CALGARY, May 12, 2020 /CNW/ -
First Quarter 2020 Highlights
- Generated $109 million or
$0.39 per share of free cash flow
("FCF") in the quarter compared to $95
million or $0.33 per share of
FCF for the same period in 2019, an 18 per cent increase per
share;
- Adjusted availability was 92.8 per cent compared to 89.4 per
cent for the same period in 2019;
- Our partners on the Sheerness joint venture plant completed a
planned outage to convert one of the units to have dual-fuel
capabilities;
- Entered into a Letter of Intent to sell the Pioneer Pipeline to
NOVA Gas Transmission Ltd. ("NGTL"), a wholly-owned subsidiary of
TC Energy, for a purchase price of $255
million;
- Announced the acquisition of a 29 MW contracted cogeneration
asset located in Michigan from two
private companies for a purchase price of approximately
US$27 million;
- Advanced our Clean Energy Investment Plan by starting
construction on the WindCharger battery project which is expected
to reach commercial operation in July
2020;
- Returned $9 million of capital to
shareholders in the first quarter through the repurchase and
cancellation of 1,297,000 common shares at an average price of
$6.73 per share through our normal
course issuer bid ("NCIB") program;
- Received regulatory approval from the Alberta Utilities
Commission ("AUC") for the repowering of Sundance Unit 5 and
Keephills Unit 1 into combined cycle units; and
- Successfully implemented our business continuity plan in
response to the COVID-19 pandemic which ensured continued essential
services to our customers and communities, and safeguarded the
health and safety of our employees and contractors.
Subsequent Events
- Commenced construction on the Windrise wind farm in April. We
now expect the project to be fully commissioned for second half of
2021 due to a delay in the manufacturing of turbines from one of
our suppliers due to COVID-19 pandemic; and
- Held TransAlta's first virtual Annual and Special Meeting of
Shareholders (the "Meeting") in which all Board nominees were
elected and all resolutions passed. Upon his re-election,
John Dielwart was appointed as Chair
of the Board, replacing Ambassador Gordon
Giffin who announced his retirement from the Board in
January 2019.
TransAlta Corporation ("TransAlta" or the "Company") (TSX: TA)
(NYSE: TAC) today reported its first quarter 2020 financial
results, with comparable EBITDA(1) of $220 million, in line with the same period last
year. Funds from operations ("FFO")(1,2) increased two
percent to $172 million for the
quarter compared to $169 million in
2019. FCF(1) for the first quarter was
$109 million, representing a
$14 million increase compared to the
same period in 2019.
Comparable EBITDA for the three months ended March 31,
2020, was consistent with the same period in 2019. Strong
performance at the US Coal and Wind and Solar segments was offset
by lower comparable EBITDA at the Canadian Coal and Energy
Marketing segments as well as higher Corporate costs.
Operations, maintenance and administration ("OM&A") expense
for the three months ended March 31,
2020, increased by $24 million compared to the same
period in 2019. This increase in OM&A is largely due to
realized gains and losses from the total return swap in our
Corporate segment. A portion of the settlement cost of our
share-based payment plans is fixed by entering into total return
swaps, which are cash settled every quarter.
Free cash flow(1) ("FCF"), one of the Company's key
financial metrics, totalled $109
million for the three months ended March 31, 2020, an
increase of $14 million compared to
the same period last year. This was primarily as a result of
continued strong operational results from our segments, realized
foreign exchange gains and lower distributions paid to
subsidiaries' non-controlling interests.
"First quarter results were strong amidst an unprecedented
pandemic in which the company reacted quickly and efficiently to
ensure the essential power demands of our communities and customers
were uninterrupted and everyone remained healthy," said
Dawn Farrell, President and Chief
Executive Officer. "Our results demonstrate the strength of our
operations, our contractedness and our portfolio diversification,
giving us confidence to reaffirm our free cash flow outlook for the
year. Although the longer-term effect of the pandemic and global
crude oil prices on power prices is uncertain, our cash flow
generation is highly diversified across regions outside of
Alberta with a majority contracted
or hedged. Based on our forecast, we are on-track to be at the
mid-point of our free cash flow outlook range."
"Thank you to all employees, contractors and their families
whose exceptional efforts ensure the continued strong operational
performance of the company," added Mrs. Farrell.
COVID-19 Response
The Company formally implemented its
business continuity plan on March 9,
2020, which is focused on ensuring that: (i) employees that
can work remotely do so; and (ii) employees operating and
maintaining our facilities, and who are not able to work remotely,
are able to work safely and in a manner that ensures they remain
healthy. This plan includes health screening, enhanced cleaning
arrangements, travel bans, revised work schedules, contingent work
teams and the reorganization of processes and procedures to limit
contact with other employees and contractors on-site.
Currently, all of our facilities remain fully operational and
capable of meeting our customers' needs. We have modified our
operating procedures and implemented restrictions to non-essential
access to our facilities to support continued operations through
the pandemic. The Corporation continues to work and serve all of
our customers and counterparties under the terms of their
contracts. We have not experienced interruptions to service
requirements. Electricity and steam supply continue to remain a
critical service requirement to all of our customers and have been
deemed an essential service in our jurisdictions.
Our growth construction programs are underway and progressing
forward under our business continuity health measures. We are
on-track to complete the conversion of Sundance Unit 6 during the
second half of 2020. The Company continues to advance conversion of
its Keephills Unit 2 and Unit 3 in 2021, but these projects could
be delayed by two to three months due to delays in procuring
certain equipment as a result of COVID-19.
The Company continues to maintain a strong financial position in
part due to our long-term contracts and hedged positions. The
Company is scheduled to receive $400
million from the second tranche of financing from the
Brookfield investment in the
fourth quarter of 2020 and has access to additional capital through
potential project financing of existing assets that are currently
unencumbered. We currently have access to $1.7 billion in liquidity including $338 million in cash and have sufficient
liquidity to meet the upcoming debt maturity due November 2020 and growth construction
requirements. The next major debt repayment is scheduled for
November 2022.
In addition, the Company has 74 per cent of its Alberta thermal baseload merchant generation
hedged at approximately $52 per MWh
for the remainder of 2020.
First Quarter 2020
Segmented Review
Comparable EBITDA (in CAD$ millions)
|
3 Months
Ended
|
March 31,
2020
|
March 31,
2019
|
Canadian
Coal
|
44
|
63
|
U.S. Coal
|
33
|
(10)
|
Canadian
Gas
|
29
|
30
|
Australian
Gas
|
30
|
30
|
Wind and
Solar
|
74
|
69
|
Hydro
|
26
|
27
|
Energy
Marketing
|
13
|
19
|
Corporate
|
(29)
|
(7)
|
Total Comparable
EBITDA(2)
|
220
|
221
|
- Canadian Coal: Comparable EBITDA for the three months ended
March 31, 2020, decreased
$19 million compared to the same
period in 2019. This largely reflects lower merchant production and
associated revenue primarily due to the planned dual-fuel
conversion outage at Sheerness, lower contract production as a
result of curtailments and lower merchant production in the coal
fleet resulting from additional wind resources supplying power to
the market and lower demand resulting from COVID-19 and reduced oil
production in the province in March.
- U.S. Coal: Comparable EBITDA returned to more normalized levels
in the three months ended March 31,
2020, increasing by $43
million compared to the same period in 2019, primarily due
to the impacts of an isolated and extreme pricing event in
March 2019 during which Centralia was unable to commit one of its
units to physical production for day-ahead supply due to an
unplanned forced outage repair. In addition, comparable EBITDA in
the first quarter of 2020 benefited from the strengthening of the
US dollar relative to the Canadian dollar.
- Canadian Gas: Comparable EBITDA for the three months ended
March 31, 2020, was consistent with
the same period in 2019, which was in line with expectations as the
impact of lower merchant production and revenue at Sarnia was largely offset by lower fuel costs.
Due to the nature of our contracts, changes in production do not
have a significant financial impact as our contracts are structured
as capacity payments with customer supplied fuel or a passthrough
of fuel costs.
- Australian Gas: Comparable EBITDA for the three months ended
March 31, 2020, was consistent with
the same period in 2019, as the weakening of the Australian dollar
relative to the Canadian dollar was offset by lower costs due to
cost-saving initiatives.
- Wind and Solar: Comparable EBITDA for the three months ended
March 31, 2020, increased by
$5 million compared with the same
period in 2019, primarily due to the timing of environmental
attributes sales, higher production, partially offset by lower
pricing in Alberta.
- Hydro: Comparable EBITDA for the three months ended
March 31, 2020, was consistent with
the same period in 2019, as higher Ancillary Services revenues were
offset by lower energy revenues and higher net payments relating to
the Alberta Hydro PPA.
- Energy Marketing: Comparable EBITDA for the three months ended
March 31, 2020, decreased by
$6 million compared to the same
period in 2019, which was in line with expectations as we had
particularly strong performance from the US Western desk in the
first quarter of 2019.
- Corporate: Our Corporate overhead costs for the three months
ended March 31, 2020, were
$29 million, an increase of
$22 million compared to $7 million in the same period in 2019, primarily
due to realized gains and losses from the total return swap. A
portion of the settlement cost of our share-based payment plans is
fixed by entering into total return swaps, which are cash settled
every quarter. In the three months ended March 31, 2020, we realized a loss of
$11 million from the total return
swap on our share-based payment plans, whereas in the same period
last year we realized a net gain of $13
million.
Consolidated Financial Highlights
Net earnings
attributable to common shareholders for the three months ended
March 31, 2020, was $27 million, compared to a loss of $65 million in the same period in the prior
year. Strong earnings from our US Coal and Wind and Solar segments
and a reduction in the Centralia
mine decommissioning provision due to changes in discount rates
were partially offset by higher Corporate OM&A costs, foreign
exchange losses due to the weakening of the Canadian dollar
relative to the US dollar and lower earnings attributable to
non-controlling interests.
Total sustaining capital expenditures of $29 million were $4
million higher compared to 2019 primarily due to higher
planned major maintenance in our coal segments.
First Quarter 2020 Highlights
In $CAD
millions, unless otherwise stated
|
3 Months
Ended
|
March 31,
2020
|
March 31,
2019
|
Adjusted availability
(%)(3)
|
92.8
|
%
|
89.4
|
%
|
Production (GWh)
(3)
|
6,486
|
|
8,125
|
|
Revenues
|
$
|
606
|
|
$
|
648
|
|
Fuel, carbon
compliance and purchased power
|
$
|
238
|
|
$
|
366
|
|
Operations,
maintenance and administration
|
$
|
128
|
|
$
|
104
|
|
Net earnings (loss)
attributable to common shareholders
|
$
|
27
|
|
$
|
(65)
|
|
Cash flow from
operating activities
|
$
|
214
|
|
$
|
82
|
|
Comparable
EBITDA(1)
|
$
|
220
|
|
$
|
221
|
|
Funds from
operations(1)
|
$
|
172
|
|
$
|
169
|
|
Free cash
flow(1)
|
$
|
109
|
|
$
|
95
|
|
Net earnings (loss)
per share attributable to common shareholders, basic and
diluted
|
$
|
0.10
|
|
$
|
(0.23)
|
|
Funds from operations
per share(1)
|
$
|
0.62
|
|
$
|
0.59
|
|
Free cash flow per
share(1)
|
$
|
0.39
|
|
$
|
0.33
|
|
Dividends declared
per common share
|
$
|
0.04
|
|
$
|
—
|
|
Dividends declared
per preferred share(4)
|
$
|
0.26
|
|
$
|
—
|
|
TransAlta is in the process of filing its unaudited interim
Consolidated Financial Statements and accompanying notes, as well
as the associated Management's Discussion & Analysis
("MD&A"). These documents will be available May 12, 2020 on the Investors section of
TransAlta's website at www.transalta.com or through SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.
Notes
(1)
|
These items are
not defined under IFRS. Presenting these items from period to
period provides management and investors with the ability to
evaluate earnings trends more readily in comparison with prior
periods' results. Refer to the Comparable EBITDA, Funds from
Operations and Free Cash Flow and Earnings and Other Measures on a
Comparable Basis sections of the Company's MD&A for further
discussion of these items, including, where applicable,
reconciliations to measures calculated in accordance with
IFRS.
|
(2)
|
Excludes payments
associated with finance leases.
|
(3)
|
Availability and
production includes all generating assets under generation
operations that we operate and finance leases and excludes hydro
assets and equity investments. Production includes all generating
assets, irrespective of investment vehicle and fuel
type.
|
(4)
|
Weighted average
of the Series A, B, C, E, and G preferred share dividends declared.
Dividends declared vary year over year due to timing of dividend
declarations.
|
Conference call
TransAlta will hold a conference call
and webcast at 9:00 a.m. MT
(11:00 a.m. ET) today, May 12, 2020, to discuss our first quarter 2020
results. The call will begin with a short address by Dawn Farrell, President and CEO, and
Todd Stack, Chief Financial
Officer, followed by a question and answer period for
investment analysts and investors. A question and answer period for
the media will immediately follow.
First Quarter 2020 Conference
Call:
Toll-free North American participants call:
1-888-231-8191
Webcast link:
https://produceredition.webcasts.com/starthere.jsp?ei=1306905&tp_key=62df091f51
Related materials will be available on the Investor Centre
section of TransAlta's website at
http://www.transalta.com/investors/events-and-presentations. If you
are unable to participate in the call, the instant replay is
accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code
1951906 followed by the # sign. A transcript of the broadcast will
be posted on TransAlta's website once it becomes available.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of
electrical power generation assets in Canada, the United
States and Australia with a
focus on long-term shareholder value. TransAlta provides
municipalities, medium and large industries, businesses and utility
customers with clean, affordable, energy efficient and reliable
power. Today, TransAlta is one of Canada's largest producers of wind power and
Alberta's largest producer of
hydro-electric power. For over 100 years, TransAlta has been a
responsible operator and a proud community-member where its
employees work and live. TransAlta aligns its corporate goals with
the UN Sustainable Development Goals and has been recognized
by CDP (formerly Climate Disclosure Project) as an industry leader
on Climate Change Management. TransAlta is proud to have achieved
the Silver level PAR (Progressive Aboriginal Relations) designation
by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at
transalta.com.
Cautionary Statement Regarding Forward Looking
Information
This news release contains forward looking statements,
including statements regarding the business and anticipated
financial performance of the Company that are based on the
Company's current expectations, estimates, projections and
assumptions in light of its experience and its perception of
historical trends. In some cases, forward-looking statements can be
identified by terminology such as "plans", "expects", "proposed",
"will", "anticipates", "develop", "continue", and similar
expressions suggesting future events or future performance. In
particular, this news release contains forward-looking statements,
pertaining to, without limitation, the following: the
potential impact of COVID-19 on the Company and the actions to be
undertaken by the Company in response to the COVID-19 pandemic;
entering into an agreement with NGTL for the sale of the Pioneer
Pipeline, including the terms and timing thereof; the commercial
operation date for the WindCharger battery project; the potential
repowering of Sundance Unit 5 and Keephills Unit 1 into combined
cycle units; the conversion of Sundance Unit 6 by the second half
of 2020; the conversion of Keephills Unit 2 and Unit 3, and the
timing thereof; the closing of the $400
million investment from Brookfield; access to additional capital
through potential project financing of existing assets that are
currently unencumbered; and sufficient liquidity to meet the
upcoming debt maturity due November
2020 and growth construction requirements. The
forward-looking statements contained in this news release are based
on many assumptions and are subject to a number of significant
risks and uncertainties that could cause actual plans, performance,
results or outcomes to differ materially from current expectations.
Factors that may adversely impact what is expressed or implied by
the forward-looking statements contained in this news release
include risks relating to the impact of COVID-19 and the associated
general economic downturn, the impact of which will largely depend
on the overall severity and duration of COVID-19 and the general
economic downturn, which cannot currently be predicted, and which
present risks including, but not limited to: more restrictive
directives of government and public health authorities; reduced
labour availability impacting our ability to continue to staff the
Company's operations and facilities; impacts on the Company's
ability to realize its growth goals; decreases in short-term and/or
long-term electricity demand and lower power pricing; increased
costs resulting from the Company's efforts to mitigate the impact
of COVID-19; deterioration of worldwide credit and financial
markets that could limit the Company's ability to obtain external
financing to fund its operations and growth expenditures; a higher
rate of losses on accounts receivables due to credit defaults;
further disruptions to the Company's supply chain; impairments
and/or write-downs of assets; and adverse impacts on the Company's
information technology systems and the Company's internal control
systems as a result of the need to increase remote work
arrangements, including increased cybersecurity threats.
Other factors that may adversely impact the Company's
forward-looking statements include, but are not limited to, risks
relating to: operational risks involving the Company's
facilities, including unplanned outages at such facilities;
disruptions in the transmission and distribution of electricity;
the effects of weather and other climate-related risks; disruptions
in the source of water, wind, solar or gas resources required to
operate our facilities; natural disasters; equipment failure and
our ability to carry out repairs in a cost-effective or timely
manner; and industry risks and competition. The foregoing
risk factors, among others, are described in further detail in the
Company's Management's Discussion and Analysis and Annual
Information Form for the year ended December
31, 2019, which are available on SEDAR at www.sedar.com.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect the Company's
expectations only as of the date of this news release. The purpose
of the financial outlooks contained in this news release are to
give the reader information about management's current expectations
and plans and readers are cautioned that such information may not
be appropriate for other purposes and is given as of the date of
this news release. The Company disclaims any intention or
obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
Note: All financial figures are in Canadian dollars unless
otherwise indicated.
View original
content:http://www.prnewswire.com/news-releases/transalta-reports-first-quarter-2020-results-and-reaffirms-2020-outlook-301057333.html
SOURCE TransAlta Corporation