Maxim Power Corp. (TSX:MXG) ("MAXIM" or the "Corporation") announced today the
release of financial and operating results for its fourth quarter and year ended
December 31, 2009. The audited financial statements, accompanying notes and
Management Discussion and Analysis will be available on SEDAR on March 25, 2010
and on MAXIM's website. All figures reported herein are Canadian dollars unless
otherwise stated.
FINANCIAL HIGHLIGHTS
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Three Months Ended Twelve Months Ended
($ in thousands except per December 31 December 31
share amounts) 2009 2008 2009 2008
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Revenue $ 41,977 $ 53,429 $ 143,737 $ 146,682
EBITDA (1) 8,177 18,251 33,019 39,387
Net income 505 7,520 2,129 11,312
Per share basic and
diluted $ 0.01 $ 0.15 $ 0.04 $ 0.23
Cash provided by operations 14,902 14,225 38,789 27,177
Per share basic and
diluted $ 0.28 $ 0.26 $ 0.72 $ 0.55
Electricity Deliveries (MWh) 365,221 311,809 1,226,634 1,005,172
Net Generation Capacity (MW)
(2) 788 758 788 758
Average Alberta Power Prices
($ per MWh) $ 46 $ 95 $ 48 $ 90
(1) EBITDA is earnings before interest, taxes, depreciation and
amortization and is not a measure under Canadian Generally Accepted
Accounting Principles ("GAAP") and may not be comparable to similar
measures presented by other companies. Refer to Non-GAAP measures
section of the MD&A for an explanation and reconciliation.
(2) Generation capacity is manufacturer's nameplate capacity net of
minority ownership interests of third parties.
OPERATING RESULTS
MAXIM generated a record 1,226,634 MWh in 2009 compared to 1,005,172 MWh in
2008, which is an increase of 221,462 MWh or 22.0%. Revenue for 2009 decreased
$2.9 million or 2.0% to $143.7 million over 2008 revenue of $146.7 million as a
result of the lower average Alberta power price realized at HR Milner in 2009 of
$51 compared to $86 in 2008. The decrease in average power price was partially
offset by a full year of results of the Forked River, Pittsfield, and two
cogeneration facilities in France acquired in 2008.
Accordingly, earnings before interest, taxes, depreciation and amortization
(refer to Non-GAAP measures - "EBITDA" in the MD&A), decreased $6.4 million to
$33.0 million in 2009 from $39.4 million in 2008, net income was $2.1 million
compared to 2008 of $11.3 million. Offsetting this was an increase in cash flow
from operations of $11.6 million to $38.8 million compared to $27.2 million in
2008 as a result of the change in working capital balances.
During the fourth quarter of 2009, MAXIM generated revenue of $42.0 million
compared to $53.4 million for 2008 and EBITDA was $8.2 million compared to $18.3
million in 2008 primarily due to the lower average Alberta power prices. The
lower prices were partially offset by total production for the fourth quarter of
365,221 MWh compared to 311,809 MWh in 2008. Milner produced record quarterly
generation of 290,737 MWh during the fourth quarter of 2009 compared to 242,601
MWh for the same period in 2008. Alberta power prices averaged $46 per MWh in
the fourth quarter of 2009 versus $95 per MWh in the fourth quarter of 2008.
During 2009, MAXIM entered into an arrangement agreement to amalgamate with
EarthFirst Canada Inc. ("EarthFirst"). All conditions were satisfied and the
amalgamation closed on March 2, 2010, for a total investment of $5.9 million
plus closing costs. The amalgamation provides MAXIM with a strategic development
opportunity, the Buffalo Atlee Power Project, which has the potential for over
200 MW of wind generation capacity along with $117.4 million in Canadian tax
pools related to the power business.
MAXIM's wholly-owned French subsidiary, Comax France SAS ("COMAX"), acquired the
Sebi and Chabossiere cogeneration facilities on February 27, 2009 and repowered
these facilities for a cost of EUR 6.2 million. These acquisitions subsequent to
repowering add an additional 11 MW of electrical capacity and 12 MW of thermal
capacity which became operational in November 2009.
During 2009, COMAX entered into several loan and capital lease agreements with
French banks for total financing of EUR 15.9 million. At December 31, 2009, EUR
10.2 million had been drawn on the new loans and leases, with funds used to
finance the repowering of the Sebi and Chabossiere facilities, acquire and
renovate facilities and sites. Undrawn amounts will be used to complete plant
renovations during the first half of 2010. Of the new debt, EUR 7.2 million
bears interest at the three month EURIBOR plus fees ranging from 2.21% to 2.43%,
while the remaining EUR 6.4 million bears interest at fixed rates ranging from
4.40% to 5.10%. Maturity dates on the loans range from 2012 to 2021.
On June 11, MAXIM amended its existing credit agreement with the Bank of
Montreal ("BMO"). The amendment provides for term debt financing of $35 million,
$28.6 million of which was drawn on closing, a $10.0 million revolving facility
for general corporate purposes, and a $3.5 million risk management facility. On
September 10, 2009, MAXIM drew the remaining $6.4 million under the term
facility in order to support MAXIM's capital requirements.
During 2009, COMAX advanced its initiative to sell electrical generating
capacity commencing in 2010. On February 22, 2010, COMAX entered into power
purchase agreements ("PPA's") to provide 74 MW of electrical generating capacity
to Electricite de France for a term of eight years. This service is being
provided through ten distributed generation sites, five of which represent new
sites acquired for this purpose and five of which are existing power plants
being adapted for this purpose. The total investment is Cdn. $10 million, of
which $9.6 million or 96% is being provided by a number of French banks, and the
remaining $400 thousand or 4% is being provided by cash on hand. Work will be
carried out through the spring of 2010 to reconfigure equipment at certain sites
for commercial operations to commence on July 1, 2010.
GROWTH INITIATIVES
Mine 14 Project
MAXIM obtained approval of the Energy Resources Conservation Board ("ERCB") and
authorization of the Lieutenant Governor in Council for the permit to develop
the Milner No. 14 coal mine and a license to commence commercial operations.
Development of the mine is expected to commence once key commercial arrangements
necessary to support development have been concluded.
Deerland Peaking Station
As previously announced, MAXIM has received regulatory approvals from the
Alberta Utilities Commission and Alberta Environment to construct and operate
the Deerland Peaking Station, a 190 MW natural gas-fired peaking facility. The
station is to be located immediately adjacent to the existing Deerland high
voltage substation in Alberta's industrial heartland, an area expected to
experience significant growth in electrical demand. Construction of the facility
is expected to take approximately twelve months once the key commercial
arrangements necessary to support construction have been concluded. MAXIM
anticipates that it will be able to conclude these arrangements with improved
market heat rates.
Milner Expansion
In January 2009 MAXIM submitted applications to the Alberta Utilities Commission
and Alberta Environment to construct and operate a 500 MW coal-fired generation
facility adjacent to its existing Milner facility. The regulatory review process
has commenced and is expected to conclude in 2010.
Buffalo Atlee
MAXIM acquired the Buffalo Atlee Power Project ("Buffalo Atlee"), situated near
Brooks, Alberta, through an amalgamation with EarthFirst Canada Inc. This
project has the potential for development of 200 MW of wind generation capacity.
Wind data has been collected on the site for approximately four years and
Buffalo Atlee holds an exploratory Crown land permit with a term of four years,
expiring on January 1, 2011. MAXIM intends to renew the land permit upon its
expiry. The addition of wind generation to MAXIM's existing portfolio of assets
will diversify MAXIM's generation fuel types and provides the potential to
offset the impact of proposed carbon legislation. MAXIM intends to further
investigate the economic feasibility of developing this project following the
amalgamation with EarthFirst Canada Inc.
OUTLOOK
2009 Guidance
MAXIM provided updated guidance for its projected 2009 results on November 12,
2009. This guidance was based on MAXIM's existing portfolio of assets and
therefore did not include the impact of possible acquisitions or
commercialization of development initiatives. The primary driver of differences
between guidance and actual results are lower Alberta power prices, which
averaged $48 per MWh for 2009 versus the forecast price of $52 per MWh.
Maxim Power Corp. 2009 Guidance and Results
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Recorded at
($000's, except per Guidance on December 31,
share amounts) November 12, 2009 2009 Difference
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EBITDA (refer to
non-GAAP measures) 39,000 33,019 (5,981)
Net income 5,900 2,129 (3,771)
Per share - basic
and diluted $ 0.11 $ 0.04 $ (0.07)
Cash provided by
operations 34,000 38,789 4,789
Per share - basic
and diluted $ 0.63 $ 0.72 $ 0.09
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EBITDA for 2009 was $33.0 million, which is $6.0 million or 15% lower than
guidance of $39 million. Lower EBITDA is primarily attributable to lower revenue
earned than forecast due to lower than anticipated Alberta power pool prices.
Fourth quarter Alberta power prices averaged $46 per MWh compared to the
forecast price of $53 per MWh.
MAXIM recorded net income of $2.1 million in 2009, which was $3.8 million lower
than guidance of $5.9 million. Lower net income is primarily attributable to
lower power prices than anticipated.
Cash provided by operations was $38.8 million or $4.8 million higher than
guidance of $34.0 million. Higher cash provided by operations was the result of
working capital fluctuations due to collection of accounts receivable partially
offset by the decrease in cash inflows related to lower fourth quarter revenue.
The 2009 guidance was based on the following assumptions and is compared to
results recorded at December 31, 2009.
Maxim Power Corp. 2009 Assumptions for Guidance and Results
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Guidance on
($000's, except as November 12, Recorded at Difference
otherwise noted) 2009(1) December 31, 2009
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Electricity
deliveries (MWh) 1,276,000 1,226,634 (49,366)
Net generation
capacity at year
ending (MW) 788 788 -
Capital
expenditures
(excluding
acquisitions)
HR Milner 8,000 8,516 516
Other assets 3,000 3,204 204
Development
projects 2,000 1,692 (308)
France facilities -
investment and
financing
Acquire and
repower 24,700 21,698 (3,002)
Financing (23,400) (15,871) 7,529
Net France
facilities 1,300 5,827 4,527
Average Alberta
spot electricity
price $ 52.00 $ 47.85 $ 4.15
Average annual
foreign exchange
rates
C$/USD $ 1.15 $ 1.14 $ (0.01)
C$/Euro $ 1.50 $ 1.59 $ 0.09
Weighted average
shares outstanding
(000's) 54,182 54,181 (1)
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(1) Unchanged from previously updated 2009 guidance provided on August 13,
2009.
2010 Guidance
MAXIM intends to provide 2010 Guidance with the release of its Q1, 2010 results.
CONFERENCE CALL FOR 2009 RESULTS
MAXIM will host a conference call for analysts and investors on Tuesday, March
30, 2010 at 10:00 a.m. MT (12:00 p.m. ET). The call will be hosted by John
Bobenic, MAXIM's President and Chief Executive Officer, and by Mike Mayder, Vice
President, Finance and Chief Financial Officer. To participate in this
conference call, please dial (866) 226-1792 or (416) 340-2216 in the Toronto
area. It is recommended that participants call at least ten minutes prior to
start time.
A recording of the conference call will be available from 1:00 p.m. MT (3:00
p.m. EDT) on March 30, 2010 until April 6, 2010 at 9:59 p.m. MDT (11:59 p.m.
ET). To access this replay, please dial (800) 408-3053 or (416) 695-5800
followed by the passcode 3376050. In addition, the webcast will be available
commencing March 31, 2010 in the Investor Relations section of MAXIM's web site
at www.maximpowercorp.com.
About MAXIM
Based in Calgary, Alberta, MAXIM is an independent power producer, which
acquires or develops, owns and operates innovative and environmentally
responsible power projects. MAXIM currently owns and operates 44 power plants in
western Canada, United States and France, having 809 MW of electric and 117 MW
of thermal net generating capacity. Approximately 80% of MAXIM's current
portfolio is comprised of clean burning natural gas, high efficiency
cogeneration, waste heat and landfill gas fuelled generation. MAXIM trades on
the TSX under the symbol "MXG". For more information about MAXIM, visit our
website at www.maximpowercorp.com.
Statements in this release which describe MAXIM's intentions, expectations or
predictions, or which relate to matters that are not historical facts are
forward-looking statements. These forward-looking statements involve known and
unknown risks and uncertainties which may cause the actual results, performances
or achievements of MAXIM to be materially different from any future results,
performances or achievements expressed in or implied by such forward-looking
statements. MAXIM may update or revise any forward-looking statements, whether
as a result of new information, future events or changing market and business
conditions and will update such forward looking statements as required pursuant
to applicable securities laws.
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