TransAlta Renewables Reports Second Quarter 2019 Results and Declares Dividends
Second Quarter 2019 Financial Highlights
-- Comparable EBITDA of $111 million, an increase of 13% over Q2 2018; -- Adjusted funds from operations increased $7 million or 10% compared to Q2 2018; and -- Cash available for distribution per share increased 10% quarter-over-quarter
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."
-- 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) Owned 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 www.transaltarenewables.com or at SEDAR at www.sedar.com.
Notes (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 based.
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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