TORONTO, ONTARIO -- (MARKET WIRE) -- 08/11/09 -- Atlantic Power Corporation (TSX: ATP.UN)(TSX: ATP.DB)(the "Company") today announced its results for the three and six months ended June 30, 2009. All amounts are in U.S. dollars unless otherwise indicated.
Highlights:
- Results consistent with management's expectations and guidance
- Conservative 71% payout ratio for first six months of 2009
- Actively hedging low natural gas prices at Lake and Auburndale Projects
- Final settlement for Path 15 rates approved by FERC
- Pending dispositions of Stockton and Mid-Georgia rationalize portfolio and generate cash for future growth
"Our results for the second quarter and first half of 2009 were consistent with our expectations and in- line with our guidance for the year," commented Barry Welch, President and CEO. "Despite planned outages to prolong the life and to ensure efficient and reliable operations at several of our Projects, we achieved a conservative 71% payout ratio through the first half of the year. Looking ahead, we are maintaining our long-term guidance that, without taking into account the benefit of any future acquisitions or organic growth opportunities, we will have sufficient cash on hand and projected future cash flows from our Projects to meet the current level of cash distributions into 2015."
Operating Performance
Adjusted EBITDA at the Projects, including earnings from equity investments, decreased by $12.5 million for the quarter ended June 30, 2009 compared to the same period last year. For the first six months of 2009, Adjusted EBITDA decreased by $23.9 million compared to the same period last year. Adjusted EBITDA in the second quarter and first half of 2009 was affected by a number of factors, including:
- Increased EBITDA attributable to the acquisition of the Auburndale project in November 2008
- Lower EBITDA at Pasco due to the commencement of the Project's new ten-year tolling agreement on January 1, 2009 at lower rates than the power purchase agreement that expired at the end of 2008
- The absence of EBITDA at Onondaga as the contracts that provided substantially all of the project's cash flow expired in the second quarter of 2008
- A distribution in the first quarter of 2008 from the cost method Gregory Project related to the non-recurring release of debt service reserves at that Project
- Decreased EBITDA at Chambers and Badger Creek due to planned and unplanned outages during the first six months of 2009
Cash Flow Available for Distribution
For the three months ended June 30, 2009, Cash Flow Available for Distribution declined to $21.3 million compared to $27.2 million for the same period last year. For the first half of 2009, Cash Flow Available for Distribution declined to $39.3 million compared to $57.0 million for the same period in 2008. The decrease is due primarily to changes in adjusted EBITDA as outlined above.
Distributions declared in the second quarter of 2009 were $14.4 million, resulting in a payout ratio of 68% compared to a payout ratio of 60% in last year's second quarter. For the six months ended June 30, 2009, Distributions declared were $27.8 million, resulting in a payout ratio of 71% compared to 57% for the same six month period last year.
Recent Developments
The Company is in advance stages of negotiation to sell its 50% interest in the Mid-Georgia Project. Mid-Georgia is a 308 MW dual-fuel, combined-cycle cogeneration project located in Kathleen, Georgia. The purchase and sale agreement is expected to be signed soon, with closing anticipated to occur before the end of 2009. Historically, Mid-Georgia has provided minimal Adjusted EBITDA and was not expected to make cash distributions to the Company for the next several years. The proceeds from the sale will be used to finance future growth.
On July 27, 2009, the Company signed a purchase and sale agreement to sell its 50% interest in the Stockton Project for a nominal cash payment. Stockton is a 55 MW coal/biomass cogeneration facility located in Stockton, California. Completion of the sale is subject to closing conditions and is anticipated to occur before the end of 2009. The Company expects to record a book loss on the sale of approximately $2 million and a tax loss of approximately $12 million. The Project is facing additional capital investment in order to use more biomass fuel and historically has only provided approximately 2% of the Company's Adjusted EBITDA. The tax loss on the sale of Stockton will be used to mitigate the expected tax gain on the sale of Mid-Georgia and increase the after-tax cash proceeds of the Mid-Georgia disposition.
In the first quarter of 2009 Path 15, FERC staff, and the intervenors in the Project's rate case filed an uncontested settlement with the FERC related to the approval of the Company's proposed rates for the 2008 - 2010 period. The FERC issued a final order approving the settlement on August 3, 2009. The terms of the settlement will allow Path 15 to continue making distributions to the Company that are consistent with management's expectations in 2009 and 2010. In the third quarter of 2009, Path 15 will be making a refund of approximately $1.6 million, comprising the amount collected in excess of the settlement rates since the initial order in February 2008. Provision for this refund has been recorded as of June 30, 2009. Independently, the final landowner litigation over right-of-way issues was resolved recently, which resulted in approximately $6 million being released during the second quarter to the Company from a construction reserve account.
During the three months ended June 30, 2009, the Company acquired 481,600 IPSs at an average price of Cdn $8.42 under the terms of its existing normal course issuer bid. As of June 30, 2009, the Company had acquired a cumulative total of 1,040,220 IPSs at an average price of Cdn $8.61 since the inception of the issuer bid. The issuer bid terminated on July 24, 2009. The Company does not anticipate any additional share repurchases at this time.
Guidance
The Company reiterates its previous guidance that based on management projections, the Company's cash on hand and projected future cash flows only from existing Projects are sufficient to meet the current level of cash distributions to IPS holders into 2015 before considering any positive impact from potential acquisitions or organic growth opportunities.
Based on year-to-date results and management projections for the remainder of the year, the Company confirms its expectation to receive distributions from its Projects in the range of $90 million to $95 million for the full year 2009. The reduction from 2008 Project distributions is partially attributable to non-recurring positive cash flows in 2008 and anticipated changes to contractual cash flows and planned outages as more fully described in Management's Discussion and Analysis for the three and six months ended June 30, 2009. A decrease in 2009 Project distributions has historically been included in management's long-term cash flow projections and does not change the Company's ability to continue paying distributions to shareholders at current levels.
The calculation of Cash Flow Available for Distribution and a summary of Adjusted EBITDA by individual project for the three and six months ended June 30, 2009 are attached to this news release.
The Company's financial statements for the period and management's discussion and analysis for the three and six months ended June 30, 2009 are available on the Company's website at www.atlanticpowercorporation.com and on SEDAR at www.sedar.com.
Certain statements in this news release may constitute "forward-looking statements", which reflect the expectations of Atlantic Power Management, LLC (the "Manager") regarding future growth, results of operations, performance and business prospects and opportunities of Atlantic Power Corporation and the Projects. Examples of such statements include: the expectation that the Company's cash on hand and projected future cash flows from existing Projects will be adequate to meet the current level of cash distributions to IPS holders into 2015 without additional acquisitions; the amount of distributions expected to be received from the Projects for the full year 2009; the Company's current forecast of expected annual cash distributions from the Lake and Auburndale Projects through 2012; the expected decrease in distributions from Chambers in 2009; and the expected completion of the dispositions of the Company's investments in Stockton and Mid-Georgia. Such forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to the assumption that the Projects will operate and perform in accordance with the Company's expectations. 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. In addition to the assumption described above, reference should also be had to the factors discussed under "Risk Factors" in the Company's Annual Information Form dated March 30, 2009. 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.
Cash Flow Available for Distribution is not a measure recognized under Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Management believes Cash Flow Available for Distributions 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 Flow Available for Distributions is attached to this news release and is also included in the Company's management's discussion and analysis for the three months ended June 30, 2009. 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. Investors are cautioned that the Company may calculate this measure in a manner that is different from other issuers.
About Atlantic Power
Atlantic Power Corporation owns interests in a diversified portfolio of 14 power generation projects and one transmission line located in major markets in the United States. Atlantic Power's objectives are to maintain the stability of cash distributions to its shareholders and increase the long term value of the Company by enhancing the performance of its existing assets and by making accretive acquisitions. For more information, please visit the Corporation's website at www.atlanticpowercorporation.com.
Atlantic Power Corporation
Cash Flow Available for Distribution
(In thousands of U.S. dollars, except as otherwise stated)
Three months Six months
ended June 30, ended June 30,
(unaudited) 2009 2008 2009 2008
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Cash flows from operating
activities 21,754 30,328 36,777 57,756
Project-level debt
repayments (7,795) (12,226) (11,715) (18,017)
Interest on IPS portion of
Subordinated Notes 8,365 9,690 16,078 19,394
Purchase of property, plant
and equipment(2) (1,018) (573) (1,876) (2,104)
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Cash Flow Available for
Distribution(1), US$ 21,306 27,219 39,264 57,029
Per Basic IPS, US$ $0.35 $0.44 $0.65 $0.93
Per Diluted IPS, US$ $0.35 $0.44 $0.62 $0.88
Interest on IPS Subordinated
Notes 8,365 9,690 16,078 19,394
Dividends on IPS Common
Shares 6,079 6,507 11,672 13,024
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Total IPS distributions, US$ 14,444 16,197 27,750 32,418
Per IPS, US$ $0.24 $0.26 $0.46 $0.53
Payout ratio 68% 60% 71% 57%
Cash Flow Available for
Distribution, Cdn$ 24,865 27,488 47,331 57,425
Per Basic IPS, Cdn$ $0.41 $0.45 $0.78 $0.93
Per Diluted IPS, Cdn$ $0.41 $0.44 $0.75 $0.89
Total IPS distributions, Cdn$ 16,561 16,303 33,234 32,598
Per IPS, Cdn$ $0.27 $0.27 $0.55 $0.53
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(1) Cash Flow 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 issuers. See "Non-GAAP Financial Measures".
(2) Excludes $3.0 million investment in Rollcast made in the first quarter
of 2009.
Atlantic Power Corporation
Project Adjusted EBITDA(1) (in thousands of U.S. dollars)
Three months Six months
ended June 30, ended June 30,
(unaudited) 2009 2008 2009 2008
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Adjusted EBITDA(1) from consolidated
and proportionately consolidated
Projects
Auburndale 10,386 - 18,547 -
Badger Creek 512 675 1,731 2,287
Chambers (1,128) 5,172 5,024 13,456
Koma Kulshan 455 420 412 319
Lake 7,723 9,215 15,620 16,698
Mid-Georgia 628 1,172 1,387 1,975
Onondaga - 4,206 - 8,646
Orlando 2,136 1,523 3,975 304
Pasco 901 8,474 2,869 16,002
Stockton (1,259) (508) (1,114) 588
Topsham 703 570 1,118 1,255
Path 15 6,931 7,360 13,832 14,424
Other (145) 282 (306) 541
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Total adjusted EBITDA(1) from
consolidated and proportionately
consolidated Projects 27,843 38,561 63,095 76,495
Amortization 14,816 11,638 29,796 24,956
Interest expense, net 6,958 6,489 13,656 12,747
Change in the fair value of
derivative instruments (48,012) 94,411 12,578 120,472
Other (income) expense (999) (1,358) (809) (1,881)
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Income (loss) from consolidated and
proportionately consolidated
Projects 55,080 (72,619) 7,874 (79,799)
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Adjusted EBITDA(1) from equity and
cost method Projects
Delta-Person 391 508 824 1,002
Gregory 600 791 600 8,933
Rumford 652 601 1,308 1,192
Selkirk 2,998 4,457 2,998 5,197
Other (97) - (95) (162)
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Total adjusted EBITDA(1) from equity
and cost method Projects 4,544 6,357 5,635 16,162
Amortization 193 463 403 926
Interest expense, net 92 147 190 372
Other Income - - (95) -
---------------------------------------------------------------------------
Income from cost and equity
investments 4,259 5,747 5,137 14,864
Project income
Total adjusted EBITDA(1) from all
Projects 32,387 44,918 68,730 92,657
Amortization 15,009 12,101 30,199 25,882
Interest expense, net 7,050 6,636 13,846 13,119
Change in the fair value of
derivative instruments (48,012) 94,411 12,578 120,472
Other (income) expense (999) (1,358) (904) (1,881)
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Project income (loss) as reported in
the statement of income 59,339 (66,872) 13,011 (64,935)
Income (loss) from consolidated and
proportionately consolidated
Projects 55,080 (72,619) 7,874 (79,799)
Equity income from equity and costs
investments 4,259 5,747 5,137 14,864
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Project income (loss) as reported in
the statement of income 59,339 (66,872) 13,011 (64,935)
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(1) Adjusted EBITDA is not a measure recognized under GAAP and does not have
a standardized meaning prescribed by GAAP. Adjusted EBITDA is defined as
earnings before interest, taxes, depreciation, amortization (including
non-cash impairment charges) and changes in fair value of derivative
instruments. Management uses adjusted EBITDA at the Projects to provide
comparative information about Project performance. See "Non-GAAP
Financial Measures" in this MD&A.
Contacts: Atlantic Power Corporation Patrick Welch (617) 977-2700 info@atlanticpowercorporation.com www.atlanticpowercorporation.com