Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q3 2012 Earnings Presentation
31 slides from Capstone Infrastructure's earnings presentation, Nov 14, 2012
Slide 1: Q3 2012 Results Presentation
Q3 2012 Results Presentation November 14, 2012
Slide 2: Notice to Readers
Notice to Readers Certain of the statements contained within this document are forward-looking and reflect management’s Although the Corporation believes that it has a reasonable basis for the expectations reflected in these expectations regarding the future growth, results of operations, performanc
Slide 3: 2012 Highlights
2012 Highlights Addressing our priorities ► Successfully refinanced all debt maturing in 1 2012: recapitalizations of Värmevärden & hydro power facilities; sale of 20% interest in Bristol Water; refinancing of CPC-Cardinal facility ► 2 Established new common share dividend policy of $0.30 per share
Slide 4: Financial Overview
Financial Overview In line with expectations In millions of Canadian dollars or on a per share basis unless Three months ended Variance Nine months ended Variance otherwise noted Sep 30 Sep 30 2012 2011 (%) 2012 2011 (%) Revenue 85.0 40.4 110.5 263.0 124.3 111.5 Net income 11.8 (11.8) (200.3) 27.4 (
Slide 5: Financial Overview: Revenue and Adjusted EBITDA
Financial Overview Revenue Adjusted EBITDA1,2 Key Drivers +112% +104% ► Contributions from newest businesses In $ millions ► Offset by lower power In $ millions production at power facilities ￚ Poor hydrology in Q3 +111% +85% ￚ More scheduled maintenance outages in 2012 ￚ Poor wind conditions at Eri
Slide 6: Financial Overview: Power production
Financial Overview Power production Actual Actual Average long-term production (GWh) (1) Type Facility PPA Expiry Q3 2012 Q3 2011 Q1 Q2 Q3 Q4 Annual Gas Cardinal 2014 300.1 301.8 342.9 278.1 303.5 332.6 1,257.1 Wind Erie Shores 2026 32.5 32.0 76.3 52.5 34.0 78.1 240.9 Biomass Whitecourt 2014 48.7 54
Slide 7: Financial Overview: Adjusted Funds from Operations
Financial Overview Adjusted Funds from Operations YTD 2012 AFFO by Business1,2 Quarterly & YTD Variance in AFFO2,3 -11% Key Drivers ► Higher debt amortization costs In $ millions ► Payment of preferred YTD 2012 AFFO by Country1,2 dividends plus -43% applicable taxes 1 - Chart illustrates contributio
Slide 8: Capstone Today
Capstone Today Stronger foundation from which to grow Capstone has a strong, diversified portfolio that is continuing to deliver stable operating performance. Substantially lower risk profile in terms of portfolio diversification & balance sheet New international scope & partnerships Evolving utilit
Slide 9: Power Segment Performance: Quarterly overview
Power Segment Performance Quarterly overview For the three months ended Sep 30, 2012 (in millions of Canadian dollars unless otherwise noted) Gas Wind Biomass1 Hydro Solar Total Power generated (GWh) 300.1 32.5 48.7 23.5 13.4 418.2 Capacity factor (%) 96.3 14.9 96.4 29.9 30.3 nmf Availability (%) 98
Slide 10: Power Segment Performance: Year-to-date overview
Power Segment Performance Year-to-date overview For the nine months ended Sep 30, 2012 (in millions of Canadian dollars unless Gas Wind Biomass1 Hydro Solar Total otherwise noted) Power generated (GWh) 893.5 163.9 149.5 118.2 33.8 1,358.9 Capacity factor (%) 90.7 25.2 96.3 50.4 25.7 nmf Availability
Slide 11: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Three months ended Sep 30 Nine months ended Sep 30 (in millions of Canadian dollars unless otherwise noted) 2012 2011 2012 2011 Water supplied (megalitres) 20,248 - 61,370 - Revenue 45.6 - 132.8 - Adjusted EBITDA 11.1 - 38.4 - AFFO - - 4.9 - ► Higher rainf
Slide 12: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Three months ended Sep 30 Variance Nine months ended Sep 30 Variance (in millions of Canadian dollars unless otherwise noted) 2012 2011 (%) 2012 2011 (%) Heat production (GWh) 125 149 (16.1) 726 416 74.5 Interest income 0.7 1.7 (60.0) 2.7 3.4 (20.6) Adjusted
Slide 13: Expenses
Expenses Total expenses increased by 73.5% in Q3 & 79.1% YTD 2012, excluding internalization costs (in millions of Canadian dollars unless otherwise noted) Three months ended Sep 30 Variance Nine months ended Sep 30 Variance 2012 2011 (%) 2012 2011 (%) Corporate1 2.3 4.7 (51.9) 8.1 11.3 (27.9) Power
Slide 14: Cash Resources
Cash Resources As at (in millions of Canadian dollars unless otherwise noted) Sep 30, 2012 Dec 31, 2011 Power 14.4 14.0 Utilities- Water 40.7 35.4 Corporate 1.8 8.2 Unrestricted cash & cash equivalents 56.9 57.6 Less: cash with access limitations Power (5.9) (10.1) Utilities – Water1 (40.7) (35.4) C
Slide 15: Debt Profile
Debt Profile Debt-to-capitalization ratio of 60.3% Long-Term Debt Maturity Profile Covenants Covenant Sep 30, 2012 CPC - Cardinal Debt/Capitalization Ratio1 Max 0.70x 0.63x Fixed Charge Coverage Ratio Min 1.25x 5.03x Interest Coverage Ratio Min 2.50x 3.61x Erie Shores Debt DSCR Min 1.20x 1.75x Amher
Slide 16: Strategic Priorities: Cardinal
Strategic Priorities: Cardinal Advancing negotiations ► Dialogue with OPA is continuing ￚ Engaging with various government ministries with OPA’s approval ► Working towards outcome that recognizes Cardinal’s high quality & importance ￚ Electricity ￚ Industrial ￚ Economic ￚ Social ￚ Community ► Timing
Slide 17: Creating Value for Shareholders
Creating Value for Shareholders Drivers of Near-Term Value ► Availability & performance of power facilities ► Meeting regulatory targets at Bristol Water ► Fuel cost management at Värmevärden Drivers of Long-Term Value ► Completing smart acquisitions & development projects ► Diversifying our portfol
Slide 18: Creating Value: Focus on operational excellence
Creating Value Focus on operational excellence Seeking opportunities to incrementally increase cash flow ► Sale of renewable energy credits (RECs) at Whitecourt ￚ Already contributed ~$800K in revenue in 2012 18
Slide 19: Creating Value: Achieving regulatory targets at Bristol Water
Creating Value Achieving regulatory targets at Bristol Water Utilities Segment – Bristol Water ► Executing capital projects, which will drive growth in RCV ► Focused on achieving regulatory targets ￚ Leakage of < 51M litres/day in 2012 – 2013 ￚ Top quartile ranking in 2012 on Ofwat’s Service Incenti
Slide 20: Creating Value: Achieving scale & diversification
Creating Value Achieving scale & diversification Lower payout ratio provides better flexibility to internally fund future acquisitions or development projects 20
Slide 21: Stronger Today
Stronger Today High quality, low risk & inflation-linked infrastructure portfolio Active Management Drives Strong Asset Performance Capabilities & Disciplined Approach to Relationships that Span Growth with Focus on Sector Enhancing Returns Ready to capitalize on the huge infrastructure investment o
Slide 22: Appendix
CAPSTONE INFRASTRUCTURE
Slide 23: 2012 Outlook: Power Portfolio
2012 Outlook1 Expect stable performance & total Adjusted EBITDA of ~$110M to $120M Power Portfolio Expected to Perform in Line with LTA Production DRIVERS ‣ Steady production across portfolio subject to wind, water flows & sunlight ‣ Full year of contribution from Amherstburg Solar Park MITIGATING F
Slide 24: 2012 Outlook: Bristol Water
2012 Outlook1 Expect stable performance & total Adjusted EBITDA of ~$110M to $120M Bristol Water Expected to Deliver $7.5M in Dividends in 2012 DRIVERS ‣ Steady demand with little seasonal variation ‣ Benefitting from a ~3.9% real increase & a 5.2% inflationary increase in regulated revenue (total i
Slide 25: 2012 Outlook: Värmevärden
2012 Outlook Expect stable performance & total Adjusted EBITDA of ~$110M to $120M Full Year Contribution from Värmevärden ‣ Leverage in business following the recapitalization ‣ Expect to receive ~$4M in cash flow from this investment in 2012 ￚ Continuing emphasis on operational efficiency ￚ Buildin
Slide 26: Non-GAAP Performance Measures & Assumptions
Non-GAAP Performance Measures & Assumptions
Slide 27: 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 28: 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 29: 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 business and economic conditions affecting the Corporation’s operations will continue substantially in their
Slide 30: Additional Details
CAPSTONE INFRASTRUCTURE
Slide 31: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts Asset management plan, which is developed by water utilities in the UK every five years & approved by Ofwat. Common shares outstanding 72,157,802 Annual long-term average production (LTA) Preferred shares outstanding 3,000,000 An avera
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