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TransAlta Renewables Reports Third Quarter 2019 Results and Declares Dividends

CNW Group - Wed Nov 6, 6:00AM CST

Third Quarter 2019 Financial Highlights

--  Comparable EBITDA of $86 million, a decrease of 2% over Q3
        2018;
    --  Adjusted funds from operations of $69 million, an increase of
        $2 million or 3% compared to Q3 2018; and
    --  Cash available for distribution increased by $2 million
        compared to Q3 2018.

TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX:RNW.TO) today reported financial results for the three and nine months ended Sept. 30, 2019. Comparable EBITDA((1,2)) for the quarter and nine months ended September 30, 2019 was $86 million and $313 million, respectively, representing a 2% decrease for the quarter and a 6% increase year-to-date, as compared to the equivalent periods in the previous year. Comparable EBITDA for the three months ended Sept. 30, 2019 decreased by $2 million, mainly due to lower Comparable EBITDA at Australian Gas and US Wind and Solar, partially offset by higher Comparable EBITDA from Canadian Wind. Comparable EBITDA for the nine months ended Sept. 30, 2019 increased by $17 million, mainly due to an increase in US Wind & Solar EBITDA from the Lakeswind wind and Mass Solar solar economic interests acquired in May 2018, an increase in Canadian Wind Comparable EBITDA due to insurance proceeds related to a 2018 tower fire at Summerview and higher green attribute revenues and higher Comparable EBITDA at Canadian Gas due to decreased fuel consumption stemming from a customer planned outage, partially offset by lower Comparable EBITDA at Australia Gas due to the impact of the weakening Australian dollar.

"Third quarter results were in line with our overall expectations," said John Kousinioris, President. "We remain very focused on successfully commissioning our two US wind projects prior to the end of the year. In addition, we are continuing work to add further accretive projects to our portfolio, including potential additional drop-down opportunities from TransAlta Corporation."

CAFD for the three months ended Sept. 30, 2019 increased by $2 million due to higher AFFO. CAFD for the nine months ended Sept. 30, 2019 increased by $6 million mainly due to higher AFFO partially offset by higher principal repayments of amortizing debt and finance lease obligations.

Reported net earnings attributable to common shareholders for the three months ended Sept. 30, 2019 increased by $12 million primarily due to an increase in the change in fair value of financial assets of $29 million, lower foreign exchange losses of $5 million and a reduction in fuel, royalties and other costs of $5 million, partially offset by an increase in depreciation expense of $11 million, a reduction of finance income of $10 million and interest income of $10 million from subsidiaries of TransAlta, both related to our investment in Australian Gas. Reported net earnings attributable to common shareholders for the nine months ended Sept. 30, 2019 decreased by $12 million. The decrease was attributable to higher foreign exchange losses of $33 million due to the weakening Australian dollar, a reduction of finance income and interest income from subsidiaries of TransAlta of $74 million, partially offset by an increase in the change in fair value of investments in subsidiaries of TransAlta of $66 million, a decrease in interest expense of $7 million, and an increase in income tax recovery of $21 million mainly due to the reduction in Alberta corporate tax rates in the third quarter of 2019.

The Company also declared a monthly dividend of $0.07833 per common share for holders of record on January 15, 2020, February 14, 2020 and March 13, 2020 payable on each of January 31, 2020, February 28, 2020 and March 31, 2020.

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. The project is mechanically complete with all nine
        turbines fully assembled and commercial operation is expected
        by the end of the year.
    --  Construction continues on 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 by the end of
        the year.
    --  On August 1, 2019, Mr. David Drinkwater was appointed Chair of
        the Board of Directors. Mr. Allen Hagerman's term as Chair
        expired pursuant to the terms of the Chair Terms of Reference.
        Mr. Hagerman continues to serve as an independent director on
        the Board of Directors.

The following table depicts key financial results and statistical operating data:

Third Quarter 2019 Highlights

In $CAD millions, unless otherwise stated                                          3 Months ended                9 Months ended


                                                                                     Sept. 30, 2019

           Sept. 30, 2018                 Sept. 30, 2019

     Sept. 30, 2018

                                                                                ---


       Renewable energy production (GWh)(3)                                                                     706                            665               2,574                   2,545



       Revenues                                                                                                  89                             90                 327                     322



       Comparable EBITDA(1,2)                                                                                    86                             88                 313                     296



       Cash flow from operating activities                                                                       75                             78                 258                     282



       Adjusted funds from operations(1)                                                                         69                             67                 243                     235



       Cash available for distribution(1)                                                                        67                             65                 216                     210



       Net earnings attributable to common shareholders                                                          24                             12                 131                     143



       Net earnings per share attributable to common shareholders, basic and diluted                           0.09                           0.05                0.50                    0.56



       Adjusted funds from operations per share(1)                                                             0.26                           0.25                0.92                    0.92



       Cash available for distribution per share(1)                                                            0.25                           0.25                0.82                    0.82



       Dividends paid per common share                                                                         0.23                           0.23                0.70                    0.70



       Dividends declared per common share(4)                                                                  0.23                           0.23                0.70                    0.70

    ---

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 Sept. 30                                           2019         2018



                ($CAD millions)


                                                                   Owned                   Economic       Total              Owned                 Economic       Total
                                                      Assets                  Interest                          Assets                    Interest

                                                        ---


       Comparable EBITDA                                                  50       36        86           43                  45         88



       Interest expense                                                 (10)                       (10)               (11)                                 (11)



       Sustaining capital expenditures                                   (5)     (2)      (7)         (8)                                  (8)



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



       Tax equity distributions                                                  (1)      (1)                            (2)       (2)



       Distributions paid to subsidiaries' non-controlling interest                                                    (1)                                  (1)



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



       Insurance recovery                                                                                                        (6)       (6)



       Interest income and other                                           2        3         5            1                 (4)       (3)



       Change in long term receivable                                                                                              9          9



       Adjusted funds from operations                                     35       34        69           24                  43         67

    ---
9 Months Ended Sept. 30                                           2019         2018



                ($CAD millions)


                                                                   Owned                   Economic       Total              Owned                 Economic       Total
                                                      Assets                  Interest                          Assets                    Interest




       Comparable EBITDA                                                 195      118       313          179                 117        296



       Interest expense                                                 (30)                       (30)               (38)                                 (38)



       Sustaining capital expenditures                                  (22)     (5)     (27)        (20)                (1)      (21)



       Current income tax expense                                        (1)     (6)      (7)         (4)                  1        (3)



       Tax equity distributions                                                  (4)      (4)                            (2)       (2)



       Distributions paid to subsidiaries' non-controlling interest      (4)                        (4)                (3)                                  (3)



       Realized foreign exchange loss                                    (4)                        (4)



       Provisions                                                                                                        2                                     2



       Insurance recovery                                                (4)                        (4)                          (6)       (6)



       Interest income and other                                           6        4        10            3                 (2)         1



       Change in long term receivable                                                                                              9          9



       Adjusted funds from operations                                    136      107       243          119                 116        235

    ---

A complete copy of TransAlta Renewables' third 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 (AFFO) 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 (CAFD) 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
                  and losses. Both the current and
                  prior period amounts have been
                  adjusted to reflect this change.



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



     (4)       Includes DRIP non-cash payments.

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 including additional drop-downs from TransAlta Corporation; and the commissioning and commercial operation of the Antrim and Big Level wind projects during the fourth quarter 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, including any weather, construction or regulatory impacts; 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.

View original content: http://www.newswire.ca/en/releases/archive/November2019/06/c1511.html

SOURCE: TransAlta Renewables Inc.

Investor Inquiries: Investor Relations, Phone: 1-800-387-3598 in Canada and U.S.,
Email: investor_relations@transalta.com; Media Inquiries: Media Relations, Phone:
Toll-free media number: 1-855-255-9184, Email: ta_media_relations@transalta.com

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