TransAlta Renewables Reports First Quarter 2018 Results

May 10, 2018

CALGARY, Alberta (May 10, 2018)

First Quarter 2018 Financial Highlights

  • Comparable EBITDA(1) of $111 million was consistent with last year;
  • Adjusted funds from operations(1) increased $14 million over Q1 2017; and
  • Cash available for distribution(1) increased approximately 16% year-over-year.

TransAlta Renewables Inc. (“TransAlta Renewables” or the “Company”) (TSX: RNW) today reported its financial results for the three months ended March 31, 2018. Comparable EBITDA of $111 million was consistent with last year.  Cash available for distribution for the first quarter was $96 million, an increase of $13 million compared to 2017.

Reported net earnings attributable to common shareholders increased $39 million primarily as a result of the Class B shares fair value loss of $44 million in the prior year, and higher finance income of $15 million this year, which was partially offset by a lower foreign exchange gain of $25 million.

“Results for the quarter were strong and highlighted the stability in the cash flows from our business,” said John Kousinioris, President. “We are now focused on the construction of our Kent Hills wind farm expansion and progressing our two new US Wind Projects.”

 2018 Highlights and Subsequent Events

  • On February 20, 2018, we entered into an arrangement to acquire two construction-ready wind projects in the Northeast United States. The wind development projects consist of: (i) a 90 MW project located in Pennsylvania that has a 15-year power purchase agreement; and (ii) a 29 MW project located in New Hampshire with two 20-year power purchase agreements (collectively, the “US Wind Projects”).  A subsidiary of TransAlta Corporation (“TransAlta”) acquired the 90 MW project on March 1, 2018, whereas the acquisition of the 29 MW project remains subject to certain closing conditions.
  • On April 20, 2018, we acquired an economic interest in the US Wind Projects from a subsidiary of TransAlta pursuant to the terms of the arrangement entered into on February 20, 2018.  The remaining construction and acquisition costs of the US Wind Projects are to be funded by TransAlta Renewables and are estimated at US$240 million.  We expect to fund these costs through existing liquidity and tax equity.
  • On May 1, 2018, we entered into a contract with a leading blockchain company to supply up to 35 MW of power and provide space at our Sarnia industrial park.  The contract has a 5-year term with an extension option for up to an additional five years.
  • TransAlta Corporation hosted its Annual General Meeting on April 20, 2018, during which it was announced that Donald Tremblay, former Chief Financial Officer, had decided to leave TransAlta and the Company effective May 8, 2018, and has relocated to eastern Canada. The Company thanks Mr. Tremblay for his contributions and leadership over the past four years. Todd Stack, TransAlta’s Managing Director and Corporate Controller, has been appointed as Chief Financial Officer of TransAlta Renewables.

2018 Outlook

TransAlta Renewables reaffirms its financial outlook for 2018 which was released on February 23, 2018 and is outlined in the table below.

Measure Low High
Comparable EBITDA $400 million $420 million
Adjusted funds from operations $315 million $340 million
Cash available for distribution $260 million $290 million

The 2018 outlook includes expected revenues from long-term contracts and the sale of green attributes. We expect renewable energy production from our wind and hydro assets to be in the range of 3,400 to 3,800 GWh. Gas-fired generation primarily receives compensation for capacity, and accordingly, production is not a significant indicator of that business. TransAlta Renewables will continue to focus on growing cash available for distribution through the development and acquisition of highly diversified and contracted assets.

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

First Quarter 2018 Highlights

In $CAD millions, unless otherwise stated

3 months ended

March 31, 2018

3 months ended

March 31, 2017

Renewable energy production (GWh) (2) 1,004 1,010
Revenues 125 124
Comparable EBITDA 111 111
Adjusted funds from operations 97 83
Cash available for distribution 96 83
Net earnings attributable to common shareholders 66 27
Net earnings per share attributable to common shareholders, basic and diluted 0.26 0.12
Adjusted funds from operations per share(1) 0.39 0.37
Cash available for distribution per share(1) 0.38 0.37
Dividends paid per common share 0.23 0.22
Dividends declared per common share 0.23 0.22

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 March 31

($CAD millions)

2018 2017

Owned

Assets

Economic

Interest

Total Owned

Assets

Economic

Interest

Total
Comparable EBITDA 74 37 111 74 37 111
Interest expense (10) (10) (12) (12)
Change in long term receivable (9) (9)
Sustaining capital expenditures (5) (1) (6) (5) (1) (6)
Current income tax expense (2) (2) (2) (2)
Distributions paid to subsidiaries’

non-controlling interest

(1) (1)
Unrealized risk management (gain)loss (1) (1) 1 1
Provisions 2 2
Currency adjustment (1) (1) (2) (2)
Other 1 3 4 3 3
Adjusted funds from operations 59 38 97 58 25 83

A complete copy of TransAlta Renewables’ first 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.

TransAlta Renewables Annual Meeting of Shareholders

TransAlta Renewables will hold its Annual Meeting of Shareholders today, May 10, 2018, at 10:00 a.m. MT (12:00 p.m. ET) at the Kahanoff Centre, Suite 201, located at 105 – 12 Avenue S.E., in Calgary, Alberta. The Annual Meeting of Shareholders will be broadcast via webcast. To access the broadcast, please visit http://www.transaltarenewables.com/investors/events-and-presentations.

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 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 18 wind facilities, 13 hydroelectric facilities, seven natural gas generation facilities and one natural gas pipeline, representing an ownership interest of 2,316 MW of net generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the State of Wyoming 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 certain financial outlooks, pertaining to, without limitation, the following: expected comparable EBITDA, adjusted funds from operations and cash available for distribution for 2018; the satisfaction of the closing conditions and the acquisition of the 29 MW project located in New Hampshire; and the construction, commissioning and funding of our growth projects, including the Kent Hills wind farm expansion and the two US Wind Projects. 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; 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, 2017 and 2018 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.

For more information:

Investor Inquiries: Media Inquiries:
Sally Taylor Stacey Hatcher
Manager, Investor Relations Manager, Communications
Phone: 1-800-387-3598 in Canada and U.S. Phone: 1-855-255-9184
Email: investor_relations@transalta.com Email: ta_media_relations@transalta.com

 

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