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Press release from Marketwire

Maxim Power Corp. Announces 2013 Third Quarter Financial and Operating Results

Thursday, November 07, 2013

Maxim Power Corp. Announces 2013 Third Quarter Financial and Operating Results

21:01 EST Thursday, November 07, 2013

CALGARY, ALBERTA--(Marketwired - Nov. 7, 2013) - Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG) announced today the release of financial and operating results for its third quarter ended September 30, 2013. The unaudited condensed consolidated financial statements, accompanying notes and Management Discussion and Analysis ("MD&A") will be available on SEDAR and on MAXIM's website on November 7, 2013. All figures reported herein are Canadian dollars unless otherwise stated.

The Financial Highlights below includes the results from Maxim Power (USA), Inc. ("MUSA") to September 30, 2013, which are recorded as discontinued operations in MAXIM's financial statements. Refer to MAXIM's unaudited condensed consolidated financial statements and MD&A for further details.

FINANCIAL HIGHLIGHTS

Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in thousands except per share amounts) 2013 2012 2013 2012
Net revenue (1) $ 45,046 $ 41,620 $ 136,933 $ 105,454
Adjusted EBITDA (1) 14,828 16,612 43,232 25,259
Adjusted net income (1) 9,685 9,765 20,395 9,946
Net income attributable to shareholders 7,640 8,343 18,672 2,253
Per share - basic and diluted $ 0.14 $ 0.15 $ 0.34 $ 0.04
Funds from operations (2) 13,632 16,700 41,133 25,666
Per share - basic and diluted $ 0.25 $ 0.31 $ 0.76 $ 0.47
Electricity Deliveries (MWh) 340,144 354,976 834,029 834,992
Net Generation Capacity (MW) (3) 802 788 802 788
Average Alberta Power Prices ($ per MWh) $ 83.62 $ 78.09 $ 90.84 $ 59.48
Average Milner Realized Electricity Price ($ per MWh) $ 108.94 $ 134.70 $ 125.13 $ 87.48
  1. Select financial information was derived from the unaudited condensed consolidated financial statements and is prepared in accordance with Part 1 of the Canadian Institute of Chartered Accountants Handbook ("GAAP"), except net revenue, adjusted EBITDA, and adjusted net income. Net revenue, adjusted EBTIDA and adjusted net income are calculated based on the total of continuing and discontinued operations. Net revenue is provided to highlight revenue net of any gains or losses realized on commodity swaps. Adjusted EBITDA is provided to assist management and investors in determining the Corporation's approximate operating cash flows before interest, income taxes, and depreciation and amortization and certain other income and expenses. Adjusted net income is used to compare MAXIM's results among reporting periods without consideration of unrealized gains and losses and to evaluate MAXIM's performance. Net revenue, adjusted EBITDA, and adjusted net income do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies.
  2. Funds from operations is an Additional GAAP measure provided to assist management and investors in determining the Corporation's cash flows generated by operations before the cash impact of working capital fluctuations.
  3. Generation capacity is manufacturer's nameplate capacity and includes discontinued operations, net of minority ownership interests of third parties.

OPERATING RESULTS

Net revenue increased in the third quarter of 2013 compared to the third quarter of 2012, primarily due to a higher realized price in the Northeast U.S. This was partially offset by lower generation in the Northeast U.S., reduced production due to Milner turnaround carrying into the third quarter and a lower realized price at the Milner facility. Adjusted EBITDA, adjusted net income, net income attributable to shareholders and funds from operations decreased during this same period. The decrease in these financial measures is primarily due to higher operating costs incurred, in part as a result of the Milner turnaround carrying into the third quarter.

On a year-to-date basis, net revenue, adjusted EBITDA, adjusted net income, net income attributable to shareholders and funds from operations have increased from the prior year. The increase in these financial measures is primarily due to an increase in Alberta power prices, which positively impacted Milner results, as well as improved results in the Northeast U.S.

STRATEGIC REVIEW

During the fourth quarter of 2012, MAXIM appointed financial advisors to review the Corporation's investments in the United States and France in order to identify options to maximize shareholder value. Credit Suisse Securities (USA) LLC was engaged as financial advisor with respect to MAXIM's investments in the United States and HSBC Bank plc was engaged as financial advisor with respect to MAXIM's investments in France.

As previously reported, the Corporation announced that it had entered into an agreement to sell 100% of its ownership interest in MUSA to Patriot Power Holdings, LLC ("Patriot"), an affiliate of Rockland Capital for US$112 million including the assumption of US$22 million of debt resulting in sales proceeds of US$90 million. The Corporation is responding to a regulatory inquiry related to its offers to supply electricity to the ISO New England market, which may give rise to a claim. The evaluation of the France initiative is ongoing with no expectation of outcome at this time.

GROWTH INITIATIVES

Summit Coal Limited Partnership ("SUMMIT") Mine 14 Project

SUMMIT's Mine 14 project, which is located north of Grande Cache, Alberta, has current estimates of 18.9 million tonnes of low-mid volatile metallurgical coal reserves with a mine life of 17 years based on the NI 43-101 Technical Report filed on SEDAR. SUMMIT's Mine 16S project is located 30 kilometers northwest of the Mine 14 leases and represents 1,792 hectares or 29% of SUMMIT's total area of leases. An NI 43-101 Technical Report has not been prepared for the Mine 16S property.

In 2013, MAXIM received regulatory approvals to construct and operate a coal beneficiation plant. Early in the third quarter of 2013, SUMMIT's mine license was amended to increase coal production 2.7 times, from 480,000 tonnes to 1,300,000 tonnes per year. These advancements provide SUMMIT with all of the requisite government and regulatory approvals to construct and operate M14.

The Corporation considers the advancement of the M14 and M16S development projects strategic for MAXIM in part because of the value of metallurgical coal and in part due to Milner's ability to utilize tailings and lower quality fuels, which are by-products of the beneficiation of coal, to produce electricity.

Deerland Peaking Station ("D1")

MAXIM is actively pursuing commercial arrangements that will allow for the construction of the 190 MW D1 Station. The D1 site is located near Bruderheim in Alberta's Industrial Heartland adjacent to the existing Deerland high voltage substation. D1 has received all regulatory approvals and MAXIM has entered into an agreement to secure firm natural gas transportation services. D1 is the only permitted peaking development project in the province of Alberta as at the date of this press release.

D1 is an attractive project as Alberta is experiencing tighter supply demand fundamentals and increasingly volatile electricity prices. Demand for electricity is increasing, base load supply is expected to contract through retirement of coal-fired units and wind power is intermittent. MAXIM expects that peaking requirements across Alberta will continue to grow as a result of these market drivers.

Milner Expansion ("M2")

The AUC has granted MAXIM approval to develop a 500 MW generating facility adjacent to the existing 150 MW generating facility ("M1"). A lengthy public consultation and regulatory process culminated in the project's final approval by the AUC on August 10, 2011. On September 12, 2012, the Government of Canada enacted new greenhouse gas legislation that limits the amount of carbon dioxide emitted by coal-fired generation facilities. MAXIM is examining ways to meet the new standards including the development of a natural-gas fired facility. All aspects are presently being studied to determine the most attractive option for shareholders.

Buffalo Atlee ("B1")

MAXIM's B1 Power Project, situated near Brooks, Alberta, has the potential for development of over 200 MW of wind generation capacity. Wind data has been collected on the site for approximately five years. MAXIM holds an exploratory Crown land permit with a term of five years, expiring on January 1, 2016. The addition of wind generation to MAXIM's existing portfolio of assets will diversify MAXIM's generation fuel types and provide the potential to offset the impact of any new greenhouse gas legislation.

CONFERENCE CALL FOR Q3 2013 RESULTS

MAXIM will host a conference call for analysts and investors on Tuesday, November 12, 2013 at 11:30 am MT. The call will be hosted by John Bobenic, MAXIM's President and Chief Executive Officer, and by Mike Mayder, Vice President, Finance and Chief Financial Officer. To participate in this conference call, please dial (800) 766-6630 or (416) 340-8527 in the Toronto area. It is recommended that participants call at least ten minutes prior to start time.

A recording of the conference call will be available until November 19, 2013. To access the replay, dial (800) 408-3053 or (905) 694-9451 followed by the passcode 1750251. In addition, the recording will be available commencing November 12, 2013 in the Investor Relations section of MAXIM's website at www.maximpowercorp.com.

About MAXIM

Based in Calgary, Alberta, MAXIM is an independent power producer, which acquires or develops, owns and operates innovative and environmentally responsible power and power related projects. MAXIM currently owns and operates 40 power plants in western Canada, the United States and France, having 802 MW of electric generating capacity. MAXIM trades on the TSX under the symbol MXG. For more information about MAXIM, visit our website at www.maximpowercorp.com.

Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions and will update such forward-looking statements as required pursuant to applicable securities laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
Maxim Power Corp.
John R. Bobenic
President and CEO
(403) 750-9300


Maxim Power Corp.
Michael R. Mayder
Vice President, Finance and CFO
(403) 750-9311
www.maximpowercorp.com

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