Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q2 2013 Earnings Presentation
32 slides from Capstone Infrastructure's earnings presentation, Aug 13, 2013
Slide 1: Q2 2013 Results Presentation
VALUE EVERY DAY Q2 2013 Results Presentation August 13, 2013
Slide 2: Notice to Readers
Notice to Readers Certain of the statements contained within this presentation are forward-looking and reflect management's expectations regarding the future growth, results of operations, performance and business of Capstone Infrastructure Corporation (the “Corporation”) based on information curren
Slide 3: Q2 2013 Snapshot
Q2 2013 Snapshot Strong performance in quarter & year to date Revenue Adjusted EBITDA1 AFFO1 In $ millions In $ millions In $ millions 1 - "Adjusted EBITDA“ and “Adjusted Funds from Operations” are non-GAAP financial measures and do not have any standardized meaning prescribed by International Finan
Slide 4: Q2 Financial Performance
Q2 Financial Performance In millions of Canadian dollars Quarter Ended June 30 Variance Six Months Ended June 30 Variance or on a per share basis unless otherwise noted 2013 2012 (%) 2013 2012 % Revenue 93.5 85.8 9.0 187.8 178.0 5.5 Net income 14.6 - n.m.f. 30.5 16.7 83.3 Adjusted EBITDA1,2 31.8 27.
Slide 5: Q2 2013 Highlights
Q2 2013 Highlights Progress against strategic objectives Cardinal Re-Contracting 1 ► ► Held regular discussions with Ontario Power Authority Focused on long-term solution Maximize Business Performance 2 POWER ► Power facilities achieved high availabilities & total production slightly above long-term
Slide 6: Q2 2013 Highlights
Q2 2013 Highlights Progress against strategic objectives Growth 3 ► ► Subsequent to quarter end, entered into definitive agreement to acquire 100% of Renewable Energy Developers Inc. (ReD) Capstone will gain: ￚ Net 95 MW of operating wind power facilities in Ontario & Nova Scotia ￚ An attractive net
Slide 7: Q2 2013 Financial Overview: Revenue
Q2 2013 Financial Overview Revenue Drivers of Revenue Variance +5.5% In $ millions +9.0% ► Higher regulated water rate at Bristol Water ► Increased power production at Cardinal & Erie Shores 7
Slide 8: Q2 2013 Financial Overview: Expenses
Q2 2013 Financial Overview Expenses Drivers of Expense Variance +5.0% In $ millions +6.9% ► Higher fuel costs at Cardinal due to greater fuel consumption ► Higher operations & maintenance costs at Bristol Water ► Increased project development expenses ► Offset by lower admin costs 8
Slide 9: Q2 2013 Financial Review: Expense breakdown
Q2 2013 Financial Review Expense breakdown (in millions of Canadian dollars unless otherwise noted) Quarter Ended Jun 30 Variance Six Months Ended Jun 30 Variance 2013 2012 (%) 2013 2012 (%) Corporate (2.5) (3.7) (30.9) (4.7) (5.8) (18.7) Power segment (26.0) (24.4) 7.0 (53.2) (50.6) 5.1 Utilities s
Slide 10: Q2 2013 Financial Overview: Adjusted EBITDA
Q2 2013 Financial Overview Adjusted EBITDA1 Variance in AFFO Drivers of Adjusted EBITDA Variance Adjusted EBITDA by Business2 ► Higher power production at -0.9% Cardinal & Erie Shores In $ millions ► Higher dividend from Värvmevärden as +15.7% surplus cash available for Adjusted EBITDA by Geography2
Slide 11: Q2 2013 Financial Overview: Adjusted Funds from Operations
Q2 2013 Financial Overview Adjusted Funds from Operations1 Q2 2013 AFFO by Business2 Drivers of AFFO Variance ► Lower maintenance capex at Cardinal ► Higher dividend from +21.7% Värmevärden Lower admin In $ millions ► expenses +143.2% ► For year-to-date Q2 2013 AFFO by Country2 period, lower interes
Slide 12: Q2 2013 Financial Overview: Power production
Q2 2013 Financial Overview Power production Actual Actual Average long-term production (GWh) (1) Type Facility PPA Expiry Q2 2013 Q2 2012 Q1 Q2 Q3 Q4 Annual Gas Cardinal 2014 307.9 251.4 343.4 281.4 303.5 333.3 1,261.6 Wind Erie Shores 2026 56.2 47.5 76.9 53.0 34.0 76.9 240.8 Biomass Whitecourt 2014
Slide 13: Power Segment Performance: Quarterly
Power Segment Performance Quarterly For the quarter ended Jun 30, 2013 (in millions of Canadian dollars Gas Wind Biomass1 Hydro Solar Development Total unless otherwise noted) Power generated (GWh) 307.9 56.2 47.2 58.4 12.5 n/a 482.2 Capacity factor (%) 96.9 26.0 92.6 74.8 28.6 n/a n.m.f. Availabili
Slide 14: Power Segment Performance: Year-to-date
Power Segment Performance Year-to-date For the six months ended Jun 30, 2013 (in millions of Canadian dollars unless Gas Wind Biomass1 Hydro Solar Development Total otherwise noted) Power generated (GWh) 655.3 137.0 96.6 85.3 18.6 n/a 992.8 Capacity factor (%) 99.0 31.9 96.0 54.9 21.2 n/a n.m.f Avai
Slide 15: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended Jun 30 Variance Six Months Ended Jun 30 Variance (in millions of Canadian dollars unless otherwise 2013 20121 (%) 2013 2012 (%) noted) Water supplied (megalitres) 20,695 21,359 (3.1) 39,933 41,122 (2.9) Revenue 47.3 45.7 3.6 91.4 87.2 4.8 Adj
Slide 16: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended Jun 30 Variance Six Months Ended Jun 30 Variance (in millions of Canadian dollars unless otherwise noted) 2013 2012 (%) 2013 2012 (%) Heat & steam production (GWh) 209 209 - 641 602 6.5 Interest income1 0.7 0.7 8.0 1.4 2.0 (29.9) Adjusted EBITD
Slide 17: Cash Resources
Cash Resources As at Jun 30 As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2013 2012 Power 26.7 20.9 Utilities- Water 9.1 25.3 Corporate 13.6 3.3 Unrestricted cash & cash equivalents 49.5 49.6 Less: cash with access limitations Power (12.5) (8.4) Utilities – Water1 (9.2) (25.3
Slide 18: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile In Compliance with all Covenants Covenant Jun 30, 2013 CPC - Cardinal Debt/Capitalization Ratio1 Max 0.70x 0.61x Fixed Charge Coverage Ratio Min 1.25x 8.78x Interest Coverage Ratio Min 2.50x 4.1
Slide 19: 2013 Outlook
2013 Outlook1 ►Expect Following Lowercompletion AdjustedofEBITDA ReD transaction, Contribution expect inAdjusted 2013 EBITDA in 2013 to be ~$115 to $125M, assuming: ￚ Partial year contribution from ReD’s operating wind facilities ￚ Offset by higher admin expenses & transaction-related costs ￚ Transa
Slide 20: Priorities for Balance of 2013
Priorities for Balance of 2013 Resolution of Cardinal ► Regular discussions ► Continue to believe Cardinal’s value proposition is compelling ￚ Needed part of supply mix ￚ Well situated ￚ Close to load centres ￚ Strong industrial partner ￚ Tangible economic benefits ￚ Broad community support ► Focuse
Slide 21: Resolution of Cardinal
Resolution of Cardinal Ontario’s Long-Term Energy Plan ► Ontario’s Long-Term Energy Plan (LTEP) in process of being updated ► Recent OPA & Independent Electricity System Operator (IESO) forecast shows capacity gap starting in the 2016-2020 timeframe ► Supports need for an efficient, flexible facilit
Slide 22: Priorities for Balance of 2013: Completing ReD transaction
Priorities for Balance of 2013 Completing ReD transaction & integration ► Circulars filed early August ► Special meetings of Capstone & ReD shareholders on September 4th ► Currently expect to close transaction by end of September/early October 22
Slide 23: Growth Focus
Growth Focus Four core infrastructure pillars Power Utilities P3 Transportation • Traditional • Water • Courts • Roads • Renewable • Gas (transmission & • Hospitals • Rails • District heating & distribution) • Schools • Airports cooling • Electric • Transportation • Ports • Waste to energy (transmis
Slide 24: Strong Fundamentals
Strong Fundamentals High quality, diversified portfolio that is continuing to deliver strong performance Substantial investment in Bristol Water, a business we expect to generate perpetual, growing cash flow Solid balance sheet New development pipeline through ReD transaction Experienced team with s
Slide 25: Appendix
CAPSTONE INFRASTRUCTURE
Slide 26: 2013 Outlook: Power
2013 Outlook1 Power Expect Slightly Higher Adjusted EBITDA in 2013 DRIVERS FOR 2013 ‣ Less maintenance downtime at Cardinal ‣ Performance in line with long-term average production across portfolio subject to wind, water flows & sunlight ‣ Lower average effective gas transportation toll of $1.95 per
Slide 27: 2013 Outlook: Bristol Water
2013 Outlook1 Bristol Water Expect Lower Adjusted EBITDA Contribution in 2013 DRIVERS FOR 2013 ‣ Steady demand with little seasonal variation ‣ Benefitting from a ~6.9% increase in the regulated water tariff starting on April 1, 2013 MITIGATING FACTORS ‣ Capstone will hold a 50% interest in Bristol
Slide 28: 2013 Outlook: Värmevärden
2013 Outlook1 Värmevärden Expect Higher Adjusted EBITDA Contribution in 2013 ‣ Performance expected to continue to support fixed interest payments on Capstone’s shareholder loan & dividends on our equity investment ‣ Interest income will be lower in 2013 ￚ Capstone repatriated a portion of its share
Slide 29: Non-GAAP Performance Measures
Non-GAAP Performance Measures Definitions This presentation contains figures that are performance measures not defined by International Financial Reporting Standards (IFRS). These non-GAAP and additional GAAP performance measures do not have any standardized meaning prescribed by IFRS and are, there
Slide 30: Non-GAAP Performance Measures (continued)
Non-GAAP Performance Measures Definitions (continued) Adjusted Funds from Operations (AFFO) Capstone’s definition of AFFO measures cash generated by activities of infrastructure business investments which is available for dividends and general corporate purposes. For wholly owned businesses, AFFO is
Slide 31: Assumptions
Assumptions Material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to the following: that the acquisition (the “ReD Acquisition”) of all of the common shares of Renewable Energy Developers Inc. (“ReD”)
Slide 32: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts As at Jun 30, 2013 Asset management plan, which is developed by water utilities in the UK every five years & approved by Ofwat. Common shares outstanding 72,865,409 Annual long-term average production (LTA) Preferred shares outstanding
Capstone Infrastructure — Q2 2013 Earnings Presentation on 6ix