Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG)
announced today the release of financial and operating results for
its second quarter ended June 30, 2012. The unaudited financial
statements, accompanying notes and Management Discussion and
Analysis will be available on SEDAR and on MAXIM's website on
August 10, 2012. All figures reported herein are Canadian dollars
unless otherwise stated.
FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
June 30, June 30,
($ in thousands except per share
amounts) 2012 2011 2012 2011
Net revenue (1) $ 17,961 $ 17,884 $ 63,834 $ 72,881
Adjusted EBITDA (1) (1,313) (1,987) 8,647 13,833
Adjusted net income (loss) (1) (3,658) (3,990) 181 569
Net loss (8,991) (5,475) (6,090) (916)
Per share - basic and diluted $ (0.17) $ (0.10) $ (0.11) $ (0.02)
Funds from operations (1) (1,212) (2,124) 8,966 13,695
Per share - basic and diluted $ (0.02) $ (0.04) $ 0.17 $ 0.25
Electricity Deliveries (MWh) 153,372 180,535 480,015 572,540
Net Generation Capacity (MW) (2) 788 815 788 815
Average Alberta Power Prices ($
per MWh) $ 40.03 $ 51.90 $ 50.07 $ 66.88
Average Milner Realized
Electricity Price ($ per MWh) $ 66.60 $ 53.70 $ 60.37 $ 64.78
(1) Select financial information was derived from the unaudited
condensed consolidated interim financial statements and is prepared
in accordance with Part 1 of the Canadian Institute of Chartered
Accountants Handbook ("GAAP"), except net revenue, adjusted EBITDA,
adjusted net income (loss) 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, and
depreciation and amortization and certain other income and
expenses, adjusted net income is used to compare MAXIM's results
among reporting periods without consideration of unrealized gains
and losses and to evaluate MAXIM's performance 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,
adjusted net income and FFO do not have any standardized meaning
prescribed by GAAP and may not be comparable to similar measures
presented by other companies.
(2) Generation capacity is manufacturer's nameplate capacity net
of minority ownership interests of third parties.
OPERATING RESULTS
Net revenue, adjusted EBITDA, adjusted net income (loss) and
funds from operations increased in the second quarter of 2012 when
compared to the second quarter of 2011. The increase in these
financial measures is primarily due to higher generation and
pricing at MAXIM's Pittsfield facility in the Northeast US.
Adjusted EBITDA and funds from operations have also increased due
to fuel cost savings at the Milner facility in Alberta. These
increases have been partially offset by lower Alberta power prices
and a longer turnaround at Milner in 2012.
Net loss in the second quarter of 2012 was favorably affected by
the aforementioned factors, offset by an unrealized loss on a
derivative coal contract.
On a year to date basis, net revenue, adjusted EBITDA, adjusted
net income (loss), net loss, and funds from operations have
decreased from the prior year. The decrease in these financial
measures is primarily due to a decline in Alberta power prices
which impacted Milner results as well as lower generation in the
Northeast US. Net loss further decreased because of the previously
mentioned unrealized loss on a derivative coal contract, which was
partially offset by a gain from the sale of the APP facility.
GROWTH INITIATIVES AND NOTABLE EVENTS
Deerland Peaking Station ("D1")
MAXIM is actively pursuing commercial arrangements that will
allow for the construction of the 190 MW D1 Station to commence in
late 2012. MAXIM received regulatory approvals in 2008 to construct
and operate D1. The D1 site is located near Bruderheim in Alberta's
Industrial Heartland, and it is in close proximity to the entry
point of the proposed Gateway pipeline and adjacent to the existing
Deerland high voltage substation. This area is expected to
experience significant growth in electrical demand. D1 is the only
permitted peaking development project in the province of Alberta as
at the date of this press release. This project is attractive due
to an anticipated contraction of reliable base load supply in the
Alberta power market. As such, MAXIM expects peaking requirements
across Alberta to continue to grow to meet increasing demand and to
provide firm backup for additional intermittent wind resources.
During the second quarter of 2012, MAXIM entered into an agreement
to secure firm natural gas transportation services for D1.
Summit Coal Limited Partnership ("SUMMIT") Mine 14 Project
MAXIM is advancing the development of Mine 14, located north of
Grande Cache, Alberta, to realize value through the potential sale
of coal to metallurgical coal markets and potentially to augment
coal supply to Milner. During the second quarter of 2012, SUMMIT
acquired three additional coal leases, two of which are adjacent to
its existing Mine 14 lease. The new leases comprise 1,328 hectares,
which increases SUMMIT's lease holdings by 25% to 6,669 hectares.
SUMMIT is currently carrying out an exploration program to identify
additional Resources and Reserves on both its existing and recently
acquired leases.
The current Technical Report for Mine 14, issued on May 3, 2012
pursuant to National Instrument 43-101, does not include additional
coal that may be identified through the 2012 exploration program.
This report identifies Measured and Indicated Resources of 119.3
million tonnes and Inferred Resources of 154.0 million tonnes.
Proven and Probable Reserves, which are included in the Resource
estimate, are 18.7 million tonnes. Refer to the May 2012 Technical
Report on SEDAR (www.sedar.com), which was prepared by Golder
Associates. MAXIM anticipates that it will provide an updated
Technical Report during the fourth quarter of 2012 to incorporate
the findings of its 2012 exploration program.
SUMMIT has achieved certain key milestones essential to
commencing commercial operations of Mine 14. In 2011, the ERCB
granted the license to commence underground mining of the Mine 14
coal reserve. SUMMIT has firm terminal capacity and terminal
processing services to enable the majority of Mine 14's proposed
coal production to access the valuable seaborne coking coal market
commencing January 1, 2015. SUMMIT has also secured firm 2013
delivery dates for critical mining equipment, including continuous
miners and shuttle cars.
Milner Expansion ("M2")
On August 10, 2011, MAXIM received approval from the Alberta
Utilities Commission for its new 500 MW M2 project. MAXIM is
planning to construct and operate this new 500 MW generating
station on the site of, and adjacent to, the existing 150 MW Milner
generating station. 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. Advancing the
project is subject to pending Government of Canada regulations,
which are expected in the second half of 2012.
Buffalo Atlee ("B1")
MAXIM acquired the Buffalo Atlee Power Project ("B1"), 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 provide 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 available in the second half of 2012.
OUTLOOK
2012 Guidance
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 price from
independent sources.
Guidance is as follows:
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(in thousands of Canadian dollars, except as otherwise For the year ending
noted) December 31, 2012
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Adjusted EBITDA 34,300
Funds from operations 34,900
Funds from operations per share - basic and diluted ($
per share) 0.65
Adjusted net income 11,600
Adjusted net income per share - basic and diluted ($
per share) 0.21
Net income 6,100
Net income per share- basic and diluted ($ per share) 0.11
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The forecast 2012 results are based upon the following assumptions:
----------------------------------------------------------------------------
(in thousands of Canadian dollars, except as otherwise For the year ending
noted) December 31, 2012
----------------------------------------------------------------------------
Electricity deliveries (MWh):
HR Milner 722,227
Other facilities 532,942
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Total electricity deliveries 1,255,169
Net generation capacity at year end (MW) 796
Capital expenditures (excluding acquisitions):
France repowering and peaking facilities 9,300
Development projects 12,500
Other assets 3,400
HR Milner 1,600
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Total capital expenditures 26,800
Average Alberta spot electricity price ($/MWh) 64.80
Average annual foreign exchange rates:
C$/USD 1.00
C$/Euro 1.27
Weighted average shares outstanding - basic (000's) 54,084
Weighted average shares outstanding - diluted (000's) 54,086
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In addition to the above assumptions, the 2012 forecast assumes
all sales of Milner output at Alberta spot market prices. The 2012
average Alberta power price forecast of $64.80 per MWh is based
upon settled prices to the date of this MD&A and NGX forward
prices for the remaining balance of the period. The impact of a
$5/MWh increase/(decrease) in the NGX price for the remaining
balance of the period would result in a corresponding $900 thousand
increase/(decrease) in adjusted EBITDA and FFO and a $700 thousand
increase/(decrease) in adjusted net income and net income. Forecast
results include the assumption that MAXIM will continue its
development initiatives related to Deerland, Mine 14 and other
capital projects.
CONFERENCE CALL FOR SECOND QUARTER 2012 RESULTS
MAXIM will host a conference call for analysts and investors on
Tuesday August 14, 2012 at 11:00 am MDT. 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) 226-1798
or (416) 340-2218 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 August
14, 2012 to August 21, 2012. To access the replay, dial (800)
408-3053 or (905) 694-9451 followed by the passcode 4502310. In
addition, the webcast will be available commencing August 14, 2012
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 and power related projects.
MAXIM currently owns and operates 40 power plants in western
Canada, the United States and France, having 788 MW of electric and
111 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) 750-9300 Maxim Power Corp. Michael R. Mayder Vice President,
Finance and CFO (403) 750-9311
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