DEDHAM, Mass., March 2, 2017 /PRNewswire/ -- Atlantic Power
Corporation (NYSE: AT) (TSX: ATP) ("Atlantic Power" or the
"Company") today reported its financial results for the three
months and year ended December 31,
2016. For additional information regarding the
Company's 2016 performance, 2017 guidance and certain operational
updates, including the status of certain upcoming Power Purchase
Agreement (PPA) renewals, please consult Management's prepared
remarks and the accompanying presentation, which will be available
on the Conference Calls page of the Company's website
(www.atlanticpower.com).
Fourth Quarter 2016 Financial Results (vs. 2015)
- Cash provided by operating activities of $19.9 million vs. $19.7
million
- Net loss of $(6.6) million vs.
$(88.6) million; 2015 included a
$127.8 million impairment charge
- Project income of $13.3 million
vs. project loss of $(104.3) million,
including impairment charges
- Project Adjusted EBITDA of $42.3
million vs. $50.4 million;
decline was attributable to lower water flows at Curtis Palmer,
lower waste heat, and a scheduled maintenance outage at
Oxnard
Full Year 2016 Financial Results (vs. 2015)
- Cash provided by operating activities of $111.8 million vs. $87.4
million
- Net loss of $(122.4) million vs.
$(62.4) million; both years included
significant impairment charges
- Project income of $10.1 million
vs. project loss of $(41.4)
million
- Project Adjusted EBITDA of $202.2
million vs. $208.9 million;
results were below the Company's guidance of $205 to $215 million due to lower water flows at
Curtis Palmer, lower waste heat and severance costs at three
Ontario projects
Other Highlights
- Achieved net reduction in debt in 2016 of $22 million, despite upsizing term loan in April;
now have significantly improved debt maturity profile
- Repurchased 8.1 million common shares at an average price of
$2.42 since December 2015
- Reduced total overhead costs by 28% to $23 million in 2016 from $32 million in 2015
- Initiated 2017 Project Adjusted EBITDA guidance (see page 4 of
this release)
- Expect to repay another $150
million or more of debt in 2017
"During 2016, we refinanced our existing term loan and revolver
with a larger $700 million term loan
and a $200 million revolver, both
with extended maturity dates. We also paid down $288 million of debt, ending the year with a
reduction in consolidated debt of approximately $22 million, net of the term loan
upsizing. Since year end 2013, we have reduced
consolidated debt by more than $800
million and improved our maturity profile
considerably. We also made further progress in reducing our
interest payments and corporate overhead costs, which are now
$60 million and $31 million lower than 2013 levels,
respectively," said James J. Moore,
Jr., President and CEO of Atlantic Power. "In
addition, we have lowered our share count by 6.6% since
December 2015 by repurchasing and
canceling approximately 8.1 million common shares at an average
price of $2.42 per share."
"By strengthening our balance sheet, addressing our near-term
maturities and reducing our fixed costs, we believe that we have
positioned the Company to take a disciplined approach on renewals
of PPAs and withstand an extended downturn in a very cyclical
business," said Mr. Moore. "We are enthusiastic about our
strengthened financial position, expected 2017 operating cash flow
and the uses of capital that we have available which are consistent
with our objective of increasing intrinsic value per
share."
Mr. Moore continued, "After two years of dramatic change, the
Company is now in a position to pay down an additional $150 million or more of debt in 2017; continue to
repurchase shares when they trade at a significant discount to our
estimates of intrinsic value per share, as they do today; work
toward PPA renewals without financial pressure to transact quickly
in a down market, and begin to implement a growth strategy, with
efforts currently focused on industrial customers."
Atlantic Power
Corporation
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Table 1 – Selected
Financial Results
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(in millions of
U.S. dollars, except as otherwise stated)
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Unaudited
|
|
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Three months
ended December 31,
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Twelve months
ended December 31,
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|
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2016
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2015
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2016
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2015
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Financial
Results
|
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Project
revenue
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$93.4
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$98.4
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$399.2
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$420.2
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Project income
(loss)
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13.3
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(104.3)
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10.1
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(41.4)
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Net loss attributable
to Atlantic Power Corporation
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(6.6)
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(88.6)
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(122.4)
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(62.4)
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Cash provided by
operating activities
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19.9
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19.7
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111.8
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87.4
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Project Adjusted
EBITDA
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42.3
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50.4
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202.2
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208.9
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All amounts are in
U.S. dollars and are approximate unless otherwise indicated.
Project Adjusted EBITDA is not a recognized measure under
generally accepted accounting principles in the United States
("GAAP") and does not have a standardized meaning prescribed by
GAAP; therefore, this measure may not be comparable to similar
measures presented by other companies. Please refer to
"Non-GAAP Disclosures" beginning on page 13 of this news release
for an explanation and a reconciliation of "Project Adjusted
EBITDA" as used in this news release to project income (loss), the
most directly comparable measure on a GAAP basis, and Net
loss.
The Wind Projects
were sold in June 2015 and are included in discontinued operations
for the three months and year ended December 31, 2015.
Results of the Wind Projects are excluded from Project revenue,
Project income (loss) and Project Adjusted EBITDA as shown in Table
1 and as discussed below but are included in Net loss attributable
to Atlantic Power Corporation and Cash provided by operating
activities as shown in Table 1. Please see page 13 for a
summary of results of discontinued operations. The Wind
Projects consisted of five operating wind projects in Idaho and
Oklahoma and representing 521 MW net ownership: Goshen (12.5%
economic interest), Idaho Wind (27.6% economic interest), Meadow
Creek (100% economic interest), Rockland Wind Farm (50% economic
interest, but consolidated on a 100% basis) and Canadian Hills (99%
economic interest).
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Financial Results
Three Months Ended December 31,
2016
The primary operational factors that affected the Company's
results for the fourth quarter of 2016 included lower water flows
at Curtis Palmer, lower waste heat at the Company's Ontario plants, a scheduled maintenance outage
at Oxnard, turbine maintenance
expense at Kapuskasing and
North Bay and severance cost at
Kapuskasing, North Bay and Nipigon. These negative
drivers were partially offset by higher water flows at
Mamquam.
Net loss attributable to Atlantic Power Corporation for
the fourth quarter of 2016 of $(6.6)
million included a $1.2
million non-cash impairment of the remaining goodwill at
Moresby Lake and a $12.7 million
charge for the non-cash accelerated amortization of intangible
assets related to the PPAs at Kapuskasing and North Bay, which were terminated early as
described in the Company's January 9,
2017 press release. Net loss for the fourth quarter of
2015 of $(88.6) million included a
$127.8 million non-cash impairment of
long-lived assets and goodwill, primarily at Williams Lake.
The $82.0 million reduction in net
loss in 2016 was primarily attributable to the reduction in
impairment expense and an increase in the fair value of derivative
instruments, partially offset by higher amortization expense, a
reduction in largely unrealized foreign exchange gain, lower income
tax benefit and the operational factors described
previously.
Project income for the fourth quarter of 2016 was
$13.3 million versus project loss for
the year-ago period of $(104.3)
million. The $117.6
million improvement from project loss in 2015 to project
income in 2016 was primarily attributable to lower impairment
expense and an increase in the fair value of derivative instruments
as described previously, partially offset by higher amortization
expense and the operational factors described previously.
Project Adjusted EBITDA for the fourth quarter of 2016
was $42.3 million, a decline of
$8.1 million from $50.4 million in the year-ago period.
Primary contributors to the decline were a $3.3 million reduction at Curtis Palmer due to
lower water flows; a $5.0 million
decrease at Kapuskasing and
North Bay due to lower waste heat,
turbine maintenance expense, and severance expense; and a
$2.2 million decrease at Oxnard due to the scheduled maintenance
outage. Results for Kapuskasing, Nipigon and North
Bay included $1.1 million of
severance expense related to the revised operational status of and
contractual arrangements for these plants announced in the
Company's January 9, 2017 press
release. These decreases were partially offset by a
$2.2 million increase at Mamquam due
to favorable water flows and lower maintenance expense.
Cash provided by operating activities of $19.9 million was in line with the $19.7 million reported for the year-ago
period. Significant uses of cash provided by operating
activities during the fourth quarter of 2016 included $15.0 million of term loan amortization,
$3.0 million of project debt
amortization and $2.1 million of
preferred dividend payments.
Year Ended December 31,
2016
The primary operational factors that affected the Company's
results for the year ended December 31,
2016 included an extended planned outage at Morris in the
third quarter, lower water flows at Curtis Palmer, lower waste heat
and fuel price escalation at some of the Company's Ontario plants, a contractual price adjustment
at Calstock, and a scheduled
maintenance outage at Oxnard. These negative drivers were
partially offset by the absence of an outage at Manchief (compared
to 2015) and higher water flows at Mamquam.
Net loss attributable to Atlantic Power Corporation of
$(122.4) million for the year ended
December 31, 2016 increased
$60.0 million from a net loss of
$(62.4) million in 2015. The
increased net loss was the result of a $32.8
million non-cash write-off of deferred financing costs in
the second quarter attributable to the Company's refinancing
activities (included in interest expense), $12.7 million of accelerated amortization expense
in the fourth quarter related to the Kapuskasing and North Bay PPAs, a $13.9 million largely unrealized foreign exchange
loss as compared to a $60.3 million
unrealized foreign exchange gain in 2015, and the absence of income
from the discontinued Wind business ($19.5
million in 2015). The operational factors described
previously had a net negative impact. These negative factors
affecting the 2016 net loss were partially offset by reduced
impairment expense ($85.9 million in
2016, mostly in the third quarter, as compared to $127.8 million in 2015) and a $22.5 million positive variance in the fair value
of derivatives. Another positive factor was that corporate
general and administrative costs declined $6.8 million in 2016 from 2015.
Project income of $10.1
million for the year compared favorably to project loss of
$(41.4) million for 2015. The
2016 result benefited from lower impairment expense as previously
described, a favorable change in the fair value of derivative
instruments, higher project income at Manchief, which had a
scheduled maintenance overhaul in the second quarter of 2015,
partially offset by lower project income at Morris, which had an
extended planned outage in the third quarter of 2016, lower project
income at Curtis Palmer due to lower water flows, a contractual
price adjustment at Calstock, a
scheduled maintenance outage at Oxnard and increased amortization
expense.
Project Adjusted EBITDA of $202.2
million for the year decreased $6.7
million from $208.9 million
for 2015. Primary contributors to the decline were a
$10.1 million reduction at Morris due
to lower revenues and higher maintenance expense resulting from the
extended outage in 2016, a $3.3
million decrease at Curtis Palmer due to lower water flows,
and a decrease of $7.6 million at the
Ontario projects due to lower
waste heat, fuel escalators and a contractual price adjustment at
Calstock. The stronger U.S. dollar had a negative non-cash
translation impact of approximately $2.9
million, almost all of which was in the first quarter.
These negative factors were partially offset by a $7.2 million increase at Manchief, which had a
major gas turbine outage in 2015, and a $6.7
million increase at Mamquam due to higher water flows.
Cash provided by operating activities of $111.8 million increased $24.4 million from the 2015 level of $87.4 million. The increase was primarily
attributable to a $29.3 million
reduction in cash interest payments due to debt repayment in 2015
and 2016 and the absence of make-whole premiums associated with the
redemption of the 9.0% Senior Unsecured Notes in 2015, a
$6.8 million reduction in corporate
G&A expense and a positive variance in changes in working
capital. These positive drivers were partially offset by the
loss of $21.9 million of operating
cash flow from the Wind businesses, which were included in the 2015
result. The $6.7 million
decrease in Project Adjusted EBITDA described previously also had a
negative impact on operating cash flow in 2016. In 2016, the
Company used its $111.8 million of
cash provided by operating activities to amortize $96.5 million of term loan and project debt, make
capital expenditures of $7.2 million
and pay preferred dividends of $8.5
million.
2017 Guidance
The Company has not provided guidance for Project income or Net
income because of the difficulty of making accurate forecasts and
projections without unreasonable efforts with respect to certain
highly variable components of these comparable GAAP metrics,
including changes in the fair value of derivative instruments and
foreign exchange gains or losses. These factors, which
generally do not affect cash flow, are not included in Project
Adjusted EBITDA.
The Company has initiated guidance for 2017 Project Adjusted
EBITDA in the range of $225 to $240
million. The increase from the 2016 level of
$202.2 million is primarily
attributable to the expiration on December
31, 2016 of an above-market gas supply contract for two of
the Company's Ontario projects.
Other positive factors include an expected full year cash
return on completed optimization investments; an expected return to
average water flows, particularly at Curtis Palmer and Mamquam; and
revised operational and contractual arrangements for Kapuskasing and North Bay as described in the Company's
January 9, 2017 press release, net of
the cost of putting those plants into a non-operational
status. Morris is also expected to have a positive
comparison because of the extended outage it underwent in 2016, but
this is expected to be more than offset by a planned maintenance
outage at Frederickson in 2017 and expenses associated with
preparing Tunis for a return to
service in 2018 under the new PPA.
Table 2 provides a bridge of the Company's 2017 Project Adjusted
EBITDA guidance to Cash provided by operating activities. For
purposes of providing this bridge to a cash flow measure, the
impact of changes in working capital is assumed to be nil.
Atlantic Power
Corporation Table 2 – Bridge of 2017 Project Adjusted
EBITDA Guidance to Cash Provided by Operating
Activities (in millions of U.S.
dollars) Unaudited
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2017 Project
Adjusted EBITDA Guidance(1)
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$225 -
$240
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Adjustment for equity
method projects(2)
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(1)
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Corporate G&A
expense
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(22)
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Cash interest
payments
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(67)
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Cash taxes
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(4)
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Other
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-
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Cash provided by
operating activities
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$130 -
$145
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Note: For the
purpose of providing a bridge of Project Adjusted EBITDA guidance
to a cash flow measure, the impact of changes in working capital on
Cash provided by operating activities is assumed to be
nil.
(1)
Initially provided March 2, 2017.
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(2) For
equity method projects, represents difference between Project
Adjusted EBITDA and cash distribution from equity method
projects.
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Liquidity and Balance Sheet
Liquidity
As shown in Table 3, the Company's liquidity at December 31, 2016 was $204.1 million, essentially unchanged from
$205.1 million at September 30, 2016. An $8.2 million reduction in the unrestricted cash
balance was mostly offset by a $7.2
million increase in borrowing capacity resulting from a
reduction in letters of credit outstanding. The unrestricted
cash of $85.6 million includes
approximately $60 million at the
parent, of which the Company considers approximately $50 million to be discretionary cash available
for general corporate purposes.
Atlantic Power
Corporation
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Table 3 –
Liquidity (in millions of U.S. dollars)
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Unaudited
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December
31,
2016
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September
30,
2016
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Revolver
capacity
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$200.0
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$200.0
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Letters of credit
outstanding
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(81.5)
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(88.7)
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Unused borrowing
capacity
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118.5
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111.3
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Unrestricted
cash
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85.6
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93.8
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Total
Liquidity
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$204.1
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$205.1
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Note: Liquidity
numbers presented do not include restricted cash of $12.6 million
at September 30, 2016 and $13.3 million at December 31,
2016.
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Balance Sheet
Repayment of Term Loan and Project Debt
During the fourth quarter of 2016, the Company amortized
$15.0 million of the APLP Holdings
term loan and $3.0 million of
project-level debt. For the full year, the Company amortized
$85.5 million of term loan debt,
including $25.3 million in the first
quarter related to the previous term loan, and $11.1 million of project-level debt.
Redemptions and Repurchases of Convertible Debentures
There were no redemptions or repurchases of convertible
debentures in the fourth quarter of 2016. For the year, the
Company redeemed or repurchased a total of $191.5 million principal amount of convertible
debentures. This was done under the normal course issuer bid
(NCIB) in the first quarter ($18.8
million), through the redemption at par of both 2017 issues
in the second quarter ($110.1
million) using proceeds from the term loan refinancing, and
under a substantial issuer bid in the third quarter ($62.7 million), also using proceeds from the
refinancing.
Debt Balance and Leverage at December
31, 2016
Although the refinancing of the Company's previous term loan in
April 2016 resulted in a net increase
in debt of $252 million, the
allocation of a majority of the net cash proceeds from the
refinancing to debt redemptions and repurchases in the second and
third quarters of this year, together with ongoing amortization of
the new term loan and project debt, as described previously, offset
all but $10 million of this
increase. At December 31, 2016,
the Company's consolidated debt was $996.5
million, excluding unamortized discounts and deferred
financing costs, as compared to $1,018.7
million at year end 2015. The Company's consolidated
leverage ratio (consolidated gross debt to trailing 12-month
consolidated Adjusted EBITDA) was 5.6 times at December 31, 2016.
Debt Maturity Profile
As a result of refinancing and discretionary repurchases to
date, the Company has no bullet maturities at the corporate level
prior to June 2019, when the
remaining $42.6 million of Series C
convertible debentures will mature. In addition, the Company
has $60.3 million (U.S. dollar
equivalent) of Series D convertible debentures maturing in December
2019. The reshaping of the Company's maturity profile is
further improved by the later maturity dates for the new term loan
(2023 versus 2021 previously) and the new revolver (2021 versus
2018 previously). The Company also has one project debt
bullet maturity during this period – the term loan at its
Piedmont project totaling
$54 million at its maturity date of
August 2018. In addition to these bullet maturities, the
Company has amortizing debt at various projects through 2025 and
required amortization of the APLP Holdings term loan per a targeted
debt schedule through the 2023 maturity date.
2017 Debt Repayment Plans
The Company expects to amortize $100
million of its APLP Holdings term loan and $11.8 million of project debt in 2017 using cash
flow. In addition, the Company plans to allocate $40 million or more of its discretionary cash to
additional debt reduction (which could include convertible
debentures, further paydown of term loan and project debt
maturities). Thus, in total, the Company expects to repay
approximately $150 million or more of
debt in 2017.
Normal Course Issuer Bid (discretionary repurchases of debt
and equity)
The NCIB implemented by the Company in December 2015 expired on December 28, 2016. Under this program, the
Company repurchased $18.8 million
principal amount of convertible debentures, all in the first
quarter of 2016. The Company also repurchased a total of
slightly less than 8.1 million common shares, including 8.0 million
in 2016, at a total cost including commissions of approximately
$19.6 million (average price of
$2.42 per share). Share
repurchases in the fourth quarter of 2016 totaled 2.4 million at a
total cost of $5.8 million (average
price of $2.44 per share).
The Company implemented a new NCIB on December 29, 2016. Under this NCIB, the
Company may purchase up to 10% of the public float of the Company's
outstanding common shares and convertible debentures and up to 5%
of the amount issued and outstanding of Atlantic Power Preferred
Equity Ltd.'s preferred shares. Details of the program can be
found in the Company's December 20,
2016 press release.
Other Financial Updates
PPA Expirations and Negotiations
The Company has PPAs or other contractual arrangements scheduled
to expire for nine of its projects in the next five years.
Together these represent 25% of the Company's capacity and 30% of
2016 Project Adjusted EBITDA. In January 2017, the Company put the Kapuskasing, North
Bay and Nipigon projects in
Ontario into a non-operational
state, under arrangements that provide a fixed monthly payment to
the projects until December 2017 for
Kapuskasing and North Bay and October
2018 for Nipigon. Another Ontario project,
Tunis, has not been operating
since the expiration of its previous PPA in December 2014, but has a 15-year PPA that will
commence between November 2017 and
June 2019, at the Company's
option. The Company plans to return Tunis to service under the new PPA in
2018. In San Diego, the Company's three plants (Naval
Station, North Island and Naval Training Center) have expiring PPAs
in December 2019, but these PPAs are
dependent on the Company's right to use the underlying sites under
agreements with the Navy that expire in February 2018. The
Company is currently considering negotiating, extending or entering
into new agreements or arrangements for certain of the Ontario, San
Diego and other projects for which the PPAs expire during
this period. For information on the status of these
negotiations or arrangements, please consult the Company's 2016
Annual Report on Form 10-K.
Optimization Investments
The Company made approximately $3.4
million of optimization-related investments in its projects
in 2016, with the majority of those for upgrades to a boiler and
two combustion turbines at Morris and a spillway upgrade project at
Curtis Palmer, all of which were completed in 2016. The
Company expects to complete the upgrade of the third combustion
turbine at Morris during an outage in the spring of this
year. Although the Company will continue to evaluate the
potential for additional such investments, they are expected to be
relatively modest. The Company has begun an evaluation of its
operation and maintenance costs and expects that to be a major
focus in 2017.
The Company realized a cash flow benefit of approximately
$8 million in 2016 from optimization
investments made in 2013 through 2016 totaling approximately
$25 million, which was below the
original expectation primarily because high levels of waste heat at
Nipigon reduced the need for the
duct burners and booster pump that were installed as optimization
projects in 2014 and 2015, respectively. In addition, lower
water flows at Curtis Palmer in 2016 reduced the contribution from
the turbine upgrades completed in 2013 and 2014. The Company
expects to realize a cash flow benefit of approximately
$12 million in 2017 from these
investments and those made in 2017, assuming average water
conditions.
Maintenance and Capex
In 2016, for its consolidated projects only, the Company
incurred $37.9 million of maintenance
expense versus $36.2 million in
2015. In addition to maintenance expensed in the period, the
Company made $7.2 million of capital
expenditures versus $11.3 million in
2015. Including the Company's share of projects in which it
has an equity ownership interest, maintenance expense was
$46.2 million in 2016 versus
$55.6 million in 2015, and capital
expenditures were $7.5 million versus
$11.6 million in 2015. For
2017, including its share of equity-owned projects, the Company
expects to incur maintenance expenses of approximately $45 million (in line with the 2016 level) and
make capital investments of between $5
million and $6 million (slightly lower than the 2016
level). The maintenance expenditures in 2017 include an
estimate of the cost to prepare Tunis for a return to service in 2018 under
the new PPA.
Material Weakness Remediated
As previously disclosed in the Company's 2015 Annual Report on
Form 10-K, the Company had identified a material weakness in its
internal controls over financial reporting because its internal
controls over its long-lived asset and goodwill impairment tests
where not designed effectively. During 2016, management
developed and implemented new control procedures to remediate this
material weakness. Upon completion of the testing of the
design and operating effectiveness of these new control procedures
in the annual goodwill impairment analysis it conducted in the
fourth quarter of 2016, management concluded that as of
December 31, 2016, it had remediated
the previously identified material weakness.
Subsequent Event
As disclosed in the Company's 2016 Annual Report on Form 10-K,
on February 27, 2017, the Company
received notice from the Ontario Electricity Financial Corporation
(OEFC) that the Company will be receiving a payment of
approximately Cdn$8.4 million for its
Kapuskasing and North Bay plants representing the application
of the price escalator calculation under their respective PPAs for
power sold to OEFC in 2016. This payment stems from the
Global Adjustment litigation brought by a group of Non-Utility
Generators against the OEFC, which was decided in favor of the
plaintiffs by the Superior Court of Canada. The OEFC was
denied leave to appeal this ruling by the Supreme Court of
Canada in January 2017.
The Company was not a party to the litigation, but did enter
into a standstill agreement with the OEFC in 2015, with respect to
its Kapuskasing, North Bay and Tunis projects. Under the standstill the
Company reserved its right to bring claims against the OEFC with
respect to the calculation of the price escalator provision in the
PPAs for these three plants.
The OEFC payment of Cdn$8.4
million is for Kapuskasing
and North Bay only during 2016 and
does not cover any prior period. The Company has notified the
OEFC that it reserves its right to contest the payment
amount. The amount will be included in the Company's revenue
only when the matter is settled and all contingencies have been
resolved. The Company's 2017 financial guidance does not
include any current or retroactive payments with respect to this
matter.
Supplementary Financial Information
Results for project income and Project Adjusted EBITDA exclude
discontinued operations, which consist primarily of the Wind
businesses that were sold in June 2015. Results of
discontinued operations are summarized on page 13 of this
release.
A discussion of non-GAAP disclosures and schedules reconciling
Project Adjusted EBITDA, a non-GAAP measure, to the comparable GAAP
measure, can be found on pages 13 to 14 of this release.
Investor Conference Call and Webcast
Atlantic Power's management team will host a telephone
conference call on Friday, March 3,
2017 at 8:30 AM ET.
Management's prepared remarks and an accompanying presentation will
be available on the Conference Calls page of the Company's website
prior to the call.
Conference Call / Webcast Information:
Date: Friday, March
3, 2017
Start Time: 8:30 AM
ET
Phone Number: U.S. (Toll Free) 1-855-239-3193;
Canada (Toll Free) 1-855-669-9657;
International (Toll) 1-412-542-4129.
Conference Access: Please request access to the
Atlantic Power conference call.
Webcast: The call will be broadcast over Atlantic
Power's website at www.atlanticpower.com.
Replay/Archive Information:
Replay: Access conference call number
10100699 at the following telephone numbers: U.S.
(Toll Free) 1-877-344-7529; Canada
(Toll Free) 1-855-669-9658; International (Toll)
1-412-317-0088. The replay will be available one hour after
the end of the conference call through April
2, 2017 at 11:59 PM
ET.
Webcast archive: The conference call will be archived
on Atlantic Power's website at www.atlanticpower.com for a period
of 12 months.
About Atlantic Power
Atlantic Power owns and operates a diverse fleet of twenty-three
power generation assets across nine states in the United States and two provinces in
Canada. The Company's power generation projects sell
electricity to utilities and other large commercial customers
largely under long-term power purchase agreements, which seek to
minimize exposure to changes in commodity prices. The
aggregate gross electric generation capacity of this portfolio is
approximately 2,138 megawatts (MW), and the Company's aggregate net
ownership interest is approximately 1,500 MW. Nineteen of the
projects are currently operational, totaling 1,975 MW on a gross
capacity basis and 1,337 MW on a net ownership basis. The
remaining four projects, all in Ontario, are not operational, three due to
revised contractual arrangements with the offtaker and the other,
Tunis, has a forward-starting
15-year contractual agreement that will commence between
November 2017 and June
2019.
Atlantic Power's shares trade on the New York Stock Exchange
under the symbol AT and on the Toronto Stock Exchange under the
symbol ATP. For more information, please visit the Company's
website at www.atlanticpower.com or contact:
Atlantic Power Corporation
Investor Relations
(617) 977-2700
info@atlanticpower.com
Copies of the Company's financial data and other publicly filed
documents are available on SEDAR at www.sedar.com or on EDGAR at
www.sec.gov/edgar.shtml under "Atlantic Power Corporation" or on
the Company's website.
************************************************************************************************************************
Cautionary Note Regarding Forward-Looking Statements
To the extent any statements made in this news release contain
information that is not historical, these statements are
forward-looking statements within the meaning of Section 27A of the
U.S. Securities Act of 1933, as amended, and Section 21E of the
U.S. Securities Exchange Act of 1934, as amended, and under
Canadian securities law (collectively, "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 the Company
and its projects. These statements, which are based on
certain assumptions and describe the Company's 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 Company's views of its debt maturity profile;
- the Company's views of its ability to take a disciplined
approach on PPA expirations and to withstand an extended downturn
in the business;
- the Company's view of the uses of capital available to it; the
Company's expectation that it will repay $150 million or more of debt in 2017;
- the Company's view that its shares trade at a significant
discount to its estimates of intrinsic value per share;
- the Company's view of its ability to implement a growth
strategy;
- the Company's estimation that 2017 Project Adjusted EBITDA will
be in the range of $225 to $240
million, and its expectations with respect to the drivers of
2017 Project Adjusted EBITDA;
- the Company's estimation that 2017 cash flows provided by
operating activities will be in the range of $130 to $145 million, assuming for this purpose
that working capital changes are nil;
- the Company's estimate of discretionary cash (approximately
$50 million), and its plans to
allocate approximately $40 million or
more to discretionary debt repayment in 2017;
- the Company's expectation that it will realize a cash flow
benefit of approximately $12 million
in 2017 from discretionary investments made in 2013 through 2016
totaling approximately $25
million;
- the Company's expectation that in 2017, including its share of
equity-owned projects, capital expenditures will total
approximately $5 to $6 million and
maintenance expense will total approximately $45 million; and
- the results of operations and performance of the Company's
projects, business prospects, opportunities and future growth of
the Company will be as described herein.
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" and "Forward-Looking
Information" 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 the Company,
including, without limitation, the outcome or impact of the
Company's business strategy to increase the intrinsic value of the
Company on a per-share basis through disciplined management of its
balance sheet and cost structure and investment of its
discretionary cash in a combination of organic and external growth
projects, acquisitions, and repurchases of debt and equity
securities; the Company's ability to enter into new PPAs on
favorable terms or at all after the expiration of existing
agreements, and the outcome or impact on the Company's business of
any such actions. 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 Company's ability to achieve its
longer-term goals, including those described in this news release,
is based on significant assumptions relating to and including,
among other things, the general conditions of the markets in which
it operates, revenues, internal and external growth opportunities,
its ability to sell assets at favorable prices or at all and
general financial market and interest rate conditions. The
Company's actual results may differ, possibly materially and
adversely, from these goals.
Atlantic Power
Corporation
Table 4 –
Consolidated Balance Sheet (in millions of U.S.
dollars)
|
|
|
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$85.6
|
$72.4
|
Restricted
cash
|
13.3
|
15.2
|
Accounts
receivable
|
37.3
|
39.6
|
Current
portion of derivative instruments asset
|
4.0
|
-
|
Inventory
|
16.0
|
16.9
|
Prepayments
|
5.9
|
8.3
|
Other current
assets
|
2.8
|
4.5
|
Total current
assets
|
164.9
|
156.9
|
|
|
|
Property, plant and
equipment, net
|
733.2
|
777.7
|
Equity investments in
unconsolidated affiliates
|
266.8
|
286.2
|
Power purchase
agreements and intangible assets, net
|
246.2
|
308.9
|
Goodwill
|
36.0
|
134.5
|
Derivative
instruments asset
|
4.6
|
0.3
|
Other
assets
|
5.1
|
6.7
|
Total
assets
|
$1,456.8
|
$1,671.2
|
|
|
|
Liabilities
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$4.5
|
$6.9
|
Accrued
interest
|
0.7
|
1.6
|
Other accrued
liabilities
|
24.4
|
25.4
|
Current
portion of long-term debt
|
111.9
|
15.8
|
Current
portion of derivative instruments liability
|
7.6
|
36.7
|
Other current
liabilities
|
1.8
|
2.5
|
Total current
liabilities
|
150.9
|
88.9
|
|
|
|
Long-term debt
(1)
|
749.2
|
682.7
|
Convertible
debentures (2)
|
100.4
|
277.7
|
Derivative
instruments liability
|
21.3
|
20.8
|
Deferred income
taxes
|
68.3
|
85.7
|
Power purchase and
fuel supply agreement liabilities, net
|
25.3
|
27.0
|
Other long-term
liabilities
|
55.5
|
53.2
|
Total
liabilities
|
$1,170.9
|
$1,236.0
|
|
|
|
Equity
|
|
|
Common shares, no par
value, unlimited authorized shares; 114,649,888 and 122,153,082
issued and outstanding at December 31, 2016 and December 31, 2015,
respectively
|
1,272.9
|
1,290.6
|
Accumulated other
comprehensive loss
|
(148.5)
|
(139.3)
|
Retained
deficit
|
(1,059.8)
|
(937.4)
|
Total Atlantic Power
Corporation shareholders' equity
|
64.6
|
213.9
|
Preferred shares
issued by a subsidiary company
|
221.3
|
221.3
|
Total
equity
|
285.9
|
435.2
|
Total liabilities and
equity
|
$1,456.8
|
$1,671.2
|
(1) Net of
unamortized discount and deferred financing costs
(2) Net of
unamortized deferred financing costs
|
|
|
Atlantic Power
Corporation
|
Table 5 –
Consolidated Statements of Operations
|
(in millions of
U.S. dollars, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December
31,
|
Twelve months
ended
December
31,
|
|
|
2016
|
2015
|
|
2016
|
2015
|
Project
revenue:
|
|
|
|
|
|
|
|
Energy
sales
|
|
$45.8
|
$46.6
|
|
$184.2
|
$191.5
|
Energy
capacity revenue
|
|
28.7
|
31.9
|
|
141.9
|
149.3
|
Other
|
|
18.9
|
19.9
|
|
73.1
|
79.4
|
|
|
93.4
|
98.4
|
|
399.2
|
420.2
|
Project
expenses:
|
|
|
|
|
|
|
Fuel
|
|
38.7
|
39.8
|
|
149.5
|
165.1
|
Operations and
maintenance
|
|
25.8
|
21.9
|
|
105.2
|
103.5
|
Development
|
|
-
|
-
|
|
-
|
1.1
|
Depreciation
and amortization
|
|
37.9
|
26.2
|
|
113.5
|
110.0
|
|
|
102.4
|
87.9
|
|
368.2
|
379.7
|
Project other income
(expense):
|
|
|
|
|
|
|
Change in fair
value of derivative instruments
|
|
17.8
|
6.7
|
|
37.9
|
15.4
|
Equity in
earnings of unconsolidated affiliates
|
|
8.0
|
8.4
|
|
35.9
|
36.7
|
Gain on sale
of equity investments
|
|
-
|
-
|
|
-
|
-
|
Interest,
net
|
|
(2.3)
|
(2.0)
|
|
(9.2)
|
(8.2)
|
Impairment
|
|
(1.2)
|
(127.8)
|
|
(85.9)
|
(127.8)
|
Other income,
net
|
|
-
|
(0.1)
|
|
0.4
|
2.0
|
|
|
22.3
|
(114.8)
|
|
(20.9)
|
(81.9)
|
Project income
(loss)
|
|
13.3
|
(104.3)
|
|
10.1
|
(41.4)
|
|
|
|
|
|
|
|
Administrative and
other expenses:
|
|
|
|
|
|
|
Administration
|
|
5.0
|
6.4
|
|
22.6
|
29.4
|
Interest,
net
|
|
18.2
|
15.8
|
|
106.0
|
107.1
|
Foreign
exchange loss (gain)
|
|
(5.1)
|
(11.2)
|
|
13.9
|
(60.3)
|
Other income,
net
|
|
-
|
-
|
|
(3.9)
|
(3.1)
|
|
|
18.1
|
11.0
|
|
138.6
|
73.1
|
Loss from continuing
operations before income taxes
|
|
(4.8)
|
(115.3)
|
|
(128.5)
|
(114.5)
|
Income tax
benefit
|
|
(0.4)
|
(29.9)
|
|
(14.6)
|
(30.4)
|
Loss from continuing
operations
|
|
(4.4)
|
(85.4)
|
|
(113.9)
|
(84.1)
|
Net (loss) income
from discontinued operations, net of tax (1)
|
|
-
|
(1.3)
|
|
-
|
19.5
|
Net loss
|
|
(4.4)
|
(86.7)
|
|
(113.9)
|
(64.6)
|
Net loss attributable
to noncontrolling interests
|
|
-
|
-
|
|
-
|
(11.0)
|
Net income
attributable to preferred share dividends of a subsidiary
company
|
|
2.2
|
1.9
|
|
8.5
|
8.8
|
Net loss attributable
to Atlantic Power Corporation
|
|
($6.6)
|
($88.6)
|
|
($122.4)
|
($62.4)
|
Basic and diluted
(loss) income per share:
|
|
|
|
|
|
|
Loss from
continuing operations attributable to Atlantic Power
Corporation
|
|
($0.06)
|
($0.71)
|
|
($1.02)
|
($0.76)
|
(Loss) income
from discontinued operations, net of tax
|
|
-
|
(0.01)
|
|
-
|
0.25
|
Net loss attributable
to Atlantic Power Corporation
|
|
($0.06)
|
($0.72)
|
|
($1.02)
|
($0.51)
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
115.5
|
122.1
|
|
119.5
|
121.9
|
Diluted
|
|
115.5
|
122.1
|
|
119.5
|
121.9
|
|
|
|
|
|
|
|
Dividends per common
share:
|
|
$-
|
$0.02
|
|
$-
|
$0.09
|
(1)
Includes contributions from the Wind Projects, which are components
of discontinued operations.
|
Atlantic Power
Corporation
|
Table 6 –
Consolidated Statements of Cash Flows (in millions of U.S.
dollars)
|
|
|
|
|
|
Twelve months
ended December 31,
|
|
|
|
2016
|
2015
|
Cash provided by
operating activities:
|
|
|
|
|
Net loss
|
|
|
($113.9)
|
($64.6)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
|
113.5
|
120.3
|
Gain on sale of
assets
|
|
|
0.2
|
(48.7)
|
Gain on purchase and
cancellation of convertible debentures
|
|
|
(3.7)
|
(3.1)
|
Write off of deferred
financing costs
|
|
|
32.8
|
9.0
|
Stock-based
compensation expense
|
|
|
1.8
|
2.3
|
Long-lived assets and
goodwill impairment charges
|
|
|
85.9
|
127.8
|
Equity in earnings
from unconsolidated affiliates
|
|
|
(35.9)
|
(36.2)
|
Distributions from
unconsolidated affiliates
|
|
|
55.3
|
58.5
|
Unrealized foreign
exchange loss (gain)
|
|
|
13.8
|
(60.5)
|
Change in fair value
of derivative instruments
|
|
|
(37.9)
|
(14.7)
|
Change in deferred
income taxes
|
|
|
(17.5)
|
(3.5)
|
Change in other
operating balances
|
|
|
|
|
Accounts
receivable
|
|
|
2.3
|
5.7
|
Inventory
|
|
|
0.9
|
2.4
|
Prepayments and other
assets
|
|
|
17.0
|
11.9
|
Accounts
payable
|
|
|
(0.2)
|
(8.9)
|
Accruals and other
liabilities
|
|
|
(2.6)
|
(10.3)
|
Cash provided by
operating activities
|
|
|
111.8
|
87.4
|
|
|
|
|
|
Cash (used in)
provided by investing activities:
|
|
|
|
|
Change in restricted
cash
|
|
|
1.9
|
7.3
|
Proceeds from sale of
assets and equity investments, net
|
|
|
-
|
326.3
|
Contribution to
unconsolidated affiliate
|
|
|
-
|
(0.6)
|
Capitalized
development costs
|
|
|
-
|
(0.8)
|
Reimbursement of costs
for third-party construction project
|
|
|
4.8
|
-
|
Purchase of property,
plant and equipment
|
|
|
(7.2)
|
(11.3)
|
Cash (used in)
provided by investing activities
|
|
|
(0.5)
|
320.9
|
|
|
|
|
|
Cash used in
financing activities:
|
|
|
|
|
Proceeds from New Term
Loan facility, net of discount
|
|
|
679.0
|
-
|
Common share
repurchases
|
|
|
(19.5)
|
-
|
Repayment of corporate
and project-level debt
|
|
|
(544.4)
|
(403.3)
|
Repayment of
convertible debentures
|
|
|
(188.5)
|
(18.9)
|
Deferred financing
costs
|
|
|
(16.2)
|
-
|
Dividends paid to
common shareholders
|
|
|
-
|
(11.1)
|
Dividends paid to
noncontrolling interests
|
|
|
-
|
(3.7)
|
Dividends paid to
preferred shareholders
|
|
|
(8.5)
|
(8.8)
|
Cash used in
financing activities
|
|
|
(98.1)
|
(445.8)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
13.2
|
(37.5)
|
Cash and cash
equivalents at beginning of period at discontinued
operations
|
|
-
|
3.9
|
Cash and cash
equivalents at beginning of period
|
|
|
72.4
|
106.0
|
Cash and cash
equivalents at end of period
|
|
|
$85.6
|
$72.4
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
Interest
paid
|
|
|
$70.7
|
$100.0
|
Income taxes paid,
net
|
|
|
3.5
|
10.2
|
Accruals for
construction in progress
|
|
|
1.2
|
0.6
|
Results of Discontinued Operations
The Wind projects, which were sold in June 2015, had no impact on financial results in
2016. For the year ended December 31,
2015, the Wind projects had Project income of $52.6 million and cash provided by operating
activities of $21.9 million, as shown
in Table 7.
Atlantic Power
Corporation
|
Table 7 –
Discontinued Operations
|
(in millions of
U.S. dollars, except as otherwise stated)
|
Unaudited
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
Twelve
months ended
December 31,
|
|
|
2016
|
2015
|
|
2016
|
2015
|
Project
revenue
|
|
$-
|
$-
|
|
$-
|
$34.8
|
Project (loss)
income
|
|
-
|
(0.6)
|
|
-
|
52.6
|
Net (loss)
income
|
|
-
|
(1.1)
|
|
-
|
19.5
|
Cash provided by
operating activities
|
|
-
|
-
|
|
-
|
21.9
|
Cash used in
investing activities
|
|
-
|
-
|
|
-
|
(12.8)
|
Non-GAAP Disclosures
Project Adjusted EBITDA is not a measure recognized under
GAAP and does not have a standardized meaning prescribed by GAAP,
and is therefore unlikely to be comparable to similar measures
presented by other companies. Investors are cautioned that
the Company may calculate this non-GAAP measure in a manner that is
different from other companies. The most directly comparable
GAAP measure is Project income (loss). Project Adjusted
EBITDA is defined as project income (loss) plus interest, taxes,
depreciation and amortization (including non-cash impairment
charges) and changes in the fair value of derivative
instruments. Management uses Project Adjusted EBITDA at the
project level to provide comparative information about project
performance and believes such information is helpful to
investors. A reconciliation of Project Adjusted EBITDA to
Project income (loss) and to Net loss on a consolidated basis is
provided in Table 8 on page 14 of this release.
Cash Distributions from Projects is the amount of cash
distributed by the projects to the Company out of available project
cash flow after all project-level operating costs, interest
payments, principal repayment, capital expenditures and working
capital requirements. A bridge of Project Adjusted EBITDA to
Cash Distributions from Projects, previously included in this
release, can be found in the fourth quarter and year end 2016
presentation on the Company's website.
Project income (loss) and Project Adjusted EBITDA by project,
previously included in this release, can be found in the fourth
quarter and year end 2016 presentation on the Company's
website.
Atlantic Power
Corporation
|
Table 8 –
Reconciliation of Net loss to Project Adjusted
EBITDA
|
(in millions of
U.S. dollars, except as otherwise stated)
|
Unaudited
|
|
|
|
|
|
|
|
|
Three months
ended
December 31
|
|
Twelve months
ended
December 31
|
|
2016
|
2015
|
|
2016
|
2015
|
Net loss
attributable to Atlantic Power Corporation
|
($6.6)
|
($88.6)
|
|
($122.4)
|
($62.4)
|
Net income
attributable to preferred share dividends of a subsidiary
company
|
2.2
|
1.9
|
|
8.5
|
8.8
|
Net loss attributable
to noncontrolling interests
|
-
|
-
|
|
-
|
(11.0)
|
Net loss
|
($4.4)
|
($86.7)
|
|
($113.9)
|
($64.6)
|
Net (loss) income
from discontinued operations, net of tax
|
-
|
1.3
|
|
-
|
(19.5)
|
Net loss from
continuing operations
|
(4.4)
|
(85.4)
|
|
(113.9)
|
(84.1)
|
Income tax
benefit
|
(0.4)
|
(29.9)
|
|
(14.6)
|
(30.4)
|
Loss from continuing
operations before income taxes
|
(4.8)
|
(115.3)
|
|
(128.5)
|
(114.5)
|
Administration
|
5.0
|
6.4
|
|
22.6
|
29.4
|
Interest expense,
net
|
18.2
|
15.8
|
|
106.0
|
107.1
|
Foreign exchange loss
(gain)
|
(5.1)
|
(11.2)
|
|
13.9
|
(60.3)
|
Other income,
net
|
-
|
-
|
|
(3.9)
|
(3.1)
|
Project income
(loss)
|
$13.3
|
($104.3)
|
|
$10.1
|
($41.4)
|
|
|
|
|
|
|
Reconciliation to
Project Adjusted EBITDA
|
|
|
|
|
|
Depreciation and
amortization
|
$42.7
|
$31.2
|
|
$133.5
|
$130.1
|
Interest expense,
net
|
2.7
|
2.1
|
|
10.9
|
9.8
|
Change in the fair
value of derivative instruments
|
(17.8)
|
(6.7)
|
|
(37.9)
|
(15.4)
|
Impairment
|
1.2
|
127.8
|
|
85.9
|
127.8
|
Other (income)
expense
|
0.2
|
0.3
|
|
(0.3)
|
(2.0)
|
Total Project
Adjusted EBITDA
|
$42.3
|
$50.4
|
|
$202.2
|
$208.9
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/atlantic-power-corporation-releases-fourth-quarter-and-year-end-2016-results-300417393.html
SOURCE Atlantic Power Corporation