TransAlta Renewables Reports Third Quarter 2018 Results

Nov 1, 2018

CALGARY, Alberta (November 1, 2018)

Year-to-Date 2018 Financial Highlights

  • Comparable EBITDA of $297 million was slightly lower than last year;
  • Adjusted funds from operations increased $18 million over 2017; and
  • Cash available for distribution increased approximately 7% year-over-year.

TransAlta Renewables Inc. (“TransAlta Renewables” or the “Company”) (TSX:RNW) today reported its financial results for the three and nine month periods ended September 30, 2018. Comparable EBITDA(1) for the quarter and nine months ended September 30, 2018 was $88 million and $297 million, respectively, slightly lower 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.

Cash available for distribution(1) for the third quarter was $65 million, down $5 million compared to the same period last year, due to lower adjusted funds from operations(1) and higher principal repayments of amortizing debt. Cash available for distribution for the nine months ended Sept. 30, 2018 increased by $14 million to $210 million, due to higher adjusted funds from operations, partially offset by higher principal repayments of amortizing debt.

Reported net earnings attributable to common shareholders for the three months ended Sept. 30, 2018 increased $85 million, primarily as a result of higher finance income, lower interest expense, and lower foreign exchange losses. Reported net earnings attributable to common shareholders for the nine months ended September 30, 2018 increased $167 million, primarily as a result of higher finance income and lower interest expense.

“Strong performance from our highly contracted and diversified asset base during the quarter allowed us to focus on progressing our growth strategy,” said John Kousinioris, President. “The announcement regarding Microsoft as a counterparty at Big Level and the commissioning of the Kent Hills 3 wind expansion highlight our ability to grow and develop projects directly with customers.”

Third Quarter Highlights and Subsequent Events

  • On October 15, 2018, we announced Microsoft Corp. as the counterparty to the 15-year power purchase arrangement signed earlier this year for the 90 MW Big Level wind facility now under construction in Pennsylvania. All regulatory approvals have been completed and commercial operation is expected in the second half of 2019.
  • On October 19, 2018, we announced the commissioning of the 17.25 MW Kent Hills 3 expansion bringing total generating capacity to 167 MW. Natural Forces Technologies Inc, a wind-energy developer based in Atlantic Canada, co-developed and co-owns the wind farm, which is under a 17-year power purchase arrangement with New Brunswick Power.

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

Third Quarter 2018 Highlights

In $CAD millions, unless otherwise stated

Three Months Ended

Nine Months Ended

Sept 30, 2018

Sept 30, 2017

Sept 30, 2018

Sept 30, 2017

Renewable energy production (GWh)(2)

665

604 2,545

2,500

Revenue

90

91

322

325

Comparable EBITDA(1)

88

96

297

306

Adjusted funds from operations(1)

67

70

235

217

Cash available for distribution(1)

65

70

210

196

Net earnings attributable to common shareholders

12

(73) 143

(24)

Net earnings per share attributable to common shareholders, basic and diluted

0.05

(0.30) 0.56

(0.10)

Adjusted funds from operations per share(1)

0.25

0.29 0.92

0.94

Cash available for distribution per share(1)

0.25

0.29 0.82

0.85

Dividends declared per common share

0.23

0.23 0.70

0.60

Dividends paid per common share

0.23

0.22 0.70

0.66

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.

 

Three Months Ended Sept 30

($CAD millions)

2018

2017

Owned

Assets

Economic

Interest

Total Owned

Assets

Economic

Interest

Total

Comparable EBITDA

43

45 88 49 47 96

Interest expense

(11) (11) (14)

(14)

Change in long-term receivable

9 9 9

9

Sustaining capital expenditures

(8)

(8) (7) (6)

(13)

Current income tax refund (expense)

(1)

1 (2)

(2)

Tax equity distributions

(2) (2)

Distributions paid to subsidiaries

non-controlling interest

(1)

(1) (1)

(1)

Unrealized risk management (gain) loss

1

1

Realized foreign exchange gain (loss)

1

1 1

1

Provisions and reserves

(4)

(4)

Insurance recovery

(6) (6)

Currency adjustment and other

1

(4) (3) (3)

(3)

Adjusted Funds From Operations

24

43 67 24 46

70

 

 

Nine Months Ended Sept 30

($CAD millions)

2018

2017

Owned

Assets

Economic

Interest

Total Owned

Assets

Economic

Interest

Total

Comparable EBITDA

180

117 297 187 119

306

Interest expense

(38)

(38) (38)

(38)

Change in long-term receivable

9 9 (6)

(6)

Sustaining capital expenditures

(20)

(1) (21) (21) (10)

(31)

Current income tax refund (expense)

(4)

1 (3) (5)

(5)

Tax equity distributions

(2) (2)

Distributions paid to subsidiaries’

non-controlling interest

(3)

(3) (4)

(4)

Unrealized risk management (gain) loss

(1)

(1)

Realized foreign exchange gain (loss)

2

2

Provisions and reserves

2

2 (4)

(4)

Insurance recovery

(6) (6)

Currency adjustment and other

3

(2) 1 1 (4)

(3)

Adjusted Funds From Operations

119

116 235 122 95

217

A complete copy of TransAlta Renewables’ third quarter report, including Management’s Discussion and Analysis (“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) 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 2,421 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 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; ability to capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; maintaining diversity in terms of geography, generation and counterparties; paying out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis; developing previously announced projects and further growing the business, including directly with customers; and achieving commercial operation of the Big Level wind farm in 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; 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; changes in tax, environmental, and other laws and regulations; adverse weather impacts as it relates to the construction of the Big Level wind farm; 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 the 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 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: Toll-free media number: 1-855-255-9184
Email: investor_relations@transalta.com Email: ta_media_relations@transalta.com

 

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