Maxim Power Corp. (TSX:MXG) ("MAXIM" or "the Corporation")
announced today the release of financial and operating results for
its third quarter ended September 30, 2011. The unaudited financial
statements, accompanying notes and Management Discussion and
Analysis will be available on SEDAR on November 15, 2011 and on
MAXIM's website. All figures reported herein are Canadian dollars
unless otherwise stated.
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
September 30, September 30,
($ in thousands except
per share amounts) 2011 2010 2011 2010
Net revenue (1) $ 37,593 $ 31,123 $ 110,474 $ 114,555
Adjusted EBITDA (1) 13,445 6,466 27,038 29,703
Net income 17,787 108 16,871 24,882
Per share-basic and
diluted $ 0.33 $ 0.00 $ 0.31 $ 0.46
Funds from operations
(1) 13,135 5,609 27,313 24,569
Per share-basic and
diluted $ 0.24 $ 0.10 $ 0.51 $ 0.45
Electricity Deliveries
(MWh) 335,268 351,910 907,808 998,486
Net Generation Capacity
(MW) (2) 815 815 815 815
Average Alberta Prices
($ per MWh) $ 94.71 $ 35.69 $ 76.72 $ 52.37
Average Milner Realized
Electricity Price
($ per MWh) $ 95.41 $ 51.72 $ 76.91 $ 60.03
1. Select financial information was derived from the unaudited condensed
consolidated interim financial statements and is prepared in accordance
with IFRS, except net revenue, adjusted EBITDA and funds from operations
("FFO"). Net revenue is provided to highlight revenue net of any gains
or losses realized on commodity swaps. 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 income and expenses 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. Net revenue, adjusted EBITDA and FFO do
not have any standardized meaning prescribed by IFRS and may not be
comparable to similar measures presented by other companies. Refer to
'Non-IFRS measures' for reconciliations between non-IFRS financial
measures and comparable measures calculated in accordance with IFRS.
2. Generation capacity is manufacturer's nameplate capacity net of minority
ownership interests of third parties.
OPERATING RESULTS
Third quarter 2011 revenue, net of a realized loss on commodity
price swaps ("net revenue"), adjusted EBITDA, funds from
operations, and net income increased $6.5 million, $7.0 million,
$7.5 million, and $17.7 million, respectively, in comparison to the
same period of 2010. The improvement in these performance measures
reflects higher Alberta power prices during the quarter and the
impact of reselling coal that was surplus to Milner requirements.
Net income has increased by a greater amount than the other noted
key performance indicators due to unrealized gains on coal
remarketing and coal purchase agreements.
On a year to date basis, net revenue and adjusted EBITDA have
decreased $4.1 million and $2.7 million, respectively, when
compared to the same period of 2010. The negative movements in
these performance measures reflect the impact of low second quarter
power prices and generation volumes, which was partially offset by
higher Alberta power prices in the first and third quarters and by
higher earnings from MAXIM's US Northeast facilities in the first
quarter of the year.
Funds from operations for the nine months ended September 30,
2011 increased $2.7 million in comparison to the same period of the
prior year, when funds from operations was reduced by an
unfavourable non-recurring $4.2 million arbitration settlement
reached in May 2010. The remaining change in funds from operations
is a decrease of $1.5 million, which is due to the unfavourable
items noted above, partially offset by a decrease in taxes paid
during the period.
Net income of $16.9 million for the nine months ended September
30, 2011 represents an $8.0 million decrease in comparison to the
same period of 2010. The decrease is primarily due to a one-time
$22.6 million gain recognized in the first nine months of 2010 as a
result of MAXIM's amalgamation with EarthFirst Canada Inc. offset
by the $4.2 million arbitration settlement noted above. The
remaining change in net income is an increase of $10.4 million,
which is due to a gain on derivative coal contracts in the third
quarter of 2011, offset by the unfavourable factors noted above in
respect to net revenue and adjusted EBITDA variances, and by a
non-cash mark-to-market unrealized loss on floating for fixed
commodity swaps.
GROWTH INITIATIVES
Mine 14 ("M14")
MAXIM has extracted and tested unoxidized coal and prepared
detailed metallurgical specifications of the low volatile resource
to finalize the wash plant design. Construction activities are now
targeted to commence in early 2012 and MAXIM anticipates that M14
will be fully commissioned and producing coal in 2013. Various
options to finance M14 are still under evaluation.
Milner Expansion ("M2")
On August 10, 2011, the Alberta Utilities Commission ("AUC")
issued a final decision on MAXIM's application to construct and
operate a 500 MW Milner expansion project ("M2") adjacent to the
existing 150 MW Milner facility ("M1").
M2 has been under development by MAXIM since May 2005. A lengthy
public consultation and regulatory approval process culminated in
the project's approval by the AUC. M2 will utilize supercritical,
pulverized coal technology, making it one of the cleanest and most
fuel-efficient coal-fired power plants in Canada that can meet
Alberta's growing electric energy needs and allow for the orderly
retirement of a less efficient, less reliable and aging
conventional coal-fired fleet.
The M2 design incorporates emission control equipment capable of
achieving 60 to 80 percent reductions in sulphur dioxide, nitrogen
oxides and mercury compared to the conventional coal- fired power
plants still operating in Alberta. The highly efficient M2 design
will also reduce carbon dioxide emissions by 20% compared to these
existing plants. M2 is a reliable and low- cost generation supply
solution for Albertans that is entirely consistent with federal and
provincial goals for emissions reductions.
Deerland Peaking Station ("D1")
MAXIM has received all required regulatory approvals to
construct and operate the Deerland Peaking Station ("D1"), a 190 MW
natural gas-fired peaking facility that will be located in
Bruderheim, Alberta, immediately adjacent to the existing Deerland
high voltage substation in Alberta's industrial heartland. This
area is expected to experience significant growth in electrical
demand.
Subject to the conclusion of satisfactory commercial
arrangements necessary to support the investment, MAXIM will
initiate construction of this shovel-ready project.
Buffalo Atlee
The Buffalo Atlee Power Project, situated near Brooks, Alberta,
has the potential for over 200 MW of wind generation capacity. Wind
data has been collected on the 22,000 acre project site for the
last 5 years. 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 would
diversify MAXIM's generation fuel types.
France
COMAX France S.A.S. will be investing development capital of
$2.2 million dollars to repower certain cogeneration facilities and
add to its peaking fleet commencing in Q4 2011. The renovation will
result in the renewal of a 12 year Power Purchase Agreement ("PPA")
with Electricity de France ("EdF") at the cogeneration site. Comax
will be adding 7MW to its growing portfolio of peaking service
assets, that operate under eight year PPA's. Financing for 80% of
the cost of these investments has been committed by various banks
in France. COMAX continues to pursue growth opportunities through
acquisitions and renovations of existing assets.
GUIDANCE
In preparing its guidance, management uses Alberta forward
electricity prices as a proxy for actual future Alberta spot
electricity prices. The market for forward contracts is relatively
illiquid and forward prices may not be a good predictor of settled
prices as they may not factor in events such as unplanned outages,
which can cause a significant increase in settled power prices.
Notwithstanding, MAXIM prepares its guidance using forward
electricity prices from independent sources.
MAXIM is updating guidance issued on March 25, 2011 as
follows:
Guidance provided on
Select guidance KPI's March 25, 2011 Updated 2011 Guidance
----------------------------------------------------------------------------
Adjusted EBITDA(1) 37,972 37,185
Funds from operations(1) 34,853 37,941
Funds from operations per
share - basic and
diluted(1)(2) ($per share) 0.65 0.70
Net income (loss) 6,436 17,237
Net income (loss) per share
- basic and diluted(2) 0.12 0.32
----------------------------------------------------------------------------
1. Adjusted EBITDA and funds from operations are not measures
under IFRS and may not be comparable to similar measures presented
by other companies. Refer to 'Non-IFRS measures' for additional
detail.
2. Per share amounts are calculated using average weighted
shares outstanding consistent with the table below.
MAXIM is revising 2011 Guidance primarily due to an increase in
forecast net income from $6.4 million to $17.2 million. The $10.8
million increase is largely attributable to unrealized financial
derivative gains on MAXIM's long-term coal purchase contract and
coal remarketing agreements.
Forecast funds from operations has increased from $34.9 million
to $37.9 million. The increase relates primarily to the transition
from Canadian GAAP to IFRS during 2011. The cash flow statement
prepared as part of the March 25, 2011 Guidance classified finance
costs as an operating activity, whereas Updated Guidance has moved
such costs into investing activities in accordance with IFRS
presentation requirements. The financial derivative gains noted
above are non-cash items and do not impact funds from
operations.
Forecast adjusted EBITDA has fluctuated only $0.8 million from
2011 Guidance provided on March 25, 2011.
These projections are based on MAXIM's existing portfolio of
assets, do not include the impact of possible acquisitions or the
commercialization of development initiatives, and are based on the
following assumptions:
Guidance provided on Updated 2011
Guidance Assumptions March 25, 2011 Guidance
----------------------------------------------------------------------------
Electricity deliveries (MWh):
- HR Milner 1,016,791 776,461
- Other facilities 598,237 471,102
Net generation capacity at year
end (MW) 822 818
Capital expenditures (excluding
acquisitions):
- France repowering and peaking
facilities 16,922 7,511
- Development projects 1,693 4,164
- Other assets 1,871 2,207
- HR Milner 1,000 2,371
Average 2011 Alberta spot
electricity price ($/MWh) (1) 73.21 77.88
Average annual foreign exchange
rates:
- C$/USD 1.00 0.98
- C$/Euro 1.35 1.38
Weighted average shares
outstanding - basic and diluted
(000's) 54,033 54,065
----------------------------------------------------------------------------
1. The updated forecast average 2011 Alberta power price is based upon
January to September settled prices and forward wholesale prices.
The decrease in Milner generation from 1,016,791 MWh per March
25, 2011 Guidance to 776,461 MWh per Updated Guidance is a result
of reduced generation during periods of lower power prices during
the second quarter. The decrease in forecast generation at other
MAXIM facilities is attributable to reduced production from US
Northeast power plants, primarily due to less favourable weather
conditions than originally forecast.
Forecast capital expenditures have been decreased to reflect the
rescheduling of certain plant renovations in France, offset by
increased Mine 14 development activity and higher capital spending
during Milner's annual turnaround.
CONFERENCE CALL FOR Q3 2011 RESULTS
MAXIM will host a conference call for analysts and investors on
November 16, 2011 at 1:30 pm MT (3:30 pm 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 (877) 240-9772 or (416) 340-8527 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 3:30
pm MT (5:30 pm ET) on November 15, 2011 until November 30, 2011 at
9:59 pm MDT (11:59 pm ET). To access this replay, please dial (800)
408-3053 or (416) 694-9451 followed by the passcode 5535068. In
addition, the call will be available commencing November 16, 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, the United
States and France, having 809 MW of electric and 117 MW of thermal
net generating capacity. 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.
Contacts: Maxim Power Corp. John R. Bobenic President and CEO
(403) 263-3021 Maxim Power Corp. Michael R. Mayder Vice President,
Finance and CFO (403) 263-3021www.maximpowercorp.com
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