Atlantic Power Corporation (NYSE: AT) (TSX: ATP) (“Atlantic
Power” or the “Company”) today announced its results for the
quarter ended March 31, 2011. All amounts are in U.S. dollars
unless otherwise indicated. Please see “Regulation G Disclosures”
attached to this news release for an explanation and US GAAP
reconciliation of the terms “EBITDA”, “Adjusted EBITDA” and “Cash
Available for Distribution” as used in this news release.
Highlights
- Operating results in line with annual
guidance
- Construction at Piedmont Green Power is
on schedule and on budget
- Closed sale of Topsham project for cash
proceeds of $8.5 million
- Maintaining guidance to sustain current
level of dividends into 2016, even with no positive impact from
potential acquisitions or organic growth
“Our results for the quarter met our expectations and are in
line with our guidance for the year,” commented Barry Welch,
President and CEO. “We continue to focus on accretive development
and acquisition opportunities to enhance our long-term cash flows
and are confident that we can continue to execute on our growth
strategy.”
Operating Performance
Project Adjusted EBITDA, including earnings from equity
investments, decreased by $2.8 million to $36.0 million for
the quarter ended March 31, 2011 compared to $38.8 million for the
same period last year. The decrease was primarily attributable to
maintenance at three of our projects, which was partially offset by
an increase in EBITDA from acquisitions as well as from favorable
energy prices at Lake and Auburndale. Project Adjusted EBITDA in
the first quarter was affected by the following factors:
- EBITDA of $1.7 million at
Cadillac, as the project was acquired in December 2010;
- increased EBITDA of $2.1 million
at Lake and Auburndale due to increased contractual capacity
payments under the project’s PPA and favorable energy prices;
offset by
- decreased EBITDA of $2.5 million
at Pasco primarily attributable to higher operations and
maintenance expenses related to the unplanned replacement of gas
turbine blades during a maintenance outage;
- decreased EBITDA of $2.4 million
at Selkirk primarily attributable to lower capacity revenue. A
planned outage was longer than expected resulting in a delay in the
receipt of capacity payments until the second quarter; and
- decreased EBITDA of $1.3 million
at Chambers attributable to higher maintenance costs associated
with a planned outage in April and lower dispatch during the first
quarter.
Cash Flow Available for Distribution
For the three months ended March 31, 2011, Cash Flow Available
for Distribution decreased by $1.2 million compared to the
same period last year. Our payout ratio for the first quarter 2011
was 114% as compared to 89% in the same period in 2010. The
increase in our payout ratio is primarily attributable to the
increased dividend obligation from our common share issuance in
October of 2010. Our current payout ratio and project distributions
are in line with our expectations and previous guidance for the
full year 2011.
Construction of Piedmont Green Power
The construction of Piedmont Green Power, our 53 MW biomass
project, is on schedule and on budget and the remainder of our
equity has been contributed, bringing our total equity investment
to $75 million. The remainder of the construction costs will be
funded by the project-level financing that was closed in October
2010. Turnkey construction of the project is led by Zachry
Industrial and we are managing construction risks jointly with our
affiliate, Rollcast Energy. Cash distributions to the Company from
the project are expected to average $8 million to $10 million for
each full year of project operation after completion of
construction in late 2012.
Sale of Topsham
On February 28, 2011, we entered into a purchase and sale
agreement with an affiliate of ArcLight Capital Partners, LLC for
the purchase of our lessor interest in the project. The transaction
closed on May 6, 2011 and we received cash proceeds of $8.5
million, resulting in no gain or loss on the sale.
Guidance
Based on actual performance to date and projections for the
remainder of the year, we confirm our previous guidance that we
expect to receive distributions from our projects in the range of
$80 million to $90 million for the full year 2011
compared to $83 million in 2010. We continue to expect overall
levels of operating cash flows in 2011 to be improved over actual
2010 levels. Higher distributions from existing projects, initial
distributions from our recent investments in Idaho Wind and
Cadillac, and a slightly lower payment under the management
termination agreement are expected to be partially offset by the
non-recurrence of the cash tax refunds received in 2010. These
increased operating cash flows in 2011, combined with the impact of
our recent public offerings, are expected to result in a payout
ratio of approximately 100% to 105% in 2011 subject to the
financial performance of our projects. In 2012, additional
increases in distributions from projects are expected to further
increase operating cash flow compared to 2011, the most significant
factor being increased distributions from Selkirk following the
final payment of its non-recourse project level debt in
mid-2012.
Based on management’s cash flow projections, we believe the
current level of dividends is sustainable into 2016 before
considering any positive impacts from potential future acquisitions
or organic growth opportunities.
Outstanding Common Shares and Convertible Debentures
As of May 10, 2011, we had 68,531,901 common shares,
Cdn$48.1 million principal amount of 6.50% convertible secured
debentures due October 31, 2014, Cdn$75.0 million
principal amount of 6.25% convertible debentures due March 15,
2017, and Cdn$80.5 million principal amount of 5.60%
convertible debentures due June 30, 2017 outstanding. Holders
of common shares currently receive a monthly dividend at an annual
rate of Cdn$1.094 per common share.
The calculation of Cash Available for Distribution and a summary
of Adjusted EBITDA by individual project for the quarter ended
March 31, 2011 are attached to this news release.
Copies of financial data and other publicly filed documents,
including the Company’s annual information form, are available on
SEDAR at www.sedar.com under “Atlantic Power Corporation” or on the
Company’s website at www.atlanticpower.com.
Investor Conference Call and Webcast
A telephone conference call hosted by Atlantic Power's
management team will be held on Thursday, May 12, 2011 at
10:00 AM ET. The telephone numbers for the conference call are:
Local/International: (416) 849-2698, North American Toll Free:
(866) 400-2270. The Conference Call will also be broadcast over
Atlantic Power's website at www.atlanticpower.com. Please call or
log in 10 minutes prior to the call. The telephone numbers to
listen to the conference call after it is completed (Instant
Replay) are Local/International: (416) 915-1035, North American
Toll Free (866) 245-6755. Please enter the passcode 377980# when
instructed. The conference call will also be archived on Atlantic
Power's web site.
About Atlantic Power
Atlantic Power Corporation owns and operates a diverse fleet of
power generation and infrastructure assets in the United States.
Our power generation projects sell electricity to utilities and
other large commercial customers under long-term power purchase
agreements, which seek to minimize exposure to changes in commodity
prices. Our power generation projects in operation have an
aggregate gross electric generation capacity of approximately 1,948
megawatts in which our ownership interest is approximately 871 MW.
Our corporate strategy is to generate stable cash flows from our
existing assets and to make accretive acquisitions to sustain our
dividend payout to shareholders, which is currently paid monthly at
an annual rate of Cdn$1.094 per share. Our current portfolio
consists of interests in 12 operational power generation projects
across nine states, one biomass project under construction in
Georgia, and an 84-mile,500 kilovolt electric transmission line
located in California. Atlantic Power also owns a majority interest
in Rollcast Energy, a biomass power plant developer with several
projects under development.
Atlantic Power trades on the New York Stock Exchange under the
symbol AT, on the Toronto Stock Exchange under the symbol ATP and
has a market capitalization of approximately $1.0 billion. For more
information, please visit the Company’s website at
www.atlanticpower.com.
Forward-looking Statements
Certain statements in this news release may constitute
“forward-looking statements”, which reflect the expectations of
management regarding the future growth, results of operations,
performance and business prospects and opportunities of our Company
and our projects. These statements, which are based on certain
assumptions and describe our future plans, strategies and
expectations, can generally be identified by the use of the words
"may," "will," "project," "continue," "believe," "intend,"
"anticipate," "expect" or similar expressions that are predictions
of or indicate future events or trends and which do not relate
solely to present or historical matters. Examples of such
statements in this press release include, but are not limited, to
statements with respect to the following:
- The belief that, based on management’s
cash flow projections, the current level of dividends is
sustainable into 2016 without additional acquisitions or organic
growth opportunities;
- The expectation that distributions from
our projects will be in the range of $80 million to
$90 million for the full year 2011;
- The expectation that overall levels of
operating cash flows in 2011 will be improved over actual 2010
levels;
- The expectation that the payout ratio
in 2011 will be approximately 100%-105% and that improvements in
cash flow and payout ratio are expected in 2012;
- The expectation that cash distributions
from Piedmont are expected to average $8 million to $10 million for
each full year of project operation; and
- The expectation that Piedmont will
complete construction in late 2012.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not or the times at or by which such
performance or results will be achieved. Please refer to the
factors discussed under "Risk Factors" in the Company's periodic
reports as filed with the Securities and Exchange Commission from
time to time for a detailed discussion of the risks and
uncertainties affecting our Company. Although the forward-looking
statements contained in this news release are based upon what are
believed to be reasonable assumptions, investors cannot be assured
that actual results will be consistent with these forward-looking
statements, and the differences may be material. These
forward-looking statements are made as of the date of this news
release and, except as expressly required by applicable law, the
Company assumes no obligation to update or revise them to reflect
new events or circumstances. The financial outlook information
contained in this news release is presented to provide readers with
guidance on the cash distributions expected to be received by the
Company and to give readers a better understanding of the Company’s
ability to pay its current level of distributions into the future.
Readers are cautioned that such information may not be appropriate
for other purposes.
Atlantic Power Corporation
Consolidated Balance Sheets (in
thousands of U.S. dollars)
March 31,2011
December 31,2010
(Unaudited)
Assets Current assets: Cash and cash
equivalents $ 28,258 $ 45,497 Restricted cash 23,268 15,744
Accounts receivable 19,781 19,362 Note receivable - related party
17,671 22,781 Current portion of derivative instruments asset 9,340
8,865
Prepayments, supplies and other
8,583 8,480 Refundable income taxes
2,079
1,593 Total current assets 108,980 122,322
Property, plant and equipment, net
284,018 271,830 Transmission system rights 186,171 188,134 Equity
investments in unconsolidated affiliates 294,231 294,805 Other
intangible assets, net 82,933 88,462 Goodwill 12,453 12,453
Derivative instruments asset 22,461 17,884 Other assets
16,554
17,122 Total assets
$
1,007,801 $
1,013,012
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable and accrued liabilities $ 22,857 $ 20,530 Current
portion of long-term debt 24,394 21,587 Current portion of
derivative instruments liability 8,940 10,009 Interest payable on
convertible debentures 3,759 3,078 Dividends payable 6,430 6,154
Other current liabilities
124
5 Total current
liabilities 66,504 61,363
Long term debt
240,692 244,299 Convertible debentures 210,005 220,616 Derivative
instruments liability 20,214 21,543 Deferred income taxes 31,632
29,439 Other non-current liabilities 1,949 2,376 Commitments and
contingencies
- -
Shareholders’ equity
Common shares
642,453 626,108 Accumulated other comprehensive income 527 255
Retained deficit
(209,528 )
(196,494 )
Total Atlantic Power Corporation shareholders' equity
433,452
429,869 Noncontrolling interest
3,353
3,507 Total equity
436,805
433,376 Total liabilities and equity
$ 1,007,801
$ 1,013,012
Atlantic Power Corporation
Consolidated Statements of
Operations (in thousands of U.S. dollars)
(Unaudited)
Three months ended Mar. 31,
2011 2010 Project
revenue: Energy sales $ 18,502 $ 15,913 Energy capacity
revenue 27,138 23,194 Transmission services 7,644 7,644 Other
381
470 53,665 47,221 Project expenses: Fuel 17,068
16,157 Operations and maintenance 8,833 5,041 Project operator fees
and expenses 2,239 919 Depreciation and amortization
10,879 10,071
39,019 32,188 Project other income (expense): Change in fair value
of derivative instruments 3,561 (12,194 ) Equity in earnings of
unconsolidated affiliates 1,311 5,436 Interest expense, net (4,647
) (4,411 ) Other expense, net
(2
) -
223 (11,169
) Project income 14,869 3,864 Administrative and other
expenses (income): Administration 4,054 4,100 Interest expense, net
3,968 2,794 Foreign exchange gain
(658
) (1,792 )
7,364
5,102 Income (loss) from operations before
income taxes 7,505 (1,238 ) Income tax expense
1,523 4,873
Net income (loss) 5,982 (6,111 ) Net loss attributable to
noncontrolling interest
(154
) (48 ) Net
income (loss) attributable to Atlantic Power Corporation
$ 6,136 $
(6,063 )
Net income (loss) per share attributable
to Atlantic Power Corporation Shareholders:
Basic $ 0.09 $ (0.10 ) Diluted $ 0.09 $ (0.10 )
Atlantic Power Corporation
Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)
(Unaudited)
Three months ended March 31,
2011
2010 Cash flows from operating
activities:
Net (loss) income
$ 5,982 $ (6,111 ) Adjustments to reconcile to net cash provided by
operating activities: Depreciation and amortization 10,879 10,071
Long-term incentive plan expense 825 1,420
Equity in earnings from unconsolidated
affiliates
(1,311 ) (5,436 ) Distributions from unconsolidated affiliates
1,450 1,334 Unrealized foreign exchange loss (gain) 1,878 (623 )
Change in fair value of derivative instruments (3,561 ) 12,194
Change in deferred income taxes 2,011 4,829 Change in other
operating balances Accounts receivable (419 ) 350 Prepayments,
refundable income taxes and other assets 176 (372 ) Accounts
payable and accrued liabilities 1,937 1,276 Other liabilities
500
1,907 Net cash provided by operating activities
20,347 20,839 Cash flows used in investing activities:
Acquisitions and investments, net of cash acquired - 324 Change in
restricted cash (7,524 ) (7,526 ) Proceeds from related party loan
5,110 - Biomass development costs (308 ) (317 ) Purchase of
property, plant and equipment
(15,393
) (319 ) Net
cash used in investing activities (18,115 ) (7,838 ) Cash
flows used in financing activities: Repayment of project-level debt
(3,400 ) (2,700 )
Proceeds from project-level debt
borrowings
2,781 - Dividends paid
(18,852
) (15,795 )
Net cash used in financing activities
(19,471 )
(18,495 ) Net decrease in cash and cash
equivalents (17,239 ) (5,494 ) Cash and cash equivalents at
beginning of period
45,497
49,850 Cash and cash equivalents at end
of period
$ 28,258 $
44,356 Supplemental cash flow information Interest
paid $ 4,659 $ 1,450 Income taxes paid (refunded), net $ 14 $ (26 )
Regulation G Disclosures
Cash Available for Distribution is not a measure recognized
under U.S. generally accepted accounting principles (“GAAP”) and
does not have a standardized meaning prescribed by GAAP. Management
believes Cash Available for Distribution is a relevant supplemental
measure of the Company’s ability to earn and distribute cash
returns to investors. A reconciliation of Cash Flows from Operating
Activities to Cash Available for Distributions is provided below.
Investors are cautioned that the Company may calculate this measure
in a manner that is different from other companies.
Adjusted EBITDA, earnings before interest, taxes, depreciation
and amortization (including non-cash impairment charges), is not a
measure recognized under GAAP and is therefore unlikely to be
comparable to similar measures presented by other issuers and does
not have a standardized meaning prescribed by GAAP. Management uses
Adjusted EBITDA at the Project-level to provide comparative
information about project performance. A reconciliation of Project
Adjusted EBITDA to project income is provided on the following
page. Investors are cautioned that the Company may calculate this
measure in a manner that is different from other issuers.
Atlantic Power Corporation
Cash Available for Distribution
(In thousands of U.S. dollars, except
as otherwise stated)
(Unaudited)
Three months ended March
31,
2011 2010 Cash flows from
operating activities 20,347 20,839 Project-level debt
repayments (3,400 ) (2,700 ) Purchases of property, plant and
equipment (1) (308 ) (319 ) Cash Available for
Distribution(2) 16,639 17,820
Dividends on Common Shares
18,992 15,801 Payout ratio 114 %
89 % Expressed in Cdn$ Cash Available for Distribution
16,407 18,540
Total distributions to shareholders
18,623 16,527 (1)
Excludes construction-in-progress costs related to our Piedmont
biomass project. (2) Cash Available for Distribution is not
a recognized measure under GAAP and does not have any standardized
meaning prescribed by GAAP. Therefore, this measure may not be
comparable to similar measures presented by other companies.
Atlantic Power Corporation
Project Adjusted EBITDA (in
thousands of U.S. dollars)
(Unaudited)
Three months ended March 31,
2011 2010 Project
Adjusted EBITDA by individual segment Auburndale $
10,313 $ 9,371 Lake 8,490 7,313 Pasco (1,077 ) 1,415 Path 15 6,570
7,053 Chambers 4,724 5,988
Total
29,020 31,140
Other Project Assets Segment
Cadillac 1,747 - Piedmont (29 ) - Idaho Wind 806 - Badger Creek 760
736 Koma Kulshan 60 119 Orlando 1,891 1,801 Topsham - 415 Delta
Person 399 364 Gregory 772 855 Rumford - (8 ) Selkirk 1,109 3,530
Rollcast (467 ) - Other (75 ) (157 )
Total adjusted EBITDA from Other Project
Assets segment
6,973 7,655
Project income Total adjusted EBITDA from
all Projects 35,993 38,795 Depreciation and amortization 17,437
16,386 Interest expense, net 6,240 5,778 Change in the fair value
of derivative instruments (2,784 ) 12,520 Other (income) expense
231 247
Project income as reported in the
statement of operations
$ 14,869 $ 3,864
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