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Press release from CNW Group

Atlantic Power Corporation Releases Third Quarter 2011 Results

Friday, November 11, 2011

Atlantic Power Corporation Releases Third Quarter 2011 Results16:40 EST Friday, November 11, 2011 << >>BOSTON, Nov, 11, 2011 /CNW/ -- 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 paymentsunder 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 info@atlanticpower.comCopies 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 December 30, 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 Ninemonths ended ended September 30, 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 Nine months ended ended September 30, 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 Nine months ended ended September 30, 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 ----------------------------- ------ ------ ------- ------- >>For further information: Web Site: http://www.atlanticpower.com