Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q1 2013 Earnings Presentation
31 slides from Capstone Infrastructure's earnings presentation, May 14, 2013
Slide 1: Q1 2013 Results Presentation
VALUE EVERY DAY Q1 2013 Results Presentation May 14, 2013
Slide 2: Notice to Readers
Notice to Readers Certain of the statements contained within this document 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 currently
Slide 3: Q1 2013 Snapshot
Q1 2013 Snapshot Variance mostly driven by reduced ownership in Bristol Water --- not operational performance Revenue Adjusted EBITDA1 AFFO2 In $ millions In $ millions In $ millions 1 – Of the $4.9 million variance in Adjusted EBITDA, $4.8 million was attributable to the Corporation's reduced inter
Slide 4: Q1 2013 Highlights
Q1 2013 Highlights Businesses operating well Power Facilities Bristol Water Värmevärden ► Achieved high ► Higher water rates ► Benefiting from availabilities across drive 6.1% revenue price adjustments facilities & 7.9% gross ► Improved plant ► Production slightly Adjusted EBITDA availability above
Slide 5: Q1 Financial Performance
Q1 Financial Performance Mostly reflects reduced ownership in Bristol Water In millions of Canadian dollars or on a per share basis unless otherwise noted Quarter Ended March 31 Variance 2013 2012 (%) Revenue 94.3 92.2 2.3 Net income 15.9 16.6 (4.3) Adjusted EBITDA1,2 32.3 37.2 (13.1) AFFO1,3 13.6 1
Slide 6: Q1 Priorities
Q1 Priorities Cardinal re-contracting ► New Premier & Cabinet selected in February ► During quarter, re-engaged with various government ministries to meet new personnel & re-establish awareness ► Actively back at table with Ontario Power Authority ￚ Focus on long-term solution ￚ Continue to explore
Slide 7: Q1 2013 Financial Overview: Revenue
Q1 2013 Financial Overview Revenue Drivers of Revenue Variance +2.3% In $ millions ► Reflects higher regulated water rate at Bristol Water ► Higher electricity sales at Cardinal ► Offset by overall 1.3% decline in power production due to less favourable weather conditions 7
Slide 8: Q1 2013 Financial Overview: Expenses
Q1 2013 Financial Overview Expenses Drivers of Expense Variance +3.2% In $ millions ► Slightly higher operating expenses at Bristol Water ► Higher fuel costs at Cardinal as a result of increased production 8
Slide 9: Q1 2013 Financial Review: Expense breakdown
Q1 2013 Financial Review Expense breakdown (in millions of Canadian dollars unless otherwise noted) Quarter Ended Mar 31 Variance 2013 2012 (%) Corporate (2.2) (2.1) 2.2 Power segment (27.1) (26.2) 3.5 Utilities segment – Water1 (23.4) (22.6) 3.5 Corporate project development costs 0.05 (0.06) nmf T
Slide 10: Q1 2013 Financial Overview: Adjusted EBITDA
Q1 2013 Financial Overview Adjusted EBITDA1 Variance in AFFO Drivers of Adjusted EBITDA Variance -13.1% Adjusted EBITDA by Business2 ► $4.8M of $4.9M variance was directly related to reduced ownership interest in Bristol Water & In $ millions lower interest income from Värmevärden Adjusted EBITDA by
Slide 11: Q1 2013 Financial Overview: Adjusted Funds from Operations
Q1 2013 Financial Overview Adjusted Funds from Operations1 Q1 2013 AFFO by Business2 Drivers of AFFO Variance ► Lower interest -8.5% income from Värmevärden ► Higher principal repayments In $ millions ￚ Repaid $2.7M in debt during Q1 2013 AFFO by Country2 quarter ► Lower overall power production 1 -
Slide 12: Q1 2013 Financial Overview: Power production
Q1 2013 Financial Overview Power production Actual Actual Average long-term production (GWh) (1) Type Facility PPA Expiry Q1 2013 Q1 2012 Q1 Q2 Q3 Q4 Annual Gas Cardinal 2014 347.3 341.9 343.4 278.1 303.5 333.3 1,258.3 Wind Erie Shores 2026 80.8 84.0 76.9 52.5 34.0 76.9 240.3 Biomass Whitecourt 2014
Slide 13: Power Segment Performance
Power Segment Performance For the quarter ended Mar 31, 2013 (in millions of Canadian dollars unless Gas Wind Biomass1 Hydro Solar Total otherwise noted) Power generated (GWh) 347.3 80.8 49.4 27.0 6.1 510.6 Capacity factor (%) 101.1 37.8 99.3 35.0 14.0 nmf Availability (%) 100.0 98.7 99.8 99.0 99.6
Slide 14: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended Mar 31 Variance (in millions of Canadian dollars unless otherwise noted) 2013 20121 (%) Water supplied (megalitres) 19,238 19,763 (2.7) Revenue 44.1 41.5 6.1 Adjusted EBITDA before non-controlling interest 20.8 19.3 7.9 Adjusted EBITDA 10.4 1
Slide 15: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended Mar 31 Variance (in millions of Canadian dollars unless otherwise noted) 2013 2012 (%) Heat & steam production (GWh) 432 392 10.2 Interest income 0.7 1.4 (48.3) Adjusted EBITDA & AFFO1 0.7 1.4 (48.3) 1 – Värmevärden’s contribution to Capstone’s
Slide 16: Cash Resources
Cash Resources As at Mar 31 (in millions of Canadian dollars unless otherwise noted) 2013 2012 Power 27.6 20.9 Utilities- Water 11.8 25.3 Corporate 3.8 3.3 Unrestricted cash & cash equivalents 43.3 49.6 Less: cash with access limitations Power (11.6) (8.4) Utilities – Water1 (11.8) (25.3) Cash & cas
Slide 17: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile In Compliance with all Covenants Covenant Mar 31, 2013 CPC - Cardinal Debt/Capitalization Ratio1 Max 0.70x 0.61x Fixed Charge Coverage Ratio Min 1.25x 7.65x Interest Coverage Ratio Min 2.50x 3.9
Slide 18: 2013 Outlook
2013 Outlook1 ►Expect Expect Lower Adjusted Adjusted EBITDA EBITDA to be ~$110 Contribution 2 2013 to $120Min ► Key assumptions: ￚ Holding 50% ownership interest in Bristol Water for full year ￚ Lower average effective gas transportation rate in 2013 of $1.95 per GJ compared with $2.24 per GJ in 201
Slide 19: Creating Value for Shareholders: Securing new PPA for Cardinal
Creating Value for Shareholders Securing new PPA for Cardinal ► Actively back in discussions ► Timing remains beyond our control ► Continuing to explore potential for a one-year extension to current PPA ► Continue to believe Cardinal’s value proposition is compelling ￚ Needed part of supply mix ￚ We
Slide 20: Creating Value for Shareholders: Drivers of Value
Creating Value for Shareholders Drivers of Near-Term Value ► Availability & performance of power facilities ► Achieving strong operational performance across all businesses ► Meeting regulatory targets at Bristol Water Drivers of Long-Term Value ► Completing smart acquisitions & development projects
Slide 21: Creating Value for Shareholders: Bristol Water key value driver
Creating Value for Shareholders Bristol Water is a key value driver for Capstone ► Executing capital projects, which will drive growth in RCV ► Focused on achieving regulatory targets ￚ Leakage of < 50M litres/day ￚ Top quartile ranking on Ofwat’s Service Incentive Mechanism customer service measure
Slide 22: Creating Value for Shareholders: Growth & diversification
Creating Value for Shareholders Growth & diversification Core Infrastructure Categories Target Assets for CSE P3s REGULATED ASSETS USER-PAY ASSETS amount of COMPETITIVE investment ASSETS ► Courts ► Transmission & ► Road ►needed per Merchant year Power ► Hospitals Distribution Assets ► Rail ►over the
Slide 23: Strong Fundamentals
Strong Fundamentals High quality portfolio diversified by infrastructure category & geography Substantial investment in Bristol Water, a business we expect to generate perpetual, growing cash flow Solid balance sheet & access to capital for growth Experienced team with strong relationships across bo
Slide 24: Appendix
CAPSTONE INFRASTRUCTURE
Slide 25: 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 26: 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 27: 2013 Outlook: Värmevärden
2013 Outlook1 Värmevärden Expect Lower 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 shareh
Slide 28: 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 29: 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 30: 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 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 72,697,188 Annual long-term average production (LTA) Preferred shares outstanding 3,000,000 An avera
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