In July 2011, the Company closed an offering to sell 9,200,000 common shares at a price of $25.10 per share to a syndicate of underwriters for gross proceeds of approximately $231 million, less underwriters’ fees of approximately $9 million. The net proceeds from the common share offering were used to purchase an additional 9,200,000 common limited partnership units of Capital Power L.P. (CPLP). CPLP used the funds to repay a portion of the outstanding indebtedness under its credit facilities, which was drawn to fund the acquisitions of the New England facilities, and for general corporate purposes including financing development projects and working capital requirements. This transaction reduced EPCOR Utilities Inc.’s ownership interest in CPLP to approximately 48.9% effective for the third quarter from 54.1% at June 30, 2011.
Development of K2 Wind Ontario project
On August 3, 2011, CPLP entered into a limited partnership agreement with Samsung Renewable Energy Inc. (Samsung) and Pattern Renewable Holdings Canada ULC (Pattern) for the development, construction and operation of a 270 megawatt (MW) wind power project to be known as K2 Wind Ontario (K2). Formerly referred to as the Kingsbridge II Wind Power Project, K2 will be developed in the Township of Ashfield-Colborne-Wawanosh in southwestern Ontario. The project has an expected total capital cost of $874 million, most of which will be funded through project financing.
The Ontario Power Authority has signed a PPA for K2. The completion of the project is subject to obtaining necessary corporate approvals, executing definitive agreements, and receiving regulatory approvals. The partners expect that construction would begin in 2013, with commercial operation in 2014.
At commencement of commercial operation, each of the three partners will have an equal economic interest in the project. Capital Power will contribute the project lease agreements and development work completed to August 3, 2011, while Samsung and Pattern will contribute the PPA and transmission access rights. Capital Power will continue to lead the provincial Renewal Energy Approval process for the project which it has been doing since 2006. Samsung will serve as the engineering procurement and construction contractor, and the K2 partnership will finalize the turbine model and supplier.
Keephills 3 power plant begins commercial operation
On September 1, 2011, the Company and TransAlta Corporation (TransAlta) completed the 495 MW (gross) Keephills 3 generating facility, which is now in commercial operation. The facility is the most technologically advanced coal-fired plant in Canada and the Company’s share of its final cost is expected to be approximately $955 million. Costs for the plant, excluding mine capital, are being equally shared by its owners – Capital Power, which led the construction, and TransAlta, which operates the plant.
Update on Atlantic Power Corporation’s acquisition of CPILP
In June 2011, CPILP and Atlantic Power Corporation (Atlantic Power) entered into an arrangement agreement under which Atlantic Power would acquire, directly and indirectly, all of the outstanding limited partnership units of CPILP, including Capital Power’s ownership interest, for $19.40 per limited partnership unit, payable in cash or shares of Atlantic Power. Approval votes by Atlantic Power shareholders and CPILP unitholders have been scheduled for November 1, 2011, and if successful, will likely result in the transaction closing shortly thereafter. If the transaction is completed in November, the distribution for the month ended October 31, 2011 will be CPILP’s final distribution.
Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on October 26, 2011 at 1:00 pm (ET) to discuss third quarter results. The conference call dial-in numbers are:
(403) 532-8075 (Calgary)
(604) 681-0262 (Vancouver)
(647) 837-0597 (Toronto)
(877) 353-9586 (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: (877) 353-9587 (toll-free) and entering conference reference number 549495# followed by participant code 21543#. The replay will be available until midnight on November 30, 2011.
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-IFRS Financial Measures
The Company uses (i) EBITDA, (ii) funds from operations, (iii) funds from operations excluding non-controlling interests in CPILP, (iv) cash flow per share, (v) normalized earnings attributable to common shareholders, (vi) normalized earnings per share as financial performance measures, and (vii) dividend coverage ratio. These terms are not defined financial measures according to IFRS and do not have standardized meanings prescribed by IFRS, and therefore may not be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of the Company’s results of operations from management’s perspective. Reconciliations of EBITDA to net income, funds from operations and funds from operations excluding non-controlling interests in CPILP to cash flows from operating activities, normalized earnings attributable to common shareholders to net income attributable to common shareholders, and normalized earnings per share to earnings per share are contained in the Company’s Management’s Discussion and Analysis dated October 26, 2011 for the nine months ended September 30, 2011 which is available under the Company’s profile on SEDAR at www.SEDAR.com.
Certain information in this press release is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, and expect or similar words suggest future outcomes.
Forward-looking information in this press release includes, among other things, information relating to: (i) expectations regarding the date that construction would begin and commercial operation date of the K2 wind project, the total cost of the project and method of funding the project, the project’s generation capacity and its impact on the Company’s wind portfolio, the area of development, the ability to obtain corporate and regulatory approvals; the partners economic interest in the project at commercial operation; finalization of the project’s turbine model and supplier; and each partner’s contribution to the project; (ii) the Company’s share of its final expected cost of the Keephills 3 generating facility; and (iii) expectations regarding the timing of closing and outcome of the CPILP strategic review transactions.
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 include, but are not limited to: (i) the operation of the Company’s facilities; (ii) the Company’s financial position and credit facilities and sources of funding; (iii) the Company’s assessment of the markets and regulatory environments in which it operates; (iv) weather; (v) availability and cost of labour and management resources; (vi) performance of contractors and suppliers; (vii) availability and cost of financing; (viii) counterparties will perform their obligations; (ix) ability to implement strategic initiatives which will yield the expected benefits; (x) ability to obtain necessary regulatory approvals for development projects; (xi) the Company’s assessment of capital markets, common share ownership distribution, and ability to complete future share and debt offerings; (xii) locations of projects and the areas of which they will be developed, including the availability and use of certain optioned lands; (xiii) costs of construction and development; (xiv) ability to obtain court and regulatory approvals, and unitholders’ and shareholders’ favourable votes in relation to the CPILP strategic review transaction; and (xv) ability to obtain corporate and regulatory approvals for the K2 project.
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 risks and uncertainties include, but are not limited to, risks relating to: (i) regulatory and government decisions including changes to environmental, financial reporting and tax legislation; (ii) weather and economic conditions; (iii) construction; (iv) availability and cost of financing; (v) availability and cost of labour, equipment and management resources; (vi) performance of counterparties, partners, contractors and suppliers in fulfilling their obligations to the Company; and (vii) the completion of the CPILP strategic review transactions and the K2 project. If any such risks actually occur, they could materially adversely affect the Company’s business, financial condition or results of operations. In that case the trading price of the Company’s common shares could decline, perhaps materially.
About Capital Power Corporation
Capital Power is a growth-oriented North American independent power producer, building on more than a century of innovation and reliable performance. Capital Power’s vision is to be recognized as one of North America’s most respected, reliable and competitive power generators. Headquartered in Edmonton, Alberta, Capital Power has interests in 35 facilities in Canada and the U.S. totalling nearly 5,100 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources.
Click here to view the management’s discussion and analysis and consolidated financial statements