Maxim Power Corp. Announces Second Quarter 2010 Results
August 11 2010 - 6:46PM
Marketwired Canada
Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG) announced today that
it released its financial and operating results for the second quarter of 2010.
The unaudited consolidated financial statements, accompanying notes and
Management's Discussion and Analysis ("MD&A") will be available on SEDAR and
MAXIM's website on August 12, 2010. All figures reported herein are in Canadian
dollars unless otherwise stated.
FINANCIAL HIGHLIGHTS
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Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
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($ in thousands except per share
amounts)
Revenue $ 32,659 $ 18,856 $ 83,432 $ 74,132
Adjusted EBITDA (1) 10,345 713 22,275 18,148
Net income (loss) 385 (4,227) 1,683 776
Per share-basic and diluted $ 0.01 ($ 0.08) $ 0.03 $ 0.01
Funds from (used in) operations 4,193 (1,015) 15,645 10,209
Per share-basic and diluted $ 0.08 ($ 0.02) $ 0.29 $ 0.19
Electricity Deliveries (MWh) 261,960 199,778 646,595 532,112
Net Generation Capacity (MW)(2) 809 773 809 773
Average Alberta Prices ($ per MWh) $ 81 $ 32 $ 61 $ 48
Average Milner Realized Electricity
Price ($ per MWh) $ 93 $ 33 $ 64 $ 52
(1) Select financial information was derived from the unaudited interim
consolidated financial statements and is prepared in accordance with
Canadian generally accepted accounting principles ("GAAP"), except
Adjusted EBITDA and Funds from operations ("FFO"). Adjusted EBITDA
is provided to assist management and investors in determining the
Corporation's approximate operating cash flows before interest, income
taxes, and depreciation and amortization and FFO is provided to assist
management and investors in determining the Corporation's cash flows
generated by operations before the cash impact of working capital
fluctuations. Adjusted EBITDA and FFO do not have any standardized
meaning prescribed by Canadian GAAP and may not be comparable to similar
measures presented by other companies. Refer to Non-GAAP measures in
MAXIM's MD&A for reconciliations between non-GAAP financial measures and
comparable measures calculated in accordance with Canadian GAAP.
(2) Generation capacity is manufacturer's nameplate capacity net of minority
ownership interests of third parties.
OPERATING RESULTS
During the second quarter of 2010, MAXIM increased its electrical generation
from 199,778 MWh in 2009 to 261,960 in 2010, an increase of 31%, resulting from
the increased production from MAXIM's Northeast US power plants. During the
quarter the average power price realized at HR Milner facility ("Milner") was
$93 per MWh in 2010 compared to $33 per MWh in 2009 for an increase of $60 per
MWh. MAXIM also benefited from a $1.4 million gain on the sale of carbon dioxide
emission credits generated but not required at Milner. As a result, revenue for
the quarter increased $13.8 million or 73% from $18.9 million in 2009 to $32.7
million in 2010, Adjusted EBITDA increased $9.6 million to $10.3 million in 2010
compared to $0.7 million in 2009, and net income increased $4.6 million to $0.4
million in 2010 compared to a loss to $4.2 million in 2009.
On May 25, 2010, MAXIM received an arbitration decision relating to the dispute
between its wholly-owned subsidiary, Milner Power Limited Partnership ("MPLP"),
and Coal Valley Resources Inc. ("CVRI") regarding the price MPLP pays for coal
purchased from CVRI. To date, MPLP's supply of thermal coal to Milner has
primarily been sourced from a CVRI mine located in Hinton, Alberta. In July of
2008, MPLP exercised its option to extend the term of the coal supply agreement
for an additional five years expiring on December 31, 2013. CVRI was of the view
that they had the right to initiate a price review for the extended term and
requested the price for coal be increased above the price provided for under
escalation provisions of the agreement. An independent arbitrator was appointed
to consider the matter and rendered two concurrent decisions. The arbitrator
firstly decided that a price review was warranted and secondly established the
price that MPLP is to pay for coal purchased from CVRI effective February 1,
2009. Based on these prices, MPLP was required to pay an additional $5.6 million
for 2009 and $3.4 million for purchases of coal up to May 25, 2010. In addition
to the arbitrated amount, MPLP settled with CVRI a dispute related to under
delivery of coal during 2007 and 2008. As a result, CVRI was required to pay
$1.4 million to MPLP.
Increases over the first half of 2010 compared to 2009 in revenue, adjusted
EBITDA, and net income were primarily due to the increase in the average Milner
realized power price, $64 per MWh in 2010 compared to $52 per MWh in 2009, and
the increase in electrical generation in 2010 compared to 2009. Production for
the first half of 2010 totaled 646,595 MWh compared to 532,112 MWh in 2009
reflecting the increase in generation at MAXIM's Northeast US facilities.
GROWTH INITIATIVES
Mine 14 Project
During 2009, MAXIM obtained a permit to develop the Mine 14 coal leases and
commence commercial operations. MAXIM considers this resource to be valuable
both as a fuel source for its existing Milner facility, its planned Milner
Expansion, and for the sale of metallurgical coal commencing as early as Q4
2011. During the second quarter of 2010, MAXIM continued the evaluation of
options to advance the development and financing of Mine 14.
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 key commercial arrangements
have been concluded.
Milner Expansion
MAXIM continues to propose 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 late 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 over 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 five
years, expiring on January 1, 2016. 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 plans to advance the development of this project once greater clarity on
carbon policy is provided by the government.
2010 Guidance
MAXIM is confirming guidance issued on May 25, 2010 for projected 2010 Adjusted
EBITDA, Net Income and Funds from Operations.
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Guidance Provided
($000's, except per share amounts) on May 25, 2010
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Adjusted EBITDA (1) 40,000
Funds from operations (1) 30,900
Funds from operations per share - basic and diluted (1)(2) $ 0.57
Net income 4,500
Net income per share - basic and diluted (2) $ 0.08
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(1) The following measures are not measures 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.
-- Adjusted EBITDA is a measure of earnings before interest, taxes,
depreciation and amortization, and certain other expenses
-- Funds from operations is a measure of cash flow from operations
before working capital requirements
(2) Per share amounts are calculated using an estimated 54,030,000 average
weighted shares outstanding for 2010
MAXIM's results are significantly impacted by Alberta spot power prices. In
preparing its guidance, management uses Alberta forward electricity prices as a
proxy for expected future Alberta sport electricity prices. The market for
forward contracts is relatively illiquid and forward prices may not be a good
predictor of settled prices as they may not factor in events such as unplanned
outages that can cause a significant increase in settled power prices.
Notwithstanding, MAXIM prepares its guidance using forward electricity prices
from independent sources. The above guidance incorporates an average 2010
Alberta power price of $59.07 per MWh.
Forward-Looking Information
Certain information in this press release is forward-looking and is subject to
important risks and uncertainties. The results or events predicted in this
information including the aforementioned guidance for 2010 and prospects
relating to capitalization and operation of Mine 14 may differ materially from
actual results or events. Factors which could cause actual results or events to
differ materially from current expectations include the ability of the
Corporation to implement its strategic initiatives, the availability and price
of energy commodities, government and regulatory decisions, plant availability,
competitive factors in the power industry and prevailing economic conditions in
the regions that the Corporation operates. Forward-looking statements are often,
but not always, identified by the use of words such as "anticipate", "expected",
"plan", "estimate", "may", "project", "predict", "potential", "could", "might",
"should" and other similar expressions. The Corporation disclaims any intention
or obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise except as required
pursuant to applicable securities laws.
Readers are cautioned that management's expectations, estimates, projections and
assumptions used in the preparation of such information, although considered
reasonable at the time or preparation, may prove to be imprecise and, as such,
undue reliance should not be placed on forward-looking statements.
RESIGNATION OF MR. WILLIAM GALLACHER
On August 11, 2010 MAXIM's Board of Directors accepted the resignation of Mr.
William (Bill) Gallacher from the Company's board of directors. Mr. Gallacher
has served as an independent director since 2000. MAXIM's board, employees and
shareholders thank Mr. Gallacher for his service and wish him all the best in
his ongoing endeavors.
CONFERENCE CALL FOR SECOND QUARTER 2010 RESULTS
MAXIM will host a conference call for analysts and investors on August 24, 2010
at 9:00 a.m. MT (11:00 a.m. ET). The call will be hosted by John R. Bobenic,
MAXIM's President and Chief Executive Officer and Michael R. Mayder, MAXIM's
Vice President, Finance and Chief Financial Officer.
To participate in this conference call, please dial (877) 240-9772 or (416)
340-8530 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 2:00 p.m. MT (4:00
p.m. ET) on August 24, 2010 until September 2, 2010 at 9:59 p.m. MT (11:59 p.m.
ET). To access this replay, please dial (800) 408-3053 or (416) 695-5800
followed by the passcode 8215413. In addition, the webcast will be available 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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