DEDHAM, Mass., Aug. 1, 2019 /CNW/ --
Second Quarter 2019 Financial Highlights
- Net income attributable to Atlantic Power increased to
$1.2 million or $0.01 per diluted share from a net loss of
$0.6 million or ($0.01) per diluted share in Q2 2018
- Project income increased to $21.7
million from $13.6 million in
Q2 2018, mostly due to Manchief (gas turbine overhaul in 2018) and
Curtis Palmer (higher water flows in 2019)
- Cash from operating activities increased to $38.9 million from $28.1
million in Q2 2018, mostly due to higher Project Adjusted
EBITDA and slightly lower cash interest payments
- Project Adjusted EBITDA increased to $50.8 million from $39.8
million in Q2 2018
- Repaid $18.3 million of term loan
and project debt and redeemed remaining Cdn$24.7 million of Series D convertible
debentures (US$18.5 million
equivalent); improved leverage ratio to 3.8 times
- Liquidity at June 30, 2019 of
$194.4 million, including
approximately $39 million of
discretionary cash, in line with the March
31st level
Recent Developments
- Completed the acquisition of the Allendale and Dorchester contracted biomass plants in
South Carolina from EDF Renewables
for $13 million on July 31, 2019
- In July 2019, Kenilworth customer exercised option to extend
contract one year to September
2021
Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ("Atlantic
Power" or the "Company") today reported its financial results for
the three and six months ended June 30,
2019.
"Second quarter results were strong primarily due to
above-average water flows at Curtis Palmer. During the quarter, we
continued to strengthen our balance sheet by repaying $37 million of debt," said James J. Moore, Jr., President and CEO of
Atlantic Power. "In the past few months, we have announced an
agreement to acquire equity ownership interests in two contracted
biomass projects in North Carolina
and Michigan for $20 million and we have closed on the purchase of
two contracted biomass projects in South
Carolina for $13 million.
These acquisitions represent a meaningful addition to the level and
length of our existing contracted cash flows. In addition, we
reached an agreement to sell Manchief to the existing customer for
$45.2 million following the
expiration of the Power Purchase Agreement (PPA) in May 2022, which removes re-contracting
uncertainty for this project and supports further debt
reduction."
Atlantic Power
Corporation
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Table 1 - Summary
of Financial Results
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(in millions of
U.S. dollars)
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Unaudited
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Three months ended
June 30,
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Six months ended
June 30,
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2019
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2018
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2019
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2018
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Project
revenue
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$71.3
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$66.2
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$144.3
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$146.2
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Project
income
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21.7
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13.6
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52.2
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41.8
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Net income (loss)
attributable to Atlantic Power Corporation
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1.2
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(0.6)
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10.1
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15.2
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Cash provided by
operating activities
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38.9
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28.1
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68.1
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78.4
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Cash (used in)
provided by investing activities
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(0.1)
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(1.3)
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1.1
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(2.4)
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Cash used in
financing activities
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(41.3)
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(32.5)
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(66.8)
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(78.2)
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Project Adjusted
EBITDA
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50.8
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39.8
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104.5
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93.2
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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" 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).
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Financial Results for the Three Months Ended June 30, 2019
Second quarter 2019 results for Project Adjusted EBITDA and
operating cash flow exceeded the Company's expectations, mostly
because generation at Curtis Palmer was significantly above the
long-term average due to higher water flows, in a continuation of
the first quarter performance.
Project income, Net income and Project Adjusted
EBITDA
Project income for the second quarter of 2019 was
$21.7 million, an $8.1 million increase from $13.6 million in the year-ago period. Project
revenue increased $5.1 million as a
result of higher water flows at Curtis Palmer, the start-up of
Tunis under a new PPA in
October 2018 and the consolidation of
Koma Kulshan in July 2018. Operations
and maintenance expense decreased $8.6
million, mostly at Manchief, which had a gas turbine
overhaul in 2018, and at Tunis,
which incurred start-up maintenance in the 2018 period.
Depreciation and amortization expense decreased $4.9 million as the 2018 period included
amortization of the remaining PPA intangible asset at Nipigon. These favorable expense comparisons
were partially offset by a $6.8
million unfavorable change in the fair value of derivative
instruments.
Net income attributable to Atlantic Power
Corporation for the second quarter of 2019 was
$1.2 million compared to a
$0.6 million net loss in the second
quarter of 2018. The improvement of $1.8
million was primarily attributable to an $8.1 million increase in Project income, a
$2.7 million increase in the fair
value of the convertible debenture conversion option (included in
"Other (income) expense, net"), and a $1.2
million reduction in administration expense. These positive
factors were partially offset by a foreign exchange loss of
$4.9 million as compared to a
$5.4 million gain in the comparable
2018 period, which was related to the revaluation of debt
denominated in Canadian dollars (the Canadian dollar appreciated
from March 31, 2019 to June 30,
2019).
Project Adjusted EBITDA for the second quarter of
2019 increased $11.0 million to
$50.8 million from $39.8 million in the second quarter of 2018. The
increase was primarily driven by Manchief (+$7.4 million), due to
lower maintenance expense and increased dispatch in 2019; Curtis
Palmer (+$5.9 million), which had higher water flows in 2019; and
Tunis (+$2.2 million), which
incurred maintenance expense in the 2018 period in preparation for
start-up under a new PPA in October
2018. Increases at these projects were partially offset by
Chambers (-$1.7 million, due to lower
energy and steam demand and lower prices for excess energy) and
more modest decreases at Cadillac and Oxnard.
Cash Flow
Cash provided by operating activities for the second
quarter of 2019 was $38.9 million, an
increase of $10.8 million from
$28.1 million in the second quarter
of 2018. The increase was primarily attributable to the
$11.0 million increase in Project
Adjusted EBITDA and a slight reduction in cash interest and cash
taxes, partially offset by a $1.8
million unfavorable year-over-year change in working capital
and a $1.1 million reduction in
distributions from unconsolidated affiliates, driven by a lower
distribution from Chambers, due to lower Project Adjusted
EBITDA.
Cash used in investing activities for the second
quarter of 2019 was $0.1 million,
compared to $1.3 million in the
second quarter of 2018, when the Company acquired an additional
ownership interest in Koma Kulshan for $1.1
million.
Cash used in financing activities for the second
quarter of 2019 was $41.3 million as
compared to $32.5 million in the
year-ago period. In 2019, the Company repaid $18.3 million of term loan and project debt,
redeemed $18.5 million (US$
equivalent) of the remaining Series D convertible debentures, made
$1.9 million of cash payments for
vested LTIP units withheld for taxes, paid $1.8 million of preferred dividends and
repurchased $0.9 million of common
and preferred shares. In the comparable 2018 period, the Company
repaid $26.4 million of term loan and
project debt, repurchased $3.3
million of common and preferred shares and paid $2.1 million of preferred dividends.
During the second quarter of 2019, the net decrease in the
Company's cash, restricted cash and cash equivalents was
$2.5 million.
Financial Results for the Six Months Ended June 30, 2019
Results for the first six months of 2019 were strong, reflecting
above-average generation at Curtis Palmer due to higher water
flows, the non-recurrence of the Manchief gas turbine overhaul, and
the start-up of Tunis, partially
offset by the short-term contract extension for Williams Lake that began in April 2018 which reduced the project's gross
margin.
Project income, Net income and Project Adjusted
EBITDA
Project income for the first six months of 2019 was
$52.2 million, a $10.4 million increase from $41.8 million in the year-ago period. Project
revenue decreased $1.9 million due
primarily to the San Diego
projects, which ceased operations in February 2018, and to Williams Lake, due to the short-term contract
extension. These declines were partially offset by revenue
increases at Curtis Palmer, which benefited from higher water
flows; Tunis, which re-started
operations in October 2018, and Koma
Kulshan, which was consolidated in July
2018. Operations and maintenance expense decreased
$13.4 million, mostly at Manchief and
Tunis. Depreciation and
amortization expense decreased $12.4
million due to lower amortization at Nipigon and the shutdown of the San Diego projects. Decreases in these
expenses were partially offset by a $12.9
million unfavorable change in the fair value of derivative
instruments.
Net income attributable to Atlantic Power
Corporation for the first six months of 2019 was
$10.1 million compared to
$15.2 million in the 2018 period. The
decrease of $5.1 million was
primarily attributable to a foreign exchange loss of $9.9 million as compared to a $13.6 million gain in the comparable 2018 period,
related to the revaluation of debt denominated in Canadian dollars
as the Canadian dollar appreciated from December 31, 2018 to June
30, 2019, and a $4.2 million
decrease in the fair value of the convertible debenture conversion
option. These negative factors were partially offset by a
$10.4 million increase in Project
income, a $4.7 million increased gain
on the repurchase of the Company's preferred shares and a
$4.0 million decrease in interest
expense.
Project Adjusted EBITDA for the first six months of
2019 increased $11.3 million to
$104.5 million from $93.2 million in the first six months of 2018.
The increase was primarily driven by Curtis Palmer (+$8.6 million),
Manchief (+$7.9 million), and Tunis (+$5.7 million), for reasons previously
described, and Orlando (+$1.4
million), due to a capacity rate escalation and lower maintenance
expense. Increases at these projects were partially offset by
decreases at Williams Lake
(-$4.9 million), due to the
short-term contract extension; Chambers (-$2.3 million), due to lower energy and steam
demand and lower excess energy pricing; and modest decreases at
Cadillac, Oxnard, Mamquam and
Calstock.
Cash Flow
Cash provided by operating activities for the first
six months of 2019 was $68.1 million,
a $10.3 million decrease from
$78.4 million in the comparable 2018
period. This decrease was primarily attributable to a $24.5 million adverse change in cash flows
attributable to changes in working capital. The 2018 period
included a $17.7 million release of
working capital by Kapuskasing,
North Bay and the three
San Diego projects when they
ceased operation. The negative impact on cash flow of changes in
working capital was partially offset by the benefit to cash flow of
the $11.3 million increase in Project
Adjusted EBITDA.
Cash provided by investing activities for the first
six months of 2019 was $1.1 million
as compared to a $2.4 million use of
cash in the 2018 period. In 2019, the Company realized $1.5 million of salvage proceeds from the
San Diego projects, whereas in
2018, the Company used cash to acquire an additional ownership
interest in Koma Kulshan for $1.1
million.
Cash used in financing activities for the first six
months of 2019 was $66.8 million as
compared to $78.2 million in the
year-ago period. In 2019, the Company repaid $34.0 million of term loan and project debt,
redeemed $18.5 million (US$
equivalent) of the remaining Series D convertible debentures,
repurchased $8.7 million of common
and preferred shares, paid $3.7
million of preferred dividends and made $1.9 million of cash payments for vested LTIP
units withheld for taxes. In the comparable 2018 period, the
Company issued $92.2 million of
Series E convertible debentures, redeemed $88.0 million of Series C and Series D
convertible debentures, repaid $58.8
million of term loan and project debt, repurchased
$13.7 million of common and preferred
shares, incurred $4.8 million of
deferred financing costs and paid $4.3
million of preferred dividends.
During the first six months of 2019, the net increase in the
Company's cash, restricted cash and cash equivalents was
$2.4
million.
Liquidity and Balance Sheet
Liquidity
As shown in Table 2, the Company's liquidity at June 30, 2019 was $194.4
million, a decrease of $3.5
million from $197.9 million at
March 31, 2019. At June 30, 2019, there was $45.6 million of cash at the parent, of which the
Company considers approximately $39
million to be discretionary cash available for general
corporate purposes.
Atlantic Power
Corporation
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Table 2 -
Liquidity
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(in millions of
U.S. dollars)
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Unaudited
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June 30,
2019
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March 31,
2019
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Cash and cash
equivalents, parent
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$45.6
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$47.6
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Cash and cash
equivalents, projects
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25.8
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27.2
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Total cash and cash
equivalents
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71.4
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74.8
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Revolving credit
facility
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200.0
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200.0
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Letters of credit
outstanding
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(77.0)
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(76.9)
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Availability under
revolving credit facility
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123.0
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123.1
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Total
liquidity
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$194.4
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$197.9
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Excludes restricted
cash of:
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$1.4
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$0.5
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Balance Sheet
Debt Repayment
During the second quarter of 2019, the Company repaid
$17.5 million of the APLP Holdings
term loan and amortized $775 thousand
of project-level debt. On April 10,
2019, as previously reported, the Company redeemed the
remaining Cdn$24.7 million of 6.00%
Series D Debentures (US$18.5 million
equivalent) at par plus accrued interest. The total outlay of
US$18.9 million equivalent was funded
from discretionary cash.
At June 30, 2019, the Company's
consolidated debt was $685 million,
excluding unamortized discounts and deferred financing costs, and
the Company's consolidated leverage ratio (consolidated gross debt
to trailing 12-month consolidated Adjusted EBITDA) was 3.8 times,
which was improved from 4.5 times at March
31, 2019.
The Company expects to repay another $34
million of consolidated debt in the second half of 2019, and
expects to have a leverage ratio of approximately 4 times at year
end 2019.
Debt Maturity Profile
As a result of the Series D redemption in April 2019, the Company's next bullet maturity is
not until April 2022, when the
$200 million revolving credit
facility matures. There are currently no borrowings outstanding,
although $77 million is being used
for letters of credit.
The $417.5 million APLP Holdings
term loan is being repaid through amortization and the sweep, with
approximately $125 million of the
principal expected to be remaining at the April 2023 maturity date.
Normal Course Issuer Bid (NCIB) Update
In the second quarter of 2019, the Company repurchased and
canceled 9,800 shares of the Cumulative Rate Reset Preferred,
Series 2 at Cdn$18.40 per share, for
a total cost of Cdn$180 thousand
(US$138 thousand equivalent). Earlier
this year, the Company reached the 10% limit on Series 1 and Series
3 repurchases under this NCIB. Also during the second quarter, the
Company repurchased and canceled approximately 313 thousand common
shares at an average price of $2.27
per share, for a total investment of approximately $712 thousand.
2019 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 is maintaining its guidance for 2019 Project
Adjusted EBITDA in the range of $175
million to $190 million.
Results are currently trending toward the upper end of this range,
primarily due to Curtis Palmer. In 2018, water flows at Curtis
Palmer were very close to the historical average while those for
Mamquam were better than average. In the first six months of 2019,
higher water flows at Curtis Palmer have resulted in generation
significantly above the long-term average, which has benefited
results; some of this benefit may reverse over the remainder of the
year due to the variability of water flows. Results for Mamquam
have been lower than in 2018 and are generally in line with
expectations. The 2019 guidance assumes a shutdown of Williams Lake at the end of September, when
the existing short-term contract extension expires. If a new PPA is
entered into, the Company expects to reflect it in guidance at that
time.
Table 3 provides a bridge of the Company's 2019 Project Adjusted
EBITDA guidance to an estimate of 2019 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. The decline in 2019 estimated Cash provided by operating
activities from the 2018 level is largely attributable to the
working capital assumption, Chambers project debt amortization of
$5.2 million (captured in the
adjustment for equity method projects), and expected
decommissioning outlays for the San
Diego projects. Results in the first six months of 2019
benefited relative to expectations from strong performance at
Curtis Palmer and the timing of certain revenues and expenditures,
including the timing of decommissioning outlays; some of this
benefit may reverse over the remainder of the year.
Atlantic Power
Corporation
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Table 3 - Bridge
of 2019 Project Adjusted EBITDA Guidance to Cash Provided by
Operating Activities
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(in millions of
U.S. dollars)
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Unaudited
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2019
Guidance
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(initiated
2/28/19)
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2018
Actual
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Project Adjusted
EBITDA
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$175 -
$190
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$185.1
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Adjustment for equity
method projects(1)
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(5)
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(0.0)
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Corporate G&A
expense
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(22)
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(23.9)
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Cash interest
payments
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(39)
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(41.3)
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Cash taxes
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(4)
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(3.1)
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Decommissioning (San
Diego projects)
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(5)
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(0.5)
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Other (including
changes in working capital)
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(0)
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21.2
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Cash provided by
operating activities
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$100 -
$115
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$137.5
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Note: For the
purpose of providing 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. See
comment in preceding paragraph.
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(1) For equity method projects,
represents difference between Project Adjusted EBITDA and cash
distribution.
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Commercial and Operational Updates
Decommissioning of San Diego Projects
As previously reported, the Company is required by its land use
agreements with the U.S. Navy to decommission its three project
sites in San Diego (Naval Station,
Naval Training Center and North Island). The Company is continuing
to work through a critical path issue with San Diego Gas &
Electric, and now expects decommissioning work to be completed in
the first half of 2020. In the second quarter of 2019, the Company
recorded a $1.4 million increase to
the asset retirement obligation for these facilities, and now
expects the cash outlay to total approximately $6.6 million, subject to receipt of final
demolition bids later this fall. Net of $1.7
million of salvage proceeds received to date, the net cash
outlay is estimated to be approximately $5
million.
Biomass Acquisitions
On July 31, 2019, the Company
completed the acquisition of the Allendale and Dorchester plants in South Carolina from EDF Renewables for
$13 million, of which $2.6 million was paid as a deposit in
September 2018 and the remaining
$10.4 million was paid at closing
from the Company's discretionary cash. Allendale and Dorchester have been in service since 2013 and
each has a capacity of 20 megawatts. All of their output is sold to
Santee Cooper, a state-owned utility, under PPAs that run to the
fourth quarter of 2043. Under the terms of the PPAs, the
plants receive energy payments for energy produced. The fuel
cost component of the energy revenues is based on a biomass market
index. There is no project-level debt at either
plant. The Company expects the two projects to generate a
combined Project Adjusted EBITDA of approximately $3 million annually.
On May 14, 2019, the Company
executed an agreement to acquire, for $20
million, the equity ownership interests held by AltaGas
Power Holdings (U.S.) Inc. (AltaGas) in two contracted biomass
plants. Upon closing of the transaction, expected in the third
quarter of 2019 subject to regulatory and other customary
approvals, the Company will acquire a 50% interest in the 48
megawatt Craven County plant in
North Carolina and a 30% interest
in the 37 megawatt Grayling plant in Michigan. Craven
County has been in service since October 1990 and has a PPA with Duke Energy that
runs through December 2027. Grayling
has been in service since June 1992
and has a PPA with Consumers Energy that runs through December 2027. There is no project-level debt at
either plant. The Company intends to fund the purchase price from
discretionary cash.
The Company has previously indicated that it expects these four
plants and the remaining ownership interests in Koma Kulshan
acquired in 2018 to generate a combined Project Adjusted EBITDA of
$8 million to $10 million annually on average through the date
of the first PPA expiration (December
2027).
Manchief Sale Agreement
On May 24, 2019, the Company
executed an agreement for the sale of the 300 megawatt gas-fired
Manchief plant to Public Service Co. of Colorado, the existing customer under the PPA,
for $45.2 million, subject to working
capital and other customary adjustments. The sale is subject to
regulatory approvals and is expected to close in May 2022, following the expiration of the PPA.
The Company will continue to realize the cash flows under the PPA
until closing. Proceeds of the sale are expected to be used to
reduce the remaining principal amount of the Company's senior
secured term loan.
PPAs
Williams Lake (British Columbia). The project continues
to operate under a short-term contract with BC Hydro that is
scheduled to expire on September 30,
2019. Discussions with BC Hydro on a potential long-term
contract are continuing.
Kenilworth (New Jersey). In July 2019, Merck executed the third of its three
successive one-year renewal options under the Energy Services
Agreement, thus extending the expiration date to September 2021. The Company is in discussions
with Merck regarding a potential further contract extension beyond
2021.
Maintenance and Capex
In the second quarter of 2019, the Company incurred $6.8 million of maintenance expense. For the full
year, which does not have any planned major outages, the Company is
projecting maintenance expense of approximately $26.2 million (up slightly from previously, due
to higher maintenance expense at Oxnard and Moresby Lake) and capital
expenditures of approximately $1.1
million. (All of these figures include the Company's
proportional share of maintenance expenses and capital expenditures
at equity method investments.)
Financial Results by Segment and by Project
A schedule of Project income (loss) and Project Adjusted EBITDA
by segment for the three and six months ended June 30, 2019 and the comparable 2018 periods can
be found on page 13 of this release.
A schedule of Project income (loss), Project Adjusted EBITDA and
Cash Distributions by project for the three and six months ended
June 30, 2019 and the comparable 2018
periods can be found in the second quarter 2019 presentation on the
Company's website. 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.
Supplementary Information Regarding Non-GAAP
Disclosures
A discussion of non-GAAP disclosures and a schedule reconciling
Project Adjusted EBITDA, a non-GAAP measure, to the comparable GAAP
measure, can be found on page 13 of this release.
Investor Conference Call and Webcast
Atlantic Power's management team will host a telephone
conference call and webcast on Friday,
August 2, 2019 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, August
2, 2019
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 10133246 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 September 2, 2019 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 is an independent power producer that owns power
generation assets in ten states in the
United States and two provinces in Canada. The Company's generation projects sell
electricity and steam to investment-grade utilities and other
creditworthy large customers predominantly under long‑term PPAs
that have expiration dates ranging from 2019 to 2043. The Company
seeks to minimize its exposure to commodity prices through
provisions in the contracts, fuel supply agreements and hedging
arrangements. The projects are diversified by geography, fuel
type, technology, dispatch profile and offtaker (customer).
The majority of the projects in operation are 100% owned and
directly operated and maintained by the Company. The Company has
expertise in operating most fuel types, including gas, hydro, and
biomass, and it owns a 40% interest in one coal project.
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.
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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
forward-looking information 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," "should," "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 view that Project Adjusted EBITDA and operating
cash flow in the three and six months ended June 30, 2019 were ahead of its expectations,
primarily due to above-average water flows at Curtis Palmer;
- the Company's view that the acquisitions of four biomass plants
will meaningfully add to the level and length of its existing
contracted cash flows;
- the Company's view that the sale agreement for Manchief removes
re-contracting uncertainty for the project and supports further
debt reduction;
- the Company's view that approximately $39 million of cash at the parent is available
for discretionary purposes;
- the Company's expectation that it will repay another
$34 million of consolidated debt over
the remainder of the year, and that its leverage ratio at year end
2019 will be approximately 4 times;
- the Company's estimate that approximately $125 million of its term loan will be outstanding
at the April 2023 maturity date, with
the balance having been repaid previously through amortization and
the sweep;
- the Company's guidance for 2019 Project Adjusted EBITDA in the
range of $175 million to $190 million, and its view that results are
currently trending toward the upper end of the range, primarily due
to Curtis Palmer;
- the Company's assumption in its 2019 guidance of average water
conditions for its hydro projects;
- the Company's assumptions in its 2019 guidance with respect to
Williams Lake;
- the Company's estimate for 2019 Cash provided by operating
activities in the range of $100
million to $115 million,
assuming for this purpose that changes in working capital are
nil;
- the Company's estimation that cash outlays associated with the
decommissioning of the three San
Diego projects will total approximately $6.6 million and that work will be completed in
the first half of 2020;
- the Company's estimate that the Allendale and Dorchester projects will generate a combined
Project Adjusted EBITDA of approximately $3
million annually;
- the Company's estimate that the acquisition of equity ownership
interests in two contracted biomass plants from AltaGas will close
in the third quarter of 2019;
- the Company's estimate that the four acquired biomass plants
and the additional ownership interest acquired in Koma Kulshan will
generate a combined Project Adjusted EBITDA of $8 million to $10
million annually on average through the date of the first
PPA expiration (December 2027);
- the Company's expectation that the sale of Manchief will close
in May 2022, following the expiration
of its PPA, and that proceeds from the sale will be used to reduce
the remaining principal amount of the Company's senior secured term
loan;
- the Company's expectations for re-contracting Williams Lake, Kenilworth and other projects with expiring
PPAs;
- the Company's estimation that, in 2019, including its share of
equity-owned projects, maintenance expense will total approximately
$26.2 million and capital
expenditures will total approximately $1.1
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
U.S. Securities and Exchange Commission (the "SEC") from time to
time for a detailed discussion of the risks and uncertainties
affecting the 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.
Atlantic Power
Corporation
|
|
|
Table 4 –
Consolidated Balance Sheet
|
|
|
(in millions of
U.S. dollars)
|
|
|
Unaudited
|
|
|
|
June
30,
|
Dec.
31,
|
|
2019
|
2018
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$71.4
|
$68.3
|
Restricted
cash
|
1.4
|
2.1
|
Accounts
receivable
|
30.2
|
35.7
|
Current portion of
derivative instruments asset
|
0.3
|
4.2
|
Inventory
|
15.7
|
15.8
|
Prepayments
|
5.4
|
4.0
|
Income taxes
receivable
|
-
|
0.3
|
Lease
receivable
|
2.0
|
-
|
Other current
assets
|
3.6
|
5.9
|
Total current
assets
|
130.0
|
136.3
|
Property, plant, and
equipment, net
|
537.4
|
549.5
|
Equity investments in
unconsolidated affiliates
|
137.6
|
140.8
|
Power purchase
agreements and intangible assets, net
|
156.4
|
170.1
|
Goodwill
|
21.3
|
21.3
|
Derivative
instruments asset
|
-
|
0.3
|
Right-of-use lease
assets
|
5.7
|
-
|
Other
assets
|
6.1
|
6.2
|
Total
assets
|
$994.5
|
$1,024.5
|
Liabilities
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$2.4
|
$2.5
|
Accrued
interest
|
2.4
|
2.3
|
Other accrued
liabilities
|
15.6
|
20.2
|
Current portion of
long-term debt
|
113.1
|
68.1
|
Current portion of
derivative instruments liability
|
10.0
|
4.5
|
Convertible
debentures
|
-
|
18.1
|
Short-term lease
liability
|
1.5
|
-
|
Other current
liabilities
|
0.5
|
0.2
|
Total current
liabilities
|
145.5
|
115.9
|
Long-term debt, net
of unamortized discount and deferred financing costs
|
471.1
|
540.7
|
Convertible
debentures, net of discount and unamortized deferred financing
costs
|
79.8
|
75.7
|
Derivative
instruments liability
|
18.2
|
15.4
|
Deferred income
taxes
|
7.9
|
9.0
|
Power purchase
agreements and intangible liabilities, net
|
20.7
|
21.2
|
Asset retirement
obligations, net
|
51.8
|
49.2
|
Long-term lease
liability
|
4.8
|
-
|
Other long-term
liabilities
|
3.9
|
5.0
|
Total
liabilities
|
$803.7
|
$832.1
|
Equity
|
|
|
Common shares, no par
value, unlimited authorized shares; 109,381,678 and 108,341,738
issued and outstanding at June 30, 2019 and December 31,
2018
|
1,260.9
|
1,260.9
|
Accumulated other
comprehensive loss
|
(141.5)
|
(146.2)
|
Retained
deficit
|
(1,111.5)
|
(1,121.6)
|
Total Atlantic Power
Corporation shareholders' equity
|
7.9
|
(6.9)
|
Preferred shares
issued by a subsidiary company
|
182.9
|
199.3
|
Total
equity
|
190.8
|
192.4
|
Total liabilities and
equity
|
$994.5
|
$1,024.5
|
Atlantic Power
Corporation
|
|
|
Table 5 -
Consolidated Statements of Operations
|
(in millions of
U.S. dollars, except per share amounts)
|
Unaudited
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
June
30,
|
June
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Project
revenue:
|
|
|
|
|
|
Energy
sales
|
$36.5
|
$31.4
|
|
$73.5
|
$69.8
|
Energy capacity
revenue
|
$31.6
|
23.3
|
|
61.8
|
43.4
|
Other
|
$3.2
|
11.5
|
|
9.0
|
33.0
|
|
$71.3
|
66.2
|
|
144.3
|
146.2
|
Project
expenses:
|
|
|
|
|
|
Fuel
|
15.8
|
15.0
|
|
35.8
|
37.2
|
Operations and
maintenance
|
18.6
|
27.2
|
|
35.1
|
48.5
|
Depreciation and
amortization
|
16.1
|
21.0
|
|
32.3
|
44.7
|
|
50.5
|
63.2
|
|
103.2
|
130.4
|
Project other income
(loss):
|
|
|
|
|
|
Change in fair value
of derivative instruments
|
(7.0)
|
(0.2)
|
|
(9.4)
|
3.5
|
Equity in earnings of
unconsolidated affiliates
|
9.4
|
11.2
|
|
22.3
|
23.5
|
Interest,
net
|
(0.2)
|
(0.4)
|
|
(0.6)
|
(1.0)
|
Other expense,
net
|
(1.3)
|
-
|
|
(1.2)
|
-
|
|
0.9
|
10.6
|
|
11.1
|
26.0
|
Project
income
|
21.7
|
13.6
|
|
52.2
|
41.8
|
|
|
|
|
|
|
Administrative and
other expenses:
|
|
|
|
|
|
Administration
|
5.0
|
6.2
|
|
11.8
|
12.2
|
Interest expense,
net
|
11.0
|
11.1
|
|
22.1
|
26.1
|
Foreign exchange loss
(gain)
|
4.9
|
(5.4)
|
|
9.9
|
(13.6)
|
Other (income)
expense, net
|
(3.7)
|
(0.2)
|
|
0.9
|
(2.2)
|
|
17.2
|
11.7
|
|
44.7
|
22.5
|
Income from
operations before income taxes
|
4.5
|
1.9
|
|
7.5
|
19.3
|
Income tax
expense
|
1.6
|
0.9
|
|
2.2
|
4.2
|
Net income
|
2.9
|
1.0
|
|
5.3
|
15.1
|
Net income (loss)
attributable to preferred shares of a subsidiary
company
|
1.7
|
1.6
|
|
(4.8)
|
(0.1)
|
Net income
attributable to Atlantic Power Corporation
|
$1.2
|
($0.6)
|
|
$10.1
|
$15.2
|
Net earnings (loss)
per share attributable to Atlantic Power
Corporation shareholders:
|
|
|
|
|
|
Basic
|
$0.01
|
($0.01)
|
|
$0.09
|
$0.13
|
Diluted
|
$0.01
|
($0.01)
|
|
$0.09
|
$0.13
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
109.7
|
112.4
|
|
109.3
|
113.6
|
Diluted
|
110.2
|
112.4
|
|
138.0
|
140.1
|
Atlantic Power
Corporation
|
|
|
Table 6 -
Consolidated Statements of Cash Flows
|
|
(in millions of
U.S. dollars)
|
|
|
Unaudited
|
Six months ended
June 30,
|
|
2019
|
2018
|
Cash provided by
operating activities:
|
|
|
Net income
|
$5.3
|
$15.1
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
32.3
|
44.7
|
Other gain
|
(0.9)
|
|
Share-based
compensation
|
0.8
|
1.1
|
Asset retirement
obligation
|
1.4
|
-
|
Equity in earnings
from unconsolidated affiliates
|
(22.3)
|
(23.5)
|
Distributions from
unconsolidated affiliates
|
25.4
|
27.3
|
Unrealized foreign
exchange loss (gain)
|
10.2
|
(13.3)
|
Change in fair value
of derivative instruments
|
11.2
|
(5.9)
|
Amortization of debt
discount, deferred financing costs and right-of-use lease
assets
|
4.4
|
5.4
|
Change in deferred
income taxes
|
(0.7)
|
2.0
|
Change in other
operating balances
|
|
|
Accounts
receivable
|
4.1
|
27.4
|
Inventory
|
0.1
|
3.7
|
Prepayments and other
assets
|
(0.6)
|
3.8
|
Accounts
payable
|
0.1
|
(1.9)
|
Accruals and other
liabilities
|
(2.7)
|
(7.5)
|
Cash provided by
operating activities
|
68.1
|
78.4
|
|
|
|
Cash provided by
(used in) investing activities:
|
|
|
Investment in
unconsolidated affiliate
|
-
|
(1.1)
|
Proceeds from asset
sales
|
1.5
|
-
|
Purchase of property,
plant and equipment
|
(0.4)
|
(1.3)
|
Cash provided by
(used in) investing activities
|
1.1
|
(2.4)
|
|
|
|
Cash used in
financing activities:
|
|
|
Proceeds from
convertible debenture issuance
|
-
|
92.2
|
Repayment of
convertible debentures
|
(18.5)
|
(88.0)
|
Common share
repurchases
|
(0.8)
|
(9.2)
|
Preferred share
repurchases
|
(7.9)
|
(4.5)
|
Repayment of corporate
and project-level debt
|
(34.0)
|
(58.8)
|
Cash payments for
vested LTIP units withheld for taxes
|
(1.9)
|
(0.8)
|
Deferred financing
costs
|
-
|
(4.8)
|
Dividends paid to
preferred shareholders
|
(3.7)
|
(4.3)
|
Cash used in
financing activities:
|
(66.8)
|
(78.2)
|
|
|
|
Net increase
(decrease) in cash, restricted cash and cash equivalents
|
2.4
|
(2.2)
|
Cash, restricted cash
and cash equivalents at beginning of period
|
70.4
|
84.9
|
Cash, restricted cash
and cash equivalents at end of period
|
$72.8
|
$82.7
|
|
|
|
Supplemental cash
flow information
|
|
|
Interest
paid
|
$18.7
|
$20.2
|
Income taxes paid,
net
|
$2.4
|
$1.9
|
Accruals for
construction in progress
|
$-
|
$0.1
|
Right-of-use asset
obtained in exchange for finance lease liability
|
$0.1
|
$-
|
Atlantic Power
Corporation
|
|
|
|
|
Table 7 - Project
Income (Loss) and Project Adjusted EBITDA by Segment
|
|
|
(in millions of
U.S. dollars)
|
|
|
|
|
Unaudited
|
|
|
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|
2019
|
2018
|
2019
|
2018
|
Project income
(loss)
|
|
|
|
|
East U.S.
|
$18.6
|
$18.4
|
$42.5
|
$39.1
|
West U.S.
|
0.0
|
(6.3)
|
0.4
|
(8.2)
|
Canada
|
7.4
|
1.2
|
15.8
|
8.5
|
Un-allocated
Corporate
|
(4.3)
|
0.3
|
(6.5)
|
2.4
|
Total
|
$21.7
|
$13.6
|
$52.2
|
$41.8
|
Project Adjusted
EBITDA
|
|
|
|
|
East U.S.
|
$33.4
|
$31.2
|
$69.4
|
$64.4
|
West U.S.
|
6.9
|
(0.7)
|
13.0
|
5.4
|
Canada
|
10.2
|
9.0
|
21.9
|
23.2
|
Un-allocated
Corporate
|
0.3
|
0.3
|
0.2
|
0.2
|
Total
|
$50.8
|
$39.8
|
$104.5
|
$93.2
|
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 and to Net income on a
consolidated basis is provided in Table 8 below.
Atlantic Power
Corporation
Table 8 - Reconciliation of Net Income (Loss) to Project Adjusted
EBITDA
(in millions of U.S. dollars)
Unaudited
|
|
|
Three months
ended
|
Six months
ended
|
|
|
June
30,
|
June
30,
|
|
|
2019
|
2018
|
2019
|
2018
|
|
Net income (loss)
attributable to Atlantic Power Corporation
|
$1.2
|
($0.6)
|
$10.1
|
$15.2
|
|
Net income (loss)
attributable to preferred share dividends of a
subsidiary company
|
1.7
|
1.6
|
(4.8)
|
(0.1)
|
|
Net income
|
$2.9
|
$1.0
|
$5.3
|
$15.1
|
|
Income tax
expense
|
1.6
|
0.9
|
2.2
|
4.2
|
|
Income from
operations before income taxes
|
4.5
|
1.9
|
7.5
|
19.3
|
|
Administration
|
5.0
|
6.2
|
11.8
|
12.2
|
|
Interest expense,
net
|
11.0
|
11.1
|
22.1
|
26.1
|
|
Foreign exchange loss
(gain)
|
4.9
|
(5.4)
|
9.9
|
(13.6)
|
|
Other (income)
expense, net
|
(3.7)
|
(0.2)
|
0.9
|
(2.2)
|
|
Project
income
|
$21.7
|
$13.6
|
$52.2
|
$41.8
|
|
|
Reconciliation to
Project Adjusted EBITDA
|
|
|
|
|
|
Depreciation and
amortization
|
$20.1
|
$25.1
|
$40.2
|
$53.1
|
|
Interest expense,
net
|
0.8
|
0.9
|
1.5
|
1.9
|
|
Change in the fair
value of derivative instruments
|
7.0
|
0.2
|
9.4
|
(3.6)
|
|
Other expense,
net
|
1.2
|
-
|
1.2
|
-
|
|
Project Adjusted
EBITDA
|
$50.8
|
$39.8
|
$104.5
|
$93.2
|
|
View original
content:http://www.prnewswire.com/news-releases/atlantic-power-corporation-releases-second-quarter-2019-results-300895383.html
SOURCE Atlantic Power Corporation