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Press release from Marketwire

Macquarie Power & Infrastructure Income Fund Announces Second Quarter Results

Monday, August 09, 2010

Macquarie Power & Infrastructure Income Fund Announces Second Quarter Results16:19 EDT Monday, August 09, 2010TORONTO, ONTARIO--(Marketwire - Aug. 9, 2010) - Macquarie Power & Infrastructure Income Fund (TSX:MPT.UN)(TSX:MPT.DB.A) ("MPT" or the "Fund") today reported unaudited results for the quarter ended June 30, 2010. Management's Discussion and Analysis and unaudited financial statements for the quarter are available on the Fund's website at www.macquarie.com/mpt and on SEDAR at www.sedar.com. "We have delivered solid operational performance in 2010 with high availability across our power generation facilities and overall increased electricity production despite unfavourable wind and hydrological conditions," said Michael Bernstein, President and Chief Executive Officer. "Our results to date in 2010 reflect two significant one-time impacts, namely the sale of our interest in Leisureworld and higher than normal administrative costs. A key highlight of the quarter was the acquisition of the Amherstburg Solar Park, which further diversifies our portfolio and will contribute to the reliability of our long-term cash flow. We expect the Amherstburg Solar Park to deliver an attractive total return to our unitholders and look forward to the expected start of commercial operations in June 2011."Financial Overview (in millions of Canadian dollars or on a per unit basis unless otherwise noted) ---------------------------------------------------------------------------- Quarter ended Six Months ended June 30 June 30 2010 2009 Variance 2010 2009 Variance ---------------------------------------------------------------------------- Revenue 35.5 32.6 8.9% 79.6 72.9 9.2% ---------------------------------------------------------------------------- Cash flows from operating activities 9.2 9.3 (0.8%) 22.7 22.6 0.7% ---------------------------------------------------------------------------- Adjusted EBITDA(1) 10.4 11.4 (8.7%) 29.5 27.6 6.5% ---------------------------------------------------------------------------- Funds from operations(1) 5.7 7.5 (23.9%) 20.0 20.1 (0.4%) ---------------------------------------------------------------------------- Distributable cash(1) 5.5 10.2 (46.1%) 20.2 25.2 (19.8%) ---------------------------------------------------------------------------- Distributable cash per unit(1) 0.109 0.205 (46.8%) 0.404 0.504 (19.9%) ---------------------------------------------------------------------------- Distributions per unit 0.165 0.262 (37.0%) 0.330 0.525 (37.1%) ---------------------------------------------------------------------------- Payout ratio(1) 151% 128% (17.9%) 82% 104% 21.1% ---------------------------------------------------------------------------- Electricity production (MWh) 492,336 458,511 7.4% 1,042,513 1,000,114 4.2% ---------------------------------------------------------------------------- (1)"EBITDA", "Adjusted EBITDA", "funds from operations", "distributable cash", "distributable cash per unit" and "payout ratio" are non-GAAP financial measures and do not have any standardized meaning prescribed by GAAP. As a result, these measures are unlikely to be comparable to similar measures presented by other issuers. Definitions of each measure are provided on page 4 of Management's Discussion and Analysis with reconciliation to GAAP measures provided on pages 9, 10 and 11, respectively. Key Drivers of Financial ResultsHigher productionIn the second quarter and year-to-date periods, the Fund achieved improved electricity production and higher revenue due to fewer maintenance outages at the Cardinal gas cogeneration ("Cardinal") and Whitecourt biomass power ("Whitecourt") facilities than in the same periods last year. Cardinal also benefitted from higher electricity rates under its power purchase agreement. The performance of these facilities was partially offset by decreased production at Erie Shores Wind Farm ("Erie Shores") in 2010 due to lower than normal wind speeds and by atypically low water flows at the Wawatay hydro power facility in the second quarter. Sale of Leisureworld Senior Care LP ("Leisureworld")Adjusted distributable cash for the quarter and year-to-date periods was lower than last year due to decreased distributions from Leisureworld as a result of the sale of that business on March 23, 2010. The termination of the Leisureworld management agreement with Macquarie Power Management Ltd. ("MPML" or the "Manager"), which is the manager of the Fund, reduced fees payable to the Manager in the quarter and first six months of the year. The Fund will continue to see the various impacts of this one-time event in subsequent quarters until the proceeds from this sale have been fully reinvested into new infrastructure businesses. Higher administrative expensesThe Fund experienced increased administrative expenses in the quarter and year-to-date period of 117.8% and 37.2%, respectively, over the same periods last year, mostly arising from higher than normal expenses related to project and business development activity and non-recurring costs related to the corporate conversion process and the transition to International Financial Reporting Standards. These factors were only partially offset by the decrease in fees paid to the Manager following the sale of Leisureworld in the first quarter.Higher interest expenseInterest expenses for the quarter and year to date increased by 20.5% and 25.2%, respectively, over the same periods last year. This primarily reflected higher interest paid on the credit facility established in May 2009 as well as a higher principal amount outstanding on the Fund's 6.50% convertible debentures compared with last year.Financial PositionAs at June 30, 2010, the Fund's unrestricted cash and cash equivalents totalled $65.8 million (December 31, 2009 - $53.1 million) of which $55.1 million (December 31, 2009 - $42.5 million) was not designated for major maintenance, capital expenditure or general reserves. The Fund was conservatively leveraged relative to the low risk profile and long life of its assets, with a debt to capital(2) ratio of 44.3% as at June 30, 2010 (December 31, 2009 - 49.9%). With cash on hand, cash accumulation as a result of the lower distribution to unitholders, and amounts available under the Fund's credit facility, the Fund currently has access to approximately $100 million in capital to pursue growth opportunities. AcquisitionOn June 23, 2010, the Fund entered into an agreement with SunPower Corp. ("SunPower") to acquire a 20 MW solar photovoltaic (PV) power project (the "Amherstburg Solar Park") in Amherstburg, Ontario to be designed, built and operated on behalf of MPT by SunPower. The approximate $130 million project will be primarily funded by a syndicate of international lenders including approximately $26 million of additional equity to be contributed by MPT upon the expected start of commercial operations in June 2011. Fiscal 2010 OutlookFor 2010, the Fund expects improved performance from its portfolio compared with 2009, which will be partially offset by an increase in Fund-level administrative and interest costs. Despite these increased expenses, the Fund's operating cash flow is expected to be higher in 2010 than in 2009. An outlook for each of the Fund's assets is provided on pages 17 to 20 of the Management's Discussion and Analysis for the quarter ended June 30, 2010.Based on the Fund's current portfolio, the new distribution policy of 66 cents per unit annually is expected to be sustainable through 2014 and to result in a payout ratio of approximately 70% to 75% over this period. With the sale of Leisureworld, the 2010 payout ratio will be above 80% but could move higher in future years as the Fund executes its growth strategy, which could include development opportunities or operating assets with low current yields but strong growth prospects. Conference Call and WebcastManagement of the Fund will hold a conference call (with accompanying slides) to discuss second quarter results on Tuesday, August 10, 2010 at 8:30 a.m. ET. The conference call will be accessible via webcast through the Fund's website with accompanying slides at www.macquarie.com/mpt and by telephone at 416-695-7806 (Canada) or 1-888-789-9572 (North America). A replay of the call will be available until August 24, 2010 by dialling 416-695-5800 or 1-800-408-3053 and entering the passcode 5625821.Distribution Reinvestment Plan (DRIP)Eligible unitholders may elect to participate in the Fund's Distribution Reinvestment Plan. For more information about the DRIP, please visit the Fund's website at www.macquarie.com/mpt. About Macquarie Power & Infrastructure Income FundMacquarie Power & Infrastructure Income Fund's mandate is to invest in core infrastructure businesses in Canada and internationally. MPT aims to acquire and actively manage a high quality portfolio of long-life infrastructure businesses that will generate sustainable, long-term distributions and an attractive total return for investors. MPT's portfolio currently includes investments in gas cogeneration, wind, hydro and biomass power generating facilities, representing approximately 350 MW of installed capacity. MPT is also developing a 20 MW solar power facility in Ontario. MPT is managed by an affiliate of Macquarie Group Limited. Please visit www.macquarie.com/mpt for additional information.DisclaimerThis news release is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in the Fund, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult our investment adviser if necessary. None of the entities noted in this news release is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of these entities.Certain of the statements contained in this news release are forward-looking and reflect management's expectations regarding the Fund's future growth, results of operations, performance and business based on information currently available to the Fund. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements use forward-looking words, such as "anticipate", "continue", "could", "expect", "may", "will", "estimate", "believe" or other similar words. The forward-looking statements in this news release are based on information currently available and what the Fund currently believes are reasonable assumptions, including the material assumptions for each of the Fund's assets set out in the Fund's 2009 Annual Report under the heading "Outlook" on page 42, as updated in subsequently filed Quarterly Financial Reports of the Fund (such documents are available on the Canadian Securities Administrators' System of Electronic Document Analysis and Review ("SEDAR") at www.sedar.com). Other material factors or assumptions that were applied in formulating the forward-looking statements contained herein include the assumption that the business and economic conditions affecting the Fund's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates and that there will be no unplanned material changes to the Fund's facilities, equipment and contractual arrangements. Although the Fund believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons, including risks related to: power infrastructure (operational performance; power purchase agreements ("PPAs"); fuel; contract performance; development risk; technology risk; default under credit agreements; land tenure and related rights; regulatory regime and permits, and force majeure) and the Fund (changes in federal tax rules for flow-through entities; other tax-related risks; variability of distributions; geographic concentration and non-diversification; dependence on Macquarie Power Management Ltd. ("MPML" or the "Manager") and potential conflicts of interest; insurance; environmental, health and safety regime; availability of financing; unitholder dilution; volatile market price for units; international financial reporting standards; nature of units; unitholder liability). For a more comprehensive description of these and other possible risks, please see the Fund's Annual Information Form dated March 25, 2010 for the year ended December 31, 2009 as updated in subsequently filed Quarterly Financial Reports and other filings of the Fund with the Canadian securities regulators. These filings are available on SEDAR at www.sedar.com. The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements. These forward-looking statements reflect current expectations of the Fund as at the date of this news release and speak only as at the date of this news release. Except as may be required by law, the Fund does not undertake any obligation to publicly update or revise any forward-looking statements. (2)The fair value of unitholders equity reflected the Fund's market capitalization as at June 30, 2010 based on a unit price of $6.95 (December 31, 2009 - $6.11) and units outstanding of 49,911,369 (December 31, 2009 - 49,911,927 units). Units outstanding include Class B exchangeable units of a subsidiary of the Fund of which there were 3,249,390 outstanding at June 30, 2010 (December 31, 2009 - 3,249,390 units).FOR FURTHER INFORMATION PLEASE CONTACT: Macquarie Power & Infrastructure Income Fund Michael Smerdon Vice President and Chief Financial Officer (416) 607 5167 michael.smerdon@macquarie.com or Macquarie Power & Infrastructure Income Fund Sarah Borg-Olivier Vice President, Investor Relations (416) 607 5009 sarah.borg-olivier@macquarie.com