EDMONTON, Alberta – Capital Power Corporation (Capital Power, or the Company) (TSX:CPX) released today its financial results for the third quarter of 2009. Net income for the third quarter 2009 was $14 million or $0.64 per share.
“Despite weak summer power prices in Alberta, our third quarter financial performance was in-line with our expectations,” said Brian Vaasjo, President and Chief Executive Officer of Capital Power. “We continued to see good performance from our power plants with strong average generation plant availability of 95 per cent in the third quarter. At the Clover Bar Energy Centre, we commenced operations on a new 100-megawatt natural gas turbine in Unit 2. Based on the experience gained from the installation of Unit 2, we now expect to see Unit 3 come on-line in the first quarter of 2010, which is approximately six months ahead of schedule as well as being approximately $5 million lower than earlier estimates. Once completed, the Clover Bar facility will have a gross generation output of 243 megawatts.”
“Our construction project at Keephills 3, jointly owned with TransAlta, continues to experience cost pressures which has resulted in an increase of approximately six per cent to our previous $1.8 billion total project costs estimate to $1.9 billion,” continued Vaasjo. “The project schedule has also been delayed a few months with commercial operations now targeted for the second quarter 2011.”
“We continue to take a leadership role in carbon capture and storage (CCS) technology through our partnership with TransAlta and Alstom Canada to develop one of the world’s largest CCS projects (Project Pioneer) at the Keephills 3 plant that was announced earlier this month,” stated Vaasjo. “The expected $780 million funding from the Province of Alberta and Government of Canada will help Project Pioneer work towards its goal of capturing one million tones of greenhouse gas emissions annually. In addition to Project Pioneer, we are committed to completing the front end engineering and design work on the Integrated Gasification Combined Cycle (IGCC) project at our Genesee facility. However, we do not intend to develop an IGCC facility at this time primarily because the technology is not economical in today’s power price environment.”
|Operational and Financial Highlights(1) (unaudited)||Three months ended
Sept. 30, 2009
|(millions of dollars except per share and operational amounts)|
|Electricity generation (GWh)||3,534|
|Generation plant availability (%)||95%|
|Earnings per share||$0.64|
|Dividends declared per share||$0.315|
|Funds from operations(2)||$93|
(1) The operational and financial highlights in this press release are derived from and should be read in conjunction with Management’s Discussion and Analysis and the Interim Consolidated Financial Statements for the third quarter, 2009.
(2) Gross margin, Operating margin and Funds from operations are non-GAAP financial measures and do not have standardized meanings under GAAP, and therefore, may not be comparable to similar measures used by other enterprises. Reconciliations to these non-GAAP financial measures to net income in the case of gross margin and operating margin, and cash provided by operating activities in the case of funds from operations are included at the end of this press release.
Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on November 2, 2009 at 11:00 am (ET) to discuss the third quarter results. The conference call dial-in numbers are: (416) 340-8061 or (866) 223-7781 (toll free). Interested parties may access the webcast on the Company’s website at https://www.capitalpower.com/. An archive of the webcast will be available on the website. A replay of the conference call will be available following the call at: (416) 695-5800 or (800) 408- 3053 (toll free) and entering pass code 2164117. The replay will be available until 11:59 p.m. (ET) on November 9, 2009.
About Capital Power
Capital Power is a growth-oriented North American independent power producer, building on more than a century of innovation and reliable performance. The Company’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 31 facilities in Canada and the U.S. totaling approximately 3,400 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources.
This news release contains forward-looking statements, including “forward-looking statements” within the meaning of applicable Canadian and United States securities laws, as it relates to anticipated financial performance, events and strategies. Such forward-looking statements include, without limitation, (i) the expected timing of commercial operation and project costs of Keephills 3 and Clover Bar Energy Centre Unit 3; and (ii) expected funding from the Province of Alberta and Government of Canada on Project Pioneer. Where statements by Capital Power express or imply an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Capital Power expressly disclaims any obligation to release publicly revisions to any forward looking statement to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
Non-GAAP Financial Measures
The Company uses (i) gross margin, (ii) operating margin, and (iii) funds from operations as financial performance measures. These terms are not defined financial measures according to Canadian GAAP and do not have standardized meanings prescribed by GAAP, and therefore may not be comparable to similar measures used by other enterprises.
Gross margin and operating margin
Capital Power uses gross margin and operating margin to measure the operating performance of plants and groups of plants from period to period. A reconciliation of gross margin and operating margin to net income is as follows:
|(unaudited, $ millions)||Three months ended
Sept 30, 2009
|Energy purchases and fuel||307|
|Operations, maintenance, and direct administration||49|
|Depreciation, amortization and asset retirement accretion||44|
|Foreign exchange losses||3|
|Net financing expenses||17|
|Income taxes (reduction)||(2)|
Funds from operations and funds from operations excluding non-controlling interests in EPCOR Power L.P.
Capital Power uses funds from operations to measure the Company’s ability to generate funds from current operations. Changes in working capital are primarily made up of intercompany payables and receivables between the Company and EPCOR and are not representative of how working capital is managed by the Company in this period of transition. Therefore, the Company uses funds from operations as its primary operating cash flow measure. The Company measures its interest in cash flows by excluding the non-controlling interest in EPCOR Power L.P.’s cash flows. A reconciliation of (i) funds from operations and (ii) funds from operations excluding non-controlling interests in EPCOR Power L.P., to cash provided by operating activities is as follows:
|(unaudited, $ millions)||Three months ended
Sept 30, 2009
|Funds from operations excluding non-controlling interests in EPCOR Power L.P.||$ 70|
|Funds from operations due to non-controlling interests in EPCOR Power L.P.||23|
|Funds from operations||93|
|Change in non-cash operating working capital||(40)|
|Cash provided by operating activities||$ 53|