CALGARY, Aug. 3, 2018 /PRNewswire/ -
Second Quarter 2018 Financial Highlights
- Funds from operations were $188
million, in line with the same period last year; and
- Free cash flow was $96 million
compared to $30 million in 2017, a
220% increase.
Year-to-Date 2018 Financial and Operating Highlights
- Free cash flow increased $209
million to $334 million
compared to the same period last year;
- Net debt lower by $345 million in
the first six months, resulting in Net Debt / EBITDA ratio of
3.0x
- Acquired two construction ready wind projects in the United States
TransAlta Corporation ("TransAlta" or the "Company") (TSX: TA;
NYSE: TAC) today reported second quarter 2018 financial results
that demonstrate our progress of increasing free cash
flow(1), improving operating performance, reducing
corporate debt, and advancing the transition to clean power
generation.
Free cash flow was higher by $66
million and $209 million
respectively, for the three and six months ended June 30, 2018. During the second quarter,
all generating segments, except Canadian Coal, contributed cash
flow in line with or better than last year. On a year to date
basis, Canadian Coal benefitted from the one-time payment in the
first quarter for the early termination of the Sundance B and C
Power Purchase Arrangements ("PPAs"), as well as reduced capital
requirements due to the retirement of Sundance Unit 1 and the
mothballing of Sundance Units 2, 3, and 5. Strong
contributions from our Hydro and Canadian Gas segments were driven
by increases in prices for power and ancillary services in
Alberta. Based on our
outlook for the balance of the year, we are tracking to achieve the
upper end of our free cash flow guidance of $300 million to $350
million.
Our debt repayment strategy is progressing well, and we are
ahead of plan in reducing net debt and strengthening our balance
sheet. During the quarter we reduced net debt by an
additional $63 million, bringing our
total net debt reduction for the year to $345 million. Subsequent to the quarter we
exercised the early redemption of our $400
million 6.40 per cent bond due in 2019 with the proceeds
from our off-coal bond offering of approximately $345 million at a rate of 4.509 per cent.
Since 2015 we have eliminated $1.2
billion in debt and intend to use our strong cash flow to
finance the repayment of our next bond maturity due in 2020.
"Cash flows were stronger than we expected for the first half of
the year due to exceptional performance from the Alberta hydro assets," said Dawn Farrell, President and Chief Executive
Officer. "Subsequent to the quarter, we retired our $400 million bond and now have one of the
strongest balance sheets in the industry."
Other Highlights
- Entered into a transaction to transfer the economic interest in
the Lakeswind Wind Farm and solar projects located in Massachusetts, and ownership of the Kent
Breeze Wind Farm, to TransAlta Renewables. The total purchase
price for this transaction was $166
million, which includes the assumption of $62 million of tax equity and debt.
- Purchased and cancelled 587,300 common shares at an average
price of $6.77 per share during the
first half of the year through our Normal Course Issuer Bid which
commenced March 14, 2018.
- TransAlta's interest in TransAlta Renewables was reduced from
approximately 64 per cent to 61 per cent as a result of TransAlta
Renewables bought deal offering of 11,860,000 common shares, which
were issued at $12.65 per share for
gross proceeds of approximately $150
million.
Subsequent Events
- Retired the previously mothballed Sundance Unit 2 due to its
relatively short useful life, small size relative to other units,
and the capital required to return the unit to service.
- Exercised the early redemption of the outstanding 6.40 per cent
debentures due November 2019 for
approximately $425 million funded
through the proceeds of the July 20th,
2018 off-coal bond offering of approximately $345 million at a rate of 4.509 per cent per
annum.
Second Quarter 2018 Review by Segment
|
|
|
Comparable
EBITDA
(in CAD$ millions)
|
3 Months
Ended
|
6 Months
Ended
|
June 30,
2018
|
June 30,
2017
|
June 30,
2018
|
June 30,
2017
|
Canadian
Coal
|
43
|
85
|
265(a)
|
176
|
U.S. Coal
|
18
|
34
|
45
|
44
|
Canadian
Gas
|
62
|
57
|
127
|
145(b)
|
Australian
Gas
|
31
|
32
|
62
|
63
|
Wind and
Solar
|
34
|
42
|
99
|
110
|
Hydro
|
49
|
28
|
66
|
42
|
Energy
Marketing
|
8
|
12
|
17
|
8
|
Corporate
|
(20)
|
(22)
|
(40)
|
(46)
|
Total Comparable
EBITDA
|
225
|
268
|
641
|
542
|
a) Includes $157
million in compensation from the Balancing Pool for the early
termination of the Sundance B and C PPAs.
|
b) Includes $34
million payment from the OEFC relating to the settlement of an
indexation dispute.
|
- Canadian Coal: Excluding the $157
million in compensation from the Balancing Pool for the
early termination of the Sundance B and C PPAs, comparable EBITDA
for the three and six months ended June 30,
2018 decreased $42 million and
$68 million respectively, compared to
2017. Gross margin was negatively impacted by the expiry of
the Sundance A PPA and the termination of the Sundance B and C
PPAs.
- U.S. Coal: Comparable EBITDA for the quarter decreased
$16 million but was flat on a
year-to-date basis, compared to 2017. The reduction in EBITDA
during the quarter was primarily due to unfavorable mark-to-market
positions on forward financial contracts.
- Canadian Gas: Comparable EBITDA for the three months ended
June 30, 2018 increased by
$5 million compared to 2017, due to
higher realized margins in 2018 and cost reduction
initiatives. On a year-to-date basis, comparable EBITDA
decreased by $18 million, mainly due
to the $34 million contract
indexation dispute settlement received in 2017, which was partially
offset by higher margins received in 2018.
- Australian Gas: Comparable EBITDA for both the three and six
months ended June 30, 2018 were in
line with the same periods in 2017. The addition of South Hedland
was largely offset by the loss of the contribution from the Solomon
Power Station contract.
- Wind and Solar: Comparable EBITDA for the three and six months
ended June 30, 2018 were down
$8 million and $11 million respectively, compared to 2017,
mainly due to the recognition of unrealized mark-to-market losses
this period partially offset by favourable pricing.
- Hydro: Comparable EBITDA for the three and six months ended
June 30, 2018 increased $21 million and $24
million respectively, compared to 2017, primarily due to an
increase in revenues from ancillary services at higher market
prices, which more than offset the lower generation.
- Energy Marketing: For the three months ended June 30, 2018 comparable EBITDA was lower
compared to the same period in 2017 due to less favourable market
dynamics. Year-to-date, comparable EBITDA was up $9 million compared to 2017 reflecting a return
to typical returns after weak performance in the first quarter of
2017.
- Corporate: Our Corporate overhead costs of $20 million and $40
million for the second quarter and year-to-date
respectively, were reduced by $2
million and $6 million,
compared to 2017, due to lower incentive payments and cost
reduction initiatives.
Consolidated Earnings Review
The net loss
attributable to common shareholders during the second quarter of
2018 was $105 million compared to a
net loss of $18 million in
2017. For the six months ended June
30, 2018, the net loss was $40
million compared to a loss of $18
million for the same period in 2017. The higher net loss in
2018 compared to 2017 was due primarily to lower comparable EBITDA
and lower finance lease income related to the sale of the Solomon
facility.
Minimal planned major maintenance capital was invested during
the first two quarters of 2018, resulting in total sustaining
capital for the three and six months periods ending June 30, 2018 being $48
million and $70 million lower
than the comparable periods in 2017, respectively. Total capital
expenditures for the year are still expected to be in line with our
previous guidance of $215 to
$235 million.
Operating Review
Adjusted availability for the three
and six months ended June 30, 2018
were 85.8 per cent and 90.1 per cent, respectively, compared to
84.0 per cent and 86.2 per cent for the same periods in 2017.
The increase is primarily due to a reduction in the number of
unplanned outages compared to the first half of 2017.
Production for the three and six months ended June 30, 2018 decreased 2,509 GWh and 4,388 GWh,
respectively, compared to 2017, despite higher availability,
primarily due to the Sundance
units becoming merchant, which resulted in less
dispatching.
Second Quarter and YTD 2018 Financial and Operational
Highlights
|
|
|
In $CAD millions,
unless otherwise stated
|
3 Months
Ended
|
6 Months
Ended
|
June 30,
2018
|
June 30,
2017
|
June 30,
2018
|
June 30,
2017
|
Adjusted availability
(%)(2,3)
|
85.8%
|
84.0%
|
90.1%
|
86.2%
|
Production (GWh)
(3)
|
5,198
|
7,707
|
12,370
|
16,758
|
Revenue
|
446
|
503
|
1,034
|
1,081
|
Comparable
EBITDA
|
225
|
268
|
641
|
542
|
Net Earnings (loss)
attributable to common shareholders
|
(105)
|
(18)
|
(40)
|
(18)
|
Funds from
operations
|
188
|
187
|
506
|
389
|
Cash Flow from
Operating Activities
|
104
|
63
|
529
|
344
|
Free Cash
Flow
|
96
|
30
|
334
|
125
|
Net Earnings (loss)
per common share attributed to common shareholders
|
($0.36)
|
($0.06)
|
($0.14)
|
($0.06)
|
Funds from operations
per share
|
$0.65
|
$0.65
|
$1.76
|
$1.35
|
Free cash flow per
share
|
$0.33
|
$0.10
|
$1.16
|
$0.43
|
Dividends declared
per common share
|
$0.04
|
$0.04
|
$0.08
|
$0.04
|
Notes
(1)
These items are not defined under IFRS. Presenting these items
from period to period provides management and investors with the
ability to evaluate earnings trends more readily in comparison with
prior periods' results. Refer to the Funds from Operations and Free
Cash Flow and Earnings and Other Measures on a Comparable Basis
sections of the Company's MD&A for further discussion of these
items, including, where applicable, reconciliations to measures
calculated in accordance with IFRS.
|
(2)
Availability and production includes all generating assets
(generation operations and finance leases that we
operate).
|
(3)
Adjusted for economic dispatching at U.S. Coal.
|
TransAlta is in the process of filing its Consolidated Financial
Statements and accompanying notes, as well as the associated
Management's Discussion & Analysis ("MD&A"). These
documents will be available today on the Investors section of
TransAlta's website at www.transalta.com or through SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.
Conference call
We will hold a conference call and
webcast at 9:00 a.m. MST
(11:00 a.m. EST) today, August 3, 2018, to discuss our second quarter
2018 results. The call will begin with a short address by
Dawn Farrell, President and CEO, and
Brett Gellner, Interim Chief
Financial Officer, followed by a question and answer
period for investment analysts and investors. A question and answer
period for the media will immediately follow. Please contact
the conference operator five minutes prior to the call, noting
"TransAlta Corporation" as the company and "Sally Taylor" as
moderator.
Dial-in numbers – Second Quarter 2018
Results:
Toll-free North American participants call:
1-888-231-8191
Outside of Canada & USA call: 1-647-427-7450
A link to the live webcast will be available on the Investor
Centre section of TransAlta's website at
http://www.transalta.com/investors/events-and-presentations. If you
are unable to participate in the call, the instant replay is
accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code
8876455 followed by the # sign. A transcript of the broadcast will
be posted on TransAlta's website once it becomes available.
About TransAlta Corporation:
TransAlta
owns, operates and develops a diverse fleet of electrical power
generation assets in Canada,
the United States and Australia with a focus on long-term
shareholder value. We provide municipalities, medium and large
industries, businesses and utility customers clean, affordable,
energy efficient, and reliable power. Today, we are one of
Canada's largest producers of wind
power and Alberta's largest
producer of hydro-electric power. For over 100 years, TransAlta has
been a responsible operator and a proud community-member where its
employees work and live. TransAlta aligns its corporate goals with
the UN Sustainable Development Goals and we have been
recognized by CDP (formerly Climate Disclosure Project) as an
industry leader on Climate Change Management. We are also proud to
have achieved the Silver level PAR (Progressive Aboriginal
Relations) designation by the Canadian Council for
Aboriginal Business.
For more information about TransAlta, visit our web site
at transalta.com.
Cautionary Statement Regarding Forward Looking
Information
This news release contains forward looking statements,
including statements regarding the business and anticipated
financial performance of the Company that are based on the
Company's current expectations, estimates, projections and
assumptions in light of its experience and its perception of
historical trends. In some cases, forward-looking statements can be
identified by terminology such as "plans", "expects", "proposed",
"will", "anticipates", "develop", "continue", and similar
expressions suggesting future events or
future performance. In particular, this news release
contains forward looking statements including, without
limitation, statements pertaining to TransAlta's business and
anticipated future financial performance; our strategy,
including as it relates to increasing free cash flow,
improving operating performance, reducing corporate debt and
advancing the transition to clean power generation; our 2018
financial outlook, including expected free cash flow and achieving
the upper end of our free cash flow guidance of $300 to $350
million; utilizing strong cash flow to finance
the repayment of our next bond maturity due in 2020;
and the acquisition and development of two construction ready wind
farms in the US, including the satisfaction of the closing
conditions pertaining to one of the wind farms. These
forward-looking statements are not historical facts but are
based on TransAlta's belief and assumptions based on information
available at the time the assumptions were made. These statements
are subject to a number of risks and uncertainties that may cause
actual results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could cause
such differences include: operational risks involving our
facilities; changes in market prices where we operate; unplanned
outages at generating facilities and the capital investments
required; equipment failure and our ability to carry out repairs in
a cost effective and timely manner; the effects of weather;
disruptions in the source of fuels, water or wind required to
operate our facilities; energy trading risks; failure to obtain
necessary regulatory approvals in a timely fashion; negative impact
to our credit ratings; legislative or regulatory developments and
their impacts, including as it pertains to the capacity market
being developed in Alberta;
increasingly stringent environmental requirements and their
impacts; increased competition; global capital markets activity
(including our ability to access financing at a reasonable cost);
changes in prevailing interest rates; currency exchange rates;
inflation levels and commodity prices; general economic conditions
in the geographic areas where TransAlta operates; disputes or
claims involving TransAlta or TransAlta Renewables, including those
pertaining to South Hedland; 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 and Annual Information
Form for the year ended December 31, 2017. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect TransAlta's expectations only as of the
date of this news release. The financial outlook that is contained
in this news release is being provided for the purpose of giving
the reader information about management's current expectations and
plans. TransAlta 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
otherwise indicated.
View original
content:http://www.prnewswire.com/news-releases/transalta-reports-second-quarter-2018-results-300691619.html
SOURCE TransAlta Corporation