Capital Power reports first quarter results
Strong operating performance leads to double-digit percentage increases in earnings and cash flow per share
EDMONTON, Alberta – Capital Power Corporation (Capital Power, or the Company) (TSX: CPX) today released its financial results for the quarter ended March 31, 2012. Funds from operations were $116 million in the first quarter of 2012, up 40% from $83 million, on a comparable basis, in the first quarter of 2011. Cash flow per share for the quarter was $1.19 compared with $1.04 for the same quarter in the previous year. Normalized earnings attributable to common shareholders in the first quarter of 2012, after adjusting for one-time items and fair value adjustments, were $27 million, or $0.46 per share, compared with $11 million, or $0.34 per share, in the comparable period in 2011.
“First quarter financial performance was directly attributable to excellent operating performance, highlighted by average plant availability of 97 per cent,” said Brian Vaasjo, President and CEO of Capital Power. “We were particularly pleased to achieve high availability in the mid-to-upper-90 per cent range across the fleet, with the exception of the Genesee 3 facility, which came back on-line in mid-January from its unplanned outage.”
“Our financial results in the first quarter were in-line with expectations, despite lower Alberta power prices caused by a mild winter and low natural gas prices,” added Mr. Vaasjo. “Normalized earnings per share increased 35 per cent to $0.46 in the first quarter compared to $0.34 a year ago and we continued to generate strong growth in cash flow, up 14 per cent from last year to $1.19 per share.”
“Spot power prices in Alberta averaged $60 per megawatt hour in the first quarter while the New England mass hub price was US$33 per megawatt hour. Should these weaker power prices continue for the remainder of the year, we expect our financial performance for full year 2012 will be slightly under the low end of our target range for normalized earnings of $1.50 to $1.70 per share,” continued Mr. Vaasjo.
| Operational and Financial Highlights(1) | Three months ended March 31 (unaudited) |
|
| millions of dollars except per share and operational amounts | 2012 | 2011 |
| Electricity generation (excluding acquired Sundance PPA and CPILP plants) (GWh) | 4,222 | 2,451 |
| Generation plant availability (excluding acquired Sundance PPA and CPILP plants) (%) | 97% | 93% |
| Revenues and other income | $380 | $458 |
| EBITDA(2) | $152 | $84 |
| Net Income attributable to shareholders | $40 | $3 |
| Earnings per share | $0.66 | $0.06 |
| Diluted earnings per share | $0.64 | $0.05 |
| Dividends declared per common share | $0.315 | $0.315 |
| Normalized earnings attributable to common shareholders(2) | $27 | $11 |
| Normalized earnings per share(2) | $0.46 | $0.34 |
| Funds from operations(2) | $116 | $103 |
| Funds from operations excluding non-controlling interests in CPILP(2) | $116 | $83 |
| Cash flow per share(2) | $1.19 | $1.04 |
| Dividend coverage ratio(2) | 3.1 | 2.3 |
| Capital expenditures | $141 | $89 |
(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, 2012.
(2) Earnings before finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange losses, and gains on acquisitions and disposals (EBITDA), Funds from operations, Funds from operations excluding non-controlling interests in CPILP, Cash flow per share, Dividend coverage ratio, 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, therefore, may not 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, Earnings per share and Net cash flows from operating activities are included in the Company’s Management’s Discussion and Analysis dated April 26, 2012, which is available under the Company’s profile on SEDAR at www.SEDAR.com.
Significant Events
$250 million debt issue
On February 21, 2012, CPLP completed a public offering of $250 million unsecured medium-term notes. The notes have a coupon rate of 4.85%, are payable semi-annually commencing on August 21, 2012 and mature on February 21, 2019. The net proceeds of the offering were used for repayment of amounts owing under credit facilities, financing on ongoing capital projects, working capital requirements, and general corporate purposes,
$2 billion base shelf prospectus
On February 16, 2012, Capital Power filed a Canadian base shelf prospectus, which expires in March 2014, under which it may raise up to $2 billion collectively in common shares of the Company, preferred shares of the Company and subscription receipts exchangeable for common shares and/or other securities of the Company.
Sale of Atlantic Power shares
On February 10, 2012, the Company completed the sale of its shares in Atlantic Power, which were acquired in November 2011 as part of the Atlantic Power acquisition of CPILP, for proceeds of $52 million on a bought deal basis. These shares were initially recorded at $48 million and subsequently adjusted to their fair value of $53 million as of December 31, 2011 resulting in an unrealized gain of $5 million recognized in 2011. For the three months ended March 31, 2012, the Company recognized a realized pre-tax gain of $4 million with income taxes estimated to be $1 million offset by the reversal of the unrealized gain of $5 million recognized in the previous year.
Subsequent Event
Secondary offering of Capital Power common shares by EPCOR
Effective April 5, 2012, EPCOR exchanged 9,775,000 of its exchangeable common limited partnership units in CPLP for common shares of Capital Power on a one-for-one basis and sold 9,755,000 common shares of Capital Power to the public pursuant to a secondary offering at $23.55 per common share. Capital Power did not receive any of the approximate $230 million of proceeds from EPCOR’s sale of common shares. This transaction reduced EPCOR’s ownership interest in CPLP to approximately 29% from its interest of approximately 39% at March 31, 2012 and reduced EPCOR’s ownership of the common shares of Capital Power on a diluted basis to 29% from 39%. EPCOR has advised that it intends to sell all or a portion of its remaining interest in CPLP as its demands for capital require and market conditions permit.
Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on April 30, 2012 at 11:00 AM (ET) to discuss first quarter results. The conference call dial-in numbers are:
(403) 532-5601 (Calgary)
(604) 681-8564 (Vancouver)
(416) 623-0333 (Toronto)
(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 770024# followed by participant code 21543#. The replay will be available until midnight on May 30, 2012.
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) EBITDA, (ii) funds from operations, (iii) funds from operations excluding non-controlling interests in CPILP, (iv) cash flow per share, (v) dividend coverage ratio, (vi) normalized earnings attributable to common shareholders, and (vii) 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 therefore may not 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 EBITDA to net income, funds from operations and funds from operations excluding non-controlling interests in CPILP to net 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 April 26, 2012 for the three months ended March 31, 2012 which is available under the Company’s profile on SEDAR at www.SEDAR.com.
Forward-looking Information
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 expectations regarding impact of power prices.
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) status and impact of policy, legislation and regulation, and (iv) 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) power plant availability and performance including maintenance expenditures, (ii) changes in electricity prices in markets in which the Company operates, (iii) regulatory and political environments including changes to environmental, financial reporting and tax legislation, (iv) acquisitions and developments including timing and costs of regulatory approvals and construction; (v) ability to fund current and future capital and working capital needs, (vi) changes in energy commodity market prices and use of derivatives, (vii) changes in market prices and availability of fuel, and (viii) changes in general economic and competitive conditions. See Risks and Risk Management in the Company’s Management’s Discussion and Analysis dated March 13, 2012 for further discussion of these and other risks.
Click here to view the management’s discussion and analysis and consolidated financial statements.