Atlantic Power Corporation Releases Third Quarter 2011 Results
BOSTON, Nov, 11, 2011 /PRNewswire/ -- Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ("Atlantic Power" or the "Company") today announced its results for the three and nine months ended September 30, 2011. All amounts are in U.S. dollars unless otherwise indicated. Please see "Regulation G Disclosures" attached to this news release for an explanation and US GAAP reconciliation of the terms "EBITDA," "Project Adjusted EBITDA" and "Cash Available for Distribution" as used in this news release.
Highlights
- Closed acquisition of Capital Power Income L.P. ("CPILP") on November 5, 2011
- Financial results in line with expectations
- Maintaining 2011 project cash flow and payout ratio guidance
"We are pleased that the results for the quarter met our expectations and are in line with our guidance for the year," commented Barry Welch, President and CEO. "With the successful close of the CPILP acquisition behind us, we are focusing on the critical task of fully integrating CPILP's people and assets into our organization. First and foremost, we are dedicated to finding a permanent CFO to join our management team. We have met with several great candidates, and hope to have an announcement on that front soon."
Operating Performance
Project Adjusted EBITDA, including earnings from equity investments, decreased by $0.5 million to $41.0 million for the quarter ended September 30, 2011 compared to $41.5 million for the same period last year. The primary drivers behind the decrease were:
- decreased earnings at Chambers due to an increase in operations and maintenance costs in connection with a forced outage in July 2011;
- decreased earnings at Lake attributable to the plant running favorable off-peak dispatch during the third quarter of 2010; and
- decreased earnings at Badger Creek due to lower capacity payments under the new one year interim power purchase agreement beginning in April 2011.
These decreases were partially offset by:
- contributions from the Cadillac Renewable facility, which was acquired in December 2010; and
- contributions from Idaho Wind, which became operational in the first quarter of 2011.
Project Adjusted EBITDA, including earnings from equity investments, increased by $1.0 million to $119.8 million for the nine months ended September 30, 2011 compared to $118.8 million for the same period last year. The increase in EBITDA was attributable to the following factors:
- contributions from the Cadillac Renewable facility, which was acquired in December 2010; and
- contributions from Idaho Wind, which became operational in the first quarter of 2011.
These increases were partially offset by:
- decreased earnings at Selkirk due to lower capacity revenue in connection with a planned outage that was longer than expected and resulted in a delay of recognition of capacity payments until the fourth quarter of 2011;
- decreased earnings at Pasco primarily due to higher operations and maintenance expenses attributable to the unplanned replacement of gas turbine blades during a maintenance outage and un-planned repairs associated with the generator and boiler;
- decreased earnings at Chambers attributable to lower dispatch and a forced outage in July 2011; and
- decreased earnings at Topsham, as the project was sold in May 2011.
Cash Available for Distribution
For the three and nine months ended September 30, 2011, Cash Available for Distribution increased by $2.6 million and $11.8 million, respectively, compared to the prior year. The payout ratio for the nine months ended September 30, 2011 was 93% compared to 96% for the same period in 2010. The decrease in the payout ratio is attributable to the increase in EBITDA previously described and the release of $5.8 million previously trapped cash at Selkirk. The current payout ratio and project distributions are in line with expectations and previous guidance for the full year 2011.
The calculation of Cash Available for Distribution (in both US$ and Cdn$) and a summary of Project Adjusted EBITDA by individual project for the three and nine months ended September, 2011 are attached to this news release.
Capital Power Income L.P. Acquisition
On November 5, Atlantic Power acquired all the outstanding units of CPILP pursuant to the Plan of Arrangement that was approved by the Court of Queen's Bench of Alberta on November 1. Details of the acquisition can be found in our closing press release dated November 7, 2011.
Guidance
Based on our actual performance to date and projections for the remainder of the year, we continue to expect to receive distributions from our projects in the range of $80 million to $90 million for the full year 2011. We expect overall levels of operating cash flows in 2011 to be improved over actual 2010 levels. Higher distributions from existing projects, initial distributions from our recent investment in Idaho Wind and Cadillac, and a slightly lower payment under the management termination agreement are expected to be partially offset by the one-time cash tax refund of $8.0 million received in 2010. These increased operating cash flows in 2011, combined with the impact of our public offerings in 2010, are expected to result in a payout ratio of approximately 100% to 105% in 2011 subject to the financial performance of our projects. In 2012, additional increases in distributions from projects are expected to further increase operating cash flow compared to 2011. The most significant factors in the expected higher operating cash flow in 2012 is accretion from the acquisition of CPILP and increased distributions from Selkirk following the final payment of its non-recourse project level debt in mid-2012.
Outstanding Common Shares and Convertible Debentures
As of November 9, 2011, we had 113,474,259 common shares, Cdn$44.9 million principal amount of 6.50% convertible secured debentures due October 31, 2014, Cdn$68.1 million principal amount of 6.25% convertible debentures due March 15, 2017, and Cdn$80.5 million principal amount of 5.60% convertible debentures due June 30, 2017 outstanding. Holders of common shares currently receive a monthly dividend at an annual rate of Cdn$1.15 per common share.
Investor Conference Call and Webcast
A telephone conference call hosted by Atlantic Power's management team will be held on Monday, November 14, 2011 at 10:00 AM ET. The telephone numbers for the conference call are: U.S. Toll Free: 1-877-317-6789; Canada Toll Free: 1-866-605-3852; International Toll: +1 412-317-6789. The Conference Call will also be broadcast over Atlantic Power's website. Please call or log in 10 minutes prior to the call. The telephone numbers to listen to the conference call after it is completed (Instant Replay) are U.S. Toll Free: 1-877-344-7529; International Toll: +1-412-317-0088. Please enter conference call number 10005106. The conference call will also be archived on Atlantic Power's website.
About Atlantic Power
Atlantic Power is a leading publicly traded, power generation and infrastructure company with a well diversified portfolio of assets in the United States and Canada. Our power generation projects sell electricity to utilities and other large commercial customers under long-term power purchase agreements, which seek to minimize exposure to changes in commodity prices. The net generating capacity of the Company's projects is approximately 2,116 MW, consisting of interests in 30 operational power generation projects across 11 states and 2 provinces, one 53 MW biomass project under construction in Georgia, and an 84-mile, 500 kilovolt electric transmission line located in California. Atlantic Power also owns a majority interest in Rollcast Energy, a biomass power plant developer with several projects under development. Atlantic Power is incorporated in British Columbia, headquartered in Boston and has offices in Chicago, Toronto, and Richmond, B.C.
Our corporate strategy is to generate stable cash flows from our existing assets and to make accretive acquisitions to sustain our dividend payout to shareholders, which is currently paid monthly at an annual rate of Cdn$1.15 per share.
Atlantic Power has a market capitalization of approximately $1.5 billion and trades on the New York Stock Exchange under the symbol AT and on the Toronto Stock Exchange under the symbol ATP. For more information, please visit the Company's website at www.atlanticpower.com or contact:
Atlantic Power Corporation
Amanda Wagemaker, Investor Relations
(617) 977-2700
[email protected]
Copies of financial data and other publicly filed documents get filed on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.shtml under "Atlantic Power Corporation" or on the Company's website.
Cautionary Note Regarding Forward-looking Statements
To the extent any statements made in this news release contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended and under Canadian securities law (collectively, "forward-looking statements").
Certain statements in this news release may constitute "forward-looking statements", which reflect the expectations of management regarding the future growth, results of operations, performance and business prospects and opportunities of our Company and our projects. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "project," "continue," "believe," "intend," "anticipate," "expect" or similar expressions that are predictions of or indicate future events or trends and which do not relate solely to present or historical matters. Examples of such statements in this press release include, but are not limited, to statements with respect to the following:
- The expectation that distributions from our projects will be in the range of $80 million to $90 million for the full year 2011;
- The expectation that overall levels of operating cash flows in 2011 will be improved over actual 2010 levels; and
- The expectation that the payout ratio in 2011 will be approximately 100%-105% and that improvements in cash flow and payout ratio are expected in 2012.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. Please refer to the factors discussed under "Risk Factors" in the Company's periodic reports as filed with the Securities and Exchange Commission from time to time for a detailed discussion of the risks and uncertainties affecting our Company. Although the forward-looking statements contained in this news release are based upon what are believed to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or circumstances. The financial outlook information contained in this news release is presented to provide readers with guidance on the cash distributions expected to be received by the Company and to give readers a better understanding of the Company's ability to pay its current level of distributions into the future. Readers are cautioned that such information may not be appropriate for other purposes.
Atlantic Power Corporation Consolidated Balance Sheets (in thousands of U.S. dollars) |
|||
September 30, |
December 31, |
||
2011 |
2010 |
||
(Unaudited) |
|||
Assets |
|||
Current assets: |
|||
Cash and cash equivalents |
$38,254 |
$45,497 |
|
Restricted cash |
28,123 |
15,744 |
|
Accounts receivable |
19,104 |
19,362 |
|
Note receivable – related party |
7,326 |
22,781 |
|
Current portion of derivative instruments asset |
649 |
8,865 |
|
Prepayments, supplies and other |
10,967 |
8,480 |
|
Refundable income taxes |
1,594 |
1,593 |
|
Total current assets |
106,017 |
122,322 |
|
Property, plant and equipment, net |
360,594 |
271,830 |
|
Transmission system rights |
182,245 |
188,134 |
|
Equity investments in unconsolidated affiliates |
275,425 |
294,805 |
|
Other intangible assets, net |
71,802 |
88,462 |
|
Goodwill |
12,453 |
12,453 |
|
Derivative instruments asset |
4,593 |
17,884 |
|
Other assets |
15,892 |
17,122 |
|
Total assets |
$1,029,021 |
$1,013,012 |
|
Liabilities and Shareholders' Equity |
|||
Current liabilities: |
|||
Accounts payable and accrued liabilities |
$42,373 |
$20,530 |
|
Current portion of long-term debt |
22,562 |
21,587 |
|
Current portion of derivative instruments liability |
34,921 |
10,009 |
|
Interest payable on convertible debentures |
2,442 |
3,078 |
|
Dividends payable |
6,003 |
6,154 |
|
Other current liabilities |
10 |
5 |
|
Total current liabilities |
108,311 |
61,363 |
|
Long term debt |
294,989 |
244,299 |
|
Convertible debentures |
188,620 |
220,616 |
|
Derivative instruments liability |
27,892 |
21,543 |
|
Deferred income taxes |
18,142 |
29,439 |
|
Other non-current liabilities |
2,193 |
2,376 |
|
Commitments and contingencies |
- |
- |
|
Total liabilities |
640,147 |
579,636 |
|
Shareholders' equity |
|||
Common shares, no par value, unlimited authorized shares; 68,997,122 and 67,188,154 issued and outstanding September 30, 2011 and December 31, 2010, respectively |
649,070 |
626,108 |
|
Accumulated other comprehensive income (loss) |
(1,218) |
255 |
|
Retained deficit |
(262,136) |
(196,494) |
|
Total Atlantic Power Corporation shareholders' equity |
385,716 |
429,869 |
|
Noncontrolling interest |
3,158 |
3,507 |
|
Total equity |
388,874 |
433,376 |
|
Total liabilities and equity |
$1,029,021 |
$1,013,012 |
|
Atlantic Power Corporation Consolidated Statements of Operations (in thousands of U.S. dollars, except per share amounts) (Unaudited) |
|||||
Three months ended September 30, |
Nine months ended September 30, |
||||
2011 |
2010 |
2011 |
2010 |
||
Project revenue: |
|||||
Energy sales |
$17,104 |
$22,713 |
$53,471 |
$55,285 |
|
Energy capacity revenue |
27,070 |
23,196 |
81,859 |
69,585 |
|
Transmission services |
7,638 |
7,813 |
22,773 |
23,186 |
|
Other |
521 |
317 |
1,153 |
1,108 |
|
52,333 |
54,039 |
159,256 |
149,164 |
||
Project expenses: |
|||||
Fuel |
14,818 |
19,678 |
46,202 |
51,606 |
|
Operations and maintenance |
8,645 |
6,846 |
27,518 |
19,248 |
|
Depreciation and amortization |
10,908 |
10,082 |
32,711 |
30,224 |
|
34,371 |
36,606 |
106,431 |
101,078 |
||
Project other income (expense): |
|||||
Change in fair value of derivative instruments |
(11,484) |
(9,744) |
(12,497) |
(20,946) |
|
Equity in earnings of unconsolidated affiliates |
2,374 |
4,088 |
5,647 |
12,550 |
|
Interest expense, net |
(4,494) |
(4,165) |
(13,684) |
(12,884) |
|
Other income (expense), net |
(7) |
22 |
(40) |
233 |
|
(13,611) |
(9,799) |
(20,574) |
(21,047) |
||
Project income |
4,351 |
7,634 |
32,251 |
27,039 |
|
Administrative and other expenses (income): |
|||||
Administration |
11,936 |
4,103 |
20,661 |
12,046 |
|
Interest |
3,337 |
2,707 |
10,815 |
8,019 |
|
Foreign exchange loss (gain) |
21,576 |
(2,253) |
20,383 |
179 |
|
Other income, net |
- |
- |
- |
(26) |
|
36,849 |
4,557 |
51,859 |
20,218 |
||
(Loss) income from operations before income taxes |
(32,498) |
3,077 |
(19,608) |
6,821 |
|
Income tax (benefit) expense |
(4,520) |
3,614 |
(10,681) |
12,105 |
|
Net loss |
(27,978) |
(537) |
(8,927) |
(5,284) |
|
Net loss attributable to noncontrolling interest |
(78) |
(99) |
(349) |
(228) |
|
Net loss attributable to Atlantic Power Corporation |
$(27,900) |
$(438) |
$(8,578) |
$(5,056) |
|
Net loss per share attributable to Atlantic Power Corporation Shareholders: |
|||||
Basic |
$(0.40) |
$(0.01) |
$(0.13) |
$(0.08) |
|
Diluted |
$(0.40) |
$(0.01) |
$(0.13) |
$(0.08) |
|
Weighted average number of common shares outstanding: |
|||||
Basic |
68,910 |
60,511 |
68,384 |
60,466 |
|
Diluted |
66,910 |
60,511 |
68,384 |
60,466 |
|
Atlantic Power Corporation Consolidated Statements of Cash Flows (in thousands of U.S. dollars) (Unaudited) |
||||
Nine months ended September 30, |
||||
2011 |
2010 |
|||
Cash flows from operating activities: |
||||
Net loss |
$(8,927) |
$(5,284) |
||
Adjustments to reconcile to net cash provided by operating activities |
||||
Depreciation and amortization |
32,711 |
30,224 |
||
Long-term incentive plan expense |
2,257 |
3,287 |
||
Gain on step-up valuation of Rollcast acquisition |
- |
(211) |
||
Equity in earnings from unconsolidated affiliates |
(5,647) |
(12,550) |
||
Distributions from unconsolidated affiliates |
15,542 |
9,897 |
||
Unrealized foreign exchange loss |
28,175 |
4,369 |
||
Change in fair value of derivative instruments |
12,497 |
20,946 |
||
Change in deferred income taxes |
(10,315) |
10,555 |
||
Change in other operating balances |
||||
Accounts receivable |
258 |
(3,072) |
||
Prepayments, refundable income taxes and other assets |
(570) |
1,189 |
||
Accounts payable and accrued liabilities |
1,536 |
3,747 |
||
Other liabilities |
(1,178) |
576 |
||
Net cash provided by operating activities |
66,339 |
63,673 |
||
Cash flows used in investing activities: |
||||
Acquisitions and investments, net of cash acquired |
- |
(41,182) |
||
Change in restricted cash |
(12,379) |
(7,398) |
||
Proceeds from sale of equity investments |
8,500 |
- |
||
Proceeds from Idaho Wind loan |
15,455 |
- |
||
Short-term loan to Idaho Wind |
- |
(12,801) |
||
Biomass development costs |
(753) |
(1,827) |
||
Purchase of property, plant and equipment |
(79,070) |
(2,077) |
||
Net cash used in investing activities |
(68,247) |
(65,285) |
||
Cash flows used in financing activities: |
||||
Proceeds from project-level debt |
65,374 |
- |
||
Repayment of project-level debt |
(13,166) |
(11,841) |
||
Equity investment from noncontrolling interest |
- |
200 |
||
Proceeds from revolving credit facility borrowings |
- |
20,000 |
||
Dividends paid |
(57,543) |
(47,599) |
||
Net cash used in financing activities |
(5,335) |
(39,240) |
||
Net decrease in cash and cash equivalents |
(7,243) |
(40,852) |
||
Cash and cash equivalents at beginning of period |
45,497 |
49,850 |
||
Cash and cash equivalents at end of period |
$38,254 |
$8,998 |
||
Supplemental cash flow information |
||||
Interest paid |
$21,567 |
$16,587 |
||
Income taxes refunded, net |
$(352) |
$(1,607) |
||
Accruals for capital expenditures |
$19,547 |
- |
||
Regulation G Disclosures
Cash Available for Distribution is not a measure recognized under U.S. generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Management believes Cash Available for Distribution is a relevant supplemental measure of the Company's ability to earn and distribute cash returns to investors. A reconciliation of Cash Flows from Operating Activities to Cash Available for Distributions is provided below. Investors are cautioned that the Company may calculate this measure in a manner that is different from other companies.
Project Adjusted EBITDA, earnings before interest, taxes, depreciation and amortization (including non-cash impairment charges), is not a measure recognized under GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers and does not have a standardized meaning prescribed by GAAP. Management uses Project Adjusted EBITDA at the Project-level to provide comparative information about project performance. A reconciliation of Project Adjusted EBITDA to project income is provided on the following page. Investors are cautioned that the Company may calculate this measure in a manner that is different from other issuers.
Atlantic Power Corporation Cash Available for Distribution (In thousands of U.S. dollars, except as otherwise stated) (Unaudited) |
|||||
Three months ended September 30, |
Nine months ended September 30, |
||||
2011 |
2010 |
2011 |
2010 |
||
Cash flows from operating activities |
$21,624 |
$27,695 |
$66,339 |
$63,673 |
|
Project-level debt repayments |
(2,825) |
(2,700) |
(13,166) |
(11,841) |
|
Purchase of property, plant and equipment(1) |
(268) |
(557) |
(814) |
(2,077) |
|
Transaction Costs(2) |
8,470 |
- |
9,238 |
- |
|
Cash Available for Distribution(3) |
27,001 |
24,438 |
61,597 |
49,755 |
|
Total dividends to shareholders |
19,010 |
15,904 |
57,552 |
47,618 |
|
Payout ratio |
70% |
65% |
93% |
96% |
|
Expressed in Cdn$ |
|||||
Cash Available for Distribution |
26,833 |
25,404 |
60,520 |
51,552 |
|
Total dividends to shareholders |
18,874 |
16,556 |
56,259 |
49,639 |
|
(1) Excludes construction-in-progress related to our Piedmont biomass project. |
|
(2) Represents costs associated with the CPILP acquisition. |
|
(3) Cash Available for Distribution is not a recognized measure under GAAP and does not have any standardized meaning prescribed by GAAP. Therefore, this measure may not be comparable to similar measures presented by other companies. See "Supplementary Non-GAAP Financial Information". |
|
Atlantic Power Corporation Project Adjusted EBITDA (in thousands of U.S. dollars) (Unaudited) |
|||||
Three months ended September 30, |
Nine months ended September 30, |
||||
2011 |
2010 |
2011 |
2010 |
||
Project Adjusted EBITDA by individual segment |
|||||
Auburndale |
$10,158 |
$10,018 |
$32,077 |
$29,820 |
|
Lake |
8,517 |
9,325 |
25,431 |
23,937 |
|
Pasco |
1,149 |
1,335 |
1,541 |
3,752 |
|
Path 15 |
7,117 |
7,318 |
20,873 |
21,348 |
|
Chambers |
3,358 |
4,637 |
12,389 |
14,780 |
|
Total |
30,299 |
32,633 |
92,311 |
93,637 |
|
Other Project Assets |
|||||
Selkirk |
4,322 |
3,927 |
8,636 |
10,983 |
|
Orlando |
1,824 |
2,185 |
4,917 |
5,856 |
|
Cadillac |
2,178 |
- |
6,569 |
- |
|
Gregory |
1,027 |
1,373 |
2,755 |
3,656 |
|
Idaho Wind |
747 |
- |
2,798 |
- |
|
Badger Creek |
(63) |
699 |
738 |
2,209 |
|
Delta Person |
561 |
461 |
1,403 |
1,365 |
|
Koma Kulshan |
374 |
53 |
808 |
606 |
|
Rollcast |
(348) |
(249) |
(1,121) |
(628) |
|
Piedmont |
(14) |
- |
(75) |
- |
|
Topsham |
- |
415 |
- |
1,378 |
|
Other |
73 |
46 |
88 |
(244) |
|
Total Adjusted EBITDA from Other Project Asset segment |
10,681 |
8,910 |
27,516 |
25,181 |
|
Total adjusted EBITDA from all Projects |
40,980 |
41,543 |
119,827 |
118,818 |
|
Depreciation and amortization |
17,824 |
16,349 |
52,922 |
49,331 |
|
Interest expense, net |
6,624 |
5,906 |
19,952 |
17,784 |
|
Change in the fair value of derivative instruments |
10,871 |
10,706 |
12,913 |
23,435 |
|
Other expense |
1,310 |
948 |
1,789 |
1,229 |
|
Project income as reported in the statement of operations |
$4,351 |
$7,634 |
$32,251 |
$27,039 |
|
SOURCE Atlantic Power Corporation
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