BOSTON, Feb. 28, 2013 /CNW/ - Atlantic Power Corporation
(NYSE: AT) (TSX: ATP) ("Atlantic Power" or the "Company") today
released its results for the three months and year ended
December 31, 2012. The Company also
provided initial guidance for 2013 and announced a lower dividend
level to strengthen its ability to execute on growth and enhance
long-term total shareholder return.
All amounts are in U.S. dollars unless otherwise indicated.
Cash Available for Distribution, Payout Ratio, and Project Adjusted
EBITDA are not recognized measures under generally accepted
accounting principles in the United
States ("GAAP") and do not have standardized meanings
prescribed by GAAP; therefore, these measures may not be comparable
to similar measures presented by other companies. Please see
"Regulation G Disclosures" attached to this news release for an
explanation and the GAAP reconciliation of "Cash Available for
Distribution", "Payout Ratio" and "Project Adjusted EBITDA" as used
in this news release.
2012 Highlights
- Achieved project cash distributions of $275 million, exceeding the Company's guidance of
$255 to $265 million
- Increased cash flows from operating activities by $111 million to $167 million for the year ended
December 31, 2012, compared to
$56 million for the same period in
2011
- Delivered a Payout Ratio of 100%, within the Company's guidance
of 96% to 102%
- Added 450 MW of net generating capacity
- Paid off a $265 million
construction loan with tax equity financing at Canadian Hills
Wind
- Placed Canadian Hills in commercial operation in December,
within budget and on schedule
- Acquired Ridgeline Energy, a Seattle-based wind and solar project
developer, in December
Recent Developments
- Announced in January 2013 an
agreement to sell its Auburndale,
Lake and Pasco projects for approximately $136 million
- Expect Piedmont to achieve
commercial operation in late March
2013
- Increased average remaining power purchase agreement ("PPA")
life by 58% to approximately 11.4 years from 7.2 years, reflecting
asset sales and addition of Canadian Hills, Piedmont and Ridgeline in 2013
"We had strong financial results in 2012, with cash
distributions from projects of $275
million exceeding our guidance range," said Barry Welch, President and CEO of Atlantic
Power. "We also successfully managed two large construction
projects, with the completion of our 300 MW Canadian Hills Wind
project in December and the expected commercial operation of our 53
MW Piedmont biomass project in late March
2013. We also closed the acquisition of Ridgeline Energy at
the end of last year, which added 150 MW of operating wind projects
to our portfolio. In addition, Ridgeline provides us with
demonstrated capabilities in both developing and acquiring
renewable energy projects, which we expect will be an important
area of growth for us."
"We will continue executing on our growth plans this year by
investing approximately $140 to $150
million of net cash available to us by mid-year in one or
more acquisitions that will make accretive contributions to our
cash flows," continued Mr. Welch. "In addition, together with our
Ridgeline team we are moving a number of solar and wind projects
through the development pipeline toward commercial viability and
should have more to discuss on this later in the year. In short, we
continue to capitalize on our strong industry relationships,
reputation and experienced team to drive growth initiatives that
will meet our financial objectives and grow long-term shareholder
value."
Atlantic Power
Corporation
Table 1 – Selected
Results
(In thousands of U.S.
dollars, except as otherwise stated)
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Years
ended December 31,
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2012
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2011
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(Audited)
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Project revenue
(1)
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$440,377
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$93,895
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Project loss
(1)
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(31,908)
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(5,443)
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Cash flows from operating
activities
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167,078
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55,935
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(Unaudited)
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Project Adjusted EBITDA
(1)
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225,570
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84,911
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Cash Available for
Distribution
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131,553
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78,958
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Total dividends declared to
shareholders
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131,832
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86,357
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Payout ratio
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100%
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109%
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Aggregate power generation
(Net MWh) (1)
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6,407,946
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2,808,279
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Weighted average
availability (1)
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95.3%
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96.1%
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(1) The Path 15,
Auburndale, Lake and Pasco projects have been classified as assets
held for sale. Accordingly, the revenues, project (loss) and
Project Adjusted EBITDA of these assets have been classified as
discontinued operations for the years ended December 31, 2012 and
2011, which means that the results from these discontinued
operations are excluded from these figures. The Company has not
reconciled non-GAAP financial measures relating to the Projects
Held for Sale to the directly comparable GAAP measures due to the
difficulty in making the relevant adjustments on an individual
project basis.
Note: Project Adjusted
EBITDA, Cash Available for Distribution and Payout Ratio are not
recognized measures under GAAP and do not have any standardized
meaning prescribed by GAAP; therefore, these measures may not be
comparable to similar measures presented by other companies. Please
refer to Table 8 for Reg. G reconciliations of these measures to
GAAP.
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Financial Review
Financial Results for Quarter and Year Ended December 31, 2012
Cash flows from operating activities increased by $111.1 million to $167.1
million for the year ended December
31, 2012, compared to $55.9
million for the same period in 2011. The increase over the
prior-year period is primarily due to contributions from the 18
projects acquired as part of the Company's acquisition of Capital
Power Income, LP (the "Partnership") in November 2011 and improved distributions from
several other projects.
Project income decreased by $7.9
million to project loss of $(6.1)
million for the quarter ended December 31, 2012, compared to project income of
$1.8 million for the same period in
2011. For the year ended December 31,
2012, project income decreased by $26.5 million to project loss of $(31.9) million, compared to project loss of
$(5.4) million for the same period in
2011. The decrease relates primarily to the non-cash,
mark-to-market adjustments to reflect the fair value of gas
purchase agreements in our Northeast segment. Generally, reported
project income can fluctuate significantly due to impacts from the
non-cash mark-to-market fair value of derivatives.
For the full year 2012, the Company received $275 million in cash distributions from projects,
which exceeded the Company's guidance range of $255 to $265 million in cash distributions from
projects. The additional $10 million
not accounted for in the guidance was attributable to cash receipts
from Lake following the settlement of the project's litigation with
Progress Energy Florida regarding off-peak generation, as well as
additional cash generated from Lake's off-peak dispatch in
2012.
Project Adjusted EBITDA, including earnings from equity
investments, increased by $12.1
million to $57.1 million for
the quarter ended December 31, 2012,
compared to $45.0 million for the
same period in 2011. Project Adjusted EBITDA, including earnings
from equity investments, increased by $140.7
million to $225.6 million for
the year ended December 31, 2012,
compared to $84.9 million for the
same period in 2011. These increases over the prior-year periods
are primarily due to contributions from the 18 Partnership
projects. For further information, attached to this news release is
a summary of Project Adjusted EBITDA by segment for the three
months ended December 31, 2012 and
2011 and the twelve months ended December
31, 2012, 2011 and 2010 (Table 7), and a summary of Project
Adjusted EBITDA for selected projects for the year ended
December 31, 2012 (Table 9).
Projects Held for Sale/Discontinued Operations
Financial results for the years ended December 31, 2012 and December 31, 2011 are affected by the
classification of the Company's Path 15 transmission line ("Path
15"), Auburndale Power Partners, L.P. ("Auburndale"), Lake CoGen,
Ltd. ("Lake") and Pasco CoGen, Ltd.
("Pasco") projects (collectively, the "Projects Held for Sale"), as
assets held for sale; accordingly, the revenues, project income and
Project Adjusted EBITDA for the Projects Held for Sale have been
classified as discontinued operations and excluded from continuing
operation results. The results for the Projects Held for Sale have
been separately stated in the Consolidated Statements of Operations
as "Income from discontinued operations". Project income (loss)
attributable to the Projects Held for Sale was $(33.6) million and $18.3
million for the three months and year ended December 31, 2012, respectively, compared to
$(0.3) million and $39.0 million for the same periods in 2011,
respectively. Project Adjusted EBITDA attributable to the Projects
Held for Sale was $26.2 million and
$106.9 million for the three months
and year ended December 31, 2012,
respectively, compared to $20.4
million and $100.4 million for
the same periods in 2011, respectively. Cash flow attributable to
the Projects Held for Sale is included in cash flow from operating
activities as shown on the Consolidated Statement of Cash Flows as
well as in the calculation of Cash Available for Distribution. The
Company has not reconciled non-GAAP financial measures relating to
the Projects Held for Sale to the directly comparable GAAP measures
due to the difficulty in making the relevant adjustments on an
individual project basis.
Cash Available for Distribution and Payout Ratio
For the year ended December 31,
2012, cash flows from operating activities increased by
$111.1 million, to $167.1 million, compared to $55.9 million for the same period in 2011. For
the year ended December 31, 2012,
Cash Available for Distribution increased by $52.6 million to $131.6
million, compared to $79.0
million for the same period in 2011.These increases over the
prior-year periods are primarily due to contributions from the 18
Partnership projects.
For the year ended December 31,
2012, the Payout Ratio associated with the dividend was 100%
compared to 109% in the comparable prior-year period. The Payout
Ratio for the year ended December 31,
2012 was within the Company's guidance of 96% to 102%. For
further information, attached to this news release are the
calculations of Cash Available for Distribution and Payout Ratio
(Table 8).
Asset Sales
As part of the ongoing optimization of its portfolio, the
Company has identified certain assets as candidates for potential
divestiture where it is not the majority owner or operator, the
operating model has changed (to merchant due to contract
expirations, for example), or which do not make meaningful cash
flow contributions. Atlantic Power announced in January 2013 that the Company and certain of its
subsidiaries had entered into an agreement with Quantum Utility
Generation, LLC to sell the Company's interests in Auburndale, Lake and Pasco projects
(collectively, the "Florida Assets") for a purchase price,
including working capital adjustments, of approximately
$136 million (the "Florida Assets
Sale"). The sale agreement followed a determination by the Company
that these projects would not be recontracted on an acceptable
basis in the near term and operating them on a merchant basis would
not be consistent with its business model. The Florida Assets Sale
is subject to customary closing conditions and approvals, including
approval from the Federal Energy Regulatory Commission, and is
expected to close in the first quarter of 2013. The Company intends
to use the expected $111 million of
net cash proceeds from the Florida Assets Sale to fully repay the
Company's senior credit facility, which is expected to have an
outstanding balance of approximately $64
million at close, and to fund acquisitions.
On December 7, 2012, Atlantic
Power signed a purchase and sale agreement with PNM, a subsidiary
of PNM Resources, Inc., pursuant to which the Company has agreed
together with its partners in the investment, to sell the
Delta-Person generating station ("Delta-Person"). The Company
expects the transaction to close in the third quarter of 2013, and
expects net proceeds of approximately $9.0
million. The transaction is subject to regulatory
approval.
In addition, the Company is actively pursuing the potential sale
of its Gregory project and its Path 15 transmission line.
Strategy and Financial Outlook
In its most recent review of strategy, business prospects,
financial position, operating environment and outlook by management
and the Board of Directors, the Company focused on its objective of
providing shareholders with an attractive total return, with a view
to appropriately balance the income and growth components of total
return to enhance long-term value.
Growth in cash flows is expected to come from a combination of
the development and acquisition of new assets and improvements in
the performance of its existing portfolio. The Company expects to
continue executing on its growth strategy by utilizing its core
competencies and building on its proven track record of acquiring
both operating plants and late-stage development projects, with a
focus on projects with long-term PPAs and limited commodity
exposure. With its recent acquisition of Ridgeline, the Company now
also has a pipeline of proprietary wind and solar development
projects. The mix of growth opportunities, and therefore allocation
of the Company's resources, has shifted towards earlier-stage
construction and development projects, including some at a
greenfield stage. At the same time, the Company remains committed
to a disciplined approach to growth, ensuring that new investments
are accretive to cash flow, earnings and leverage metrics either
immediately (in the case of operating plants) or in the first full
year of operation (for construction and development projects).
As part of this review process, management updated the Company's
cash flow projections under a variety of scenarios, considering the
Company's cost of capital, financial leverage, operating and
commercial assumptions and near-term recontracting prospects. The
assessment also considered ongoing developments in Ontario, including the Company's Tunis project that has a contract expiring in
2014. Tunis is not in the first
group for which recontracting discussions are currently underway
with the Ontario government. The
process is running behind the government's timetable and is not
transparent; therefore the outcome is uncertain, but recent signals
are increasingly challenging. In addition, lower flows on the
TransCanada pipeline have resulted in higher tolls and reduced
waste heat from adjacent gas compressors, both of which have been
reducing operating margins at all of the Company's Ontario projects. Thus, the Company considered
it appropriate to adjust expectations for these projects, at least
until such time as there is clarity and/or more positive
signals.
In addition, the updated projections incorporated the impact on
distributable cash resulting from: (1) the continued reduction of
post-PPA estimated cash flows at Lake and Auburndale, and the subsequent announcement of
the Florida Assets Sale; (2) the expected sale of the Company's
Path 15 transmission line; (3) lower demand and market price
projections in New York causing
reduced recontracting expectations for the Company's Selkirk project; and (4) the impact on cash
needs of a greater share of the Company's growth investments
(relative to the mix of investments in the past) requiring cash
upfront while cash returns from these investments could lag by 12
to 24 months.
Dividend Level
In light of all these considerations and in order to accomplish
the Company's strategic and financial objectives, the Board,
together with management, has concluded that it is in the best
interest of the Company and its shareholders to target a lower,
more sustainable payout ratio that balances yield and growth, and
at the same time is consistent with the Company's outlook for its
current and prospective projects under a range of scenarios. The
lower dividend level is expected to improve the Company's
operational and financial flexibility and enhance its ability to
deliver on its strategic and financial objectives. Management
believes that this dividend level is sustainable under a wide range
of scenarios, including adverse scenarios (though not anticipated)
where growth opportunities are constrained and/or access to the
capital markets is limited.
As a result of this review, the Board, with management's
recommendation, has unanimously approved a reduction in the annual
dividend level to Cdn$0.40 per share,
or Cdn$0.03333 per share on a monthly
basis. The new dividend level will commence with the March 2013 dividend to shareholders of record on
March 28, 2013. Shareholders of
record as of that date will receive a dividend of Cdn$0.03333 per share on April 30, 2013. The February 2013 dividend of Cdn$0.09583, declared on February 15, 2013, will be paid on March 28, 2013 to shareholders of record on
February 28, 2013.
"Delivering an attractive total return to shareholders is the
primary goal of our business model," said Mr. Welch. "We believe
that a lower dividend payout ratio will enhance the Company's
ability to deliver long-term shareholder returns through a balanced
approach of sustainable income plus growth from accretive
acquisitions, construction-ready and development projects."
2013 Guidance
- Project Adjusted EBITDA of $250 to $275
million
- Cash Available for Distribution of $85
to $100 million
- Payout Ratio 65% to 75%
Project Adjusted EBITDA. Based on its projections,
the Company expects to generate Project Adjusted EBITDA in the
range of $250 to $275 million for the
full year 2013. The Company expects that overall levels of Project
Adjusted EBITDA in 2013 will be higher than 2012 actual Project
Adjusted EBITDA of $226 million due
primarily to a full year of contributions from Canadian Hills and
Meadow Creek, and 9 months
contribution from Piedmont. (Note
that Project Adjusted EBITDA attributable to discontinued
operations is excluded from both 2012 results and 2013
guidance.)
Cash Available for Distribution. The Company
expects to generate Cash Available for Distribution in the range of
$85 to $100 million for the full year
2013. The Company expects that overall levels of Cash Available for
Distribution will be lower than 2012 actual Cash Available for
Distribution of $132 million,
primarily due to the decrease in cash flow from discontinued
operations, primarily the Florida Assets, partially offset by a
full year of contributions from new projects. (Note that consistent
with past practice, cash flow from discontinued operations is
included in Cash Available for Distribution. This represents
$77 million of the 2012 result and
approximately $44 million of 2013
guidance.)
Dividend Payout Ratio. Atlantic Power anticipates
a 2013 Payout Ratio of approximately 65% to 75%, compared to its
2012 actual Payout Ratio of 100%, subject to the financial
performance of its projects. On a pro forma basis reflecting the
lower dividend for a full year and excluding cash from discontinued
operations, the 2013 Payout Ratio is expected to be approximately
100%, based on the midpoint of our cash flow guidance. Notably, the
2014 Payout Ratio is expected to be in the range of 75% to 85%.
See Table 2 for a comparison of 2013 guidance to 2012 actual
results.
Atlantic Power
Corporation
Table 2 – 2013 Guidance
to 2012 Actual
(In millions of U.S.
dollars, except as otherwise stated)
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2013
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2012
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Project Adjusted EBITDA
(1)
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$250 - $275
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$226
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Cash Available for
Distribution
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$85 - $100
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$132
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Total dividends declared to
shareholders
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$63
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$132
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Payout Ratio
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65% - 75%
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100%
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(1) The Path 15,
Auburndale, Lake and Pasco projects have been classified as assets
held for sale. Accordingly, the Project Adjusted EBITDA of these
assets has been classified as discontinued operations for the year
ended December 31, 2012, which means that the results from these
discontinued operations are excluded from this figure.
Note: Project Adjusted
EBITDA, Cash Available for Distribution and Payout Ratio are not
recognized measures under GAAP and do not have any standardized
meaning prescribed by GAAP; therefore, these measures may not be
comparable to similar measures presented by other companies. Please
refer to Table 7 for Reg. G reconciliations of these measures to
GAAP. The Company has not provided a reconciliation of
forward-looking non-GAAP measures, due primarily to variability and
difficulty in making accurate forecasts and projections, as not all
of the information necessary for a quantitative reconciliation is
available to the Company without unreasonable efforts.
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Liquidity
Based on the Company's guidance for 2013 and incorporating the
new dividend policy, management expects the Company to have
approximately $140 to $150 million of
cash available to invest in growth projects as of mid-2013 after
retaining $50 million of cash on the
balance sheet and while preserving $210 to
$225 million of access under its revolving credit facility
(which would be undrawn at that time). See Table 3 for projected
liquidity and cash availability at mid-2013.
Atlantic Power
Corporation
Table 3 – Projected
Liquidity and Cash Available for Investment (in millions of U.S.
dollars)
(as of mid-2013)
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Revolver capacity less
letters of credit
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$210 - $225
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Unrestricted cash
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$190 - $200
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Less: unrestricted planned
cash reserve
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$(50)
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Total Liquidity
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$350 - $375
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Cash available for
investment without drawing on revolver
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$140 - $150
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Business Update
Canadian Hills
Canadian Hills Wind, LLC ("Canadian Hills") achieved commercial
operation on December 22, 2012 and
met its schedule for receiving federal production tax credits. The
Company owns 99% of Canadian Hills, having made a capital
contribution of approximately $193
million in July 2012. Canadian
Hills received tax equity investments in December 2012 of $225
million in aggregate from a consortium of four institutional
tax equity investors along with an approximate $44 million tax equity investment by the Company,
which it expects to syndicate with additional tax equity investors
in the first half of 2013. Canadian Hills' outstanding construction
loan was repaid with proceeds from these tax equity investments,
thereby delevering both Canadian Hills and Atlantic Power's balance
sheet by $265 million. Annual cash
distributions to the Company from Canadian Hills are expected to be
in the range of $15 to $19 million
for the years 2013 through 2020.
Piedmont Green Power
The commercial operation date of Piedmont Green Power
("Piedmont") has been delayed until March
2013 due to start-up issues identified in late-stage
testing. The project remains within budget. Piedmont is expected to provide $6 to $8 million in project cash flows on a full
year basis, which is updated from previous guidance of $8 to $10 million in project cash flows on a full
year basis. The change in guidance is primarily due to reduced
expectations regarding the value of the project's renewable energy
credits ("RECs").
Ridgeline Energy
The acquisition of Ridgeline Energy, Inc. ("Ridgeline") in
December 2012 added 150 net MW of
operating wind capacity to the Company's portfolio. The purchase
price of the Ridgeline acquisition was $81
million, and includes the purchase of all of the outstanding
shares of capital stock of Ridgeline and the 100% equity interest
in the Meadow Creek project
("Meadow Creek"), a 120 MW wind project that entered commercial
operation in December. In addition to the operating projects
acquired, Ridgeline added an experienced renewable development team
with development pipeline of more than 10 solar and wind projects
totaling more than 600 MW. This team will also assist our
assessment and pursuit of other renewable acquisitions and in
managing our growing renewable energy portfolio. Although the
amount of development expenditures could vary significantly
depending on ongoing progress with the projects in development, the
Company's current estimate is that the net impact of those
expenditures along with cash flow from the operating projects will
be approximately neutral in 2013 to 2015 and significantly
accretive thereafter.
Investor Conference Call and Webcast
A telephone conference call hosted by Atlantic Power's
management team will be held on Friday,
March 1, 2013 at 8:30 AM ET.
An accompanying slide presentation will be available on the
Company's website prior to the call. The telephone numbers for the
conference call are: U.S. Toll Free: 1-877-317-6016; Canada Toll
Free: 1-855-669-9657; International Toll: +1 412-317-6016. The
conference call will also be broadcast over Atlantic Power's
website, with an accompanying slide presentation. 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 U.S. Toll Free: 1-877-344-7529; International Toll:
+1-412-317-0088. Please enter conference call number 10024857. The
conference call will also be archived on Atlantic Power's
website.
About Atlantic Power
Atlantic Power owns and operates a diverse fleet of power
generation and infrastructure assets in the United States and Canada. The Company's power generation
projects sell electricity to utilities and other large commercial
customers largely under long-term PPAs, which seek to minimize
exposure to changes in commodity prices. Its power generation
projects in operation have an aggregate gross electric generation
capacity of approximately 3,366 MW in which our aggregate ownership
interest is approximately 2,117 MW. These totals exclude projects
designated as held for sale at December 31,
2012 and our 40% interest in Delta-Person for which the
Company entered into an agreement to sell in December 2012. On January
30, 2013, the Company and certain of its subsidiaries
entered into an agreement to sell our interests in the Auburndale, Lake and Pasco projects. The
Company expects to enter into a purchase and sale agreement in the
remaining part of the first quarter to sell its 100% interest in
its Path 15 project. Its current portfolio of continuing operations
consists of interests in twenty-nine operational power generation
projects across eleven states in the
United States and two provinces in Canada. In addition, the Company has one 53 MW
biomass project under construction in Georgia. Recently the Company acquired a wind
and solar development company, Ridgeline, located in Seattle, Washington, which will enhance its
ability to develop, construct, and operate wind and solar energy
projects across the United States
and Canada. The Company also owns
a majority interest in Rollcast Energy, a biomass power plant
developer in North Carolina.
Atlantic Power has a market capitalization of approximately
$1.2 billion and trades 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
Amanda Wagemaker, Investor
Relations
(617) 977-2700
info@atlanticpower.com
Copies of financial data and other publicly filed documents get
filed 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 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 expectation that the Company will receive cash
distributions from Canadian Hills in the range of $15 to $19 million annually through 2020, and
that distributions are expected to increase thereafter;
- the expectation that the Company will successfully sell the
projects and facilities currently proposed for sale, including Path
15, Delta-Person, Gregory, Auburndale, Lake, and Pasco and on the
contemplated timetable and at the expected price, where
applicable;
- the expectation that developing and acquiring renewable energy
projects will be important area of growth for the Company;
- the expectation that the Company will invest approximately
$140 to $150 million of its net cash
available by mid-year 2013 in one or more acquisitions and that
those acquisitions will make accretive contributions to the
Company's cash flows;
- the expectation regarding the impact of acquisition
opportunities on the Company, including earnings and cash
flows;
- the expectation that the Company will use net proceeds from the
Florida Assets Sale to fully repay the Company's senior credit
facility, and that the senior credit facility is expected to have
an outstanding balance of approximately $64
million at closing of the sale;
- expectations for the dividend Payout Ratio and the impact of
the dividend reduction on the Company including that a lower
dividend Payout Ratio will enhance the Company's ability to deliver
long-term shareholder returns through a balanced approach of
sustainable income plus growth from accretive acquisitions,
construction-ready and development projects;
- the belief that the new dividend level is sustainable under a
wide range of scenarios;
- the expectation that the Company would not expect to require
access to the capital markets other than to address debt maturities
in 2015 and 2017;
- the expectation that the Company's total liquidity mid-2013 is
in the range of $350 to $375
million;
- the expectation that 2013 Project Adjusted EBITDA will be in
the range of $250 to $275
million;
- the expectation that 2013 Cash Available for Distribution will
be in the range of $85 to $100
million;
- the expectation that the 2013 Payout Ratio will be in the range
of 65% to 75% and, on a pro forma basis, reflecting the lower
dividend for a full year and excluding cash flow from discontinued
operations, approximately 100%;
- the expectation that the 2014 Payout Ratio is expected to be in
the range of 75% to 85%;
- the expectation that the Company's tax equity investment will
be syndicated in the first half of 2013;
- the expectation that Piedmont
biomass will achieve commercial operation in March 2013 and that the Company will receive
$6 to $8 million in project cash
flows on a full year basis;
- the estimate that the net impact of development expenditures at
Ridgeline along with the cash flows from 150 MW of operating
projects acquired with Ridgeline will be approximately neutral in
2013 to 2015 and significantly accretive thereafter; and
- the future growth, results of operations, performance and
business prospects and opportunities of the Company and its
projects as described above.
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
Table 4 – Consolidated
Balance Sheets (in thousands of U.S. dollars)
|
|
|
|
|
December 31,
|
December 31,
|
|
2012
|
2011
|
Assets
|
|
|
Current assets:
|
|
|
Cash and
cash equivalents
|
$60,191
|
$60,651
|
Restricted cash
|
28,618
|
21,412
|
Accounts
receivable
|
58,531
|
79,008
|
Current
portion of derivative instruments asset
|
9,456
|
10,411
|
Inventory
|
16,855
|
18,628
|
Prepayments and other current assets
|
13,427
|
7,615
|
Security
deposits
|
19,033
|
-
|
Assets
held for sale
|
351,379
|
-
|
Refundable income taxes
|
4,219
|
3,042
|
Total
current assets
|
561,709
|
200,767
|
|
|
|
Property, plant and
equipment, net
|
2,055,510
|
1,388,254
|
Transmission system
rights
|
-
|
180,282
|
Equity investments in
unconsolidated affiliates
|
428,690
|
474,351
|
Other intangible assets,
net
|
524,883
|
584,274
|
Goodwill
|
334,668
|
343,586
|
Derivative instruments
asset
|
11,115
|
22,003
|
Other assets
|
86,077
|
54,910
|
Total
assets
|
$4,002,652
|
$3,248,427
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
Current liabilities:
|
|
|
Accounts
payable
|
$17,735
|
$18,122
|
Accrued
interest
|
18,954
|
19,916
|
Other
accrued liabilities
|
73,735
|
43,968
|
Revolving credit facility
|
67,000
|
58,000
|
Current
portion of long-term debt
|
121,203
|
20,958
|
Current
portion of derivative instruments liability
|
33,038
|
20,592
|
Dividends payable
|
11,505
|
10,733
|
Liabilities associated with assets held for sale
|
189,038
|
-
|
Other
current liabilities
|
3,264
|
165
|
Total
current liabilities
|
535,472
|
192,454
|
|
|
|
Long-term debt
|
1,459,138
|
1,404,900
|
Convertible debentures
|
424,246
|
189,563
|
Derivative instruments
liability
|
118,070
|
33,170
|
Deferred income taxes
|
164,018
|
182,925
|
Power purchase and fuel
supply agreement liabilities, net
|
44,009
|
71,775
|
Other non-current
liabilities
|
71,374
|
57,859
|
Commitments and
contingencies
|
-
|
-
|
Total
liabilities
|
2,816,327
|
2,132,646
|
|
|
|
Equity
|
|
|
Common
shares, no par value, unlimited authorized shares; 119,446,865 and
113,526,182 issued and outstanding December 31, 2012 and 2011,
respectively
|
1,285,487
|
1,217,265
|
Preferred shares issued by a subsidiary company
|
221,304
|
221,304
|
Accumulated other comprehensive income (loss)
|
9,383
|
(5,193)
|
Retained
deficit
|
(565,229)
|
(320,622)
|
Total
Atlantic Power Corporation shareholders' equity
|
950,945
|
1,112,754
|
Noncontrolling interest
|
235,380
|
3,027
|
Total equity
|
1,186,325
|
1,115,781
|
Total liabilities and
equity
|
$4,002,652
|
$3,248,427
|
Atlantic Power
Corporation
Table 5 – Consolidated
Statements of Operations
(in thousands of U.S.
dollars, except per share amounts)
|
|
|
|
|
|
|
Years Ended December
31,
|
Three months
ended Dec 31,
|
|
2012
|
2011
|
2010
|
2012
|
2011
|
Project revenue:
|
|
|
|
Unaudited
|
Energy
sales
|
$217,038
|
$43,590
|
$ -
|
$58,024
|
$37,969
|
Energy
capacity revenue
|
154,851
|
34,009
|
786
|
37,553
|
25,165
|
Other
|
68,488
|
16,296
|
265
|
18,375
|
16,024
|
|
440,377
|
93,895
|
1,051
|
113,952
|
79,158
|
|
|
|
|
|
|
Project expenses:
|
|
|
|
|
|
Fuel
|
169,093
|
37,471
|
193
|
45,541
|
33,564
|
Operations and maintenance
|
124,759
|
22,723
|
1,060
|
35,168
|
17,507
|
Depreciation and amortization
|
118,031
|
23,682
|
88
|
30,652
|
20,946
|
|
411,883
|
83,876
|
1,341
|
111,361
|
72,017
|
Project other income
(expense):
|
|
|
|
|
|
Change
in fair value of derivative instruments
|
(59,272)
|
(14,594)
|
3,275
|
(7,921)
|
(2,873)
|
Equity
in earnings of unconsolidated affiliates
|
15,246
|
6,356
|
13,777
|
3,405
|
709
|
Gain on
sales of equity investments, net
|
578
|
-
|
1,511
|
-
|
-
|
Interest
expense
|
(16,438)
|
(7,244)
|
(3,638)
|
(4,175)
|
(3,242)
|
Other
income (expense), net
|
(516)
|
20
|
211
|
22
|
60
|
|
(60,402)
|
(15,462)
|
15,136
|
(8,669)
|
(5,346)
|
Project income (loss)
|
(31,908)
|
(5,443)
|
14,846
|
(6,078)
|
1,795
|
|
|
|
|
|
|
Administrative and other
expenses (income):
|
|
|
|
|
|
Administration
|
28,267
|
37,688
|
16,149
|
6,275
|
17,309
|
Interest, net
|
89,868
|
25,953
|
11,701
|
20,599
|
15,138
|
Foreign
exchange loss (gain)
|
547
|
13,838
|
(1,014)
|
(3,892)
|
(6,545)
|
Other
(income), net
|
(5,728)
|
-
|
(26)
|
-
|
-
|
|
112,954
|
77,479
|
26,810
|
22,982
|
25,902
|
Income (loss) from
continuing operations before income taxes
|
(144,862)
|
(82,922)
|
(11,964)
|
(29,060)
|
(24,107)
|
Income tax expense
(benefit)
|
(28,083)
|
(11,104)
|
16,018
|
(9,008)
|
1,796
|
Loss from continuing
operations
|
(116,779)
|
(71,818)
|
(27,982)
|
(20,052)
|
(25,903)
|
Income (loss) from
discontinued operations (1)
|
16,459
|
36,177
|
24,127
|
(34,515)
|
(811)
|
Net loss
|
(100,320)
|
(35,641)
|
(3,855)
|
(54,567)
|
(26,714)
|
Net loss attributable to
noncontrolling interest
|
(593)
|
(480)
|
(103)
|
102
|
(131)
|
Net income attributable to
preferred share dividends of a subsidiary company
|
13,049
|
3,247
|
-
|
3,283
|
3,247
|
Net loss attributable to
Atlantic Power Corporation
|
$(112,776)
|
$(38,408)
|
$(3,752)
|
$(57,952)
|
$(29,830)
|
|
|
|
|
|
|
Basic (loss) earnings per
share:
|
|
|
|
|
|
Loss
from continuing operations attributable to Atlantic Power
Corporation
|
$(1.11)
|
$(0.96)
|
$(0.45)
|
(0.20)
|
(0.26)
|
Income
(loss) from discontinued operations, net of tax
|
0.14
|
0.46
|
0.39
|
(0.30)
|
(0.01)
|
Net loss
attributable to Atlantic Power Corporation
|
$(0.97)
|
$(0.50)
|
$(0.06)
|
(0.50)
|
(0.27)
|
Diluted (loss) earnings per
share:
|
|
|
|
|
|
Loss
from continuing operations attributable to Atlantic Power
Corporation
|
$(1.11)
|
$(0.96)
|
$(0.45)
|
(0.20)
|
(0.26)
|
Income
(loss) from discontinued operations, net of tax
|
0.14
|
0.46
|
0.39
|
(0.30)
|
(0.01)
|
Net loss
attributable to Atlantic Power Corporation
|
$(0.97)
|
$(0.50)
|
$(0.06)
|
(0.50)
|
(0.27)
|
|
|
|
|
|
|
(1) Includes
contributions from the Florida Assets and Path 15, which are
designated as assets held for sale and discontinued operations.
|
|
|
|
|
|
|
|
|
|
Atlantic Power
Corporation
Table 6 – Consolidated
Statements of Cash Flows (in thousands of U.S.
dollars)
|
|
|
|
Years ended December
31,
|
|
2012
|
2011
|
2010
|
Cash flows from operating
activities:
|
|
|
|
Net loss
|
$(100,320)
|
$(35,641)
|
$(3,855)
|
Adjustments to reconcile to
net cash provided by operating activities
|
|
|
|
Depreciation and amortization
|
157,207
|
63,638
|
40,387
|
Long-term incentive plan expense
|
2,453
|
3,167
|
4,497
|
Loss on
the disposal of property, plant and equipment and other charges
|
840
|
-
|
-
|
Impairment of long-lived assets and equity investments
|
60,495
|
1,522
|
3,136
|
Gain on
sale of equity investments
|
(578)
|
-
|
(1,511)
|
Equity
in earnings from unconsolidated affiliates
|
(25,741)
|
(7,878)
|
(16,913)
|
Distributions from unconsolidated affiliates
|
38,347
|
21,889
|
16,843
|
Unrealized foreign exchange loss
|
19,029
|
8,636
|
5,611
|
Change
in fair value of derivative instruments
|
46,712
|
22,776
|
14,047
|
Change
in deferred income taxes
|
(34,055)
|
(9,908)
|
17,964
|
Other
|
-
|
-
|
(210)
|
Change in other operating
balances
|
|
|
|
Accounts
receivable
|
2,280
|
(15,563)
|
1,729
|
Prepayments, refundable income taxes and other assets
|
(19,490)
|
1,653
|
9,311
|
Accounts
payable and accrued liabilities
|
21,135
|
4,931
|
(6,551)
|
Other
liabilities
|
(1,236)
|
(3,287)
|
2,468
|
Cash provided by operating
activities
|
167,078
|
55,935
|
86,953
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
Acquisitions and investments, net of cash acquired
|
(80,496)
|
(591,583)
|
(78,180)
|
Change
in restricted cash
|
(11,589)
|
(5,668)
|
945
|
Proceeds
from sale of equity investments
|
27,925
|
8,500
|
2,000
|
Proceeds
from (loans to) related party
|
-
|
22,781
|
(22,781)
|
Biomass
development costs
|
(480)
|
(931)
|
(2,286)
|
Construction in progress
|
(456,205)
|
(113,072)
|
(44,146)
|
Purchase
of property, plant and equipment
|
(2,902)
|
(2,035)
|
(2,549)
|
Cash used in investing
activities
|
(523,747)
|
(682,008)
|
(146,997)
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
Proceeds
from issuance of long term debt
|
-
|
460,000
|
-
|
Proceeds
from issuance of convertible debenture, net of offering costs
|
230,640
|
-
|
74,575
|
Proceeds
from issuance of equity, net offering costs
|
66,294
|
155,424
|
72,767
|
Proceeds
from project-level debt
|
291,865
|
100,794
|
-
|
Repayment of project-level debt
|
(284,783)
|
(21,589)
|
(18,882)
|
Payments
for revolving credit facility borrowings
|
(60,800)
|
-
|
(20,000)
|
Proceeds
from revolving credit facility borrowings
|
69,800
|
58,000
|
20,000
|
Deferred
financing costs
|
(31,217)
|
(26,373)
|
(7,941)
|
Equity
contributions from noncontrolling interest
|
225,000
|
-
|
200
|
Dividends paid
|
(144,117)
|
(85,029)
|
(65,028)
|
Net cash provided by (used
in) financing activities
|
362,682
|
641,227
|
55,691
|
Net (decrease) increase in
cash and cash equivalents
|
6,013
|
15,154
|
(4,353)
|
Less cash at discontinued
operations
|
(6,473)
|
-
|
-
|
Cash and cash equivalents
at beginning of year
|
60,651
|
45,497
|
49,850
|
Cash and cash equivalents
at end of year
|
$60,191
|
$60,651
|
$45,497
|
Supplemental cash flow
information
|
|
|
|
Interest
paid
|
$121,396
|
$40,238
|
$26,687
|
Income
taxes paid (refunded), net
|
$4,765
|
$1,109
|
$(8,000)
|
Accruals
for construction in progress
|
$11,963
|
$4,095
|
$-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulation G Disclosures
Cash Available for Distribution is not a measure recognized
under 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 Distribution
and to Payout Ratio is provided below. Investors are cautioned that
the Company may calculate this measure in a manner that is
different from other companies.
Project Adjusted EBITDA is defined as project income (loss) plus
interest, taxes, depreciation and amortization (including non-cash
impairment charges) and changes in fair value of derivative
instruments. Project Adjusted EBITDA is not a measure recognized
under GAAP and is therefore unlikely to be comparable to similar
measures presented by other companies and does not have a
standardized meaning prescribed by GAAP. Management uses Project
Adjusted EBITDA at the project-level to provide comparative
information about project performance. A reconciliation of Project
Adjusted EBITDA to project income (loss) is provided on the
following page. Investors are cautioned that the Company may
calculate this measure in a manner that is different from other
companies.
Atlantic Power
Corporation
Table 7 – Project
Adjusted EBITDA by Segment (in thousands of U.S.
dollars)
(Unaudited)
|
|
|
|
|
|
|
|
Years ended December
31,
|
Three months
ended
Dec 31,
|
|
2012
|
2011
|
2010
|
2012
|
2011
|
Project Adjusted EBITDA
by segment
|
|
|
|
|
|
Northeast
|
$128,611
|
$59,299
|
$36,030
|
$43,455
|
$31,899
|
Southeast (1)
|
8,840
|
6,567
|
7,873
|
2,292
|
1,724
|
Northwest
|
48,422
|
11,363
|
736
|
9,969
|
7,757
|
Southwest (2)
|
52,841
|
10,228
|
9,733
|
4,889
|
5,334
|
Un-allocated corporate
|
(13,144)
|
(2,546)
|
(457)
|
(3,328)
|
(1,708)
|
Total
|
225,570
|
84,911
|
53,915
|
57,277
|
45,006
|
|
|
|
|
|
|
Reconciliation to
project income
|
|
|
|
|
|
Depreciation and amortization
|
164,958
|
55,608
|
25,493
|
42,001
|
32,662
|
Interest
expense, net
|
24,122
|
15,178
|
9,613
|
5,927
|
4,911
|
Change
in the fair value of derivative instruments
|
56,579
|
17,152
|
321
|
7,740
|
5,016
|
Other
(income) expense
|
11,819
|
2,416
|
3,642
|
7,516
|
622
|
Project income
|
$(31,908)
|
$(5,443)
|
$14,846
|
(6,078)
|
1,795
|
(1) Excludes the
Florida Projects, which are designated as assets held for sale and
discontinued operations.
|
|
|
|
|
|
|
|
(2) Excludes
Path 15, which is designated as an asset held for sale and
discontinued operations.
|
Atlantic Power
Corporation
Table 8 – Cash Available
for Distribution (in thousands of U.S. dollars)
(Unaudited)
|
|
|
|
|
|
|
|
Years
ended Dec 31,
|
|
|
|
2012
|
2011
|
2010
|
Project Adjusted
EBITDA
|
|
|
$225,570
|
$84,911
|
$53,915
|
Depreciation and amortization
|
|
|
164,958
|
55,608
|
25,493
|
Interest
expense, net
|
|
|
24,122
|
15,178
|
9,613
|
Change
in the fair value of derivative instruments
|
|
|
56,579
|
17,152
|
321
|
Other
(income) expense
|
|
|
11,819
|
2,416
|
3,642
|
Project income
(loss)
|
|
|
$(31,908)
|
$(5,443)
|
$14,846
|
Administrative and other expenses (income)
|
|
|
112,954
|
77,479
|
26,810
|
Income
tax expense (benefit)
|
|
|
(28,083)
|
(11,104)
|
16,018
|
Income
from discontinued operations, net of tax
|
|
|
16,459
|
36,177
|
24,127
|
Net loss
|
|
|
$(100,320)
|
$(35,641)
|
$(3,855)
|
Adjustments to reconcile to net cash provided by operating
activities
|
|
|
264,709
|
103,842
|
83,851
|
Change
in other operating balances
|
|
|
2,689
|
(12,266)
|
6,957
|
Cash provided by
operating activities
|
|
|
$167,078
|
$55,935
|
$86,953
|
Project-level debt repayments
|
|
|
(19,574)
|
(21,589)
|
(18,882)
|
Purchases of property, plant and equipment (1)
|
|
|
(2,902)
|
(2,035)
|
(2,549)
|
Transaction costs (2)
|
|
|
-
|
33,402
|
-
|
Realized
foreign currency losses on hedges associated with the Partnership
transaction (3)
|
|
|
-
|
16,492
|
-
|
Dividends on preferred shares of a subsidiary company
|
|
|
(13,049)
|
(3,247)
|
-
|
Cash Available for
Distribution (4)
|
|
|
$131,553
|
$78,958
|
$65,522
|
Total
cash dividends declared to shareholders
|
|
|
131,832
|
86,357
|
65,648
|
Payout Ratio
|
|
|
100%
|
109%
|
100%
|
(1) Excludes
construction-in-progress costs related to our Piedmont biomass
project and construction costs for our completed Canadian Hills
project.
(2) Represents
costs incurred associated with the Partnership acquisition.
(3) Represents
realized foreign currency losses associated with foreign exchange
forwards entered into in order to hedge a portion of the foreign
currency exchange risks associated with the closing of the
Partnership acquisition.
(4) 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.
See "Supplementary Non-GAAP Financial Information" above.
|
|
|
|
|
|
|
|
Atlantic Power
Corporation
Table 9 – Project
Adjusted EBITDA by Project (for Selected Projects) (in thousands of
U.S. dollars)
(Unaudited)
|
|
|
|
|
|
|
|
|
Year ended December
31,
|
|
|
2012
|
Project Adjusted EBITDA
by segment
|
|
|
Northeast
|
|
|
Chambers
|
|
$27,751
|
Curtis
Palmer
|
|
28,045
|
Kapuskasing
|
|
4,445
|
Nipigon
|
|
14,638
|
North
Bay
|
|
8,068
|
Selkirk
|
|
17,773
|
Tunis
|
|
13,470
|
Cadillac
|
|
9,253
|
Other
|
|
5,168
|
Total
|
|
128,611
|
Southeast
|
|
|
Orlando
|
|
8,958
|
Other
|
|
(118)
|
Total
|
|
8,840
|
Northwest
|
|
|
Williams
Lake
|
|
18,523
|
Frederickson
|
|
10,813
|
Other
|
|
19,086
|
Total
|
|
48,422
|
Southwest
|
|
|
Manchief
|
|
15,107
|
Morris
|
|
8,218
|
Other
|
|
29,516
|
Total
|
|
52,841
|
Un-allocated corporate
|
|
(13,144)
|
Total
|
|
$225,570
|
|
|
|
Reconciliation to
project income (loss)
|
|
|
Depreciation and amortization
|
|
$164,958
|
Interest
expense, net
|
|
24,122
|
Change
in the fair value of derivative instruments
|
|
56,579
|
Other
(income) expense
|
|
11,819
|
Project income
(loss)
|
|
$(31,908)
|
|
|
|
|
|
|
SOURCE Atlantic Power Corporation