Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Shareholder Meeting (June 2015)
35 slides from Capstone Infrastructure's shareholder meeting presentation, Jun 17, 2015
Slide 1: Annual General Meeting of Shareholders
Essential Annual General Meeting of Shareholders June 17, 2015
Slide 2: Notice to Readers
Notice to Readers This document is being distributed on a confidential basis by Capstone Infrastructure Corporation (“Capstone” or the “Corporation”). References to “we” “us”, “our” and similar expressions are to Capstone. This document is an outline of matters for discussion only and no representat
Slide 3: Formal Proceedings
INFRASTRUCTURE FORMAL PROCEEDING
Slide 4: Agenda
AGENDA Formal proceedings ► Call to Order ► Notice of Meeting ► Quorum & Voting Procedure ► Minutes of Last Meeting ► Financial Statements & Auditor’s Report ► Nomination & Election of Directors ► Re-appointment of Auditors ► Other Business ► Termination of Formal Meeting
Slide 5: Management's Presentation
MANAGEMENT’S PRESENTATION Michael Bernstein President and Chief Executive Officer
Slide 6: Last 12 Months: Four objectives from 2014 AGM
LAST 12 MONTHS Four objectives from 2014 AGM Maximize asset performance Manage business responsibly Advance growth initiatives Achieve successful AMP6 outcome at Bristol Water
Slide 7: Building a Strong Foundation
BUILDING A STRONG FOUNDATION Diversified, de-risked, extended portfolio 2005 2010 2015 Cardinal Whitecourt Erie Shores Hydros Amherstburg ReD Operating Skyway 8 St. Philemon Goulais Värmevärden Bristol Water 2010 2015 2020 2025 2030 2035 2040 2045 2050 Perpetual Long-term visibility on cash flow dur
Slide 8: Maximize Performance
MAXIMIZE PERFORMANCE Well maintained, diversified high-quality portfolio 5-yr avg. availability Facility 2014 Cardinal 98.5% 97.4% Wind assets 97.3% 97.4% Hydro facilities 96.4% 98.3% Whitecourt 96.4% 96.3% Amherstburg 98.6% 97.4% 439 MW TO 466 MW ~8 YRS TO ~16 YRS Growth since June 2014 in net inst
Slide 9: Maximize Performance: Improving performance at Bristol Water
MAXIMIZE PERFORMANCE Improving performance at Bristol Water
Slide 10: Responsible Management: Efficiency, creativity, innovation
RESPONSIBLE MANAGEMENT Efficiency, creativity, innovation ► Simplified corporate structure ► Lower administrative expenses in Q1 2015 ► Potential $25M and incremental future cash flows from OEFC lawsuit
Slide 11: Cardinal: new contract and financial impact
RESPONSIBLE MANAGEMENT Cardinal: new contract and financial impact ► New 20-year contract signed in March 2014 ► Became effective January 1, 2015 ► Dispatchable operations rather than 24/7 ► Completion of $30 million life extension ► Gained certainty on Cardinal’s future but with reduced economics 2
Slide 12: Whitecourt: secured new 15-year contract
RESPONSIBLE MANAGEMENT Whitecourt: secured new 15-year contract ► Free fuel from wood waste supplier ► Protection from current depressed prices in Alberta ► Ability to benefit when pool prices recover ► Potential for value of environmental attributes Contract is extendable to 20 years
Slide 13: Fiscal 2014 among Capstone's best years financially
RESPONSIBLE MANAGEMENT Fiscal 2014 among Capstone’s best years financially ► $160.4 million Adjusted EBITDA ► Assets performed well ► Bristol Water contribution ► New contributions from ReD acquisition
Slide 14: Advance Growth: Proven execution success with wind projects
ADVANCE GROWTH Proven execution success with wind projects ► Expanded portfolio of operating wind power facilities to 228.5 MW net ► Development projects largely completed on time and under budget ► Commissioned all near-term projects ￚ 10 MW Skyway 8 (Aug ‘14) ￚ 24 MW Saint-Philémon (Jan ‘15) ￚ 25
Slide 15: Bristol Water: Ofwat final determination
BRISTOL WATER Ofwat final determination Average SIM Score 11/12-13/14 90 80 70 60 50 Customer service levels among the best in the sector
Slide 16: Bristol Water: Ofwat final determination
BRISTOL WATER Ofwat final determination Average Water Charges 2014-15 Customer rates below average of comparable water systems
Slide 17: Bristol Water: Ofwat final determination
BRISTOL WATER Ofwat final determination Industry Bill Decreases 25% 20% 15% 10% Industry Average: 4.5% 5% -% Imposed rate reduction 4X higher than industry average
Slide 18: Bristol Water: Final stretch of regulatory review
BRISTOL WATER Final stretch of regulatory review Ofwat set allowable total wholesale expenditure of £409 million ‣ 14% higher than Draft Determination of £359 million ‣ Average household bill falls to £164 in first year, then to £152 ‣ Allowable cost of capital (WACC) of 3.6%; PAYG rate of 55% ‣ N
Slide 19: Bristol Water: Final stretch of regulatory review
BRISTOL WATER Final stretch of regulatory review ► Ofwat final determination rejected ► CMA review underway ► Arbitration process is going well ► Confident in an improved result ► Expert analysis supports better outcome ► Remains a valuable, growing, perpetual asset with excellent long-term prospect
Slide 20: Four Objectives: Largely achieved our goals
FOUR OBJECTIVES Largely achieved our goals Strong portfolio performance Excellent financial results Good progress on several strategic priorities Uncertainty on Bristol Water Disappointing share price
Slide 21: Management's Presentation
MANAGEMENT’S PRESENTATION Michael Smerdon Executive Vice President and Chief Financial Officer
Slide 22: Fiscal 2014: One of Capstone's strongest years
FISCAL 2014 One of Capstone’s strongest years financially Revenue ($M) Adjusted EBITDA ($M)1 AFFO ($M)1 +13.4% +24.9% +41.3% 1 - "Adjusted EBITDA“ and “Adjusted Funds from Operations” are non-GAAP financial measures and do not have any standardized meaning prescribed by International Financial Repor
Slide 23: Q1 2015: In line with forecast
Q1 2015 In line with forecast and reflecting Cardinal impact Revenue ($M) Adjusted EBITDA ($M)1 AFFO ($M)1 -21.2% -29.3% -67.3% Represents contribution from Cardinal 1 - "Adjusted EBITDA“ and “Adjusted Funds from Operations” are non-GAAP financial measures and do not have any standardized meaning pr
Slide 24: Development Pipeline: Narrowing the gap
DEVELOPMENT PIPELINE Narrowing the gap STEADY SIX NEW WIND BRISTOL WATER OUTCOMES FOR PROJECTS PORTFOLIO • Settlers Landing* • Whitecourt contract • Major efficiencies, • Snowy Ridge* price support capex deferral, • Ganaraska* • Wind production at expected favourable long-term average CMA outcome •
Slide 25: Bristol Water: CMA review of Ofwat business plan
BRISTOL WATER CMA review of Ofwat business plan 14% real reduction in customer rates from Q2 2015 Any adjustments from CMA come into effect Q2 2016 Expect rate base to continue to grow for years to come
Slide 26: Financial Position
FINANCIAL POSITION Capital structure aligned to cash flow profile 70.8% $63.5M Debt to capitalization ratio1 Available liquidity2 2 As at Mar 31, 2015, includes cash and equivalents for general corporate 1As at March 31, 2015 purposes and undrawn corporate credit facility
Slide 27: Solid Foundation
SOLID FOUNDATION Fundamentally sound company ► Pathway to new cash flow ► Disciplined approach to financial and asset management ► Confident in Bristol Water CMA outcome ► Bristol Water’s long-term prospects ► Well-managed, high-quality assets
Slide 28: Management's Presentation
MANAGEMENT’S PRESENTATION Michael Bernstein President and Chief Executive Officer
Slide 29: Creating Value: Existing Assets
CREATING VALUE Four building blocks Responsible asset management Corporate efficiencies and savings Life-extension and recontracting Cardinal Whitecourt fuel supply and price support ? Bristol Water Existing Assets
Slide 30: Creating Value: Existing Pipeline
CREATING VALUE Four building blocks Completed Skyway 8 Saint-Philémon Goulais In Progress Six other projects Existing • • Five in Ontario One in Saskatchewan Pipeline Existing Assets
Slide 31: Creating Value: New Pipeline
CREATING VALUE Four building blocks Pursuing Ontario LRP Wind Solar New Storage Pipeline BC standard offer US opportunities Existing Pipeline Existing Assets
Slide 32: Creating Value: M&A
CREATING VALUE Four building blocks Potential M&A transactions M&A New Pipeline Existing Pipeline Existing Assets
Slide 33: Creating Value: Focus on the long term
CREATING VALUE Focus on the long term ► Track record of disciplined acquisitions ► Current acquisition environment is short-term focused ► Emphasis on organic growth
Slide 34: 2015 Priorities
2015 PRIORITIES Delivering value to shareholders ► Secure improved outcome for Bristol Water ► Optimize asset performance ► Grow through development ► Pursue M&A at the right time and price
Slide 35: Questions?
\ QUESTIONS? INFRASTRUCTURE
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