Maxim Power Corp. Announces Third Quarter 2011 Financial and Operating Results
November 14 2011 - 4:44PM
Marketwired Canada
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.
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