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Press release from PR Newswire

Atlantic Power Corporation Releases Fourth Quarter and Year End 2011 Results

Wednesday, February 29, 2012

Atlantic Power Corporation Releases Fourth Quarter and Year End 2011 Results14:20 EST Wednesday, February 29, 2012BOSTON, Feb. 29, 2012 /PRNewswire/ -- Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ("Atlantic Power" or the "Company") today announced its results for the three months and year ended December 31, 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 "Project Adjusted EBITDA" and "Cash Available for Distribution" as used in this news release.  HighlightsAcquired Capital Power Income L.P., now Atlantic Power Limited Partnership (the "Partnership"), on November 5, 2011 for a total enterprise value of approximately $1.8 billion:increasing outstanding shares by 64% and doubling the enterprise value of the Company to approximately $3.3 billion;adding 18 generation projects and increasing the Company's net generating capacity by 143% to 2,116 MW;diversifying the Company's portfolio by adding plants in new regions of the United States and eight Canadian plants in Ontario and British Columbia;establishing Atlantic Power as the owner operator for approximately 50% of its projects; andincreasing Atlantic Power's employee count to 277 and adding offices in Toronto, Vancouver, Chicago and San DiegoAcquired a 30% interest in Rockland Wind, an 80 MW wind farm in American Falls, Idaho in December 2011, bringing the Company's total net generating capacity to 2,140 MWPayout ratio is within the Company's guidance range for 2011Announced agreement to acquire 51% of Canadian Hills, a 300 MW wind power project in Oklahoma in January 2012Announced agreement with Primary Energy Recycling Corporation ("PERC") to sell Atlantic Power's 14.3% interest in Primary Energy Recycling Holdings ("PERH") in February 2012"Since the close of the acquisition of the Partnership, we have made significant progress integrating the companies," commented Barry Welch, President and CEO.  "Our commercial development team, that we began augmenting since last year, has continued to identify strong opportunities accretive acquisitions, such as our recently announced Canadian Hills project.   Our access to growth capital has been further strengthened by our increased market cap and trading liquidity. We are also focusing on opportunities to rationalize the combined portfolio and both optimize and extend our existing contracts. In addition, our 2012 budgets for the Partnership facilities include capital expenditures for improvements in the reliability, efficiency and sustainability of our assets."Operating PerformanceThe Company's financial results for 2011 include approximately two months of results from the Partnership and its projects.  Project Adjusted EBITDA, including earnings from equity investments, increased by $31.7 million or 94%  to $65.5 million for the quarter ended December 31, 2011 compared to $33.8 million for the quarter ended December 31, 2010, primarily due to contributions of $29.6 million from the 18 projects added to Atlantic Power's portfolio when it acquired the Partnership.Project Adjusted EBITDA, including earnings from equity investments, increased by $32.7 million or 21.4% to $185.3 million for the year ended December 31, 2011 compared to $152.6 million for the year ended December 31, 2010, primarily due to contributions of $29.6 million from the 18 projects added to Atlantic Power's portfolio when it acquired the Partnership. Other significant contributors to 2011 EBITDA compared to 2010 include $8.9 million from Cadillac, which was purchased in the fourth quarter of 2010, and $4.3 million from Idaho Wind, which became operational in the first quarter of 2011.Aggregate power generation in MWh's for 2011 increased approximately 24% from the previous year primarily due to increased generation from the newly acquired Partnership projects.  Weighted average availability of Atlantic Power's projects also increased by 1.3% to 96.5% for the year ended 2011.Cash Available for DistributionFor the year ended December 31, 2011, Cash Available for Distribution increased by 25% or $16.7 million compared to the prior year, primarily due to cash received from the Partnership projects in November and December.  The payout ratio for the year ended December 31, 2011 was 105% compared to 100% for the prior year and is within the Company's guidance range for 2011.The calculation of Cash Available for Distribution (in both US$ and Cdn$) and a summary of Project Adjusted EBITDA by segment for the year ended December 31, 2011, 2010 and 2009 are attached to this news release.RocklandThe Rockland Wind Project LLC ("Rockland") is an 80 MW wind power generating facility located near American Falls, Idaho, which commenced commercial operation in December 2011.  Atlantic Power acquired a 30% ownership interest in Rockland in December 2011 for $12.5 million. Rockland's other owners include Ridgeline Energy, LLC, the project developer, and an affiliate of Diamond Generating Corporation. Electricity is sold to Idaho Power Company under a 25-year fixed-price PPA expiring in 2036.  Canadian HillsOn January 31, 2012, Atlantic Power invested approximately $23 million of late-stage development capital to acquire 51% of Canadian Hills Wind, LLC ("Canadian Hills"). Canadian Hills owns an approximately 300 MW wind power project in development, located approximately 20 miles west of Oklahoma City, Oklahoma. It has executed long-term power purchase agreements with investment grade offtakers for 250 MW and is currently negotiating a similar PPA for the remaining 48 MW.  Construction is expected to begin by April 2012 with commercial operations expected in November 2012. The Company will be responsible for operations and the asset management of the Project. Total project costs are expected to be approximately $460 million. Subject to final due diligence, Board approval and other conditions, Atlantic Power will have the right to invest 100% of the project's non-tax equity, or approximately $170 million.  The balance of approximately $290 million will be funded by tax equity and the Company expects no project-level debt.Primary Energy Recycling HoldingsOn February 16, 2012, Atlantic Power entered into an agreement with Primary Energy Recycling Corporation whereby PERC will purchase the Company's 14.3% common membership interests in PERH for approximately $24 million, plus a management agreement termination fee of approximately $6.1 million for a total price of $30.1 million.  The transaction remains subject to pricing adjustment or termination under certain circumstances and financing, and is expected to occur in the second quarter of 2012.  Change in Reporting Segments for 10-KAs a result of the acquisition of the Partnership, Atlantic Power revised its reportable business segments during the fourth quarter of 2011. The new operating segments are Northeast, Southeast, Northwest, Southwest and Un-allocated Corporate.  Financial results for the years ended December 31, 2010 and 2009 have been presented to reflect the change in operating segments. Atlantic Power revised its segments to align with changes in management's resource allocation and assessment of performance. These changes reflect the Company's current operating focus.OutlookBased on actual performance to date and projections for the remainder of the year, Atlantic Power expects to receive distributions from its projects in the range of $250 to $265 million for the full year 2012. The Company expects overall levels of operating cash flows in 2012 to be improved over actual 2011 levels due primarily to full year contributions from the Partnership assets and increased distributions from Selkirk following the final payment of its non-recourse projectlevel debt by mid-2012. These increased operating cash flows in 2012, in addition to the smaller and final management termination fee to ArcLight and a one-time realized gain from the termination of a portion of our aggregate foreign currency forward contracts from the combined company, are expected to result in a significant increase in cash available for distribution.  Atlantic Power anticipates a 2012 payout ratio of approximately 90% to 97%, subject to the financial performance of its projects.Investor Conference Call and WebcastA telephone conference call hosted by Atlantic Power's management team will be held on Thursday, March 1, 2012 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 10009044. 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 2,140 MW, consisting of interests in 31 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 in Charlotte, NC.  Atlantic Power is incorporated in British Columbia, headquartered in Boston and has offices in Chicago, Toronto, Vancouver and San Diego.Our corporate strategy is to increase the value of the company through accretive acquisitions in North American markets while generating stable, contracted cash flows from our existing assets to sustain our dividend payout to shareholders. Our dividend is currently paid monthly at an annual rate of Cdn$1.15 per share.Atlantic Power has a market capitalization of approximately $1.6 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 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 or on EDGAR at 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 $250 million to $265 million for the full year 2012;The expectation that overall levels of operating cash flows in 2012 will be improved over actual 2011 levels;The expectation that the payout ratio in 2012 will be approximately 90% to 97%;The expectation that the PERH transaction will close in the second quarter of 2012;The expectation that Canadian Hills will commence construction by April 2012 and achieve commercial operation in November of 2012; andThe expectation that financing for Canadian Hills will not include project level debt.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 CorporationConsolidated Balance Sheets (in thousands of U.S. dollars)December 31, December 31,20112010AssetsCurrent assets:Cash and cash equivalents$60,651$45,497Restricted cash21,41215,744Accounts receivable79,00819,362Note receivable ? related party-22,781Current portion of derivative instruments asset10,4118,865Inventory18,6285,498Prepayments and other7,6152,982Refundable income taxes3,0421,593Total current assets200,767122,322Property, plant and equipment, net1,388,254271,830Transmission system rights180,282188,134Equity investments in unconsolidated affiliates474,351294,805Other intangible assets, net584,27488,462Goodwill343,58612,453Derivative instruments asset22,00317,884Other assets54,91017,122Total assets$3,248,427$1,013,012Liabilities and Shareholders' EquityCurrent liabilities:Accounts payable$18,122$8,608Accrued interest19,9163,975Other accrued liabilities43,96811,025Revolving credit facility58,000-Current portion of long-term debt20,95821,587Current portion of derivative instruments liability20,59210,009Dividends payable10,7336,154Other current liabilities1655Total current liabilities192,45461,363Long-term debt1,404,900244,299Convertible debentures189,563220,616Derivative instruments liability33,17021,543Deferred income taxes182,92529,439Power purchase and fuel supply agreement liabilities, net71,775-Other non-current liabilities57,8592,376Commitments and contingencies--Total liabilities2,132,646579,636EquityCommon shares, no par value, unlimited authorized shares; 113,526,182 and 67,118,154 issued and outstanding December 31, 2011 and 2010, respectively1,217,265626,108Preferred shares issued by a subsidiary company221,304-Accumulated other comprehensive income (loss)(5,193)255Retained deficit(320,622)(196,494)Total Atlantic Power Corporation shareholders' equity1,112,754429,869Noncontrolling interest3,0273,507Total equity1,115,781433,376Total liabilities and equity$3,248,427$1,013,012Atlantic Power CorporationConsolidated Statements of Operations (in thousands of U.S. dollars, except per share amounts)Years Ended December 31,Three months ended Dec 31,20112010200920112010Project revenue:UnauditedEnergy sales$106,062$69,116$58,953$52,591$13,831Energy capacity revenue131,36293,56788,44949,50323,982Transmission services30,08731,00031,0007,3147,814Other17,3841,5731,11516,231465284,895195,256179,517125,63946,092Project expenses:Fuel93,99365,55359,52247,79113,947Operations and maintenance56,83231,23728,15329,31411,989Depreciation and amortization63,63840,38741,37430,92710,163214,463137,177129,049108,03236,099Project other income (expense):Change in fair value of derivative instruments(22,776)(14,047)(6,813)(10,279)6,899Equity in earnings of unconsolidated affiliates6,35613,7778,5147091,227Gain on sales of equity investments, net-1,51113,780-1,511Interest expense(20,053)(17,660)(18,800)(6,369)(4,776)Other income (expense), net202191,26660(14)(36,453)(16,200)(2,053)(15,879)4,847Project income33,97941,87948,4151,72814,840Administrative and other expenses (income):Administration38,10816,14926,02817,4474,103Interest, net25,99811,70155,69815,1833,682Foreign exchange loss (gain)13,838(1,014)20,506(6,545)(1,193)Other (income) expense, net-(26)362--77,94426,810102,59426,0856,592Income (loss) from operations before income taxes(43,965)15,069(54,179)(24,357)8,248Income tax expense (benefit)(8,324)18,924(15,693)2,3576,819Net (loss) income(35,641)(3,855)(38,486)(26,714)1,429Net loss attributable to noncontrolling interest(480)(103)-(131)125Preferred share dividends of a subsidiary company3,247--3,247-Net (loss) income attributable to Atlantic Power Corporation$(38,408)$(3,752)$(38,486)$(29,830)$1,304Net (loss) income per share attributable to Atlantic Power Corporation Shareholders:Basic$(0.50)$(0.06)$(0.63)$(0.26)$0.02Diluted$(0.50)$(0.06)$(0.63)$(0.26)$0.02Atlantic Power CorporationConsolidated Statements of Cash Flows (in thousands of U.S. dollars)             Years ended December 31,201120102009Cash flows from operating activities:Net loss$(35,641)$(3,855)$(38,486)Adjustments to reconcile to net cash provided by operating activities Depreciation and amortization63,63840,38741,374Common share conversions recorded in interest expense--4,508Subordinated note redemption premium recorded in interest expense--1,935Long-term incentive plan expense3,1674,497-Gain on sale of assets-(1,511)(12,847)Earnings from unconsolidated affiliates(7,878)(16,913)(14,213)Impairment of equity investments1,5223,1365,500Distributions from unconsolidated affiliates21,88916,84327,884Unrealized foreign exchange loss8,6365,61124,370Change in fair value of derivative instruments22,77614,0476,813Change in deferred income taxes(9,908)17,964(6,436)Other-(210)106Change in other operating balancesAccounts receivable(15,563)1,72910,520Prepayments, refundable income taxes and other assets1,6539,311(3,454)Accounts payable and accrued liabilities4,931(6,551)2,959Other liabilities(3,287)2,468(84)Net cash provided by operating activities55,93586,95350,449Cash flows (used in) provided by investing activities:Acquisitions and investments, net of cash acquired(591,583)(78,180)(3,068)Proceeds from (loan to) Idaho Wind22,781(22,781)-Change in restricted cash(5,668)945575Biomass development costs(931)(2,286)-Proceeds from sale of assets8,5002,00029,467Purchase of property, plant and equipment(115,107)(46,695)(2,016)Net cash (used in) provided by investing activities(682,008)(146,997)24,958Cash flows (used in) provided by financing activities:Proceeds from issuance of long term debt460,000--Proceeds from issuance of equity, net offering costs155,42472,767-Proceeds from issuance of convertible debenture, net of offering costs-74,575-Deferred financing costs(26,373)(7,941)-Repayment of project-level debt(21,589)(18,882)(12,744)Proceeds from revolving credit facility borrowings58,00020,000-Repayments of revolving credit facility borrowings-(20,000)(55,000)Dividends paid(85,029)(65,028)(24,955)Equity contributions from noncontrolling interest-200-Proceeds from issuance of project level debt100,794-78,330Redemption of IPSs under normal course issuer bid--(3,369)Redemption of subordinated notes--(40,638)Costs associated with common share conversion--(4,508)Net cash provided by (used in) financing activities641,22755,691(62,884)Net (decrease) increase in cash and cash equivalents15,154(4,353)12,523Cash and cash equivalents at beginning of year45,49749,85037,327Cash and cash equivalents at end of year$60,651$45,497$49,850Supplemental cash flow informationInterest paid$40,238$26,687$69,186Income taxes paid (refunded), net$1,109$(8,000)$(216)Accruals for capital expenditures$4,095$-$-Regulation G DisclosuresCash 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 is defined as project income plus interest, taxes, depreciation and amortization (including non-cash impairment charges) and changes in fair value of derivative instruments.  Project Adjusted EBITDA 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 CorporationCash Available for Distribution(In thousands of U.S. dollars, except as otherwise stated)(Unaudited)Years ended December 31,201120102009Cash flows from operating activities$55,935$86,953$50,449Project-level debt repayments(21,589)(18,882)(12,744)Interest on IPS portion of subordinated notes(1)--30,639Purchase of property, plant and equipment(2)(2,035)(2,549)(2,016)Transaction Costs(3)33,402--Realized foreign currency losses on hedges associated with Partnership transaction(4)16,492--Cash Available for Distribution(5)82,20565,52266,328Interest on subordinated notes--30,639Dividends on common shares86,35765,64827,988Total dividends declared to shareholders86,35765,64858,627Payout ratio105%100%88%Expressed in Cdn$Cash Available for Distribution81,36367,54075,673Total dividends declared to shareholders85,43767,91466,325(1)   Prior to the common share conversion in November 2009, a portion of our monthly distribution to IPS holders was paid in the form of interest on the subordinated notes comprising a part of the IPSs. Subsequent to the conversion, the entire monthly cash distribution is paid in the form of a dividend on our common shares.(2)   Excludes construction-in-progress costs related to our Piedmont biomass project.(3)    Represents costs incurred associated with the Partnership acquisition.(4)   Realized foreign currency losses associated with foreign exchange forwards entered into in order to hedge a portion of the foreign currency exchange risks associated with the closing of the Partnership acquisition.(5)   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" above.Atlantic Power CorporationProject Adjusted EBITDA (in thousands of U.S. dollars)(Unaudited)Years ended December 31,Three months endedDec 31,20112010200920112010Project Adjusted EBITDA by segmentNortheast$59,299$36,030$32,435$31,617$9,235Southeast79,44578,24575,26515,55414,890Northwest11,3637368227,757206Southwest37,71737,86735,89111,9489,794Un-allocated corporate(2,546)(294)(234)(1,425)(359)Total185,278152,584144,17965,45133,766Reconciliation to project incomeDepreciation and amortization95,56465,79167,64342,64216,460Interest expense, net27,99023,62831,5118,0385,844Change in the fair value of derivative instruments25,33417,6435,04712,421(5,792)Other (income) expense2,4113,643(8,437)6222,414Project income $33,979$41,879$48,415$1,728$14,840SOURCE Atlantic Power Corporation