TransAlta Renewables Reports Fourth Quarter and Full Year 2018 Results and Provides Outlook for 2019
Full-Year 2018 Financial Highlights
-- Comparable EBITDA of $430 million was slightly higher than last year; -- Adjusted funds from operations increased $15 million over 2017; and -- Cash available for distribution increased approximately 4% year-over-year.
TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX:RNW.TO) announced today its financial results for the three months and year ended December 31, 2018. Comparable EBITDA((1)) for the quarter and year ended December 31, 2018 was $133 million and $430 million, respectively, slightly higher than last year. Contributions from the South Hedland Power Station and from assets acquired at US Wind and Solar were offset by the sale of the Solomon Power Station.
Our AFFO((1)) and CAFD((1)) also increased for the full year by $15 million and $11 million, respectively, primarily through higher EBITDA and lower interest expense.
Net earnings (loss) attributable to common shareholders increased by $227 million primarily as a result of higher finance income of $90 million. A $137 million prior period impairment on our investment in the Australian Assets negatively impacted 2017 results.
"Financial and operational performance for the year was strong and, as expected, allowed us to focus on growing our asset base" said John Kousinioris, President. "Our strong balance sheet continues to provide us with numerous levers to fund future accretive growth."
The following table outlines TransAlta Renewables' financial targets for 2019:
In $CAD millions 2018 Results 2018 Outlook 2019 Outlook --- Comparable EBITDA 430 400 - 420 425 - 455 --- Adjusted funds from operations ("AFFO") 343 315 - 340 320 - 350 --- Cash available for distribution ("CAFD") 295 260 - 290 270 - 300 ---
Guidance for 2019 reflects the addition of Kent Breeze, Lakeswind, and Mass Solar acquired from TransAlta in 2018. In 2019, we expect renewable energy production from our wind and hydro assets, including those owned through economic interests, to be in the range of 3,700 to 4,200 GWh. Our gas-fired generation primarily receives compensation for capacity, and accordingly, production is not a significant performance indicator of that business.
2018 Highlights and Subsequent Events
-- Announced the commissioning of the 17.25 MW Kent Hills 3 expansion bringing total generating capacity to 167 MW at the facility. -- Entered into an arrangement to acquire interests in two construction-ready wind projects, consisting of a 90 MW project in Pennsylvania and a 29 MW project in New Hampshire. -- Acquired 100 per cent of the economic interest in three entities from TransAlta, resulting in direct ownership of the 20 MW Kent Breeze wind farm for total purchase price of $39 million, an indirect economic interest in the 50 MW Lakeswind wind farm in Minnesota, and an indirect economic interest in the 21 MW of solar projects located in Massachusetts ("Mass Solar") for a total purchase price for the two assets was $65 million (US$50 million), net of the indirect assumption of $62 million (US$48 million) of tax equity obligations and project debt. The three renewable assets have an average weighted contract life of approximately 15 years. -- Issued 11,860,000 common shares at a price of $12.65 per share for gross proceeds of approximately $150 million. The net proceeds were used by TransAlta Renewables to partially repay drawn amounts under its Credit Facility. -- Implemented a dividend reinvestment plan ("DRIP") for Canadian holders of common shares. Commencing with the dividend payable on July 31, 2018, eligible shareholders may elect to automatically reinvest monthly dividends into additional common shares of the Company.
The following table depicts key financial results and statistical operating data:
Fourth Quarter and Year Ended December 31, 2018 Highlights
In $CAD millions, unless otherwise stated 3 Months Ended Year Ended --- Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2017 --- Renewable energy production (GWh)(2) 1,107 1,123 3,652 3,623 --- Revenue 140 134 462 459 --- Comparable EBITDA(1) 133 118 430 424 --- Adjusted funds from operations(1) 108 111 343 328 --- Cash available for distribution(1) 85 88 295 284 --- Net earnings (loss) attributable to common shareholders 93 33 236 9 --- Net earnings (loss) per share attributable to common shareholders, basic and diluted 0.35 0.13 0.92 0.04 --- Adjusted funds from operations per share(1) 0.41 0.44 1.33 1.40 --- Cash available for distribution per share(1) 0.32 0.35 1.15 1.21 --- Dividends paid per common share 0.23 0.23 0.94 0.90 --- Dividends declared per common share 0.23 0.31 0.94 0.91 ---
The following tables provide further detail on the allocation of the Comparable EBITDA between owned assets and assets in which TransAlta Renewables holds an economic interest; as well as a reconciliation to AFFO.
3 Months Ended December 31 ($CAD millions) 2018 2017 --- Owned Economic Total Owned Economic Total Assets Interest Assets Interest --- Comparable EBITDA 90 43 133 84 34 118 --- Interest expense (7) (7) (12) (12) --- Change in long term receivable 5 5 6 6 --- Sustaining capital expenditures (14) (3) (17) (6) (2) (8) --- Current income tax expense (2) (2) (4) (1) (1) --- Tax equity distributions (1) (1) --- Distributions paid to subsidiaries' non-controlling interest (1) (1) 1 1 --- Unrealized risk management loss 1 1 1 1 --- Realized foreign exchange gain (1) (1) --- Provisions (2) (2) --- Interest income 3 3 --- Currency adjustment, reserves and other (3) 1 (2) 3 4 7 --- AFFO 62 46 108 69 42 111 ---
12 Months Ended December 31 ($CAD millions) 2018 2017 --- Owned Economic Total Owned Economic Total Assets Interest Assets Interest --- Comparable EBITDA 270 160 430 271 153 424 --- Interest expense (45) (45) (50) (50) --- Change in long term receivable 14 14 --- Sustaining capital expenditures (34) (4) (38) (27) (12) (39) --- Current income tax expense (6) (1) (7) (6) (6) --- Tax equity distributions (3) (3) --- Distributions paid to subsidiaries' non-controlling interest (4) (4) (3) (3) --- Unrealized risk management loss 1 1 --- Realized foreign exchange gain 1 1 --- Insurance recovery (6) (6) --- Interest income 3 3 --- Currency adjustment, reserves and other (1) (1) 4 (4) --- AFFO 181 162 343 191 137 328 ---
TransAlta Renewables is in the process of filing its Annual Information Form, Audited Consolidated Financial Statements and accompanying notes, as well as the associated Management's Discussion and Analysis ("MD&A"). These documents will be available today through TransAlta Renewables' website at www.transaltarenewables.com or through 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) 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.
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, pertaining to, without limitation, the following: our strategy and growth plans; ability to identify, acquire and fund future accretive growth; the 2019 Outlook, including comparable EBITDA, AFFO and CAFD; and renewable energy production from our wind and hydro assets being in the range of 3,700 to 4,200 GWh. These forward-looking statements are not historical facts but reflect the Company's current expectations concerning future plans, actions and results. These forward looking statements are based on a number of assumptions, including assumptions pertaining to: counter-party arrangements; continued ownership levels by TransAlta Corporation of the common shares in the Company; being able to realize on commercial and business development opportunities, including attracting new customers at the Sarnia facility; the closing of the Antrim acquisition in the first half of 2019; Big Level and Antrim wind farms contributing to cash flows in the second half of 2019; securing tax equity investments at Antrim and Big Level; continued levels of participation in the dividend reinvestment plan; no significant changes to the regulatory environment, including carbon taxes; and production levels at the renewable energy facilities being in-line with historical production. 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; operational breakdowns, failures, or other disruptions; changes in economic and market conditions; continued access to debt, tax equity, and capital markets, including tax equity; failure to obtain regulatory approvals for projects expected to be acquired, including Antrim; changes in tax, environmental, and other laws and regulations; adverse weather impacts as it relates to the construction of the Big Level and Antrim wind farms; 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 Management's Discussion and Analysis and Annual Information Form for the year ended December 31, 2018. 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 Company is providing the guidance and other forward looking information for the purpose of assisting shareholders and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our financial performance objectives, vision and strategic goals, and 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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