Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG) announced today that
it released its financial and operating results for the third 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 November 16, 2010. All figures reported herein are in
Canadian dollars unless otherwise stated.
FINANCIAL HIGHLIGHTS
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Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
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($ in thousands except per share
amounts)
Revenue $ 31,123 $ 27,628 $114,555 $101,761
Adjusted EBITDA (1) 6,058 6,696 28,332 24,844
Net income (loss) (139) 848 1,544 1,624
Per share-basic and diluted $ (0.00) $ 0.02 $ 0.03 $ 0.03
Funds from (used in) operations 5,532 6,430 21,170 16,639
Per share-basic and diluted $ 0.10 $ 0.12 $ 0.39 $ 0.31
Electricity Deliveries (MWh) 351,910 329,301 998,487 861,413
Net Generation Capacity (MW) (2) 809 778 809 778
Average Alberta Prices ($ per MWh) $ 36 $ 50 $ 52 $ 48
Average Milner Realized Electricity
Price ($ per MWh) $ 52 $ 50 $ 60 $ 51
(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, depreciation and amortization and certain other non-recurring
items 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 third quarter of 2010, MAXIM increased its electrical generation from
329,301 MWh in 2009 to 351,910 in 2010, an increase of 7%, 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 $52 per
MWh in 2010 compared to $50 per MWh in 2009 for an increase of $2 per MWh. As a
result, revenue for the quarter increased $3.5 million or 13% from $27.6 million
in 2009 to $31.1 million in 2010. Adjusted EBITDA decreased $0.6 million to $6.1
million in 2010 compared to $6.7 million in 2009 and net income decreased $1.0
million to a loss of $0.1 million in 2010 compared to income of $0.9 million in
2009 resulting primarily from reduced margins at Milner due to the arbitration
award on May 25, 2010 that resulted in an increase in coal costs in excess of
inflation.
Increases over the first nine months of 2010 compared to 2009 in revenue and
adjusted EBITDA were primarily due to the increase in the average Milner
realized power price, $60 per MWh in 2010 compared to $51 per MWh in 2009, and
the increase in electrical generation in 2010 compared to 2009. Production for
the first nine months of 2010 totaled 998,487 MWh compared to 861,413 MWh in
2009 due to the increased generation at MAXIM's northeast US facilities. MAXIM
also benefited from a $1.4 million gain on the sale of carbon dioxide emission
credits generated but not required at Milner.
GROWTH INITIATIVES
Mine 14 Project
During 2010, MAXIM initiated a process to sell its interest in Mine 14.
Management has commissioned a plan to sell the asset and has engaged a third
party to assist in completing the process. MAXIM anticipates the sale to be
completed within the next three to six months.
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 early 2011. Development
is contingent upon higher Alberta power prices.
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 supports project development based on higher power prices than those
realized during recent months. 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 updating guidance issued on May 25, 2010:
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Guidance Provided Updated 2010
($000's, except per share amounts) on May 25, 2010 Guidance
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Adjusted EBITDA (1) 40,000 31,000
Funds from operations (1) 30,900 23,000
Funds from operations per share - basic
and diluted (1) (2) $ 0.57 $ 0.43
Net income (loss) 4,500 (2,000)
Net income per share - basic and diluted (2) $ 0.08 $ (0.04)
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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.
- 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 average weighted shares
outstanding consistent with the table below
These projections are based on MAXIM's existing portfolio of assets, do not
include the impact of possible acquisitions or commercialization of development
initiatives, for the sale of the Corporations interest in Mine 14, and are based
on the following assumptions:
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Guidance Provided Updated 2010
($000's, except as otherwise noted) on May 25, 2010 Guidance
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Electricity deliveries (MWh) 1,341,900 1,326,100
HR Milner 961,100 880,800
Other facilities 380,800 445,300
Net generation capacity at year ending (MW) 809 809
Capital expenditures (excluding acquisitions)
France repowering and peaking facilities 7,300 6,800
Development projects 3,500 2,200
Other assets 2,100 2,000
HR Milner 1,200 1,900
Average 2010 Alberta spot electricity price
($/MWh) $ 64.00 $ 49.34
Average annual foreign exchange rates
C$/USD $ 1.01 $ 1.03
C$/Euro $ 1.36 $ 1.43
Weighted average shares outstanding (000's) 54,030 54,035
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Adjusted EBITDA forecast for 2010 decreases $9 million, from $40 million per
guidance provided on May 25, 2010 to $31 million per updated guidance. This
decrease is primarily attributable to the lower than estimated Alberta power
prices experienced during the majority of 2010. Funds from operations and net
income forecast for 2010 decrease from $30.9 million and $4.5 million,
respectively, from May 25, 2010 guidance to $23.0 million and to a loss of $2.0
million, respectively, per revised guidance.
MAXIM anticipates that the unfavorable impact to its overall cash position from
lower Alberta power prices and the aforementioned arbitration award will be
mitigated by the monetization of MAXIM's Mine 14 coal leases. On December 2,
2009, the Alberta Energy Resources Conservation Board ("ERCB") granted Milner a
permit to develop the underground coal mine referred to by the Corporation as
Mine 14. Mine 14 is to be located north of Grande Cache, Alberta and is
estimated to contain 13 million recoverable tonnes of high quality metallurgical
coal. (Refer to Technical Report on The No. 14 Mine Project filed on SEDAR on
March 22, 2005.) MAXIM has held discussions with numerous counterparties to
advance the Corporation's goal of identifying the highest value commercial use
for Mine 14 and is significantly advanced in its process to realize value from
this resource. MAXIM anticipates that it will close a transaction with one of
the counterparties within the next six months.
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 spot 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. The above
guidance incorporates an average 2010 Alberta power price of $49 per MWh, versus
$64 per MWh as incorporated in the May 25, 2010 guidance.
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 of preparation, may prove to be imprecise and, as such,
undue reliance should not be placed on forward-looking statements.
CONFERENCE CALL FOR THIRD QUARTER 2010 RESULTS
MAXIM will host a conference call for analysts and investors on November 18,
2010 at 11:00 a.m. MT (1:00 p.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 (800) 952-6845 or (416)
695-6622 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 November 18, 2010 until November 25, 2010 at 9:59 p.m. MT (11:59
p.m. ET). To access this replay, please dial (800) 408-3053 or (905) 694-9451
followed by the passcode 8838246. In addition, the recording will be available
in the Investor Relations section of MAXIM's website 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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