Maxim Power Corp. Announces 2012 Third Quarter Financial and Operating Results
November 08 2012 - 6:17PM
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, 2012. The unaudited financial statements, accompanying notes and Management
Discussion and Analysis will be available on SEDAR and on MAXIM's website on
November 9, 2012. 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) 2012 2011 2012 2011
Net revenue (1) $ 41,620 $ 37,593 $ 105,454 $ 110,474
Adjusted EBITDA (1) 16,612 13,690 25,259 27,523
Adjusted net income (1) 9,765 5,404 9,946 5,973
Net income 8,343 17,787 2,253 16,871
Per share - basic and
diluted $ 0.15 $ 0.33 $ 0.04 $ 0.31
Funds from operations
(2) 16,700 13,618 25,666 27,313
Per share - basic and
diluted $ 0.31 $ 0.24 $ 0.47 $ 0.50
Electricity Deliveries
(MWh) 354,976 335,268 834,992 907,808
Net Generation Capacity
(MW) (3) 788 809 788 809
Average Alberta Power
Prices ($ per MWh) $ 78.09 $ 94.69 $ 59.48 $ 76.26
Average Milner Realized
Electricity Price
($ per MWh) $ 134.70 $ 95.41 $ 87.48 $ 76.91
(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, and adjusted net income. 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, and 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. Net revenue, adjusted
EBITDA, and adjusted net income do not have any standardized meaning
prescribed by GAAP and may not be comparable to similar measures presented
by other companies.
(2) Funds from operations is an Additional GAAP measure provided to assist
management and investors in determining the Corporation's cash flows
generated by operations before the cash impact of working capital
fluctuations.
(3) Generation capacity is manufacturer's nameplate capacity net of minority
ownership interests of third parties.
OPERATING RESULTS
Net revenue, adjusted EBITDA, and funds from operations increased in the third
quarter of 2012 when compared to the third 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 as well as higher realized
prices at Milner due to greater price volatility with Milner remaining
predominantly unhedged to commodity prices in the third quarter of 2012.
Net income in the third quarter of 2012 was favourably affected by the
aforementioned factors, partially offset by an unrealized (non-cash) loss on a
derivative coal contract in 2012 as compared to an unrealized gain in 2011.
On a year to date basis, net revenue, adjusted EBITDA, net income 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 had led to
lower generation and impacted Milner results. Net income 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.
AMENDMENT OF COAL CONTRACT
On November 8, 2012, the Corporation, through a subsidiary, amended one of its
long-term coal supply agreements. The amended agreement will expire in 2015 and
based on the current prices in the amended agreement, the purchase commitment
remaining decreases by $20.1 million.
GROWTH INITIATIVES
Deerland Peaking Station ("D1")
MAXIM is actively pursuing commercial arrangements that will allow for the
construction of the 190 MW D1 Station to commence during 2013. 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
SUMMIT is wholly owned by MAXIM and was formed in 2011 to advance the Mine 14
Project. 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. The field work for the 2012 exploration program was recently completed and
MAXIM anticipates providing an updated Technical Report during the first quarter
of 2013, which will contribute to the advancement of a strategic review related
to SUMMIT's Mine 14 project.
Milner Expansion ("M2")
The AUC has granted MAXIM approval to develop a 500 MW generating facility
adjacent to the existing 150 MW generating facility ("M1"). A lengthy public
consultation and regulatory process culminated in the project's final approval
by the AUC on August 10, 2011. On September 12, 2012 the Government of Canada
enacted new greenhouse gas legislation that limits the amount of carbon dioxide
emitted by coal-fired generation facilities. MAXIM is examining ways to meet the
new standards including development of a natural gas-fired facility. All aspects
are presently being studied to determine the most viable and effective course of
action.
Buffalo Atlee ("B1")
MAXIM acquired the B1 Power Project, 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 five 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 the new greenhouse gas legislation.
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.
MAXIM is updating guidance that was provided on August 9, 2012 as follows:
($ in thousands except per share amounts)
----------------------------------------------------------------------------
Guidance provided on Updated 2012
Select guidance KPI's August 9, 2012 Guidance
----------------------------------------------------------------------------
Adjusted EBITDA 34,300 37,200
Funds from operations 34,900 37,700
Funds from operations per share -
basic and diluted ($ per share) 0.65 0.70
Adjusted net income 11,600 14,200
Adjusted net income per share -
basic and diluted ($ per share) 0.21 0.26
Net income 6,100 8,000
Net income per share- basic and
diluted ($ per share) 0.11 0.15
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MAXIM's revised 2012 guidance reflects an increase in all of its guidance KPI's.
The increase is primarily due to improved performance at the Pittsfield facility
during the third quarter as well as greater volatility in Alberta spot prices
during the third quarter and beginning of the fourth quarter.
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 2012
Guidance Assumptions August 9, 2012 Guidance
----------------------------------------------------------------------------
Electricity deliveries (MWh):
HR Milner 722,227 645,550
Other facilities 532,942 557,898
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Total electricity deliveries 1,255,169 1,203,448
Net generation capacity at year end
(MW) 796 796
Capital expenditures (excluding
acquisitions):
France repowering and peaking
facilities 9,300 9,100
Development projects 12,500 8,900
Other assets 3,400 3,500
HR Milner 1,600 2,100
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Total capital expenditures 26,800 23,600
Average Alberta spot electricity
price ($/MWh) 64.80 63.86
Average annual foreign exchange
rates:
C$/USD 1.00 1.00
C$/Euro 1.27 1.25
Weighted average shares outstanding
- basic (000's) 54,084 54,084
Weighted average shares outstanding
- diluted (000's) 54,086 54,085
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The decrease in Milner generation from 722,227 MWh per August 9, 2012 guidance
to 645,550 MWh is a result of reduced generation during periods of lower power
prices during the third quarter, which is expected to continue in the fourth
quarter. This is partially offset by an increase in generation in the Northeast
US during the third quarter, primarily due to transmission constraints and
weather based demand at the Pittsfield facility.
Forecasted capital expenditures have decreased primarily to reflect a deferral
in the construction timeline for Deerland from 2012 to 2013.
CONFERENCE CALL FOR 2012 THIRD QUARTER RESULTS
MAXIM will host a conference call for analysts and investors on Friday November
9, 2012 at 11:30 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) 696-5910 or (416) 340-2217 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 November 9, 2012 to
November 16, 2012. To access the replay, dial (800) 408-3053 or (905) 694-9451
followed by the passcode 6805469. In addition, the recording will be available
commencing November 9, 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
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
www.maximpowercorp.com
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