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TransAlta Renewables Reports Second Quarter 2019 Results and Declares Dividends

CNW Group - Thu Aug 8, 6:00AM CDT

Second Quarter 2019 Financial Highlights

--  Comparable EBITDA of $111 million, an increase of 13% over Q2
    --  Adjusted funds from operations increased $7 million or 10%
        compared to Q2 2018; and
    --  Cash available for distribution per share increased 10%

TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX:RNW.TO) today reported its financial results for the three and six months ended June 30, 2019. Comparable EBITDA((1,2)) for the quarter and six months ended June 30, 2019 was $111 million and $227 million, respectively, representing a 13% increase for the quarter and 9% improvement year-to-date. The increase was mainly attributable to the US Wind and Solar segment with the addition of the Lakeswind and Mass Solar assets acquired in May 2018; an increase in Canadian Wind due to higher green attribute revenues, new asset additions of Kent Breeze and Kent Hills 3 in 2018, and insurance proceeds related to a 2018 fire at Summerview; and favourable market impacts at Canadian Gas.

Cash available for distribution((1)) for the second quarter was $57 million, an increase of $6 million compared to 2018. Strong EBITDA performance and lower interest expense were partially offset by higher sustaining capital expenditures and higher distributions paid to our partners. Cash available for distribution for the six months ended June 30, 2019, increased by $2 million to $149 million, due to higher adjusted funds from operations.

Reported net earnings attributable to common shareholders for the three and six months ended June 30, 2019, decreased $34 million and $24 million, respectively, compared to 2018, primarily driven by lower finance and interest income related to subsidiaries of TransAlta and higher unrealized foreign exchange losses, partially offset by an increase in the fair value of investments in subsidiaries of TransAlta and a decrease in interest expense and income tax expense.

The Company also declared a monthly dividend of $0.07833 per common share for holders of record on October 15, 2019, November 15, 2019 and December 13, 2019 payable on each of October 31, 2019, November 29, 2019 and December 31, 2019.

"Results in the second quarter delivered positive growth supported by the acquisition of contracted renewable assets in mid-2018," said John Kousinioris, President. "We are excited to continue this growth plan with the upcoming commissioning of two additional US wind projects later this year and continue to be focused on adding new accretive projects to the fleet."

2019 Highlights

--  On March 28, 2019, a subsidiary of TransAlta Corporation
        ("TransAlta") closed the acquisition of the Antrim wind project
        which was previously announced on February 20, 2018. The
        Company has an economic interest in the 29 MW project, located
        in New Hampshire, which has two 20-year PPAs with
        counterparties having a Standard & Poor's credit rating of A+
        or better. Commercial operation of the Antrim wind project is
        expected during the second half of 2019.
    --  Construction continues at Big Level, the 90 MW wind project in
        Pennsylvania which has a 15-year PPA with Microsoft
        Corporation. Foundations are complete and turbine erection is
        progressing. We expect to commission this project in the second
        half of 2019.
    --  Effective May 16, 2019, the Corporation appointed Brent Ward to
        the role of Chief Financial Officer of TransAlta Renewables.
        Todd Stack, the previous Chief Financial Officer was appointed
        to the Chief Financial Officer role of TransAlta. Mr. Ward also
        serves as Managing Director and Treasurer of TransAlta.

The following table depicts key financial results and statistical operating data:Second Quarter 2019 Highlights

In $CAD millions, unless otherwise stated                                  3 Months Ended                     6 months ended

                                                 June 30, 2019

         June 30, 2018

     June 30, 2019

           June 30, 2018

     Renewable energy production (GWh)(3)                                              867          874               1,868                           1,878

     Revenues                                                                          111          107                 238                             232

     Comparable EBITDA(1,2)                                                            111           98                 227                             208

     Cash flow from operating activities                                                52           72                 183                             204

     Adjusted funds from operations(1)                                                  80           73                 174                             170

     Cash available for distribution(1)                                                 57           51                 149                             147

     Net earnings attributable to common shareholders                                   31           65                 107                             131

      Net earnings per share attributable to common shareholders, basic and diluted    0.12         0.26                0.41                            0.52

     Adjusted funds from operations per share(1)                                      0.30         0.29                0.66                            0.68

     Cash available for distribution per share(1)                                     0.22         0.20                0.56                            0.59

     Dividends paid per common share                                                  0.23         0.23                0.47                            0.47

     Dividends declared per common share                                              0.23         0.23                0.47                            0.47

The following tables provide further detail on the allocation of the comparable EBITDA between owned assets and assets in which TransAlta Renewables holds an economic interest; as well as a reconciliation to adjusted funds from operations.

3 Months Ended June 30                                           2019                                                      2018

                ($CAD millions)

                                        Owned                         Economic     Total             Owned                  Economic        Total
                           Assets                         Interest                        Assets                Interest

     Comparable EBITDA                                                         71     40                   111                          63        35        98

     Interest expense                                                        (10)                       (10)                       (17)              (17)

     Sustaining capital expenditures                                         (10)   (2)                 (12)                        (7)               (7)

     Current income tax expense                                                     (2)                  (2)                        (1)               (1)

     Tax equity distributions                                                       (2)                  (2)

      Distributions paid to subsidiaries' non-controlling
       interest                                                                (4)                        (4)

     Realized foreign exchange loss                                           (2)                        (2)                        (1)               (1)

     Insurance recovery                                                       (4)                        (4)

     Other                                                                      3      2                     5                           1                  1

     Adjusted funds from operations                                            44     36                    80                          38        35        73

                6 Months Ended June 30                                           2019                                                      2018

                ($CAD millions)

                                        Assets                   Economic Interest Total         Owned Assets          Economic Interest    Total

     Comparable EBITDA                                                        145     82                   227                         136        72       208

     Interest expense                                                        (20)                       (20)                       (27)              (27)

     Sustaining capital expenditures                                         (17)   (3)                 (20)                       (12)      (1)     (13)

     Current income tax expense                                               (1)   (4)                  (5)                        (3)               (3)

     Tax equity distributions                                                       (3)                  (3)

      Distributions paid to subsidiaries' non-controlling
       interest                                                                (4)                        (4)

     Realized foreign exchange loss                                           (1)                        (1)                        (1)               (1)

     Provisions                                                                                                                       2                  2

     Insurance recovery                                                       (4)                        (4)

     Other                                                                      3      1                     4                           2         2         4

     Adjusted funds from operations                                           101     73                   174                          97        73       170

A complete copy of TransAlta Renewables' second quarter report, including MD&A and unaudited financial statements, is available through TransAlta Renewables' website at or at SEDAR at


     (1)       Comparable EBITDA refers to earnings
                  before interest, taxes, depreciation
                  and amortization including finance
                  lease income and adjusted for
                  certain other items. Adjusted funds
                  from operations includes the
                  deduction of sustaining capital
                  expenditures and distributions to
                  non-controlling interests and
                  excludes the effects of timing and
                  working capital on distributions
                  from subsidiaries of TransAlta in
                  which the Company holds an economic
                  interest. Cash available for
                  distribution refers to adjusted
                  funds from operations, less
                  principal repayments of amortizing
                  debt. These items are not defined
                  under International Financial
                  Reporting Standards ("IFRS").
                  Presenting these items from period
                  to period provides management and
                  investors with the ability to
                  evaluate earnings and cash flow
                  trends more readily in comparison
                  with prior periods' results. Refer
                  to the Non-IFRS Measures section of
                  the MD&A for further discussion of
                  these items, including, where
                  applicable, reconciliations to
                  measures calculated in accordance
                  with IFRS.

     (2)       During the first quarter of 2019, we
                  revised our approach to reporting
                  adjustments to arrive at comparable
                  EBITDA, mainly to be more comparable
                  with other companies in the
                  industry. Comparable EBITDA is now
                  adjusted to exclude the impact of
                  unrealized mark-to-market gains or
                  losses. Both the current and prior
                  period amounts have been adjusted to
                  reflect this change.

     (3)       Includes production from the Wyoming
                  Wind Farm and excludes Canadian and
                  Australian gas-fired generation.
                  Production is not a key revenue
                  driver for gas-fired facilities as
                  most of their revenues are capacity

About TransAlta Renewables Inc.

TransAlta Renewables is among the largest of any publicly traded renewable independent power producers ("IPP") in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 21 wind facilities, 13 hydroelectric facilities, seven natural gas generation facilities, one solar facility and one natural gas pipeline, representing an ownership interest of 2,414 megawatts of owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the States of Wyoming, Massachusetts, Minnesota and the State of Western Australia. Our objectives are to (i) provide stable, consistent returns for investors through the ownership of, and investment in, highly contracted renewable and natural gas power generation and other infrastructure assets that provide stable cash flow primarily through long-term contracts with strong counterparties; (ii) pursue and capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; (iii) maintain diversity in terms of geography, generation and counterparties; and (iv) pay out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis.

Cautionary Statement Regarding Forward Looking Information

This news release contains forward-looking statements, including statements regarding the business and anticipated financial performance of the Company that are based on the Company's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "plans", "expects", "proposed", "will", "anticipates", "develop", "continue", and similar expressions suggesting future events or future performance. In particular, this news release contains forward-looking statements, including as it pertains to: the Company's growth plan; adding new accretive projects to the fleet; and the commercial operation of the Antrim and Big Level wind projects during the second half of 2019. These forward-looking statements are not historical facts but reflect the Company's current expectations concerning future plans, actions and results. These statements are subject to a number of risks and uncertainties that could cause actual plans, actions and results to differ materially from current expectations including, but not limited to: competitive factors in the renewable power industry; delays in the construction or commissioning of the US wind projects; operational breakdowns, failures, or other disruptions; changes in economic and market conditions; continued access to debt, tax equity, and capital markets; changes in tax, environmental, and other laws and regulations; and other risks and uncertainties discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time and as also set forth in the Company's MD&A for the year ended December 31, 2018 and 2019 Annual Information Form. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this news release. The purpose of the financial outlooks contained herein is to give the reader information about management's current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note: All financial figures are in Canadian dollars unless noted otherwise.

SOURCE TransAlta Renewables Inc

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SOURCE: TransAlta Renewables Inc

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