Maxim Power Corp. Announces 2010 Financial and Operating Results
March 25 2011 - 5:55PM
Marketwired Canada
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, 2010. The audited financial statements, accompanying notes and
Management Discussion and Analysis will be available on SEDAR on March 28, 2011
and on MAXIM's website. All figures reported herein are Canadian dollars unless
otherwise stated.
FINANCIAL HIGHLIGHTS
Three Months Ended Twelve Months Ended
December 31 December 31
($ in thousands except per
share amounts) 2010 2009 2010 2009
Revenue $ 36,694 $ 41,977 $ 151,249 $ 143,737
Adjusted EBITDA (1) 5,564 8,177 33,879 33,019
Net income (416) 505 1,128 2,129
Per share basic and diluted $ (0.01) $ 0.01 $ 0.02 $ 0.04
Funds from operations (1) 4,702 7,084 25,872 23,724
Per share basic and diluted $ 0.08 $ 0.13 $ 0.48 $ 0.44
Electricity Deliveries (MWh) 323,551 365,221 1,322,037 1,226,634
Net Generation Capacity (MW)
(2) 809 788 809 788
Average Alberta Power Prices
($ per MWh) $ 46 $ 46 $ 51 $ 48
(1) Select financial information was derived from the audited 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 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
MAXIM generated a record 1,322,037 MWh in 2010 compared to 1,226,634 MWh in
2009, which is an increase of 95,403 MWh or 7.8%. Revenue for 2010 increased
$7.5 million or 5.2% to $151.2 million over 2009 revenue of $143.7 million
attributable primarily to increased dispatches in the US Northeast where high
summer temperatures resulted in increased electricity demand.
Adjusted earnings before interest, taxes, depreciation and amortization (refer
to Non-GAAP measures - "Adjusted EBITDA" in the MD&A), increased $0.9 million to
$33.9 million in 2010 from $33.0 million in 2009. Funds from operations
increased by $2.1 million to $25.9 million in 2010. Net income for 2010 was $1.1
million compared to 2009 of $2.1 million. These amounts were adversely affected
by the unfavourable CVRI arbitration award in 2010.
During the fourth quarter of 2010, MAXIM earned revenue of $36.7 million
compared to $42.0 million for 2009 and Adjusted EBITDA was $5.6 million compared
to $8.2 million in 2009 due to lower production in Alberta and France and higher
coal prices, partially offset by an increase in revenues in the US. Fourth
quarter 2010 production decreased 41,670 MWh or 11% to 323,551 MWh compared to
365,221 MWh during the same quarter of 2009. The decrease is primarily due to a
31% or 89,581 MWh decrease at Milner, which was idled for extended periods at
certain times during the quarter when spot prices fell below the facility's
marginal costs. The decrease in Milner generation was largely offset by an
increase from the US segment. During the fourth quarter of 2010, MAXIM's US
plants generated more than twelve times the electricity they had produced in the
same quarter of 2009, which was a result of the end of the Pittsfield facility's
RMR contract in May 2010, along with increased demand in the ISO-NE marketplace.
On March 2, 2010, MAXIM amalgamated with EarthFirst Canada Inc. for a total
investment of $7.2 million. 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. The transaction also
provides MAXIM with $117.4 million in Canadian tax pools related to the power
business.
MAXIM's wholly-owned French subsidiary, Comax France SAS ("COMAX"), entered into
power purchase agreements to provide 74 MW of electrical peaking services to
Electricite de France for a term of eight years. During 2010, COMAX added to its
growing portfolio of peaking service assets by purchasing an additional power
project site. A portion of the contracted capacity began commercial operations
in December 2010, with the remainder scheduled to come online over the first and
second quarters of 2011.
GROWTH INITIATIVES
HR Milner Life Extension
MAXIM has entered into an agreement whereby MAXIM can operate the Milner
generating facility indefinitely. MAXIM is no longer required to cease
operations of the facility by December 31, 2015. MAXIM has assumed the
obligation to reclaim the site upon the eventual decommissioning of the power
plant, the cost of which will be financed in part by $15 million currently held
in trust for this purpose with the remainder funded by MAXIM. MAXIM has posted
security of $3 million for the estimated cost of remediation in excess of the
funds already held in trust. The amount of security will be reviewed annually
and will be adjusted if the obligation changes. MAXIM considers the Milner site
to be a strategic development site for generation facilities given its proximity
to transmission lines, water, natural gas lines, and coal resources.
Mine 14
Mine 14 represents a valuable metallurgical coal resource and source of fuel for
Milner. This site has 13 million tonnes of recoverable metallurgical coal and it
is estimated that the by-product from processing this coal is sufficient to
satisfy fuel requirements of the existing Milner generating facility for 10
years. MAXIM obtained approval in 2009 from the Energy Resources Conservation
Board ("ERCB") and authorization from the Lieutenant Governor in Council for the
permit to develop Mine 14 and a license to commence commercial operations.
Milner Expansion
MAXIM is proposing to develop a new generating facility at the existing Milner
location with the addition of 500 MW of clean coal-fired generating capacity.
The Environmental Impact Assessment for the project was deemed complete by
Alberta Environment on November 24, 2010, allowing the project to progress to
the final regulatory phase. The regulatory review process has commenced and is
expected to conclude in the second quarter of 2011.
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. MAXIM expects peaking
requirements to continue to grow to meet overall demand growth and to provide
firm backup for additional intermittent wind resources. Arrangements are subject
to improving power prices and market heat rates. Construction of the facility is
expected to take approximately twelve months once key commercial arrangements
have been concluded.
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. MAXIM 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.
OUTLOOK
2011 Guidance
MAXIM is providing the following guidance for 2011. 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 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. Notwithstanding, MAXIM prepares its guidance using
forward electricity prices from independent sources.
MAXIM 2011 Guidance is as follows:
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For the year
ending December
($000's, except per share amounts) 31, 2011
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Adjusted EBITDA (1) 37,972
Funds from operations (1) 34,853
Funds from operations per share - basic and diluted (1) (2) $ 0.65
Net income (loss) 6,436
Net income per share - basic and diluted (2) $ 0.12
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The forecast 2011 results are based upon the following assumptions:
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For the year
ending December
($000's, except as otherwise noted) 31, 2011
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Electricity deliveries (MWh)
HR Milner 1,016,791
Other facilities 598,237
Net generation capacity at year end (MW) 822
Capital expenditures (excluding acquisitions)
France repowering and peaking facilities 16,922
Development projects 1,693
Other assets 1,871
HR Milner 1,000
Average 2011 Alberta spot electricity price ($/MWh) $ 73.21
Average annual foreign exchange rates
C$/USD $ 1.00
C$/Euro $ 1.35
Weighted average shares outstanding (000's) 54,033
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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 MAXIM's MD&A
dated March 25, 2011 for a reconciliation of these non-GAAP measures.
-- 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
In addition to the above assumptions, the 2011 forecast assumes all sales of
Milner output at Alberta spot market prices, with the exception of an average of
72 MW sold at contracted prices during the first quarter.
The forecast average 2011 Alberta power price of $73.21 per MWh is based upon
settled prices to date and forward wholesale prices. Average Alberta power
prices are forecast to settle higher in 2011 than in 2010 as a result of recent
occurrences in the Alberta marketplace, including the potential permanent
retirement of Sundance units #1 and #2 (576 MW total) and extended unplanned
outages of other natural gas fired power facilities. The positive impact of
these generation outages on first and second quarter 2011 power prices will be
partially offset by the anticipated commissioning of the Keephills #3 generating
station (450 MW) in the third quarter of 2011.
The forecast also assumes turnaround maintenance at Milner will occur during the
second quarter and will last 21 days. Forecast results include the assumption
that MAXIM will continue its development initiatives related to Mine 14, the
Milner expansion, and other projects and do not include the impact of any
acquisitions or the monetization of Mine 14. An increase in net generation
capacity is based upon the assumption that all planned France peaking plants
will be in service by December 31, 2011.
CONFERENCE CALL FOR 2010 RESULTS
MAXIM will host a conference call for analysts and investors on April 5, 2011 at
9:00 am MT. 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)
223-7781 or (416) 340-8018 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 April 5 to April 12,
2011. To access the replay dial (800) 408-3053 or (905) 694-9451 followed by the
passcode 1133684. In addition, the webcast will be available commencing April 6,
2011 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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